Personal Finance Strategies - Ben Kinney / the Cash Flow Quadrant

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Personal Finance Strategies - Ben Kinney / the Cash Flow Quadrant

Julie Coleman
Rental Property Investor · Los Angeles, CA · Member since 2019 · 22 posts · 16 votes

To follow up the @BiggerPockets .com podcast last week with Ben Kinney, I want to hear your thoughts about his investment strategy breakdown below. It reminds me a lot of the assets vs liabilities discussed in Rich Dad Poor Dad's Cashflow Quadrant Book. How does it apply to your situation and what vehicles are you investing in to mimic a similar scenario?

Ben Kinney's Stategy

  • 20% - Extra Cash Reserves (Emergency Savings fund)
  • 20% - For Buy and Hold Real Estate
  • 20% - Financial instruments (retirement and 401ks, ways to defer taxes)
  • 20% - Businesses to invest in that other people run (property management properties, becoming a hard money lender, stocks)
  • 20% - Charity

Below is a graphic how I currently divide my personal income and assets. I am a 30 year old who currently owns 1 owner occupied investment in California and am looking to purchase buy and hold investments using refinancing in addition to the personal financing strategy below to further build wealth.

Feel free to share your own strategy and critic mine for the better. Thanks!

From my W2 income

  • Automatic deposit into a bank savings account for emergency savings funds for personal use. This account is not for emergency or capital expenses in real estate. 
  • I currently house hack my only real estate investment so I pay my portion of "lost opportunity of renting the unit I occupy" back to my investment fund plus any extra money to make up 20% for future buy and hold real estate.
  • I currently only pay the max amount allowed for 401K IRA. No 401k roth.
  • I invest in the traditional stock market. 
  • The amount I have to live on at the end of the day. I hope to give back more once systems are up and running later in my investment career. 
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  • Julie Coleman
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2019 · 22 posts · 16 votes
    7y

    #cashflow #cashflowquadrant #biggerpocketspodcast @Brandon Turner @David Greene

    1Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    7y

    nice flo chart

    0Reply
  • Julie Coleman
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2019 · 22 posts · 16 votes
    7y

    @Max T. Thanks!

    0Reply
  • Tony Nguyen
    Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
    7y

    Hey Julie, nice flow chart, how'd you make it?

    Everyone manages their money differently. When I first started, I actually delayed paying my income taxes for a year to have capital for a down payment. Yes, I had penalties to deal with, but they were small compared to the proceeds I created. In addition, I used methods 1 + 2 that I've written below. 

    Investing into stocks/401k is completely up to the individual. For example, I don't which many will say is not the right move, but again, I do better in real estate then I do with stocks/401k so it's my decision to use "concentrated efforts" to make the best return possible on my money. 

    To answer your question, what I would do if I were in your position would be one of two things:

    1) use sweat equity to find deals and partners to fund them while you work them. In other words, be the operator, find a financier. 

    2) find partners to fund your value add investments as a loan (no equity to partners) to grow your portfolio.

    This answer can get very, very in-depth so feel free to reach out if you want to discuss, thank you. 

    0Reply
  • Travis DeForge
    Rental Property Investor · Wiesbaden, Germany · Member since 2019 · 49 posts · 50 votes
    7y

    I do this:

    5% income to Roth 401k (5% company match)
    10% to Roth IRA
    20% Saving for the next down-payment(s) (real estate)
    10% Self Directed investments (Syndicating/Crowdfunding/dividend growth investing stocks, etc.)
    30% Living expenses (everyday bills) (No housing costs/ no consumer debt)
    5% Saving for miscellaneous expenses (things like oil changes, snow tires, etc)
    10% Saving for large purchases (next vehicle, vacations)
    5% Unallocated / Charitable giving

    This works for me because I have no consumer debt or student loans, and my Emergency fund is already funded. Everybody is so different on this stuff. I try to have as much of my money as possible buying more assets (currently 45%). That will go up over time because I don't expect my cost of living to increase dramatically, but my income will.

    0Reply
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