July 14, 2022

JF2872: Financial Freedom — Should You Stop Working? | Passive Investor Tips ft. Travis Watts


 

 

Passive Investor Tips is a weekly series hosted by full-time passive investor and Best Ever Show host, Travis Watts. In each bite-sized episode, Travis breaks down passive investor topics, simplifying the philosophy and mindset while providing tactical, valuable information on how to be a passive investor.

In the first episode of Passive Investor Tips, Travis explains what financial freedom is, how to determine the amount of money you need to retire, and how to know when (or if) you should stop working.

 

1. What is financial freedom? 

Financial freedom, or financial independence, is achieved simply when you have more passive income than you have lifestyle expenses. For example, if you earn $10K per month in passive income, and your lifestyle only requires $7K per month, congratulations! You have financial freedom.

 

2. Retirement is a dollar amount. What’s your number?

Travis views retirement as a dollar amount rather than an age. It’s possible to retire in your fifties, forties, or even thirties. The real questions to ask yourself, he says, are: (1) How much is enough for you? And (2), Should you stop working if you happen to have enough?

 

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3. What would you do if you didn’t have to work?

Travis encourages anyone seeking financial freedom to consider if they enjoy what they do for work actively. “To me, my mantra has always been that passive income allows you to do more of the things you love and less of the things you do not,” Travis explains. 

He recommends walking yourself through this exercise: Imagine you earn $10K per month in net income from your current job. Now, imagine that you have $10K in passive income being deposited into your bank account whether or not you work. Would you quit your job? Switch to part-time work? Pivot careers? Take a sabbatical? 

It’s important to be able to write down, discuss, and articulate your answers to these questions before moving forward on your path to financial freedom.

 

4. Should you stop working?

Ultimately, the answer to this question depends on you, your lifestyle, and what you want to spend your time doing.

 

 

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TRANSCRIPT

Travis Watts: Hello, everybody, and welcome to the very first episode of Passive Investor Tips. I'm your host, Travis Watts, I'm the former host of the Actively Passive Investing Show, here on Best Ever. Very excited to be releasing this new segment in this new series with you; we have finally concluded 100 episodes of The actively Passive Investing Show, so now we're making a pivot to this new series.

Passive Investor Tips has always been my Instagram and Facebook handle, for those connected with me on social media. And the purpose and intent of this series is to paint the philosophy and the mindset, and to give you tactical, valuable information on how to be a passive investor. Not everybody wishes to be a full-time passive investor like myself; some folks are part time passive investors, some people are just looking into it for educational purposes, or for diversifying their portfolio... The way I like to think of this is it's like a free coaching or a free mentorship program, we're going to have a dedicated playlist on YouTube, for those of you that are more visual learners. And of course, there'll be the audio version on bestevercre.com as well.

These episodes are going to be great, to the point, very quick. If you happen to be waiting on a meeting to start, you happen to be doing a quick commute, you just have 5-10 minutes of time and you want to tune in to the Best Ever show, this is going to be the show for you. So that's it for the backstory. I'm going to dive right into today's first topic, "Financial freedom - should you stop working?"

The reason that a lot of us are investing, whether we're passive or active, is to have an ultimate goal of financial independence, financial freedom, retirement, whatever you call it. The way I look at it is retirement is a dollar amount, it's not an age. So it's more than possible that you could retire in your 30s, your 40s, your 50s, and the old 65 and a half or 68, or whatever it is doesn't have to be applicable in your story. So the question that we're trying to answer is how much is enough for you? And see, we're all different.

And the other question is "Should you stop working if you happen to have enough?" Let me quickly define FI or financial independence through the way I see it. It's that you have more passive income than you have lifestyle expenses. So the simple math is, if you have $10,000 per month in passive income and your lifestyle only require 7000 per month, you have financial independence.

Break: [00:04:45.24] to [00:06:32.03]

Travis Watts: So we're all going to have different numbers. I've spoken to thousands of investors at this point; some people's number is 50k per month, some people's 10k a month, some people's 4k a month. It all depends on you, your needs your lifestyle, how you want to live. So here's what I want to have you consider - do you enjoy what you do for work or actively? Because here's the thing at the end of the day - why would you stop doing something that you love? To me, my mantra's always been that passive income allows you to do more of the things you love and less of the things you do not.

You see, there's very little difference between winning the lottery, like so many of us daydream about, and actually having financial independence. At the end of the day, you have more money than you need to support your lifestyle. So let's paint a practical example here. Let's say that currently, at your active job or career, you earn $10,000 per month in net income. Now let's say you have $10,000 net income being deposited automatically into your bank account, whether or not you work, aka passive income. Now, this is where we all differ; you would have some folks who quit their job because, quite frankly, they don't enjoy the work that they do. You would have some people that would just simply continue working and use the extra income to do whatever with. Some people would switch to part-time work, so it's not necessarily that they don't enjoy what they're doing, they're just overworked. Some people would pivot careers, try something new. Some people might take the opportunity to take a short sabbatical, maybe six months off, and then return to the workplace. We're all different. So I encourage you to think, what would you do?

This exercise in episode number one is simply to get you to open your mind a little bit, to start writing down and speaking out about the things that bring value to you, the things that you love and enjoy, and the things that you don't. We need to clearly be able to articulate that to move forward. And that's why I start with this in episode one, to start opening our mind in our context.

So the answer to today's question of financial freedom, "Should you stop working?" is quite simply that it depends on you. I'm gonna leave you today and throughout the week to think on that. I encourage you to write it down, talk it through and clearly articulate that for yourself.

I'm Travis watts. You're listening to our brand new series, Passive Investor Tips, exclusively here on Best Ever. I look forward to sharing more with you in episode number two next week. In the meantime, like, subscribe, comment; let's connect on social media. Have a best ever week, everyone!

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