** Money Diary is about learning from fictional stories. If children can learn for tales and fables why can’t adults. This post will explore the use of real estate to acheive financial independence. **
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Meet Elaine, She is a 45 year old woman who used real estate to fast track her way to financial independence. She worked for 23 years saved and invested to reach this point.
Here is her Journey:
Early Saving and Budgeting
Elaine started working later than most. She did not babysit, participate in summer jobs or work during her college years. Her parents wanted her to focus in school and not be distracted by money. So, her first job was when she graduated college.
She got hired as a management trainee for $45,000. Elaine was getting a bi-weekly paycheck of $1,400. She spent more than she made. Before she knew it she was in credit card debt for a whapping $10,000 in less than a year. Once she saw how much her finances were unraveling she decided to take action.
She moved in with roommates after her 1 bedroom $1000 apartment lease ended. Elaine started creating a budget and started saving a full paycheck. She picked up side hustles to cover her debt. When she turned 23, she had $30,000 saved up and had zero debt.
Read other Money Diary series:
1. How to turn your finances around
3. A single mom exceling in her personal Finance
Elaine and her Real Estate investment Journey
She knew she did not want to lose the momentum she had. Elaine researched for the best investment vehicles for her savings. She stumbled upon coah carson’s blog about house hacking.
She purchased a $200,000 duplex in a good neighborhood in Indiana. Elaine lived on one side and rented the other side. She also had a roommate on her side of the duplex. This allowed her to live for free.
Here is her housing cost:
Unit A rental – $1200
Unit B roommate – $500
Total Income – $1700
Total Mortgage and bills – $1700
She repeated this process with 3 different houses. By the time she was 35, she owned 4 houses and 10 doors. Her income from her job had grown to $80,000 as well.
Book recommendations:
Elaine and her path to financial independence
Elaine knew she could add all her extra income into a new property or reduce her debt. She decided to take action on the later. She wanted to keep 2 free and clear homes and so she threw all her leftover income and rental returns towards paying off these 2 homes.
It took her 10 years, when she was 45 years old she had two houses free and clear. Lived in 1 unit for free and had a mortgage on 2 other houses. This allowed her to replace her income.
Lessons from Elaine’s use of real estate for financial independence
- It ok to make mistakes- Elaine put herself through a lot of debt in a short amount of time. Your mistakes matter less when you take steps to correct them.
- budgeting is necessary if you want to succeed
- house hacking is one of the best ways to grow your finances
