Most of us want money freedom, time freedom, and emotional freedom. I picture these as the three necessary legs on a stool. Can I balance on one or even two legs? Yes – maybe even for a long time, but eventually exhaustion sets in and I’ll go down to the ground. 

How many stories have we all heard of someone making it big financially, having lots of time on their hands for enriching activities, then they sabotage it all, hurting themselves and loved ones because emotionally, they’re a mess?

The three legs of freedom are built and sustained through the act of studying them. The word “study” repels many of us. However, if you deeply desire the three legs of freedom then commit yourself to the following: (I have done this for over 20 years; I’m eating my own cooking on this advice.)

1. Commit without fail to read or listen to podcasts on money, health, or finance for a minimum of 30 minutes every day. Knowledge compounds just like money compounds. At first, the difference between you and others is small, but with time and persistence, the gap can become huge. The race is not to the swift but to those that persevere.
2. Set written goals. This activates the natural goal-seeking mechanism that all of us have. Clarity and focus bring results. The human brain is a pattern seeking, goal striving machine. It’s there to serve you, but you must tell it what (specifically, with clarity AND in writing) you want to accomplish.

What are the chances you’ll eventually collect all three legs of the stool without these two ingredients? Success at this level is about work, not luck.

Finally, don’t get discouraged when a rocket is shot to the moon. It’s off course over 95% of the time. Without frequent adjustments and correction, it simply vanishes into deep space. You will make errors, have failures of discipline, and go through periods of discouragement. Just keep adjusting, adding new knowledge, and remember that it’s your life. You deserve a great life and you have a high impact on the outcome. 

At first glance, this advice seems simple, plus more work/another time suck. Remember Pareto’s Principle – 80% of your results come from 20% of your activity. All of us have 24 hours in a day. Where will you focus your time?

“It is not the daily increase but the daily decrease. Hack away at the unessential.” – Bruce Lee

“The art of being wise is the art of knowing what to overlook.” – William James

After college, I came back to my hometown and went into the family business which had a very modest beginning. My hometown is small but is centrally located and within commuting distance of a large metropolitan city. 

Conventional thought sees the small pond (small town) as simple people, small thinking, and even smaller opportunities. The reality is somewhat like the David and Goliath story. While David appeared under-resourced, we all know how that turned out.

It’s like a pond with some pretty good fish in it, but everyone thinks the big lake down the road looks better. In reality it’s lots of fishermen, lots of pressure, and tough to keep a meal on the table in the long run. 

Compare and contrast that to the small pond where integrity, competence, and word-of-mouth referral can help you thrive. I got plenty of whatever I wanted from the city, but got to fish my own way in my small pond. My town has a generous supply of “millionaires next door” but conventional wisdom hasn’t spoiled them. The American dream is still alive. 

As of this current entry, starting at zero, I now find that my net worth has the possibility of eventually being in the top 1% of the country, and growing in small town, rural, middle America – despite semi-retiring at age 52. In a small town, everyone is famous – when you provide value to others in your business, they will beat a path to your door. 

“Life is really simple, but we insist on making it complicated.” – Confucius

Relationships are everything. When you’re young and in school, the highest GPA, the math wiz or the best test taker may mean something. However, in most of the post-school world, it’s all about relationships. 

Success is full of critical qualities that cannot be measured such as integrity, grit, proper temperament, persistence, and adaptability, to name a few. Simple competence, being reliable and likable, along with the above qualities, will literally kick doors open for you. 

I know multiple business people whose clients wait months or even a year simply to do business with them. Why? Because their reputation is so strong. Who needs to spend thousands on advertisements when word of mouth works better…and is free. 

You would want to work with people like that, so become like that. Simple, but not easy. Educate yourself in terms of personal development on building “soft skills”, creating networks, forming relationships which are mutually beneficial. Avoid the path of least resistance and become a part of the ‘Good Ole Boy’ network. It works, it’s easier, more profitable, and lots more fun.

Time is an incredibly valuable and non-renewable resource. A great example would be the time many spend commuting to and from work. Let’s say you spend two hours for a roundtrip commute for work. 

2 hours x 5 days a week = 10 hours

10 hours of weekly commute x 50 work weeks per year = 500 hours

500 hours per year x 40 working years = 20,000 hours

20,000 hours / 40 hour work week = 500 work weeks

500 work weeks = approximately 10 YEARS of work weeks spent in your car

Time is a form of wealth, and figuring out a way to save time allows for more play, side hustles, and life satisfaction. Be willing to question whether the 10 years of work weeks spent in the car commuting, car depreciation, fuel, and what you net on a higher salary after you pay tax on the salary, is worth the time spent. My commute is three minutes, allowing me investing and side hustle time. Moreover, I was able to attend every event my children participated in. This is just one example – be willing to question.

Starting early makes the journey easier, less stressful, and the wealth (all forms of it) larger. If you’re not making bone-headed purchases, investing poorly, or making major relationship mistakes, you can deploy the savings into predictable (long term, not short term) passive income sources that produce while you sleep or play.

Savings combined with low fee index funds plus good debt on positive cash flowing real estate can, with time, produce a solid net worth and annual income. 

This principle is for those that can delay gratification and play the long game. Time is the friend of good investment. Reverse engineering where and when you want to arrive in financial terms can be done with reasonable predictability, allowing for less stress. 

Get your plan, work your plan, and enjoy every day. Being a ‘sit on your ass’ investor is about making a few good decisions annually, then simply waiting for the miracle of compounding to work for you. 
Less stress, less taxes, higher return. While this works with investing, this also works with you. Health, relationships, your personal psychology, and happiness all compound (in good or bad ways). The earlier you start, the better it can compound out. The best investment you can make is in continuous personal development.

Principle #1

You must spend time on a compound interest calculator and master the understanding of uninterrupted compounding power.

Let’s say your rich uncle gave you $10,000 at your birth to be invested at 10% interest (the approximate long term average of the S&P 500 index with dividends reinvested). It’s to be left there until you’re 65 years old. Doing so, your nest egg would have grown to $6,475,000.00. Now assume you don’t need that money but you want to leave a healthy inheritance for your kids to be dispersed when you hit the age of 86. They will get to split $52,400,000.00! This is the power of compounding and time. As a side note, this was only with a 1 time contribution of $10,000. 

 On the other side of this coin is how compound interest can work against you if you’re paying off debt. 

Imagine that you’re carrying a $10,000 balance on a credit card (at 4% interest-which is much lower than real world rates). You plan to not place anything else on the card and to pay it off in five years. Even though you’d be chipping away at your balance and paying an extremely low interest rate, you could still end up paying a lot in interest charges-more than $1,000!

And if you were being charged 18% compounded daily – which is closer to the average credit card interest rate – you would pay $5,236 in interest after five years!

Don’t Interrupt your compounding! 

Don’t withdraw money for short term goals like trips or car purchases just because some money has accumulated. 

Don’t withdraw money for emergencies. They most likely will happen at some point. So, plan ahead and save 6-12 months of expenses.

Compounding only works if you allow your investment to grow. The results will seem slow to come at first, but persevere! Most of the magic comes at the very end. So, start early, and invest regularly. Most importantly, don’t interrupt the power of compounding.

“Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t, pays it.” – Einstein

I think it important to note that generational wealth is not providing for a life of idle time. Work will absolutely be necessary, of course. Rather, I’m suggesting setting up a system that propels you to the front of the freedom line. The freedom line naturally includes more options, earlier in life, in regard to time, recreation, health, family and more opportunity. That said, this is the system which my children, grandchildren and other family members can benefit from…if they seize the opportunity.

Housing is a major expense. They can live in a rental of mine for the cost of utilities while getting started. 

I partner with them in buying a couple of rentals a year on a 15-year amortization. I’ll provide the bootstrap down payment, plus backstop unexpected expenses. They can do the labor. IF they prove reliable, I’ll gift them my interest before or after my death. They can have my part of any income. 

For example, in 15 years, they’ll own 30 positive, cash flowing homes. In my market as of this post, that’s OVER $200,000 in hybrid/passive income when free and clear (indexed for inflation). Rentals can scale into a large business or simply be a small helper.

They can learn the art and science of rentals. You can partner with others, go solo, or do both (that’s what I did). Most mom and pop rentals have a high failure rate. In this case, they’ll be taught about proper financing, have access to capital, learn to place themselves in deal flow, and learn the craft of running your own business (rentals). 

Assuming a margin of safety, you can look at an amortization table of your rentals paying off and be fairly stress-free about your financial future. This gives you all types of wealth (discussed in Part I). This is compounding in action. All these resources can save decades of life’s most valuable resources – time, opportunity, and choice.

Annual contributions to a Roth in a low fee index fund should be a helper in retirement (this is their responsibility).

They can simply have a job or start their own business (every tradesman that does quality work in my area is swamped with business and has been for many years). 

Having a good plan, some money to bootstrap you, proper temperament, and a willingness to delay gratification can result in a comfortable semi-retirement in your 40’s. By investing in a small growing community where people are wanting to live, it’s highly likely to work out. Lots of options and a plan they can repeat with their children or grandchildren if they choose.

Money and time freedom by mid-life. Now what? Politics, charity work, a vocation of your passion, plenty of hiking in the mountains, whatever brings meaning to your life.

“Liberty means responsibility. That is why most men dread it.” – George Bernard Shaw

At first glance, this title might lead you to believe the content is about piling up money. While a certain level of money is part of the puzzle, wealth is much more comprehensive. Having a generous amount of free time, having a wide range of choices or opportunities, living in a low stress environment and experiencing a place in the world, with purpose and connections (friends and family) are all forms of wealth. 

When you hear the phrase “generational wealth” you might picture spoiled/entitled people partying around the pool daily with no need to work. That is not what I am talking about. It’s the recognition that the gap between the upper middle class and the rich in lifestyle is not that large. When you eliminate the need to show off houses with 20 rooms you never live in, $5,000 watches, and the Bentley, then the rich live pretty much like the upper middle class. Both drive nice vehicles, have comfortable houses, sleep on the same brands of mattresses, eat the same foods, and the list goes on. 

What I’m hoping to provide to my family are the philosophies, roadmap, physical location, and funds to bootstrap my children and grandchildren should they want a life of freedom. Along this process, perhaps some of this content will provide tools for you, my readers, to live your best life as well. 

As I reflect, I’ve traded off most of my life to provide the economic resources for my family. I was on straight commission with no benefits and taxed heavily if I had a decent year. I was paying for my ex-wife’s house, our house, raising children, and watching my wife slowly die. I will never have the words to describe the pain, stress, and grief I was experiencing. The opportunity I hope to provide will be a plan where there is the highest likelihood of having a physical, emotional, and economic support system for my children and grandchildren, should they want it. Bad luck can happen to anyone and any family. This plan can be the difference between eventually thriving or going into a ditch and never recovering.

Most success revolves around being a contrarian in thought and action. That does NOT mean being obstinate, but rather doing your own thinking instead of following the herd then acting. As of this writing, 40% of America cannot come up with $400 without borrowing. The mean net worth is somewhere around $100,000, including home equity. If you follow the herd, you may just end up where the herd is going. Keep an open mind while I list resources and principles. Also remember it’s very possible (I suggest very likely) that with the right plan and resources, an average income can eventually put you in the high to ultra high net worth category. I’ve done it and have witnessed many others do it as well.

The plan is actually quite simple (one of its strengths), but also requires you to avoid stupid decisions (the more challenging part) and understand a few simple principles, which can help you avoid the stupid mistake part. Occam’s razor tells us that among competing theories, the one with the fewest decision points has the highest likelihood of being correct. (The more assumptions you have to make, the more likely you are to have an error in judgment.) The plan needs to allow for a wide range of career choices and the opportunities to form partnerships or syndicates, but partnership formation need not be necessary for success. 

In my case, I did both individual investing and partnering with trusted people (my family), which was instrumental in additional success. A long financial runway and a plan which is simple and flexible are crucial on the road to freedom. Most people are of the traditional thought of building a financial lake then draining it in their later years hoping they don’t run out of money before running out of life. My generational wealth plan is the reverse. In fact, the plan was applied to my parents. Dad is gone, but as Mom approaches 90, her stream of income out of it continues to grow. It’s the same plan my wife and I are using with the same results. I’ve shut any traditional business down years ago, but the lake and river out of my plan keeps growing.

My hope is that the experiences and knowledge I’ve acquired during my journey are used as tools for my children, grandchildren and for generations to come. As a reader of this blog, I wish the same for you and your family as well.

“To be your own man is hard business. If you try it, you will be lonely often and sometimes frightened. But no price is too high to pay for the privilege of owning yourself.” – Rudyard Kipling

1. Beginning your adult life with too much bad debt. Student loans, credit card debt, expensive vehicles and homes, plus a high cost of living area, all fit in this category.
2. Having no cash reserves for unexpected emergencies – they will happen.
3. Having no extra cash available after expenses to invest.
4. Having no plan or written goals on what you want from life.
5. Having no qualified mentors. Figuring out how life works on your own can cost you decades. It can only take a few errors in judgment to go into the ditch and stay there.
6. Having poor tax management. Taxes will be one of your largest expenses. It’s not what you make but rather what you keep.
7. Everyone has to use money. An unwillingness to learn how money works sets you up to fail. No one will care more about your future than you. Educating yourself on how money works is a learnable skill. Money is not everything, but it is like oxygen. When there’s not enough, it’s all you can think about. Money is opportunity and choice.
8. Having a spouse on a different wavelength or value system. When you’re not pulling together, it’s almost impossible.
9. Failure to realize that you are disposable (age discrimination, death, disability, being fired; being replaced by technology). Recognize that a job is vertical income. It’s only one income source that’s taxed heavily, plus you’re a free agent (disposable). The job is simply used to feed your family PLUS help build horizontal (passive) streams of income (dividends, interest, rental income, pensions, etc.) You’re never free until you have enough horizontal income. Forgetting that is hoping to be lucky or simply denial. Single points of failure can be catastrophic. Losing a job at a key time of life can be just that.
10. Failure to guard your health. You’re not invincible.

Act when the urge is strong or else it will disappear. Commit now. Will you start a journal of your insights, purchase a book, begin written goals, or just resume your old routine? I’ll help you jump start your success with three suggestions.

1. Emotional freedom: “Daring Greatly” by Brene Brown; “Psycho-Cybernetics” by Maxwell Maltz
2. Financial freedom: “How Much Money Do I Need To Retire?” by Todd Tressider, “The Psychology of Money” by Morgan Housel; “Richer, Wiser, Happier” by William Green
3. Time freedom: “4-Hour Workweek” by Timi Ferriss

“Remember, you need to buy the umbrella before it rains.” – Robert Frost