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 this episode, Travis discusses how passive income can be used as a way to enhance your lifestyle. He explores whether it is possible to increase your happiness with passive income by sharing his journey from being a W-2 income earner to a full-time passive investor and how it has impacted his own life.
Click here to know more about our sponsors:
Travis Watts: Welcome back, Best Ever listeners. This is another episode of Passive Investor Tips. I'm your host, Travis Watts. I appreciate you being here and tuning in. Passive Investor Tips are short episodes dedicated to the passive investor; we talk about philosophy, mindsets, strategies, tools and tricks to help you along your investing journey.
This episode is called "Money doesn't make you happy, but can passive income?" That's the question that we're answering today, with the disclaimers, as always, I'm not a financial adviser; I'm not telling you or anyone else what to do. Please do your own due diligence research and seek your own investment advisors.
So we've all heard the saying money doesn't make you happy, which in a general sense, or in a simple sense, I tend to agree with. After all, money is what - it's just pieces of paper. So what's the value in just collecting pieces of paper, or putting your money in the bank, or looking at little blips on your computer screen go up and up and up until the day you die, and then you're gone, right? So passive income is a bit of a unique spin on this topic, and the way I look at passive income is it's a way to enhance your lifestyle. So with that, let's explore if it's also possible to increase your happiness along the way.
So I shared a story in the last episode about a time in my life where I had about $20,000 in gross income for the year, and I didn't have any passive income or investments to speak of. Now, I wasn't necessarily the happiest person in the world, but if we really dive into why that was, it had a lot to do with my very limited lifestyle. So a few examples include that I love travel, and I wasn't able to do that, because I had to cut back on the budget, I wasn't able to go on fancy date nights, I drove a car in the Florida heat that didn't have air conditioning for years... I would sit in traffic and take the long route everywhere I went, because I couldn't afford the toll roads... Slept on an air mattress for a couple years, because not only could I not afford a mattress or a bed, but I also had to think about when I move, because I was renting other people's rooms in their houses during college, that I would have to move that; I'd have to then go get a U-Haul or rent a truck, and to me, that was just too much of an expense. And last but not least, I couldn't eat the foods I wanted to eat, so I couldn't be as healthy as I otherwise wanted to be. My diet really comprised of dollar menu stuff on fast food restaurant menus.
So all of these factors really narrow down to lifestyle... So if you think about it this way, if at that point in my life you had taken a million dollars and deposited it into my bank account, and I chose to either save that money for a rainy day or for retirement, or if I had chose to invest that million dollars into something that did not produce passive income, then nothing really would have changed in my day to day life. So in that sense, money doesn't make you happier. I completely agree.
However, years later, I got on the pursuit of chasing passive income and building up diversified passive income streams, and I've got to tell you guys, it was a complete game-changer for me. So I want to share with you a couple snippets from my story and from my journey. The first real estate deal I did - many of you have heard this story... I bought a townhome two bed, one bath, and I rented out a spare bedroom for $600 per month to a college student. This was out in Colorado. So that was the first time I was really introduced to the concept of passive income, and money I didn't have to necessarily work for. I was just handed a check at the end of every month for $600. So what I did is I used the $600 - this is the key - to increase my lifestyle. So a couple examples at that point in my life that I used that money on was eating a little bit better food, so that I could be a healthier person, and the other thing was upgrading my car to at least a vehicle that had air conditioning in it. So by nature, as you might imagine, I did get a little bit happier at that point in my life having those kinds of comforts.
So if we fast-forward a few years after that point in my life, my cashflow was roughly $2,500 per month, and again, I used the money to increase my lifestyle. I bought a nicer home, in a better neighborhood, that was further removed from the crime and things I had to deal with on a day to day, like having my car broke into... And I was able to upgrade to an actual bed and a mattress, which was super-nice for getting better sleep and becoming healthier... And I didn't have to exchange more time at a job that at that point I really didn't enjoy doing.
Break: [00:05:16.03] to [00:07:11.06]
Travis Watts: A few years after that my passive income finally exceeded my total lifestyle expenses, which is a miracle moment. It's what I call financial independence, or FI. And at that point, technically, you don't need a job, because you've just replaced your job with passive income, which sounds really cool, but here's the problem. I was young, I was single, I had no kids, I had no pets, I was unmarried... So I knew that I was going to have to keep going on this journey of building more passive income, to accommodate for inflation, and self-sustaining myself on private health insurance and things that I wasn't having to deal with in the moment, but would inevitably kick in down the road.
So if we fast-forward a few years after that point, I was able to do exactly that - I stuck to my guns, I stuck to my strategy, and my passive income inevitably grew as deals sold and turned over and I reinvested the gains... So I was able to finally get married to the love of my life, and then we were able to have a child, and now our passive income exceeds our lifestyle expenses by a pretty wide margin... So we're able to live the lifestyle that we want to live. But again, it doesn't mean to me that when you reach FI, that you just stop working, or that you never enter the workforce again. My wife still works, I still work, but we love what we do, and that's the beauty of it - we can free up our time to spend our time on the things that we love and enjoy most. I bet you listening right now - yes, you - have a particular skill set or a hobby or something that you would pretty much do for free, but I'll bet if you did charge for it, you could still generate income from it. So it doesn't have to be this rat race of making more and more money, but it could just be "Hey, I do enjoy doing this, but why not make a little profit at it as well?"
So looking forward, my wife and I, we still set goals for our financial future, and we're not too far off from actually achieving those goals... But instead of looking at it from acquiring more stuff, or what I call the success cycle, which means that every step you take up in the ladder of finance, that you just are acquiring more things and more liabilities, we look at it from a lifestyle perspective - what are the things that we want in our life to bring more happiness to us, or to make our lives easier? And that's a big difference. So for us, it's about travel, spending time with friends and family, focusing on projects that bring true enjoyment and fulfillment to us, rather than having to clock into the office nine to five, until we're in our 60s or 70s.
So again, it doesn't necessarily mean stop working at any point in your career or in your lifetime, it just means you have more flexibility and creative control over your time and where you choose to spend it. So that's what creates happiness for us. Not saying it's the solution for you or anyone else, but I can honestly say that we are actually happier having passive income in our lives. So with that in mind, hopefully, if nothing else out of this episode, you got a different perspective or a few things to consider when it comes to you, your lifestyle, your goals and your future; as I like to say, to your success, everyone, and thank you for tuning into another episode of Passive Investor Tips.
I'm Travis Watts. If we haven't connected, let's do it on Bigger Pockets, LinkedIn, Facebook, Instagram, like, subscribe, comment, share these episodes with anyone you think could find value in them... And don't forget to have a best ever week, and we'll see you on the next episode. Thanks so much for tuning in today.
This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.
The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.
No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.
Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.
The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.