50 Doors Annual Results as of Jan 2020

2020 is the 7th year on my road to 50 doors!

The journey started in 2014 when my husband and I decided to go after passive cash flow and financial freedom. Without any prior experience, we set out to get 50 rental units within five years. Each unit would theoretically give us $200 of passive income. Overall, we aimed to achieve 10K/month cashflow.

Here we are seven years later! Happy to share actual results and lessons learned as of the end of 2019.

Financial Freedom Strategy

• Invest in Assets, which put money in my pocket
• Eliminate Liabilities, which take money away
• Until the positive cash flow from the assets covers my family's day to day needs aka we are Financially Free

BIG DREAM and THE DREAMLINE

I am working towards September 2022 deadline.

Or should I say DREAM-line? Ba-dam-shh...

The plan is to go away on a sailing trip during the 2022/2023 school year.

Timing will be perfect. Our little guy will still be in middle school. We'll do some sailing and sight-seeing and come back for his first year of high school in 2024.

My two oldest sons will be independent by then. Ha-ha, we'll see how that goes! As a side note, I would have never thought that handling teenagers can be A LOT TRICKIER than real estate investing! But this is a topic for a different type of blog.

WITH THIS IN MIND, MY BIG 2020 GOAL IS TO GET THE BOAT!!!

Status as of the End of 2019

KEY POSITIVES

• Our portfolio now has 17 assets. We added one in 2019.
• The total door count is 20! Only 30 more doors to complete the original 50 Doors plan
• I'm thrilled that our cashflow has bounced back up to 15K from the 2018 dive down to 3.9K.Tight hands-on asset management definitely paid off.
• I am most grateful for the caring, responsive, and responsible tenants and their families, as well as reliable and easy to work with property managers, handymen, trades, advisors, and partners.
• However....

THE KEY LESSON LEARNED

My biggest 2019 takeaway is EASY DOES IT!

Continuous rapid expansion can be emotionally exhausting and extremely stressful.

Every new asset you add to your portfolio requires resources - time, money, skill, energy, etc. Ever since we started, all equity and cash flow from older assets were going right back into the growth funnel and used to acquire new assets.

Too many times over the past year, my safety cushion was too thin. I relied on pure luck to make ends meet, juggle, and balance all the in-flows and out-flows.

Choosing the right pace is crucial in the long run. Giving myself ample cushion room yet still making great headway is the art I'd like to master.

Update on Objectives for 2019: Mostly Complete

1. Eliminate a big chunk of my most costly liability, Bad Debt. This will increase my overall cash flow. With less debt, I'll attract other people's money on better terms. Done!
2. Acquire assets that put money in my pocket at a reasonable pace without getting new bad debt. This will increase positive cash flow as well. Done!
3. Sell non-performing assets in Spring 2019 to improve cash flow. Kind of done! I was able to improve operations without selling the assets.
4. Acquire liquid assets. You can't buy groceries on real estate equity. Liquid assets will be my rainy day fund to protect me from a fire sale in case of an emergency. Great progress! Lots done and way more still to be done!
5. Plan ahead for the sailing trip! Budget, research, and make sure my husband gets his sailing license. Getting there! Break your leg, Anton! :) Good luck on your skipper exam in a couple of months

Objectives for 2020

1. Double revenue & double cash flow! Not sure how yet... don't ask.
2. Take it easy & enjoy life - read, yoga, meditate, be active, have fun, help and support my loved ones, and give back.
3. Last but not least - Get The Boat!   

Numbers

Link to My Portfolio 2019 is here.

Link to My Portfolio 2018 is here.

How to Become 22% Financially Free

Most of my girlfriends think that
living with my parents is
a horrific idea :)

Over the Christmas break, my family made a very big decision. We all finally agreed that it's time to eliminate one of our biggest liabilities - our home! 

We decided to join efforts cross generations and consolidate two residences: my family moved in with my parents.

This is not only because we love each other to pieces, but also because we saw a great opportunity to optimize our spending. This is a step towards our financial freedom goal and a part of the following chain reaction:

• Spending goes hand in hand with saving.
• Saving goes hand in hand with investing. 
• Investing goes hand in hand with multiple streams of income.
• Multiple streams of income go hand in hand with financial freedom.

I understand if you think it's a crazy move. Even my nine-year-old jokes:

My son: Mom, how do you feel about living with your Mom when you are almost 40?

Leaving 16 years of memories behind

Me: I like it

My son: Why? [Pauses] Free food?!?

Then, he bursts into laughing loudly at his own black humour.

All joking aside, this is a big change for our family. Kids had to change schools, karate dojo, pack
and move all of their stuff, and try to make new friends. My husband and I packed 16 years of life into boxes and garbage bags and piled it in my parents' basement. My parents now have to observe our semi-chaotic living in their previously idyllically quiet home.

Why? Because this change takes us closer to achieving our financial freedom goal. Now, our upcoming year-long Sailing Trip in a couple of years is more real than we've ever imagined.

Myth: Home is an Asset

Most people consider the home that they live in to be an asset.

There is a lot of evidence all around us in favour of this myth. For example, real estate agents will tell us that home is the most expensive asset we will purchase in our lifetime.

A creditor will ask us to put the market value of our principal residence at the top of the Assets column on their credit application.

Our personal financial advisor will ask about the value of our home and enter it on the first line of the assets section of our Personal Financial Information form.

Let's be pragmatic about facts:

A real estate agent will get paid a commission based on the purchase price you pay for your home. 

A creditor will collect thousands of dollars of interest payments when you borrow from them and secure a loan against your home.

A financial planner will help you in many ways:

a mortgage, insurance, a secured loan, an investment portfolio, and a repeating annual financial plan update, all of which is based on the market value of your home; all of which comes with a price tag.

Please keep in mind that I am a grateful customer to a few amazing real estate brokers, mortgage brokers, and financial planners. Knowledgeable advisors help me tremendously on my way to financial freedom! The value of the products and services they provide to me greatly outweigh the associated costs and propel me forward. In fact, I wouldn't be able to achieve what I've done so far without their help. If you are reading this - Thank you!

The trick to appreciating the value of these services is to know exactly what you are after.

The advisors, especially great ones, will give you the advice that you'd like to hear. This is because a huge part of their job is to help you achieve your dreams. They will cater services to your tastes and help you make the decisions to achieve your desires.

Therefore, if you go with conventional definitions and believe your home to be an asset, you will inevitably purchase an expensive home and spend a lot of money on it! Your advisors will help you do it to the maximum.

Your Decisions are Yours to Sponsor

Since my goal is financial freedom, I make it my highest priority to fully understand the costs of each of my liabilities, including my home.

I am fully and solely responsible for all the associated home expenses such as:

Mortgage Interest and principal 

Mortgage insurance 

Life and disability insurance premiums 

Property taxes 

Property insurance 

Maintenance and repair costs 

Snow and grass care costs 

Cable 

Internet 

Phone line 

Security alarm system 

Furnace lease 

Water tank lease 

Utilities 

Interest on the furniture bought on credit card 

Interest on the car as fancy as my neighbour's

Netflix

Amazon Prime 

Cleaning lady (I notice that the trend is more bathrooms than people in a house!)

A second car if the house is far from work 

Given my personal goal, I choose to disagree with the conventional definitions and concur with Robert Kiyosaki, who insists that we put our home on the liabilities side of the equation.

In order for me to balance my personal budget, I have to face the harsh reality and be ready to pay the bills that I signed up for. There's definitely a lot of bills to pay when it comes to home ownership!

Consequently, my advisors strive to help me find the best bang for the buck, save every penny possible, and use my personal home to the fullest.

Abundant Opportunities

Homeownership combined with the home being classified as a liability (as opposed to being an asset) gives you tremendous opportunities.

First and foremost, I bet you can save two to three hundred dollars a month, if you carefully revisit all of your regular expenses, decide which of them you no longer need, and stop paying for them.

Keep in mind that small savings add up.

For example, over the past couple of months I shaved off the following on little things:

- Replaced mortgage and loan protector insurance with whole life and disability insurance +$100

- Stopped paying for a home thermostat rental +$15

- Cancelled Netflix +$12

Sub-Total: $127 per month = $1,524 per year = $1,836 before tax.

After moving to my parents, I've also added the following savings:

- Cancelled internet +$65

- Cancelled home insurance +$40

- Cut utilities and property taxes in half +$500

Sub-Total: $605 per month = $7,260 per year = $8,746 before tax.

Adding $656 monthly saving I shared last month, grand total becomes:

$127 + $605 + 656 = $1,388 per month = $16,656 per year.

At 17% tax rate, that is $20,067 of pre-tax salary.

An average family with 73.7K annual household income has to work for over eleven weeks to earn enough money to cover these expenses.

Given the recurring nature of these expenses, it's not just a one-time eleven-week long work project. You'd have to work for eleven weeks every year to pay for all these obligations.

For me personally, getting rid of these liabilities means that my husband can be on vacation for 11 weeks out of 52 every year. 

This alone makes us 

22% FINANCIALLY FREE

Sailing Trip Awaits!

Not bad, eh?

PS Saving and being frugal around your home-related expenses is just one side of the coin. Being a homeowner can open many investment opportunities and become the basis of your future wealth and financial freedom. Email me at ask@50doors.com if you'd like to learn more

Tax Saving on Steroids: Better than RRSP

Two years ago, I had a great job. I loved it. In fact, I loved my job too much.

I'd wake up at two or three am in the morning a few times a week to get some work done, while it was still relatively quiet and almost nobody else was working. I'd work through the day, and then put in a few more hours right before bed time, usually late at night, after my kids and my husband fell asleep.

I loved the job. It felt like a game. Loved solving puzzles and moving up to the next level. I was addicted. 

I was a conscientious super star at work and a dedicated WORKAHOLIC

Once, I even managed to impress the CEO and the CFO. I doubled an important business metric while holding an interim job for a quarter, in addition to my own regular job. I got a performance bonus! Hooraaah! That felt amazing!

Extremely shocked was I when only half of the bonus got deposited to my checking account. How could that be?

The answer was simple: Taxes.

Blinded by Success

Blinded by Success

That was the first time I actually noticed the impact taxes made on my net pay.

That same year happened to be the year of the highest earnings I ever achieved being a full time employee. I was really proud to be in a high marginal tax bracket.

Taxes didn't hurt. On the contrary, I was certain that it was a good problem to have:

The amount shown in Box 22, Income Tax Deducted, Line 437 of my T4 slip felt as a badge of honor.

I felt successful.

That year I finally saw the benefit of contributing to RRSP. At the very last minute just before RRSP contribution deadline,it occurred to me that for whatever contribution I can make, I'd get almost half of the money back as a tax refund.

For every RRSP dollar that'd be deducted out of my earnings, I would put 50 cents of tax refund back into my pocket

Wow. I got cash advances on several credit cards and took some money out of my TFSA and made my first ever RRSP contribution, which ironically became my last RRSP contribution as well.

Bingo! A couple of months later, taxes were filed and almost half of my contribution came back. I paid back the cash advances. "Wow! I rock," - I thought looking at my RRSP savings.

Unbearable Tax Burden

Stressed. Depressed. Overworked

Some time has gone by. It became obvious that I couldn't keep working 16 hours a day. I was exhausted. Tired. Depressed. Rock bottom was approaching fast.

I remember the day when I gave up.

I was driving to work in the morning. This was the forth 20-hour day in a row. Tears were running down my face.

Why am I even doing it to myself?

Is it worth it?

The recent performance bonus felt like a mean prank now.

I felt like a failure. I knew that this was the end of my career. I didn't make it to the top.

I thought again about my performance bonus slashed in half by tax and many thousands of dollars of tax I paid that year to CRA.

I thought about 50 cents deducted from every dollar. 

50 cents from every dollar that I made during those horrific 20-hour long days and short four hour nights when my dreams were a continuation of the previous day's train of incoming emails, never-ending meetings, and insurmountable workload.

Every minute my brain kept persistently telling me "Why are you doing this to yourself? Stop! It's not worth it"

Finally I heard my own subconscious scream for help. I knew I wouldn't last until retirement at this pace. I'd just collapse. This wouldn't be the first time when I'd have a break down and have to take a stress leave to recuperate.

Enough! I am not going to drive myself into the ground. I gave my notice and quit working.

The Best of The Two Worlds: High Income, Little Tax

The irony is that if I worked smart, rather than hard, I would have had time to learn that there were ways to minimize tax. 

I could have had the best of the two worlds: high paycheque and little tax.

Alas, I missed my chance.  I am sharing my knowledge with you, a successful high income earning employee, who works smart at a fun interesting job and wants to find a way to pay less tax.

The Best of The Two Worlds: High Income, Little Tax

This is all legal. This is all risky. You should do your own research, due diligence, etc. and check with your accountant. 

The steps are simple in this Tax-Optimization Strategy:

1. Work smart, earn a LOT and get into high (or preferably highest) marginal tax bracket
2. Invest in a flow-though fund that's eligible for up to 100% tax deduction and get a tax refund, which basically reduces your capital at risk by 50%
3. Convert your income into more tax favourably taxed capital gains, essentially reducing tax by 50%.

A sample calculator and a detailed example of how flow-through fund works can be found at Maple Leaf Short Duration Flow-Through fund website here. 

I am a big proponent of tax saving strategies. I was thrilled when I learned about this flow-through tax optimization and investing strategy a few weeks ago. 

Certain alternative energy projects
are qualified to issue flow-through shares

Keep in mind that the window to invest in flow-through shares is very short: late fall to early December.

If you'd like to discuss or learn more about this topic, please send me an email or post below. All questions, feedback, ideas are welcome. 

Discovery of the Year: Passive Income Exists! and why I say so

Lo-o-o-o-o-ng road to Financial Freedom

Up until very recently, I thought that 4% return on your money was a GREAT deal.

In fact, I believed that anything better than 4% was most likely a SCAM.

Given this information, my freedom seemed practically-unattainable:

My financial freedom was THREE MILLION dollars away

3 million @ 4% = $120,000 / year = $10,000 / month

Imagine, how HAPPY I was when I learned that there are 

NUMEROUS LEGITIMATE WAYS

to make more than 4% on your money! 

How about 6%, 8%, 12%, 17 % or even 20+%?!?

With higher returns, the path to financial freedom is much shorter! 

For example, at 8% return, financial freedom is

1.5 million away:

1.5 million @ 8% = $120,000 / year = $10,000 / month 

Discovery of Private Exempt Market

During summer, I started investing in what is called private exempt market. I learned about this type of investing from a good friend, whom I met at a networking event about a year ago.

Investing means lending your money to someone who will use it to create value and pay you your money back with a profit.

You have to remember that investing can be risky - you can lose time, money, go through a load of stress, etc.

This is why there's a whole slew of regulation around investing in private exempt markets, which is in place to protect consumers (aka you and me) from making bad decisions and getting themselves into financial trouble.

Private market means all non-public businesses, from mom-and-pop-shops to huge private enterprises.

Exempt means that there are rules for investing into these private deals.

You have to meet one of the exemptions to qualify. 

These exemptions are governed by law. Their purpose is to protect the consumers from financial losses, which they can't withstand.

Up until a couple of years ago, only accredited investors were qualified to invest in private exempt market and private companies could not advertise investment opportunities to non-accredited investors.

Accredited investor is someone who meets at least one of the following criteria:

• Earns more than $200,000 per year before taxes
• Together with spouse, earns more than $300,000 
• Owns more than $1 million before taxes of financial assets but net of related liabilities
• Owns more than $5 million of net assets 

Needless to say, the whole concept of private exempt market was invisible / forbidden / unattainable to average middle class professionals because most of us don't qualify as an accredited investor, so we fall under the protected class.

I personally had no idea about these deals. Protection worked :)

The Good News!

The good news is - the legislation was updated and we now qualify and can learn about investing in private exempt market. 

Here is the recently added Eligible Investor exemptions:

1. Owns $400,000 or more net assets
2. Earns more than $75,000 per year before taxes 
3. Together with spouse, earns more than $125,000 

Lastly, there is one more exemption - Any Investor!

Legislation still protects us by setting the limits of how much Eligible and Any Investors can invest.

Yet, we all now have an opportunity to invest into many of the same deals that accredited investors have been investing into. And I bet, most accredited investors wouldn't be too thrilled investing into something like this, which I constantly see in my Facebook feed:

This is NOT a good deal.
Hope you aren't clicking on ads like this one...

My First Two Assets in Private Exempt Market

11% vs. 3.2% - Gets You There Faster!

I invested in two private exempt market deals so far. Here are the key reasons why I chose them:

1) Like the horse and bet on the Jockey 

• I educated myself about the details of the project and understood it. I checked with people who are a lot smarter than I will ever be.
• I am very clear about the business model, project plan, exit strategy, and underlying securities 
• Most importantly, I verified the track record of the Jockey. I know that they’ve done what they are about to do over and over and over and over again successfully. 

2) Operating within my comfort zone

• Using RRSP money, which will not be available to me anyways for a couple more decades 
• NOT putting all my life’s savings into a deal all at once - I allocated two chunks and spread them across two independent projects 
• Selected projects within the real estate niche, which I'm familiar with
• Am comfortable with the timeline and the fact that my money will be locked for 3-5 years

3) Trust but verify

I chose one asset with frequent cash distributions and another one with higher return and longer waiting period.

The former pays investors quarterly. I chose it because I wanted to see how the asset works start to finish, before looking for any other deals.

I got my first quarterly deposit! Over $900 dollars - a single quarterly payment covered my family's internet for an entire year. Not bad!!!

The best thing is this income was purely passive.

I can imagine how much work it has taken the private business to generate this return.

For me, it is truly passive - zero effort - 11.06% annualized return.

Now, that I've completed this small proof of concept, the sky is the limit :)

Hope this blog post helps.

I wonder if you knew these deals existed and 6, 8, 10, 17% or 20+% passive return was achievable? 

What was your experience? 

Feel free to leave a comment below! 

Financial Freedom Blueprint Gets You There Faster!

Financial Freedom Blueprinting! LOTS to think about!

Do you ever wonder if you are on the right track? 

Do you ever question your past decisions? I do!

Recently I partnered with a company that creates professional Financial Plans.

Working out the first draft of my financial plan took a lot of pondering, discussion, questions, answers, assumptions, frustration, and so forth.


Once all data has been gathered and finalized, we entered it into the financial planning software.

The program ran through hundreds of calculations and applied a few algorithms to project the value of our estate, upcoming tax obligations, assets, liabilities, cash flow, savings, etc. for years to come.

Within seconds, I got to see:

• how much money I'll have when my kids grow up
• upcoming periods of cash surplus and shorfalls
• the size of my future estate 
• my future TAX liabilities!! 

Amazing! The Financial Plan instantly gave me a visual summary of my financial future. It also helped me assess my progress towards my goal to be Financially free.

Just to give you a taste - below are some sample charts I pulled out. This is using dummy data.

What Will my Net Worth Be?

Here's a sample graph that shows a Net Worth forecast.

Red bars show liabilities. Black bars are total assets.

What will my Estate be when I turn 80?

Here's a sample estate summary  - you can see it for any point in time!

Analyzing Financial Plan

The next step is to review the initial outlook. Analyse it. Consult with experts, run through a few scenarios, and create an action plan.

The biggest and most obvious issue in my personal financial plan is insufficient liquidity.

Most of our assets are hard assets. Therefore, our long term plan shows that we should work on a strategy to acquire liquid assets, and focus on creating additional streams of passive income, as well as converting some of the hard assets into liquid.

This is not a surprise! In fact, we are currently approximately 66% done with our original passive income goal, so there's definitely room to improve. 

However, it was surprising and rewarding to realize the long-term effect of our efforts so far. Even though there's still lots to do - the plan shows that we've accumulated a lot of value, which will continue to grow with time.

Financial Freedom Blueprint

I'm so-so happy to continue to work with the Financial Planning team to build out a few scenarios for the future and incorporate upcoming actions: acquisitions, re-finances, exits, addition of new asset types, and so forth.

There are a few forks in the road when it comes to building wealth. 

Each of the scenarios we've prepared shows me a different path forward. 

So all of these scenarios together become a part of my financial freedom blueprint. 

Having an accurate and validated plan adds a LOT of clarity to my action plan. 

There's no reason to constantly question myself - the road ahead is clear.

Instant Return on Investment

Ready for the Winter

The townhouse I acquired with a serious discount last month, came with no heating.

The previous owner removed electric baseboards throughout the house and used a gas stove in the basement as the only heat source. She was saving considerably on the monthly utilities!

My brother-in-law being extremely frugal as well is another person I know who uses a wood stove to heat his entire house!

However, I don’t think I’ll be successful finding tenants who’d be thrilled about a similar set up.

Most tenants would be looking for either baseboards on every level or a gas furnace. I don’t blame them!

Can you imagine starting a wood stove early mornings when it’s 30 degrees below zero?! 

I was debating between installing new electric baseboards or using the opportunity to upgrade to a gas furnace. I decided to get quotes and work timeline for both options and go from there.

My amazing property manager received several quotes from multiple reputable vendors. Now, we knew that the costs would be as follows:

1) Electric baseboards: $6,000
2) Gas furnace including ducts: $9,000.

Instant Return: $9,000 makes $4,000 = 44% ROI

A local appraiser let me know that the price of the property would go up by $15,000, conservatively, once the gas furnace is in place. This is a $4,000 net gain on a 9K investment.

44% return - not bad, eh?

An additional benefit is that the property will look more attractive to potential tenants. Many families prefer gas heating, as it typically costs less than electricity.

This property is a condo town house. I learned from the condo manager that, before making any updates, I am supposed to get approval from the Condo Board.

Getting Board's Approval 

The approval process turned out to be much smoother than I expected. I received an “Alteration / Renovation request Form” form from the Board. Then, completed this form and returned the following to the Board before their scheduled meeting:

1) Completed Alteration / Renovation Request form
2) Photos of the locations where the contractor will core through the brick (with the area circled)
3) Contractor’s WSIB eClearance Letter and Insurance Certificate.

My property manager helped me with all three of these!

The Board confirmed their approval and we now have all the work scheduled.

I am very grateful to my Property Manager and his team. 

Can’t wait to start looking for a tenant! I’m sure they’ll love this home and enjoy being warm and cozy during the winter.

Million Dollar Decision: Spend or Save?

Balancing Act! Spending vs Saving

Recently, I ran across a fantastic company. I loved their business model.

The team their helps Canadians take control over their finances and build passive income. Most of their clients achieve the following objectives:

1. Pay off their bad debt within about 30 days
2. Create about a $1,000,000 investment portfolio within 8-10 years
3. And all this, without sacrificing their current lifestyle. 

I am starting to work closer with this firm, to learn more about the specific software program and approach they use to achieve such tremendous success. I can see how this process will benefit many of my readers.

Wouldn’t you want to have a million dollar portfolio!?

This afternoon, I worked through my own numbers and a couple of scenarios to see how I can use my primary home plus leverage to build up my passive income.

I'd like to share my notes with you. It’s amazing how the decision to hang on to current lifestyle affects the long-term outcome!

The Formula

Step 1) Re-finance your primary residence to extract as much equity as possible. Pay-off all high interest rate bad debt and invest the rest.

Step 2) Repeat step #1 above three times: today, then in 3 to 5 years, and then again in about 10 years.

Assumptions

Below are the key assumptions I made when working through my own numbers. These assumptions are reasonable in my particular case.

Your situation might be different, so please adjust and feel free to post questions below the post:

• Property appreciates steadily at 5% a year
• At first refinance, my mortgage interest rate will increase from 3.15 to 4.5%
• Mortgage interest rate will remain at 4.5% for all future years
• I will be able to re-finance up to 75% loan to value every five years
• My portfolio will be invested with an average 11% annual return.

Scenario 1: Keeping My Lifestyle

After each re-finance, I’ll spend all of the passive income.

It is important for me to use the extra disposable income right away.

Outcome

• Fifteen years later, my net worth will be $770,000.
  
• My investment portfolio will be $383,000, producing $42,000 of passive income a year. This income will not be enough to cover my annual mortgage principal and interest payment of $55,000.

Scenario 2: Extreme Frugality

After each re-finance, I’ll find a way to reduce my day-to-day spending, so that all of the passive income goes right back into my portfolio. 

As a result, my disposable income will get smaller with each refinance, yet my portfolio will grow very fast thanks to the compounding interest.

Outcome

• Fifteen years later, my net worth will be $1,307,000.
  
• My investment portfolio will be $1,001,700, producing $110,000 of passive income a year – more than enough to cover my mortgage payments of 55K. 

Know Your Options - Make Conscious Decisions 

These two scenarios show you the full spectrum of possibilities.

The first scenario best fits those who appreciate today and live in the moment. It shows that with some effort put into making your equity work for you, you can build some wealth while enjoying some extra passive income.

The second scenario emphasizes the importance of being conscious about the impact of compounding interest over a long time. If you can be frugal – be frugal! This will pay off over time and you could be on the road to creating a multi-million-dollar portfolio and hundreds of thousands in passive income!

Whichever point on the spectrum of options you choose, it's extremely important to know yourself well, evaluate the possibilities, and go for whatever plan you believe fits your needs and desires best.

How to Stop Living Paycheck to Paycheck

2012 was the year my husband and I  decided to take control over our financial destiny.

At the time, Anton worked for a small start up. The start up didn’t make it, so Anton had no job and no income.

I was running a small consulting firm – we implemented Human Resources systems for companies around the world.

I was a workaholic and drove myself into the ground – I was extremely exhausted, depressed, and had to close the business.

You know what? Our three kids couldn’t care less that we didn’t make any money. They still wanted to eat, drink, do sports, buy Pokemon cards, etc. It was pretty horrible!

That was the rock bottom for us. 

So we made two decisions:

1. We decided to write our resumes and get ourselves proper jobs. Like grown ups do.
2. We decided that we will find a way to make sure that this type of financial disaster never-ever-ever happens to us again

 That’s when we realized that we had absolutely no idea about money.

We knew very well how to spend it. But that was it!

So we started educating ourselves.

Some of you might have heard about the Law of Attraction and Bob Proctor.

Bob Proctor is considered to be one of the world's greatest authorities on attracting wealth. What he says is

 “Thoughts become things. If you see it in your mind, you will hold it in your hand”,

- Bob Proctor 

Maybe it was the law of attraction, or maybe I was just click happy on the Internet.

But one day we got a call from Rich Dad Poor Dad coaching team. So Anton and I signed up for an 8-week real estate training program with Rich Dad Poor Dad.

Taking that course and committing to do as we were taught, was one of the best decisions we ever made.

We learned about assets.

An asset is something that puts money in your pocket. 

I’ll show you an example later.

We learned that to become financially independent, you need to acquire assets. Assets will work for you and put money in your pocket. If you own some assets, you’ll have income from them and you will no longer be at the mercy of your employer or your next paycheck.

We also found out about liabilities.

A liability is something that takes money away from you.

For example, traditionally, we think that our house and our car are assets. 

But the reality is that both of them are actually liabilities.

That’s because we have to pay money to maintain them every month - mortgage, insurance, utilities, gas.

Here’s an example of an asset.

This is a small house in Chatham, Ontario.

It rents for $800.

All expenses add up to about $700.

Cash in your pocket is $100 every month.

By show of hands. 

Who would like to have an asset like this? Right, most people think that 100 bucks isn’t worth the effort. 

Audible, Netflix and a Sushi Buffet for up to 4 people cost about $100 bucks.

All three of these liabilities together can be covered by the cash flow from the tiny Chatham house we looked at earlier.

You can look at it this way: if you stop going to work and never get another paycheck, you’ll still be able to afford Netflix, Audible and Sushi.


Let me ask you now. Who would like to have the tiny Chatham house, so that you can get free Netflix, free Audible, and free Sushi for the rest of your life?

Based on the concepts we reviewed:

Assets put money in your pocket. 

Liabilities take money away from you.

The formula to financial freedom is: 

Acquire assets and eliminate liabilities until the cash from assets covers all the expenses from your liabilities. Then you are financially free.

Time to Collect Your Money

As I summarize in the 1-minute video on the left, last Sunday I woke up to an email  from Shopify with the subject of... drum roll... champaign bottle pop... hold your breath...

Time to collect your money

"Hmm. Really?!? " was my first thought.

My strategy is always to expect the worst. This approach helps me keep going and not take disappointments to heart. So, I told myself to chillax before clicking into the email.

Chillax is my new favourite word by the way. I learned it from my kids. It means exactly what it sounds like: calm down and relax.

And being as calm as I could be, I clicked into the email, which told me to finish my Shopify Payments setup to get paid for my first sale.

So, it was official: my online store had its first sale! I had my first customer who bought several digital products at 50 Doors. Yay! It worked!! I couldn't believe it.

My new online asset is starting to put money in my pocket. To be specific, here's how the math looks:

$20.00 from customer - $5.68 to google ads 

= $14.32 profit

As you may already know, asset is something that puts money in your pocket.

The theory is that if you own enough assets, the money from all of them will add up and cover all your expenses. 

Once that happens, you can consider yourself infinitely wealthy. 

A wealthy person has assets working for him or her. Per this definition, the wealthy can live forever without relying on going to work to make money. 

To measure how wealthy you are, just think how long you can survive for without working. 

My starting point was 30 days - simply because I lived paycheck to paycheck. I am still not a lot more ahead, but making some progress. 

My husband and I set out with our 50 doors goal: 50 assets, each putting $200 dollars a month into our pocket, so we have about 10K a month to feed our (always hungry) family. Boys sure do eat a lot!

There are many different types of assets. In my mind, the major categories include: 

1. real property
2. businesses and 
3. financial assets.

Real Property Assets

The basic idea is that you own something tangible and get paid for letting others use it:

A house, car, vending machine, solar panels, fancy suite or dress, a parking spot, etc. 

Take an object, find someone who'd like to borrow it, lend it and collect cash.

Business Assets

Business is a system set up to solve a problem for a profit. 

Find something that will help others around you. Figure out how to attract people in need of the solution that you are offering and help them at a profit.  

This is what I hope my website is doing. It is helping people educate themselves and get their first real estate investment property in Canada smoothly.

Financial Assets

I recently came across this table (source: Desrosiers Automotive Consultants Inc. (“DACI”):

Automotive revenue in Canada 

What struck me is in the column highlighted with blue. Let's take 2015:

Imagine all the factories building new cars: that's 32% of revenue

Imagine all the dealerships selling used cars: that's 18% of revenue

Imagine all the servicemen helping us repair and maintain our cars: 10% of revenue.

Now think about the money we borrow to buy all of the above:

Automotive finance produces 

the biggest chunk of revenue: 

40%

The point is that money can easily become one of your assets as well.

There is unlimited number of opportunities around you to put that asset to work for you. Examples include investing in private businesses, mortgages, equities, bonds, etc.

What I am now finding out is that you don't need a lot of money to start. You can make each dollar that you don't spend become an asset that works for you.

The trick is to educate ourselves, so that we can make decisions and balance risk and reward in each project. Then, act on our knowledge and get in the game.

Interested? Hesitant? Afraid? Let me know your thoughts in the comments below. I can't wait to hear from you.

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