Tag Archives: creating purpose

Get Rid of Your Money

Most Americans don’t have very much in savings. Those that do try to protect the amount they have, whether that’s $1,000 or $100,000. But I have a challenge to everyone who thinks stashing money will make you more secure. What if you got rid of your money, what would you do?

If you had $3,246 in the bank one day and $25.47 in the bank the next you’d probably go into panic mode. Your instincts would start kicking in. You’d figure out how to cut spending, eliminate waste from your life, and earn more income to make the difference. In other words, you’d wake up.

What happens when we have chunks of money sitting in the bank is that we convince ourselves that we’re making it, or that we’re safe. This is dangerous.

Instead, realize that the little money you have in the bank, be it $45 or $45,000 still makes you broke. I know to a lot of people $45,000 is a lot of money, but if you want to change the way you think about money, it starts here. Instead of thinking of what you could buy with $45,000, think of what you’d like to buy.

As soon as you realize that the $36,000 car, $5,000 vacation, and the 25 year retirement are on your list, $45,000 doesn’t seem like very much does it?

I personally have a little over $6K in the bank. Currently I’m gearing up for another year of college. With 2.5 to 3 years left I’m beginning to realize that it’s going to be difficult to get through college with no debt, even with lower costs than most, on just $6K. It’s time to up my game.

I’m going to have to start stashing away for college next year, both by working over the summer, taking odd jobs, and even working during the semester. Having perspective on that $6,000 helps me realize that it’s really not a lot of money – that reaching my goals will require a change in mindset.

For everyone who’s out of college and not saving for something that’s just around the corner, consider getting rid of your money. Now I don’t mean you should go and buy a newer car or travel to Europe. But it’s possible that some day you can do those things if you do what I’m going to suggest you do with the money: invest it.

Investing the money you have other than an emergency fund is a great move. Make sure you have enough money for 3 to 6 months of expenses and everything over that needs to get out of there. Put it into retirement accounts, buy real estate, pick an investment that you feel comfortable with and are ready to pull the trigger on. (just make sure to do your research)

So next time you get a $3,000 bonus, inheritance or gift, consider getting rid of it by paying off debts, securing an emergency fund, and finally putting everything else out the door into the world of investing.

Disclaimer: The information regarding personal finance found in this blog is not a substitute for professional guidance. By following the guidance in this blog you are doing so at your own risk. This blog is simply the option of one person for informational and educational purposes. Please refer to your personal financial advisor in regards to guidance over your specific situation.

How do Most People get Rich?

What if you had to choose one investment vehicle to get you to riches? What would it be? It’s an intriguing question not only because so many people have done it so many different ways, but because the question deals more with the future than looking at the past.

The vast majority on the Forbes billionaires list have gotten there through owning all or part of their own business. The industries range from technology to finance to fashion and even real estate.

Most of the newer billionaires have done it through technology (like Mark Z., Bill Gates, and Jeff Bezos). A good portion of the older billionaires have made it though finance. But even within sectors there is great variation as to how the billionaires made it. For example in the technology sector Jeff Bezos has done it through online retail while Zuckerberg has done it through social media.

Real estate, whether you consider it a business(which it true) or it’s own investment category altogether has also created many wealthy people. One notable difference between billionaires in real estate and millionaires in real estate is that the millionaires have focused primarily on single family and small multifamily homes while the billionaires have purchased scalable, large operation commercial properties. (For example Donald Bren.)

Arguably it’s very difficult to get into these large operations without significant capital. So for the average investor a good place to start is either smaller properties or partnerships. Either way you look at it, real estate as a whole has been a solid investment for both the well-off and the ultra-rich.

If you’re looking to the fastest made billionaires technology businesses are your best bet. If you’re looking for the most stable, predictable, simple and versatile investment, real estate is your best choice. Most of the other investment options including bitcoin, gold, bonds, futures, options and commodities have considerably less stellar track records. However the one similarity between the ultra rich is that they have done so with extreme focus and specialization – becoming experts in their field of influence.

As times change and new technology becomes more mainstream there becomes a great advantage to the person who is willing to pick one thing, just one thing, and focus entirely on it.

How Can Active Income Be Better Than Passive Income?

I could pretend like this was easy – like I could share the secret sauce of creating passive income for life. But it’s not that easy. No reputable story I’ve heard, book I’ve read, or person I’ve talked to, has guaranteed 100% passive income at very little or zero personal sacrifice. That’s because it doesn’t exist.

When looking at income you can categorize it into three main groups: Income you work for (earned income), income that comes to you without work on a regular basis (Also called passive or residual), and income that you receive when you sell an asset (stock or real estate) for more than you bought for it (capital appreciation).

There are a lot of videos, books and even seminars, that claim to help you create passive income. I’m here to show you why they’re all wrong.

I don’t want passive income. At least not in the way most of the gurus are talking about. Recently I’ve been reading Tim Farriss’ book “The 4-Hour Workweek”. While I’ve been able to glean some useful information out of it like how to simplify certain tasks and create automation I disagree with the premise of the book: the less work the better.

The whole idea of slimming and cutting your time down into 4 hours of work each week is actually appalling to me. While I certainly don’t want to be working 80 hour weeks like he talks about avoiding, I also have seen the benefits of working hard with true purpose.

Whenever I get done with work there is a feeling of built confidence and endurance. Even on challenging days you feel like you’ve overcome worthwhile obstacles. In my option without some sort of work life becomes meaningless.

From Christmas 2017 till March 2018 I had practically all the time in the world to think about this question. I was in Zambia with my family, spending time with them before I headed back to the U.S. in March.

The thing was most of my family was busy during the day, which left me plenty of time to think – including about this question. I thought, how can generate enough money so that I don’t have to work. I strategized this for a while. I finally realized I didn’t want to eliminate work altogether. I simply wanted to make it optional.

To be fair Tim Farriss is actually probably right about a great deal in the book – that there are ways to relatively easily create more time in your life – whether through automation or elimination. However the whole way the book is presented is how to reduce work or almost like work is bad. He tapped into the feeling that many people feel: they don’t like work.

I have a simpler and (I believe) better solution. This choice is difficult to find yet it’s what some of the most successful people in the world have chosen. People like Bill Gates, Jeff Bezos, Elon Musk and many of the ultra rich followed this path. Why not pick a kind of work that you enjoy? Why not experiment and explore the options till you find something that excites you and makes you enjoy “work”?

 

What $30K Can Become

 

I’ve had the opportunity to travel a lot over the last few years. But over the next few much hard work lies in store. This doesn’t mean I’ll cut out travel completely, but I may have to sacrifice more trips for reaching my goals.

One of my biggest goals over the next four years as I finish college is my retirement account. I maxed out my contributions last April for the 2017 tax year($5500). This year, though, I hope to do the same. That means, by the end of this year I should have roughly $11K in my Roth IRA.

Imagine what this could turn into over 30, 40 or even fifty years! As I work this summer and during the school year I will see the balance of my Roth gradually rise. Maxing it out (which will be no small task) for the next four years(2018, 2019, 2020 and 2021 will set me up for a fantastic retirement safety net.

Maxing out contributions over five years (2017-2021) is $27500, but most likely it will be a little more by 2021 so there’ll be roughly $30K in there let’s say for simplicity. Compounding that investment over 38 years (2022-2060) at roughly the long term average of the stock market, 10%, leaves me with the following picture:

Screen Shot 2018-07-10 at 7.06.53 AM.png

I got this off Calculator.net, but there are many other tools out there.

When I first looked at it I couldn’t believe how much growth this thing could kick out. However I started to think of ways to improve it like the rate of return and the time horizon. What happens when I wait just five more years to age 65?

Screen Shot 2018-07-10 at 7.09.51 AM.png

The whole amount raises about about $700K!

There are a few things to consider though. For one this totally forgets about inflation, which will eat away at the purchasing power considerably.  Seconded this assumes a 10% compounded rate of return. Although I’m not actually considered about this because stocks tend to do very well over long periods of time.

Altogether the picture this paints is one of optimism and potential. Imagine if I continue to contribute beyond the age of 22!

My Friend Joseph

We all crave for some sort of sense that we’re creating value. As I spent months in Garneton, Zambia, I realized what I was missing was that same sense. I wanted to feel like I was contributing, or producing something in my life.

The simple act of helping out at the LifeSong orphan school did just that. As the day began I started reaching out to kids who looked open to conversation with someone. I told them my name and they said theirs – things that everyone does around the world.

I remember meeting another kid whose name was Joseph. We shared the same name! I got the chance to join Joseph and his friends during class, and even teach for a bit. We talked about the workbench, and how it was used for carpenters and people who worked with their hands.

My friend Dean Leonard, my Brother, and I volunteered to help when a group from Fort Worth came. We each joined in singing, dancing, and coloring with the kids. It was a fulfilling time – something I had been missing during my time in Zambia.

I recall trying the African food, including fried caterpillar – a Zambian tradition. I placed one in my mouth slowly and hesitatingly. I began to chew. It felt chewy in my mouth – almost like chicken but chewier, not actually that bad.

Often I’ve faced moment like this – moments in which I feel like I’m not contributing and not being productive. Many times the best thing to do is to just spend time with people, have fun, build into their life and learn together.

Vison & Purpose: The Freedom to Dream

Whenever I travel somewhere I always enjoy imagining what the city will look like in the following decades. For example in my recent travels to Dallas, TX I couldn’t help but wonder what this city, which has been growing rapidly in the past decade will look like in the following two.

It’s fun to create these kinds of imaginative pictures but we can also do the same with our personal lives. In my personal financial journey I’ve begun to dream, plan and execute towards an amazing future. However often times I’ll talk to folks who don’t know where they’re going with their finances. They can’t see beyond the current year or decade. These people don’t see how fun and exciting creating a financial vision can be.

The blog up to this point has been primarily focused on my experiences as a traveler. Although I will continue to share stories from future trips (and a particularly special adventure I had last April), I will be sharing more about my truly greatest interest: personal finance.

There are so many facets of the personal finance world I can’t expect to cover all of them in the scope of just a few blog posts. As with a lot of things, personal finance isn’t as simple as chewing gum (which probably actually has a pretty complex molecular structure). However I hope I can demystify the subject at least a little.

While I don’t claim to be an expert I know I can provide value to a lot of you by summarizing wisdom I’ve gleaned from some of the leading financial experts – wisdom that I got from reading literally hundreds of books, videos, and articles. I may even take you on a tour through my personal finances.

For me dreaming bold has always been a natural outflow of my outlook on life. I view the world through the lens of what things are capable of being, and how they can improve in the future. While I recognize there can be extremely painful periods for everyone, I know we will continue to see the overall improvement of living standards for third world countries as well as America.

That’s why I’m so optimistic about my future and the future of everyone else in my age group. As this younger generation begins rising up in the workforce a few things will become apparent. 1) This is one of the best times to be alive for anyone who wants to create financial freedom. 2) The sooner you take personal responsibility for your finances and take initiative to understand more, the sooner you can begin making moves that will set you up for a better life in your 40’s, 50’s, 60’s and beyond. And lastly 3) For anyone who thinks this isn’t important or it’s too complicated or boring, remember: Personal finance is one of the top 4 most important topics (up there with God, relationships, and physical health).

On this fourth of July I hope we can appreciate the opportunity we have in this country to both dream and pursue happiness. Personal finance doesn’t have to be boring or complicated – that’s what I hope you take away in this blog.

Disclaimer: The information regarding personal finance found in this blog is not a substitute for professional guidance. By following the guidance in this blog you are doing so at your own risk. This blog is simply the option of one person for informational and educational purposes. Please refer to your personal financial advisor in regards to guidance over your specific situation.