Hi, Reader!

My newsletters this summer have focused on some tactics that helped me to quit my W-2 job as a teacher in order to be a full-time real estate investor.

These tactics don't just move the needle a little; if executed correctly, they're complete life-changers.

First, I told you about house-hacking. This involves renting out part of your personal home, often completely covering your mortgage payment.

Next, I told you about the runway fund. In short, a runway fund is saving up 12 months of expenses so that you have the freedom to quit your job and pursue real estate (or whatever) full-time.

Now that I think about it, it's sort of a 3-legged stool approach to quitting your W-2. House hacking and the runway fund are the first two legs. And I'll tell you about the 3rd leg today.

Let's get into it.

Quitting your W-2 to pursue financial freedom on your own terms is hard. Simple, but not easy. For most people, it takes sacrifice, and the 3rd leg of the stool requires the most sacrifice of all:

Frugal living.

Imagine someone that's really going to try this. He has a 12 month runway fund saved up and ready to deploy for his living expenses. Woo hoo! He's renting out the basement apartment, covering most of his mortgage. Nice job! He just submitted his resignation letter to his boss. Way to go! And he's going to give his all over the next 12 months to buy cash-flowing real estate to replace his W-2 income.

But with all this free time now, the Amazon boxes start coming in. Sometimes 3 or 4 boxes a day. And heck, now he has time to plan some vacations, test drive some new cars, and get some new furniture delivered.

You can see where this is headed. He's probably going to fail. Instead of focusing his energy on building his business and improving himself, his expenses are getting out of control.

For most people, it's the least-fun part of pursuing financial freedom. Unless you've got an unfair advantage in some other area, frugal living is an integral part of getting to the point where you can live life on your terms.

Here's the good news: frugal living doesn't have to be a lifetime sentence; it's a season. It's a season to match your long-term goals with your short-term decisions.

Here are a few areas of frugal living that have made a massive impact on my pursuit of financial freedom.

Vehicles

Buy reliable, used vehicles with cash. Avoid financing vehicles at all costs. If you can't pay cash, you probably can't afford the car.

But the dealer is offering 0%, or 0.9%, or 1.9% (or whatever) financing. Why not save your cash and finance the vehicle?

Here's why: your vehicle payments will make you a slave to your W-2. As you get more and more reoccurring monthly payments, you'll need to continue to earn more and more money just to pay your monthly bills. Since you're on a path to financial freedom, your goal should be to reduce your reoccurring monthly expenses as much as possible. When you pay cash for vehicles, you don't have reoccurring vehicle payments, thus providing freedom from needing the monthly cashflow to make those payments.

The last five vehicles I have purchased have all been either a Toyota Prius or Toyota Highlander. I purchased them for a fraction of what they would cost new, and four of them had 100k miles on them when I bought them. These are extremely reliable vehicles that will go 200k+ miles and require few or no repairs along the way.

It's nearly impossible to have a bunch of monthly vehicle payments AND achieve financial freedom at the same time.

Buy Used Stuff

Vehicles, furniture, clothes, bikes, kid stuff. I buy all of this stuff used. You can often find stuff that looks brand new for a fraction of what brand new costs.

Credit Cards Points

I've been into collecting credit card points since I was 20 years old. It's not for everyone, because it requires serious attention to detail. Since I love traveling and I'm willing to jump through all of the hoops that the credit card companies put in place, collecting points has been huge for me. I've used points for splurges, like flying business class, visiting Bora Bora, and staying in fancy hotels. But I also use credit card points for business trips and trips to visit family. Credit card points can make these trips free or highly discounted. With the Southwest Companion pass, it's rare that we actually pay for an airplane ticket.

Eating In

Get used to packing a lunch and keeping cans of soup on hand. Paying the bill at restaurants can be simply painful! Avoid going out to restaurants simply because it's more convenient or you don't feel like cooking at home. Get in the habit of establishing meal habits for each night of the week, freezing extra meals, and having easy go-to meals in your repertoire. Being in the habit of having filling snacks on hand (like a big bag of almonds+cashews) can also eliminate the need for going out to lunch. It takes planning, but it can save you loads of money. Save the trips out to restaurants for special times like celebrations and spending time with friends and family.

Frugal living often involves delaying gratification. But in some cases, you'll realize that thing wasn't even gratifying in the first place! And now you've reduced your monthly expenses - bonus!

The day will come for you to splurge - to finance that car and eat at fancy restaurants. If your dream is is financial freedom apart from your W-2, make the difficult choices today so that your long-term goals become a reality.

THIS WEEK ON THE PODCAST

I talk with Todd Pease, with JLL Cincinnati. In this conversation, we discuss how tenants are responding to spending 3.08 days per week in the office, what types of amenities attract great tenants, and the potential opportunities for investors.

Listen here on Apple Podcasts.

Listen here on Spotify.

Watch on Youtube.

I'd love to hear from you. Reply to this email or connect on Linked In.

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Curious about commercial real estate? Read The Top 6 Reasons to Invest in Non-Residential Commercial Real Estate. ​