Following my mentors’ simple advice, the first step I followed was to open up a spreadsheet, list all my living expenses for the year, then divide by twelve. This gave me the monthly living costs for myself, wife and family. This result became my “Magic Number”.
Then all I had to do was to have a passive income, (that is money coming in without me physically working) that the total exceeds my “magic number”. Ignoring all the financial planners’ advice, I decided to use the numbers in the “current days value” and decide that any changes, (due to inflation) must be able to keep pace with the living expenses. It no longer matters which one of the investments, providing I could measure the return. I did not worry about twenty or thirty years, I worried about the next month and year. I needed to hit passive income milestones on my journey.
That’s is when my strategy changed. Managed funds gave little return, superannuation was locked away for too many years. I looked at multiple options and eventually decided to focus on property.
Doing the basic math.
If I owned four houses outright, the first one pays for all the expenses of the whole four.
The second, third and fourth will pay for my living expenses. If I could do that I would no longer have to work. That set my first property dream, to own four houses outright.
Then I could buy an RV (Recreational Vehicle) or camper and travel where I wanted for how long I wanted. All I needed was 4 houses owned outright. Sounds simple right? No, it was not that simple, but it gave me a starting point to head in. Something to start me measuring my progress.
I could sleep better at night, instead of worrying, I could measure my progress. The numbers became like an obsession, I knew the goal, how to measure my progress, and what I needed to do to achieve it.
I discovered the journey was hard and full of pitfalls. I had to learn about property, protecting wealth in Australia and it is not a simple task.
But I discovered that it took less than ten years to achieve the dream. The dream of not having to work, with passive income exceeding expenses.
If you lie awake at night or sitting in the dark worried about the future, there is a part to follow to relieve that horrible helpless feeling. Simply work out your “Magic Number” and start your mind thinking about what you need to do and how to do it.