Escape the day job - True story of one bankers escape from the 9 to 5 to become financially free.
In this episode of the MidLife Entrepreneurs podcast Business Coach, Kevin H. Boyd talks to ex-banker Christian Michael, about how he escaped the 9 to 5 to lead a life of financial freedom and to finally follow his dream of becoming a professional football coach.
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Kevin H. Boyd:
Midlife Entrepreneurs Podcast Number 4.
Kevin Boyd: (00:16)
So here I am with the Christian. Michael did you used to uh, work as a banker and uh, then he read my book The Job Delusion. So Christian, what was life like when you had a job?
Well, um, when I did land my first full-time paid job at the bank, it was fantastic because it was where I lived all my life. It was in my home town of Brighton. I had everything, I asked for in a job. I would get up for 7:00 AM I put my suit on and traveled to work on the 8:23 train to Brighton, I would get to my desk at 8:45 and work on the phone at the computer and in meetings, I felt great. Then, when I realised that it was the same routine every day with the same nonsense. Friday you from above hierarchy, um, different, uh, criteria is coming through each week with more rules, more regulation, basically more things to do and every day was stressful. Like there was no, there was not a single day where I’ve gone all I really enjoyed today. It was stress free.
Kevin Boyd: (01:43)
So Christian, um, when you read The Job Delusion, uh, what were some of the ideas that you took from it?
I started to think that working in a nine to five job isn’t the be all or end all. Once I read The Job Delusion, I started to realise that I could then borrow money from the bank, which would give me more money, which is obviously there’s and that money, which is theres, I can use to buy a property to rent out to tenants who will pay me
Kevin Boyd: (02:19)
while they go out to work.
Kevin Boyd: (02:21)
Yeah. So there’s like a key principle here which we are talking about sometimes it’s called leverage. Sometimes it’s called gearing, which is the, you know, with any mortgage these days you put about 25% of the costs down and the bank gives you the other 75%. So this is like, this key principle that wealthy people do is that they use other people’s money.
Hmm. Uh, yeah. And this is exactly why I’ve done so. Um, it was kind of running at the same time and I was going to work. I was miserable. I wasn’t getting a pay rise. Um, I was in the same routine but behind the scenes, now I have my first investment property. Like I said, it was unencumbered. And then I read The Job Delusion, I realised that by gearing and using other people’s money, the bank, I could then use that money, get the tenants to start paying me with their income, that effectively becomes my income. So they go out to work to do that. And I’m not doing anything to do that.
Kevin Boyd: (03:29)
And the beauty of this model in a way, so that is scalable. I mean when, when it’s you working, you only, there are only 24 hours in the day than you can ever work. But with using other people’s time and other people’s money, it’s kind of, it is, you can scale it as much as you like.
Sure, and what I realised is that I did not want to be working till I’m 65 in a job, which is let’s face it, probably not going to go anywhere. Um, the increase in the salary was 2% of my gross salary, which is, you know, an extra 700 quid before tax 700 pounds a year. Yeah. Yeah. I was, I saw this is not the way forward for me. And then, you know, whilst I was reading The Job Delusion, I realised that with the income I am getting in from the two investment properties I have, it was time to call it a day at the bank, which was this February. And it’s been the best decision I’ve made in my life.
Kevin Boyd: (04:48)
So how are you feeling now? Now you’re not doing the nine to five.
Alright. It sounds Cliche, but I feel as though I’ve won the lottery. But it’s a lottery of knowledge, like the wealth of knowledge of knowing that with a few clever techniques making money work for you. I have a wealth of freedom and a lot of people don’t have that in the world. The world of paying bills, paying down mortgages, we’ve capital and interest, et Cetera, et cetera. I have more time. I have less stress, if any. I don’t have any stress at all. I just feel so peaceful. And it is incredible how two months ago I was really stressed out. You know, if everything was fast paced and everything was now, now, now, and it was a lot of noise, you know, there, there was no time to just look out the window and I’d just feel free.
Financially free. Exactly. Yeah.
Kevin Boyd: (05:58)
And I think that’s great. You know, what you’re demonstrating is, and the reason I wrote the book was to try and convey some of these ideas which I got from many other books I’d read. And some of them are very simple ideas, but very powerful ideas. You know, that simple one of like using other people’s time and other people’s money, has transformed your life in a relatively short period of time. A year or two. Uh, so that now that you don’t have to do a nine to five job unless you choose to be still do and they don’t have to do anymore.
Absolutely. I mean, I feel extremely lucky that I’ve been able to gain this information as such a young age. I’m 26, I’ve got two investment properties, I’ve got great family, I’ve got great friends, but effectively I’ve got a great network and without looking at this book or having the right people around me, I wouldn’t be able to implement what I’ve created.
Kevin Boyd: (06:55)
I mean, you’re, you’re touching on a key idea here as well. We talk about in the book about your, your net work being your net worth and you know, sort of simply put is like the people you hang out with, the people you spend time with. Will, affect how you behave and if you’re with people who think, oh, the only way through life is to have a job and just put up with what life gives you, then you too will think the same way. It’s human nature. Um, but it sounds like you’ve started to kind of branch out to that into surrounding yourself more with people who have a more expansive mindset. I’m like, well this is where I’m at, but how can I change it?
Yeah, absolutely. What I feel extremely privileged in as well is that I’ve been lucky enough to have inheritance, I’ve used that money to get the first investment property, uh, two years ago. I then read The Job Delusion, and met yourself and I’ve used the banks time and money to loan me the funds in order to buy the property. And then now I’m in this position where I’m financially free. So is, is, is like, you know, those steps to get to this stage here. You know, obviously it didn’t happen overnight, but like you said, I can easily go and get a job now if I wanted to earn more money, if I want to have a new chapter. But at the moment I’ve, I’m enjoying this free time.
Kevin Boyd: (08:30)
And I think we identified a really key idea there as well that when you received your inheritance, especially being at a young age and been could have been very tempting to go out and just sort of, hey, let’s blow that money. Let’s buy a fast car and go on holidays and stuff. And it’s something I talk about in the book about the difference your assets and liabilities that you actually chose to buy assets. And basically an asset is something that brings money to you and a liability, something that takes money from you. So, and of course, you know, buying a, a nice car, it’s lovely, but it’s costing you money. It’s, it’s depreciating by the day, but you didn’t do that. You went and bought assets and now they’ve gone up in value and they’re also creating income for you every day. And these are some key ideas that people need to really start to grasp. It’s like start filling your life with assets are not things that keep taking money away from you. Liabilities.
Absolutely. I mean, as time went on, um, my parents said to me, Christian, do you want to come and have a view in for a flat? In my head I was giving up 150,000 pounds to go and put into bricks and mortar and I thought, well, I could use that money and splash some of it or a nice car or a nice holiday or some new clothes or trainers or, or whatever. And, and then it all changed and my mindset had changed. Um, over time. I mean, I think what prompted that was not only the market was starting to go off a little bit.
The property market.
Exactly. Yeah. Um, but also the interest rates are obviously going down and I wasn’t getting that interest that I was every year. So when interest rates hit zero, I started to panic and I was like, Whoa, I’m looking at doing that because of the capital’s not make me any money. So, then I started to think about property and I took the plunge and I put an offer in for a one bedroom flat, for 160,000 pounds. And it was currently earning 600 pounds per calendar month. I thought, right, I can use this money to put into this flat bar, still have a little bit of money leftover to do something else with. So I did it.
Kevin Boyd: (10:55)
So you’re only putting like 25% down for the cost of the property. Exactly. Yes. So this is a key idea, isn’t it? That some people think, oh, it’s good to have no mortgage and own the property right. Outright, which is, which is fine, but it means all your money’s stuck there.
Exactly. And this is exactly what I was under the impression that if I was going to put all this money into this property, that’s it. Like there’s no more budget. I’m still going to have to go to work to earn money and to make a living. Yes. I had um, and money coming through, through the, the tenants pay me for income. That’s great. You know, that was like a, a little bit of a bonus after my salary, but I was still going to go to work. I’m still having to use my time, um, and my energy to, so obviously, yeah.
Kevin Boyd: (11:46)
So what changed your mind about keeping all the money in there and switching to getting a mortgage?
When you have a mortgage, you don’t have to pay off the capital and interests at the same time every month for 30 years of the term of the loan. Like what you could do is just pay the interest.
Kevin Boyd: (12:07)
Well hold on, hold on. You, but you’ve got to pay off the loan at some point. How does that work?
Haha, well a lot of people think that the price of the property today, is going to be exactly the same price as the property in 30 years time. When the bank wants its money back, the capital,
Kevin Boyd: (12:26)
it’ll be the same number. But because of inflation, that 200,000 will be in 30 years from now. What will 200,000 be? Probably what most people earn in, in a, in a year in their job. So it’ll be a smaller, sum of money.
Exactly. So let, let’s, let’s be clear. You can’t buy youth, but you can buy freedom effectively. So, so basically what you’re doing is your holding that 200,000 pounds that you owe the bank for 30 years time. But in that 30 years you would have income, the property price would go up and you’ve had freedom.
Kevin Boyd: (13:08)
Yes, I moved because cause we’re basing that on in the UK that house prices double ran that every seven to 10 years. So Yes. we assume 250,000 pound house in 10 years would be 500,000 in 20 years would be 1 million and in 30 years, but actually be 2 million pounds. But you only have a 200,000 pound loan, which is tiny.
Sure, so, when the bank says, okay, would you like to repay us back that loan that you owe us or would you like us to extend the loan? From the bank’s perspective, obviously because I used to work for a bank, the bank look like this, they earn money from interest. Effectively the bank owns the asset. However, your asset has now doubled, if not tripled in value. Therefore, when they give you the option, would you like to extend the loan for another 10 years time? Yeah. You’re not going to say no are you?
Kevin Boyd: (14:10)
It’s interesting the way banks work because we were talking about earlier about assets and liabilities. Assets pays money to you liabilities take money from you. From a banker’s perspective. Lending money is considered an asset because that’s going to bring some money to them. And actually having the money in the bank is a liability because there’s not making them any money. Um, so the other thing that banks always want to know is that their money is secure. So if they’ve lent you money against an asset, uh, when you first buy it, and it’s like 75% of the value of the asset they’ve lent money on, but at times 25, 30 years have gone by, that will only be something like 10% or 20%. But it is secure.
So flipping it, flipping the loan to value into your favour. Yes.
Kevin Boyd: (14:55)
And so the bank, I, you know, I can’t predict what the banks will want to do in 30 years time, but just based on that fundamental idea, I’d be surprised if any bank didn’t want to keep lending you more money, particularly with investment properties because they’re not your own home there. They’re a commercial product. So they’re more likely to extend that though. This is what we like to talk about is opportunity cost. It’s like, yes, you can of course pay that mortgage down, but that’s money you’re taking away from yourself that you could do other things with.
Exactly. And what Kevin was saying to me was, okay, how about you just pay the interest and then the money that you would have paid for the capital you can do with something else, you can spend it to live, you can spend it again and do something you want to do
Kevin Boyd: (15:45)
or acquire more assets. Exactly. So yeah, so it’s a really simple idea. Stop paying down the capital on your mortgage. Keep, keep the extra money and do something with it. Do something to increase your wealth, increase your assets, and ultimately increase the amount of fun you can help with your life.
Hmm. I agree.
Kevin Boyd: (16:06)
Thank you for listening. This has been Kevin Boyd of Upward Spiral Coaching. Please subscribe to my podcast and follow me on YouTube and get in touch if you want to discuss how I can help you transform your life.
Thank you for listening. This has been Kevin Boyd of Midlife Entrepreneurs. Please subscribe to my podcast and follow me on Youtube and get in touch if you want to discuss how I can help you transform your life.