The Roadmap to Financial Freedom: A Millionaire's Guide to Building Automated Wealth

The Roadmap to Financial Freedom

A Millionaire’s Guide to Building Automated Wealth

Brennan Schlagbaum

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COVER DESIGN: PAUL McCARTHY

AUTHOR PHOTO: COURTESY OF THE AUTHOR

This book is dedicated to my daughter, Logan, whose battle with Dravet Syndrome has made me see life through different eyes.

Acknowledgments

I would like to acknowledge the Dravet Syndrome Foundation for the information and help they have provided us since Logan was diagnosed with Dravet Syndrome. One hundred percent of the proceeds of this book will go directly to the Dravet Syndrome Foundation. It is my hope that funds from this book will lead to more answers and cures for all of those diagnosed with Dravet Syndrome. My goal is to bring more awareness to this syndrome that is such an enigma. You can contribute to the Dravet Syndrome Foundation at https://dravetfoundation.org/donate/.

I would be remiss if I did not acknowledge my wife, Erin. Without her dedication and commitment to me and our goal, this journey would not have been possible. Thank you for putting up with all of my spreadsheets, helping me build Budgetdog, and helping me with this book.

I would also like to thank Pam Fitzpatrick for helping me find the words to bring my message to life.

About the Author

Brennan is a 32-year-old CPA living in the Dallas, Texas, area. He is a husband and father of two girls (Logan Lee and Ellie Gray). He began @budgetdog as a way to help others make money simple. He is dedicated to creating a financial literacy movement and making your life easy when it comes to money. He specializes in helping individuals and families create a practical roadmap for their financial future.

Introduction

Life is funny. Not laughable funny but amusing in an interesting way. It is certainly an enigma; we never know where it is going to take us. Life ebbs and flows, constantly changing. In life, there are difficulties and challenges we all must face. That is the certainty. This is true about most people's lives. It has always been true of my life, but it was only in looking back, in retrospect, that I realized it has always been this way.

As a kid, teen, and even a young adult, I didn't understand the significance of life's ups and downs. Once I became fully cognizant of the volatility of life as well as the fleeting nature and rarity of it, I knew I had to choose a path that would allow me to control what I could in a world where little is static and there are no guarantees. I also gained an understanding of disappointments and setbacks which are nothing more than life lessons. Being aware of those things brought me to where I am today.

Understanding your financial and life goals, tracking your money, growing your money, and protecting your money are what this book is about. I have been in your shoes. I have been in debt and was spending money without really thinking because it was just the way everyone lived. Like many of you, I didn't know where to begin with personal finances because I did not have an education about it when I was growing up. I found myself right out of college, with degrees in accounting and finance, and I was earning a decent income as an auditor. My whole life was ahead of me, but I had no real knowledge of what I should actually be doing with my money. I was earning it. Wasn't that enough? I really did not know where to start or what to do with my money.

But I opened my eyes, educated myself, and committed myself to changing my situation in order to create the life I wanted and knew was possible. Now it is my life mission to help others realize their dreams of creating the lives they have always dreamed about; a life that is free of debt, financial burdens, and stress.

With this book I will take you step-by-step through the same process and the same steps I followed. Together we will walk through the framework that I developed and refined in Budgetdog Academy to help you achieve financial success. Through this book, I will provide you with the tools to lay out your plan, track your money, grow your money, and protect your money. This book is going to teach you the same framework that my wife and I used to accomplish our financial goals. The goal is to help you lay out your own roadmap that will lead you to financial success.

I have broken the book down into the steps, chapter-by-chapter, that will enable you to be financially independent. Not all the steps may apply to you today, so you may need to come back to different chapters as they pertain to your unique financial journey. However, I encourage you to read this book in its entirety because many of the principles that I teach cross over into other areas of life such as family, fitness, faith, and business, and are all valuable and necessary to achieve continued financial success.

In Chapter 1, Who I Am: My Journey, I give you my background. This is important so you know who I am and why I am the right person to help you along your financial journey. I will explain my journey to you, so you fully understand that anyone, including you, can achieve financial independence and success. Personal finance does not have to be complicated, but it will take commitment and dedication on your part to achieve your goals. I can show you how to do this, but you have to bring the desire and passion to win.

Chapter 2, The First Step, is where we will look at the psychology of money, especially spending, saving, and investing. It is all about your relationship with money, so you are able to understand your money mindset. This chapter will help you better understand yourself and what you value, which is reflected in your spending. It also focuses on knowing your spending habits and how they are tied to your goals. I share with you what my goals were that led me to this place. It will be your opportunity to hone in on your goals that will ultimately lead you to your financial wellness.

Chapter 3 focuses on getting organized. In this chapter, Evaluate Your Financial Situation: Getting Organized Through the Balance Sheet, we work through setting up your balance sheet, which is your starting point. To achieve anything, you need to be honest with yourself about your starting point. Let's be really honest: most of us, unless we were bequeathed money before we were born, have a starting point of $0 at birth. When I started my journey, my starting point showed me that I was in a hole; I had an $8,000 negative net worth. So, I had actually gone backward. Yikes! This chapter will help you establish your number, so you will know exactly what your starting point is. If you don't know your beginning point, it is difficult to proceed to the next steps or to have any kind of barometer to measure your growth and success.

Once you know your starting place, in Chapter 4, Craft a Plan: Create Your Budget, you will now create your budget and begin to get more organized with your spending. So in this chapter, we build upon Chapter 3 and continue my Budgetdog Framework aspect called Tracking Your Money. Your budget will help you focus on your spending, tracking your money, and committing to your goal. This step may amaze you, as it can reveal wasted money that you can actually use to help pay off some of your debt or help accelerate you toward your financial goal. These steps will show you what is possible with what you currently have as long as you are intentional with your money. In this chapter, you will learn how it is possible to see the finish line even if it is years away because you will have the right tools in place to show you the exact road map to paying off your debts, therefore freeing up your cash flow for more exciting things like growing your money!

Chapter 5, Getting Out of Debt: The Triumph Before the Real Storm, will continue to give you strategies on how to track your money. Here you will learn about paying close attention to your money and debt payoff through methods such as amortization schedules. By the time you get to this point, you will be paying off debt, if you have any, either through the snowball method, avalanche method, or a hybrid combination method. We will cover what each of these debt payoff strategies entails, so you can decide which strategy you will employ in your journey. For those who are in the process of paying off debt, I am going to introduce you to an extremely powerful tool that will fully map out your debt payoff and show you the impact that even small additional payments can make to your debt payoff timeline. Then you will be well on your financial journey of becoming financially independent.

Congratulations! You are becoming more solvent, so it is now time to learn how to Grow Your Money, the second tenet of my framework and Part II of this book. This is the part everyone wants to skip ahead to, especially if they don't have debt. But let me stop you right here! If you have not mastered your mindset around money and spending, clearly defined your starting point with your balance sheet, and built and learned how to follow your monthly budget, and know how to utilize amortization schedules—how to track your money—you need to go back to Chapter 2 and start again. All of the work up to this point is the most valuable work you will do in this entire book because it will set the stage, speed, and efficiency for everything else you will achieve. So do not skip ahead.

In Chapter 6, Setting the Stage for Your Investments, we jump into information about investments, so you can make sound financial decisions to Grow Your Money. Here I discuss the five main types of asset classes for building wealth: cash and cash equivalents, stocks (equities), bonds (fixed income), real estate, and commodities (real assets). We will also delve into topics such as brokers; investment products; stock market basics; diversification and Target Date Fund Diversification; 401(k), 403(b), and 457(b) plans; Thrift Savings Plan (TSP); Individual Retirement Account (IRA); 529 College Savings Plan; Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA); Health Savings Account (HSA); Taxable Brokerage Account; and Single Asset versus Mutual Fund versus Index Fund versus Exchange-Traded Funds (ETFs). In addition, I will give you investment strategies for building your portfolio and my personal recommendations along with when to start investing and how to start investing. This chapter is about giving you the tools and information you need to really grow your money, so you can continue on the journey of reaching your financial goals.

In chapter 7, Formulating Your Investment Plan, you will learn where to invest, how to invest, and how much to invest. This chapter is about maximizing your investments. The overarching ideas for chapter 7 include where to buy assets classes, types of investment accounts, investment fees to be aware of, when to invest, how much to invest, your risk profile for investing, and an investing framework. I will give you the secrets to simplify investing.

Growing your money might be the ultimate goal for many of you who are reading this book, but let me emphasize that it is not the end. In chapter 8, Build Your Moat, you will learn ways to protect yourself and your money. A key component of having money is protecting it. This chapter is about building your moat to ensure you don’t lose your money due to some preventable misfortune. Protecting Your Money is the third aspect of my framework. The overarching ideas for chapter 8 include insurance and the different types, tax diversification compared to tax planning, trusts and wills, durable healthcare power of attorney, and financial power of attorney. I will give you insight into different insurances and layers of protection. Your action plan here will be to assess where you are, so you can create a strategy to help you provide layers of financial protection.

Chapter 9, while you may find it somewhat motivational, is really about my WHY. Budgetdog, My Money Mindset, and My Passion deviates from finances and goals to give you some background on what, or rather who, fuels my WHY today. My life is not without trials and emotional turmoil. This chapter, perhaps more than any, will show the real reasons behind tracking your money, growing your money, and protecting your money. For me, this primarily comes down to my daughter, Logan (Chapter 10).

In the Conclusion, I will give you my feelings about success, the importance of paying it forward, and the responsibility that comes with having money. Securing your financial future and achieving financial freedom mean that you are able to help others. It is such a fantastic part of the financial journey to know that not only have you enriched your own life, but you are also able to make a true difference to the lives of others. This will be our key focus as we conclude the book. The conclusion of the book is really your beginning. What you do with this information, and how successful you are, are entirely up to you.

Action Plans are included throughout the book. Consider these as your homework—homework to secure your future. Completing these plans will be the key to your success. Reading the book without implementing any of it will not help you on your financial journey. You will need to put into action each part in order to best utilize the ultimate goal in its entirety.

Throughout the book, you will also find some of my financial words of wisdom. These are takeaways you can apply to your financial life. These are rules of thumb I live by and teach at Budgetdog Academy. These are general financial pieces of advice. In addition, you will also find my investing strategies. Again, these are little pearls of wisdom for you to easily reference as you continue on your financial journey. These are the same investing strategies I continue to use. These quick tips are not enough on their own. You must put in the work on the steps and master the framework in order to maximize your success. Don't shortchange yourself or take shortcuts.

Together we will walk you through the same process I took to pay off all of my debt, including my home. You will learn how to become financially independent along with the importance of thinking about your spending and saving habits. I will teach you my framework which will give you the basics to apply to your current financial state wherever you may fall in that process and to which you can refer back to for years to come when life happens. I will teach you the basics, but you will have to put in the work to make it happen. Your why will be what turns this jumble of words into the life-changing plan you will put into action; one that will push you forward until you reach your goals and achieve your Why.

Understanding your Why is important, and it is different from my Why. You have already taken the first step to changing your financial situation. You invested in