My First Step To Financial Freedom

So for just over a month, I have been moonlighting as an investment consultant where I have been given the green light to take some of the technical knowledge that I have gained about investing in the stock market and to put it into real practice.  I am not required to put in any given number of hours, and I am not paid an hourly fee, so this is really not a job.  My passive income generated from this is based on a percentage of the monthly profit that I generate off of the account.  I classify this as passive income, because after some initial struggles and mental blocks that I had to overcome, including having the strength to make decisions even when I wasn't 100% confident in myself, eventually this can develop into an opportunity where i put in very little time and effort every month and will continue to earn monthly income off of the profits.  Also, since I didn't have to put any money into the account, my return on investment (ROI) is infinity, thus proving that there are such things in life as an infinite ROI.  

Now I'm definitely not in a position where I am ready to walk away from my career, nor am I even wanting to.  I have found that the confidence I've gained knowing that I can truly achieve financial freedom and it's not a matter of if, but when, has instilled in me a stronger work ethic when I am at my job.  Now I'm even more determined to work harder while I'm there because the bigger I can make my quarterly bonus, the more money I will have to invest and the faster I will achieve financial freedom.  If you can't tell, I'm pretty excited about the opportunities that are starting to find me.  Tomorrow I will be travelling out of town to investigate another potential income opportunity for me that if you had told me 6 months ago was a possibility, I would have told you that it would be impossible.

I truly hope that those working towards financial freedom can gain a little bit of confidence from what I'm writing here.  If you have your own success stories, please send them to me.  I would love to start a network group of people that are working towards financial freedom so that we could bounce ideas off each other and keep each other motivated.  If anyone is interested, let me know.

How To Attain Your Goals

Corporations are very good at setting goals and putting together a plan to achieve those goals.  Since most of my career has been in sales, I've learned from past managers how my sales targets are generally the last thing calculated and come down from the upper corporate ladder after the "brass" has figured out how much the company wants to grow for the year.  After that, it was my job to utilize my skills to hit that goal.  In my personal investments, side businesses, and passive income opportunities, I've realized that something that has seriously hindered my progress and even contributed to failure in a couple of ventures is that my goals were either undefined, too weakly defined, or completely off-base.  Goals are absolutely vital to success in escaping the "Rat Race" and gaining financial freedom.

A goal is something you plan to achieve, in its simplest definition.  If you don't plan to achieve it, you won't take action; then it's a dream.  A goal needs to be specific and measurable.  It should have a time element, possibly milestones along the way to track success, and maybe even an earnings target.  A goal should also be attainable.  If you set your goal way too high, you'll either never get started because the task seems so daunting or give up on yourself way too fast after the slightest setback.  But on the flip side, don't let yourself off the hook and stay in the same rut forever.

Here's an example of a poorly constructed goal: "I want to retire comfortably and not have to worry about money."  It's a great idea, but it's vague and unattainable without getting some clarification.  Remember: without action, even the best goals are nothing more than just a dream.  

Are You a Saver or an Investor?

Last night, I read an article on US News and World Report (you can see the article here) about how the majority of "investment experts" are now recommending members of Generations X and Y (I'm at the tail end of X, my wife is at the beginning of Y) to set a retirement savings goal of at least $2 million.  I could write a post every day for at least a month about where I disagree with this article.  However, the one thing that I focused on is that the investment advisors's recommendations are to "save money in your retirement account and build a nest egg."  I did a word count and throughout the article, the word "save" shows up 11 times.  They talked about saving a lot.  I also did a word count on "invest".  Guess how many times the word "invest" showed up?  None.  The only time the term investment came up in the article was in reference to the people advising us to save.  On the surface, this makes sense.  Most people do believe that saving for retirement is investing.  I went to the dictionary to compare saving versus investing.



Save (v): Keep safe or rescue (someone or something) from harm or danger.
Invest (v): To commit (money or capital) in order to gain a financial return.


It looks to me like saving and investing are not the same thing at all.  Instead, I believe it's a decision (choice) between the two.  Some people save for retirement and hope their nest egg will last them when they retire at 65 (or later, as the article suggests).  Others invest their money, build passive cash flow, and have a much higher chance of success.  I've known both savers and investors and one thing I can say about them is investors seem to enjoy investing a lot more than savers do saving.  Even though investors do lose sometimes, it's just part of the game.


Now I'm not saying don't ever save money.  It's important to have an emergency fund set aside as a buffer (about 3 months of income is my buffer).  But for my overall retirement plan, I am choosing to be an investor and I plan on retiring way before the age of 65.  I believe the key reason I will achieve this is because I first chose at the age of 25 to become an investor instead of a saver.

First Steps

Tonight, I took my first real step towards escaping the Rat Race.  I did market research and technical analysis over the past couple of nights with the stock market and placed 2 orders tonight that should get filled Monday morning when the market opens.  Even with all the education, knowledge, and skill that I know I've put into my decisions (and I could easily have done more than 2, I'm just starting small for now), it's still pretty nerve racking taking that first step.  I was talking with someone yesterday who told me that the stock market is gambling.  If so, it's designed that the people with financial education basically flip the odds and are playing as the house rather than the gambler, and I hope to someday feel that confident in my own skills.  Only through winning, losing, and learning as I go will I continue to develop.  One of my coaches in my financial education explained to me that it's the learning from the successes (and even more importantly, from the failures) that separates the rich from the poor.

What Would You Give Up For A Little Extra Cash?

So there's been quite a bit of change going on in my life and my family's life.  My wife just got a job (temporary contract with a Federal Contractor, but can be extended) that will take her away almost every day of the week for the near future and leaves me alone with the kids from the time I get off work until I put them to bed.  I know it's going to be a struggle, but we have our financial goals as a couple and a family, and the extra income will definitely help us towards achieving them.  For us, it's worth the short-term sacrifice if it helps us get to the point where we don't have to worry about which bills to pay or how to make a little extra money here or there.


Which brings me to an article I read on Yahoo about what people were doing to make extra money and why they were doing it.  There were people doing mystery shopping for gas money and typing up foreclosure lists to avoid being put on it, but the one that stuck out in my mind the most was a guy named John from California, who has a full time job and then also teaches 3 night classes per week.  He enjoys teaching, but says it's hard on him and his family because sometimes he doesn't get home till 11pm.  His quote that stuck out in my mind is "Still, when you have a family to provide for, you have to make sacrifices and you damn well better do it." 


If I had the opportunity to meet this man in person, I would want to ask him what his plans were to increase his financial wealth so that in a couple of years, he doesn't have to teach at night anymore.  Or perhaps he can retire from his day job and only teach at night, and be able to see his family a lot more.


Everything I have in life I attribute to my family.  My parents raised me, my grandparents spoiled me, my sister kept me humble, my kids keep me going, my wife is my rock, and my parents continue to counsel and teach me to this day.  Within reason, there isn't anything I wouldn't sacrifice to spend more time with my family.  That's why I am taking risks and starting to build passive income streams.  That's why I currently have 6 financial books checked out of my local library and have a goal to read all of them by the end of September.  I'm building up my financial IQ and my passive income so that when the time is right, I can finally look to my family who has supported me all the while and we can celebrate the success of my early retirement together.


Good luck to everyone and god bless!

Recent News

I read 3 articles today on Yahoo that dealt with financial news.

The first was an article about Bank of America Merrill Lynch and Morgan Stanley and the likelihood of a global recession on the horizon. Essentially, it was a doom and gloom article for the economy and did list several indicators that can point to an eventual 2nd recession.  However, when asked for an odds ratio, both companies gave the odds at about 1/3 on whether or not we will have a recession.  Of course, let's not forget that it took Ben Barnanke, the Chairman of the Federal Reserve, a year AFTER the last recession started before they could clearly state that the US had been in a recession for a year.

The second article was about the recent downturns in the stock market and how different financial planners from across the country were advising their clients to sell off some of their funds and move the money into cash or Treasury funds.  I found it pretty entertaining that someone had mentioned that they could not afford to lose (as an investor) 4-5% in a $5,000,000 retirement account (That's $200,000 - $250,000).  Over a 2 week period, that could be considered a typical swing depending on how aggressive the investment strategy is.  However, the question is: if someone isn't willing to take that kind of short term loss, why were they invested in the stock market that heavily at the time?

The third article was about personal finance, and was part of the financially fit series on yahoo, which I would highly recommend to anyone that is looking to increase their financial knowledge or needs help staying in the black.  This particular article was about where the average consumer unit (a statistic created by the US Bureau of Labor Statistics) and it shows for the average consumer unit what percentage of their income goes into 7 major categories and gives you the opportunity to measure what you spend against the averages just to see how you stack up to the average.  My goal is to someday be spending well above those averages dollar-wise, but be well below those averages percentage-wise.

The best piece of advice I can give anyone is to increase your financial knowledge.  It's not something we're really given in school.  Most of us don't even get it in college.  It's something you have to go out and search for.  If you're looking for a place to start, let me know and I'd be glad to share where I got started.

Good luck to everyone!

Financial Advice From Millionaires?

I just finished reading this article where Paul Sullivan, a columnist for the NY Times, meets with an investment group of self-made millionaires called Tiger 21 and they go through all of his finances and then proceed to challenge, or grill, him on what he is doing and why.  There is some sound advice in the article, and I would recommend reading it.  I've linked the article here.

While the advice is good, I have to say I found myself wanting more.  In the article, at the very end, Mr. Sullivan states that the group mostly made their money from having high paying jobs and investing well, or from starting businesses and building them up.  While in the meeting, he makes no mention of whether or not Mr. Sullivan's portfolio is in line with his retirement goals or if he is taking advantage of the investment opportunities that come his way.  In this article, I kept reading about how they were in good financial shape because they save money, but nowhere in the article does it talk about investing wisely and making your money work well for you.  I suppose you can only ask for so much free advise from a group of millionaires.  If you want to join their ranks, you're going to have to learn to think like them and play by their rules.

Good Luck and God Bless!