Healthy foundations for financial freedom

8 Replies

Hello everyone, I'm Wyatt and I'm new to biggerpockets. I live in Fort Collins, Co and I'm super excited about starting down the path of financial freedom and independence.

I first became interested in financial freedom when I got my new job and the raise that followed. I didnt know what to do with it as it was such a different wage than what I was used too. I knew I should save but I didnt know how much and I wasn't very consistent with it. Finally my brother told me about the book that started it all "The Richest Man in Babylon" by George Clason.

After listening to it on audible 5 times I branched off and got more book ideas from my brother. I've read some of the "rich dad" series as well as "think and grow rich" and soon "the 4 hour work week". But I find myself wondering and often planning my years to come with the knowledge that I've gathered.

My standing questions is, How do I start my foundation? I've heard you should always have at least 6 months of reserves in case anything happens and you can't work. Well I've started that and my end of the year goal will be to have finished that. But then what?

I laid out a 5 year plan that will begin next year and the first thing on my to do list is gain 500 dollars in passive income monthly from non realestate assets. Does anyone have any ideas or suggestions? Has anyone done this before? I'm currently doing youtube but that's taking a bit slower than I thought it would so I was wondering if anyone has found success in other non realestate assets.

Thank you in advance, I look forward to the conversations.

Welcome to Bigger Pockets! I'm a real estate agent and investor in Massachusetts and I'm moving to Fort Collins this coming October. I too am looking forward to getting into the real estate community and hopefully getting additional investment properties under my belt! 

Welcome to BP and Fort Collins! I live here in town as well. I’m still new to the game as well, but I’ve spent quite a bit of time networking and trying my best to get connected with the investing community here. There’s a bunch of really cool, successful and super helpful people milling around town. 

Shoot me a PM and we’ll see if we can get a coffee and chat on the calendar!

Cheers!

@Logan Brown

Welcome to BP

I have a love / hate relationship with financial planning. Its' what my college degree is in, but I could never go into the profession because I don't believe in the high mutual fund fees. Can't sell what I won't buy. That's why I like real estate! I'm happy to sell it. True win-win where the commissions are justified.

To answer your question... it really depends on your risk tolerance and financial obligations. My risk tolerance went conservative when I had my first child last year. Now I have a human being dependent on me. Bigger stakes.

I have a stronger foundation now, than when before I started a family. My basic strategy is to leverage as much as possible, while making sure I have enough buffer to withstand personal issues or market hiccups. 

Here's a snippet of my plan:

Since I never plan on tapping into my 401k (until the government starts making me take distributions at 70.5), it begs the question of "How much do I need in my 401k?... or any at all?!?"

Yes, I do believe in contributing to 401k's (and similar retirement accounts). It's my ultimate "oh s***" emergency fund. Here's my strategy for emergency funds:

Tier 1 - 6 months in a savings account. This includes 6 months of personal funds and 6 months (including salary expenses to myself) in my business account.

Tier 2 - 6 months+ ROTH IRA. I love ROTH IRA's because the money grows tax-free and contributions can be withdrawn at any time without penalty. It's a great emergency fund! I'll continue to contribute every year that we're allowed too.

Tier 3 - 401k (the ultimate "oh ****" emergency fund!). Now I don't have a rule of thumb for how much I need in there. Since there is more than enough to live off of for awhile, how much more do I need put in there? Especially since I don't plan on using it in retirement.

I'll send you my full strategy. Might help you out.

Connect with @James Orr . He's got a great meetup in Ft. Collins and is the perfect guy for you to sync up with.

Welcome to the BP community. Fort Collins is a great place with awesome folks. 

I don't have much info outside of RE for passive income, so here is my suggestion based on real estate. Although I don't believe in BP's BRRRR strategy, I DO believe in their house hacking strategy. If you can take this extra money and buy yourself a house or preferably a duplex (only 11 duplexes have sold in Fort Collins market in all of 2018 soooo eeek!) and rent out the extra rooms/other side. First, your living expenses would be a fraction of what they would be if you had to pay the entire mortgage. Second, after 5 years, with rent appreciation conservatively at 5%, move into another house/duplex and you should cash flow easily with your original property. I am sorry this isn't what you asked for outside of real estate, but I think this is the best opportunity to begin your financial freedom path. If you do this 2 to 3 times and your rentals cash flow $300-$600/each, that is substantial passive income.

Good luck!!

@Wyatt Brumbaugh I have several clients that are using Fulfillment By Amazon (FBA) as a means of generating extra income to help with down payments and to qualify for buying additional investment properties. One of them mentioned in a class he taught recently for the Fort Collins real estate investor club, NCREIG, that he is making about $140K per year net from that side hustle.

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