The following is a guest post by Deets Lamoss from Freedom595. He is a man who has reached the goal of finding freedom from work for the rest of his life, and he is willing to share his story with others. Enjoy.
If you had a choice, would you rather be rich or wealthy? Most people would be happy with either situation because they think the words mean the same thing, but read on and you will see they are two very different financial states with different end results.
Why should I listen to you?
Before we get there, let me give you some of my background so you can see that I walk my own talk. I come from a typical Midwestern middle class family and was raised to pursue the stereotypical American dream.
I went to college and earned an Engineering degree and a MBA. I then proceeded to work for corporations over the next 36 years in essence selling my time for money. Along the way I got married, had two daughters, bought a house, etc.
When I turned 50, I remember having a depressing birthday trying to figure out what to do with my life. I wasn’t happy at my job and I didn’t have a clear idea of how or when I would be able to retire. I had accumulated some significant assets over that time but they had had their ups and downs with the whims of the stock market.
I decided there had to be a better way, so I started reading personal finance books. Lots of books. I also asked my friends and colleagues what they were doing financially. It was during this phase that I discovered the difference between being rich vs. wealthy. This literally changed my life.
Rich vs. Wealthy
To me, both terms meant you had a lot of money. However, I didn’t understand there was more to it. What I found out is that being rich means you have accumulated some amount of money, let’s say two million dollars that you will spend when you retire to sustain your lifestyle. Being wealthy means your assets generate income that exceeds your expenses.
This was a light bulb moment for me and I hope it causes you to pause and think about what this really means. Income means financial freedom: the ability to do what you want to do when you want to do it.
It means never having a boss again. It means never having to go to another meeting that you don’t want to attend. It means pursuing the hobbies and activities that you really enjoy. It means spending more time with friends and family. It means traveling to new and interesting places around the world.
Putting Words into Action
This revelation caused me to change my whole investing strategy. Instead of simply saving more money and putting it into the stock market, I started buying income producing assets with the goal of replacing my job’s salary by the time I reached 59 1/2 years old.
Once I embarked on this new path, I felt like it was the first time in my life that I was in control of my own destiny. I had a plan and I was methodically achieving it with every check or payment I received from my passive income portfolio. It would also ensure that I would not be financially strapped if I was caught up in a corporate downsizing or reorganization.
I was depositing cold hard cash into my checking account vs. unrealized paper profits in a mutual fund. You can’t buy a cup of coffee with paper profits, but you can pay your mortgage with the income generated by your investments.
Things ended up going better than expected and on July 15, 2016 I retired from the W-2 workforce which was 15 months ahead of schedule.
I am proof that anyone with a commitment to saving, a willingness to learn, and the courage to take action can achieve financial freedom. My goal is to never touch my portfolio’s principal so that it continues to generate income for the rest of my life and also leave a significant nest egg for my wife and daughters when I am no longer here.
If you want to dig into this deeper, then I suggest reading Rich Dad, Poor Dad by Robert Kiyosaki. This and other great books are listed on the Suggested Reading List on my blog at www.freedom595.com.
The Earlier the Better
My only regret I have is that I didn’t learn this in my 20’s. If I had started investing in passive income assets then, I would have been able to retire much earlier. So even if you are young with little in savings, you can do this too. It will mean delaying immediate gratification purchases (like new cars, toys, vacations), but you will be building a portfolio that delivers financial freedom for the rest of your life.
I hope this gets you thinking about your own investment strategy and that you choose to be wealthy as opposed to simply being rich. I wish you good luck in your financial pursuits.