A SavvyInterview – Michael

I met Michael through social media and was intrigued by not only the title of his book,  An Average Joe’s Pursuit for Financial Freedom,but also the suggestion on the cover to change your perception of money.

I’m glad he has taken some time to sit for a SavvyInterview and share some of his thoughts on personal finance.

RS: What was the catalyst that started you on the road to fiscal fitness?

Michael: In the Spring of 2009, my company’s management announced that they were going to restructure their assets. For those of you that have never gone through a company restructuring, it is another way of saying “possible layoffs.” At that time I was in the process of reading Robert Kiyosaki’s Rich Dad, Poor Dad book. The problem of my financial security became very clear while reading this book. I worked for a paycheck rather than having my money work for me.

The next question was how long could I live without a paycheck before going bankrupt. The answer was not very long. It was the Spring of 2009 when I changed my definition of “success.” It took me 12 years into my professional career to decide exactly what a “successful career” meant to me. I began setting goals that would help me to be free from a paycheck rather than climbing the corporate ladder to be a high paid employee.

RS: What is the one personal finance concept you believe someone seeking financial freedom should understand and practice?

Michael: In order to increase our success rate of achieving financial freedom, we must be able to identify ways to generate passive income. We must develop a habit of spending earned money on assets that create passive income and spending less of our money on liabilities that take money out of our bank account.

RS: Tell us about your book, “An Average Joe’s Pursuit for Financial Freedom.”

Michael: An Average Joe’s Pursuit for Financial Freedom offers a different perspective on money than what is traditionally taught by our parents and in our school systems. The reason there is such a discrepancy between the wealthy and the poor is due to the difference in the way money is perceived. We are not born with the ability to maintain wealth; it is something that is learned.

The knowledge of knowing how to make money work to generate passive income is something that anyone can learn as long as they are disciplined. Average Joe’s Pursuit for Financial Freedom is based on practical concepts and discusses the problems that the majority of us face with our personal finance. The concepts in this book are based on theory by an author that practices what he writes about.

RS: What was the best financial advice you ever received?

Michael: The best financial advice I ever received was not to be afraid of the power of leveraging the money I have available. The quickest way to become financially free is to use borrowed capital for an investment using the cash flow to be greater than the interest payable.

RS: The worst?

Michael: The worst financial advice we are all taught as children, is a penny saved is a penny earned. I am not a fan of using 401(k) retirement plans and the stock market as a vehicle to obtain financial freedom. These types of financial vehicles require investing 100% of our equity. We are not able to borrow capital from banks to leverage our money in the stock market because stocks are too risky for a bank to loan money for investing. If the stock market is viewed by a bank to be too risky for a bank to loan money for investing, why would we invest the majority of our hard-earned money in a 401k retirement plan that invests in the stock market?

RS: How do you define wealth?

Michael: Being financially free or wealthy is using income that you do not have to work for to pay your daily expenses: housing, food, medical expenses, travel and entertainment. This income is generated from investments that create passive income rather than depleting your savings or your 401(k) retirement plan you worked so hard to set aside.

James
 

James retired in 2005 after serving 21 years in the United States Army. During the latter part of his career, James' interest in personal finance was piqued based on his own experiences and observations of the way most Americans plan – or more accurately, fail to plan – for retirement and the difficulty many face in starting the process. His most valued education has been lessons learned from personal experience and through conversations with smart, savvy friends.

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