Learning Curve

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Learning Curve

Lee is representing the typical check-by-check living style that afflicts most of Middle America … the sad thing is that there is a growing percentage of the population that would be jealous, and I fear that with the job losses etc. associated with the current downturn, this is a growing portion of current society.

However, Lee has two huge advantages over others in his predicament: (a) himself – he knows that he needs to do something different (b) us – he has the 7m7y community behind him.

Now that I’ve built you up, what advice can you give? 😉


cash-flow-lee1My being slow to respond to this post request comes about because of the same reason I still live check to check…’I just don’t get it’.  But I’ll try anyway:

What have I learned so far? If it’s possible to get my act together I need to do it now, not yesterday.  I’ve learned that the potential of reaching my “number” by “the date” and finally it’s a lot more important to save than I ever imagined.

My Struggle at this point in our journey is two fold and they are both things that I have “got to do” regardless of where the journey takes me.  I need to set up a savings and by the way I have opened and “ING” account, small but nevertheless it’s there.  I need to increase the income.  Again I have started doing some writing with a couple of on-line writing gigs, but I need to generate some “real income” if I am to come anywhere near my “number”.   Getting ready to “Launch” brings with it a certain sense excitement but also discouragement.

My monthly income statement including my spouse is approximately $3,354 (broken down that figures her after tax take home of $2,400 if she gets over time) I then receive with my retirement $354.00 and some non dependable income (Remember I am self employed) of $600.00.  My monthly expenses including mortgage, car payment, utilities, gas, church donation, food and just plain wasteful spending is usually $2, 650 which should leave me with about $700 each month,  but I usually don’t know what pocket I left it in in. 🙁  My Assets  are $183,515 made up of my small retirement, house, car and less that 100 bucks in cash. Then the Liabilities $109,000 include the house, student loan, car payment and back taxes.

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Lee, it’s great that you are operating cash flow positive each month. That’s a huge and important hurdle.

I think your immediate priorities on the path toward your number will be increasing your monthly cash flow (savings) and coming up with (and executing) a plan for investing that surplus.

I think your efforts to increase cash flow will probably be better spent coming up with ways to supercharge and increase your income rather than trying to squeeze blood out your turnip by trying to reduce expenses.

If memory serves me, you do not presently have much in the way of equity investments (stocks/mutual funds).

I may be stating the obvious, but I think we need to focus our efforts on increasing your income and rapidly growing your savings via smart investments.

I look forward to continuing the discussion.

@ Lee- Just like Adrian said, the thing that separates you from the herd is…now you know better. Like the saying goes, once you know better, you can do better.

There is no reason that you can’t be added to the list of highly successful people that found their purpose late in life. Winston Churchill, Colonel Sanders, Jack Weil, Sylvia Lieberman, and Lee.

Ryan I have been known to tape specific “quotes” to my bathroom mirror as a motivational reminder, I think I’ll do just that with the “list of highly successful people that found their purpose late in life” you gave me. Thanks

Jeff – Good advice, I’m already heading that direction, I just need to pick up steam.

Lee there’s not much I can add to the great advice the guys have given to you above other than save save save what you can right now, as much as possible, but the REAL ticket is increasing your income, building a successful business, writing career, etc…

I think your key as well as most of us really, is to take what you love to do most and turn it into an incredibly profitable business model that spins off a lot of cash that you can invest and then have an exit strategy in place for when you sell off that business!

Scott, I like your last paragraph A LOT. But, I find it to be the most difficult challenge/struggle/obstacle etc. that I’m dealing with in this entire experiment.

Having an extra $700 a month (on paper, since you’re not sure which pocket to find it in at the end of the month) is actually a lot better than most people are doing right now. Have you ever tried writing down all of your expenses and purchases for a month or two to find out where that $700 is going?

Otherwise, I agree with everyone else, increasing the income and putting that money into some sort of savings/investment seems to be the way to go 🙂

Actually the extra $700 a month varies a lot since I am self employed and have no sure income except for the small retirement. $700 is on the “very” top end if it was a really good month.

Lee, I think were in the same boat as far as having some extra money after expenses, but just not sure where it goes (hence not saving as much as we should). This may just be a basic “decrease money spending as much as possible” exercise which will put more into your savings in the short term while making attempts to increase your income.

On a note about investing…it’s one thing to say, save and invest, but it’s another to actually take money you’ve saved up (this is the easy part) and actually put it somewhere and expect it to grow (a substantial amount in yours and my case especially).
What I’m getting at is that it takes an edge. Most people who have an edge have it because they learned something new. It’s not too late (insert Ryan’s Colonel Sanders example) for you to learn something new and generate YOUR edge.

Just make sure this new found knowledge/skill/experience/idea/project has the potential to get you where you need to go.

@ Debbie – You’ve been peeking ahead 😉

@ Lee – Actually, Debbie’s right … in fact, this is the very next thing that I am going to be asking each of the 7MITs to do: write down all of your expenses for exactly one month (no more / less).

Ryan, I like how you seem to be always inspirational…”highly successful people that found their purpose late in life”.

Lee, Debbie is right in knowing that you are more knowledgeable about your money than most people. Most people have no clue $700 is missing. Least you know the amount and that it needs to be found.
You have a great group of supporters praising you on to make your goal. There is no doubt in my mind that you will make it. 🙂

OK FOLKS HERE’S THE DEAL – I regularly, as in six days a week, stop by Panera Bread and purchase a Cafe’ Mocha Grande and a USA Today which here in Kansas cost me $4.75 a day… I’m going to try something different, I think I’ll “NOT DO THAT DURING APRIL” but instead I’ll open a savings account and see if I can make a small but important change in my spending style. From time to time I’ll also post some comments regarding my journey on another blog site located at http://www.new-lifesupport.com follow along if you wish.

@ Lee – Dropping the mocha/paper expense will:

1. Save you 6 x 50 x $5 ~ $1,500 this year

2. Earn you 2% on that money (compounding), giving you an extra $2,600 in 10 years time (‘worth’ $1,800 in today’s dollars)

3. Give you a topic to write about (“How to De-Latte Your Way To Wealth”?) that will attract you to the wider internet audience, thus earning you more in ad revenue from your blog: say an EXTRA $4 a week or $3,500 over 10 years ($2,500 in today’s dollars)

$4,300 (in today’s dollars) is a big achievement over 10 years for most people … sad, but true.

So, WHILE you are doing this ($4k is $4k, right?) we will need to focus where you will get the best results:

Right now, your ‘self-employment’ is bringing in $700 some months, less (a lot less?) in others …

Let’s just say that you ‘only’ find ways to double that: over the next 10 years you will have put an extra $150k in your pocket ($100k in today’s dollars).

So, the equation that YOU should be thinking about, goes along the lines that Jeff/Scott/Josh recommended:

a) How many LOTS of $700 do I need to put into my pocket each month to make my Number?

b) How do I get my NEXT ‘lot’ of $700 / mth?

c) Repeat

… since it’s unlikely that you can SAVE you way to even one of these ‘$700 lots’, why don’t you have a latte while you think about how you WILL do it?

IMHO that’s how you will join the list of luminaries in Ryan’s List 🙂

@ Adrian – My favorite pair of pants has a lot of pockets and one of them is just right for my starting attempt at savings, so I’m going to stick with my plan and I’ll use your calculator to fill the others 🙂