Financial freedom doesn’t happen overnight. I’ve been on my journey to financial freedom for more than a decade.
I’m not there yet.
Here’s a look at how my journey to financial freedom has progressed since I graduated law school in 2009.
My journey to financial freedom began in my late-20s and was focused on eliminating debt.
In my 20s, I needed to pay off credit card debt and student loan debt. All I knew about the journey to financial freedom back then was that it seemed very far away.
I started budgeting, which meant reigning in my spending on things I didn’t really care about.
I began to establish good money habits. It wasn’t easy, and I was far from perfect. That’s OK. The 80/20 rule reminds us that we don’t need to aim for perfection.
By the way, my life didn’t all of a sudden become boring and miserable when I became more money conscious. Quite the opposite, actually.
I became more confident in myself because I had a plan. I no longer felt like I was sliding backwards. With each paycheck, I moved one step closer to erasing my debt. That was a powerful feeling.
In my early-30s, my journey to financial freedom was about fueling my savings.
By the time I turned 30, I had paid off my credit card debt and my student loan debt. I’ll never forget the day I made my last student loan payment as my family and I were heading out to Colorado. A huge weight had been lifted from my shoulders.
I felt free. My journey to financial freedom was still in the early stages, but I was on my way. Most importantly, I still had good habits and a plan.
The byproduct of eliminating my debt was that I had more fuel to accomplish my other goals.
What other goals?
The money I had been allocating to student loan and credit card debt could now be put towards more fun goals and experiences.
Instead of aimlessly spending the thousands of dollars each month that had been going towards debt, I rolled that money directly into savings. Highest on my list was saving for an engagement ring.
Within a year, I had enough saved to purchase the ring. I thought being free from debt was strong motivation. Turns out that motivation was nothing compared to the desire to buy a ring for the woman you love.
As your career progresses and you earn more money, you will benefit from strong personal finance habits.
As my career progressed, like many of you, I started earning more money. When I earned more, I did my best to use that additional income as fuel for my goals.
I’m grateful I had previously learned strong personal finance habits on my journey to financial freedom when I earned relatively little.
For most of us, our usual career progression is the exact opposite of the typical lottery winner. Who hasn’t heard the stories about the lottery winners that hit it big and then quickly go broke?
These stories are unfortunately all too common. What starts out with so much elation usually ends in tragedy.
The normal downfall involves unrestrained spending on things like houses, cars, and extravagant nights out. It also involves the pressure to give money away to family, friends, and charities.
The same pattern has been well-documented for professional athletes who earn millions before quickly going broke.
The challenge is the same for lottery winners and professional athletes. They come into a lot of money suddenly without any prior personal finance education. When this happens, that money disappears quickly.
What can we learn from lottery winners and professional athletes?
I think it’s safe to say that none of us are going to win the lottery or earn millions as a professional athlete. I hope I’m wrong about that!
But, we can still fall victim to the same set of challenges on the journey to financial freedom. It may not be a sudden rise and then an equally sudden drop-off. Our financial growth presents itself more slowly.
Over time, we may earn referrals/commissions, raises, and bonuses. These earnings certainly add up and can make a huge difference in our lives, if we have a plan. That’s a big “if” for most of us.
I didn’t have the full plan figured out in my 20s. Our goals change as life changes. There’s nothing wrong with that.
That said, because of the steps I took in my 20s to learn about personal finance, I was better prepared for the opportunities and challenges that arose in my 30s. I learned that when you create a solid foundation for yourself, you have options.
To me, life is all about giving yourself options. Nobody likes feeling stuck, including me.
In my mid-30s, my journey to financial freedom was about building wealth through real estate.
Besides saving for an engagement ring and a wedding, I was able to save up for a downpayment on a home. At the time I started saving up for a home, I had no idea that I could use my savings to invest in real estate.
It wasn’t until I went to a Cubs game with a good friend of mine, The Professor, that I learned about real estate investing.
This is when my journey to financial freedom really accelerated.
See, The Professor had a beautiful condo with an incredible rooftop deck near Wrigley Field. During the game, he told me he was selling the condo and moving into a 4-flat with his fiancee in an up-and-coming part of town.
Huh?
Why on earth would you give up your amazing condo? And move to a random neighborhood I’d maybe been to one time in my life?
I thought The Professor had lost his mind. Back then, I had no idea what a 4-flat even was. I couldn’t even point to his new neighborhood on a map of Chicago.
The Professor set me straight.
He walked me through the numbers. He explained that he was going from paying $3,000 per month for his condo to receiving $700 per month on top of living for free in the 4-flat. That’s a $3,700 difference per month!
The Professor also introduced me to BiggerPockets. That was huge for me because I believe in the motto, “Trust but verify.”
Over the next week, I read everything I could and listened to podcasts every day. It didn’t take long before I was convinced that I wanted a 4-flat of my own.
Eight years later, I own three buildings and 10 apartments in that same Chicago neighborhood. I have a ski rental condo in Colorado.
Without that great talk with The Professor, I don’t think I would be where I am today on my journey to financial freedom.
Man I’m glad The Professor wasn’t afraid to talk money with me!
He knew that taking about money is not taboo.
We all need to position ourselves to benefit when luck comes our way.
I was fortunate to have learned from The Professor’s experience. We all need some luck on the journey to financial freedom. I’m convinced that we’ll all catch a break here or there. The question is what we do with that luck when it comes our way.
If I hadn’t taken the time to learn about personal finance in my 20s, I wouldn’t have been positioned to benefit from that conversation with The Professor.
That’s why I say the journey to financial freedom doesn’t happen over night. It’s about one building block at a time.
For any aspiring real estate investors out there, please take that message to heart. Before you can successfully invest in real estate, you have to invest in your own financial literacy.
I’ve learned firsthand that the same principles that apply to personal finances apply to managing a real estate portfolio. Each pursuit takes a plan that only works with discipline and patience.
In my late-30s, my journey to financial freedom was about paying off debt.
In my late-30s, my journey to financial freedom pivoted from acquiring properties to optimizing my portfolio. My wife and I decided we were ready to transition from growing our real estate portfolio to paying off our debt.
In a way, I’ve come full circle on my journey to financial freedom.
We owe a lot of credit to Chad “Coach” Carson and his excellent book, Small and Mighty Real Estate Investor: How to Reach Financial Freedom with Fewer Rental Properties.
Reading Small and Mighty Real Estate Investor helped us conclude that at this point in our lives, we have enough. Our portfolio generates enough income to help fuel our current goals. If we were to continue expanding, the headaches could end up outweighing the financial benefits.
Progress is not linear, either. I’ve taken on debt in the form of mortgages and HELOCs to invest in more real estate.
In the short term, that mortgage debt pulls me further away from financial freedom.
If my plan works, that same debt will push me more rapidly to financial freedom.
Financial freedom through real estate has existed for decades, if not centuries.
By the way, I didn’t invent the plan of achieving financial freedom through real estate. That idea has existed for decades, if not centuries. I’d avoid anyone who tells you they pioneered this concept.
Years ago, I remember sharing my newfound passion for real estate with mom. She had this smile on her face as I excitedly shared this “new” phenomenon of investing in real estate to achieve financial freedom.
The next time I saw her, I realized her smile was actually more of a smirk.
She handed me a book called How You Can Become Financially Independent by Investing in Real Estate.
It was written by Albert J. Lowry, Ph. D.
In 1977!
Financial Freedom doesn’t happen over night.
It’s natural to want to jump to the finish line. I’m guilty of that, too. I think about achieving financial freedom every day and need to remind myself to take it one step at a time.
Even with all I’ve learned about personal finance, it can sometimes feel like I’m heading in the wrong direction.
Wherever you currently are on your journey to financial freedom, remember that it doesn’t happen over night. I need to constantly remind myself to stay the course.
Keep coming back to Think and Talk Money for daily reminders that financial freedom is within all of our grasps.