Using assets and cash flow to be financially free
By: KK
The term “financial independence†is used a lot, but what does it really mean? Is it having a high-paying job so that you can support yourself? Is it having enough money saved up to last you the next 30 or 40 years? Is it based on an anticipated inheritance? Or even an alimony?
For many people, financial independence translates to: “I’m going to work until I’m 65 and then I’m going to retire.â€
There are a lot of ideas out there on what constitutes financial independence, but the following is the definition I’ve been using for many years and that helped me to retire when I was 37-years-old. This isn’t the right or wrong answer. It’s simply my answer. It’s led me to become financially free.
The formula is this:
1. I buy and create assets that generate cash flow.
2. The cash flow from my assets pay for my living expenses.
3. Once my monthly cash flow from my assets is equal to or greater than my monthly living expenses then I am financially free because my assets are cash flowing and are working for me.
When the formula is completed, I no longer have to work for money. When I no longer have to work for money, I’m financially independent.
