Hi guys and gals. Do you ever feel like you’re playing the game of life on “hard” mode? Me too, sometimes. Let me give you some of my personal stats. I’m 29 years old, I live at home with my parents, I have no savings. I bring in roughly $1,800 a month after taxes from my normal job. And I have $20,000 in personal debt, almost all in collections. So yes, my credit is fucked too.
As you would imagine I should be stressed out…. Only…. I’m not.
I’m as happy and cheery as ever, probably more. Why? Because I finally figured out how to turn my life around and escape this rat race. To explain, let me tell you about this game I played about a year ago. It actually corrected my path when I got off course. As you know I’ve been pursuing entrepreneurship for 3 or 4 years now. I wanted to be financially independent and I always thought that meant I needed to make a lot of money.
Financial Independence is the state of having sufficient personal wealth to live, without having to work actively for basic necessities.
So naturally I thought I needed to create a 7-figure income to live that dream. I was wrong, but I didn’t know it yet. So, I set out chasing million dollar dreams. It wasn’t until I played the game Cashflow that I was set straight. Cashflow is a game developed by Robert Kiyosaki. You might know him as the author of Rich Dad, Poor Dad, the Cashflow Quadrant, and The Business of the 21st Century. What Cashflow does is teach you the basic principles of his books in a fun way.
Cashflow plays much like Monopoly…. Except it’s based in the real world.
Instead of collecting properties and taxing your friends out of the game. Your goal is to acquire wealth and escape the rat race! Without going through the rules I’ll give you a run through and show you what opened my eyes. You start the game off as one of like 10+ people/occupations. Your profile tells you a number of things: your monthly income, expenses, number of kids, assets, savings, and liabilities. Then much of the game is like any board game. You roll dice and move around the board. Every time you pass one of the paydays you add your net income after expenses to your bank account. Then you use that money to pay off debt, invest and cover all expenses like hospital bills, unexpected children, taxes, and relatives in need.
It’s actually a lot of fun.
There’s two parts to the game worker and entrepreneur. So your first goal is to become an entrepreneur. There’s two ways to make that transition. Investments and eliminating expenses. Doing both is the quickest way to make the transition and that’s where the light bulb went off and then blew up. While playing the game you start to strategically eliminate your expenses or create second and third flows of income. Exactly the strategy that could be used in real life.
Remember that Financial Independence definition?
Isn’t it possible to hit that goal by lowering your monthly expenses? It sounds like a hard task because so many of us live paycheck-to-paycheck. But it’s totally possible. Let me tell you how I do it.
First things first.
I took inventory of all my expenses: my car note, insurance, rent, daycare, cell phone, credit card bills, food, clothes, etc. Next, I separated those into permanent and temporary bills. Temporary bills were the ones that could be paid off completely. Now that I had a few targets I could set some goals. My first goal, making enough to cover one temporary bill per month. I aimed for the smallest bill, my credit card bills. $200 extra per month is child’s play. The next goal was to cover another temporary bill with passive or extra income. A little harder to achieve but manageable, I just needed about $500 extra per month. And the rest was just repeating those steps with each new bill, I would grow my income to cover it and aim for another.
The reason this a powerful strategy is it doesn’t use your normal income to cover your bills. Therefore you pay down your debt systematically with easily managed income. With that plan in mind it’s actually very simple to set yourself up for success in a major way.
Let’s say you make $2,000 per month and your bills come out to just about $1,500 per month. You’re not too tight but could use some breathing room. If say $500/month is the payment on misc bills totaling $5000. That $5000 can be paid off in full, so, your first order of business is paying down that debt. How can you create $500 in a month?
People have lots of problems, figure out what solutions they would pay for, and if you can provide that.
Example, people on a health kick might want to meal prep but are too lazy or busy to do it themselves. If you can cook you can start a meal prep service. $100 a month plus food expenses is very affordable for the consumer plus five clients nets you $500 per month. Maintain those clients for 10 out of 12 months and that’s an extra $5,000 in a year.
Now it’s a year later and that $5000 set of bills is paid off. If you haven’t acquired more debt your monthly expenses are now only $1,000. Your meal prep service is going well so you decide you’re going to cover the rest of your expenses with your side hustle. All you have to do is acquire 5 more clients or charge more for your services.
It’s been another year and now with 10 clients you net $1,000 extra per month. All of your bills are now covered by your side hustle! Best part you still have your income from your job which is free to spend however. My advice invest into your business and expand it into more clients and hired help. This is how legitimate homegrown businesses are born!
But you say you can’t cook?
That’s cool, can you clean, tutor, organize, babysit, dog sit, or drive? Seriously, what CAN you do? If you’re good at it then there’s likely someone that will pay for that service. The hardest part is finding the people willing to pay. So you see it’s not incredibly difficult to escape this rat race. It might take some resourcefulness and paying a little extra to Uncle Sam but it’s more than worth the effort.
So to recap:
- Figure out all all monthly expenses.
- Separate permanent from temporary.
- Develop a plan to attack one temporary bill of the time.
- Repeat as you cover each bill with passive or easily manage income.
- Live a great life.
You don’t have to make a million dollars to live free you just need to make a little extra!
Thanks for reading!
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