My personal budget closes out this Wednesday. After spending more money than my paycheck brings in consecutively for the last few months from my mom's passing (due to various costs related to being the executor of her estate, and taking over as cat dad and the house and such)... I've managed to zero out my budget this month. I should, actually, end up saving a few bucks too. My mom would be proud because she was always all about saving money. I got my sense of financial savviness from her.
I can just hear her saying "Great job Ken!" And then giving me a thumbs up.
In reality I'm going to end up spending more money than I made by 10 bucks because I'll have my Planet Fitness auto debit charge on Monday. Not much I can do about that one. It's kind of a necessity since the gym is one of the things saving me money too. It's a nice thing to do for an hour and it doesn't cost any extra above the monthly gym membership fee. I just go and run on the treadmill, or use the elliptical while reading a book or listening to iTunes U courses or InfoQ.com conference presentations. That charge may also end up being reimbursed at the end of the year. We have an updated health plan at my job that actually gives us back up to 300 bucks if we go to a fitness club more than 120 times in a year. I'm not sure what my number is at so far but I'm going fairly often so I should be able to hit that 120 no problem. Planet Fitness is 20 bucks times 12 times a year... 240 bucks. So basically if I go to the gym at least 120 times... my planet fitness membership is free. It's a no brainer.
Now, as I mentioned before I will, according to my personal budget accounting cost analysis spreadsheet that I keep (Yeah, I'm a nerd, whatever, I love spreadsheets), go beyond my budget by 10 bucks. However, I'm able to subsidize that cost from my credit card cash back. I received $51 back from the previous months credit card expenses. That money was deposited into my account at the beginning of this month. So, it falls within this months budget as an income on my personal accounting tracking.
My budget runs by my credit card statement dates. So the budget runs from the 20th to the 20th of each month. From December 20th to today, I've spend JUST under 10 bucks of what I get paid at my 9-5 job. However, I do have some additional float space...
I withdrew 100 bucks from the ATM during my budget period but I still have 90 in cash left from that. So technically I'm under budget, but I used that 100 dollar cash from the ATM in as an expense. Then I have the 51 bucks income from the credit card cash back. This only works because I pay my card balance in full every month. Carrying a balance would mean finance charges which would work against me. So I grab the cash back and pay it in full to capture an extra little bit of money each month as income. Then on top of that I did make 23 dollars in CD Baby deposits from digital music sales and I have about 140 dollars in stock dividends. I have to be careful with the stock dividends and the CD Baby music sales because that is top line income and not bottom line. That's revenue and not profit. So, additionally there are taxes that will need to be paid on those income sources, whereas my paycheck from work already takes the taxes out ahead of time.
I'm a huge fan of positive cashflows. I'm not so much concerned with total amount that is in the bank, so much as what the month to month income is. I use this in my personal life for my personal finances and as well when I do research for investing. I like to call it, income velocity.
I think of income velocity as a faucet. Let's take the example that you have a bank account with a pretty good size amount of money in it. It's not earning any income though, or maybe it's getting a small interest rate of a few pennies to a dollar a month. So, it's like a bathtub full of water. you can make withdrawals on a bank account... and the balance slowly goes down. You can take small cups of water out of the tub and it goes down.
Eventually, without replenishment it will run out. I don't like this. This makes me not sleep well at night. This makes me worry about the future and the possibility of my finances drying up.
Instead I like faucets. Faucets can drip into a tub, and if you never take cups of water from the tub... Eventually it will fill up... As long as you keep that tub drain plugged up. SO if you only save small drips into a tub... Eventually you might end up with a significant savings... but it's highly unlikely and it will take a long time. In life, this is nearly impossible. There's always going to be cash flowing out.... So there's always going to be some water going down the drain. My thing is, if that faucet is always running... so the income is always coming in.... and it's coming in at a faster and faster flow rate (increasing income velocity)... it doesn't matter what your drain looks like. Eventually that drain could be completely unblocked... if that faucet is roaring out water like a fire hydrant...
That tub will fill up in seconds, not minutes, not hours, not days. That's what you want. You want consistent and ever increasing cashflows.
Obviously it's good to manage expenses too... Because you can be making billions and still lose money...
Amazon does this. They keep making MORE and more money... but they spend through the roof.
But again, I don't worry as much about total account values, I don't worry about how much is in a tub, because if that drain plug is pulled out, or someone shows up with a huge bucket... They can just take all the money in the account out and drain it SUPER fast.
What I like to balance is the in amounts and the out amounts. Whatever is coming in should be your limit to what is going out. Doesn't matter how much is in the account to me at least.
But if you've got a fire hydrant of cash generation ability.... People can show up with buckets and fill their buckets and go on their way. That thing will keep pumping out money.
The key is to keep that money flowing in. When that money starts to dry up... Things get dicey.
Most people will change their lifestyle to match their income, which is fine.... but if you suddenly lose your job or something happens that the income is shut off... you could be in big trouble.
This is why I'm always a fan of trying to diversify your income sources. Don't just have one source of income that could get shut off at any moment. Lets say you got promoted to a great top level job at your company.... That's awesome... but... Just be wary... Things happen in life... So maybe scale your lifestyle back and save and invest a good amount of money and start to generate income from your investments. Or start a side business or hobby that also brings in money. Two, or ten. Or 100 fire hydrants are better than one. Or... Instead of one big fire hydrant... You could have 100 garden hoses. Same amount of water coming in... But if one or two or even 10 of those turn off suddenly... You've still got water coming in to fill buckets with. Just at a slightly reduced rate.
Here's an example of a guy that got fired from his executive level job because of an incident that occurred last October...
He went out that night probably thinking that his job was very secure. The idea that he could possibly get fired from his job... Probably was the LAST thing on his mind.
One thing leads to another and suddenly... That income source that was probably actually pretty sweet... Dries up. If his lifestyle had been right up there with his salary, he might have trouble keeping up with his bills once his savings runs out. Unless he can find a new job that pays the same or better very soon. But with such publicity it could be tough to get beyond an interview once that interviewer does a quick Google search.
Side note: Always be on your best behavior and always act professional in all aspects of your life and know that what you do in one area of your life, will probably be known in another area of your life. It's hard to keep work and personal life separate these days. So always just be on your best behavior no matter who it is you come in contact with.
Anyways, incomes can dry up, this is why I'm always trying to budget some of the money I make and put it into new ways to make more money. Then I'll take some of those ways of making money once they start generating income and put that money into new ways of making money. Create a positive income velocity feedback loop... and diversify to additional incomes.
It's not 1 single rain drop that fills up a stream causing it to overflow its banks. It's a lot of them all together. Just like it's not 1 single water molecule that fills that tub... It's a lot of little tiny ones.
Yes, it's nice to splurge a little while on yourself... And every now and then I'll do that. But... if you keep that as a percentage of your budget and save/reinvest the rest of your money and let it build.... You can have a much bigger total amount of money to spend in the splurge category...
You never know what bumps lie ahead in life... So I recommend whenever possible to not use that extra money in your budget, but instead to build up your savings and even try to think of a way to put the money to work for you and then use that income for the unexpected things in life. You never know what tomorrow will bring. Always be prepared for worst case scenario.
If you spend more than you make, you can only sustain that for so long... If you spend as much as you make... or less than you make... You can sustain that indefinitely. And especially if you spend less than you make and then invest that extra money back into something that generates more income... Then the income you have to work with and budget from each month can start to grow.
That's just my meandering outlook on money and finances and budgeting and what not. I realize there are different ways to slice the pie... so whatever your way is... If it works for you. Awesome. If not... Maybe try out a different budgeting strategy.
I feel like the this whole blog post can be summed up as income sustainability. In other words, give someone a fish and they will eat once, teach someone to fish and they will eat for a lifetime.. Unless they don't like fish. That would suck to have to eat fish your whole life if you don't really like fish. Maybe try out farming too. Farm one day and fish the next. Diversify your food source. Then you can sell options contracts on your futures crop commodity prices... And then take that money and invest in a start up that makes more efficient farming equipment for farmers and fishing equipment for fish catching workers. Then take that company public and cash out your shares after the IPO... Something like that.
I've given this a lot of thought... and I've decided on new beginnings. My mom always said "Go do what makes you happy". For these last several years I've just stuck around this area to help her and be her caregiver. I love her and miss her a TON. She's really what kept me here in this area. But, truth be told, I've never much liked this area. Actually, that's not entirely true, I like the area... It's the people. They aren't bad per say, they are just very closed off. Like most of the people I know and I'm friends with, aren't actually from this area. They are transplants from elsewhere. I don't know, the people who are ACTUALLY from this area, we just don't seem to mix well. They aren't warm and friendly and open. They are hard. Especially when it comes to dating. It's like trying to pick an axe through a block of ice just to get to the person's frozen heart... True there are some exceptions to the rules... But most aren't inviting. Most are impossible. They almost give off the vibe like they are angry at you and they don't even know you. They don't have that Midwest warmth, or that Southern charm. They are more like, if I don't know you, I don't want to talk to you, I don't want to know you. You have to battle your way in and it's exhausting. I'm a gregarious person. I love to get to know people. I want to find an area in the world where others are gregarious too and just love to chat and be friendly with one another and be open to possibilities and not closed off like so many of the native Philadelphia people.
Now, I started this life in warm and sunny southern California. Everyone there is super outgoing and super friendly. Philadelphia is... Not so much. I've just never had luck in this area with dating and making friends. Sure I've had some people that have becomes friends and some girls that have turned into girlfriends... But it's interesting... none of them are from Philadelphia. They are all transplants from at least a couple hours away.
For whatever reason the people of Philadelphia and myself are just like oil and water. We just don't mix.
I feel it's time for new beginnings. I want to see how I mix in some new cities. So as my mom said... I'm going to go and try to find a new place. I'm going to try and find a girlfriend that hopefully will eventually lead to marriage. I'm going to write books. I'm going to make music. I'm going to trade stocks. I'm going to see what else is out there and see if the grass might have a slightly greener coat elsewhere.
I've started a list of places to try out:
San Fran, CA
I'll probably just do month to month leases in each place and move after some time if I don't find I really fit in the area.
My plan is to consolidate all of the capital that I'll have from my own funds and as well as the proceeds that I'll recieve from my mom's estate and any proceeds I receive from my grandparents estate and really start to get SUPER serious about trading stocks. I currently consistently have been making money from my trades over the last several years. It's not a TON of money because I don't have much of my own capital, I've saved some, but not enough to make a significant amount of money. Even though I've made some bad trades and actually lost money, because of how my trading style works, I still have made money every year with the losses accounted for. Each bad trade is a learning experience as well. And each year the amount of money I've made has also increased. I'm getting better at it every year that goes by. If I could focus on that full time I'd be really good at it I imagine. My plan isn't to make millions, it's just to make something comparable to my current salary in IT. Enough to afford rent, and food, and bills... and some spending cash.
Trading is risky, but the thing about dividend trades is that regardless of the stock price, there are many companies that pay reliable dividends that you can count on just as you would a job salary from working.
Here's a list of companies that have reliably increased their dividend for at least the last 25 years.
That money just comes in 4 times a year. So you just hold the stock and let it fluctuate in value and then use the dividend income as you would your normal 2 week paycheck from work.
But instead of getting showered and dressed and fighting the traffic on the roads... Etc. etc... You just wake up and...
Well that's pretty much it. You just wake up and check for the deposit. Then go do whatever else you want to do with your day.
This way I won't have to worry about applying for jobs in the places I move to. I can simply move when I want and where I want. All I need is an internet connection. Mostly my trading style is longer term trades and relies mostly on dividend collection so I won't have to watch it closely. I rely on fundamental dividend paying stocks that reliably increase their dividends each year. Things like water companies and electrical utility companies. Basic needs, like food, shelter, things like that. Real estate investment trusts that own property such as the property that Walgreens sits on. Walgreens pays them rent every month... And they in turn pay a dividend every quarter to me for holding their shares.
I'm going to wait a couple years to move. I'll continue to build up my stock holdings and track the returns... Much like an airplane lifting off the runway. I want to know I'm off the ground first before I start to maneuver my flight controls. I won't just simply go and quit my job and sell the house unless I have data driven results that my trading and budgets can be calculated with a margin of safety as well so that I know I will have plenty of money to sit on.
I'm already using some of my dividends to pay bills so I've got the system already in works. Just have to keep increasing the amount of income that I make from it.
My goal is age 35. I plan to live in a different city probably every 3 to 6 months... From about 35 to 40. Hopefully I'll eventually meet "the one" and we can settle down and stay put in whatever city I end up meeting her in. Obviously if I do meet a girl before October 10th of 2017... I'll just stay around here, or even keep this house.
So, I'll give Philly a little more time to show me a true love. As of right now, it's not looking good.
I've had several friends that have moved new places and found love within a couple years of living in those places. They had terrible success dating in Philadelphia, so I figure if it can work for them... It might work for me! If not... It will just be a new beginning and a new experience living somewhere new.
I had a strange thing occur to me recently. As I'm working on things related to my mom's estate over my break from work, I found a letter stating the address of a fellow that has been the trustee over my grandparents trust for several years and that the tax returns for the trust have been filed in Florida instead of California because he moved to Florida from California...
My mind was a little blown.
Try this one on for size/fate and God and the order of the universe... The girl I've been hooked on for the last 5 years keeping my heart in her clutches, moved to the exact same area in Florida, literally a stones throw away, as the guy that's been keeping my family trust in his clutches. Both are ALSO from a stones throw away from one another in the NJ/NY area originally.
They both moved to Florida in the same year. He moved from California, and she moved from Pennsylvania.
Talk about serendipity. Or whatever. I wonder if the two of them have run into one another down in Florida... Maybe in line next to one another at the grocery store. Or out on the town having a drink at the same bar or having dinner at the same restaurant sitting just a table apart...
Neither of them even a clue that they both consumed the better part of my thoughts in the last half decade.
And if all of that wasn't enough how about this...
My grandmother's maiden middle name and the girl's middle name are the same.
It seems as though everything in the universe IS interconnected. Could just be random chance... But it seems really uncanny to me.
The world is a strange place. Fact is most certainly stranger than any fiction anyone could ever dream up. That's for sure!