Have you ever questioned just how much cash you'' ll requirement. to retire conveniently? Preparation for retirement can be challenging, but knowing exactly how much you require.
Let'' s explore the elements that.
Welcome you aboard for this episode of Finance Ark! On this network, we dove in on a.
trip into the substantial realm of economic issues, where we guide you via every step of.
the process as well as help you in browsing the difficult globe of finance, from straightforward.
budgeting suggestions to advanced investing techniques. So, grab your life vest and.
get aboard the Money Ark! Figuring out just how much cash you'' ll requirement. to retire depends on various elements, such as your preferred retired life.
lifestyle, expected life expectancy, rising cost of living, healthcare prices, and also.
Protection, pensions, as well as financial investments.
Once you have an approximation of your. retirement expenses as well as revenue, you can calculate the distinction as well as determine. exactly how a lot you ' ll demand to conserve to connect the void.
Monetary specialists often suggest that you aim. The real amount you ' ll need to save can differ. Consider consulting.
you desire on your own during your gold years when making retired life strategies due to the fact that it might be. different from your existing lifestyle.If you plan to take long trips, buy a second residence, or engage.
in expensive pastimes like golf, you ' ll requirement to put even more cash apart. Developing a retirement budget plan to.
estimate prices for housing, transport, food, healthcare, as well as pastime can be helpful
. Once you ' ve evaluated your retired life expenditures, develop a plan to conserve for your retired life goals..
You might'increase your contributions, purchase assets with greater returns, and even prolong your.
functioning years.By interacting, you can establish a personalized retirement that takes.
right into account your one-of-a-kind goals as well as circumstance. Let ' s start intending currently, and also make sure that.
your retired life is delightful and also hassle-free. Second', anticipated lifespan: Your retired life cost savings.
require to last you via your gold years, and with individuals living much longer. and also healthier than in the past, it ' s crucial to intend accordingly. That ' s. why it ' s crucial to consider your expected life expectancy when identifying just how a lot. you ' ll need to save for retired life.
Health care costs often tend to climb as you age,. Additionally, rising cost of living can considerably. To make sure you have the funds necessary to.
In this manner, you can consider all the various'components. that go right into identifying just how much you ' ll demand to save.With mindful planning and saving, you. can take pleasure in a safe and secure and comfy retired life. Third, Rising cost of living:
When making retired life. plans, you'must take inflation right into account due to the fact that it has a long-term propensity
. to reduce the value of your sources. It ' s important to invest in assets that.
can remain up with or outperform inflation, such as equities and real estate, to battle.
Additionally, it ' s critical to remember. To make certain you ' re still.
You can make sure that your cash holds.
The typical couple retiring at age 65. This price consists of expenditures such as health and wellness.
insurance policy premiums, deductibles, copays, as well as out-of-pocket expenses.While Medicare.
is offered to individuals aged 65 and also over, it does not cover all medical care costs. Supplementing Medicare with other insurance options may be essential to fully. cover healthcare expenditures in retired life. Health and wellness interest-bearing accounts ( HSAs). allow pre-tax contributions to meet medical care expenses in retirement, as well as. it ' s vital to assess your healthcare protection alternatives as well as ensure that you. have enough insurance coverage to meet your demands. By factoring in healthcare costs when planning for. retired life, evaluating health care coverage choices, and also benefiting from interest-bearing accounts as well as. various other financial investment opportunities, you can assist make certain that you have the financial resources. required for a comfortable as well as secure retirement.Fifth, potential unanticipated costs:
. unanticipated expenditures are a truth in retired life, and also it ' s vital to be prepared for them. Whether it ' s a vehicle repair, a medical costs, or a residence repair service, unexpected expenses can rapidly. build up and also diminish your retired life savings. One means to plan for these expenses is to.
develop a reserve right into your retired life savings plan. A reserve should.
be separate from your other retirement cost savings and also quickly obtainable in case of an. emergency. You can start by reserving a section of your income every month as well as gradually.
Professionals suggest having three to 6 months '. It ' s also crucial to have a contingency plan.
By having a backup strategy in position,. you can assist guarantee that unforeseen expenses don ' t hinder your retired life strategies. Preparation. for unanticipated costs might seem daunting, however it ' s crucial to have a proactive. technique to your retirement financial savings plan. This consists of regularly
reviewing your. costs, savings, and also financial investments to make certain that you ' re on the right track to fulfill your.
retirement goals.With careful planning, you can prepare for unforeseen'costs and enjoy. a comfortable and economically secure retirement. Remember that retired life planning is an. continuous procedure as well as that putting in the time to take into consideration all the variables that may. have an effect on your retired life savings will certainly assist you appreciate a positive and also safe retirement. Begin making prepare for your
gold years early,
regularly evaluate them, as well as take. effort to do so. You may enjoy your effort ' s rewards as well as retire with peace. of mind if you have the right strategy in position. Are you prepared to take control of your funds?. Register for our channel for more suggestions on financial savings and financial investments. Don't fail to remember. to turn on notifications so you never ever miss a new video. Allow's grow. our wealth with each other! Remain tuned!Read More
hi i'm clark and today i'd like to talk to you about money goals and little everyday choices that can help you lead a successful life for those of you that aren't familiar with our channel we normally do videos on how to sail and uh wonderful places that we go to my wife and i sail a 50 year old sailboat we travel all over the world this video is going to be a little different this is a little more personal this is me kind of telling you my story of how i was able to retire young and lead this life i hope it could be inspirational to you even from a very young age i have wanted to live an intentional life i didn't necessarily have the name for it back then but i wanted to live honorably i wanted to live on my own terms i wanted to live in a way that was right but not in a way where i was following the herd not in the way that i was doing what other people wanted me to do lately there seems to be a trend for people to live a little more frugally a little lighter on the world uh you see that with tiny house people my wife used to do that you see that with us cruisers we live out here uh quite lightly um it's and i see that with a group that's referring to their idea as fire f-i-r-e stands for financial independence and retire early it's kind of all the same thing make some money don't spend everything you make don't live paycheck to paycheck so that you can be free and not live a life where you're just accumulating stuff to to impress others or impress yourself the minimalists are kind of doing the same thing though maybe they're not working so hard to retire young but they're still kind of trying to spend less and not accumulate stuff as their personal badge i've been living this way for a very long time if you're contemplating a lifestyle change in this direction i thought it might be helpful to see what happens when you've done this for like 30 years let's start out with my story i grew up in a farming town in northern new york state my dad was a barber my mom was a secretary when i was first born and became a stay-at-home mom later on she got a degree and became a school nurse we didn't have a huge amount of money we had enough though we always had food we always had shelter we never had worries but we just didn't have enough to have that new fancy car and trendy clothes and it just wasn't our thing to try to keep up with the joneses i'm really glad i was raised that way after i finished college i found a job locally in northern new york it wasn't a great job it's not a really industrial or technological part of the world and i do tech and also it was the middle of the recession in the 80s this recession was bad the unemployment numbers were worse than the 2007 recession that well wiki calls the great recession so it was the job i could find i um was a little bored with the job and it didn't pay very well because that job was so boring um i started uh consulting during the day i started meeting with local businesses and uh showing them how to use a pc pcs had just come out i mean they were the first ones uh but right along with the first pcs were the first clones so i would show them they could save a lot of money by buying a clone i'll help them buy them i would write custom software for them sometimes sometimes i just show them how to use word processors but anyway um it taught me that i could be a consultant basically i didn't have to necessarily work for a company with a paycheck i did a little better i bought a sailboat i bought a 25-foot sailboat and i i never owned a sailboat before i'd only been sailing like twice in my life at that point i worked at a kids camp and found some sailboats and ended up teaching sailing that was the first time i ever did it but sailing really intrigued me so i bought this boat and i'm sailing it around lake ontario and one day i found myself out at some little island on lake ontario alone uh no friends came that day and i'm reading a magazine cruising world i think it was and it had an article on the economics of well living the lifestyle i have now and i realized it's achievable it you know it's it's a big deal but it's not something that can't be done i knew i was gonna have to work hard i knew i was gonna have to take some risks but i became kind of a goal for me to try to retire young and get out and see the world on these terms it was it was really important that article changed my life so pretty short order after that um i found a contracting gig in austin texas i helped ibm develop os2 i quit my day job big risk there because i was just hired to come and do if they didn't like me they would kick me out but there was more money and it was a much more interesting project that one went well um i started doing some other projects and next thing you know my client list was ibm boeing starbucks uh a t a bunch of other ones you haven't heard of but doing interesting things i was successful by basically anybody's standard and i didn't quite live like other people who were doing what i was doing i was still a barber son i really didn't have this concept that money was happiness that stuff was happiness for me money was uh freedom chips a way to to not have to work later i had this saying that if you make more than you spend you're rich and if you spend more than you make you're poor and the scale of it doesn't matter this is before donald trump was president or anything like that he was like my poster child of how not to live to be in bankruptcy every five years you know it didn't matter if he was doing it at the million dollar level as far as i was concerned he was poor i tried to be rich so i lived on the rich side of that i put money away and i invested it and i set myself up to be able to retire young but not to say i didn't spend anything when i was 27 i sold my 25-foot boat and i bought a larger one i bought the one that i'm well sitting in right now uh i spent 55 thousand dollars on her uh she's um she can cross oceans she is a very sound hull but she was in bad shape so i had to tear her down and build her back up it took about eight or ten years of work while i was working and during those eight or ten years i did a lot of work on myself too i prepared myself for this long voyage one advantage of buying a boat as your well obsession or hobby is it can be home so i did save some money uh by not having an apartment anymore i just moved right aboard the boat of course the boat and its slip cost what much more than the apartment but i was gonna have the boat anyway so i tried to save money any way i could in 2000 i was 36 years old and i realized i had enough not enough in frustration i loved my job but i had enough money put away i had enough to achieve my dreams and i wasn't going to just keep chasing something uh so the right thing for me to do at the time was to close down my corporation right at the height of my income and take off sailing it was a wonderful time to be an engineer there was the tech boom going on it was really great closed it all down got in my boat and went south literally within months the tech boom bubble crashed the market dove i lost so much money in the market but since i had this minimalist mindset and since i really was living on very little money before when i was saving i just tightened my belt stayed at this lower income level as it were and wrote it through since i didn't spend spend my principal it came back it took a while but it came back the point is i was able to live on very little and actually out sailing was easier because there weren't commercials in my face saying buy this be happy buy this be happy i had a beautiful dive to go down and look at fish that costs nothing over the next 20 years i sailed this boat twenty thousand ocean miles i visited fourteen percent of the world's countries i had some amazing adventures uh because of the decisions i made in my i've been able to live a life sailing i've been able to visit the warm parts of the world get close and personal and meet other cultures hang out with some really cool people now in 55 um i've got friends who are still working and hoping to retire i've got friends that didn't make it to retire they're dead they're never going to have these adventures i'm so glad that i made those decisions in my 20s and i stuck with them in my 30s and 40s and it's given me such such a wonderful life i want to encourage you regardless of your age to live your best life come up with a plan and stick with the plan i can tell you that little everyday choices can make a huge difference in adding up to a wonderful life how do you do this where do you start i started with something that i call the economy of enough the economy of enough boils down to two things number one understand your goals what makes you happy what will make you happy you're thinking about your whole life here for me it was having financial independence and having the freedom to go off sailing for you it's going to be something else but decide what that is you have to choose something that's actually achievable if it's not achievable you're never going to get there and you have to find it exciting if it doesn't excite you there's no sense living a life without passion choose wisely you only get to make this choice once it's just not going to be time to restart once you have an achievable exciting goal that's your definition of enough it's enough to make you happy it's enough to give your life meaning and it's enough to keep you going most importantly it's a point that you can reach if you don't have a definition of enough you're cursed to chase more and more is just never achievable without that definition of enough knowing and knowing that you've succeeded to get to it a million isn't enough 10 million isn't enough the whole world wouldn't be enough you need to have your own definition of enough to find happiness number two commit to making daily choices that will let you get to your goal this is how you're going to use a little of that chasing more to get to you're enough if your life goal requires any money at all and let's face it they all do you're going to need some money achieving my goal of retiring young and finding financial independence had a lot to do with my saving and spending habits most of what i'm going to talk about now is about saving money how to build wealth through delayed gratification what do i mean by that let me first tell you about marshmallows there's a really well known and simple psychological test that's given to kids and it's like the best indicator of how well they'll do in later life it's called the marshmallow test and how it works is the the researcher gives this little kid a marshmallow and he says you know like this is your marshmallow you can eat it you can do whatever you want but if you don't eat it and i'm gonna leave the room for a bit and if you don't eat it when i come back if you still have the marshmallow i'm gonna give you another marshmallow now this is a really cool test you can just google it look it up on youtube and it's fun to watch because it's little kids trying not to eat marshmallows the point is though that the kids that can delay gratification the kids that don't eat their marshmallow are the kids that later on in life can like not have that five dollar starbucks coffee because they can know five extra bucks in my schwab account it's gonna mean like ten thousand dollars when i need it it's just the way you should live life it's so telling of a test if i had kids i'd give the kids the test and i'd use it as a training thing i'd just give them the test occasionally until they got it until they realized hey if i don't eat the marshmallow i get two marshmallows i think it would train a kid later in life i think in our society most people eat their marshmallows right away and i'm gonna teach you or tell you how i anyway got to financial success by saving marshmallows by putting off these instant gratification purchases and saving the money for when i can do really cool stuff with it and have freedom let's talk about the way to save up some marshmallows number one we're going to talk about work when it comes to work choose a profession that you're good at but choose a profession that is something people want and choose something that pays well many minimalists think that money just doesn't matter and they go into jobs that just don't pay well it's important to actually make money if you're going to follow this model while you're young in a small amount of time or you're not going to be able to retire young so again find something that people need do it really well and demand a fair payment for your efforts the world basically doesn't need another waiter what we need is a welder there's always a demand for welders you put six months into learning to weld and you're gonna get paid well bottom line understand the economy of what's valued out there and pursue a career that will let you maximize your income early the next topic is savings you need a long-term savings account for your retirement and you need a short-term working savings account just to live off of whenever money comes in pay yourself take some of that money and put it in that long-term savings once it's in there it's invested it never comes out again until you are retired you don't say there's a big expensive toy i want it i'll use that nope that money is is just locked your short term account is what you need to live on you shouldn't be going paycheck to paycheck you actually should be moving using money in that account that's a little bit old uh if you're spending everything in that account you're doing it wrong you you should have enough left over in this account to actually slip some more into that investment account when you do write that check to yourself because you save some money on not buying a latte or whatever you should feel really good the brain chemistry you make in this is an important part of it you should celebrate when you're able to put more money in that long-term retirement account let's talk about spending you should decide what you can spend based on what you need not based on how much money is in your account you want to avoid lifestyle inflation especially when you're 20s and your 30s your peers are going to start spending a lot of money around you you're not keeping up with them you're living a different life avoid the temptation to spend that extra money to show your success live below your means you've got a longer goal in mind let's talk about skills our society spends a lot of money on convenience basically paying for other people's time part of saving money is learning how to do stuff for yourself for example your car needs an oil change you can pay someone to do it but you can do it yourself and once you've done it you now know how to do it trust me it's trivial brake pads same thing really really easy job you can do it in the driveway someplace once you've learned to do that you've kind of got the confidence to start learning to do other things the more things like this you put in your belt the more things you know how to do yourself the more you can save keep this up and eventually your collection of skills become vast you can take better care of yourself with less money let's talk about food you can save a lot of money by eating cheaply i've done it to get through bad times but it's no way to live life what i'm suggesting here is just don't blow money on food you can save a lot of money by learning to cook yourself it's another skill just like your car and it'll save there's a lot of other ways to save money pack your lunch don't order coffee on the way to work don't go to restaurants as much buy a steak at home learn to cook it well when you do go out to a restaurant order water instead of some crazy drink and whatever you do don't buy bottled water if the restaurant's water isn't good enough to drink why are you eating their food it was made with that water emily and i love to throw dinner parties and that's kind of how we get that food being better feeling not going out to a restaurant and paying someone to carry food to our table but making food for friends and sharing it with them and then they reciprocate and we have much more intimate wonderful evenings that way bottom line is you eat three times a day it's a really big opportunity for savings even saving a dollar a meal adds up a lot over the long haul let's talk about housing housing is a really major expense it's probably your largest expense and because of that it's an opportunity to save a lot of money there's a lot of people out there that kind of organize their whole life around owning some big crazy expensive house they spend 30 years paying for it and it owns them because housing is such a big expense it's your biggest opportunity for savings i saved a lot of money by living on my boat i was going to own this boat anyway it was my obsession if i had this boat and tried to keep a house or an apartment that's that's a lot of money so i lived on the boat emily my wife uh she did it a different way she's a tiny house person so she lived in well tiny houses you probably know what those things are if not look them up that's pretty cool she minimized her housing expenses by like literally minimizing her house and she had the advantage of just not having a lot of room to collect stuff much like on the boat it's liberating probably those two approaches aren't right for you but there's going to be something that's right for you some way of savings living a little bit outside of the city can save a lot of money or even living in a in the city but in a less expensive neighborhood without hoa fees or a bunch of joneses to keep up with you can save a lot of money in your housing and if you live outside of the city you avoid the temptation of spending money on nightlife there just won't be as much out there emily and i live on a boat anchored in a beautiful natural bay and that decision has turned our living expense at least the housing part of it to zero bottom line rethink the size location and format of your housing you might be able to save let's talk about cars cars are like the most rapidly depreciating item you'll ever buy it's a big opportunity to save money buy an older car and learn to maintain it yourself buying a brand new car is just throwing money down the drain that doesn't mean you can't drive a nice car i drive what is probably one of the best luxury cars ever made and i bought it at 65 000 miles for four and a half thousand dollars emily has a car that's older than her but it's a really cool car and it's it's fun to drive if you want to know more ask in the comments i won't get into the details on the cars here bottom line don't buy a new car buy something that's like 5 years old but make sure it's a really good quality car nobody wants a 5 or 10 year old kia but an old mercedes or a porsche that's still a really good car and there's a lot of good choices in the middle also learn to maintain your own car we talked about that in the skill section there's a lot of opportunities to save money taking care of your own car if you stick with an older inexpensive car you really don't need to carry collision insurance i mean you can literally just buy another one for what the collision would cost in like two or three years just stick with the minimum liability that your local government requires and you're going to save a lot this list could just go on and on but there's one more thing i want to talk about that's relationships it's very important that your long-term relationships are compatible with your goals if you live with roommates or have a lot of friends that don't share these goals it's going to be difficult to keep frugal likewise if you're in a relationship with someone that finds joy by spending and chasing more it's going to be doomed to failure either you're just not going to make your goal or the relationship's going to suffer emily and i were both married before and probably the biggest problem with both of our relationships were our partners didn't understand enough they were still chasing something they didn't understand when at least we felt we had found enough so bottom line try to find someone to share your life with that understands and agrees with your idea of living frugally it can make life a lot better and of course when you get to the point of deciding whether you want to start a family that makes a huge difference financially you can live frugally with kids but understand whatever you do your costs are going to grow and you're going to lose a lot of control over your life in the u.s it cost a quarter million dollars to raise a kid to adult age and our population is booming the planet is full take that into consideration if you do decide to have children have a small family and by all means give those kids the gift of letting them understand enough and find joy in enough the biggest thing about the concept of enough is this one day if you do everything right and you meet your goal you'll be there realize when you're there stop just don't keep striving for things and position when you've got enough you've got enough now it's time to live for yourself this sounds trivial this sounds like duh you know but it isn't um i know the stress i went through when i retired i couldn't identify because it seems like everything was perfect but society had raised me to keep wanting to keep striving i stopped and it took a couple years to feel good my wife emily is running a corporation right now she does management consulting she's not going to be doing that forever and she's starting to think about shutting it down and she knows and she also knows because i've told her it's going to be stressful uh prepare for that achieving is addictive you're going to want to continue to try for more it's like natural probably the human condition but when you're there take some time to [Music] to live for yourself and you can always go back to work you just really deserve to try the other way for a while once you've achieved it let it feel good everyone should have their own philosophy if my concept of enough rings true with you use it it's yours if not try to find something else but leave that leave that intentional life have intention and how you want to live i hope sharing my experience has allowed you to feel maybe a little less alone and more inspired to lead your own better life thanks so much for watching if you enjoyed this video please hit the like button share it with a friend i really want to thank you guys for watching the guys that subscribed thanks a lot uh and really special thanks for those of you who've decided to be our patrons on patreon um we never really thought that would happen uh it was it's quite exciting to see the support come in thanks again bye [Music] you
So you've save save save your whole life and then it comes time to retire and you've got to start spending that money down well for many baby boomers spending that cash isn't as fun as they thought it would be Matt Deaton of acute Wealth Advisors he is here this morning to explain and Matt is one of the valleys leading financial advisors he and his partner Damon they have a weekly retirement radio show and they help folks prepare for retirement and Matt it's it's mind boggling really when it comes time to actually go out and spend the hard-earned money that you've worked hard for you said that some people can't do it they're they're fearful why well part of its they've they've developed habits of saving their whole life and now it's time to start spending I've got this client that I'm working with right now she had hurt us at one of our workshops and she came in and she was currently being with her advisor once a month because she was so worried about her money she had just retired she didn't know what to do and as she talked and she talked through these things I found that she was basically paralyzing or spending she just really didn't know what to do she I told her I said you have some investments but you don't have a financial plan you don't have a plan for how you're gonna spend this money and so you're really really scared about it oh yeah and so so we're working with her to kind of put that plan in place so that she can you know and she doesn't have to meet with her advisor every month right and be worried about this that she can go out and enjoy retirement all right so how do you suggest that those folks out there who might be like her how do they overcome their fear well I think there's a couple things number one I think knowledge is power the more you can understand about a subject the better and so we believe when we sit down with someone to educate them and teach them and so we spend the first few appointments just talking and educating about those the other thing that we have started to do is we've started to do these college courses okay so we hold these courses that's a community college close it's two nights it's for two hours each night so it's not long it's not extended but it's enough time to go into depth on these classes in this subject so that people can now own their finances because now they can learn about fees they can understand how to analyze their statements all these things that people get petrified and worried about that cause the issues when they were and so this to our class it's two nights for two hours it's a I mean are we you're teaching us basically how to spend so we're taking notes oh there's a workbook we're gonna teach people how to maximize their social security so the first thing we're trying to teach people is how to get the most out of their money okay but then once you understand that you're gonna know okay this is the money I need to set aside for the income I'm going to need ten years down the road but this is the money money I can spend now so I can have some fun while I'm young and I'm healthy and I can move and I can go on the cruise and all the things you've been doing so it's it's a it's a course that just starts from the basics and builds on them alright so after we finished this two-day course you've given us a plan of action our distribution plan do you suggest that we update that oh absolutely so just because you go to the one class or just because you've sat down with a financial advisor at one time you cannot just stop there you need to continue to develop and make changes to that because things are gonna change your health is going to change your spending is going to change and so you need to make adjustments to your financial plan and I would have to imagine that after they have this plan that they the fear is lifted a little bit absolutely because again instead of just having investments you have a plan and so if you're an emergency and you have a plan a lot of the fear goes away you know what you're supposed to do that class and go gosh darn it I gotta get out there and enjoy my retirement well that's all probably overwhelmed and and excited well she's turning to become more excited you know she's been overwhelmed she's been fearful now she's starting to get where she's like okay I can really enjoy the travel I don't do it I can do it and I think that you know that fear is normal because we're not getting the income anymore so we don't want to stop our current lifestyle right great information well let's give you some information let's to give you the tools that you need to enjoy retirement if you want to learn more you can attend that upcoming two-day educational course that we were just talking about hosted by acute wealth advisors there are two courses that you can choose from in October now one is going to be held at Mesa Community College the other at Glendale Community College and if you call in the next thirty minutes you're going to receive 50% off the tuition for that course so it's half off four eight zero six two zero six nine zero seven is the number to call spaces filling up so be sure to reserve your seat today acute wealth advisors they have offices across the valley for your convenience learn more by visiting acute wealth advisors dot-com
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How can I replace $70,000 a year in annual income with rental properties that is the subject of today's video hi everyone I'm Clayton Morris the president of Morris invest let's dive into it so how do we replace seventy thousand dollars a year in annual income with passive income with rental property income from tenants every month providing cash flow from the properties that we own you might think that that sounds like a tall order but it's not and I'm going to show you how simple it can be to actually replace that annual income you know a little story about me that's in fact how I got started I was frustrated sitting down with my wife one night I said we were frustrated with our bills and I said how come at the end of the month where we still have more bills to pay and we don't have enough paycheck to cover it aren't we doing well what are we doing wrong the problem was that we weren't putting the money to work for us to start creating cash flow in our lives and creating passive income so I put together and it was really the foundation of my freedom cheat sheet it's the number that changed everything for me by the way that link you can download a free pdf it's like three pages long sit down with your husband or wife and go through it totally free the link is right below this video and it'll walk you through step by step with some numbers and figures on exactly how to figure out how many houses it will take for you to recover that annual income but I want to tackle the $70,000 question specifically most of the houses that I buy and that my company rehabs and sells are in that forty to forty five thousand dollar range okay single family homes two bedroom one bath three bedroom one bath and some duplexes okay duplexes or you know door on each side typically and two bedrooms on each side or three bedrooms on each side those are the types of properties that I buy now I buy them low and I fix them up and I place a great tenant in the property each of those properties will cashflow about $700 let's just say for round number $700 okay now think about how much is $70,000 a year how much are you probably making per week well let's bring out the calculator so $70,000 a year let's divide that by 52 weeks that's about thirteen hundred and forty six dollars a week that you are earning from your paycheck okay thirteen hundred and forty six dollars a week so now let's figure out how many houses it would take us to replace seventy thousand dollars a year in passive income seventy thousand dollars right it's a simple formula if each of our houses is bringing in seven hundred dollars a month that's a simple formula right seven hundred times 12 gives us $8,400 okay now let's take that 70 thousand dollars and let's divide it by eighty four hundred that's eight houses that is eight point three properties eight houses bringing in seven hundred dollars a month now imagine if you're buying a forty thousand dollar house if you had to bring a little bit of money to put down as a down payment or deposit you were able to reach out and get private financing or seller financing on a property then you're able to accrue these properties very quickly now some of the things I didn't talk about in this video and I can dive a little deeper now that we always want to take out money for for vacancy and repairs on our numbers right so that eighty four hundred dollars a year let's multiply that now times point six so we're gonna remove forty percent for vacancy repairs and expenses this is just to be totally conservative with your numbers so let's take that eighty four hundred dollars and let's multiply that times point six so we're bringing in about five thousand and forty dollars per property per year okay so now let's take that five thousand and divide it by seventy thousand so this will be a totally conservative number but this will help us really make sure that we're totally covered should something go wrong maybe we have a vacancy for a few weeks or a month or two in one of our properties this will take in that into account so seventy thousand dollars let's divide that by five thousand forty that gives us thirteen point eight properties so let's round that up fourteen properties fourteen properties would bring you about seventy thousand dollars a year in net income that would replace that $70,000 paycheck that you're making every year then in other videos in this series I'm going to go through exactly how to find properties how to acquire properties but just for the sake of this video I wanted you to start to put your mind in a place where you can begin to reverse engineer that number for a lot of people you don't think that you're going to be able to create passive income or bring in that much cash every year hogwash I do it hundreds of thousands of other investors out there do it every day they do it exactly the way that I do it some buy residential properties some buy commercial properties it doesn't matter it can be done that's what I do I'm Clayton Morris
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