A Single Sacrifice Is All It Takes To Retire Early

necessity-vs-luxuryLast night I met with a colleague of mine who said she didn’t have any money to invest in her retirement. As it turns out, within five minutes I found several instances where she was believing her own lies. The biggest one? Her car costs as much as her mortgage… that’s nuts!

Mortgage ($810 mortgage + $140 property tax)
$950 / month

Car ($465 payment + $250 insurance + $240 gas)
$955 / month

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Our Love for “Luxury” is Costing Us Our Freedom

luxury house with poolDoes that $30,000 kitchen renovation really make you that much happier? Did you need granite countertops, new stainless steel appliances, built-in double ovens and recessed ceiling lighting?

Alternately, would new modern cabinetry with a standard countertop at a tenth of the price have been sufficient?

What about that $30,000 pool install? Did it need to be installed in-ground? Did you also need to replace your patio and extend it with high-end interlocking stone?

Alternately would an above ground pool that was a tenth the price have been sufficient?

Do these “luxurious” upgrades really bring you increased sustainable happiness or are you a victim to consumerism, short-term lust for higher-end physical possessions and, of course, trying to keep up with the Joneses.

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Can you keep great tenants from leaving in the first place?

So can you keep great tenants from leaving in the first place?
Keeping Good Tenants
“Definitely,” says Brent Mondoux, who has been investing in the Ottawa area for a number of years. “Some of the keys to holding on to our great tenants are by going back to the basics and simply treating them with respect.”
Moudoux has had a relatively low turnover in properties himself, and has forged good relationships with most of them, although he’s quick to point out that business is business when it comes down to things like missed or late payments. He recommends having a preventive system in place that will make payment a straightforward process for tenants and yourself, such as collecting post-dated cheques ahead of time and accepting rent via direct debit or e-transfer. So what are some other tips?
Key Tips
  • Be present. Tenants are unlikely to renew a lease for an absentee landlord, and they’re unlikely to be very quick to report breakages and structural issues as well. If you neglect your tenants, chances are your property will pay the price.
  • “Respond to all reported issues within an hour,” advises Mondoux.“Set expectations in terms of estimated resolution timeframe, and don’t lie. If it’s urgent, don’t delay. Set the wheels in motion immediately to resolve the problem in a timely manner.”

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How to Perform a Real Estate Cashflow Analysis

This is what a real estate cashflow analysis looks like. It informs you of your up-front costs, assesses cashflow positivity with current and potential future scenarios, budgets appropriately for vacancy/repair/contingency and accounts for overhead costs even if they may be unrealized (e.g. property management, accounting, bookkeeping, etc.). It is also vital to highlight any assumptions and verify them in writing, absolutely no exceptions.

real estate cashflow analysis

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Get Over Your Fears and Take Action Today!

ObstaclesBy the end of 2011, I had completed nine years of real estate investment courses.  Acquisition, cashflow, buy & hold, flipping, landlording, rent to own, taxation law… the list goes on and on.

Despite my educational knowledge, I still had not yet purchased a single investment property. Even though I had successfully run my own company for the previous fifteen years with positive cashflow in each and every year, I was still afraid to take the plunge.

I kept asking myself “How could I take so many calculated risks but be afraid to take this one?” I was stuck in a state of fear commonly coined as “analysis paralysis”.  I would look for the perfect deal but before I would pull the trigger I’d make up excuses as to why each potential deal wouldn’t work. The truth is there’s no such thing as a perfect deal. The human mind can be our own worst enemy and I was battling against nobody other than myself. Trying to psyche myself into taking the next step, but for some reason I kept backing down, convincing myself as to why each opportunity wasn’t optimal.

In mid-2012 I booked vacation. I decided to stay home and relax. The previous two years’ vacation was spent repairing the house after extensive water damage which had nearly depleted all of my savings. It was early afternoon and I grabbed an ice cold Corona from the fridge and went to sit in the yard and do some reading. As I hunched down in my lounge chair I continued to read my latest real estate investment book. My attention was drifting in and out and I found myself reading and re-reading the materials. I felt frustration growing within me as I thought to myself “I know this s&%t. I’ve read it a hundred times in other books.” I stood up and blurted “That’s it! I’m going to buy a property or I’m going to stop reading about real estate investing.” That was the catalyst, the last nudge through the barrier of procrastination, the trigger required to break through my analysis paralysis.

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Save An Hour of Salary, Prevent a Day and a Half of Work in the Future

The power of saving and investingOver the last 112 years, the stock market has averaged an annualized return of 8.5%*.  If you were to invest a single dollar into the market and receive the average returns, in 30 years it will be worth $11.56 (see “The Power of Compounding”)!

Let’s translate this into a figure that will scorch an image into your mind that will hopefully transform your perception of the importance of saving and power investing.  Let’s talk in terms of something that keeps us away from doing what we want, when we want to.  Yes, that’s right… work!

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Start working for yourself without quitting your job!

Early RetirementWouldn’t you love to work for yourself?  Are you afraid to quit your job?  Surprisingly, you don’t have to!  You don’t even have to work any additional hours!  What am I talking about then?  It’s simple.  Start saving today!

Alright… at this point I’ve lost a solid percentage of my readers, individuals who simply aren’t willing to sacrifice their own “perceived happiness” just to save.  But hold up one minute there… what exactly is a sacrifice?

When I used to have to wait to purchase something I thought of it as a sacrifice as well, but as time has went on and wisdom has slowly creeped into my head I now realized that I had a threatening disease known as first-world slavery and that making the actual purchase is the sacrifice.  What?!  Am I completely nuts?  No, in fact I’m not!

Recover from these words, regain your composure and then continue reading my blog please.   It’s okay… you can do it.

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Quit gifting your financial freedom to the government

Financial freedomWhat if I told you that there is a legal way to pay less tax every year?  What if I told you that there was also a way to retire earlier and with more money than you would have if you continued down the path you’re on right now?  Would you take advantage of this?  Of course you would!  Well then keep reading and let’s get started…

Almost every individual has a tough time saving.  In fact, almost half of all individuals are living paycheck to paycheck… and sadly, this includes thousands of people making $100,000+ salaries!  Terrifying!

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Change The Way You Think About Purchases, Quit Being A Slave To Your Possessions

Slave to MoneyLast week one of my friends was talking to me about her weekend filled with her perceived much needed bout of “retail therapy”.  She talked about all the new clothes and shoes, and even more clothes that she bought!  She upgraded her iPhone to the latest version and she even managed to go out to both lunch and dinner twice!

We both know what happened after.  I completely lost it!  “Are you nuts?!” I exclaimed, “I cannot believe my ears!”.  She smiled and retorted in sarcasm, “I know… I know… I went a little overboard, but I work hard so I deserve it!”.  Ironies abound, what she didn’t realize was she was about to start working even harder just to cover the costs of all of these material possessions.  Believe me, I was once in this trap for several years of my life… I know this situation all too well.

After some coaxing I convinced her to reveal the details of her purchases over the weekend so that I can create a case study to present back to her (I got her permission to post it to my blog as well).  I just couldn’t take it that she was about to set herself up for decades of suffering and I had to at least try to pull her out of the trap of first-world slavery (self-inflicted by the lust for unnecessary physical possessions).

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Want to Achieve Financial Freedom? Stop Spending So Damn Much!

Saving moneyOver the past several months I’ve had dozens of discussions with family, friends and colleagues surrounding various topics related to investing in order to achieve financial freedom.  These discussions have blurred a number of different topics – What are the best investments?  What exactly is financial freedom?  How do I approach an opportunity?  How do I get over my fears?  And the list goes on.

Today I’d like to cover one of the most important topics to achieving financial freedom.  This topic in particular revealed both significant discomfort and resistance from the majority of my colleagues during our conversations – saving for financial freedom!

Saving for financial freedom isn’t a new concept.  It’s not even a complicated one, it’s simple, spend less than you earn and save the rest; optimally save as much as you can.  After all, if you aren’t capable of saving, you won’t have very much money to invest towards achieving your financial freedom!  Ironically, in almost every instance where the topic was brought up, the reactionary comment was something along the lines of “I can’t save any more money; I’m already barely getting by!”

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