A valuable lesson that helped me become wealthy and have plenty of rental properties is what I am going to share it with you, so you do not have to work a job and become successfully unemployed.
With this lesson, you can apply it and change your life immediately. I’m going to walk you through exactly how to do this and show you exactly how I did it.
Pay Yourself First
The most important principle to follow to become wealthy is to pay yourself first. When you pay yourself first, you might be thinking that getting a paycheck is the same thing. The company you work for gives you a check, and that’s money that goes into your pocket to spend on things.
In actuality, what you’re doing is when you’re spending that money, you’re not paying yourself first but paying your cell phone company, your landlord, your car payment, the mortgage, and all that sort of stuff, first.
You’re paying everybody else first, and if there’s anything left over, that is what you’re paying yourself with. I do not want you to do that. The way to get wealthy is to do the exact opposite.
Paying Yourself First Can Be:
- funding your savings account
- your investment account
- buying investments
- getting in the stock market
- saving for your retirement
Every month, or every time you get a paycheck, you’re paying yourself first when you’re saving out a portion of that money you’re making. You are giving it to yourself for future investments to use so you can make more money.
What I did was I always lived just over broke. Living just over broke means you’re working a job, which I call “Just Over Broke,” because your boss is only paying you enough to keep you working.
They’re not paying you enough as that may take too much money out of their pockets. I will show you exactly how to do this by paying yourself first, building businesses, and buying investment properties.
Save 5% of Your Total Pay
As you are looking at paying yourself first, I suggest what I did, which is that I worked backward. Instead of looking at and paying all of your bills and saving the remainder, I want you to do the opposite.
I went through this, and it is difficult, so what we want to do is start with a certain percentage. My suggestion is to get to 10% of your total income to save to pay yourself first. You might not start there, and that is OK.
You might think that 10% is hard to begin with, and I agree. I began saving around 5% and worked up to 10%.
It may be hard but what I want you to do is take 5% of your total pay, including your taxes, and save it. For example, if you’re making $1,000 a paycheck, you want to take $50 ($1,000x.05) and put it into your savings account.
You might find it hard to do at first, but once you do it, after about three months, you will have $150 saved without even realizing it.
Choose A High-Interest Yielding Account
Put your savings in an account that will give you a healthy interest rate and make you money. A great option is CIT, and you can find a resource for that at masterpassiveincome.com/cit.
This is a high-interest savings account but not like a CD that will lock you in. Instead it is an account that will just give you a better interest rate.
At one point, it was about 2% compared to banks like Chase who offer only around .003%. I use CIT bank for all of my money.
What you’re going to do is take that 5% and, eventually 10%, and save it as you slowly control your expenses and spending habit.
For me, I have reached the point where I save 50% of what I make every month. I keep my expenses low, and my income keeps going up because I work hard, I buy more properties, I build businesses, and I save all that money. The remainder then will cover all of your bills.
Do Not Go Into Debt
The next important thing is to avoid going into debt. With debt you are digging a hole for yourself where your creditors are throwing the dirt in, and you don’t want to do that.
Cut Your Expenses
Next, cut out your expenses to make it fit the amount you have leftover. Let’s say you get $3 coffee once a day, five days a week. That’s $15 a week and $60 a month.
Instead of spending that sum of money, you can simply make your cup of coffee and bring it to work. Save that money, and put it inside your CIT account. If you do that right away, you’ll be able to start racking up cash.
What I do is cut out other things that I don’t need. For example, if you have five streaming services, consider getting rid of some because they may be unnecessary. I do not pay for any streaming services, nor do I have cable.
Instead, I have chosen to focus on building my businesses, buying properties, and loving and being with my family. We don’t have time for TV in my family, so we cut it out. For you, the TV may be necessary, so maybe consider cutting something else.
Cutting expenses will ensure that you have the extra money in your pocket. Ensure that the 95% (from the previous example) is going towards your expenses, so you don’t have to go into debt.
Increase Your Income
Another important tip is to increase your income. If you want to make more money, start doing a side hustle. That can be anything like driving an Uber, freelancing online, or something similar.
An option would be to buy a rental property from savings that you make as you increase your income and become successfully unemployed. I have 30+ properties; each of them makes me at least $250 a month in passive income.
I don’t have to work because I have all that money coming in, and my expenses are really low. Check out my free real estate investment course at masterpassiveincome.com/freecourse, where I show you how to invest in rental properties, choose where to invest, capitalize on properties, and more.
When you increase your income, you should pay yourself with that increase. This so you can buy more properties. What I did was cut out every type of vacation because the money was used to buy another property.
Cut Things That Do Not Serve Your Goals
Giving up things like vacation allowed me to quit my job after eight years. Now we get to travel and go on vacation.
Don’t forget also to check out my page and podcast, Successfully Unemployed, where there are tips and interviews from regular people who quit their regular jobs and are focused on their side hustles.
They have all become successfully unemployed with online businesses, brick and mortar businesses, courses, writing, and more.
All of the tips I have suggested have been to increase the amount of money you have saved to buy investments.
Buy Income Producing Assets
The next thing that you must do is purchase income-producing assets. You want to buy something that makes you money and keeps money in your pocket. This does not include buying a brand new car to drive around.
In that case, the money just keeps flying out of your pocket. Buying a house that makes you $250 in passive income every month by renting it out creates an income-producing asset.
I purchase properties that make me $250 a month in passive income, as do my students. My students are buying properties all over the US. One student, in particular, bought a duplex for a total of $50,000 that makes him $700 in passive income every month.
He only spent $2,000 of his own money and I show you how to do that in the free course as well.
When you make money from the income-producing asset, you should not spend the money you earn from it. Do not buy a new car, buy a new watch or whatever luxury it might be.
I encourage you to save the passive income of $250 every month in your CIT bank account. You’ll have more money to buy that next property that comes your way.
Remember, it’s like a snowball. If you go to the top of a hill or mountain, take a small snowball in your hand and roll down the hill; it will accumulate more and more snow and become bigger and bigger.
At the same time, as it becomes bigger, it also gets faster and faster. After a while, it becomes so huge and fast that you can’t even stop it!
Do Not Spend Any of That Money on Luxury
I’m blessed to have 30+ properties where I don’t work, and I just keep making more money to buy additional properties and then I repeat that cycle.
I encourage you not spend any of the earned passive income on luxuries. I’m currently in my bedroom, in a smaller house that I share with my wife and four kids.
I don’t live in a big luxurious house but I know eventually, I will buy a bigger house. This house was one of my rental properties from whenwe moved out of California into Arizona.
The tenants were moving from one of my properties, and we moved in because it made sense. It’s been a couple of years so we’re now looking for a property, and when there’s a correction in the market, we will buy a bigger house.
I don’t have any expenses and I don’t have a mortgage. All of my money is saved to buy more properties. Pretty soon, I might chose to buy apartment complexes, which is just like the game Monopoly.
You would start with land, buy a house, then buy another house, and work up to an apartment complex. You would get bigger, and make more money to pay yourself first.
Start right away! Even my kids have started this way of living. They save 50% of everything that they make. When my kids get older, hopefully, they’ll even do half of that and save 25%.
That’s so much better than I ever did. I didn’t save any money at their age. If they even save 10%, they’re so much better off than anybody else. Start as early as you can and keep paying yourself first to become wealthier than ever!
Premium online courses for any level of investor: beginner-advanced. Completely go at your own pace and can be taken through “Self-Study” or through “Membership”.
Inside the membership, attend live 90-minute Group Coaching sessions with Coach Dustin Heiner as he and the MPI Coaches teach you how to build a successful real estate investing business.
Connect with the MPI Coaches and the other like-minded investors inside the MPI Mastermind Community. Ask questions about investing and get feedback how to be successful in your business.