How To Actually Retire In 7 Years (Starting With $0)

the average life expectancy in the United States is 77 years old so if you retire at 65 that gives you just 12 years to enjoy your life if you're lucky you get to actually enjoy that time if you're not and maybe your health is bad then you kind of just sit around waiting to die that sucks but it does not need to be this way in fact you can reach early retirement in as little as seven years without ever making that much money without ever having all that much money I know because I've done this myself so right now I want to break it down year by year exactly how to retire in seven years there are a bunch of ways to do this but this is the path that I kind of took but before we get into that I want to talk about savings rates real quick this is something I'm going to talk about later in the video so I just want you to understand this your savings rate and early retirement are completely linked unless you like just win the lottery or something whether you're making 200 000 whether you're making half a million a year or 50k a year doesn't matter savings rate's important if your savings rate is just five percent you'll be able to retire in 66 years and live off of that indefinitely so no bring it up to 30 you'll be able to retire in 28 years but get it up to what I was able to get it to which is 75 and you will be able to retire in 7.1 years you can actually do it faster than that but this is kind of based on if you wanted to have enough money that you could never work never earn a dime for the rest of your life then you're gonna need to make sure you're spending way less than your earning all right year one is going to be the most boring but also one of the most important this is where you you pretty much save money the first year I've done a bunch of videos on how to save 10K fast a bunch of different tips for saving money so I'm not going to go into all those here but pretty much you want to lower all of your expenses as much as possible you're housing your transportation your food cut out any spending anywhere you can because the first year your goal is to try to save around ten thousand dollars again you can check out exactly how to do that at this video here but that's your first year now we're on to year two and that is to keep saving money but also start a side hustle now at some point there's only so much money that you can actually save and that's why Ernie Moore is so important pretty much there are two ways to do side hustles one is to trade your time for more money exciting I know this would be doordash driving for Uber getting a part-time job all of those are good things personally I did Construction in the morning and then I worked my W-2 job in the afternoon and evening but all of those involved trading time for money so that's why I switched over to the second way which is to build a business for me that was starting a YouTube channel which I didn't make money on for the first couple years for you that might mean starting a small business selling something online ideally this would be something that you could do from a laptop anywhere which we'll get into later on in the video and that's really a slower way to earn money but in the long run it can really scale and you'll get to see some compound interest effects of it just kind of shooting off the maps after a couple years of laying groundwork super important to do if you don't want to try to save up like 1.2 million dollars cash in fact we're not even talking about the stock market in this video we're going a very different route now as you're earning all that money don't spend it don't invest it into the stock market put it into a high interest savings account and don't touch it pretend it doesn't exist especially with your side hustle income I save 100 of what I make on my side puzzle I just put it right into investing fund and what we'll talk about how to start investing in the next year the goal at the end of year two is to have 25 000 saved up from basically frugal living and side hustle you could also try to earn more at your day job but for the first two years especially you want to have consistent W-2 income because we're gonna need that now we're on to year three and you have 25k saved up and I know that doesn't sound uh like retirement but this is going to really be a compounding effect here this is where you get your first house hack so what a house hack is is you buy a two to four unit multi-family with a first time home buyer FHA three and a half percent down loan side note you do have to live in there for at least a year that'll be important in a second now at this point you're not going to have a lot of cash so something that I like to do and I've done with all of the people I help health hack so let's say a property is three hundred thousand you offer 310 000 with 10 000 back towards your closing costs in effect this saves you ten thousand dollars cash and puts it onto the loan which will be paid over 30 years and you're not actually going to pay that money so it pretty much just saves you 10K cash which is good because you're gonna have more money later on in life than you will right now so you buy that property you move into one unit you rent out the other two which will cover all your mortgages taxes and insurance if you buy the property correctly and you're going to save all of that money for what comes next year four scaling at this point your side hustle is up and going at least a little bit you're living for free you're saving money things are going good this is where things really start to happen I also believe it is the absolute fastest way to reach Financial Independence I know it was for me so this time you're gonna buy another hopefully three or four unit property with a first time home buyer loan for me I used a five percent down conventional loan for my second one most people think you can't use a first time home buyer loan twice but you can if it is an upgrade to your quality of living so that means there's less units in the building that you're moving to maybe from a four unit to a three unit or the unit is nicer it's bigger and it's in a better part of the neighborhood it just needs to be an upgrade to your living situation so you're just going ahead and moving again this year and then once you move out of your first property you're gonna rent that out you should hopefully start to cash flow anywhere from 500 to a thousand dollars per month from that first rental and now we're making progress now we're at year five we're getting closer here things are starting to happen you have a few options here on what path you want to go there's a million paths to financial Independence but I'm going to give you what I think is the best way by the way this is not Financial advice I'm just some dude on the internet I'm just kind of sharing things that I've learned so everybody's situation is different just wanted to throw this in here and by the way if you want to improve your finances don't forget to subscribe you can hit the little bell thing too anyways year five you can either house hack again if you want to or you can slow down a little bit and really start to optimize what you do have right now you're really going to be focusing on earning as much as possible a couple different ways this might be a time to really spend a couple months or even the full year and work on your side hustle really try to get that up and running making anywhere from like one to three thousand per month which after three to four years of having this running should be doable you can also optimize your housing by running Airbnb out of any of your units this doesn't work in every location ever but it works in a lot of locations for me I had a four bedroom unit that I added an extra bathroom onto so it was four bedroom two bathroom I split it up I ran four separate airbnbs out of that unit that I'll just had shared common space this allowed me to effectively double how much I was making in rent so for my second property I was paying about twenty six hundred dollars a month for mortgage taxes and insurance and between renting out the Airbnb and the second unit I was making about five thousand dollars every month from that after my mortgage it was about twenty four hundred probably a little bit less probably closer to 2 000 a month that I was actually taking in because of the expenses with airbnbs but still an insane amount of money that boost just comes as kind of like a side hustle where I have to take care of the Airbnb but I made like half as much as I was making for my day job just from running that Airbnb so that can be a really cool tool to boost your income really quickly year six again you're really focusing on building those income streams building possibly multiples if not really just getting your side hustle up and running aiming to try to get it to about five thousand dollars per month which after five or six years of starting some type of business should be doable that might be multiple small things it might just mean one big thing I would recommend reading the four hour work week again if you haven't read that I actually did a video on it this is the point where while you're trying to scale you're also trying to make sure that you can step away from those businesses they don't all come back to you while they're earning more it's not directly proportionate to the amount of time that you're putting in so as we move forward this year and next year you can scale from maybe working 20 to 30 hours a week on your side hustle down to five to ten hours a week we're now on to year six the last move although it's probably not going to be your last move I should have named this one better this is where you want to move to a more long-term location so we moved to this house here it's a single family with an attached dwelling so pretty much like a duplex because of that our housing expenses are about twelve hundred dollars per month which you couldn't get like the crappiest one bedroom in our city for like 1200 a month so that's gonna lower how much we need for our retirement by a lot when your monthly expenses are so much lower for this one I couldn't get another first time home buyer loan my wife actually got an FHA loan on this property so another three and a half percent down with 10K back towards closing exactly what we've been doing if not after a couple years of saving up you would have enough money to buy a home with a conventional loan about 20 down either way you're getting something that you're going to be comfortable living in for five to ten years hopefully if you really wanted to have more rentals you could have kept house hacking a couple more years and then get a single family and let those houses pay for that really just depends on how fast you want to be out of your job so now that you got this everybody's quitting their jobs again this is not Financial advice this is just what we did literally the day after we closed Meredith put in her notice and you got two rentals one of them running an Airbnb or not it's up to you earning you anywhere from two to four thousand dollars a month you got your side hustle making four to seven thousand a month and in effect you can be financially free if you want to this would be a lean fast way to reach Financial Independence you still have a job you're not retired you have that side hustle that you need to keep working on but you're working five to ten hours a week from your laptop anywhere you want it's really cool I get to work from anywhere there's so many different jobs that you can work from your phone from a laptop even if you have a physical business you can find employees and really start to to scale that out so you don't have to be physically present and you can live the life you want to live you don't have to wait till you're 65 you don't have to wait till you have a million dollars saved up you just need to sacrifice live frugally earn more invest intelligently which I think real estate is one of the best ways if we had to do this with the stock market would have been way slower still away a lot of people do it though and yeah you can really do stuff that you're passionate about if you want to start like a podcast that you're interested in maybe call it finances unfiltered with the link down below you can do that or you can subscribe to people's channels that give you useful financial information you can do whatever you want thanks for watching I'll see you next week

Channel: Gabe Bult

Views: 316,396

Keywords: how to retire early, retire early, passive income, real estate investing, financial freedom, financial independence, investing for beginners, financial independence retire early, how to be a millionaire, house hacking, frugal living, gabe bult

Id: lkBpALQ21m4

Length: 9min 52sec (592 seconds)

Published: Mon May 08 2023