I like finding myself in places or situations where it feels like I’m doing something illegal, even if I’m not.
Maybe it’s the child in me. I just love turning to the person I’m with and saying it feels like we’re doing something illegal. It’s even better when it is sort of illegal and the person you’re with is right there with you. They’re not like we shouldn’t be doing this. Instead, they encourage the unfolding of events.
I look for a similar synergy in my work meets money life.
Sometimes when I look at how I manage my personal finances, I feel like I’m doing something wrong. Not incorrect, but wrong in the way others perceive it. Like it’s somehow illegal to eschew the conventional advice most people tend to not think twice about.
For example, I write extensively about not investing for retirement and banishing the traditional conception of retirement from your vocabulary.
Focus on a low cost of living, generating cash flow, and allocating that cash flow to live how you want to live now and into the future. To execute this cash-focused strategy, you need to be nimble.
Nimble like a high-end criminal. Like you’re laundering money. Except you’re not.
We can’t stress this combination enough:
If you can tie these things together, you’re gonna set yourself up for today. You’re gonna set yourself up for the duration. Couple this with work you love and can do for something like, if not forever, and you’re really set up.
Here’s one way to do it.
In our society, we tend to focus on a sky’s the limit approach to income. We think if we work smart and hard enough, we can make more and more and more money.
Of course, to some degree, this is true. However, most people take chasing perpetual upward mobility too far.
What a waste of time and energy.
You’ll end up in a better situation with money if you focus on making what you need and a little bit more. Then, direct that money in the most optimal way possible.
Judging by some of the response to the article where I discuss getting out of the stock market, people have difficulty wrapping their heads around the idea that you could willingly stop short of making as much money as you can. Practically every objection to my decision to sell my stocks focused on the fact that I was leaving money on the table or I can’t time the market.
We’re conditioned to respond this way.
We don’t live in a world where people consider you sane if you say I don’t need to be in the stock market because the calm of cash security beats the stress associated with investing any day.
However, you view these things, be realistic.
Understand that you’re capable, but you lack eternal capacity. Right?
We all have a number where we’re like, yeah, I probably can’t reasonably expect to make more money than this. I know I do.
Know your number.
When I finally gave up chasing every single almighty dollar, I gave myself the mental and physical space to make better use of what I do have.
It’s a prerequisite to the next two critical points of executing this relatively alternative personal financial strategy.
The beauty of knowing your number is that you can more easily set — and maintain — a low cost of living.
Sadly, as most people make more money, they also spend more money. Lifestyle expansion or, as
If you know your number, you can set your cost of living way, way below it. Then, instead of focusing on making a ton more money, you can focus on maintaining a low cost of living. Or, better yet, making it go even lower.
I recently reduced my cost of living by something like 12% when I cleared some pesky debt.
I hope to do it again between now and this time next year — if not sooner — when I pay off my car, then commit to running it into the ground.
There’s a good chance my housing situation will change at some point in the not-so-distant future. I didn’t see this coming. However, when it happens, my cost of living will head even lower.
Here’s the thing about focusing on your costs rather than your income.
It’s so much easier to give yourself a raise. On the regular.
Even if you’re not wiping out the big three — debt, transportation, and housing — you can find areas to cut back temporarily or permanently. This means more free cash flow. More free cash flow means more wiggle room and a higher level of cash security.
I’ll take this lifestyle over killing myself to get a raise every single time.
Once you take on the mindset that allows you to go there with the first two points, you’re good to go. The rest be easy.
You’ll have a handful of bank accounts. Your landscape might look something like this:
Or something like that.
No matter how you structure your pots of money (read what I mean by that here), you’ll learn to do the dance, and you’ll feel like a Fiona Apple Criminal.
And you’ll have a good defence.
You focus on allocating cash over aggressively investing it because you want to live now, not when you’re fucking seventy!
You look at that bill-paying account and, say. I’m keeping it at a level of 1.5 times expenses.
You look at the emergency and rainy day funds. They’re decently stocked, but you can always have a bit more money in each. So as that checking account cushion grows too large, you take the excess and direct it to one or both of these pots of money.
You look at that travel fund.
I love looking at my travel fund (my girlfriend — the one I didn’t quite see coming — and I have plans!).
And you’ll say, okay, I made $5,000 this month. I put $3,000 into expenses. I left an extra $1,000 in my checking. I put $500 in my emergency fund. And I’m putting the remaining $500 in the travel fund.
Or something sort of, kind of like this.
You might have other funds. Other needs. Other goals. Other desires.
That said, there’s a central component to owning and doing well with this cash-focused strategy.
know your number then keep your costs low
I’ve done it all with my money.
Made a lot. Blew threw a lot.
Had good times and bad.
I have never felt better about the way I view money and how to earn, spend, save, and allocate it than I do since I crafted and tweaked this strategy over the last incredibly interesting and, at times, challenging year.
“This article is for informational and entertainment purposes only.It should not be considered Financial or Legal Advice. Not all information will be accurate.Consult a financial professional before making any significant financial decisions.”