The Consolidation Phase

Something happens when you start accumulating assets — you also often start accumulating debt, especially if part of your portfolio is in property. That may sound scary at first, at least, until you realise that you’re in complete control of the type of debt you accumulate, and this particular debt isn’t the bad debt that will drag you down. Rather, it’s the good kind of debt that you can leverage. 

Still, your ultimate goal is to clear your debt, which brings you to the consolidation phase of wealth-building. This is the phase where you start rapidly clearing your debt. And along the way, you also increase the level of protection that you have in your portfolio. At this stage, you’ll notice some significant changes to it. And you'll start implementing a step-by-step strategy to protect yourself.

It’s also at this stage that you start building cash flow options. And what I mean by this is that you start reaping some of the fruits of your labour. For example, you may manage to get one more day of the week back because your properties generate enough cash flow. That means you have one more day to spend with the kids, or do whatever it is you feel like.

Or, this could mean that cash is flowing in to the point where you can afford the deposit on your dream house, and have the choice to send your kids to a private school if that’s important to you. Whatever it is, this is the stage where you start making some of the stuff you’ve been dreaming of a reality.

The key message to take from this is that you don’t need to wait until you’ve attained “financial freedom” to reward yourself.

During the consolidation phase, you have more cash flow options and you’re pulling your debt down. That’s going to free up your time and resources, which gives you more choice in terms of what you do next.

You’re still in control of creating that situation. You can still make it happen.

— Todd Polke