As a young accountant starting my career, I prepared tax returns for a very nice retired couple. As very nice retired couples tend to do they told me the long version of their lives, and how they ended up owning over 30 rental properties. In retirement cash-flow from their rental portfolio exceeded $20,000 a month. It all began as they were beginning their careers as young school teachers. That’s right they weren’t doctors or attorneys, they were both retired school teachers. As they were starting off, fresh out of college, newly married they decided to save for a house. If they could just live on one income for one year they would have plenty for a downpayment. They were young, no family yet, hard, but doable. As they told the story they both had grins on their faces and sparkle in their eye remembering they joy of youth and the creative ways they made do that year. At the end of that first year they had enough to put a large down payment on a house and live happily ever after…
However, when the year was over they realized they had all they needed, and spending more money to buy nicer cars, or more TV’s wouldn’t make them happier. So, another year of saving passed and they bought their first rental property. A few more years passed, a few more houses were bought, and their real estate business was starting to turn into real cash each month. Somewhere along the line they had a couple boys, and although their household expenses did creep up, they were offset by income from the rental properties. Year after year passed and every year they bought a new rental property, all the way until they retired. I don’t know what their net worth was at that point, but these were two low paid school teachers that amassed a fortune by spending less than they made and investing the rest.
I don’t work with the school teachers anymore but I learned the greatest financial lesson of my life from them, and I think about them frequently. You can choose to spend your life working to earn financial freedom on any level of income. Or, you can choose to work your entire life spending more than you make on junk that looses it’s value and become a slave to debt. This is a choice.
I’ve followed the school teachers lead and I invest most of my excess earnings in rental properties. I focus on good affordable rental markets that haven’t become overvalued. Yes, those do exist you just have to do some homework. Or, you can buy that big fancy car that will impress the neighbors and another trip on the credit card and scrape by to make your monthly payments, the choice is yours.