Tag: financial freedom

  • Dreaming About Rental Properties but Ignoring Money Mindset?

    Dreaming About Rental Properties but Ignoring Money Mindset?

    Do you dream about owning rental properties so you can generate semi-passive income while spending more time with your family?

    I want to hear about those dreams. What would you do with that time?

    Travel?

    Exercise?

    Read?

    It’s so motivating for me to learn what you would do with that kind of freedom.

    At the same time, it’s my job to remind you to not ignore key personal finance fundamentals while you’re dreaming about the future.

    When it comes to buying rental properties, this is especially true.

    Let me explain.

    If you’ve been keeping up with the blog, we’ve now learned how to run the numbers on potential real estate deals.

    In fact, I showed you that the analysis is not actually that hard. Your job is simply to account for the fixed costs and make informed predictions for the speculative costs.

    Then, we did the math together on an actual property in my target zone. By using a real example in Chicago, my goal was to further convince you that running the numbers should be easy.

    Finally, we talked about how to evaluate a rental property when the initial math looks bad. The truth is most rental properties are not going to immediately look like great investments. It’s our job as investors to negotiate and look for potential.

    By this point, you may be thinking that buying a rental property sounds great, except for one big problem:

    How are you supposed to come up with the money for a downpayment?

    Great question.

    It’s such a great question that it requires us to take a step back.

    Before evaluating rental properties, you need to evaluate your personal finances.

    It’s no secret that in order to buy a rental property, you first need available money for the downpayment.

    Unless you plan on taking on partners or getting the money from family, coming up with a sufficient downpayment is a major challenge.

    Yes, there are loan options available that require a smaller downpayment. We’ll soon talk about some of those options. I’ve used loans like this in the past.

    Still, a “smaller downpayment” does not mean “no downpayment.”

    So, how can you come up with a downpayment?

    For a downpayment, you need to have available money.

    To have available money, you need a budget that actually works.

    To have a budget that actually works, you need honest, powerful life goals.

    Does this sound familiar?

    It all comes back to money mindset.

    When was the last time you checked in on your money mindset?

    If you take a look at the Think and Talk Money homepage, you’ll see six main category tabs across the top of the page:

    Each one of these categories builds upon the previous categories.

    It all starts with money mindset.

    A strong money mindset is the foundation of the personal finance journey. Maintaining a strong money mindset requires constant and intentional thought.

    wooden boat on blue lake during daytime indicating what you can do with financial freedom.
    Photo by Pietro De Grandi on Unsplash

    I revisit my money mindset every week by taking a quick look at my Tiara Goals for Financial Freedom.

    It may seem overly simplistic, but money mindset is what separates people who reach financial freedom from those who struggle to get ahead in life.

    Don’t believe me?

    Budgeting is really not that hard. We all understand the basic concept: spend less money than you earn. Still, most of us can’t do it.

    The same applies to debt and credit. We all know to avoid debt. We know to use credit responsibly. So, why don’t we do it?

    Investing can seem complicated at first. Is it really that hard? Entire books and websites have been created to show you how to create massive wealth through simple index funds.

    What about buying rental properties? We did the math together. Analyzing deals is not that hard. The impediment for most people is coming up with the money for a downpayment.

    You may be in a similar boat right now. You want to buy a rental property but you’re discouraged because you don’t have the downpayment saved up.

    It’s not just about how much money you make.

    Buying rental properties is not just about how much money you make. Plenty of lawyers and professionals make a lot of money and struggle to come up with any excess money to invest.

    Sadly, the struggles don’t just relate to coming up with money for investments.

    Lawyers as a profession have long struggled with mental health issues. I first learned about these challenges during law school orientation. Today, I see it in practice.

    Being a lawyer is a hard way to make a living. When you work as a lawyer, the hours are intense and stress levels are consistently high.

    In 2023, the Washington Post analyzed data from the U.S. Bureau of Labor to determine what the most stressful jobs are. The study confirmed that lawyers are the most stressed.

    Of course, lawyers are not alone in struggling in this regard due to long, stressful hours.

    The same study showed that people working in the finance and insurance industries were right up there with lawyers as being highly stressed.

    Well, what can we do about it?

    How can we address these struggles?

    Where can we find money for a downpayment?

    I have some thoughts.

    How motivated are you to truly get ahead in life?

    Are you truly motivated to get ahead in life?

    Have you worked on your money mindset and found the motivation to actually create a budget that generates savings?

    If you’ve successfully created a budget and still need to generate more fuel, have you thought about a side hustle?

    When I mention side hustle, is your initial reaction that you’re too busy or important?

    Some lawyers and professionals reading this won’t even allow themselves to consider a side hustle. They automatically think, “I’m way too skilled or busy to even think about another job.” 

    In my personal finance class, we spend a lot of time challenging that notion.

    Very few people- and I mean very few- are too important or too busy to take on a side hustle.

    For most of us, it’s an excuse.

    You may think you’re one of those “too important” people.

    I would challenge you to assess whether you’re confusing “too important” with “too stressed” or “too tired” or “too cool.”

    Is continuing to worry about money really better than spending a few hours a week earning extra money doing something you love?

    Setting that conversation aside, the ideal side hustle is something you enjoy doing that can earn you extra money at the same time.

    Some examples of side hustles my students have come up with in class include:

    • Bartending. Entice your friends to come to your bar by offering cheap drinks. You get to hang out with them and get paid at the same time.
    • Fitness instructor. Instead of paying $48 for the spin class you love, become the instructor and get paid to lead the class.
    • Dog Walker. If you love dogs and don’t currently have one of your own, what better way to fill that void in your life while making money. The same applies to babysitting.
    • Home Baker. Make homemade treats with your kids and sell them to parents who don’t have the time.

    How about this idea for aspiring real estate investors: part-time property manager?

    My wife and I recently needed some help with apartment showings. We reached out to one of our favorite young people in the world to see if she’d be interested.

    A chance to make some money on the side and learn a new skill?

    She jumped on board without hesitation.

    We’ve known her for years and were not the least bit surprised. She’s exactly the type of person who will no doubt be successful in whatever she chooses to do.

    There is always a way to make more money.

    The point is there are always ways to make more money by doing things you like to do anyways. Even if you’re busy. You just have to exert some mental energy to figure out how.

    Then, when you make that extra money, put it to work for you. Make all your hustle worth it.

    At that point, we can talk about investing or buying real estate.

    Unfortunately, most people don’t want to go through this process.

    woman walking on street surrounded by buildings and thinking about own rental properties.
    Photo by Timo Stern on Unsplash

    Too many lawyers and professionals come to me and primarily want to talk about investing or buying real estate.

    They want to skip the foundation and jump right to the more exciting stuff.

    Most of the time, these are people who have never kept a budget. Or, they have massive student loan debt with no real plan to pay it off. Maybe they have a good W-2 job but no other sources of income.

    When I start exploring their situations with them, it’s clear they haven’t thought much about the personal finance building blocks.

    When they mention how hard it is to save for a downpayment, they haven’t considered looking for a new job that pays more or starting a side hustle.

    Before jumping right to owning rental properties, these are the personal finance obstacles that need to be addressed.

    If this sounds like the situation you are in, your ongoing mission is to generate more cash to fuel investments.

    The fun part is once you’ve discovered your motivations and established strong habits, you will consistently have money available so you can invest month after month for the rest of your life.

    My wife and I would not own five properties today if we didn’t first learn personal money wellness. 

    My wife and I would not own five properties (11 rental units) today if we had not first learned money wellness fundamentals.

    I don’t just mean we wouldn’t have had money available to invest, although that is certainly true. 

    I also mean we wouldn’t have the skills and knowledge to successfully run our real estate business.

    If you’ve ever wanted to be a business owner or investor, working on personal finance skills now is critical.

    Robert Kiyosaki put it best in Rich Dad Poor Dad, “It’s not how much money you make. It’s how much money you keep.”

    If you knew someone that made $1,000,000 per year, and at the end of the year, had only invested $20,000, what would your reaction be?

    What if you knew someone who made $100,000 per year and invested $20,000? Did your reaction change?

    How often do you think about your money mindset?

    Do you tend to think more about the “fun stuff” (investing, real estate) than the fundamentals (money mindset, budgeting, debt, etc.)?

    Let us know about your money mindset in the comments below.

  • Does Being Good with Money Make You a Greedy Dragon?

    Does Being Good with Money Make You a Greedy Dragon?

    Have you ever been called a “greedy dragon” before?

    I hadn’t either before this week.

    I recently posted a video on socials talking about how lawyers and professionals should not let leaky toilets prevent them from investing in rental properties.

    Apparently, this video struck a nerve with the trolls.

    I was called a “bottom dweller”, a “demon”, and my personal favorite, a “greedy dragon.”

    I like dragons. So, that last one actually felt like a compliment.

    Why does being good with money wake up the trolls?

    There’s no shortage of internet trolls out there. And, there’s nothing special about me that caught the attention of the trolls this week.

    Haters are going to hate. Trolls are going to troll.

    But, there’s an important money lesson to be learned here thanks to the trolls.

    You see, these are the types of comments you get from people with limiting money beliefs. They’ve never thought about how money can be used as a tool to build a life of purpose.

    Instead, they only think of money as a dangerous weapon to be wielded for evil purposes. They automatically think that people with money are greedy.

    The saddest part is that these people would rather exert their energy attacking people than improving their own situations. These are the type of people who are likely to always be controlled by money, instead of the other way around.

    Now, I’ll give credit to the internet trolls where credit is due. At least these trolls are not hiding their limiting money beliefs.

    That’s a good first step that many of us can benefit from.

    You don’t need to stoop to the level of internet troll to have limiting money beliefs. These kinds of attitudes towards money are way more common than you think.

    One of my main goals in starting Think and Talk Money is for all of us to confront our limiting money beliefs so we can take control of our lives.

    If your relationship with money up to this point has held you back, you’re in the right place by reading this blog.

    Another good idea is to read a good money mindset book.

    A good money mindset book with help you think of your Money Why.

    Money mindset books can help you because they explore the emotional side of money. They will force you to think about money in a way you never have before.

    The best money mindset books don’t just talk about the numbers and math of personal finance. That not only makes the books more interesting to read, it also makes them so much more practical in the real world.

    Personally, I am striving to build the best life possible for my family. To do that, I need to learn more than just the numbers.

    That means I need to be good at not only making money, but also using that money to build a life on my terms. That requires finding a balance, which can be tricky.

    To help strike that balance, I’ve studied how others have done it. Then, I can take what I learn and implement those lessons into my own life. 

    Here are my favorite money mindset books, in no particular order:

    Being on vacation with family gives you plenty of chances to think about your Money Why.

    I highly doubt the average internet troll spends much time thinking about his Money Why.

    I’ve been on vacation recently and have had a lot of reminders of my Money Why. Of course, I’ve known my Money Why since I wrote down my Tiara Goals for Financial Freedom on a beach in 2017.

    Mission Bay Resort pool representing why I want to be good with money to build experiences with my family.
    Photo by Cory Bjork on Unsplash

    My number one goal is to be with my wife and kids as much as I want. The weird part is I wrote down that goal before I was even married or had kids.

    Yes, I want to provide for my family financially. But my Money Why is more than that. I don’t want to just provide money, I want to provide time. I want to be present and share experiences.

    To accomplish that goal, I need to be good with money

    If I’m good with my money, I can achieve financial freedom.

    With financial freedom, I can choose how to spend my time. That means I can choose who to spend my time with.

    To the Internet trolls, these goals make you a greedy dragon.

    What do you think?

    Is traveling with three young kids a vacation or just “parenting in a new location?”

    Anyone who’s vacationed with young kids knows that it comes with all sorts of challenges. I’ve heard vacationing with young kids described before as “just parenting in a new location.”

    There’s some truth to that. Figuring out sleeping arrangements, meals, and activities to keep the kids entertained can be a headache. It’s hard not to think that it would have been easier to just stay at home.

    Between the occasional meltdown and the tears, it’s fair to wonder why go through the hassle?

    I’ve had these thoughts creep into my head recently while on vacation with my family.

    Then, I realized why us parents do it.

    It’s to see your five-year-old try over and over again before finally reaching the Little Mermaid diving toy on the bottom of the pool for the first time.

    The pure joy on her face when she popped out of the water with the toy in hand is an image I hope I never forget.

    It’s to watch your three-year-old play with grandma and grandpa and hearing, “Grandpa, close your eyes!” as he completes his next prank to earn an eruption of laughter.

    It’s observing your wife at the playground as she manages a baby in a stroller while simultaneously encouraging her daughter on the swings and helping her son as he climbs too high.

    How she does it, and keeps a smile on her face, I’ll never know.

    It’s the little moments like this that make it all worth it.

    Is being good with money a requirement for these types of memories?

    Nah. But, if being good with money gets me more of these memories, I’m all in.

    It’s important to think about your Money Why regularly.

    Saying that I want to be good with money is not the same thing as saying that I want to be rich.

    Funny enough, people who are good with money oftentimes feel rich regardless of what their net worth is.

    A nice quote I saw at an ice cream shop saying you can't buy me love but you can buy me ice cream meaning you can buy experiences with money.
    Photo by Zoshua Colah on Unsplash

    On the flip side, people who make a lot of money but are not good with money often feel like they’re struggling to get by. As CNBC explained after talking with financial psychologists:

    Whether you’re aiming to save more cash or boost your overall earnings, it’s important to ask yourself what you hope to achieve by obtaining more money, Chaffin says. Otherwise, if you don’t change your internal money beliefs, you may still feel anxious about money even if you hit millionaire status.

    The takeaway is that it is pointless to make money without stopping to think why you want that money and what you’re going to do with it. 

    If you’ve never thought about money that way before, here are three powerful reasons to get you started: 

    1. Money can give you choices.
    2. Money can give you personal power.
    3. Most importantly, money can give you time.

    Money is nothing but a tool that you can manipulate to get what you truly want out of life. The thing is, you have to actually think about what you want if you are going to use that tool effectively.

    Being good with money does not make you greedy.

    Being good with money does not make you a greedy dragon.

    Money is nothing but a tool. You can use that tool to build a life on your terms for you and your family.

    For my money, there’s no better pursuit than that.

    Do you want to be good with money?

    What kind of life are you hoping to build?

    Let us know in the comments below.

  • Being Good with Money is About Consistent Choices

    Being Good with Money is About Consistent Choices

    Having taught personal finance to law students and young lawyers since 2021, I’ve picked up on a common theme.

    At the conclusion of class, my students tend to be motivated and excited to get good with money.

    This makes sense because we spend a lot of time thinking and talking about what our ideal lives look like. Then, we learn how to use money as a tool to build those lives.

    In the weeks following class, I usually hear from several students who want to follow-up about topics we cover in class, like side hustles or investing in real estate.

    I’ll meet each student for coffee downtown and give them some feedback on their ideas. I love these money talks over coffee.

    My students’ excitement to take control of their money and their lives is contagious.

    Their excitement rubs off on me. I leave these conversations motivated to check in on my own money strategies and goals.

    When our chat is wrapping up, I always encourage my students to keep me posted on their journeys. I invite them to check-in every few months so I can help keep them accountable and to adjust any plans we’ve put in place.

    Unfortunately, less than 10% of my students ever follow-up after these initial meetings.

    After a while, I figured out what was going on.

    See, every now and then, I’ll run into one of these former students at a lawyer event or hanging around the courthouse. I’ll ask them about work and life and eventually about the money plan we talked about.

    That’s when I usually hear something like, “I’m still thinking about that side hustle. I just put it on the back burner for now. I’m going to do it someday.”

    Do you see the problem?

    As a wise man once taught me, “someday” means “no day.”

    a sign that says today is a goo day meaning that someday is no day.
    Photo by Yuliia Martsynkevych on Unsplash

    Financial freedom is about consistent, intentional choices.

    Ask anyone who has reached true financial freedom how they did it, and you’ll pick up on something right away.

    You’ll quickly realize that people who reach financial freedom got there by making consistent, intentional choices with their money.

    They came up with a plan and they stuck with it.

    They didn’t say “some day.”

    Achieving financial freedom is not about being the highest earner or the best investor.

    It’s about consistency.

    There are endless ways to make money. The same goes for investing that money.

    You can reach financial freedom as a lawyer who invests in index funds.

    Just the same, you can be a consultant who owns rental properties.

    Or, an engineer who buys laundromats.

    The point is the avenue you choose to build wealth is less important than the consistency of your choices.

    For example, if you commit yourself to investing 20% of your salary in index funds, you will be well on your way to financial freedom.

    But, if you can’t follow through on your plan for more than a few months, you’re never going to get there.

    Of course, we’ve all experienced this tendency in various areas of life. The easiest examples to think of relate to fitness and healthy eating.

    How many of us have said we’re going to commit to working out five days a week or eating vegetables every meal, only to give up after a couple months?

    It’s not that we want to give up, just that the rest of life gets in the way. We tell ourselves that we’ll return to healthy living someday, which actually means no day.

    When it comes to your money choices, don’t let the rest of life get in the way. Money is such a powerful tool when wielded properly and consistently.

    Don’t waste this powerful tool.

    To help make consistent choices, think about why money matters.

    To help you make consistent money choices, the first step is to think about a simple and powerful question: why does money matter?

    For me and many others, money is about financial independence, which translates to the power to choose.

    When we have the power to choose, we have the power to live a life that conforms to our personal values. That means we can live on purpose, not on auto-pilot.

    What does it mean to live on purpose?

    It means that we can choose to spend our working hours doing what is meaningful to us. It means we can choose to spend more time with the people who are meaningful to us.

    My favorite part during my personal finance for lawyers class is when my students share their motivations with each other. We all learn so much from these honest conversations.

    It’s why I believe talking about money is so important. We all benefit from knowing that we’re not alone in our money worries. We can be inspired by hearing what our friends want from their money and their lives.

    The more you think and talk about why you want to be good with money, the clearer your motivations will become.

    To help you get started, here are three powerful reasons why I want to be good with money:

    1. Money can give you choices.

    This may seem obvious, but when you have money, you have choices.

    You can choose where to live. You can choose who you work for or can work for yourself. On a daily level, you can choose how you eat, exercise, relax, and travel.

    This holds true whether you make $50,000 or $250,000. Of course, your options may be different. The point is that when you’ve made good money choices, you’ll at least have options.

    2. Money can give you personal power.

    This is another way to say that money gives you control of your life situation.

    If you are in a bad relationship, a bad job, or just need a change, money gives you the personal power to do something about it. When you don’t have money, you may be stuck.

    3. Money can give you time.

    When you have enough money to be truly financially independent, you have earned the freedom to do whatever you want with your time.

    As I mentioned earlier, you can spend your working hours at a job that is meaningful to you. And, you can spend more time with people who are meaningful to you.

    It’s been said many times, “time is our most precious resource.”

    When you have money, you can buy your time back.

    woman in white long sleeve shirt reading book on beach during daytime because she is financially free and bought her time back.
    Photo by Constantin Panagopoulos on Unsplash

    What would you do with financial freedom?

    Years ago, I asked myself this important question. I wrote down my answer and called it my Tiara Goals.

    If you haven’t ever actively thought about what you would do with financial freedom, now’s the time to do so. It is extremely motivating.

    Even when you feel like financial freedom is only a distant dream for you, it’s important to actively think about what you want out of life.

    I’d even suggest that the further away you feel from financial freedom, the more important it is to think about what it would mean for you.

    When you’re at your lowest point, visualizing what you would do with financial freedom is a helpful escape.

    Don’t forget to write down whatever you come up with.

    Here are my 7 Tiara Goals for Financial Freedom:

    1. Be with my wife and kids as much as I want. Dad never missed a game. Mom never missed a game. Nana never missed a game.
    2. Not be forced to commute to work on Friday or Tuesday or whatever day, if I need that day for myself.
    3. Choose how to spend my working hours (representing clients, teaching, volunteering, building a business, etc.).
    4. Continue to study and learn constantly.
    5. Take at least one big trip every year.
    6. Never turn down an exciting or smart opportunity because I can’t afford it.
    7. Work alongside people that value my contributions. 

    Keep in mind that I wrote these goals before I had kids and before I was even married. This was also years before the pandemic when working from home was a foreign concept to most of us. 

    I think it says a lot that I was thinking about these things way back then.

    Being consistent means thinking just a little bit about money every week.

    My goal is to help you think even a little bit about your money choices every week. That way, your money life remains in balance with the rest of your life, and you can continually evolve and adapt your choices as your life changes.

    I want to encourage you to think, and to talk, and to choose. If all I do is help you and your loved ones think more purposefully about your money, Think and Talk Money will be a success. 

    Maybe your goal is also financial independence, or the power to choose and to live on purpose.

    Maybe it’s something else entirely. Whatever it is, discovering your motivation is the crucial first step. 

    It’s so important that I’ll encourage you to think about that motivation every week.

    I’ve learned that money is something that we all need to think about as a regular part of our lives. Not that we should only think about money. Or that we need to obsess over money. Simply that we can’t ignore money. 

    How sad is it when we realize our hard earned money has just vanished? That at the end of each month, we have less money?

    If this sounds familiar, you’re not alone. There are a lot of smart people who need somewhere to turn learn about money. Or, maybe just a reminder to actively think about their money

    You don’t have to struggle with making continuous money choices alone.

    Most of us could use someone to talk to or something to read to help us learn about personal finance.

    I hope Think and Talk Money can be that place for you.

    I can’t, and won’t, tell you what to do with your money. It’s your life, after all. But, I will strive to help you think and talk with purpose about your money.

    The basic money concepts are easy enough to understand. Consistently making good choices is hard. 

    Most of us could ace a quiz that asked, “Is it a good idea to spend more money than you earn every month and plummet deeper and deeper into debt?”

    Knowing what to do is not the same as actually doing it. Remember, someday is no day.

    That’s why it helps to not be afraid to talk about money. For some reason, most of us choose to deal with money on our own. I’d like to change that.

    There’s a stigma that we shouldn’t talk about money. I’d like to change that, too.

    That way, we all have a better chance of making intentional, consistent choices with our money.

    Have you been excited about money in the past only to lose that excitement not long after?

    Have you tried talking about money with your friends and family to help you stay motivated? If not, what is holding you back?

    Let us know in the comments below.

  • Your Spouse is the Most Important Person on Your RE Team

    Your Spouse is the Most Important Person on Your RE Team

    If you’re considering your first rental property, don’t fool yourself into thinking you’ll be earning passive income.

    The bottom line is owning rental properties is a job. It’s not a full-time job. It’s not even a regular, part-time job. But, it is a job.

    There will be tenant issues, work orders, money spent, and tough decisions to be made like in any other business.

    For me, the benefits of owning rental properties significantly outweigh the downsides of being a landlord. It’s a tradeoff that I would happily make again and again.

    But, I wouldn’t be saying that if my wife wasn’t also fully committed.

    Before you buy a rental property, I encourage you to talk to your spouse first. Make sure you both are on the same page. 

    No, you do not have to have an equal division of labor. 

    Yes, you each have to commit to the good and the bad that comes along with owning rental properties.

    If you both can make that commitment, you have the best shot at owning your properties for a long time and reaching that ultimate goal: financial freedom.

    Before building out the rest of your real estate team, get on the same page with your spouse.

    Owning rental properties should not be a solo adventure. The entire experience is better when you have someone to share it with.

    Isn’t that true for most things in life?

    Whether it’s a project you’re working on or a vacation you’re taking, it’s better when you do it with other people.

    Owning rental properties is no different.

    In fact, the most successful rental property investors have a team of professionals working with them.

    Having a good team in place will help you avoid mistakes and stay motivated so you can keep your properties long-term.

    It’s not an exaggeration to say that having the right people on your team can make or break your investing experience.

    I’ve seen too many investors sell their rental properties after a couple of years because they didn’t have the right people on their team. They end up making preventable mistakes and give up because being a landlord is too hard.

    Unfortunately, that means they give up their properties long before getting the benefits from cash flow, appreciation, debt pay-down, and tax advantages.

    If you’re going to take on the challenge of being a landlord, you might as well hold your properties long enough to reap the benefits.

    And, you should take all the help you can get along the way.

    There is plenty to say about building out your real estate team. And soon enough, we’re going to talk about the key professionals that can help you run your rental property business successfully.

    But, that’s all for another day.

    Before we get to any of that, we need to talk about the single most important member of your team:

    Your spouse.

    The same holds true whether you have a significant other, partner, girlfriend, boyfriend, or anyone else you share your life wife.

    Don’t worry about analyzing the numbers and finding the perfect deal. The rest of your team came wait.

    Start with your spouse.

    Here’s why.

    Your spouse is the single most important person on your team.

    To be a successful rental property investor, your spouse needs to be on board.

    Even if you are going to be the one actively running the business, you won’t get very far if your spouse is not as committed as you are.

    Before anything else, the first thing you need to do is sit down with your spouse and talk about why you really want to own rental properties.

    That’s because owning rental properties is all about commitment.

    It’s a financial comment, a time commitment, and most of all, an emotional commitment.

    With these kinds of commitments involved, it’s essential that your spouse understands the full scope of what you’re both getting into as rental property investors.

    Here’s what I mean.

    Walking down a remote road near Reykjavik, Iceland indicating that investing in real estate takes a team, the most important person being your spouse or partner.
    Photo by Rod Long on Unsplash

    Owning rental properties is a financial commitment.

    This one should be obvious. Owning rental properties is a major financial commitment. It takes capital to buy properties and capital to maintain them.

    When you choose to invest your hard-earned money in rental properties, that means you’re not spending that money elsewhere.

    That might mean sacrificing retirement savings. It could also mean having less money to spend on your dream home. Or, less money to spend on vacations.

    The point is that before you make the financial commitment, your spouse needs to be on board with why you’re making these sacrifices.

    I’m fortunate that my wife and I have been on the same page with our rental properties since Day 1. Neither one of us needed any convincing once we did our homework and learned what was possible.

    Today, we both understand why we’re still doing it: owning rental properties speeds up our journey to financial freedom.

    It took some major financial sacrifices to get here, but we made those sacrifices together.

    As the most obvious example, we delayed buying our “forever home” until I was almost 40 and we already had two kids.

    Instead of buying a home in a nice neighborhood to raise our kids, we used our savings to buy rental properties. We were doing something different and it was important to be committed to our plan.

    It wasn’t easy to see our friends and family members buy beautiful homes in wonderful areas. We definitely noticed more than a few confused looks when we would have people over to our small apartments in the city.

    At times, we both wondered whether we were making a mistake.

    As it turned out, the trade-off was well worth it.

    Owning rental properties is a time commitment.

    Make no mistake about it, owning rental properties is a time commitment.

    We’ve talked about how owning rental properties means having a job. For lawyers and professionals, this means having a second job on top of a primary job. 

    Even with the best team and systems in place, there’s no getting around the fact that owning rental properties will always be a time commitment.

    What does the time commitment look like? What does this have to do with your spouse?

    Depending on your availability and skills, the time commitment will vary from one landlord to the next.

    You might be the type that heads over to the property every weekend to mow the lawn. To take it one step further, maybe you’re the type who has the skills to handle all maintenance requests yourself.

    Or, you might handle all showings and tenant issues personally.

    The truth is that in the beginning, many rental property investors do all of the above themselves.

    Rental property investors think of this time commitment as “sweat equity.”

    Sweat equity is what you contribute to your business but don’t exactly get paid for. When cash flow is tight, as it is for most beginners, we make up for it with sweat equity.

    The more jobs we take on ourselves, the less we pay out to other people.

    The tradeoff is that the more sweat equity you put into your properties, the less time you have to spend at home with your spouse.

    If your spouse is not on board with you being away from home, it’s going to be difficult to succeed as a rental property investor.

    If you have young kids, it’s even harder. When one spouse is at the rental property, the other spouse is usually alone with the kids. Anyone with kids knows which of those two jobs is harder.

    For example, there have been entire weekends that I’ve spent fixing up one apartment or another.

    By the way, if you’ve ever wanted to take a tour called “The World’s Worst Drywall Repairs,” I’ve got you covered.

    If it’s not repairs eating up your free time, it could be analyzing new properties, doing apartment showings, meeting with contractors, or basic bookkeeping.

    With all these time commitments, I’m lucky that my wife and I are on the same page when it comes to our rental property business. We split up these tasks and cover for each other when one person is busy with other responsibilities.

    Yes, you can outsource these jobs. We outsource as much as we can. But, there are certain jobs that you’ll always need to, or want to, handle yourself.

    real estate team meeting near a transparent glass indicating the importance of having the right people on your team before you buy rental properties.
    Photo by Charles Forerunner on Unsplash

    As just one example, we do all our showings ourselves.

    Finding the right tenants is the most important job in owning rental properties. If we outsourced this particular job, we could end up with tenants who could cause us major stress for the next year.

    Regardless of the recipe that works for you and your spouse, have the conversation before investing in rental properties.

    Make sure you each understand the time commitment involved.

    Owning rental properties is an emotional commitment.

    The financial commitment and the time commitment are only the beginning.

    Most of all, owning rental properties is an emotional commitment.

    Without having a spouse on the same emotional wavelength as you, it will be very hard to succeed as a rental property investor.

    When you own rental properties, there will be stressful times and you’ll want to lean on your spouse for support.

    There will also be moments to celebrate, and you’ll want to share those moments with your spouse.

    If your spouse is not on the same wavelength as you, these moments can feel very lonely. The lows can feel much lower and the highs don’t feel quite so high.

    Without someone to commiserate with and celebrate with, you’ll be more likely to give up.

    My wife and I have endless stories about our experiences as landlords that very few other people would truly appreciate. We can each list off the jerks we’ve rented to and the biggest headaches we’ve encountered.

    We once offered a lease renewal to a tenant at her same price. She responded that she would be happy to stay for another year if we simply replaced the kitchen countertops and appliances, added an additional bedroom and built out some new closets.

    Ummm, we’ll pass.

    My wife and I can laugh about these moments because we’re both emotionally committed to the journey. Living through these experiences together has helped us stay the course.

    Unfortunately, I’ve met a number of real estate investors over the years who tried to go it alone. I think that’s a mistake. Oftentimes, these investors don’t stay invested very long.

    It’s not because they bought bad properties or had bad tenants.

    The problem was they never prioritized the most important person on their real estate team.

    When challenges arose, they didn’t have a spouse to lean on.

    When you’re spouse is on board, investing in real estate is a rewarding challenge.

    It’s all about the journey, right?

    When times get tough in our real estate business, my wife and I lean on each other. When we miss out on evenings with the kids or nights out with friends, we remind each other what it’s all about.

    We remind each other that we wouldn’t be where we are today if we didn’t start buying rental properties in 2018.

    We both realize the commitments involved, whether it be our money, our time, or our emotions. If we weren’t in this together, there’s no way we could run our rental property business as well as we do.

    Before you buy a rental property, I encourage you to talk to your spouse first. Make sure you both are on the same page. 

    No, you do not have to have an equal division of labor. 

    Yes, you each have to commit to the good and the bad that comes along with owning rental properties.

    If you both can make that commitment, you have the best shot at owning your properties for a long time and reaching that ultimate goal: financial freedom.

    Did you talk to your spouse before buying rental properties?

    Do you run your rental property business with your spouse?

    What lessons have you learned along the way?

  • Fix Your Personal Finances Before Investing in Real Estate

    Fix Your Personal Finances Before Investing in Real Estate

    When my students ask me a question about how to start investing in real estate, I tend to respond with a question of my own:

    “How much savings does your personal budget generate each month?”

    Yes, I know. It’s so annoying to answer a question with a question.

    This particular question usually leads to a double dose of annoyance from my students.

    My students are first annoyed that I ignored their question about real estate. They didn’t come to me to talk about something boring, like budgeting. They want to know about the exciting stuff, like becoming a real estate investor.

    What I’ve noticed is that after this initial annoyance fades away, another form of annoyance sets in. My students get annoyed because they can’t actually answer the question.

    They realize they have no idea how much money they’re saving each month because they don’t have a personal budget.

    That’s a problem.

    Not having a personal budget is a problem for anyone who wants to be a successful real estate investor.

    Investing in real estate means running a business. Money comes in and money goes out. To be successful, you have to make sure that more money comes in than goes out.

    This is obvious stuff, right?

    The same logic applies to your personal budget: if you want to get ahead in life, more money needs to come in than goes out.

    The problem is most people have a hard enough time managing their personal finances. How are they going to handle managing business finances?

    That’s why I ask my students, “If you haven’t mastered this idea with your personal budget, are you sure you want to take on the stress and risk of an investment property?”

    It would be much easier to simply invest in an index fund, like VTSAX. At least in that case, you don’t have to manage a business budget. You just have to do your best to constantly add money to your investment account.

    It’s usually around this point when my students start nodding in understanding.

    Before investing in real estate, make sure your personal finances are in order.

    My goal here is not to dissuade you from investing in real estate. I am a big proponent of rental property investing.

    I’ve said it before: I think every professional or lawyer can benefit from owning rental properties.

    My only goal is to help you avoid the mistakes that crush so many beginner real estate investors. One of the biggest mistakes I see is people taking on a major financial commitment (and time commitment) without starting from a strong foundation.

    If you’ve been following along on the blog, you likely noticed the progression in topics we’ve covered.

    You’ll see links to each one of these topics featured on the top of the Think and Talk Money homepage:

    We initially covered each of those topics in order from top to bottom. First, we talked extensively about the mental side of money. Without having your money mindset in the right place, nothing else matters.

    We then spent a lot of time talking about personal finance fundamentals, like budgeting, saving, and handling credit and debt responsibly.

    Only after having our personal finance foundation in place did we talk about more fun concepts like investing and real estate.

    There’s a reason we’ve covered these topics in this order.

    If your money mindset is not in the right place, you won’t be able to stay on budget.

    If you can’t stay on budget, you’ll likely fall into debt.

    When you’re falling deeper and deeper into debt, it doesn’t make a lot of sense to prioritize investing.

    A woman holding a jar with savings written on it suggesting you need to get your personal finances in order before investing in real estate.
    Photo by Towfiqu barbhuiya on Unsplash

    Why bother with real estate if any profits are just going to disappear?

    Let’s focus on that last point for a minute.

    What sense does it make to invest if you’ve never proven to yourself that you can use those investment gains responsibly?

    I never want to see people take on the challenge of investing in real estate just to have any profits disappear because they don’t have a strong personal finance foundation in place.

    Imagine someone does the work to find and sustain a good rental property that generates $1,000 per month in cash flow.

    It’s not easy to earn that much. It takes time and effort, not to mention the risk involved.

    If that same person blows the $1,000 he earned on things he doesn’t care about, what was the point?

    Why take on the risk and do the work if the money will all be gone by the end of the month?

    Unfortunately, this is how many people go through life. They work hard, make good money, and then have nothing to show for it.

    I don’t want that to be your fate. I want you to have a plan for your money before you earn it.

    That means sticking to a budget that consistently moves you closer to living freely on your terms.

    Most of us don’t know where our next dollar is going.

    The reason most people never get ahead with their finances is because they don’t have a plan for where their next dollar is going.

    Their income hits their checking account, they spend it on this or that, and pretty soon that money has disappeared. They haven’t used the money to advance any of their priorities. It’s just gone.

    To me, this is one of the most important money mistakes that we need to fix right away. We definitely need to fix it before we take a chance on investing in real estate.

    If not, you’ll just be making the same mistakes, just with more money to lose.

    Having a plan for our money, before we earn it, is essential if we want to reach our goals. With a plan, we can eliminate the disappearing dollars with confidence that our money is being used to serve our purposes.

    How do you create a plan for your money before you earn it?

    You need to have a budget.

    If you don’t currently have a budget that results in excess money at the end of each month, I encourage you to start there before thinking bout real estate.

    How to create a Budget After Thinking.

    The key to budgeting is to eliminate disappearing dollars by creating a plan for Now Money, Life Money, and Later Money.

    Your Later Money is what you’ll eventually use to accelerate your journey to financial freedom by investing in stocks or buying real estate.

    1. Now Money

    Now Money is what you need to pay for basic life expenses.

    These expenses include housing, transportation, groceries, utilities (like internet and electricity), household goods (like toilet paper), and insurance.

    These are expenses that you can’t avoid and should be relatively fixed each month.

    2. Life Money

    Life Money is what you are going to spend every month on things and experiences in life that you love.

    This bucket includes dining out, concerts, vacations, subscriptions, gifts, and anything else that brings you joy. 

    We can’t be afraid to spend this money. This bucket is usually what makes life fun and exciting. The key is to think and talk so you are spending this money consistently on things that matter to you.

    3. Later Money

    Later Money is what you are saving, investing, or using to pay off debt.

    This bucket includes long term goals, such as retirement plan contributions (like a 401k or Roth IRA), college savings for your kids (like a 529 plan), emergency savings and paying off student loan or credit card debt.

    This bucket also includes any shorter term goals, like saving for a wedding or a downpayment for a house. 

    Most fun of all, this bucket includes any investments you make to more quickly grow your wealth, like investing in real estate or the stock market.

    Later Money is the key category that fuels your ultimate life goals, like financial independence. The more you fuel this category, the faster you can reach your goals.

    black smartphone calculator showing the number 0 indicating how to budget with two simples numbers before investing in real estate.
    Photo by Kelly Sikkema on Unsplash

    When you have strong fundamentals in place, money becomes fun.

    Being good with money doesn’t have to be stressful. Once you have the fundamentals in place, you’ll start to see how each dollar you earn gets you one step closer to financial freedom.

    Before you think about investing in real estate, make sure that your personal finances are in order.

    Owning rental properties means running a business. When the money comes in, you want to make sure it doesn’t go right out.

    Otherwise, the effort, stress, and risk of owning real estate is not worth it. Any dollar you earn is likely to disappear as quickly as it comes in.

    To prevent that from happening, establish good money habits before you buy real estate.

    In the end, you’ll be so happy that you did.

    For any real estate investors out there, did you jump in before establishing strong personal money habits first?

    What advice would you have for beginners thinking about investing in real estate?

    Let us know in the comments below.

  • Why do You Really Want to Own Rental Properties?

    Why do You Really Want to Own Rental Properties?

    Before you start doing something, figure out why you’re doing it.

    Someone smart probably said that at some point, right?

    We’ve spent a lot of time recently talking about the main reasons why I invest in rental properties. We’ve also talked about the work involved with owning rental properties.

    I’m a big believer in the power of real estate. I’ve also come to appreciate just how much work is involved in owning rental properties.

    The reason I’ve spent so much time writing about the benefits and the work involved is to make sure you know exactly what you’re getting yourself into.

    Once you fully understand and appreciate the benefits and the work involved, you’re ready for the next step:

    Think and talk about why you want to own rental properties.

    Depending on why you want to own rental properties, your strategy may be different than mine or someone else’s strategy.

    The key is to figure out your “Why” before making costly mistakes, in terms of both money and time, that don’t help advance your goals.

    Don’t skip this crucial step and jump right to analyzing deals.

    The last thing you want to do is take on such a big commitment without truly knowing why you’re doing it.

    To help you start thinking about a strategy, let’s review the benefits and also the work involved in owning rental properties.

    You can read much more in my series on real estate here.

    1. Rental property cash flow is king.

    With cash flow, you can cover your immediate life expenses. For anybody hoping to reach financial freedom, it is essential to have income to pay for your present day life expenses. 

    For my money, cash flow from rental properties is the best way to pay for those immediate expenses.

    If your present day expenses are already covered, you can use your cash flow to fund additional investments. 

    That might mean buying another rental property or investing in another asset class, like stocks.

    2. Long-term wealth through appreciation.

    Appreciation simply refers to the gradual increase in a property’s value over time. 

    While cash flow can provide for my immediate expenses, appreciation is all about the long-term benefits.

    Like investing in stocks over the long run, real estate tends to go up in value. The key is to hold a property long enough to benefit from that appreciation.

    To benefit from appreciation, all I really need to do is make my monthly mortgage payments, keep my property in decent condition, and let the market do the rest.

    Blue and orange apartment symbolizing that you need to know your strategy before buying rental property
    Photo by Brandon Griggs on Unsplash

    3. With rental properties, other people pay off my debt.

    When I buy a rental property, I take out a mortgage and agree to pay the bank each month until that mortgage is paid off. At all times, I remain responsible for paying back that debt.

    However, I do not pay that debt back with my own money. 

    Instead, I rent out the property to tenants. I do my best to provide my tenants with a nice place to live in exchange for monthly rent payments.

    I then use those rent payments to pay back the loan.

    As my loan balance shrinks, my equity in the property increases. Equity is just another way of saying ownership interest.

    When my equity in a property increases, my net worth increases. 

    4. Real estate investors earn massive taxes benefits.

    When you earn rental income, you must report this income on your tax return. Rental income is treated the same as ordinary income.

    However, the major difference between rental income and W-2 income is that there are a number of completely legal ways to deduct certain expenses from your rental income.

    Common rental property expenses may include mortgage interest, property tax, operating expenses, depreciation, and repairs. We’ll touch on a few of these deductions below.

    With all of these available deductions, the end result is that most savvy real estate investors pay little, or nothing, in taxes on their rental income each year.

    Yes, you read that right.

    I’ll say it again, just to be clear:

    Most savvy real estate investors legally pay nothing in taxes on their rental income each year.

    Do not own rental properties if you want passive income.

    Now that you know the benefits, let’s highlight just how much work is involved in owning rental properties.

    At one point or another, you may have heard someone say, “I want to invest in rental properties for some passive income.”

    Yes, we all want passive income.

    No, investing in rental properties is not passive.

    Think of owning rental properties as a way to earn “semi-passive” or “partially-passive” or “somewhat-passive” income.

    Don’t think of owning rental properties as a way to earn “passive” income.

    If you want passive income, you should be investing in index funds, like VTSAX. For more on investing in the stock market, you can check out my series on investing here.

    For me, the benefits of owning rental properties significantly outweigh the downsides of being a landlord. It’s a tradeoff that I would happily make again and again.

    How does the old saying go? “If it were easy, everybody would do it.”

    Being a landlord is not easy. It’s definitely not for everyone.

    But, then again, neither is financial freedom.

    In the end, if you are willing to put in the effort, owning rental properties will accelerate your journey to financial freedom.

    Do you still want to own rental properties after knowing the benefits and the work involved?

    Now, you know the main benefits and the work involved with owning rental properties.

    Like I said, owning rental properties is not for everyone. It takes time and effort to learn the basics.

    Then, it takes more time and effort to do your research and develop a strategy.

    At some point, you’ll need to take a chance and make a purchase. That means putting your hard-earned dollars at risk.

    None of this will be easy.

    But, it sure is a lot of fun.

    And, there is a lot of upside.

    If you still want in, I’m going to help you get started.

    for rent sign in window reflecting that all rental property investors need other know their why before they start buying.
    Photo by Aaron Sousa on Unsplash

    Ask yourself: what are my main goals in owning rental properties?

    Before you start analyzing deals, you need to think long and hard about what your goals are.

    Depending on what your’e trying to accomplish, your strategy is going to be different.

    For example, are you looking to move to an expensive neighborhood and just want to offset your ownership costs?

    You may benefit from owning a home with a coach house, granny flat, or garden unit. You can then live in the primary unit and rent out the second unit to reduce your monthly costs.

    Or, your goals might be to leave full-time employment and use rental property cash flow to fund your life. In that case, you’ll need a property that generates significant cash flow, possibly at the expense of personal comfort or long-term gains.

    On the other hand, you may love your job and have no plans of leaving anytime soon. You’re not concerned about present day cash-flow. Instead, you’re looking for long-term gains through appreciation, debt pay-down, and tax benefits.

    In this scenario, you may target markets that have shown strong growth but don’t necessarily cash flow.

    These are just a few possible considerations. One of the things I love most about investing in real estate is how many options there are. It’s up to you to decide what options are most attractive for your goals.

    This is why the first step is to think and talk about why you want to own rental properties.

    Don’t ignore this first step. Spend some serious time thinking about what you’re trying to accomplish.

    Because different properties may offer different benefits, you need to commit to a strategy before you start worrying about how to analyze specific deals.

    Too many beginner investors skip this step and realize much too late that a property they bought doesn’t help achieve their goals.

    My goal in owning rental properties is to accelerate my journey to financial freedom.

    My wife and I invest in rental properties in Chicago and Colorado to accelerate our journey to financial freedom.

    In order to be truly financially free, we need cash flow to cover our present day expenses. So, we’ve targeted properties in Chicago that generate strong monthly cash flow.

    Don’t get me wrong, we certainly hope to benefit from appreciation, debt pay-down and tax advantages. That’s why we’ve chosen to invest in neighborhoods that we think are only getting better.

    However, we view those long-term gains as more of a bonus. Our focus with our Chicago properties is on present day cash flow.

    On the other hand, our Colorado property is a long-term play. It does not generate positive cash flow. That said, we use the rental income to help offset our ownership costs.

    We are planning to keep our Colorado condo in our family for decades to come. Offsetting the ownership costs with rental income will help us accomplish that goal.

    At the same time, we are hoping that our Colorado condo appreciates in value, making it a solid long-term investment. So, even though it does not generate cash flow for us, it still fits into our long-term plans for financial freedom.

    One key point: just because my wife and I invest for cash flow doesn’t mean we are planning on leaving full-time employment.

    I am a big proponent of all lawyers and professionals having multiple streams of income. I refer to these various income streams as Parachute Money.

    Because my wife and I are earning steady paychecks, we’ve been able to use our cash flow for other investments. We have multiple income streams and are putting all those income streams to work. That’s one reason we’ve been able to scale our portfolio so quickly.

    What are your goals in owning rental property?

    You now know the benefits, the work involved, and some different strategies to consider regarding rental properties.

    Now, it’s time to ask yourself why you want to own rental properties.

    Once you figure out the “why,” you can then move onto the “how.”

    So, if you’re considering owning rental properties, what is your why?

    What goals are you trying to accomplish?

    Let us know in the comments below.

  • Invest in Real Estate and Other People Pay Your Debt

    Invest in Real Estate and Other People Pay Your Debt

    Imagine that you have the chance to own something that might be worth a lot of money down the road.

    To buy this thing, you will need to pay 25% of the purchase price. The other 75% of the price will be paid by someone else.

    Your job is to take care of that thing and keep it for a long time. It won’t be easy, but if you can handle it, you’ll wake up years from now owning something outright that is very valuable.

    So far, this sounds pretty good, right?

    Of course, there’s a catch. That person paying for 75% of the item will want to be paid back. He’ll want to earn interest, too.

    You might be thinking that this opportunity doesn’t sound so promising anymore. Having to pay off that debt might be enough to convince you not to move forward with buying this thing.

    You’re smart to be thinking about the debt. I could understand if the prospect of paying back a debt like this didn’t appeal to you. Who really wants to use their own hard-earned money to pay off debt anyways?

    Fair enough.

    But, what if I told you that other people are going to pay back that 75% (plus interest) on your behalf?

    Even more, while those other people are paying back the debt, you still get to benefit from owning the item.

    Does that change how you’re viewing this opportunity?

    Maybe now you’re thinking that this is too good to be true?

    Nope.

    This is exactly how real estate investors generate long-term wealth. They buy a property using a loan and then pay back that loan using other people’s money.

    This example leads us to the next main reason I invest in real estate:

    Other people pay off my debt.

    When you acquire the right rental properties, your tenants will pay monthly rent and that rent can be used to pay off your loan.

    That means you can pay off that loan without using any of your own money.

    As your loan balance shrinks, your net worth increases. As your net worth increases, you are creating wealth for you and your family.

    Along the way, you can reap the benefits of monthly cash flow and appreciation. That means your net worth increases even more.

    That’s a powerful combination to generate long-term wealth.

    If this concept sounds like something you may be interested in, read on.

    Before we talk more about debt pay-down, let’s review two of the other main reasons I invest in real estate.

    1. Rental property cash flow is king.

    With cash flow, you can cover your immediate life expenses. For anybody hoping to reach financial freedom, it is essential to have income to pay for your present day life expenses. 

    For my money, cash flow from rental properties is the best way to pay for those immediate expenses.

    One of the hottest destinations in Spain is Costa Blanca, these luxury homes are situated in Villamartin, Campoamor, Torrevieja, Orihuela, located near to the coast, golf course, and shopping center, an example of other people paying my debt through rent.
    Photo by Frames For Your Heart on Unsplash

    If your present day expenses are already covered, you can use your cash flow to fund additional investments.

    That might mean buying another rental property or investing in another asset class, like stocks.

    2. Long-term wealth through appreciation.

    Appreciation simply refers to the gradual increase in a property’s value over time. 

    While cash flow can provide for my immediate expenses, appreciation is all about the long-term benefits.

    Like investing in stocks over the long run, real estate tends to go up in value. The key is to hold a property long enough to benefit from that appreciation.

    To benefit from appreciation, all I really need to do is make my monthly mortgage payments, keep my property in decent condition, and let the market do the rest.

    Now that we’ve reviewed how cash flow and appreciation work together to generate long-term wealth, we can look at the additional benefits of debt pay-down.

    With rental properties, other people pay off my debt.

    When I buy a rental property, I take out a mortgage and agree to pay the bank each month until that mortgage is paid off. At all times, I remain responsible for paying back that debt.

    However, I do not pay that debt back with my own money.

    Instead, I rent out the property to tenants. I do my best to provide my tenants with a nice place to live in exchange for monthly rent payments.

    I then use those rent payments to pay back the loan.

    Each time I make a mortgage payment, part of the payment goes to interest on the loan and part of the payment goes toward the principal. This concept is known as amortization.

    By the way, this is how real estate investors use Good Debt, also know as leverage, to generate wealth.

    You may be totally against debt of all kind. That’s OK. Debt certainly carries risk. I’m not here to convince you that debt is a good thing or a bad thing. I’m just showing you how it works.

    For more on the difference between good debt and bad debt, check out my post here.

    What is loan amortization?

    Amortization is the process of paying back a loan over time in predetermined installments. While your payment amount remains the same, the composition of that payment changes over time.

    In the early years of paying off a mortgage, the vast majority of your payment goes to the interest. With each additional payment, more of the money goes towards the principal.

    When you take out a mortgage, your lender will give you an amortization table that shows you exactly how much of your monthly payment goes towards interest and principal for the duration of the loan.

    For example, if you take out a 30-year mortgage, you’ll receive a chart that shows 360 payments (12 monthly payments for 30 years). You can then look at any month in that 30-year period to see how much of your payment goes to interest vs. principal in that month.

    We hung that art piece by Tekuma artist Lulu Zheng, and I particularly loved how Lulu combines architecture and organic forms. Even if it is in the background, her 3D elephant brings the focus of the viewer towards her work, representing how renters can make a home feel like their own while they pay off my real estate debt.
    Photo by Naomi Hébert on Unsplash

    If you’re so inclined, you can also use an online calculator, like this one at calculator.net, to create an amortization chart for any loan you have.

    I’ll admit, looking at the amortization chart is the least fun part of any real estate closing.

    Seeing debt payments as far out as 30 years is a bit scary. It’s hard not to think of all the things that can go wrong during such a long time period. That’s why I prefer to think of amortization in general terms instead of specifics.

    Generally speaking, I know that some of my monthly payment goes to interest and some goes to principal. The longer I pay back the loan, the more of my payment goes to principal. That’s good enough for me.

    With a fixed-rate loan, your monthly payment remains the same.

    When you have a fixed-rate mortgage, your payment remains the same for the duration of the loan.

    At the same time, because of inflation, rents tend to go up over the long run. Rents may also go up if market conditions improve or if you have forced appreciation through enhancements to your property.

    When your rental income goes up, and your debt obligation remains constant, that means more cash flow for you.

    For example, say your monthly mortgage payment is $2,500 each month for the next 30 years. And, let’s say you currently earn $3,000 in monthly rent payments.

    Over time, your rental income should gradually increase. Some years in the future, you may be earning $4,000 or $5,000 per month in rental income. All the while, your monthly mortgage payment remains $2,500.

    You can use that extra income, after covering all other expenses, to pay for your immediate life expenses, pay off your loan faster, or invest in other assets.

    It’s for these reasons that having a fixed debt payment over a long time horizon is one of the biggest advantages to investing in real estate.

    Think of it this way. Just like with your personal Budget After Thinking, you can make significant strides towards financial freedom when your income increases and your expenses remain fixed.

    What do you think of investing in real estate so other people can pay off your debt?

    Now, you know three of my main reasons for investing in real estate: cash flow, appreciation, and debt pay-down.

    Regarding debt pay-down, each month my tenants pay rent, I can use that income to shrink my loan balance.

    As my loan balance shrinks, my equity in the property increases. Equity is just another way of saying ownership interest.

    When my equity in a property increases, my net worth increases.

    So, on top of monthly cash flow and appreciation, debt pay-down is another way to generate wealth through real estate over the long run.

    That’s three ways to make money off of a single investment.

    Not bad, huh?

    If you’re a real estate investor, let us know how you’ve used debt to increase your net worth.

  • Money Question: What Would I do with $10 Million?

    Money Question: What Would I do with $10 Million?

    In a recent post, I asked: If you woke up tomorrow with $10 million in your bank account, would you do anything differently?

    I ask a version of this question whenever I teach my personal finance course to law students.

    Asking what you would do with $10 million is just another way to ask what you would do with financial freedom.

    Attaching a specific dollar amount to the question helps make financial freedom seem real. It turns the aspirational concept of financial freedom into actual numbers.

    Many thanks to one of our blog followers, Ian, for turning the question around and asking me what I would do with $10 million!

    It’s been some time since I put some real thought into this question. I’m happy to have gone through the thought process in crafting this post.

    If you haven’t already, I encourage you to do the same and think about exactly what you would do if you woke up with $10 million.

    Before I share my answer, I want to highlight some other reader responses to the question, which should shed some light on my decisions.

    Let’s get to it.

    Disappearing on a beach.

    The most common response to what people would do with $10 million involved some version of:

    Invest the money and then disappear on a faraway beach.

    In a way, the “disappear on a beach” response illustrates what many of us are striving for with financial independence. By that, I mean the goal of having enough money to then not have to work if we don’t want to.

    palm tree near sea shore illustrating that life on a beach may get lonely after a while, which is why I would not disappear with $10 million.
    Photo by Maarten van den Heuvel on Unsplash

    Personally, I share the goal of becoming financially free, but I’m not looking to retire early and disappear. After all, I believe in FIPE not FIRE.

    I think jetting off to the beach would be nice at first but then get old pretty fast. That said, I can certainly appreciate the desire to take some time away from life’s daily stressors.

    Invest and then buy a shotgun.

    One reader, Sean, shared a pretty sensible plan:

    Put $9 million in the S&P 500, pay off debt with the rest and buy a nice shot gun.

    It’s hard to argue with this plan. Of course, it’s never a bad idea to pay off debt or invest in the S&P 500.

    I think it’s also important to treat yourself, within reason. I’m not in favor of earning financial freedom if it means being afraid to spend money on the things that make you happy.

    While I don’t know the first thing about shotguns, I’m guessing they represent a hobby of Sean’s. I’m certainly in favor of spending on hobbies, experiences, and activities that bring you joy.

    Well done, Sean.

    The struggle between “should” and “want.”

    Finally, Zach shared a sentiment that many of us struggle with when it comes to money decisions:

    I know what the answer should be but I’d really like to buy a house and a couple of the cool cars I’d always ogled over growing up.

    Zach’s comment stood out to me in the way he phrased it. He knows what he should do, which in his mind is different from what he wants to do.

    Zach’s one sentence comment sums up a money struggle that many of us have.

    We know what we should do, but we’re constantly fighting what we want to do.

    I would challenge Zach, and anyone else feeling this way, to take some time thinking about what you truly want out of life. I did this when I wrote down my Tiara Goals for Financial Freedom while on a beach in Florida.

    If you put some real thought into it, you might find that material possessions are actually not that important to you. Rather, buying your freedom is so much more valuable.

    I would want to know more about Zach’s desire to buy a couple of cool cars. Maybe, like our previous reader wanting a shotgun, having cool cars is a hobby for him that brings much joy.

    However, I have my doubts that’s what Zach meant. The way he phrased it (“cars I’d always ogled over growing up”) leads me to believe he wants these cars to show off.

    Here’s the problem with that type of spending.

    Buying a couple of cool cars would likely only give you a short-lived burst of happiness. Sure, it would be fun to drive them around at first. Maybe it’d also be fun to have your friends over and show off what you just bought.

    But, studies routinely show that the burst of happiness from material possessions like cars only lasts for so long.

    When that initial burst fades away, you’re stuck with the hassle of owning multiple cars that you probably wouldn’t even drive much. Your friends would stop caring before too long.

    Add in the cost of insurance, maintenance, and garage space, and these cool cars will be a major drag on your financial freedom.

    By the way, there’s nothing at all wrong with buying a house. You need to live somewhere. Just keep it reasonable.

    Otherwise, you’ll end up working long hours for a lot of years just to keep the house. That might not be a trade off you want to make.

    What I would do with $10 million.

    Without further ado, here’s exactly what I would do if I woke up with $10 million tomorrow.

    1. $50,000 to go on an African safari with my wife.

    My wife and I have three kids at home ages five and under. With a newborn, even date night can feel like an epic adventure. My wife does so much for all of us, that this is the easiest decision I’ve ever made.

    With the first $50,000, she and I are packing our bags for Africa and leaving the kids with Grandma. Since this would be our first big trip in six years, we’re balling out without worrying about the cost.

    I am a big advocate of using money as a tool to build memories. How could I do better than taking a dream vacation with my wife?

    2. Pay off my house.

    My goal is to be financially free. A big part of that is not having any debt. That’s why the next chunk of the $10 million is going to pay off my house.

    I could certainly make more money long-term by investing in the stock market or purchasing more rental properties. But, with $10 million at my disposal, I don’t need any more money. I know when enough is enough.

    I love my house and my community and would rather know that I can stay here with my family for the long run.

    3. Pay off my rental ski condo.

    In 2021, my wife and I bought a ski condo in Colorado. We currently rent it out for most of the year.

    If I had $10 million, I would pay off the mortgage on the ski condo, stop renting it out, and spend a lot more time out west with my family.

    Hiker on a log illustrating what I would do with $10 million, like hiking with my family.
    Photo by Jon Flobrant on Unsplash

    As I mentioned, one of my main goals in life is to create as many experiences and memories as possible with my family.

    Paying off my condo would allow all of us to spend more time together doing the things we love, like skiing, hiking, biking, and swimming.

    Best of all, we could do these things while sharing our condo with our extended family members.

    4. $250,000 in a high yield savings account.

    Everyone should have an emergency savings account. I would put $250,000 into a high yield savings account and turn to this money as my first line of defense in case of emergencies.

    After eliminating my mortgage debt on my primary home and my ski condo, $250,000 would be enough to fund my life for about 2 years. That’s a lot of runway and provides peace of mind.

    5. $300,000 total in my kids’ 529 college savings accounts.

    Besides eliminating debt, my other major financial goal right now is to save enough to pay for my three kids’ college. To cross this goal off my list once and for all, I would put a combined $300,000 into their 529 accounts.

    I landed on $300,000 by playing around with an online calculator, like this one. $300,000 should be enough to reach my goal for each kid.

    6. 70% of the rest in a total stock market index fund.

    I am an index fund investor, through and through. I have no interest in trying to beat the market or time the market.

    I’m perfectly happy with earning around 10% per year, which is the historical annual average return of the S&P 500.

    So, I would put 70% of the rest of my money in a total stock market index fund. I prefer Vanguard’s popular offering, VTSAX.

    If you’re wondering why I’m not putting all my money in “safer” asset categories, like cash or bonds, it’s because I still have a long investment horizon in front of me.

    I plan on investing for decades to come. I’m OK riding out the market swings that come with investing in stocks. I also want to keep up with inflation so my purchasing power remains strong in the future.

    7. 30% in a total bond market index fund.

    While I would mostly be invested in stocks, I would be highly motivated to preserve more of my wealth. Like I mentioned before, enough is enough.

    Investing in bonds is a good way to de-risk your portfolio, even if it means earning less each year.

    For that reason, I would allocate the remaining 30% of my money to a total bond market index fund. I would choose Vanguard’s VBTLX.

    I would not pay off my rental properties or quit my job.

    You may have noticed I did not mention paying off my rental properties or quitting my job.

    My rental properties are all on very low-rate mortgages and generate strong monthly cash flow. These properties are performing beautifully as is.

    I don’t see any good reason to mess with a good thing. I could always re-visit if circumstances changed.

    With $10 million, why am I not quitting my job and jetting off to a beach?

    The truth is I really like my life right now. I don’t see any good reason to make sudden, major life changes.

    I like the people I work with and the work that we do for our mesothelioma clients.

    On top of that, I like where I live and am not really craving any major purchases. I would probably get some new furniture for the house. Maybe I’d plant another tree or two in the backyard.

    Plus, because I’m still earning an income in this scenario, I can continue to use my income to fund my life. That’s why I didn’t account for daily spending in my plan for $10 million.

    In fact, I’d have more income available because the $10 million is more than enough for my long-term savings and investment goals.

    I could use the money I had been saving for these goals for more present day spending. I’m not sure I would, but I could spend more freely, if I wanted to.

    So, there you have it. That’s exactly what I would do with $10 million right now.

    What do you think of my plan?

    Would you do anything differently?

    Let us know in the comments below.

  • Real Estate has Accelerated my Journey to Financial Freedom

    Real Estate has Accelerated my Journey to Financial Freedom

    I invest in real estate for one reason and one reason only:

    To accelerate my journey to financial freedom.

    Through monthly cash flow, debt pay-down, appreciation, and tax benefits, I’m convinced that owning rental properties is the fastest way to reach financial freedom.

    We’ll soon discuss each of these advantages in more detail. For now, here’s a quick overview:

    • Cash Flow: After paying all the bills each month, whatever is left is considered cash flow. You can use this cash flow however you want.
    • Appreciation: Real estate tends to increase in value over the long-term. If you hold real estate long enough, you should benefit from appreciation. This also means that your net worth grows.
    • Debt Pay-down: If you have a mortgage on a rental property, your tenants are the ones paying down that mortgage each month. That means your net worth grows because your debt is shrinking.
    • Tax Benefits: The tax code favors real estate investors. Whereas W-2 income is heavily taxed, many real estate investors pay little in taxes (and sometimes nothing in taxes). Some of the biggest reasons for this are depreciation and lower tax rates for capital gains.

    With these four major advantages in mind, you can hopefully start to see how investing in real estate will accelerate your journey to financial independence.

    Additionally, you may have noticed that investing in real estate provides both immediate and long-term financial benefits. 

    Let’s focus on that point for a moment.

    Investing in real estate offers immediate and long-term financial benefits.

    To be truly financially free, you need to cover immediate life expenses and prepare for future life expenses.

    In terms of your Budget After Thinking, your Now Money and Life Money are considered immediate life expenses. Your Later Money is for future expenses.

    Rental properties can help you in each budget category. The monthly cash flow and tax benefits will cover your Now Money and Life Money needs. Debt pay-down and appreciation offer significant upside for your Later Money.

    I’ve been hard-pressed to find any other asset class that provides as many benefits for both for the here-and-now and the future.

    There’s another major reason I believe in the power of investing in real estate.

    It has to do with one of my ultimate life goals: to create more time to spend with my family. This is one of my major life goals, in part, because of what I’ve learned in my career as an attorney.

    What I’ve learned about time and family as an attorney.

    I graduated law school at age 24 and spent the first couple of years of my career clerking for an appellate court judge.

    To this day, I tell my students that clerking for a judge is the best job for recent graduates. I recommend that all my students apply for judicial clerkships.

    When my clerkship ended, I joined my current law firm where I continue to represent people with mesothelioma, a rare and terminal cancer caused by asbestos.

    If it wasn’t for what I’ve learned from my mesothelioma clients, I would have never started investing in real estate.

    Let me explain what I mean.

    I’ve learned invaluable life lessons from my clients with mesothelioma.

    Most of my clients are in their 70s and 80s. That’s because mesothelioma is a disease that takes decades to manifest. A person can be exposed to asbestos in his 30s and not get sick until his 70s.

    A significant part of my job has been meeting with my clients in their homes after they have just found out they have incurable cancer. Before we ever get around to talking about the case, we inevitably end up talking about life.

    During these conversations, I do most of the listening. You can imagine what I’ve learned about life in these moments. It is not a stretch to say that many of my core beliefs have been shaped by these powerful experiences.

    When I listen to my clients talk about life, certain themes continue to surface.

    One major theme I hear from my clients is the importance of family. They’ve taught me the importance of creating experiences and memories with loved ones, usually involving family vacations or time spent with friends.

    Summer in Paphos representing creating more experiences with family.
    Photo by Natalya Zaritskaya on Unsplash

    Like my clients, I want to create as much time as possible with my family and friends. When I look back on my life, I want to look back on all the experiences and memories I’ve created.

    With rental properties, I can earn money without being physically present. And while investing in real estate is not completely passive, it provides tremendous upside without requiring all of my time.

    That means I can spend more time with my wife and three kids while still making money.

    Because of what I’ve learned from my clients, there’s nothing more important to me.

    I started investing in real estate in my mid-30s.

    By the time I reached my mid-30s, I had paid off my student loan debt. I had successfully saved up for an engagement ring and a wedding. Newly married, my focus shifted to saving 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.

    door key symbolizing how investing in real estate can accelerate your journey to financial freedom.
    Photo by Maria Ziegler on Unsplash

    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!

    I immediately thought about the experiences and memories that I could create with my wife if we had an extra $3,700 per month to spend.

    I already knew what my clients would say about the opportunity to create such memories.

    It almost sounded too good to be true.

    I did my homework and bought my first investment property less than a year later.

    During my talk with The Professor, he introduced me to BiggerPockets.

    If you haven’t heard of BiggerPockets, it is a treasure trove of online resources to help real estate investors of all levels.

    At BiggerPockets, you can listen to podcasts, read blog posts, and ask questions on the forums. You can also choose from a wide selection of incredible books on real estate investing.

    One of my favorite BiggerPockets books is Chad “Coach” Carson’s book, Small and Mighty Real Estate Investor: How to Reach Financial Freedom with Fewer Rental Properties.

    Coach Carson’s message is right there in the title: you can use real estate to efficiently reach financial freedom. He makes a compelling argument to use real estate to build a life, not the biggest bank account.

    Being introduced to BiggerPockets was a game changer for me. I believe in the motto, “Trust but verify.” With BiggerPockets, I could do my own research and decide for myself if real estate investing was for me.

    Over the next few weeks, I read everything I could about investing in real estate. When I wasn’t reading about real estate, I listened to podcasts.

    It didn’t take long before I was convinced that I wanted a 4-flat of my own.

    I am using real estate to accelerate my journey to financial freedom.

    To me, investing in real estate is all about fast-tracking my journey to financial freedom. It has not always been easy, but it’s definitely been worth it.

    I’m fortunate that my career has introduced me to so many wonderful people.

    I am convinced that I would not have been as motivated to act if it weren’t for my conversations with my mesothelioma clients. If nothing else, I know that talk with The Professor about real estate would not have resonated with me the same way.

    Fast forward to the present day, I now own 10 apartments in Chicago and a rental ski condo in Colorado.

    Coming up in the blog, I’ll share with you everything I’ve learned about investing in real estate along the way.

    As always, reach out if you have any questions or leave a comment below.

  • What if You Woke up Tomorrow with $10 Million?

    What if You Woke up Tomorrow with $10 Million?

    If you woke up tomorrow with $10 million in your bank account, would you do anything differently?

    I ask a version of this question whenever I teach my personal finance course to law students. I’ve also asked this question to a lot of my friends and family members.

    Whether in class or with friends, this question is a great conversation starter. It’s not so much about the dollar amount as it is about the money mindset that goes along with that amount.

    That’s because asking what you would do with $10 million is just another way to ask what you would do with financial freedom.

    Attaching a specific dollar amount to the question helps make financial freedom seem real. That’s because it turns the aspirational concept of financial freedom into actual numbers.

    With those numbers in mind, you can more realistically think about what your life could look like if you were financially free.

    That’s why I love the question. I find it very interesting to talk to people about what they would do with financial freedom.

    Why I love talking about financial freedom.

    If you hear $10 million in the bank and think of spending it on mansions, boats, and cars… this is not the blog for you.

    I want to talk about using that $10 million to buy something way more valuable than material possessions: your freedom.

    When you are financially free, you can choose to do work that is meaningful to you without worrying about how much it pays. You can also choose to spend more time with people who are meaningful to you.

    I am striving for both of those things on my journey to financial freedom.

    By the way, $10 million is just an arbitrary number. Maybe your number is $3 million or $8 million or $15 million. For this conversation, use whatever number represents financial freedom to you.

    The amount may differ based on your age, spending habits, debt level, dependents, etc.

    The idea is to pick a dollar amount that is high enough that you wouldn’t have to work anymore unless you wanted to. In its simplest form, that’s what financial freedom means.

    I’ve found that when I have this conversation, $10 million is a good, round number to get people thinking about what they would do with financial freedom.

    So, today we’re going to ask ourselves if we would do anything differently if we woke up with $10 million in the bank.

    To help get the wheels turning, let’s start with some simple math to see what having $10 million in the bank really means.

    What does $10 million in the bank really mean?

    Let’s do some simple math using the 4% Rule to help frame the question.

    The 4% Rule suggests that you can safely withdraw 4% of your investments each year and expect your money to last for 30 years. 

    Without getting too technical, the 4% Rule is based off of research looking at historical investment gains, inflation, and other variables. I view the 4% Rule as a useful tool to ballpark your magic retirement number.

    The 4% Rule is a great place for us to start thinking about what you could do with $10 million.

    Here’s what the formula looks like using $10 million as our current savings:

    $10,000,000 x .04 =$400,000.00

    This means that according to the 4% Rule, you could spend $400,000 annually and expect your money to last 30 years.

    This is a useful calculation that puts into perspective how much money $10 million really is. You can essentially view having $10 million in the bank as the same as having a job that pays you $400,000 per year.

    The major difference is you don’t have to get out of bed in the morning to receive this $400,000.

    Note for simplicity’s sake, we’ll set aside the tax implications of investment income v. W-2 income for this hypothetical.

    One other note: if you had $10 million in the bank, you don’t have to spend $400,000 per year. Rather, the 4% Rule suggests you could spend up to that amount and not run out of money for 30 years. If you spend less than 4% each year, your $10 million will last longer.

    How much can you spend each month with $10 million in the bank?

    To help you picture your life with $10 million in the bank, we can break down that $400,000 annual spending amount even more.

    I like to know how much I could safely spend on a monthly basis if I had $10 million in the bank. Knowing the amount I could spend monthly helps make the $10 million more digestible.

    That requires just a bit more very simple math:

    $400,000 annually / 12 months = $33,333.33

    So, if you have $10 million in the bank, you should be able to safely spend about $33,000 per month.

    The way to the cabin lady with arm out her window symbolizing what you can do with $10 million in the bank.
    Photo by averie woodard on Unsplash

    Now, you can view that number in the context of your Budget After Thinking. You might learn that you’re spending way less than $33,000 per month. Or, you may be spending way more.

    Either way, it puts that $10 million into smaller, more digestible numbers.

    To recap, we now know that $10 million in the bank means we can spend roughly $33,000 per month and not run out of money for 30 years. The important question then becomes:

    Would you make any changes to your current life if you started each month with $33,000 in the bank without having to work?

    Let’s explore what your answer may say about your current work situation.

    Would you still work your current job if you had $10 million in the bank?

    If you had $10 million in the bank, would you continue to work your current job?

    If your answer is “Yes,” that’s a great sign that you enjoy your work and the people you work with. You also most likely have motivations for working that go beyond earning money. That’s a really nice position to be in.

    By the way, I know a good amount of people in this boat. Even with $10 million, they wouldn’t change a thing about their work situation.

    If your answer is “No,” it’s worth thinking about why you wouldn’t keep working your job. Is it the people? The hours? The lack of stimulation? Overall stress?

    $10 million in the bank should be enough to leave your job for new pursuits. You can start to ask yourself what you would do for work if you didn’t have to work for money.

    I also know a lot of people in this boat. If they had $10 million, they would be out the door tomorrow.

    Why am I talking about new pursuits instead of shutting it down completely?

    With $10 million in the bank, your initial thought might be to just shut it down completely. For people of a certain age or people with health considerations, that certainly could be the right choice.

    Setting those reasons aside, I do not believe in retiring early. I’m convinced that humans are meant to be productive. We are social creatures who at our core want to be contributing.

    I think this especially holds true for high achievers who have put in the work and made sacrifices to become financially free in the first place.

    That’s why I don’t believe financial independence has to mean retiring. It’s also why I don’t like the popular acronym, FIRE: Financial Independence, Retire Early.

    The problem for me is that the FIRE end game is suggested right there in the name: become financially independent so you can retire.

    I don’t like what the word “retire” implies.

    If you look it up, you’ll see that the word “retire“means to withdraw, to retreat, to recede.

    None of those things sound appealing to me at all. 

    Each word implies moving backwards. I’m not working so hard to achieve financial freedom so I can move backwards in life.

    Instead, I like to view my financial freedom journey as FIPE:

    Financial Independence, Pivot Early.

    I believe in FIPE not FIRE.

    When you have financial independence, you have options. You can make decisions based on your core values instead of making decisions based on money. You can pivot, if you want.

    One of the ways you can pivot is by taking more control of what you do with your working hours. It’s not about quitting work entirely and wasting away on a beach. As nice as that might sound right now, it will get old fast.

    That’s why I believe in FIPE not FIRE.

    I encourage you to think about how you might use $10 million to pivot instead of to retire. Could you use that money to buy yourself the freedom to pursue more meaningful work?

    So, what would you do with $10 million in the bank?

    The point in asking about $10 million is to help you think about your current choices and whether it’s time to make some adjustments.

    Having this conversation with your friends and family will teach you a lot about your current situation. Remember, talking about money is not taboo.

    In these conversations, pay attention to what you learn about yourself and how you presently spend your time.

    Even though $10 million may seem like a distant dream, you don’t need to have that much money to start your own financial freedom journey.

    You can start making choices today to put yourself in a better position to pivot, if you so choose.

    Maybe you wouldn’t change a single thing about your career choices. Or, maybe you would be out your employer’s door tomorrow.

    In the end, thinking about what you could do with $10 million in the bank will help you lead a more intentional life.

    So, let us know in the comments below.

    What would you do with $10 million in the bank?