For the longest time, I thought financial freedom was only for the wealthy. But everything changed for me after I read this sentence:

Financial freedom happens when your wants and needs are exceeded by your passive income.

The minute I read that statement, it spoke to me. It said there is a defining moment when financial freedom happens. Until I read that sentence, I was not sure how much money I wanted or needed or what I wanted money for.

It also said to me that if I kept my wants and my needs reasonable, then the amount of passive income I’d need to achieve financial freedom would also be reasonable. I would never settle for keeping my dreams and aspirations low, but I recognized that the sooner I got to even the most meager level of financial freedom, the sooner I would be working on my dreams and aspirations full time!

And the deepest revelation came over me: If getting wealthy was in the cards for me, it would happen after I was financially free. Why? Because after I was financially free, I wouldn’t have to have a J-O-B! I could stop giving up huge blocks of my life in the name of a paycheck that was barely getting me through life. I’d have 2,600 hours per year to figure out “wealthy” and how I was supposed to achieve that level.


Now try this exercise: Imagine a little kingdom with everything you need to survive in it—your home, utilities, cars, food, insurance, living expenses, entertainment and anything else necessary for a reasonable life. Now imagine it to be in medieval times—your castle, your horse, your chickens, your goats, your armor. Next, imagine building a moat all the way around that little kingdom and those necessities. Then, fill the moat, first with water and then with alligators and crocodiles and piranhas and such to guard what’s inside. Everything you need to be comfortable in life is to be protected, safe inside the confines of that moat.

Next, calculate exactly how much it would cost each month to maintain everything inside your moat. Come up your “number.” The day your monthly passive income equals that “number,” you are financially free. You can leave your job the day your passive income equals that “number.” When that “number” is coming in—rain or shine, whether you get out of bed or not—you are free. Your lifestyle will be paid for in full. The minute your lifestyle is paid for in full is the minute you start chasing all the dreams of your life full time!


So how do you do it?

Step 1: Cut everything (expenses) that is less important to you than your financial freedom.

Step 2: Determine how much passive income you need to pay for what’s left inside your moat.

Step 3: Create the passive income to pay for what is inside your moat.

If you could try and fail without going broke, how long would it take you to meet or even exceed your dreams? Imagine being able to sit within the safety of your own moat, in your castle, with your expenses paid and the drawbridges up and locked. Imagine being able to live comfortably, never having to worry about making a living or having a job. Do you think you would be rested? Do you think you might even get restless? Do you think you would come up with a good idea? Do you think you might be ready to engage in an endeavor or an adventure, with energy and vision and vigor, outside the castle walls and the moat?

Now, imagine that one day you have this great idea you are dying to try out. You’ve calculated everything, and you’re ready for your quest. You sound the trumpets, drop the drawbridge and go forth, beyond the safety of the castle walls and over the moat. Without risking the assets that provide for your life inside the moat, you charge out into the world to prove the value of your new idea.

But let’s say things don’t go well. The enemy lines aren’t where you thought they would be. There are too many of them. They have weapons you’ve never seen before. So you flee back toward your castle and along the way you gather many arrows in and about your backside. As you race back across the moat and into your castle, the drawbridge is quickly lifted, closed and locked. You are wounded and out of breath but safe again in your sacred place of refuge.


Because you did not risk the assets that pay for the expenses inside the moat, your kingdom is still there for you. You spend time inside your kingdom removing the arrows from your backside. You spend time healing. You spend time thinking, pondering: “What went wrong?” You think even more: “What did I do, and what should I have done? What will I do differently next time?” You rest. You replenish your energy and your stocks. You adjust your ideas and your aims. You create a new, improved plan.

The next time you charge outside the gates, you are successful. Instead of returning in a sprint with arrows in your backside, you arrive at the drawbridge on a horse that is gingerly walking. You are smiling proudly. You are traveling with the spoils of success slung over your shoulder. Your family cheers as you cross the moat. The village celebrates your victory with a fine feast.

Now ask yourself this question: If you had a castle and a kingdom like that one, how long would it be before you were wealthy beyond your dreams?

If you could fail forward, what might your future look like?

  • Mitch Stephen

    Mitch Stephen is an investor, author, educator, inventor and songwriter in San Antonio, Texas. He began investing in his 20s and has been a full-time investor for the past 20 years. Mitch teaches “The Art of Owner Financing” and how to become financially independent by creating cash flow from real estate. He is author of the book series “My Life and 1,000 Houses.” Contact him at 210-669-4020 or Mitch@Homes2Go.NET. Learn more about his programs and investing at, and

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