There are two types of people when it comes to business, those that are owned and those that own. The person that is owned, has a job even though they are self-employed. They work for their company. Their company is not an asset because without them it is basically worthless except for the assets of the company. The only way the company makes the majority of its money is from their own effort.
A person who is owned is a slave to whatever it is that has them. Whether it’s a business, debts or a job, they have to continue to work because their master requires it
So to have true financial freedom one needs to own a business or businesses but can’t be owned by the business. Financial freedom does not require a person to own a business but instead assets that provide cash flow however the easiest most reliable path to financial freedom is by owning a business.
In my opinion, to be truly financially free you need three things, money freedom, time freedom and location freedom. I don’t believe you can be truly free without all three but you need at least two. Here’s why. There a lots of people who have money but they have very little time because they are owned by their business or the debts associated with their lifestyle. They are not free, they are slaves.
Then there are those who have money and the time to enjoy it but they do not have enough money to live wherever they want yet they are free. So a person who has time and money is free at a level that satisfies themselves and they are a slave to no one but they can’t choose to live wherever they want because that would consume too much of their resources. This happens to about 10% of all retirees. They have time and a fairly sizeable nest egg but not large enough for them to have location freedom. In most cases these people have someone else manage their money and they live off the interest. They chose an amount they needed to accumulate and a time frame to do so, and they are able to enjoy life. So even though they do not have location freedom they are happy and free because they have at least two.
On the other hand, if you had time and location freedom without money you would basically be homeless or on government assistance. The homeless person may consider themselves free and in a sense they are but many governments consider them a nuisance so they are constantly moving around and since they don’t own assets they are technically dependent on others to provide shelter in places like bridges, awnings, bus stops, subway stations etc. The person on government assistance is not free because they are a dependent.
Then there are those who have all three, time, money and location freedom. Their assets provide them cash flow month after month. They don’t owe anyone money or the money that they do owe is substantially less than their cash flow. I ask people all the time. Would you take on a debt that costs you $50,000 per month if the asset brings in $75,000 per month? Who would say no? I don’t think debt that brings in cash flow substantially above the amount of the payment is wrong but in all of my courses when I discuss managing profit you build a reserve and eventually eliminate all debt. If you would like to know what you can do to get on a path to freedom order my latest book, Intestinal Fortitude, it will get you on a path to true financial freedom by exposing many of the obstacles we face in life and how to overcome them. You can order by clicking here.
To your lifelong success,
David Mulvaney