How Can 4 Phases Change Your Life?
Hey Empire Builders,
If you’ve been following the previous newsletters, you should have a solid understanding of why you're stuck financially, why your money has to come off Wall Street, what being an investor means and each of the 3 gears inside of the Passive Income Machine:
Becoming an Empire Builder
The vault
Autopilot Assets - building a portfolio of 20 single family homes
Now I'm going to show you how to put those gears to work in a framework over 10 years.
Today in 10 minutes or less:
- The framework for creating wealth
- Pre-launch phase
- Launch phase
- Escape velocity phase
- The final phase
The Framework for Creating Wealth
When I read the book Rich Dad Poor Dad, it opened up to my mind that everything I knew about money was actually wrong! And if I wanted to get different results, I had to relearn a different mindset around money. Kiyosaki’s book helped me to understand concepts, but there was no practical application.
Then I read Creating Wealth by Robert Allen, and it gave an actual framework for achieving what Allen talks about: Financial Freedom in 10 years or less.
(Robert Allen has even become a mentor in our community! It's been phenomenal to not only read his words in a book but to also see them come to life from the author himself.)
When I read this book, it was post 2008. I had just lost the majority of my money. My son had gone through open heart surgery. I had made a new commitment to figure out how to be Financially Free, become a better and more present father and find a way to live abundantly today--not waiting for the future.
Nonetheless, I still had a stressful job. At this time I was commuting out of state. I was living and working in Indianapolis during the week and then I would fly back home to be with my family in Texas.
One night in Indianapolis, I read a section of the book where Robert Allen shared a very simple promise. He said if you can find a way to buy 2 single family homes per year for 10 years, you will wake up at the end of a 10-year journey and your wealth will surprise you.
And he walked through an analogy about a spaceship getting ready to launch.
To launch into the sky, a spaceship uses about 90% of its fuel just to get out of the earth's atmosphere and break gravity.
But as it breaks gravity and gets into orbit, now gravity is actually keeping the spaceship in motion and it can jettison all of the things that it used to get out of orbit.
Now, what does this have to do with you?
The Passive Income Machine is meant to create Financial Freedom in 10 years or less. And it helps you achieve that by building a system with 4 very specific phases inside of a game plan.
We want to build a system that will put our money to work at an accelerated pace while still allowing us to own and control most of our time, right? Here are some definitions of a system:
A group of interacting or interrelated elements that act according to a set of rules and form a unified whole. Think about the Passive Income Machine. Individual elements that act together, governed by a set of rules, which we call the Core 4 and the 4 Pillars.
An organized set of doctrines, ideas or principles usually intended to explain the working of a systematic whole.
A harmonious arrangement or pattern order.
My friends, this is what we're trying to build.
We're trying to bring order to your money, order to your decisions, order to your outcomes and predictability on your path to Financial Freedom. And it's done through a system.
The 4 Phases of Your Game Plan
Now, let's go briefly through each of the 4 phases of building and launching your game plan.
Pre-launch phase
Launch phase
Escape Velocity phase
Orbit phase
An Empire Builder goes through a 10-year journey of achieving Financial Freedom. In each of these phases, there are specific things that you need to accomplish to build, launch and scale your Passive Income Machine and then deleverage and achieve Financial Freedom.
Pre-Launch Phase
In Pre-launch, you identify the problem. You now understand that if 97% of traditional financial advice is wrong, then 3% is the exact opposite. And you're trying to focus, not diversify, on the few things that actually work.
One of the key components of this foundational phase is to build a game plan, to reorient your money based on the principles of achieving Financial Freedom, using your goals and your resources. You build a solid foundation, from which you can then launch to the next phase of your game plan.
A game plan becomes a simple math problem.
When we know where you’re starting from and how much money is needed to achieve Financial Freedom, how much capital you need to produce the income that you want, it literally becomes a math problem.
We can tell you how hard your money has to work in between today and 10 years from now in order for you to achieve Financial Freedom. This gives you clarity in how to make financial decisions.
There are a couple of elements that go into launching your game plan.
Repositioning your capital and getting your money off of Wall Street.
Finding a commitment to save a minimum 10% of your income.
Getting a very clear definition of why Financial Freedom matters to you and ultimately who you must become.
Committing to a process.
I think what causes many people to fail is that they're not fully committed. They're interested, but then when it gets hard, they walk away and they do something else that they hope is easier.
The next part of Pre-launch is setting up your foundation, the vault. The vault is where your future income is going to come from.
As you scale your portfolio, you're going to take all of the equity and all of the cashflow out of that portfolio, put it back in the vault so that in the future, you can receive tax-free income for life.
Now, in order to do this, we have to design the right vault from the very beginning. This is critically important.
In order for you to be Financial Free, your vault has to be designed appropriately to minimize the cost, maximize the cash value and give you the capacity to generate massive tax-free income.
We're going to build a vault that will hold your reserves and give you the ability to step into the world of leverage. Once you're approved by the insurance company and we have the right vault designed, you fund it. This gets you ready to launch your game plan.
Launch Phase
In the launch phase, you take your Passive Income Machine and apply the Financial Freedom formula. This formula will help you make the financial decisions that will make your money grow as fast as it needs to grow.
Now, you're also going to learn more about leverage. And remember, the only difference between the wealthy and everyone else is they understand leverage, and they use it more strategically, more effectively and more frequently than the average person.
You are now stepping into the world where you literally become a bank.
Your vault is going to function as a bank, and you're going to use your vault for the 20-25% down payment required to buy a single family home. Then you're going to tap into the bank's money to leverage the rest of the purchase.
This allows your $1 to start working multiple times harder because of the leverage that we're injecting into this system.
I think the biggest thing that people are afraid of is, what if I buy the wrong house? And that is a real concern. You have to make sure you make money with your investment property. This means you have to buy the right property with the right team in the right area.
Now, we've built software to help people do this. We call this the Property Evaluation Form, or Empire Builder Software. This software allows you to take a property and to fully validate it using math.
If your numbers come out right, cells will turn green--meaning, “Go buy it!” And you can project your returns over a 10-year period of time, as you hold the property and profit from appreciation, tax advantages, leverage, tax deductions, amortization, all of those things, over time!
Now, when you step into the world of investing, it's going to seem like everything's an investment. If someone says, “This is a great investment property,” how will you know if that’s true?
This software acts like a funnel. You run some numbers and very quickly see, does it fit our criteria? Is it getting us what we want? And a few properties will pop down to the bottom of the funnel to help you make the right decisions.
In the Launch phase, your goal is to buy 3-6 properties. Once you’ve gotten to this point in your game plan, you’ve turned your system over 3-6 times, and things start to become a little bit more automatic.
In this phase, you're going to start to escape velocity. You're going to break away from the constraints of gravity, enter orbit, and have gravity start helping propel you forward.
Escape Velocity Phase: Monitor and Track
In this phase, you double down on your vault strategy, you learn to master leverage and you use CEO systems so you can spot check that you’re making the right decisions. And you really develop your money mindset.
One of the critical components of achieving Financial Freedom is understanding how your system is actually working.
If you just bet that you're going to get the return that you're looking for in a property, and you buy it but you never evaluate it, how will you know if you're on track or off track, if you’re winning or losing? Sometimes during this phase you’re going to need to make course corrections.
Think about a plane flying to a destination.
If a plane’s flight path is off by just a single degree, it's not much of a problem in the beginning. But if that plane stays off by a single degree over a long period of time, the destination will be dramatically different than what was expected.
So as you build your game plan, you want to check, what is your actual rate of return on the property? And are you actually putting in the amount of money that you said you were going to put into your game plan?
As you monitor and track your progress, you'll be able to see, “Oh my gosh, I'm 20% of the way to my goal.” Or “I'm 30% of the way to my goal.” Or “I'm 50% of the way to my goal.”
You'll be able to see your goal coming to fruition with each step that you take.
If you just make little course corrections along the way, you can ensure your path to becoming inevitable and Financially Free.
During this stage we want to decouple our time from our income. This is what truly makes it passive.
We want to build a system that can scale without us having to inject more time, effort and energy. Financial Freedom is a lifestyle, not a destination.
So many people think that someday when they have this mystical amount of money, then they'll give themselves permission to live.
But in this community, we actually encourage people to divert a portion of their game plan to building and living a life that matters right now.
Here's why:
As you build and live a life that matters right now, my friends, you actually find more reason, more desire, more intention and more commitment to continuing to build your game plan.
I’ll never forget how once I gave myself the permission to start traveling and doing things that I was waiting for “someday” to do, I came back from that first trip so motivated to do it again, to ensure that my game plan continued to grow and scale so I could fund the lifestyle that I ultimately wanted.
Orbit: The Final Phase
My friends, Orbit is the final phase when everything builds up and you get to recompose your game plan and start shifting your game plan into delivering specific income. You're not putting everything back into the game plan. You're now starting to take some of it out.
You’ve launched outside of the earth's gravity, your 4 Pillars are working and building up from cashflow to equity to amortization to tax advantages and you have all of these profit centers.
You're now going to take some of these profit centers and turn them into a stream of tax-free income.
I believe the real definition of Financial Freedom isn't just “cashflow greater than expenses.” That's how we measure it. But it’s actually financial empowerment. It's Money Mastery.
At the end of the day, my friends, money is just a tool. That's all it is. It will take you wherever you wanna go, but it will never replace you as the driver.
During this 10-year phase, you're going to make so many financial decisions and you're going to get to the point where it’s just like tying your shoe--you can do it with your eyes closed.
You're going to be able to make investment decisions that other people would look at and say, how did you do that? And it's going to be second nature to you. This, my friends, is Money Mastery.
And this, my friends, is the definition of Financial Freedom. And it's what implementing, growing, and scaling your Passive Income Machine through those 4 phases allows you to do.
Please join me next time to learn about tax-free income.
RISE UP, so that you can LIVE FREE.
Ryan D. Lee | CashFlow Tactics
