The main theme of this book, which I touched on in previous chapters, is this very simple formula:
Employee > Self Employed > Investor
You start off as an employee, you gain the skills to become self employed, and after becoming self employed, you begin saving the money you earn through self employment to become an investor later on. In general, you will not want to consider becoming an investor until you have been self employed for a minimum of five years, and or until you've amassed a minimum of $100,000.
The reason I say five years is because most businesses fail within the first five years of being launched. If you can last five years, then this means that you have what it takes to be not only a self employed freelancer, but you also have the discipline and business savvy which can allow you to become an investor. The reason I pick $100,000 as a starting point is because there are a large number of cash flow deals you can invest in with this sum or less, and because if you've successfully saved this much, it means that you've mastered the art of saving money, which means you have the maturity and discipline needed to become an investor.
While $100,000 may seem like a lot of money to save up, the truth of the matter is that this amount can be easily amassed in approximately four to five years if you live well within your means, avoid taking on any type of debt, reduce your taxes as much as possible, and work in a freelance field where you can make more than $50,000 per year. As you build your client network and take on freelance jobs, we highly recommend living a very frugal lifestyle. While this doesn't mean that you need to live a Spartan like existence, it does mean that the majority of your money should be going into a savings account, CD, or something of this nature. While I generally don't prefer CDs and savings accounts because of the low interest rate they pay, for the purpose of this book, they are perfect. Earning interest on the money you save will allow you to reach $100,000 that much quicker.
I should also note that the more frugal you are, the faster you will be able to reach $100,000. If you are willing to sacrifice now in order to enjoy life later, not only are you highly disciplined, but you are also quite wise, and you will be greatly rewarded for your efforts. I should also add that $100,000 is not an amount that should be etched in stone. For example, if you save $50,000, you study real estate well, and you find a great deal that can earn you positive cash flow, then go for it. But $100,000 is the most ideal number. If you succeed with less, then more power to you. However, there is a pesky little problem that you will face as you begin saving your way towards $100,000, and this problem is inflation.