When To Buy Your First House or Asset?…

Each of us are at a different place in our journey toward achieving financial freedom and depending on “our place” depends on what needs doing “first” to greatly increase the speed at which the journey unfolds.

We have heard over and over that it is assets like property that give us the holy grail of income types called Passive Income.  Then there is the human desire and family pressures to also own our own home.

Kiyosaki talks about “your home is not an asset!” where he explains that if something takes money out of your pocket it is represented as a liability in your accounting books because it is not adding to your bottom line.  This analogy is true for buying your first home to live in AND your first “investment” home because if you invest your “capital” reserve into an asset that gives you a poor\lower return\negative(as in a home you live in) (in comparison to what something else could do) you are doing the same thing as buying something that in your books is actually not moving you forward at an appropriate inertia.

The key is understanding your current wealth “inertia”, and then being able to judge whether something is an improvement on your inertia, based on the effect it has.  To explain this we draw an analogy with a car.  Initially the car is standing still and is not moving toward its (financial goal) destination.  Then you put the car into its first gear and you start moving “forward” by making yourself more effective and enabling yourself to acquire passive income generating assets and also the ability to acquire assets in an efficient way, then you shift into second gear and the cars ability to  increase its speed increases by increasing your capacity to build asset purchasing power and the speed at which the assets can be purchased, then you shift into third gear and your ability to increase speed is again larger and things start getting easier because the “assets” which you are purchasing, require far less effort to maintain and in allot of cases will continue to grow without your input or effort, this is the passive income we all want.

In the above analogy we used the words “ability to move forward faster" when we changed gear.  The key is to have sufficient initial or forward movement (inertia) in the car before changing gear. If however we change gear before we should, then our ability to maintain and increase speed or inertia is compromised and the same principle applies to our financial freedom inertia.

Our financial freedom inertia is the amount of time it takes to acquire our next passive income generating asset.  To break this down further the amount of time it takes to acquire passive income is based on how much cash(or resource) we can accumulate with in a period of time that allows us to purchase the next passive income generating asset.

So back to the buying of your first asset or property.  If your financial freedom “inertia” is compromised due to the purchase of your first\new asset you have at best delayed your forward movement (and this delay can be very significant) and worse reduced your financial freedom inertia.
It is important to have wise advisors who are able to “sequence” your efforts efficiently.  Join us at Taking Action, Making It Happen where we work together as a Master Mind to increase your financial freedom inertia together!

Jonathan Godney

Taking Action, Making it Happen with The Financial Freedom Mastermind
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