Don't Buy Lifestyle. Buy Assets That Cover Your Lifestyle.

Whenever you have money, or get money, it's very easy to spend it.

Some people blow it all on dumb purchases. (new car, vacations, wasteful purchases, etc...)

Don't do this.

But sometimes, people spend that money on something that seems "smart" in the moment, but actually hurts them big time in the long run.

Here's a real life example to help it make more sense.

(name's have been changed for privacy and anonymity... all the legal stuff)

Dave served in the military. Decent income but nothing crazy.

He received a lump sum payment from the military for something unfortunate that happened to him during service. It was $120,000 (net after taxes)

He was married with kids and never owned a home. The first idea that Dave and his wife had was to use that money to put a HUGE down payment on a home.

This "seemed" like a smart move.... at first.

Until Dave realized that even with that huge down payment, they would still have a mortgage payment every month, and it would still take decades to pay off the mortgage.

I offered Dave a different plan.

Since he was military, he had access to the VA loan program. Which means he can buy a home with a $0 down payment. The mortgage payments would be higher, but what happened next made all the difference.

Dave used the VA loan to purchase a slightly older house that needed some sprucing up, but was still nice and livable. This house had an advantage though. It was sitting on a few acres of land, and it was in a rural community with less county restrictions. Their mortgage was ~$2,400 a month.

This cost ~$13,000 in closing costs. So his $120k was now down to $107k.

Then Dave and his wife took the remaining $107k and built two smaller units on the property that they could post on AirBnB and rent out.

He charged $115 a night and they were rented out about 50% of the time.

Here's the math:

$115 x 2 = $230 per night

$230 x 15 rentals a month = $3,450 a month in revenue.

They did all of the maintenance, cleaning, and turnovers themselves to reduce expenses.

So they profited about $3k a month from the AirBnB's.

The revenue from the AirBnB's not only paid their $2,400 mortgage payment, it gave them an extra $600 a month in profit on top.

Here's a side by side comparison of their first idea vs the AirBnB plan:

Option 1: Use the lump sum for a big down payment. Have a ~$1,500 month mortgage for 30 years.

Option 2: Use the VA loan to get a property. Then use the lump sum to build two AirBnB's that cover the mortgage and even produce extra income on top.

They went with option 2.

They still got what they wanted (a home), but option 2 covered their mortgage payment and gave them extra cash every month.

Here's the lesson:

If you have some money to spend, don't buy your lifestyle first (lifestyle = the things you want).

Buy assets that produces cash flow, and then let the assets pay for your lifestyle. Not you.

P.S. - They used the extra $600 a month to pay off their mortgage faster. This plan put them on schedule to eliminate their mortgage EVEN FASTER than if they had just used the entire lump sum as a down payment. And when the mortgage is paid off, they'll still have the assets producing cash flow and ALL of the revenue will be theres to keep and use.

That's the real icing on the cake.

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The 15 Minute Wealth Switch

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Money is broken, Wall Street is a casino, and Uncle Sam loves taxes. This will show you the RIGHT things to do with however much money you make.