Friday, January 7, 2011

Pondering my strategy with money.

"The art of war teaches us to rely not on the likelihood of the enemy's not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable." - Sun Tzu

While not incredibly well-read or knowledgeable, I think I'm starting to find finances more interesting now than I have ever before. Maybe I'm at "that" phase in life. Certainly, it started when I finally got tired of making my money and having nothing to really show for it. Thanks to that I went through Dave Ramsey's Financial Peace University, which has probably been the best $92 I've spent on myself in a long time.

I've tried reading Richard Kiyosaki's Rich Dad Poor Dad, although have never made it through the thing even after trying for close to a decade. The idea of debt as a tool seems dangerous to me - a bit worrisome. But, I can see his points, and there is the whole risk/reward aspect to consider. That aside, though, there's a definite self-reliance he spoke of; look for opportunities. Be creative. Go out and get it instead of being complacent and satisfied. Create your own security.

I have started reading The Millionaire Next Door, and its definitely got me thinking. Some of the terms aren't familiar to me (unrealized income? what is that?), but last night's chapter (Frugal Frugal Frugal) resonated. A lot of people trade in financial security for a high-consumption lifestyle, but lament they can't get ahead, that they're not financially secure. That's been me for my adult life. But, a majority of the millionaires they studied? Frugal. They trade a high-consumption lifestyle for financial security. They define wealth a bit differently - not so much how much you earn so much as how much you keep - but that's reassuring in a way.

More achievable, even.

Looking at this, I'm beginning to wonder how I should plan my future. Thanks to Dave Ramsey, I've been able to lay some groundwork, a foundation for myself, financially. Now, I'm still adjusting to it, trying not to fall into old, bad habits. Still, when I get paid my money (albeit broadly) goes where I tell it to. Its elementary, basic, but is good for now. In the future (likely this year), I'll have to get some things done with greater thought and granularity.

Looking at my reactions, its clear I favor "defensive" financial strategies. Defensive money handling is basically protecting what you get. A budget is the simplest, most basic tool here. This is well and good, as I'v gotten to the opinion that you can out-earn your negligence for only so long. As such, I will definitely continue to work on developing, refining and furthering myself in this area.

But that's only half the equation.

"Offensive" strategies earn you money. This can be as simple as getting a job. But one thing that's I've heard repeatedly, in various forms, is don't put all you eggs in one basket. So, what happens if I lose my job? Right now my day job is my only "offense." Personality wise I seem to favor defense. Can I think of more ways to make money (including getting another, part-time, job)? Yes. Have I done any of them yet? Err... nope.

Its something I want to do this year - figure out what I would actually do to bring in more money. I have to admit its a little murky right now... one thing I've learned is that I do value my free time. To earn more requires time and effort that I've been terribly reluctant to part with. But, if one was to go by Brain Tracy's 40+ rule, right now I'm just treading water (working 40 hours/week). If I want to succeed, to advance? I need to work more than that.

And so... I ponder.

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