Many young people these days can’t do without a “decent” car which normally is at par or better than their peers, a good smartphone, looking good, having food outside all the time and sometimes some branded stuffs to adore. There’s nothing wrong though, is sometimes good to pamper ourselves.
As soon as employment begins, it is also tempting to have your own home. In fact, is also good because attempting savings for your own home is better than those who spend all their salaries away without some savings.
Yet, once you get a home, a car and perhaps some luxuries of which a middle income person would think is a normal life, you are STUCK! What? Stuck? I have 2 precious assets now! I still need a roof above my head and transport!
Assets or liabilities
Well, you carry a 7-year hire purchase loan with another 30-year home loan, both of which will force you to work to pay the installments. Stop working, no money, no repayment, assets not yours anymore.
Call them assets but they are actually liabilities because in the rich-men-world, whatever that takes money out of their pockets is called liabilities. I don’t care whether is a property, a premise, a car – as long as money flows OUT, it is a liability.
So, what’s assets? Something that puts money into your pockets. Say, a property you rent out where the rental pays for the installments and all other expenses, even comes with some surplus (positive cashflow) monthly. Then is an asset.
Wait a minute but you just said a property is a liability. If you are staying in your own home, still paying your home loan every month, it is a liability because it takes money out of your pockets. But turn that property into income generating “machine” by collecting rental, that’s an asset – the surplus puts money into your pockets.
Knowing this very early helped me a lot. In fact, I can’t spend each and every cent that goes through my hands or bank account without having them invested in some kind of assets. I attempted to only spend money that comes from positive cashflow of my investments. But frankly, I’m in the spender category too.
So I rented a modest home and bought an old Iswara which carries only 4-year loan. I fully paid the car within 3 years and still drive until now.
Cut short all commitments
What basic needs do we need for a decent living, let’s see.
Bills – water, electricity, phone
I remember sharing a room with a friend at only RM200 per month. Then, we moved to a bigger place which rents at RM450 per month. Then I stay with my Dad at RM650 rental and now at a better home at RM850 per month.
The increment in rental already dug in to my nerves because to me, if I saved RM200 per month from rental, that’s RM2,400 annually for investments. Imagine if the investment grows 10% per annum, that’s extra RM240 annually.
Remember, if I stop working, I must have at least RM850 per month just for a roof over my head. How about car/petrol, food and bills? That’s a commitment!
Look, in the income list, there can be only that few but our expenses list can be infinite. Thus is very important to cut short all commitments including perhaps, having a partner in life!
Liberate yourself as soon as possible
Many people think of retirement as age – at 55 or 60. It took me a while to shift my paradigm after reading Robert Kiyosaki’s book. It says that as long as your passive income (income that comes in without working) exceeds your monthly expenses, you are retired.
With my very low commitments and sharing rental with my Dad, my monthly expenses was between RM1,000 to RM2,500. Rental incomes surplus and my other investments gave me RM1,000 monthly at that time when I decided to quit from a daily job. I began taking emcee jobs seriously (which I did part time for many years) which pays higher per hour, more flexibility and I had much free time for myself.
I quit my job in 2009 at the age of 30. It gave me freedom and much time to think and plan for myself. I have more time to spend on new opportunities, new ventures, looking for more investments and getting things done.
In year 2010, I wrote a book and launched it to promote organ donation. In 2011, I kayaked in a 300km expedition from Mukah to Kuching also to promote organ donation. 2012 I was approached to be a Parliament candidate in the general elections and I started a “Spread Love, Save Lives” organ donation campaign which signed over 1,000 pledges. 2013 was general elections and I stood as a Parliament candidate. This year is my spiritual journey. I’m participating in the nun novitiate program, going for 2 meditation retreats and a youth camp.
All these expereiences helped me grow as a better person than I was years ago. If I didn’t have the time freedom and flexibility (after quitting my day job), I will not be doing so much exciting and experience such adventures.
So whenever I heard a friend or family member says she is buying a new home with a 30-year home loan, renovating their homes at high costs (of which can be invested to grow) or getting a new RM150,000 car, I sometimes do not know if I should congratulate them or feel sorry for them having to work for at least another 10-30 years plus the money they earn must pay all these luxuries instead of being invested in growing their portfolio.
Of course, I’d understand everyone has different needs and for the route they chose, I wish them all the best.
Yes, I may not have luxuries of a new renovated big home or an expensive car which I felt could lock me in a job for many years to come. However, I have 3 rental generating properties which give me a net worth of RM600,000 (if I sell all the properties, the new big home and luxury car is affordable), a passive income of RM1,000-RM2,000 per month which support my simple life now and no job to tie down my time and freedom.
With the time and money I now have, I can find more investments and continue to grow and one day I will have both the luxuries (if I want to but I doubt I will want them) AND the passive income. Looking at most people retiring at 55, I quit my job at 30. I have just bought myself 25 years of freedom. To me the 25 years of freedom is worth much more than the luxuries that may make me stuck for another decade or so.
All the best in your journey of liberation!