Breakaway Money

What it is

Breakaway money is the income you make after hours — outside the job. Your job is not going to get you ahead. You hear people say that all the time and you’re probably experiencing it. That’s probably why you’re here. So you need to pick something that’s going to allow you to make breakaway money. Your job puts groceries on the table. What you do after hours — investing in a business, flipping real estate, investing in paper assets — that’s what gives you breakaway money.

It’s what I call the catalyst to true wealth. Real estate, specifically flipping, is how you get there. Not only can it be your day job that brings in your grocery money, but it can also be your wealth builder — because you flip houses to give yourself the extra cash flow, and then when you have enough cash in the bank, you refinance and hold it forever.

Why it matters

A raise is still W2. A raise still goes into the same bank account, still gets taxed at the same rate, still evaporates into the same lifestyle. A raise does not change your ownership position.

Real estate is a two-in-one. Not only can it be the thing that makes you breakaway money on nights and weekends, but over time, it turns into everything else. When you’re first starting out, everybody’s got their hand in your pocket. Everybody is making money off of you. But over time, you start to take those hands out of your pocket by starting the companies you were hiring — a construction company, a property management company, maybe a brokerage, maybe a wholesaling business. That’s how I grew, not only as a real estate investor but as a business owner.

The question is what are you going to spend your time on? What horse are you going to ride? Because it is true that you just can’t get ahead with your day job alone.

How it shows up

You don’t quit the W2 to chase flipping. You build breakaway income first, on the side, using the job to fund the first deals. The three time horizons of wealth: short term is the job or a small business bringing in money weekly or monthly — you need this to survive. Medium term is flips, big chunks every few months — this is what accelerates your growth. Long term is rentals.

When you’re starting out, most of your income comes from that first bucket. But over time, if you play it right, more shifts into medium and long term. And eventually the rentals start throwing off short-term cash through rental income and medium-term cash through refinances.

You can’t jump straight into rentals if you’re broke. And everything is a flip until you’ve earned the right to hold it as a rental. Don’t try to keep wealth until you can actually afford to keep it.

Related

wealth engines, forced savings account, house hacking, gorilla flipping, flip 3 keep 1