Hello,
Looking at my life and how much running around, working and worrying I do to keep myself “alive”.
In accordance with this I’m setting some goals to achieve and milestones to reach along the path to financial independence. Currently I am a pure prolaterite in its pure meaning that I own no property and am forced to sell my labour in order to survive.The most important things one needs to survive are:
(1) Food
(2) Water (although we only need to drink a small amount we use much more in cooking, bathing, cleaning, growing plants etc)
(3) ShelterEach of these is represents a goal. For each one I must achieve an ongoing income that pays for this.
For instance I am working towards a shares/property trust portfolio that delivers about 6g a year in dividends which is what I estimate I would roughly spend on food. This is my first milestone.
The next milestone would be develop further ongoing income that covers my “shelter” be it rent or repayments on a mortgage.
Water is important as well but very hard to get your water turned off (compared to say electricity) but I assume most residence pay about $700 a year for water.
The next milestones cover things like:
Electricity, gas, car rego, petrol etc, asdl, phone line.
Other things like movie tickets, decent clothes, new shoes are important as well but much less of a problem/distraction from developing business processes and or investments.
With the freedom to develop this business processes and investments I could then establish ongoing incomes (rents, dividends, business profits) that would make cover the lesser important things mentioned above. I would tackle each one in the order in which they are responsable for maintaining my quality of life.
The more I get out of the way the more freedom I would have. Instead of using time to earn money for paying bills I am using my time to earn money to go on overseas trips and treating the world as my playground.
I think thats what most of us struggle to do caston. Not sure that most however are so methodical about it. It kind of just happens really. I guess though everyone is very different in how these things are approached given that we all have distinctly different lifestyle expectations. My family are moving ahead on a single wage, working hard to achieve our goal of financial freedom. This is achieveableBecause we go scrimp and save as much as possible, while all around us others are lapping up shiny new commodores, widescreen tv’s and other expensive toys. Sure we do go without but our common goal is very clear and we know what we want. We will have all of the above soon, paid with cash, while the others are still paying these off.
Eric
Eric,
I know what you mean. I’m driving around in an ’82 Datsun Stanza. Its very reliable but its not the best for style. Still it gets me around Perth and doesn’t cost me much in petrol.
I would like to be methodical about become financially independent and develop it as a science. Write out a “personal independence” plan much like the business plans I have written in the past.
Much like “Work ON your business not in your business”
I’d like to say: “Work ON your income not for your income”In table 5.1 of Steve’s “$1,000,000 in property in a year”
he outlines how many properties you would need to become financially independent based on the net weekly caseflow of each. At the moment $30,000 a year is to high a goal for me at least to start with. At the moment I work many long hours to pay myself about $12,000 a year.Therefor I want to take the thing exposes me the most when I operate my business. I have decided this is food. Everyone needs to eat and I particually get a bit funny if I don’t have a decent meal at regular intevals.
That is if I haven’t money for food and someone calls me up asking me to do the job for peanuts I may well accept that offer. If, however, my food income is self-sufficent I can tell them politely where to go.
So my first milestone is to gain a recurring income of $6000 a year and I need to caclulate all the actionable steps to get there based on my current situation.
regards,
Chris
To make the first milestone a bit easier I’m thinking I may make it water instead of food.
It’s more just to make a start and get at least one milestone out of the way. At the moment I don’t need to pay the water bill but this will show what happens when there is money left over. It is reinvested.
So my first milestone is to secure a recurring income of $700 a year. After that I will move into food.
sounds to me like youre well on the way to achieving great things for yourself! particularly like your eagerness to have it all mapped out and planned. and I guess thats the challenge. setting some short term term goals and sticking to them is conducive to achieving your longer term strategy.
Eric
Chris (nice topic btw) and Eric
I hear what you’re saying, but there’s an alternative view. I think one can not have investments and live pretty well, or one can have investments and live pretty poorly, with the plan of living well in say, 10, 15 or 20 years. I think it’s a balance. In my workplace, about half the staff have investment properties, and the other half do not. It’s generally the half that do not who go on overseas holidays and have weekends away- whenever they feel like it- and pay with cash! They live in nice apartments, eat the best foods, and buy expensive clothes- again, whenever they feel like it. The half that have investment properties may be more forward thinking, but all moneys go towards their investments- it’s all about opportunity cost, I suppose. But giving away one’s youth to have a decent middle-age is not the only thing to do in life. God help us if there is a significant property crash in 10-15 years- we’ll be worse off than the ones who lived it up when young.
I think if investors live poor for too many years, it has a real effect on who we are as people. We become the “investing poor” (as opposed to the “working poor”). I’m not sure that’s the goal of investing- well, certainly not my goal.
I know there’s good debt and bad debt etc… but a lot of the property investors I know are living pretty poor- and this topic and many others reflect that.
Think about it- when was the last time we went out and bought a few CD’s without feeling guilty? Or a few hundred bucks worth of clothes- just because we felt like it? When did we last just up and go overseas? Living a working life – without investing- might not be forward thinking, but the people I know who work and have disposable income, have great lives. I am not sure that whoever has the most debt when they die wins. Our portfolios might win if we put every last cent of that tax return back into it, but we could also spend it on ourselves and retire a year later.
It’s all about opportunity cost- that holiday we have now will have lots of memories- but if investing is one big grind, give me the holiday any day.
kay henry
hmmm..reminds me of the miser on TV the other day who is saving for a campervan..she saves on ‘everything’, using the free community newspapers as toilet paper, that saves her a couple of dollars a week at least…
Bit rough for me..sometimes you just gotta spend the money i say..
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorGreat points all.
Interesting time for such a topic (and a few similar topics to appear on PI.com). mmmmmmm.
Oh, it’s tax returns time. ……….Money to spend. Guilt free holiday or next I.P.????
Personally, I am swinging from “all work/investing and no play ” to a happier compromise with a bit of a life.
Which is again interesting, that a lot of forumites have to force themselves to indulge in lifes pleasures along the way. Whereas the vast mojority of the population would have to force themselves to invest at all.
Life is short, sometimes shorter than you might expect.
…..sorry to swing off topic caston. I think that your suggestion of baby-stepping financial freedom into acheivable bites, is wise. Rather than the alternative of putting your head down and going as hard as possible until………….blammo. Middle age retirement.
How much does it cost to get your twenties back???
Is it better to be happy in your 30’s and 40’s?
What is your personal compromise?
Has anyone pre-planned their life with actual hindsight?
What is life?
:0)………………yabber, yabber, yabber.
Live, Learn and GrowLifexperience
balance is the key i think. spending quality time with your kids or partners is just as vital and important as making the right investment decisions. sometimes the two go hand in hand. reading kays post above reminded me of something spontaneous i did last november. without any real planning i arranged to have the kids looked after by the outlaws and took my wife for a couple of weeks to kuching in malaysia. the time there was gold! i plan to do the same again this year. my point i guess is that we shouldn’t loose sight of our goals but on the same token lifes short (as we have seen from the terrible events in the uk recently-god rest their souls). have fun!
Eric
Well i’m 24 and people still ask me if I’m 18. I plan to keep fit and still look and feel like i’m in my 20’s when I’m in my 30’s
The way i’m designing this “personal financial independence” plan I aim for it to be a downhill battle most of the way. There IS a need to scrimp and save at the begining to get various deposits together (as you fight your way up the hill) after that all of the investments are cashflow positive or aim to quickly become so.
There are a few things unique to my situation that won’t make my plans applicable to everyone but I hope that if and when I decide to release the plan (perhaps while it is still being written) it will help other people develop their own financial independence plans.
Some of the things unique to my situation are:
* I’m currently self-employed as the technician and the helm of a technician-run company
* I will be very soon taking up a full-time laboring job so I don’t need to get a low-doc to get started in property and so that I have a regular income
* I will still be working some hours in the business but will be handing most of the reigns over to another tech who will rent my 1300 number (and thus my customer base from me)
I’d like to buy an office for the business and get it set up properly (work on it not in it) but this is going to be extra costs for me unless I can design the business to generate enough income to cover these costs which I would have time to do if I was financially independent. Chicken or the egg
I’ve done a little diagram in kolourpaint (simple KDE integrated paint program for Linux) to help explain my strategy for as as lifeX described it “baby-stepping financial freedom into acheivable bites”
This pic illustrates the problem.
http://www.arach.net.au/~pcaston/financialdependence.png
The pic in the middle came from: http://www.sputnikdesignworks.com/clipart.html
So full credit to sputnik for the clipart.The personal financial independence plan nuts out the solution.
The recurring income goals for things like food are probably going to be broken into different amounts for each “baby step”.
i) The minimum you could survive on
ii) A good portion of your regular diet but no splashing out
iii) Everything you would eat including going out to restaurantsI’m not advocating sticking to i) or ii) simply creating a recurring income that would cover them without needing work for them.
I lost that laboring job I took up. And after only 2 days…
So much for the “just do time” while saving up $400 a week strategy.
caston,
don’t let a little thing like a change of employment dampen your enthusiasm.You seem focused, and this will help you through the hiccups of life.
Good luck.
Live, Learn and GrowLifexperience
To be really I honest I have been quite down the last 3 days or so.
I’ve got my 1300 number back now and hopefully the amount of work i’m getting will pick up as July ends and everyone wants everything done before Xmas. I’ll try and put my rate up and be ultra incontrol of my finances.
I want to document the whole rags to riches process in nitty gritty details
Caston, you seem a very interesting and dedicated person!! You will succeed. Im sure you know already, but just remember (sorry about the cliche!!) that your life is about the journey not the destination and that the journey takes so long whilst the destination is a point. Enjoy the moments and whatever it is you do along the way.
caston,
I think sometimes it is better to get a job as a paye employee- even though so many people on wealth forums slag off jobs… jobs making people just over broke and all.
Being an employee can have one paying more tax than a business person- but taxation rates have been reduced recently. Being an employee can have fixed hours, whereas a person having their own abn/business can work much upward of 35 hours a week. Being an employee means one gets paid for holidays and gets superannuation paid, plus long-service leave.
There are some valuable things that can arise from being an employee- working for someone else who takes the risk. Gettinf a regular income is very important to me, at least.
I guess the real way to balance what is best for you is to check out your income at the end of each year. On another post, we’ve been discussing well=paid jobs- from < 80k- >130k… If people are liing from one meal to the next, it might be worthwhile earning a large amount as an employee, having no risk, and having a stable wage.
kay henry
I actually work very hard doing what my customers ask me to (and 99% of them have no idea what servers are used for or what runs on them) and sometimes bigger projects (setting up Small Business Server, Virtual Private Networks etc) can be daunting if I have to personally sign a service level agreement and give a fixed quote beforehand if i’ve never actually done it before and don’t know how long it will take.
Most customers can’t afford a server anyway and you need to offer finance.
And without doubt while I’m planning/quoting/implementing it I’ll get a large batch of users calling up with emergencies with the desktop PCs and internet connections either wanting me to come out or wanting support over the phone. All this while I have to manage the books.
I had a job interview recently.
The problem is they wanted me to have a lot more exposure to servers than I currently have.
One thing I did offer is that I could forward my 1300 number to their line so that the receptionist answers (informs the customer that my business has been aquired an that standard commercial rates are now applicable) and fishes the work out to me. As I get exposed to servers more (both Windows and Linux) and complete my MCSE they can gradually give me more responsibility.
The guy kept a complete poker face while I was explaining this to him so I have no idea what is going to happen. He said they were interviewing other people as well which doesn’t sound good.
I told him I was definately interested in moving to fulltime employment because it would be much easier to manage than running the business and doing everything as I am now.
There’s huge fortune to be made buying out technician-run companies like mine, setting them up properly (by developing all the processes and giving people jobs!), franchising them and using the franchise to build a commercial real estate empire.
If I was financially independent I could focus on such things instead of running around to make my next buck and feed my ever rumbleing stomach.
You may notice I haven’t been bored and posting here as much as I have been flat out since the beginning of August.
I’m saving up as much as I can. Even eating canned tuna and pasta instead of getting subway! Well actually that not entirely true but I had 4 oranges and left over chicken instead of getting red rooster for lunch today.
The means of becomming financially independent I’m investigating at the moment is every six months taking out another margin loan for an unlisted property trust. Making the repayments and saving up my next deposit out of my own earnings until I get the dividends. I need to do much more research.
a friends father was in a similar spot to you a couple of years back. Running around like crazy trying to break the bigtime with a franchise.
At the time he was on centrelink as he had no income and living at his sons place on 2 minute noodles and running up huge phone bills he couldn’t pay trying to network and grow his business.
A couple of years later he has hit the bigtime and now has a franchise thats going international this year. He is making huge bucks now and is able to give his son a rewarding and challenging management position.
Aim for greatness and keep persisting. You will succeed.
cheers
Live, Learn and GrowLifexperience
lifeX,
Just out of interest, what franchise is that?
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