Passive Investor Tips is a weekly series hosted by full-time passive investor and Best Ever Show host, Travis Watts. In each bite-sized episode, Travis breaks down passive investor topics, simplifying the philosophy and mindset while providing tactical, valuable information on how to be a passive investor.
One of the benefits of passive income is having the freedom to design your lifestyle. When all of your needs are met, your bills are paid, and you aren’t tied to the typical 9 to 5 grind, how do you want to live? In this episode, Travis discusses the four categories to consider when choosing the right lifestyle path for you. He also lays out the four steps to generating the passive income needed to get you there.
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TRANSCRIPT
Travis Watts: Welcome back, Best Ever listeners, to another episode of Passive Investor Tips. I'm your host, Travis Watts. In today's episode what we're talking about is lifestyle design; how to effectively design the optimal lifestyle of your choosing. Disclaimers as always, I'm not giving any financial advice. These are just views and opinions for educational purposes only, so please seek licensed financial advice when it comes to your own investing decisions.
I want to start this episode off by saying once you learn the game of money, once you learn how to generate active income and passive income for that matter, for many people it usually leads into lifestyle and how you want to live your life, and passive income can allow you to have the choice of how you want to spend your time. If we take a quick reference from Maslow's hierarchy of needs, the basic needs that we all have can often just be covered with active income or having a job. These are things like food, and safety, and shelter, and water. As you move beyond this and you've got some excess income or you start making investments and growing your passive income, that usually leads to a focus on relationships, and freedom, and self actualization, and you have more time to dedicate to the meaning of life, and who it is you're trying to become and how you want to live your life.
If we take for an example a person who has more passive income than they have lifestyle expenses, this allows them to start questioning things like "Well, do I want to spend more time with friends and family, or children or grandchildren? Do I want to volunteer more of my time? Do I want to travel more? And what kinds of stuff or things do I want to have in my life?" So in this episode, what I want to share with you are four considerations. These are things that have really helped me over the years in terms of designing an optimal lifestyle.
The first thing I want to start out with is talking a little bit about freedom, and what that means. To me, the game has never been about money, it's been about freedom. And I grew up lower middle class; my parents split when I was five years old, and I watched my mom struggle with having lots of low-wage jobs, and having to work two or three jobs simultaneously, and trying to make time for me in the process. My dad pretty much worked for the post office his whole life, 30 plus years; probably never made more than 50k or 60k in his working career. And in my early working career, I worked a lot of minimum wage jobs, and I had ranging incomes of 10,000 to about 20,000 per year. So it was always a struggle and a grind. And even when I started making money in my career, which was in the oil and gas industry, I then started to realize I'm sacrificing my entire life for a paycheck. I was away from home a month at a time, I worked 100-hour workweeks... I didn't have time for travel, I didn't have time for family, I didn't have time for myself; it was just wake up and work, go home, sleep and get up and go back to work. I'm sure for anybody listening to this episode, neither of those situations are ideal. I don't know what's better - having 20,000 a year and having the weekends off, or making 100,000 a year and not having any time for yourself, friends or family.
But I will say this - something I learned when I started making six figures and being around other people making that kind of money is a lot of people will associate money with things; they wanted the nicer things, the newer things. They would think about getting a new car, they would think about getting a bigger house. And that brings me to the second consideration that I want to talk about, and that's stuff; that's buying stuff. And the first thing I'll say is, if you're wanting stuff or things to impress other people, it's a lost cause. First of all, people don't care. And second, it's really not going to generate happiness long-term for you. It's going to be very short-lived, because there's always the next thing, and the newest thing, and it's a dead end road.
Now, if you're buying stuff for personal growth, or fulfillment, or because it truly makes you happy, despite what others think, then it can be fine. And I'll give you an example. I own a nice car. It's a luxury car. Some might put it in the exotic car category. But you know what? You're never going to see it online. You're never going to see it on social media. I don't try to leverage it to get attention or leads. In fact, most of my family and friends don't even know that I own it. So it was something I did for myself, because I get a personal fulfillment for it. I set a goal for myself, and I said, "If you meet this goal (this was a couple of years ago), then I can have this car for myself." It's like the movie, "I Am Legend" with Will Smith. If you've seen the movie, there's a big pandemic disease, and basically, they evacuate New York City while he stays behind as a scientist to do some research. So in other words, nobody's around; it's just him. And what does he do? He goes out and he gets a red Mustang to drive around town. Obviously, not impressing anybody, because there's nobody around. So why is he doing it? Personal fulfillment. It's exciting. It's thrilling. He's doing it for the right reasons.
So the reason so many professional athletes, lottery winners and celebrities go broke is because they're acquiring things to elevate their status and to stand out, and to impress others. So be aware that's a dead end road if it's not part of the optimal lifestyle that you're trying to create for yourself. To me, lifestyle is more about what are the most meaningful aspects of life? What do I want to bring more of into my life, and what do I want to get rid of that I dislike?
Break: [00:06:22.23]
Travis Watts: That brings me to my third topic. I want to talk a little bit about travel. Travel has been a centerpiece for my wife and I for many years; it's definitely up there and our passions and why we choose passive income to expand our lifestyle, and have the freedom to travel. And I want to say two things about it - whether or not you're into travel yourself, I will say this; there's two primary benefits that we've found from travel. There's in-the-moment happiness; that's experiencing something new, and it's being in the moment, and it's doing something different, which is more memorable... And then there's memory happiness, which is the photos, the videos and the memories that you have mentally to take with you throughout your life, with sharing unique experiences with family, friends, or even by yourself. Both of these are very important in terms of overall happiness and well being, in my opinion, not to mention all the other benefits that can come from travel, which is appreciation for what you have and what we all have here in the United States. Seeing and appreciating other cultures. There's a great book called "Die with zero" by Bill Perkins. I encourage you to read that if you want to take a much deeper dive on this topic. I know I'm not doing it justice in this short video.
Travel's probably been the number one thing that's humbled me over the years; it's so easy to get caught up in our little bubble of life that we live, and complain about first world problems. I've certainly been guilty of it over the years. In fact - funny story I'll share with you real quick... I was on the phone with an investor. This was probably a couple of years ago - and he's talking about his business that he owns, and his financial situation, and he's sharing this stuff with me, and he says "I pull a modest salary out of my company, it's $600,000 per year", and he said "Honestly, we can't cut the budget. That's just what we need to live on. There's no way my family and I could live on less than that." And I remember thinking to myself, "I wonder if this guy knows that the average household income globally is close to about $20,000 USD per year. So a little bit of perspective there. And that, by the way, according to WorldPopulationReview.com, which is a great site to learn more about incomes and stats like that, if you're interested. In any case, I would consider adding travel to your lifestyle design. It's paid some of the best dividends throughout my lifetime.
And last but not least, topic number four - I want to talk about death. I know that sounds really morbid, but hopefully I can spin this in a encouraging way for you. I remember years ago I read the book The Top Five Regrets of the Dying. This was written by a nurse named Bronnie Ware. She lives out in Australia. And for years, she worked in a terminally ill patient care unit, and her patients would always be telling her about their life regrets. So she first turned that into a blog post to inspire other people to reflect on what's important in life, and how you might want to live your life with that in mind. She later made that into a book and then became an international speaker. But the takeaway from that book for me - there was two. It was The Top Two Regrets of the Dying, and I'm gonna ruin the book for you, sorry about that... But number one was "I never pursued my dreams and aspirations", and number two was "I never spent enough time with friends and family." So something to think about as you're laying out your lifestyle design.
So a few quick tips to leave you with on how I approach investing in lifestyle design. Number one, I start with the end in mind. What am I trying to create or accomplish? And I try not to make money goals, like "I want 10k a month passive income" or "I want 5 million net worth." I try to make it about what I'm actually creating, because I'm much more passionate about that than I am about dollars and cents.
Number two, I try to figure out what type of investment can get me to that particular outcome. Is it going to be a passive, income-focused investment, or is it going to be an equity appreciation investment? We're all different, and it depends on your goals.
Number three, I began my due diligence and my research, I'm analyzing investments, I'm finding operators in the private placement space... It just depends on what it is I'm investing in. And number four, you have to make the investment; either make the investment in yourself, or make an actual financial investment. You've got to take action; nothing happens if you don't take action.
So with all of that in mind, I hope you've found some value in this episode. Always happy to brainstorm with you; reach out if you have any questions on passive income investing, or anything that I discussed here in this episode. You are listening to Passive Investor Tips, right here on Best Ever. Reach out on social media. I'm on Bigger Pockets, LinkedIn, Instagram, Facebook; I'd love to connect with you guys. Thank you for sharing your stories with me, all the positive feedback and comments. I truly appreciate you being here week after week. Have a best ever day, everybody, and we'll see you in the next episode.
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