Many people don't know that economic freedom is very different than financial independence. Economic freedom is something you can have long before you ever achieve financial freedom. And right now, during the coronavirus, which has brought most economic activity to a grinding halt, it's the perfect time to test whether you have economic freedom. If you don’t have it, now is the time to take control of your financial destiny!
Economic Freedom
The phrase economic freedom is usually applied to nations and describes how free citizens control their own labor and property. However, here I'm going to further define economic freedom as your ability to produce economic results despite the circumstances.
To know if you have achieved economic freedom you need to answer a couple questions. Are you being economically productive right now despite all the lockdowns and stay at home orders? Or are you waiting for that stimulus check, hoping Congress funds more small business bail out money? Those of you who are already creative real estate investors are being very productive right now despite the lockdowns. However, others are not, and the unfortunate thing is you could be if you were in a position of economic freedom.
Economic freedom has two aspects. The first aspect is the ability to be productive despite the circumstances, whether you have good, bad or pandemic market conditions. The second is the ability to work at any schedule from basically anywhere.
Aspect #1: Achieving Results Despite the Circumstances
While most people are out of commission, my students and I are highly productive. As expected under the circumstances, we've needed to be a little creative. For example:
- Using virtual tour tools as an alternative to actual showings so retail buyers can see our properties.
- Using creative financing to solve the problem of increased underwriting guidelines. Some conventional lenders are requiring a higher credit score. Now suddenly, in certain deals that were in process the buyer can’t get a loan.
We have solved this problem with creative financing using a 2-step process:
- We've moved to a short-term lease option where the down payment becomes a non-refundable option payment and of course they're paying as rent so we're getting a little bit of cashflow.
- At the same time, we put through credit repair to raise their credit score for when those underwriting guidelines drop back down.
So, no matter the circumstances, we're able to adjust. This is what’s so great about being a creative real estate investor. Whatever the market, we're able to be productive.
Aspect #2. Work Anytime from Anywhere
The second aspect of economic freedom involves where you work and when you work, enabling you to be as productive as possible. When contemplating investing in real estate, some people think they must drive around looking at houses all day. However, it’s just not true. Most creative real estate investors work from home and spend ninety five percent of their schedule in front of a laptop or on a cell phone. We do go look at properties, but usually only for strategic purposes.
If you have been working from home these past few months, you're realizing that you can be highly productive because you have more control of your schedule. You aren’t wasting your time driving to an office, which gives you more economic freedom.
Scheduling Time
Creative real estate investing works incredibly well on a part-time basis for beginners. In fact, most of the people that join my program start off part-time and I have a video about why that works so well. However, right now those that are temporarily full-time at home can take the opportunity to be a full-time investor.
Real Estate an Essential Service
Real estate is considered an essential service by Homeland Security because it is a basic human need. Everyone needs shelter and in our organization we focus on single family homes in affordable price ranges for several reasons:
- A lack of inventory
- They are in the highest demand
- The least amount of competition from new builds
- The most loan programs available
There is such a demand for affordable housing that even during the depths of this lockdown, we are still producing multiple offer situations when we put properties on the MLS.
Financial Freedom
Now that I have explained economic freedom, let me show you how it relates to financial freedom and why it’s essential to be economically free.
Financial freedom is when your asset income cashflow from businesses and investments exceeds your personal expenses. The idea is that you could take a three-month vacation and it would have no financial impact because your cashflow from your passive income is more than your monthly expenses.
Financial freedom is a wonderful goal which some you have already achieved. Even though many of you aren’t there yet, I'm confident you all can reach this goal given enough time and consistent focus.
Achieving Financial Freedom
Since financial freedom is a long-term goal, you may be wondering what happens between now and reaching that goal. The answer is simply that life happens. Things like your kids growing up, time with family and friends, and other activities. One of my concerns is that people focus on the long-term goal so much they sacrifice all of life to get there. So, if we don't want to sacrifice the life that we have, how do we get there?
Economic freedom is the answer. Economic freedom allows you to enjoy life while you're busy on the road to Financial freedom. What’s more, with economic freedom you reach your goal faster because you can be productive regardless of the circumstances.
Economic freedom is your ability to be economically productive regardless of market conditions and the ability to work from basically anywhere at any schedule. Financial freedom is the end goal, and you get there by staying economically free all along the way.