My real financial education began my junior year of college. Ironically, but probably not surprisingly, it began outside of the classroom.
I had just moved to an off campus house downtown with a few of my friends. Rent was cheap, splitting $850, plus utilities, 4 ways wound up being significantly cheaper than living in the dorms. Score 1 for one of my first personal finance decisions.
However, as time went on, I became more and more disenfranchised at the thought of ponying up my $225 each month, and sending it to an absentee landlord. As a result, I decided to sacrifice my unbridled autonomy by moving back home, and commuting my final year of school.
Being fortunate enough to live for free while working and finishing school, I was able to amass a nest egg quite rapidly. After I graduated, I did what we are conditioned to do by society, government, and our education system, and got a job.
I was one of the few lucky ones to get a good paying job, in a degree relevant field, with health benefits and a 401k. I made it! Or so I thought. It didn’t take long before being chained to a cubicle, 8 hours a day, 40 hours a week, asking permission to use the restroom got old. Painfully old. So this will be my life? Counting down the minutes to break, lunch, and 6:00pm? Repetitively doing the same things every day, all day for the next 43 years? Once that thought crossed my mind, I began to feverishly search for a better way. I wouldn’t make it.
That’s when I discovered passive income. Passive income is defined as: “Earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not materially involved. As with non-passive income, passive income is usually taxable; however it is often treated differently by the Internal Revenue Service (IRS).” No longer would I have to solely trade hours for income! No longer would I lose 35% of my income to Federal and State taxes! No longer would I have to ask permission to use the restroom, or go camping for 2 weeks!
So I bought a duplex and did what the industry refers to as “house hacking”. I lived in one unit, and rented the other. I also rented a room to a friend of mine. Not only did this rent cover my mortgage/taxes/insurance, it also covered my utilities, even leaving significant cash flow left over to put in my pocket. Having exonerated myself from the largest living expense the average person is forced to face, I was able to save money at a substantial rate. I was earning money while I was sleeping.
Passive income at work.
I also took a page out of “The 4 Hour Work-week” and got a job working remotely, as an outside sales rep, free from the bonds of a cubicle and significantly more flexible in terms of time. And although the travel can be extensive, I have a free company car. No car, gas, insurance or maintenance payments. Second largest living expense = taken care of.
I bought another house. I paid off the balance of my student loans. I’m now completely “bad debt” free, save for the roughly $2k I keep revolving on my rewards credit card.
I’m not completely free, but I’m close, and in a time where so many are struggling, including fellow Millenials, I’d like to share what I’ve learned about passive income, investing, credit, and how to challenge what we’re all taught in school and by society.
So thanks for stopping by, peruse the site, sign up for my newsletter, and hopefully learn something!