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How’s it going everybody this is beat the bush today i’m going to talk about ten levels of financial independence now most people are not even shooting for financial independence but if you are you’re gonna realize that as you progress towards financial independence you’re gonna pass through ten distinct stages before you actually get there now it’s important to
Divide these into ten different stages because becoming financial independence is a many many year journey so then if you have a shorter term goal you can shoot for that and then you can pass one stage at a time today’s video is sponsored by text now as you know i carry an iphone 5 with a free service with voip service now i miss a lot of calls so therefore i have to
Revert to using chat messages most the time text now has a low cost service that does use the cellular network this phone over here is called the lg trueview 5 it costs $30 to get this thing it’s a smart phone for $30 now they offer a 1.5 gigabyte plan for only $20 no contract and if you need more data they offer a 3 gigabyte plan for $28 a month if you’re currently
Using a high priced cell phone plan maybe it cost you 50 to $90 a month that’s a really high recurring cost and it’ll make it that much harder for you to become financially independent if you sign up with my signup code beat the bush you can get $20 off i’ll leave a link to their website down in the video description below now to become financially independent
You progress through many different levels the first level is bankruptcy now not everyone is gonna land in bankruptcy at all because sometimes you might be a dependent and then switch right over to the next level without ever becoming bankrupt but if you manage your finances incorrectly or perhaps something unfortunate happens that could push you back all the way
To level 1 where you’re actually owing a lot more money than you actually have level 2 is dependents where you’re dependent on a guardian or your parents for your housing and your basic daily needs now in order to pass level 2 you have to move out if you don’t it means you’re relying on someone else for your housing costs level 3 is break-even and amazingly most
Of america operates at this point where you have a job you bring in just enough money to pay off all your bills you might owe you know a big car loan 30 thousand dollars or something but the monthly payment is only let’s say $200 but let’s say you make $1,000 but you can completely cover all these monthly bills but then you have a really large amount that you owed
For student loans car loans everything else it just means that you make it enough to pay the monthly bills on all these debts level four means you completely paid off all your high interest debt including credit card debt personal loans and also car loans now once you pay off all these loans maybe you have an apartment or maybe you have a mortgage you’re going to
Have more and more of a surplus of money so that you’re gonna look at this student loan and go man it just kind of gets in the way because it keeps on asking you for money every single month so you have enough money to completely cover the student loan so you just take this money and completely pay it off level five is when you do not have a student loan at all
Level six is when you own a home but do not have a mortgage because you completely paid it off as you work you’re gonna manage your cash flow really well so that you collect more and more cash so much so that you can pay more into your mortgage so that you kind of shrink it more and more and over many many years you’re going to completely pay it off once you do
This is when you are at level six now why do i say owning a home is important for financial independence now you do not completely have to own a home as long as you bring in enough cash to pay for rent if you choose not to own a home however most people that are financially independent choose to own a home outright because it lowers their recurring expenses every
Single month if you have no mortgage that means you have many many thousands of dollars freed up every single year that you do not have to worry about pain this means that you really bring down your monthly burn rate so you only need very few dollars in order to sustain yourself now at level six you do not absolutely need to physically pay off your mortgage if
You have enough cash on hand to be able to pay off your mortgage you are at level six level seven is wealth building time you might already built up a good portfolio already but it’s not large enough so that you can live off of if your burn rates about twenty thousand dollars without housing now because you own your own home you still need five hundred thousand
Dollars of investable assets sitting there so that the appreciation and the dividends can pay for your twenty thousand dollars of expenses every single year now five hundred thousand dollars is a lot of money and depending on who you are and how much your income is it’s gonna take years in order to build up a portfolio that big so level seven is basically a spot
Where you’re trying to increase your investable assets or you’re trying to increase your cash flow so that it kind of balances out what your burn rate is level eight is bare bones financial independence is where your residual income coming from real rental properties from royalties or maybe stock appreciation and dividends all these things that you know require very
Little work in order to collect the people call it passive income if this passive income completely covers your bare-bones needs then you are at level eight level nine is what most people would like to get and are striving for is financial independence with your current standard of living now you can imagine for someone that has a really really high standard of
Living that they’re just living the life they earn a good salary however they spend it all that means their residual income needs to match that amount in order to keep that lifestyle so if your bar is this high it’s gonna require a lot more investable assets in order to have enough residual income or passive income to be able to meet this need this means that the
Higher standard of living that you have the longer you have to work in order to collect as much investable assets so most people if you’re trying to retire early you lower this bar you lower your burn rate in creative ways that means you can retire all that much earlier and become financially independent now level nine is an interesting position because if you’re
Financially independent and you don’t actually have to work you are still going to be doing something hopefully and i advise people to you know kind of go do what they’re after what they’re interested in and when you do this you’re gonna find that this activity it’s gonna generate you more money so i think if you do it properly you’re just going to earn more and
More money even though you don’t need it this means that you’re gonna progress over to level ten the ultimate find ancho independence position where it completely satisfy your current standard of living and you have more because you have more you can use it as a buffer room where you can use it as a safeguard against you know falling out of financial independence
Because of some incident or whatnot or you can relax a little bit and not push your expenses so hard and try to reduce your burn rate so much you can you can relax a little bit increase your expenses a little bit to match whatever additional amount that you’re bringing in so i hope you enjoy this way of thinking all these different levels of financial independence
When you break it down into distinct levels like this it makes the nics goal all that much easier and gives you a vision of where you need to be and what you need to do in order to get there don’t forget to give me a like on this video comment down below let me know what level you’re in i have to say that i did make this video before except there were a lot of
Questions in the comment section saying oh what if you do this and this before this other position and maybe if you don’t own a home at all can you be at level six even though you have no mortgage it means you know you’re right at level six even though you didn’t do anything it’s really much harder than that i anticipated this thing meaning that you own a home in
Order to progress down through those levels if you find out somehow you skip the level and somehow you satisfy something later on you’re at the lowest level that you skipped if you’re interested in supporting my channel check out my audible link down in the video description below where you can get a free audio book and you don’t like this audiobook you can cancel
The subscription before it ends and you don’t have to pay a thing and yet you can keep this audiobook for life and you can kind of listen to it on your commute double do to your time so that you don’t waste it while you’re doing your commute if you’re interested in supporting my channel directly or getting some help with your credit score or your finances check
Out my patreon page over here and as always don’t forget to subscribe to my channel over here and click that bell icon next to that subscribe button so that you get a notification whenever i upload a brand new video thanks for watching oh and for some of you that think i keep on farting when i’m sitting on this couch now this time i’m going to get off this couch
I’m gonna push this right here and you know it’s this part right here that’s making this farting noises see this is not me no one can fart like this consistently on cue no one has this much gas you know maybe i can like put some baby oil on it and then maybe the sound will go away
Transcribed from video
10 Levels to a Financial Rockstar By BeatTheBush