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How to Retire at 40 and the Mistakes I made!

We all make mistakes. Sometimes, its easy to fix it and go back the right way and there isn’t much lost in the process. Sometimes, it can be too late. Time is the only thing that you can not control. Everything else – for the most part – is in your control.

If you ask any ultra rich person, they will tell you that the most precious thing in the world – even more than money – is Time. Once your time is gone, it doesn’t come back. So it is important to treat this precious gift wisely and use it to our benefit.

As I share these thoughts with you, I also want to share that I have been a culprit of not using time effectively. This is one of the main reason for me to share this story so that if you have time on your side, then you don’t lose it. Here I am summarizing some of the mistakes that I made, and how you can avoid them, to be on the path to achieve your goals.

When I was about 24 years old, one of my college seniors gave me a book called Rich Dad Poor Dad, by Robert Kiyosaki. I read the book from cover to cover and was filled with inspiration. My thoughts, my brain, were on fire and I was sure that this is the way to build wealth and financial freedom. I continued to read up on other investment books and gained more knowledge about stock market investments, real estate investments and such. I wrote down my goals in a journal. I started reading those goals every night and visualized myself having all those things I desired in my goals.

Walt Disney is known to have said – If you can dream it, you can do it. That is so true. I had the dreams. I did it. The only issue is, I didn’t do enough!

Let me explain. And before I explain the details, let me say in a nutshell, that “If you can dream it, You can do it…but You gotta Do it now!” Because time is not going to wait for you.

The financial freedom that I am on track to achieve in another 5 years, i could’ve achieved that 10 years ago, If I had only planned and executed those plan meticulously instead of just dreaming and waiting for things to play out. Don’t get me wrong, I got what I worked for, and sometimes much much more than what I deserved, by God’s grace. But I learned that If I had done a few things differently, I could have been more successful. And this “could’ve” regret is the reason I want to share this lesson with you so that you don’t repeat the mistakes.

Wherever you are in your life, I am going to make this simple and start from where I started. At 25 years of age.

If you start at age 25, first thing is to Save. Save enough that you can put a $10k to $20k downpayment on a real estate deal. Now, find a rental property that can bring in $1000 in rent, and you can afford to buy it, then Do it now! Don’t wait for things to fall in place or to learn before you act – Just do it. You have your whole life ahead of you, but time won’t wait. Once you take this first step, you’ll be learning on the job. And those lessons are more valuable than reading it in the book. Next year, at age 26, add another rental property with similar numbers. In this example, I am assuming that you are taking a 15-20 year mortgage on these houses and the rental is generating a positive cash flow – even if its just $1 after all expenses. Now, imagine if you did this every year, from age 25 to 40 – that is 15 years. Most of your properties that you’ve invested in, will be close to getting free, or out of 15 years mortgage. Lets just say even 4-5 of them are going to be free in next 3 to 4 years. If each of them is bringing in $1000 – thats $5000 in your pocket – as a passive income!

During all these years, you continued to do your job or whatever that you wanted to do. But you also continued to build an empire of rental properties that will set you free ! Now, this example was simple assuming you want to take small risks and not do this aggressively. But you are always capable to save more and may be do more than one deal every year – and that could set you free even sooner.

The formula is simple. Find out where you want to go. Put a plan on paper how to get there, and then Just do It!

Now coming to the mistakes part that I promised to share.

  1. Mistake#1 : Not starting early enough – As I mentioned earlier, I read a lot of books, learned and read about a lot of investment strategies. But when it came to actually doing the thing – getting a rental home; Investing and holding when needed etc. I didn’t take action on time! and thats a bummer because what I read and Planned on Paper, will remain on paper until I take action to get it done in reality. So, Don’t Procrastinate. Jump In. Do it Now. Time is not going to come back.
  2. Mistake#2 : Luxury vs Savings. This is debatable, depending on which school of thought you follow. I was in between when it came to instant gratification and delayed gratification. Also, sometime you need to be not selfish and do the things you need to do for your family. In the long run though, you should try and maintain a balance between leaving below your means, and enjoying the life. Yes, we need to think of delayed gratifications, but at the same time for the worry of future, you should not waste the present. I was more tilted towards enjoying the present – which some people may call a mistake if you have a goal to retire by 40. (Personal Tip: If I had chosen the delayed gratification path, I’d have retired earlier.)
  3. Mistake#3: Misplaced Focus. Again, this is dependent on person’s nature and preferences. I get bored too easily and kept shifting priorities. If you are not that kind, and can focus on one thing (e.g. one job/one goal) then it will be easier for you. I am in technology business, so for me, every-time a new tech came into market, I had to learn and grow in that space. In hindsight, I know a lot of technologies, but I could have focused on just one of them and continued in one direction. This would’ve given more extra time to focus on the early retirement goals.

To be continued…

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