Replies to post #139 on maone15

[maone15]

yes, financial independence is #1. and it's alot more attainable that people think, all you have to do is build up an automatic income that exceeds your monthly expenses.

for me, that's a little over 19k/month- automatic income (small business w/ employees and some rental). all of the extra goes directly to my net-worth, since my expenses run only 19k/month

I started out with financial independence at 1k/month a long-time ago

[the first automatic income for me, was those little $0.25 turn-key candy vending machines: it just sits there and collect money, then once a week I would go to collect money and refill. now I have a base of employees that do it for me- alot of guys have turned this into a huge business, mine is still a small group of machines- still own it today]

this allows me to focus on trading/investing/starting up a business- everything else goes directly to my net-worth, and also gives you the freedom to run with an idea and not be tied to a 9-5 job

paying off a mortgage is not necessarily a goal of mine, I have more than enough money to buy a house in cash, yet I still mortgage it. that's because the interest rate is so attractive, I would rather have that equity to use for my own investments: i know I can beat the bank's interest rate simply by selling covered calls- therefore I can use that capital to make 20% a year, pay the 3% to the bank, and take 17% for myself

I just keep 2-3 years of mortgage payments in the bank at all times as a revolving balance, just in case.

student loans especially, at least where I am, are the best type of loans to have: super low interest rate. Instead of paying them off, build up your bank account- and have the money to pay them off. because you will probably never that good of an interest rate again... instead use the capital to build your net-worth, even a low-risk investment will earn more interest than the student loan, and the difference between the two interest rates (what you earn, and what you pay:) goes directly to your net-worth
[unless the student loan is a high-interest rate, then that makes sense]

-i even will sometimes borrow money off a high-interest credit card to invest, I borrow at 20%, and make 25%... and since i'm using someone else's money- i'm happy taking 5% a year on someone else's capital: eventually you will build up your credit to the point where you can call your bank manager, and get a loan for anything you want at 8%- once you build that rapport and account size.

i focus more on building financial independence and my ability to generate consistent returns, e.g. learning how to build businesses, how to invest in the stock market, etc- much more than I focus on building raw net-worth

focus on the means of building that skill-set to generate and manage money, and the net-worth will follow

EDIT: thought i'd add it as a sticky so others could read as well

EDIT: another good thing that i've seen a few smart couples do, is rent out an extra room in their house- an extra $400-800 income goes along way for a household with a tight budget. then they would use that extra money to start investing, start a side-business... slowly building every year