It all starts with a dream of who you want to be, what you want to accomplish, and why…and then believing in yourself and surrounding yourself with positive like-minded individuals…and last but not least, taking action!

You may often hear the terms financial freedom and financial independence used interchangeably. There is a subtle difference, however. In today’s quick snippet we will review the different stages of reaching financial independence.

A good resource we have utilized for our own planning is Mandy McAllister’s financial calculator – It can be customized to your own financial situation and shows in a tangible way the number of properties one needs to acquire to reach that freedom number. You do not have to use a calculator of course. Knowing your monthly expenses well will help establish that initial baseline of what your (passive) income needs to cover (check out our quick calculation on how investing $50,000 can help you build a meaningful and tax efficient income stream over time).

Stage 1: Financial security – achieved when your income covers your basic needs of shelter, food, utilities, health insurance, and gas. It is imperative to start with the basics by setting a budget and making sure you live within your means and pay down bad debt. We define bad debt as debt incurred to purchase items (outside of the ones noted above) that do not generate cash flow. We define good debt as debt incurred to purchase cash flow producing assets, where the cash flow covers not only the debt service but other expenses associated with operating the property.

Stage 2: Financial vitality – achieved when the income covers all of the above expenses plus some discretionary expenses for dining, clothes, entertainment

Stage 3: Financial independence – achieved when income covers basic expenses plus all discretionary expenses for dining, clothes, entertainment, some luxury, and travel in full.

Stage 4: Financial freedom – achieved when income covers all of the above plus added luxuries and most importantly freedom of time.

Real estate is just one tool on how you can get on the path to and ultimately achieve financial freedom. In a prior article we discussed how you can get started in real estate and how an initial investment of $50,000 can help set you on that path to freedom. You can also start as an active operator. There are multiple paths to take and which one you choose is entirely up to you. However, the key is to take action – take that first step, so you can get on the path of achieving financial freedom and reaching your own personal freedom (whatever freedom means to you). I am certainly glad that I overcame that fear and those limiting believes and the only regret I have is not starting sooner.

Should you have any questions or want to learn more about real estate investing or for an overview of our target markets, please reach out to

Disclaimer: The information presented does not constitute legal, accounting, tax, or individually tailored investment advice. Past results do not represent or guarantee future performance.