Tag Archives: Financial Freedom

The Financial Freedom Crap Shoot

In 2017, the world’s billionaire club grew by a healthy 13% to roughly 2,043 people.  In my home state of Virginia, according to Forbes, there are just 5 such billionaires.  Since there are roughly 8.3 million people living in Virginia, this gives me about a 5 in 8.3 million chance of being counted as a billionaire.  As remote as that possibility is, it’s still better than the 1 in 258,890,850 chance I have of buying a winning Mega Millions lottery ticket, and the pot for that currently stands at a paltry $145 million.

Yes, the odds of becoming a millionaire or a billionaire are annoyingly remote, even for the average ‘free’ American.  Nevertheless, my goal is to be financially free and in command of my own financial future at some point in my life before I die.  The benefits of financial freedom are obvious.  We all dream about it.  But the execution of the dream seems to vary greatly, while many have completely given up on it all together.

Here’s a rough plan to Financial Freedom I have begun to formulate for myself.  This particular plan, as opposed to the ‘win the lottery’ plan, seems easiest and most practical for me to execute, even though it is far from ideal:

According to my current calculations, my closest shot at financial freedom will be in 19 years when I turn 67.  That kind of sucks, but let me sketch it out anyway.  I have three kids to get through college over the next 8 years and I have a house mortgage to pay off.  I have accelerated my mortgage payoff through additional principal payments of $1000, which should allow me to pay it off in the next 10-13 years (if I can be consistent with the plan).  Helping my kids get through college will induce some financial headwinds over the next 8 years.  As a divorcee, my alimony payments will end in roughly six months, which will free up additional capital to help with college expenses.  Once Child Support, Alimony, College and Mortgage expenses have all been paid, I estimate my monthly expenses to be somewhat akin to the following:

  • Food: $540
  • Gas: $150
  • Water Utilities: $50
  • Electricity Utilities: $67
  • Gas Utilities: $42
  • Phone: $85
  • Gym: $15
  • Internet: $80
  • Health Insurance: $800
  • Car Insurance: $60
  • Life Insurance: $45
  • House Taxes: $410
  • Car Taxes: $25
  • Annual Car Maintenance: $167

Total estimated monthly expenses should be around $2,536, or $30,432 per year.  My current estimated monthly Social Security benefit at age 67 is $2,893, which should just cover these estimated living expenses.  Additionally, If I can manage to save $1500 per month for the next 228 months (taking me to age 67), the nut accrued could provide an additional $950 per month for the next, and probably last, 30 years of my life.  So from age 67 to 97, I should have about $3,843 per month to cover living expenses, at least until I succumb to assisted living (at which point I become my kids’ problem lol)!

I estimate my odds of achieving financial freedom by age 67 at around 75 percent.  My next steps are to figure out ways to compress my financial freedom time line by studying how billionaires have made their extravagant fortunes.

Building a Business Vocabulary – I

I’m trying to build-up my business vocabulary and acumen.  Why?  Because I am pretty comfortable as part of the technical team of an organization.  When you’re comfortable, you’re not growing.  For over twenty years I’ve worked in back-office cubes building technology for organizations.  I now want to have a larger focus, a better grasp of a company’s big picture – and no, I don’t need another degree (MBA), and associated student debt, to get me there.  I want to be a successful entrepreneur one day.  To that end, here are some words I am committing to memory, because to walk the walk, you gotta talk the talk:

Entrepreneur:  ‘A person who organizes and manages a buiness undertaking, assuming the risk for the sake of the profit.’  — Webster’s NewWorld Dictionary

To be an entrepreneur, you have to take a risk if you want to realize a profit.  There’s no getting around the risk part, by definition.

Capitalist:  ‘1. A person who has capital; owner of wealth used in business; 2. an upholder of capitalism; 3. loosely, a wealthy person.’  — Webster’s NewWorld Dictionary

Grant Cardone introduced me to the term ‘Capitalist’.  I never thought of becoming a Capitalist until I heard him mention it as a desirable characteristic.  Sell or be sold.

White Space:  Hmm.  This one is kind of tough to define.  You won’t find this defined in your average home Dictionary (mine is Webster’s NewWorld Dictionary, which I’ve had since College).  Essentially, in the context of business, this term refers to potential opportunities in the market where there might not be as much competition; a place where new businesses might have room to operate.  Here’s a 2010 HBR article that helps further define the term.

I first heard this term from listening to a Gary Vaynerchuk talk.  I highly recommend positioning yourself to hear Gary V. talk shop at some point if you can.  It’s all about the hustle.

Revenue Per User (RPU):  According to Investopedia, RPU is ‘[a]ratio used to express the profitability of a company on a per-user basis. RPUs are calculated by taking overall revenue and dividing by total number of users.’

I first heard of this term listening to Nathan Latka’s ‘The Top’ Podcast.  This cat is a business genius and I highly recommend his podcast.

Real Rate of Return (RRR): According to Investopedia, RRR is ‘[the] annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. This method expresses the nominal rate of return in real terms, which keeps the purchasing power of a given level of capital constant over time.’  For example, if you make 5% return on an investment, and inflation is said to be at 3%, then your RRR is really 2%.

Again, I picked-up this term from listening to Nathan Latka’s Podcast mentioned above.

Affluenza: According to Merriam-Webster Dictionary online, this is defined as ‘extreme materialism and consumerism associated with the pursuit of wealth and success and resulting in a life of chronic dissatisfaction, debt, overwork, stress, and impaired relationships <Affluenza is particularly rampant in the United States, where we place a high priority on financial success and material possessions. — David Hawkins, Breaking Everyday Addictions, 2008>.  

I heard this word today while standing in line at my Bank listening to a News Story on the TV.  This is one of those ridiculous words, like ‘twerk’, which has no place in a proper dictionary.  From my perspective, Money should be used to buy Financial Freedom and experiences, not more stuff.

Ohana
Ohana

“It’s not about money or connections. It’s the willingness to outwork and outlearn everyone when it comes to your business.” – Mark Cuban

Book Review: ‘Money Master the Game’

Money Master the GameI just finished reading ‘Money Master the Game: 7 Simple Steps to Financial Freedom’ by Tony Robbins.  I am not a fast reader.  At over 600 pages, this book took me over two months to get through.  I stuck with the book because I want to be financially free and I’m trying to figure out how to get there.  While I was a bit disappointed in the main premise of the book – that investing in the Stock Market (bonds, stocks, treasuries, REITs, etc) was the main way to achieve financial freedom (which I hope I have stated correctly) – I loved Mr. Robbins positive admonishments throughout the book as well as his interviews with billionaire investors and his polite insistence that they share their secrets to investing success with everyone who has ears to listen.

I started this book from the fundamental belief that the U.S. Stock Market is corrupt and rigged.  I have cooled on the value of participating in the US Stock Market as an ‘average Joe’ investor – from too much manipulation by the Federal Government through Corporate bail-outs and Quantitative Easing (QE1-3) policies, to the Federal Reserve Bank and possible involvement in equity purchases, to High Frequency Traders (HFT) manipulating stock prices, etc..  Mr. Robbins book, however, is mostly about portfolio balance and diversification in equities.  While reading this book, I realized that the Stock Market cannot be ignored as at least part of an overall financial freedom strategy.

All-in-all I thought this book was extremely well researched and very good – well worth the investment of time to study and money to purchase.  It seems to be a heart-felt attempt on Mr. Robbins’ behalf to help the average investor prepare for retirement in the face of a growing retirement crisis (most Americans are not saving nearly enough money for their retirement – myself included).  While many of his recommendations for getting started toward some hope of retirement are mostly common sense steps you’d no doubt hear from any personal finance guru (i.e., save more than you spend, get out of debt and invest your savings), Mr. Robbins goes into great depth into how successful institutional investors, like Ray Dalio, Jack Bogle (Vanguard) and Charles Schwab, invest and make money (and rarely ever lose it).  I found great value in this book from the interviews Mr. Robbins shares near the end of the book with several billionaire investors, and that, I believe, is the true genius shared in this book: that we should study and emulate the behaviours, mentalities and money management practices of the truly wealthy in order to increase one’s chances of realizing financial freedom.

To that end, I realize the Stock Market cannot be ignored; however, I intend to tread cautiously in regard to these types of digital investments.  I choose to remain largely in cash right now (perhaps even in nickels, a la Kyle Bass (mostly joking)), with limited monthly investments in my 401k, and some small physical real estate investments (sorry James Altucher).

Tony Robbins, thank you for your hard work in writing this book, sharing interviews with such highly successful people, and for encouraging all people to improve their (financial) lives!  Here’s to a better (financial) future!