The Flip Flop Lifestyle

Slavery is a topic that many people avoid like the plague but what most don’t realize or refuse to admit is that slavery is more rampant in this country today than ever before.  Of course, I’m not talking about iron shackles type of slavery - I’m talking about financial slavery.

What is financial slavery?   The opposite of slavery is freedom, so ask yourself, am I really free?  For most the immediate answer is “Yes, of course I’m free!”  But are you?  Are you really free to do what you want when you want to do it?  If you asked those same people whether they could jump on a plane this afternoon and spend a couple of weeks skiing in the Alps, more often than not you would hear “No, I have to go to work tomorrow.”  So if you have to go to work and you do not have the option of NOT going, your freedom is  limited.  As a matter of fact, you don’t really have any freedom unless your boss or your company decides to ALLOW you time off, and then you have to be back when and where they tell you.

The other aspect of financial slavery is being limited on what you do because you can’t afford it.  Maybe you’ve always wanted to explore the jungles of Costa Rica or even just learn to surf in Hawaii.  For many people, even if their slavemaster decides to grant them the free time they can’t afford to go anyway.  Lack of money is as effective a restraint as any shackles ever invented.

It is the same for people who own small businesses.  Many open their own business with the idea that it will give them more freedom when in fact they end up working twice as long and twice as hard as they would have in a normal job.  In a normal job you only have to work just hard enough to not get fired.  Since your boss pays just enough for you not to quit, it works out for everybody.  If you own your own small business, you actually have to work and work hard. But you aren’t free.  If you think you are in control, believe me that is an illusion and you need to seriously reevaluate how you look at things.

That very illusion is being shattered for many as we speak.  Over 600,000 Americans have lost their jobs so far this year and countless businesses have gone out of business.  The security that many of those 600,000 thought they had is gone.  The control that those business owners thought they had is gone.  The illusion has been exposed for many as of late - especially for those in the financial and real estate sectors.  The illusion is gone for entire countries who thought they had achieved economic independence from the United States.

So what constitutes control?  What constitutes freedom?  What constitutes financial independence?   Everybody has their own definition, but to me it is simple.  I touched n this briefly in the very first posts in this blog…  The minute that your passive or residual income meets or exceeds the amount you need to live and pay your bills, you have achieved financial independence.  The moment that you do not have to go to work to provide the necessities of life, you are free.

If you divide your monthly passive/residual income by the amount of your monthly bills you will come up with a number that can tell you exactly how close you are to being free.  We’ll call that number your Freedom Indicator Number. You want that number to be equal or greater than 1.  For example, say your monthly bills come to $3000.  If you have no passive income, your Freedom Indicator Number is 0.  If you purchase a rental property that has a positive monthly cash flow of $300,  $300 divided by $3000 = a Freedom Indicator of .1

To stay with this example, let’s say you added 4 more properties that all had positive cash flows of $300/month.  Now your passive income is $1500 per month.  $1500 divided by $3000 gives you a FIN of .5 and that’s much better.  Now, let’s say you also started in a network marketing company and worked at it diligently for a time and that started earning you $1500/month residual income as well.  That business plus your real estate investments would give you a monthly cash flow of $3000 and a FIN of 1.  Freedom.

The higher the number, the better off you are.  Believe me, if you had an FIN of 10 you would have some financial security - in the example above, that would make your passive income $30,000 per month, provided you kept your monthly expenses at $3000.  Which would be unlikely, but focus on getting the number above 1 and keep pushing to make it higher.  If you are going to have to work anyway, you may as well work at something that is going to keep paying you on a residual basis!

When you make the decision to become financially free, you will start to search for ways to create the passive and residual income.  That is the key to building wealth. I recently have had the good fortune to meet and become friends with a very wealthy individual.  I’ve learned a lot from him in the past two months and one thing that he told me stood out - he said “Steve, until you have residual based income in your life you will never become wealthy and you’ll always be working for money.”  It’s nothing that I didn’t already know - that premise was the basis for the start of The Flip Flop Lifestyle blog, but to hear it from an individual that has achieved it and has been living that life for many years really drove it home  for me.

This entry was posted on Thursday, October 16th, 2008 at 11:51 pm and is filed under Building Wealth, Personal Development, The Journey . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.