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What is financial freedom?

Financial freedom is the same thing as financial independence, early retirement, and being wealthy. The purpose of financial freedom is not to be massively rich and be able to buy fast cars, mansions, and unlimited hookers.

The purpose is to be “free” of having to give the most precious resource we have, to something we don’t even like.

The reason why this site is called “five years to financial freedom” rather than “…to financial independence” or “…to early retirement” is because the end goal is true freedom. Freedom from having to work jobs you don’t believe in, freedom from having to choose to help someone else or just help yourself, freedom from the everyday fuckery of being a wage slave.

Here is a little about some of the questions we get asked and myself, Nate Chai.

So why don’t you just travel?

friends, journey, wealth

That’s an excellent point, why don’t we all just up and go to live in a country that has an exceedingly low cost of living? Honestly it’s a fantastic way to live your life. You don’t need a lot of money to have the freedom to jump from country to country making memories and seeing amazing shit. I’ve WOOFed, I’ve been a freelance writer, I’ve slept on countless couches, but… it’s kind of the same as having a job.

Instead of working for money, you’ve got to spend your time doing other stuff in order to get by. You don’t gain more time; instead of sitting at a desk you’re planting vegetables, or sending hundreds of emails to clients, or simply looking for somewhere to sleep.

And I didn’t feel I was working toward anything substantial.

Once you set up an asset base that covers your expenses you have the time to do what you feel is important to you, because you don’t need to focus on surviving.

How are you planning on achieving this?

coffee, freedom, success
This plan will also require a tonne of coffee

The focus of this plan is to get a regular income that requires the smallest time commitment. Unfortunately there are very few ways of making truly “passive income” so by the end of these five years (2015 to 2020) I want to be putting around 10 hours a week into maintaining these assets. Assets that generate wealth are:

  • Property
  • Businesses
  • Intellectual Property
  • Stocks, bonds, and shares

Now businesses take a lot of time to start making money, and also require a lot of sweat equity. Similarly stocks, bonds, and shares take a long time and a lot of investment before they start making enough regular income. So I’m left with property and intellectual property. By the end of this journey I should’ve acquired;

  • Three five-bed houses near a university
  • Four books about subjects that sell well

I figure I need £2,000 a month in order to cover my expenses and provide me enough to continually invest £1,000 in other assets (businesses and stocks) a month which means that my assets need to provide me with around £35,000 a year!

It’s hard to estimate how well a book will sell so I’m going to have to assume this amount will just come from houses. Therefore I need houses that will net me around £250 per month, per room. Using this data I know now the areas where students will pay this amount, and can find the average cost of five beds in these areas.

Based on preliminary research this will cost me around £150,000 per property. In order to buy these properties I’ll need a 25 to 30 percent deposit. So in order to be able to afford these three properties I’ll need to raise about £135,000.

In order to raise this cash I’ll be looking for angel investors, family, and friends to loan me the money, and I’ll pay them a far greater rate than the bank offers as an incentive… at least that’s the plan.

Sounds great on paper…

It does doesn’t it. It all looks so easy when you break it down like that… but it won’t be. In order to raise that level of cash, and then ensure that I don’t piss my asset base up the wall I’m going to need to vastly improve my lifestyle, my brain, and my body.

I need to improve my strength to make house renovations easier. This means learning about nutrition, exercise, and spending time at the gym.

I need to improve my understand of how to use money better, so I can save, live better for less, and enjoy what I have. This means learning how to be frugal, repairing things, and making the most out of what I buy.

Finally, I need to learn how property works; how to get good tenants, how to get a good mortgage, and how to not buy a shitty house.

So it’s not going to be easy, but I’ll have you guys every step of the way. Learning from my failures, learning from my triumphs, and seeing how someone earns Financial Freedom.