So …You want to Retire…? From what? And… to do WHAT?

    Another Beach…?

and move to a Caribbean beach or in some countryside in Europe and maybe open your small bar, business that  (of course!) it will be very successful…bla bla bla….

Or…join the latest trend of movement of FIRE (Financial Independence. Retire Early)

SO… (did you notice how big was this so…?)

Why you didn’t retire yet?

You know…the kids, the mortgage, the family, the  <enter other excuses here>…”

Ok, let’s see why you didn’t do it yet and why you should change right now your approach on this for your mental sanity.

First and foremost…

you didn’t retire yet because you don’t really want it bad enough.

But…let’s take one additional crucial step…

Let’s go and find it….

You have to answer two questions first:

Do you want to retire from what…?

Let’s start with the first part

Retire from what?

Easy right? I am hearing you now from the screen…

You want to run away (sorry..retire)…from:

  • Your boring job
  • Your evil boss
  • A city you hate
  • Hours of commuting
  • Colleagues friendly like a bear
  • A cold and raining weather
  • Your answer

Ok, done…

Now the second part of the question…the most difficult

Retire to do what…?

I am hearing you less now….some weak and general statements like………

  • To golf more
  • To sleep more
  • To spend more time with my family
  • To relax
  • To read…write…
  • To play an instrument
  • Your answer

So…if the reasons above  are so strong to make you consider to quit your job and changing radically your life…why don’t you dedicate more time to them while you work…?

If playing golf is such a burning desire…why you are not more efficient with your time (e.g cutting internet/social media/TV time) to satisfy that burning desire?

Same for the rest…

If you are not spending time to do the things you think you like it’s only because there is not a burning desire behind them.

Instead you decided to waste your life watching a screen instead of living it

You just want to retire from something to…become lazy!

Wasting time in front a screen is your burning desire…

Let me repeat….

Wasting time in front a screen is your (only) burning desire…

Because you do it day in-day out for hours and hours and you are never bored doing that…

Indeed with the advent of the smart phones and tablets we are not bored anymore because we have anyhow always something to do…watching our phone!

Help me…!  What should I do  then?

Assess yourself
Shut down all the distractions and ask yourself what you really like
The goal here is to really understand your passion once you remove the screen time…(use phone app or other tools to track it)
You used to like golf, swimming, playing guitar, bla bla before the screens came in the picture… right?

Reignite again your passion
Start practice again what you use to love.
Set a schedule calendar for it and do it
Enroll in some tournament, competition, to set a measurable goal and a target.
It would be strange in the beginning but you will rediscover the desire…

Act on the big dream
Leaving in Europe opening a small business was your dream and 9-5 escape ?
Start planning it.
Plan a trip THIS YEAR, discover how to buy/rent a place over there…if that’s the place you really like…start thinking about the business.
You decided to invest your time reading this blog instead of watching TV or mindlessly browsing your phone…so you are committed to change, clever, energetic.
You can do it…no doubt about it…start now

That’s it.
Few points and actions.
We make it complicated but it’s not.
We just lost sight of what we are and what we love
Understand that the world out there wants every second of our attention to MONETIZE it…

Don’t fall in the trap, you are more clever than who wants to suck your money and life

Where do YOU want to live? Living in the BEST place in the World (Hint: it’s not the U.S.A.)

No bad right?

According to many survey only 10% of people love where they live.

Small percentage right?

What about Living in Your Dream Location Doing What You Love…?
(the ultimate life goal not by chance my first blog post)

What about you?

Do you live in a fantastic place…or in a ugly one (or a so-so if you are lucky)?

Pick one:

  • Fantastic
  • So-So
  • Ugly

Let me set it straight: there are no reasons to live in an ugly place that you hate….not even a So-So one.

No reasons.

No fantastic jobs, schools, family, the dogs…nothing.
No reasons you waste your live in a ugly place.

Keep reading and let’s move to your dream place…

The reasons why most of the people live in horrible places (and you might be one of them) are  three (or better two and half)

REASON #1: Their job

Is this what’s stucking you?

Have you ever noticed that most of the jobs are concentrating in horrible and/or super expensive places?

Think about it…wherever you are…think about how many people live in horrible metropolis in the USA, Europe, Latin America and Asia.

I personally visited dozen of these metropolis. People commuting 2-3 hours EVERY DAY, often for a miserable salary, doing a miserable job.
Living in a place where everybody is there only to work, so super expensive, especially the real estate, two-three sometimes five times more expensive than in other beautiful places.

Why is this happening?
Why, excluding some few exceptions, our society cannot offer us a good balance work-life?

Simply speaking because such balance does not exist, unless we create it (!).
If we live in a nice place we will be attracted by the “nice” things of the place (e.g. beaches, mountains, social life. night life etc.) that will drag away time from working…and our society doesn’t want that…correct?
They want to tie us up with a six figures mortgage/students loan for 30 years, two or three expensive cars, credit card debts so we are forced to show up every single day in the office.
Making enough money that we may feel it’s not worth it to leave our job but that are not enough to leave it (I love the way Chazz Palminteri explains it  in A Bronx tale).

That’s why if you are in this situation you have to more than ever cut the costs and invest to reach asap financial independence

REASON #2: Because they think it is normal

I do NOT think it’s so NORMAL

Most of people think it is normal to live in an ugly place working 12 hours a day Again the society…go to school…get good grades…get a job…pay your bills…get a 30 years mortgage…die

Where is the having fun, growing as person, enjoy a sunset, follow a passion, just THINK ?

Open your eyes my friend…wasting your life in a crappy place doing something you hate IS NOT NORMAL

We have only one life and that’s not suffering that we are supposed to spend it.

REASON #2.5: Because of the family

Remember them?

I call this the second and half reason.

Why not the third?

Because it might have sense to live in a so-so place if you were born there and so you find it pleasant (i.e. you don’t know any better). Or maybe your family lives there and the love for them is big enough to forget about the place you live.
Anyhow…watch out and don’t find it as an excuse to justify your inertia.
You know well what you like and what you don’t …don’t make the mistake to live a life in a perennial state of denial. I have seen too many people literally wasting their existence pretending to be happy and sadly dying after a miserable life.

Don’t be one of them.

Let’s take some actions.

So where do you want to live…and why?

In my view the best place should have the following characteristics

  1. Safe
  2. Clean
  3. With accessible and cheap good health care
  4. With amazingly good weather
  5. Cheap
  6. With great food With beautiful scenery
  7. Culturally attractive
  8. With decent balance of business, academic opportunities
  9. Not extremely far from loved ones (family, friends?)
  10. People and foreign language friendly

Though isn’t it?
According to this list few places have all or most of these characteristics.
The whole USA is out, some places in Asia can be ok, same for Central and Latin America, many European places definitively are good candidates.

Wait a second…USA is out!?

Should we all move to Europe, Central and Latin America or Asia (!)

Well…yes…

Listen…I traveled and lived in three different continents and ten different countries …and the answer is YES….

The ol’ USA…the American dream doesn’t make the list…

USA is (or can be) an opportunity…not a destination.

Good to stay there to reach financial independence because the average salaries are higher than the rest of the world and the opportunities abundant…but after you have enough money it’s better you run away from it and very quickly afterward.

Why I say that?

Try to live in the USA without a job and get sick or even with a job and getting SERIOUSLY sick….

No insurance, no health care coverage…you are totally ruined…you might lose everything in a hearth beat for a medical bill and die sad and poor..so no way…bye bye USA at least until the system will be less screwed..

Europe is a great alternative, great food, culture, generally good weather, free and averagely good quality healthcare, cheap flights, relatively short drives to travel within the old continent, mostly secure, great education facilities, very affordable education (free until high school and generally 2-6,000E per year top university (a fraction of the USA one)…with some few exclusions).

Basically a great alternative to that nice beach in Costa Rica (or Mexico, or Thailand, or… you name it) that can be relaxing to recover decades of 9 to 5 cubicle slavery but pretty boring after one week.

Step out from your mental limitations for a moment….the world doesn’t end 20 miles from your home.

Believe me.

There are much better place to live than where you are right now and taking our stuff and leave will be much less traumatic than you think.

Let me tell you my personal case:

  • after 1 weeks most of your friends and acquaintances will have forgotten you
  • after 1 months most of your relatives will do the same
  • after 2-3 months YOU will start doing the same and stop missing your favorite food, church, sport team, bar etc and will replace with new ones

Besides (and this is a big BESIDES) with all technology and social networks (Facebook, Whatsapp, Skype, instagram, wechat, messenger, LINE and other dozens) you will be in constant contact with your friends and relatives, even more than when you were at home
(I am not kidding…I have more contacts with my friends thousand of miles away than they have with other friends who live few meters away from them).

So…let’s pick the best place in the world

If you are in your 20’s and close to jump in the workforce please take a minute to reflect

Do you really want to spend the rest of of your life in a cubicle in the same place where you where born?

Don’t.

Just make the jump, take that flight, cut the umbilical cord, try that start up on the other side of the world…don’t look for safety…you will have time to look for safety.

Run away from ugly and boring place Pick the place of your dream and go…even jobless

If you are in your 30’s-40s capitalize on your skills, you will have great potentialities and possibilities to move out, ideally with a great contract. Don’t underestimate yourself, that’s the age you can give your kids a great exposure worldwide, don’t limit them to one place, one city, one country even thought you think your country is the best of the world there is still time to go back there.

If you are in your 50’s and played smartly with your finances you can say goodbye to your corporate life and downshift.

Belize? Why not?

Costarica? why not Spain, Portugal or South of Italy?

Florida?

To end up paying the insurances and hospital lobbies $3000 for a flu if you are jobless?

…no thank you…

Taking the jump is easy, eyes opener and rewarding (often also in monetary terms).

Don’t waste one more minute surrounded by ugliness and sadness, a great world is waiting for you.

I promise it.

Setting your goals (Oh no…there I go again!!!)

What about if I am telling you that setting goals is TOTALLY USELESS?

Yes…you read right…

Wait a second!

Everybody is shouting  to set your goals bla bla bla (not everyone actually..)

..and what about your spiral ????

Remember…?

Did you make the exercise?
Did you realize that you are exactly today what you really want to become (even if you don’t like it?)

Good

Here I  will explain you why setting goals is a total waste of time…and how to design your life better

Let’s start…

Why setting goals is useless

If you are like many people December 31 is setting goals day.

or better…

forget about the 90% of the goals not achieved the year just past and making another list of goals very likely identical to the one of the previous year or of the previous 5-10 years

One typical list might look like

1) Losing weight
2) Eat more vegetables
3) Exercising more
4) Walk more
5) Complain less
6) Change job
7) Cleaning more often the house
8) Making more money
9) Call more often your mother
10) Write a book
11) Start a blog
12) Learn how to play an instrument
13) etc etc

If you are an advanced goal setter you list can even look like this one:

1) Losing weigh: drop to XXXlb or YY Kg by end of the year
2) Eat vegetables at least 3 times a week
3) Exercising more: run/bike/swim at least 3 times a week for more than one hour
4) Walk XXXXX steps everyday
5) Stop complain
6) Change job by May 15 and move to a higher pay/job title one
7) Cleaning the whole house 2 times a week
8) Making XXXXX$ per year
9) Call your mother 3 times a week
10) Write a book about cooking by May 31
11) Start a blog by Jan 31
12) Learn how to play guitar good enough to play 1h a day every day
13) etc etc

Look at your goal list now…

If you are reading a blog on personal improvement like this one I am sure you have one

Are the same goals over and over in the list year after year?

You might also tried to break the yearly goal in monthly goal or weekly goal…maybe using the thousand of books and manual written out there that should have shown you the infallible method to reach your goals.

Maybe now you feel stupid or uncapable and every December 31 sadly you set the same goal being sure that this time will be the one you will achieve them! (and stopping following up on your goal on January 2!)

Don’t worry we all go throught that,,,you are not alone

The reason why you don’t reach what you call goals that you write on the list is that you don’t really…desperately…badly want them and you don’t feel the urgency to reach them.

Let me repeat it:

The reason why you don’t reach what you call goals that you write on the list is that you don’t really…desperately…badly want them and you don’t feel the urgency to reach them.

Period

Think about the things you wanted and achieved in life vs the one you think you want but not achieved yet.

What are the main differences?

The actions you took.

Plain, simple but so difficult to grasp.

Let’s go deeper

Why you achieved those things…? What’s so special with them?

Very likely because of social conditioning.

You got a diploma or a degree or a driver license because the society is pushing you to do so…there are schools for that  right?

Very likely you do some sport not to have a too devastated body.

What else?

What about the goal to play decent piano, golf, guitar?
To start that blog?

Not done yet right…? No time…you are too busy right?

What about the dream to create something for yourself? To be a small entrepreneur?

Nothing right?

is it more easy to stay in the cushy corporate world where your boss is telling you what to do, right?

Now you know the answers…maybe you can watch a funny but profound Ted talk on why we don’t reach our goals and…why we achieve something… (watch it…short and worth it!)

The bad news?

Everything is up to you
there is no blog, no book, no seminar that will make you take the first action

The action is in your head.

You can decide Right now if take the action or do something else, go back to work or browsing the web just to waste you time

Waste  your life or create  something spectacular…

It’s totally up to you…

One simple secret to decide your future

The society wants to make you believe you are not mortal.

Why?

To  keep you spending, consuming and avoid the big questions:

What’s my real purpose in life?
What I really want to be and have?

Billions of people wasted their life without having achieved anything they wanted.

Numbly they let other people designed their future, because they never know  what they wanted  for their future.

I will teach you a small but powerful secret to decide your future, to get back in control of your life.

 

Firstly: What do you want?

You need to know what you want and how to reach it….you need a compass and you governing the ship of your life.

That’s what you need

 

 

Without  compass and drive you are like a boat without anyone governing it…a boat that is going where the waves and currents (that very often are your family or bosses or society) are bringing it….eventually crashing against some rocks.

You don’t want to end up like that

You need a roadmap to be in the driver seat of your life even thought is more easy to seat in the passenger’s one and let someone else driving.

 

But driving your life like that

How to draw a roadmap?

I took this idea from a great book called The Pathfinder

Take a A4 piece of paper…design a spiral on it.

The starting point of the spiral is when you were born then when you went to school…5 years…ten years…the university…then when you start working..write what you did until today…and put a mark and label it NOW.

Your life

The ending point of the spiral is the day you will die (sorry for the bad news you will as well)….put an age….70…90…100..be realistic …write DEATH on it
Now write from the mark NOW to the mark DEATH what you expect to do in your life…write it into the details…visualize the targets…where you want to be…with whom…doing what…

Stop whatever you are doing and come back when this exercise is over…it has to take at least 30 minutes….it’s important…very likely the most important exercise of your life

Did you figure it out now…?

Finished?
Interesting…isn’t ?

Do you have still time? Very likely yes…

Or maybe not

How do you know?
What the spiral is telling you?
Is it a straight line with no changes or excitement to the grave?
A 9-5 until 65y, a gold watch as retirement gift, getting old, slow and then sick and die?
Or there is something exciting inside…a new job, place to live, kids, learning something, moving to some beaches in Ecuador or Europe and sipping cocktails until Ms. Death arrive (you can have your last cocktail with her actually).

What’s this roadmap telling you ?

I am telling you my secret.

When I first made this exercise several years ago I thought “whatever, let’s waste 30 min (actually i think i spent less than 10 minutes) of my life on this”, I completed and forgot it in some notebook.

One day, many years later (12-13 I guess) the same notebook ended up in my hands.

To my surprise most of the things I planned/envision really happened!

Not all of them but most.
Never sub estimate the power of visualization

You become what you think about, all day long

As Earl Nightingale used to say in the amazing The Strangest Secret

For better or for worst.

We become what we plan in our mind, and to me this happened also well before the Spiral exercise.

I was very clear not only on what i wanted but on ehat i will become of me
i had no doubts of what i will become that to me it was perfectly normal to picture me in my actual life
everything happened effortless, without any need of driving it

That’s why fake goals simply do not work.

Writing a Running a marathon goal on your 20XX list will never be accomplished if you are not really convinced of running a marathon is what you really want… but it’s on your list just because you think it must be there

Be the architect of your life

Your life from birth to death is already programmed and designed in your brain and the architect is you and only you.

Let me repeat:

Your life from birth to death is already programmed and designed in your brain and the architect is you and only you.

You can do anything you set your mind to, man (ok…this one I stole from Eminem… 🙂 )

 

 

 

The only Secret you need to know to Reach Financial Freedom: Passive Income

What about sleeping like this while you get paid?

Remember the formula and your goal

Saving enough money so that the passive income generated will cover all your expenses

We already talked about saving…what about passive income?

Passive Income

Passive income is the ultimate goal and dream….a vehicle that generates money 24/7 no matter what we do (sleep, golf, watching TV) thus the name passive.

Being paid to do what you like, no boss, no alarm in the morning, no customers…no bad right?

Now the question is how to build this vehicle, this mountain that will generate that lazy flow of money

Let’ s look again at our options…

Cash
While it’s good to have cash it can only lose value in time due to inflation.
Keep max 3 months of living expenses in cash and put it in some high yield checking or saving account that you can access instantly.

Period.

Don’t keep your cash in a suitcase!

CD-Bonds
Safest passive investment and because of it with the lowest return, barely matching inflation. You can make a little more money with municipal bond or bond fund with a little extra risk.

Despite the low return bond should be an important portion of the invested portfolio; the closer you are to retirement the highest the portion you should keep in bonds since it’s better during retirement not to have all portfolio allocated in stocks because a recession can eat up a big portion of your stocks portfolio and you might not have the time to recoup it.
In the USA the Bond yield typically track the interest rate of the period and the longer the maturity the higher the yield (unless the economy is closer to a recession and the yield curve is flat or inverted)
Investing in a CD insures that you will get your capital back plus the promised yield at the maturity

Example
If on Jan 01 2010 I invest $10,000 in a 1 year CD offering an yield of 2% on Jan01 2011 I will get $10,200 (the initial $10,000 plus $200 (2% of $10,000))

Stocks Mutual Funds                                                                                                                            There are thousands Stocks Mutual Funds over there, most of them too complex to understand or designed in a fancy way to attract you and charge you expensive fees.
Forget about the products your banker is trying to sell you and go for low cost (<0.05%…even better 0 now from Fidelity) index fund that tracks the major index (like S&P 500 or FTSE).
Depending on where you live, check with your bank or financial services provider and go for it.
Again watch out the fund fee…you must select a fund with less than 0.05% fee per year (basically for  $10000 invested you pay $5 year).
If you are an absolute beginner my suggestion is to invest 80% in a passive managed low cost index fund that track total market stock (USA or European) and the remaining 20% in an as well a passive managed low cost index fund that tracks the  total market bond (USA or European).
If you have some form of pension tax deferred (like 401k in the USA) where your employer matches your salary contribution (1-5% typically) maximize this first, than maximize IRAs and only after invest in taxable accounts
Never ever underestimate tax and fee…they can wipe out your return or even worst making it negative.

Individual Stocks
The Las Vegas for stock pickers.
I have to admit, I sometimes picked some single stocks, allured by the name or the buzz around it.

You don’t want to pick single stocks

Always remember,
You are not a stock expert and very likely (excluding Warren Buffet there are none around).
Why? Because you don’t have all the information about a company to be sure your investment is solid. One legal problem with the company you invested or government changes some rules and your stock can lose 20-30% in one day Have you ever imagined 20-30 years  that company like Kodak or Nokia (add stock graph) could disappear? N(stock chart) I didn’t so who place all your money there lost everything.

To use a dramatization Think about on investing in a single stock like betting on one number in a roulette…big win if the stock soars but also high risk of lose everything.
Think about investing in the stock market through index fund on regularly betting some money on the red in a casino where red is slightly more frequent than black or zero
You will surely face temporally lose but on average and on long time you will make some money (chart stock s7p or dow)

Real Estate

Real Estate can be all you need to have a solid Passive Income

It can be a good, bad or disastrous investment.
To minimize risks:

Rule#1: Location Location Location
Even thought it’s not certain, buying in downtown New York or San Francisco or in front a prestigious campus means buying a property with some intrinsic value.
Same for an oceanfront property or one close to a prestigious landmark (an apartment with a perennial obstructed view on the Eiffel tower).
I understand few people can afford this properties, foe the rest of us just do your due diligence, look for places with a healthy job market, universities, landscapes.
Look for unique features , be sure the competition around you is limited (e.g., no more buildings are allowed) .
Talk with trusted realtors, ask for data on comparable sales in the area and average rental (and average vacancies as well)
Study study study
One rule of the thumb says you should get 1% month of the property value per year in order to have positive cash flow (e.g. $2000 per month if your purchase price has been $200,000).
I find that nowadays getting 1% is very hard  unless you were fortunate enough to get an excellent deal on the property or investing in some rural Midwest property during an economical expansion (but watch out at what might happen during an economical downturn to those properties).
In mature areas I find that 0.55-0.65% are more common rates during the first 5y of ownership with gradual increases.
Anyhow Real Estate when well purchased, financed and maintained can be a great investment in the long term and a good edge against the inflation since both the rentals and the values on average growth with the inflation.
Besides, based on where you have the property you can have great tax deductions increasing your ROI.

Peer to Peer Lending
A relatively new investment.
There are two kind of lending through an intermediary (usually a company with a website)
You basically act as a bank, landing money to privates (or small companies) for disparate investments from buying a car to invest in a multi-million dollars projects.
Of course the higher the risk the higher the return
Based on the country you reside you can also have detailed information about the borrower such as his credit history and based on this information the intermediary will fix the interest rate to charge him.
You can thus decide to lend money to high quality borrowers (who wants to keep that status to be able to access cheap credit) but a low interest rate or the opposite (to high risk borrowers thus charging higher interest rate)
Up to you…I personally prefer go for a mix to minimize my risks but at the same time getting some more return vs Treasury bond or other means of investment.

Still Confused? Don’t have to! Keep it simple

That’s all… and believe me it’s not so complicated like our banks or “financial advisors” want us to believe.

Don’t think investing is for Wall street gurus and complicated and the only way is to buy useless and very expensive managed mutual funds from the “financial advisors” with lower return vs the market.

Don’t overlook the importance to invest some money and time to maximize tax return, or to avoid to buy everything full price.

Believe that many people reach financial independence simply saving more money and investing wisely the difference.

Believe that there is an alternative life vs living paycheck by paycheck out there if you just want to chose it.

Just believe me

The 3 simple habits to Reach Financial Freedom

According to 2017 CareerBuilder study

Seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year.

Overall, 71 percent of all U.S. workers said they’re now in debt, up from 68 percent a year ago, CareerBuilder said.

While 46 percent said their debt is manageable, 56 percent said they were in over their heads. About 56 percent also save $100 or less each month, according to CareerBuilder.

On this subject people, especially in the USA, discussed and are discussing ad nauseam.
But still people seems not getting the importance of it, or simply don’t care.

And this is happening in the richest and most developed economy of the world.

Why?

Mindset and Ignorance .

Let’s analyze, change them and get the first step towards Financial Independence.

Let’s start with mindset.

Mindset

Western society are based on capitalism that in the last 60-70y (let’s say after the end of WW2) degenerated in the concept of need of constant growth and increase of consumption to sustain the economy.
The concept of the constant growth is a pillar of modern economy.
Economy Growth as increase of the market value of goods and services.
Basically every company should grow in order to make more money, so increasing the market value of goods and paying taxes, the services of the Country where they operate.

The concept of strong economical growth at Country level is fundamental in emerging economies where it’s urgent to reduce poverty and build basic infrastructures such as roads and access to basic services like drinkable water, electricity and gas.

Conversely in developed Countries the continuous grow became a boomerang i.e. decreasing the quality of life of people for low/no returns.
That’s where we lost happiness to get almost nothing in change.

In a nutshell: being stuck three hours in traffic to work and contribute to economic growth in a third world emerging country might be worth if I am going to use such hard earned money to feed my kids, have clean water in the house or a roof under my head.

But (and this is a HUGE but) if I decided to be stuck in traffic in L.A. or San Jose mainly to pay the mortgage of my 4000 square feet (where I am not very often anyhow because I am always at work to pay the mortgage!) or the loan on my new cars or the latest cell phone, camera, luxury gadget etc. is very different.

We need to spend the money (as result of the growth) in something that improve our lives as total balance.

If, in a scale 0-10 (with 10 meaning  full satisfaction) working is reducing my lifestyle let’s say by 5 points but what I can buy with the earned money is increasing +8 (to feed my kids or having clean water in the house etc) the balance is positive. (-5 +8)

Conversely if a bigger mansion or the new “toys” give me back 2 o 3 point of quality life there is something wrong.

Let’s take the car for example

Well..maybe a little newer…

I had several discussions with friends making 1300-1500 USD (or Euros) per month on this subject.

I show them that, using  a conservative calculation,   an economic  car (purchase price, repairs, insurance, tax, gas excluded) costs at least  1000-1500USD or Euros PER YEAR.
This means that they work one full month ONLY to have a metal box with the wheels on the road that they use it….90% of the time to commute to a job!
So… I need the car to go to work and I  need to work to have the car…can you see something strange here?
You might think, there is no solution, I need to work and I need the car… are you really sure?
Did you consider all the options?
Like using public transportations? Moving your house closer to your job or …biking/using a cheap scooter to go to work?
Or, if really having the car is a must, what about to buy a cheap, low consumption and used one and keep it for ten or more years ?

We are so blinded by the mantra find a job, spend your money, pay your bills and die that we don’t even realize what we are doing.

Every penny spent needs some work to do in order to earn it and this work needs your time that you will not be able to spend with people or doing things you love.

Think about it, every time you spend money think in term of time needed to earn it, time staying with people you might hate, maybe your boss, your coworkers, your customers doing a dull and stressing job.

Our mindset should shift from “We work because everyone does it” to “We work in order to be happy”

Happy because our job is IMPROVING our life either like in the case of the person living in the developing countries or if working is satisfactory or if the money are good enough to aim to a quick financial independence.

Ignorance

People live paycheck by paycheck because they ignore there is another way of living.

Clear, simple and dramatic.

They make 10 and they think they are entitled to spend 10 (or 12 or more especially in the USA where paradoxically everyone should be very rich compare to other places in the world ).

The solution?  Financial Independence

The only  way out that is saving to reach Financial independence (FI) like we already discussed. 

The formula is very simple:

If

I spend each month $XXXX
I am able to generate revenues from passive investments (rental income, side job, dividends, blogs, etc) $YYYY

If $YYYY is ALWAYS equal or greater than $XXXX I am financially independent => I don’t need to work a single day in life anymore.

Everything boils down to three numbers:

1) How much I spend each year ($XXXX)
2) The net worth I have that generate the passive income ($YYYY)
3) The interest rate of the net worth that generates the passive income (Z%)

As said the FI is reached when

Expenses <= (Equal or less than) Passive income

Being

Passive income=Net Worth * Average interest generated by the net worth

We have:

Expenses <= (Equal or less than) Net Worth * Average interest generated by the net worth

Let’s make a practical example

Yearly Expenses=$24,000
Net Worth = $1,000,000

In this scenario we need a net interest of 2.4% ($24,000/$1,000,000 * 100) to cover the Yearly expenses
If our net worth is $2,000,000 we would need only a net interest of 1.2%.

Intuitively if we reduce our Yearly Expense to $20,000, we need a net interest of 2% ($24,000/$1,000,000 * 100) to cover the Yearly expenses
If our net worth is $2,000,000 we would need only a net interest of 1%.

Let’s examine some scenario

Gross Income with 2% return

To  get $24,000 per year with 2% return we would need $1,200,000…with $5,000,000 saved we will net $100,000per year before tax…with $600,000 we can afford a $1000/mo lifestyle.

Let’s see what happen when we bump our saving rate to 3% – 5% – 7% – 10%.

Here it is the gross income with 3% return
5%

 

A juicy 7%

 

An incredibly handsome 10%

 

Thus Making, Spending and Investment Return  is all what you need to know

 

1) Making

Making is the active action of making money i.e. you are doing some actions to generate that cash and if you stop doing it that cash flow disappear almost immediately.

Typically the sources are:

1) Your primary job (9-5pm or entrepreneur)
2) Side job (selling stuff, blogging with revenues, uber driving etc.)
3) Passive Income from Investments (dividends, royalties, real estate rents, peer2peer lending etc.)

Usually you know what’s the average income you can get from these activities, let’s forget for a while the possibility of inventing a great product that will skyrocket your income and let’s focus on your average income.

You know what you are making but maybe you are under evaluating how much you can increase your income.

Typically (unless you are already in a high expense area with well above average salary) you can double your income  simply changing job description and/or Country.

Yes double.

I know several people (me included) who doubled or tripled their salaries simply changing function or more commonly workplace.

But guess what…?

Not so many…why?

Because People are resistant to change

They prefer 40 years of paycheck to paycheck agony vs 10-15 years maybe far from home or in an unconformable job but with a solid income and reaching a financial independence.
Comfort and agony….if we add no tight expense control to equation you are doomed to 40 years of mediocre job and life.
You might be happy, sure, but honestly today I found that 90-95% of 9-5 people are complaining about their job, peers, boss etc. and their hobbies, vacation or family time is never enough to compensate the 80% of the time they spend for job related activities.

Being happy while you spend almost all of your low income is not the pathway to happiness…we know that…

So….what should we do?
Changing radically our job or location?

Yes (in case you missed it this was a big yes…)

Listen, if you are lucky maybe you don’t have to change location but it will be almost impossible to double your salary remaining in the same industry and region (unless you are enslaved in the actual one).
One alternative is to change industry and move to a better paid one. You might need to go back to school and get more skilled for that.
Or get skilled on making money on the internet flipping stuff or blogging or become an influencer in something
Whatever it is you need to take BOLD actions.

2) Spending

This is the easiest part, believe me.

I am already hearing you “come on man…I am already cutting corner everywhere…where can I find that extra $10!”
Are you sure?
Do this exercise for me.
Track every expense for a month (to the dollar, euro, rupia, yen, rmb…whatever else) and analyse it.
Are you still sure you cannot reduce eating out so often? Or using that car? or cancel the expensive subscription you never use? Or reducing wasting food?
Or not buying the thousands of expensive and useless gadget? Or in vacations?

Yes you can and you must to reach FI.

Reducing expenses is much important than revenues because it has a double effect:  for every dollar saved you reduce the money you need to reach the financial independence AND you can invest that dollar that will produce passive income

3) Investment Return

That’s the tricky one, especially if you are not skilled in investing.

It’s intuitive the fact that higher is your Return on your investment (or Yield) higher is your monthly check from the investment…but what is high and what is low?

The easy part…Higher the risk higher the return

The difficult…find a sweet spot between risk and returns

There are 3 or 4 way of investing after tax money…here they are

Rate of returns…

 

Confusing…?

I bet it is but it might be much more simple than you think…

What’s next

In next post we will go through these difference way of investing…for now just keep in mind that the solution is simple: saving enough money so that the passive income generated by your investment will cover all your expenses.

This is call Financial Independence, i.e. you are independent (free) from working to have your finances covered

To most of the people Financial Independence is like a dream….something not real…something only for very rich people.

Whenever I talked about it most of the people dismiss me with a gentle “whatever“, like I told them they only need to win the first price of the lottery tomorrow to make it.

These are the same people who live a miserable life of paycheck to paycheck slavery…I wonder if there is a connection…

But if reach the end of this post you will not end up like with those people.. I promise you…just wait for next post…

Are You Happy? Increase Your Happiness of 91% with 4 Simple Goals and 1 Solution

 

Are you still in a place that you hate or did you buy a one-way  ticket to Costa Rica ? (ok let’s say Lisbon…)

So we have to move somewhere else to break the chain and be happy?

Firstly:

What is happiness ?

 

The old cliché Caribbean beach?

 

The mansion?

 

 

The Lamborghini?

 

All of three…or none?

How can we define it?

Searching for happiness has been what always pushed the men to improve their conditions.

It is the progress, the man on the moon, the airplanes, the internet, you, reading me thousand of miles away.
But this is no true for everyone, there are many people whose life is “ok”: they are satisfied for what they have.
The progress doesn’t originate from them but from those who are disruptive.
So what’s the target to be happy?
The middle? “In media stat virtus” ? Or the continuous searching for improvement?
There is no universal answer; it’s up to you; on what you feel and motivate you through the day.

Once a friend of mine told me: “When I was a kid I was poor, spending my time going to the beach and I was happy. When I grew up I went to America, saw what’s behind the wall and I was screwed”(mean he got the shopping, consuming bug, ended up in debit, big house, car…you know how it works).
Now that kid would like to go back to that beach he tried to to leave…and he’s not alone.

Everything boil down to Four Steps and One Solution

Do you remember WMJHH?

WHERE: Living in the place of your dream
MONEY: Be financially independent
JOB: Escape the 9-5 life of cubicle slavery for…well…nothing…
HEALTH: Be healthy, eat better…exercise more…lose weight
HAPPY: Think outside your box and stretching that comfort zone that keep you stuck in your city, state, country, sad life etc

Thus you and me are happy if we reach this Four Goals:

  1. Do what we love
  2. In a place that we love
  3. With people we love
  4. In good health

The solution? Financial Independence!

Money buys happiness?

Well…YES!

YES

YES

Enough Money buys FREEDOM

 

Enough money…the so-called the F-you money by JL Collins

 

 

FREEDOM from a 9am-5pm-65y you hate so…yes MONEY can buy FREEDOM so happiness

 

Please carve this in your brain…MONEY DON’T BUY HAPPINESS per se.

You don’t believe me right…? It’s OK, nobody does…

So….make this simple test…be realistic and sincere…list down the 10 best memories of your life…don’t read any further before moving forward..ready? …go…

(Did you cheat or really got the ten points…?)

I bet a diet soda (well we try to save some money here, correct?) that  none of them were money related.

I bet they were instead memories of time spent with people you love and not the moment you bought some expensive toys.
I bet you were happy when you were mentally free to enjoy those moments.
Free from the heavy worries about a job, a deadline, a mortgage, a bill, a jerky boss.

So the equation is pretty simple

HAPPINESS=FREEDOM

And FREEDOM is reached through FINANCIAL INDEPENDENCE  that is reached either increasing our income or reducing our expenses until we can  live off from our saving.

So…

FREEDOM=FINANCIAL INDEPENDENCE=MAKING MORE MONEY & SPENDING LESS MONEY (until reaching a point to live off from our saving)

So part of the equation is FREEDOM=SPENDING LESS MONEY (to reach financial independence)

HAPPINESS=SPENDING LESS MONEY

as simple as that

instead we think the opposite…we think

HAPPINESS=SPENDING MORE MONEY @@@!!!

…ending up broke…

But let’s see the second part of the equation

HAPPINESS=MAKING MORE MONEY

We can do that

  1. Increasing our hourly wage or working more…
    It can be more fun (do what you love) or less fun (do what you hate)

If you reach it doing what you love congratulations! no need to read any further (or you can just to see how we are doing) otherwise keep grinding…

Look it’s a simple as that:

 

 

If you are in the intersection of the three circles…bingo! The WORLD IS YOURS!
in this categories typically fall top athletes, famous doctors, actors, super nerdy tech guy and many other people maybe not so famous.

From my experience the 1% of the population

You love something, you are talented to do it, that activity pays good money…

 

THIS IS YOUR GOAL!

 

Let’s do some real case examples

1) Teacher – Administrative
you might love it and be talented but unless you are teaching in some very top university around the world chances are slim that you make a good money.
Poor but happy…can be a good compromise…but watch out that you have only one bullet left…if one day you will hate your job you will be in big troubles..poor and sad!

And watch out next dentist bill…or if your car breaks down…or if you have to change your roof.
You don’t wanna be there…believe me

2) Engineers
you likely make good money and you must be skilled (because being an engineer require to be skilled) but unless you are a super nerdy tech guy (I would say 50% of engineer population) you cant love such dry and boring job.
We are in the Dilbert zone here…white collars good money job where some people are happy and some are miserable
In my view if you are in the intersections the happiness is still limited by the lifestyle of the engineers but maybe I am wrong…

3) Marketing or Sales  Engineer
Better than 3…you might actually doing cool stuff here detached to the technical boring aspect of the job
but you have still to show up at the job even thought you will surely have some flexibility in terms of work hours (we want to pamper our brilliant guys right?)

You might be in the magic intersection here…

4) Doctors
Depending on the country they operate they might have a nice salary and directly proportional to their stress and responsibility.
Many might love this job that has a big degree of empathy and human connections with the patient.

It can indeed be the ideal situation as well

5) Low/minimum wage jobs
Yes…the adage says you can be poor and happy…but not at this extent especially if you are in the USA or in most part of Asia where being at low/minimum wage means starving and not even access basic health care coverage. If you are in this category I hope you are in some European country with universal health care, ideally far from the big expensive metropolis.

In this category you are in the perifery of every circle
No money, no passions, no talents.
You might be ok to be here if you expenses are really low, if you have other interest and if the time schedule is very short and flexible (and again if you are not in the USA) but generally speaking you are barely surviving here, poor and sad.

6) Fashion, luxury business
people at the top of this categories are in the ideal spot but also the lower level one might make good money, in a nice and cool environment.

 

7) Entrepreneur
The good think is that you don’t have a nasty boss
The bad is that you might have hundreds of those nasty bosses (your customers) and work hundreds of hours per week.

The solution? do what you love for a super high hourly wage
Easy? no
Feasible ? Yes
If you get the solution, congratulations! you get the ideal job
Otherwise keep pushing…but miserably

So what’s the point ?

should we  all be talented, passionate and rich and 100% happy ?
Well yes

First step first…let’s reach the first 91% f happiness getting back 8-10 hours a day of freedom through FINANCIAL INDEPENDENCE. 

Head down please …keep working in your boring job, save and earn how much as you can to reach the FINANCIAL INDEPENDENCE, gain freedom from something you don’t like…and make  a giant first step toward happiness.

In next post I will talk how  to reach this financial independence and what to do with this new freedom….

PS
if you cannot wait for my next post, there are EXCELLENT blogs on financial independence you can check out in Freedom recommends…enjoy the reading!

21 Minutes to Learn How to be Happy Doing What You Love

99% of the people I know have no idea what to do with their life

They live somehow…they hope to be rich without working on it, they hope to be healthy eating crap and not exercising, they hope to be happy and famous someday.

The someday never arrived and they die fat, poor and in solitude.

Do you want to end up like that?

Living without knowing our targets is like to ride a boat (our life) with nobody governing it…sooner or later will crash on the rocks…or best case will go nowhere…

A man without a goal is like a ship without a rudder right?

Anyhow almost the totality of people live like that…

Do you?

Yes…

What about you?

Do you know what you want to do of your life?

I give you 20 second…

Done?

Is it difficult right?

I bet you just kept reading after 5 seconds just because you grew impatient…and you know why?

Because I asked you a question you want to avoid or that you consider useless because you think you are immortal, that a life made of browsing your cell phone, wasting time in the social networks and getting some charity from your boss is the BEST life you can get and this ephemeral happiness (BTW happiness. Are you sure?) will last forever…right?

Wrong  & Wrong

If you don’t know what you want you cannot be happy.
And your life won’t last forever…

Don’t you agree?

Fair enough…close this browser now and go back to live other people live on the social or watching stupid videos on Youtube all day.

Still here?

Good…

Let’ s move forward and quickly…you and me just have a couple of minutes to live less since you start reading this post…(never thought in this terms right…is it scary…isn’t it…?)

Why we avoid this question

Generally speaking we don’t want someone to ask us what we want to do with our lives (or what we like)
typically because:

  • We still don’t know what we are looking for
  • We somehow know it but we live in a state of denial that we are not putting effort in reaching our goals

So we prefer to avoid the big question, we wake up, take the car, bus, train, maybe for several hours day in day out…doing a job that best case is exciting like eating paper, worst case is a freaking hell with the only goal of surviving or wasting money in useless expensive toys (smartphone, cars, vacations).

Don’t get me wrong
There is nothing outrageous with buying toys once in a while but the impact on your net worth must be negligible (less that 0.5%))

In a nutshell, before throwing that $50,000 in a new car you must have $10M as net worth…yes you understand me correctly…you must have at least 10M$ to allow your self that car that in the best case will give you only 10 minutes of joy when you drive it out from the dealer and years of pain (car loan, insurance, accidents, scratches, gas, cost of cleaning it, fear of parking it in a dangerous area, fears of somebody stealing it…etc.)

Same for jewelry, luxury watches etc.

You want to buy that $50,000 car? Or that $10,000 Rolex? Or spending $10,000 per year in Restaurant?

How long will take you to earn that money?

How much life you need to burn?

If you live in the USA and make $25-30K/y before tax and save 10% of your income (higher than national average!) it will take MORE THAN TWENTY YEARS TO BUT THAT FREAKING CAR and FIVE YEARS FOR THE WATCH!

Make yourself a favor… read now the great book Your Money or Your Life for  some “wow” moments on this subject.

Some exception with clothes that indeed are staples objects but as staples you need to use those shoes or suit until erosion before throwing them away.

So what’s the point?

the point is that our society is build in order to make us avoiding questions such as “What do I want to do?” “What makes me really happy” because they to keep us in the rat race 9-5 (actually more and more 8am-10pm weekend and vacation included) in order to….(drum roll please) CONSUME

CONSUME: buying tons of cheap or expensive crap
CONSUME: spending $300-700 every month for cars we use just to being stuck in the traffic
CONSUME: spending $300-500 every month eating unhealthy food
CONSUME: spending thousands of dollars in medicine to cure our stress of work, sedentary life and unhealthy eating habits

Can’t you see that our society eliminated talking about death?

They are scared that if we think  about that we all will start taking care more about ourselves, working less and, you can bet, consume less crap.

Think for a while the impact of two small things like biking or walking to your job and avoid eating outside (i.e. you bring your own food to work).
How much are you going to save and improve your health?

Well…I am already earing you guys…oh you cannot understand… it is impossible…my job is very far….,  I have no time to make my own lunch,  I promised my kids to go in that restaurant since a long time

Sorry folks…those are pure and crystalline BS

But you are here reading this blog so you are different from that 9-5pm obese poor sheeps stuck in the traffic eating their double cheesburger and sweet soda 50K$ in debts.

Are you? I know you are…

Back to the questions and the solution

Do you know what you want to do of your life? What is your purpose in life?

Here we go…the 21 minutes that will change your life

  • List all the things you love or you truly want…spend 19 minutes on it
  • Review the list….2 minutes are enough…pick the one that YOU know is the one

Read it aloud, write it again hundreds of time everywhere, be sure you have it in front of your eyes all day long.

That’s the one thing you have to aim for with all your time and energy.

Forget about everything else.

That’s where your happiness is and now you know how to reach it.

PS

There is a different version of this post called How to Discover Your Life Purpose in About 20 Minutes  written several years ago from an incredible man called Steve Pavlina. If you have to read only one post from Steve this is definitively the one.

3 Simple Steps to Live in Your Dream Location Doing What You Love

Dreamplace

Are you happy?

I mean Truly happy?
Not the so-so way..the pretty much happy…
Do you feel GREAT? Or well…no bad?

Most people are not happy…just look around.

They complain all day long living in a place they hate doing something they hate, surrounded by people they, in the best case, would like to kill. They live an empty live, no emotions, just a 9-5 to pay the bills and die with a nice fake gold watch on their wrist received from colleagues (who hate them back!).

Back to you: do you have a choice to be happy or miserable?

Yes you do.

I am happy by choice and I can easily show you how you can be as well without winning the lottery.

Let’s assess where you are first…YOU ARE:

Living in a place you hate doing something you hate 

If you are here you are in trouble my friend.

But don’t despair…. the two good news are:

  1. Almost all of us at some point were here
  2. It cannot be worst than this (smile)

You can be here for three main reasons:

  1. You are lost and stuck..you simply does not what to do to change your situation.
  2. You know where you are and  you also know you  must escape from here but for the time being you think  it makes sense you stay  here because it is an investment for the future (e.g. you are learning something or you are making a huge amount of money)
  3. You are scared to move (you know kids…I will never find another job…the mortgage…the dogs…bla bla) simply throwing away your life.

Living in a place that’s ok doing something you hate

You are a little bit better off here, you might like sometimes the place and maybe your family likes it more than you.

So every morning you drink the poison of a miserable job surrounded by miserable people.

Days in, days out.

Even if this situation on the surface seems a little better than the previous one, this is the most dangerous place to be because you have (or you think you have) something potentially to lose  if you want to take the jump and change your life.

That’s the category where I estimate 80% of people fall especially people who decide to stay in their hometown or Country (the infamous comfort zone)  to compromise with a  crappy lifestyle

You don’t wanna be here my friend, believe me.

Living in a dream place doing something you hate

A rare category.

Usually in a dream place it’s difficult to do something that you really hate just because the only fact that you live in a paradise makes everything look better.
I guess that someone at minimum wage in Honolulu is more happy than the same folk in a suburb of Chicago or Detroit  in February, right?

Besides, usually in a dream place the nice jobs are not abundant, have you ever noticed that most of the jobs are concentrated in ugly and expensive  places? (maybe because otherwise people have fun instead of working!)

I guess 1% of people fall in this category that can be even more insidious of the previous one (you really want to quit your job in sunny San Diego even though it pays 8$/h and you starve?)

You don’t want to fall here either because…. you want to be in the next one:

Living in a dream place doing something you love

That’s where I want to bring you and your ultimate goal.

To achieve this you need:

Financial independence

or

Doing something you really love

Honestly…I  disagree with the mantra of “Do what you really love and money will come”  that is in every motivational book, blogs, social etc.

While I do believe that in the same job you can make more money if you like what you are doing, I don’t believe that simple following the passions will translate in financial independence.

I know hundreds of teachers, philosophers, artist of different genre, average athletes who literally starve because their job is not paying them enough.
Following your painting passion will not make you next Pablo Picasso nor studying philosophy the next Socrates, nor playing guitar the new Jimy Hendrix.

And be sure you have talent at it, passion is not enough…you must be exceptionally good.

Watch out my fellow reader…it’s more complex than how the hundreds of motivational books want you to believe.

You MUST be sure you have all three attributes below:

  1. Do something that you love
  2. Where you have an exceptional talent
  3. Where the money are

If you are lucky enough to love an engineering or software job  and be good at it there are good chances that you will get some serious cash.

If you love being a teacher you might be happy with your job but be realistic on your earning expectation, there will be low…unless you are a teacher in a top university (exceptional talent & money).

Last but not least: doing something you love as a job can quickly turn you passion in hate.

I like the colorful way MJ DeMarco put it in his 11-poverty-traps.

Let the solved problem guide you. After you put your solution to market, what does the market echo back to you? Assess. Adjust. Act. Rinse. Repeat.
As for this entire process, it should be fueled by your internal passion for freedom, autonomy, achievement, or whatever else motivates you — the manner of the work is a by-product of those passions. As Marc Cuban says, to hell with follow your passion — follow your effort. Of course, WTF does Marc Cuban know — he’s a billionaire and your broke-blogger-buddy (the one who says “do what you love”) rakes in $353/mo arbitraging Adsense, yea, keep listening to him.
In other words, what does the market WANT AND WILL PAY FOR?

I indeed met people turning their cooking passion in opening a restaurant or becoming a chef and now they simply hate cooking and they are doing it now only because of money, it became their job.

They had to sacrifice the creativity of cooking to meet the margin goals of their business restaurant…cutting corners, cooking fast for hundreds of people with cost effective ingredients vs taking a whole afternoon to cook for a family of three.
Or people with the passion of photography who now every day  shoots hundreds of vacation memory pictures daily of families  sunburned in a resort with the background of a fake pirate ship.

Far from the dream of becoming the next Robert Capa right…?

 

The Takeaways?

Remember the ultimate goal is happiness,  freedom, family and health.

  • IF you are stuck in a job you hate you cannot be happy no matter how you pretend to be and you are not free.
  • IF you are able to free up 8-10 hours a day from that job you are getting back your live so you must be happy.
  • IF you do something that you love you are happy,  free and healthy.

So…again…our primary goal is

Financial Independence

TO

  1. be free from jobs you hate
  2. be able to do what we really love
  3. leave in a dream place

If you are reading this blog you are stuck in point 1…let’s move together to point 2…and 3…

You have no other choice right…?