Friday, February 16, 2007

Pursuit of Financial Freedom

I still remember what it was like to pay off the last of our debt. Talk about a sweet feeling. It was the first real step to becoming financially free.

My wife and I had started building our wealth about a year after we met (going on 5 years now). We were going to open a coffee shop back then. We had built a b-plan, lined up financing, the whole works. Just before we signed the lease we decided to hold off. I'm not sure that was the best decision, however I am sure that we are in a great financial position now, so brewing coffee could have been better or worse but it matters not at this point. What we decided to do was buy our first rental property and we ended up buying two and our primary home all within a year and a half. It was a fast time and we were planning to buy one rental every six months for 5 years. That would have provided us with about $350,000 a year in cash flow. We stopped because the state in which we live raised property taxes to a level that created a negative cash flow each month. So the more we bought, the broker we would have become. We then used 0% financing to fix up what we had and sold out. We still have one rental and our home.

At that point I asked myself why I was focusing on real estate when I know how to make money in the stock market. I then decided to maximize our monthly cash flow into the market (individual positions for the most part). We spent some time paying off all our non-mortgage debt and when that was finished we had put ourselves in a position to invest about $4,500 a month. We thought about paying off our mortgage in the next 2-3 years instead, however after working with the numbers, we will have built much less wealth, also our home will not provide a monthly income when we resign from our main vocations (please see previous post on House vs. Portfolio)

We have worked hard at this while we were young and had the energy so that we can spend our less energetic years not as concerned about our wealth and if we will have enough. I spend my working days working with folks worried about not having enough to survive. When they were young they said things like "live in the moment" or "life is short, what if you die tomorrow" well what if you don't die tomorrow, which is the more likely outcome. Now, for the most part it is too late for them to make up their lost time. Their stories in conjunction with my growing up at the poverty level forced me to decide long ago that I would not get in their boat and guess what... I'm already reaping the benefits at 29 years old, I just look forward to it getting better.

I really enjoy watching our portfolio and wealth grow by leaps and bounds each and every month, that to me is better than buying material things, although we have many toys (work hard play hard right) we just have our priorities in place. We want to create foundations to benefit others less fortunate than us down the road and cash and stock works better than toys when giving to others.

Have a productive day,

Jake Blake


brian said...

Hey Jake -- I love your content, but I really wish you had a RSS feed so that I could tell you have updated. Just something to think about!

Jake Blake said...

Thanks Brian, I will look into it.