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How to Retire Early: The Latte Factor

Lesson 17 of 18

Renting vs Home Ownership

 

How to Retire Early: The Latte Factor

Lesson 17 of 18

Renting vs Home Ownership

 

Lesson Info

Renting vs Home Ownership

My belief is this You can't get rich. Renting the bulk of wealth in America today is actually in homes all across America. The bulk well, 60% of equity in America. Today's inside a house. As long as you're alive, you have to live somewhere. So you know, I am a proponent of home ownership and have been my entire life. I said, that smart investment you'll ever make is your home again. Why? As long as you're alive, you have to live somewhere. You can pay rent and make somebody else rich like the Game of Monopoly. Or you can own it, pay it down and eventually have it free and clear and have very low rent. People go on, but you'll have taxes, yet you will. Oh, but you'll have service. Yep, you will. It would be cheaper to rent, then out. No, it wouldn't be. It won't be cheaper to rent a known long term, because rents always go higher. Why do rents always go higher? Because I'm a landlord. I want you to pay my taxes, my overhead and make me rich. There's no landlord in America who says, Oh, ...

good, you're a renter. I'm in the charity business, and I want to make sure your wrenches cheaper for you. That's not how the game works. Um, this is from 2010. 10 right? People said when the recession hit that realized it would never come back. It was just over. Nobody warned on a home. I'm like, Are you kidding me? We should all action away. Like hope for the next recession caused the last recession in markets across America, homes went down 50% 50% at Florida, San Diego Vegas and I would go. You know, there's no way these real estate prices are staying down here because there are markets that you go into where you basically got the home for free because the price of the home now you're just paying for the land. There's this thing called replacement cost. What is it cost to build a new home today? What does it cost to build a new apartment? The one thing I can promise you is in 10 years it's gonna cost more, which is why housing prices long term always go up. So in 1963 the average price of a home was about $18,000. I was born in 1966. My parents first home was, like $15,000 in Oakland, California today you can't even buy a car for that, right? How many of you drove here in a car that costs more the home price back then, right, So some of you flew here. You walked her home prices today. Medium home prices were looking up to $390, now depends on where you are, because they're cheaper places in that. But some markets home prices air to 25 to 50 but this just takes everything and combines it. What do you noticed? If home prices going up long term, even when they dipped, they came back up. So homeowners are a lot wealthier than renters, and here's why. They're six primary benefits to homeownership. First of all, it's four savings. Every time you make a mortgage payment, a little bit of it's going towards principal, and you are making the forced investment to save it's leverage. Nobody buys a home typically for cash unless they're an investor. Most people buy homes and they put 20% down and they borrow 80%. Other people's money the bank gives it to you. Easiest place to borrow money is for your first home. Massive tax breaks. You get a tax deduction on the interest, but the tax deduction it matters the most. In my opinion, when you buy a home and it goes up in value, you can sell home when you're single and you can put in your pocket up to $250,000 tax free in profit. If you're married, you can put up to 1/2 a $1,000,000 in profit tax. Three. It's the Onley investment vehicle You can do that in, and you could do it more than once. You can also buy, invest in property and basically never pay taxes. You might invest in property. And when you want to sell to buy something else, you could do a 10 31 exchange and prolong paying taxes really indefinitely until you die. You've got pride of ownership, and really real estate proves to be a great investment. It just does, and people who tell you doesn't They're just they're not being honest. Homeowners are worth statistically way more than renters, depending on the time of marketplace in the year, home arms were somewhere between 31 to 46 times more than renters. Call it in the middle. Roughly 41 time baron. Right now you have the average Rencher worth $5000 the average homeowner worth over 172,000. It's huge. Now let me show you how to get rich faster and real estate by a home and paid off early. This is the biweekly mortgage secret. So if you've got a home, I'm fine with a person getting a 30 year mortgage because you can lock in a low rate. But if you're in a home with a $300,000 mortgage and it's $15 a month, you split that payment in half and you go 50 every two weeks. You will save $40,000 pay that home five years earlier just by taking your payment splitting in half every two weeks. You're looking me like why, which is good cause you're paying attention and you're thinking the reason is wise that what happens is you make one little extra payment a year, and that little extra payment a year is paying the principal down faster. Another way to do this is just make one extra payment a year, but people don't so bi weekly payment plans air great because most people are paid twice a year twice a month, and you can set this up with the bank and its A force way to pay your mortgage down early. Now if you want to be aggressive and retire early, uh, there's nothing better than a 15 year mortgage because you'll be on a dead and 15 years. So take that a san example that mortgage and you will save $161,000 inches payments. So year mortgage. The rates lower. Now here's the thing. The payments are a lot higher. So 30 year mortgage again. The example is 300, payments $21, versus she just stayed over here versus 15th out 1520. So to pay this mortgage off 15 years faster and save $161,000 is a little over $600 a month, which is $20 a day. That's a big way to think about these things. Like if I could save an extra $20 a day on a typical American mortgage. I could be out of debt 15 years sooner. I would save $161,000 in interest payments. The common thing I've seen is that people who retire early, it's because their mortgage is paid off. People who were doing their fifties because their mortgage is paid off, so benefits of a biweekly mortgage plan saves you a fortune. Everything just basically told you it's a force way to save money. Get your cash flow easier, its automated. Which takes me to How do you bubble prove your real estate? We've had an up cycle in real estate, but a lot of people got hurt in last recession. Here's how you bubble proof your real estate. Make sure you can afford your mortgage. Borrow less in the bank will lend you lock your rates. Rates super low Right now. Locket rates don't have adjustable rate mortgages. Avoid interest only. Don't do interest. Only avoid home equity. Don't use home equity. Don't pull home equity out. Speak credit cards. You'll just pulled the equity out of your house. Pay off your credit cards, and five years later you'll be right back into credit card debt. Call your mortgage company now. See if you can read financial rates even lower. Don't use credit cards. Go from home ownership. Automatic Familiar? Here's what you do you buy home so the McIntyre's did in the automatic millionaire book. You buy a home, you live in it. You pay the debt down earlier as the payments get lower and lower lower. You go by another home, you rent your home toe a renter and you let them pay the restroom mortgage off. You pull a little equity out that first health and you buy another home, but you'll buy a bigger house. You buy the sand size home and then you pay that debt off earlier before you know what you've turned around in your in your fifties and your own one home free and clear and you have a second home almost paid off. It's exactly the McIntyre's did in the automatic familiar book. This is what Zoe learns how to do in the latter factor. How we say it's like monopoly. Only you don't need four green homes, three woodwork, three homes over a lifetime to Did you rent one that you live in? This paid off that works just great

Class Description

AFTER THIS CLASS YOU’LL BE ABLE TO:

  • Create financial freedom starting with as little as $5 a day
  • Learn how to earn 10% rates of return of your money
  • Understand the automatic millionaire habit that changes everything
  • Retire early or transition early to a life you dream of
  • Understand the FIRE movement and how to apply it to your financial future
  • Know how to become rich faster, as a freelancer or a small business owner
  • Use the Automatic Millionaire pyramid system to double your money in 10 years or less
  • Know which companies, apps and investments today are making managing your money easier and cheaper

ABOUT DAVID'S CLASS:

What if you didn’t need to be rich to live rich? What if there were a way you could achieve financial independence and live your dreams now?

In less than five hours – The Latte Factor Class can help you take control over your money and your life. Whether you’re just starting out in business, an employee, or you’re in debt and you just want to live the life you’ve always dreamed of, “The Latte Factor” is a one day program that has inspired millions.

David Bach is the Author of The Latte Factor and the creator of The Latte Factor Method. He’s also a nine-time New York Times bestselling author of books including Start Late, Finish Rich and The Automatic Millionaire. In How to Retire Early: The Latte Factor, David Bach will teach you why you are richer than you think. He’ll help you see a future that puts you in control over your finances and back in the driver's seat of your dreams.

It’s never too late to start living your dreams; today is your starting point. Whether you are living paycheck to paycheck, or simply want to increase your net worth, this class is for you if you’re ready for a fresh outlook on life and money.

WHO THIS CLASS IS FOR:

  • Anyone who wants to stop living paycheck to paycheck
  • Freelancers
  • Small business owners
  • People who want to live their dream life

ABOUT YOUR INSTRUCTOR:

David Bach is one of America’s favorite financial experts and bestselling financial authors of our time. He has taught millions to live and finish rich through his seminars, live events, courses and books. He’s the author of 9 New York Times best sellers, with over 7 million books in print in over 19 languages - including Smart Women Finish Rich, Smart Couples Finish Rich, and The Automatic Millionaire. He’s a media favorite having made thousands of appearances the past twenty years, including on Oprah six times and the Today Show over 100 times. David is the co-founder of AE Wealth Management and Director of Investor Education. His latest book is The Latte Factor: Why You Don’t Need To Be Rich To Live Rich. David presents seminars for and delivers keynote addresses to the world’s leading financial service firms, Fortune 500 companies, universities, and national conferences.

Lessons

  1. Class Introduction

    You don’t need to work five side hustles for the next decades to achieve early retirement. You don’t need to live paycheck to paycheck for the rest of your life. Meet David Bach and learn how small amounts of money can change your life. David shares his personal finance story starting from age 7.

  2. My Start in Investing and Teaching

    What did David’s first “financial advisor” teach him? Why is it so critical that women in particular begin their retirement planning now? David shares his investment history what you’ll learn in his book, The Latte Factor: Why You Don’t Need To Be Rich To Live Rich is about.

  3. Financial Education - Know Better To Do Better

    In this lesson, David paints a picture of the dire necessity of financial education for Americans. Learn about the mindset necessary for a happy retirement, how companies force employees out of work in their 50s, what rich people now that poor people don’t and how credit card companies prey on consumers. David lays out exactly what you will learn in this class.

  4. Start Early, Start Today

    Early retirees don’t all start with six or seven digit annual incomes -- most started saving and investing early. David shares a comparison of how early planning can immensely impact your retirement savings.

  5. The Latte Factor: How It Works

    What exactly is the latte factor and how can you find yours? In this class, David breaks down the latte factor math and shows you how to save money by cutting out small non essential living expenses and developing a daily mindset geared toward retirement. He also shares his pick of online resources and apps that aid in financial planning and investing.

  6. Student Success Story

    Hear directly from Elizabeth, a member of David’s inside team regarding her financial planning journey over the past 18 months.

  7. FITE - Financial Independence to Transition Early

    Learn about the FIRE movement and David’s take on transitioning vs retiring. David reviews how to plan backwards from your desired retirement age, introduces the 50/20 formula and shows the effect of turbocharging your income stream.

  8. Common Investment Mistakes

    Don’t make these common investment mistakes that won’t yield extra income. David gives advice on buying a car.

  9. Becoming Rich on an Ordinary Income

    You don’t need that much money to become rich or build up a nest egg. David shares research from Fidelity Investments that shows the concrete steps to take to become a millionaire through 401k investments.

  10. How Much do You Need to Retire

    How much should you save and invest or, as David says, pay yourself? See what you should be saving at 30, 35, 40, 45, etc.

  11. Retirement Plans & Where to start

    David orients you to the different types of retirement accounts available, highlighting their benefits depending on your needs. Learn the difference between a traditional vs. Roth IRA, spousal IRA, SEP IRA, 401k and solo 401k plan. What is recommended if you’re self-employed? What if you have employees? David answers your questions and points to brokerages, roboadvisors and apps where you can start.

  12. How to Earn 10%

    There’s a lot of talk about earning a 10% return on your investments -- how do you actually do it? David teaches you the rule of 72, a quick way to calculate how long it takes to double your money when calculations and retirement calculators aren’t at hand. David takes audience questions, addressing financial planning in relationships, investing while in debt, and his advice for self-employment.

  13. Investment Pyramid

    The opportunities for investment can seem overwhelming and intimidating; David presents an “investment pyramid”, displaying all investment options from low to high risk. Learn what makes a diversified portfolio and what David himself invests in. Lastly, David cautions against the high-risk investment zone and which investments to stay away from.

  14. Reasons Most Investments Fail

    In this lesson, David shares the top 4 reasons most investors fail; learn what not to do. See a historical representation of an investment from 1926 through today and learn why the stock market will always favor a “boring” investor.

  15. 5 Things to do During Market Correction

    Market corrections are normal and happen throughout history. David advises on what to do on your own or with your financial planner or advisor.

  16. Retirement Accounts and Investments

    What are target dated mutual funds, asset allocation funds, balanced funds and simplified ETF solutions? Why are they ideal investments? Which Vanguard fund does David recommend? David gives you homework in this class: crucial questions to ask yourself and actions regarding your 401k.

  17. Renting vs Home Ownership

    Why is real estate one of the best investments you can make in your future? David shares benefits and advice regarding mortgages, payment plans, bubble-proofing your real estate and how to become an automatic millionaire homeowner.

  18. Why Your Dreams Matter

    David closes, returning to the point of financial freedom: to live your dreams. He gives advice on different investments to consider depending on your time frame and how to plan a sabbatical. He ends the class with your final coursework: finding your latte factor and putting steps into place to start paying yourself first.

Reviews

Ling Fan
 

Great class! Concise and powerful! Wish I knew this 10 years ago.

Kennie Johnson
 

Very helpful and inspiring

Carlos Figueiredo
 

I thoroughly enjoyed the course love it!