Category: Finance

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I Need to be Having Fun & Enjoying Life OR Working Hard to Maximize Income

I’ve been in the Los Cabos area of Mexico for over a week now, and a though crossed my mind as I was swimming in the ocean near where I’m staying.

I need to basically either be enjoying myself, trying new things, and taking advantage of everything my area has to offer, OR working as hard as I can to maximize my income at all times.

It doesn’t mean I have to pick one forever, just that I need to completely eliminate everything that’s not one of those two things.

Why?

This was the first time in 4 or 5 days that I actually swam in the ocean, despite it being extremely close. I’ve barely taken advantage of this place I’m in. Mostly because I’ve been working.

But I’ve wasted a lot of time, too.

When I’m working, I need to be working hard. And I need to constantly focus on how I can maximize the financial return for my time.

The reason for that is because I want to retire as soon as possible. The faster I can increase my net worth, the sooner I can retire and then it will be much easier to take advantage of everything around me.

And more to the point of this blog post: I need to eliminate things that are just a waste of time or that are just going through the motions.

I can’t be wasting time on things that aren’t important, and I can’t get complacent in my business and simply continue with the status quo.

I need to constantly be growing and expanding. I don’t want to work more hours, but I want to get way more out of the hours I do put in.

My goal is to retire by 50 but I would greatly prefer to do it much earlier, or at least be able to reduce my hours or increase flexibility before that.

Certainly I have improved in everything I’ve described here over the last several years and certainly the last decade. But I can’t get complacent with that. I need to continue improving, ideally at a more rapid pace.

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Neuroticism is an Expensive and Severely Limiting Trait

I think that Neuroticism is an expensive and severely limiting trait.

I feel blessed to be less neurotic than average. Probably considerably so. And only recently have I started to realize just how freeing that is.

Having traveled with others and just generally worked with others on various tasks and towards various goals, I’ve seen it all in terms of different personality types and styles.

Particularly with traveling, I’ve realized that few could do what I’m doing, and surprisingly, it has little to do with their financial state, flexibility with work, or even personal relationships.

It’s their neuroticism.

They can’t deal with minor changes in a plan, and everything has to be planned. They worry about every possible outcome and it cripples them.

It’s like life is an opportunity to accumulate a list of all the possible dangers and pitfalls available so that you can successfully avoid them.

This, of course, results in doing nothing but staying home where it’s comfortable and safe.

Which happens to be exactly what most people eventually do.

It’s almost funny, by far the #1 question I’ve ever gotten regarding my travels is, “was it safe?”

Or variations on that, such as, “weren’t you worried about getting murdered?”

People don’t ask about the culture, they don’t ask about the cool places I’ve seen, or friends I’ve made. When they think of Latin America, they only think of danger. They know they couldn’t go, because they would be too afraid.

You can chalk a lot of that up to straight up ignorance. Danger is relative. If you’ve been to Chicago, Detroit, or St. Louis, you’ve probably been to places far more dangerous than almost anywhere I’ve been.

But that’s not even the point.

Their neuroticism forces them to focus only on what could go wrong, never on what could go right. 

Still along the lines of traveling, I almost always use Airbnbs or similar rentals. Many people couldn’t do it. They’d worry that the host won’t show up on time, or that it won’t be as nice as the photos, or that the owner will rob them.

So instead, they would only ever rent a hotel in a nice tourist area.

But whereas I typically don’t spend any more than $50-70 per night to live in nice apartments, they are likely to spend $400+ per night at high-end hotels, because those are the only places they are comfortable with.

Just one example of how expensive it is to be neurotic.

Cars are another great example. For most people, the idea of their car breaking down on them while they are out is one of the most horrifying thoughts imaginable. So they only buy new or almost new, high-end cars.

Now, if you are driving reliable brands like Honda or Toyota, the difference in reliability between a car with 0 miles and one with 100,000 miles is probably fairly minimal.

But more than likely the new car will cost 3-4 times more. That’s an expensive difference, especially if they are constantly trading their car in for a newer one.

They simply cannot risk the minor inconvenience of their care ever breaking down.

I may take this to the opposite extreme of only buying high-mileage cars, and I have the privilege of having the knowledge of how to maintain them and fix them.

But a really neurotic person wouldn’t have that option even if they had the same knowledge as me.

It’s true professionally, as well. In a lot of ways.

First, a neurotic person is less likely to venture into the unknown. They are going to be less likely to try new things and learn more. They may get great at something specific, but may not advance beyond that which will hurt their career.

But I see something perhaps even worse with business owners. Often, they’ve had one bad experience or one particular fear and it’s all they can think about. When building the site, they don’t ask things like,

“How can we increase sales?”

or,

“How can we make sure that the checkout process is streamlined?”

Instead, they spend 90% of their time and focus with the site on one tiny little issue. They had one bad experience on a website that wasn’t built well, and they spend countless hours refining a part of the website that’s always worked just fine.

It’s a waste of time, but because they are paying me, it’s a waste of money, too.

Of course, there are times when it makes sense to work hard in a specific area. But people often go well beyond that and hyper-focus on something that I’ve told them, as the expert, really doesn’t need any attention.

Some of this may be getting beyond neuroticism, I suppose, but I still think it’s important to highlight.

The fact that I’m comfortable going to other countries without much of a plan and without knowing anyone, and just figure it out, is quite freeing for me. I feel like anything is possible and I enjoy that I don’t know what’s coming.

I guess I just feel sad that not everyone can experience that, and it’s often just because they are too neurotic.

That’s not a moral judgement. I think it’s just a facet of personality that I’m not sure can be changed. And obviously is associated with anxiety and mental disorders.

I just genuinely feel bad that not everyone has that freedom.

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My Buying Power has a Massive Influence on how I Feel About a Place

In the last couple days I’ve discovered the existence of the “Blue Dollar”: a euphemism for the not-so-underground black market for US dollars here in Argentina. Due to government restrictions, the official exchange rate is kept low while a parallel market tracks closer to the true value.

If you have US currency, you can exchange it for pesos at the black market rate, which currently is more than double the official rate.

So what does this mean for me?

My buying power more than doubled overnight.

Things that previously seemed moderately priced or even a tad expensive are now very affordable. Things that were already cheap… Are basically free.

I can now get a decent bottle of Malbec for $1.50 USD. Unreal.

The really interesting thing, for me, didn’t occur until after I began walking away from Western Union with a massive stack of cash in my pack. I started thinking about all the things I could do now that I didn’t need to worry about the cost. A whole new world of opportunity was available to me, guilt-free.

Immediately I felt considerably more excited about the city and my general feelings towards it improved dramatically.

Don’t get me wrong: I already liked the city quite a bit. But where there was once a mindset of thrift and having to hold back in a lot of ways, there is now only opportunity. And that mindset shift is huge.

I thought back to some of my favorite cities and places in the world, and realized that a huge contributing factor (sometimes perhaps the main factor) was simply how affordable they were.

Cheap and great tacos in Mexico, cheap drinks at my favorite college bars, cheap… Everything in Colombia. When you don’t have to worry about what you’re spending, you simply have a better time.

And then I thought a little more.

As long as things are affordable to me, I could feel this way anywhere.

If I was making $500,000/year, I wouldn’t think twice about a $30 cocktail. Just about any restaurant or bar in the world would be so affordable to me that I could just go and have a great time without worrying about the cost at all.

This all just sort of taught me that “cheap” and “expensive” are relative, and more importantly: that things are a lot more enjoyable if you can afford them without any issues.

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I’ve Always Been Restless but My Interpretation of that has Completely Changed

I feel like I’ve always been quite restless. I’m always thinking about the future and my current state and get a bit antsy.

But in the past, I feel like it made me uneasy and anxious. Now it makes me feel motivated.

So what changed?

I wish I could say it was some huge, profound realization inside myself that allowed me to break old scripts and get out of self-destructive patterns.

But it wasn’t at all.

I owed a lot of money before, and now I don’t. That’s it.

More specifically: I owed a lot of bad money like credit card debt, and it wasn’t really going away at all. It wasn’t growing much but it was still always this huge burden that made it feel like I wasn’t succeeding at all.

Recently, after a string of good financial moves, I’ve been able to quickly pay off a ton of debt, including all credit card debt. Every month, I’m able to pay everything down to zero on personal cards and in my business. I also paid off my student loans completely.

And it’s made all the difference.

In the past, I’d be thinking about the future and just worry about all the debt I had, and how it’s been years and I still hadn’t managed to really get control of things financially. It always just felt like this specter I couldn’t get away from.

And when I started feeling that way, I feel like it just turned to general anxiety and actually crippled me from getting things done and really succeeding, which probably kept me in that state a lot longer than I should have been.

But now that’s gone! I’m running a massive surplus of cash every month which I can use to pay off anything or even start investing. Whereas before it felt like I had no opportunities at all, now I can do anything I want!

And so when I feel that familiar sense of unease, I’m interpreting it as excitement and a sense of unlimited possibility in the future, and that’s actually quite liberating and motivating. Suddenly I feel like if I really focus on something, I can really take this business off the ground and do whatever I’d like with it.

That’s a great feeling.

And it really just comes down to interpreting how I’m feeling differently, not even necessarily feeling differently. I think the Buddhists would have a lot to say about that, but it’s still a really interesting thing to experience myself.

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What if Most Businesses Grow Because they Invest Money, Regardless of What In?

Today’s thoughts are a little difficult to explain, but I’ll do my best.

The background to this is that I’ve determined I could probably turn money into new clients fairly reliably by purchasing other businesses. It’s a bit costly, but it works.

Most other businesses also grow and also invest money in opportunities, though they don’t typically acquire other businesses.

But my thought is basically this: what if they are only growing because they invested money at all, regardless of where they put it?

Obviously there are free forms of marketing, though they usually take time and therefor have a real opportunity cost, so in my opinion it’s the same in the end.

So if monetary investment of any kind is what leads to growth, acknowledging that fact has some very profound ramifications.

It would essentially mean that if you want to grow, you need to have extra cash on hand in order to invest in worthwhile activities. Without that budget, you’ll struggle to grow.

I think you could also simplify all forms of marketing and just say that all marketing you can invest in has an expected rate of return and acquisition cost for new clients, and while your goal is of course to maximize return and minimize costs, ultimately you’re going to have to spend money regardless.

Furthermore, given your limited resources, why not do everything you can to find the investment options with the highest ROI, and then invest everything into that?

Why bother diversifying at all?

I think so many businesses have so much on their plate with trying to run a bunch of social media pages and accounts, email marketing, SEO, trade shows, branded merchandise, various advertising, and much more.

But at the end of the day, all of those cost something and all of them have differing ROIs. Nothing should really matter other than the ROI, so why would you bother diversifying to that extent?

I think you should find what works best, and then put everything into it.

And now that you’ve found what works, and you’ve acknowledged that all you’re doing at this point is turning cash into growth for your business, the question becomes: how can I free up as much cash as possible so I can grow as fast as possible?

That is, assuming growth is your goal. But this is capitalism, so growth should basically always be the goal. Anyone who is putting any effort into marketing but doesn’t seem to think they want to grow (or more commonly: doesn’t actually have the capacity or ability to handle growth), is confused and should reconsider his priorities.

Historically, I’ve spent almost nothing on marketing; I’ve only put in my time. Which worked for a while, but obviously has a limit. I only have so much time, but money could grow forever.

I feel like I can see a future where I’ve figured out where to put my marketing dollars, where I’m putting everything I make back in and keep the ball rolling. It seems predictable and safe.

But as long as I accept this model as accurate and worthwhile, my mindset needs to shift completely. Whereas in the past my thoughts were always on marginally improving things and… I actually don’t really know what I was trying to do. I guess just grow “naturally”, whatever that means?

But whereas that, my goal now should literally just be to make as much money as possible now, take advantage of my credit, and invest as much as I can into growth. And as I take on more clients and have more recurring revenue, use that cash to grow even faster.

Unfortunately, I’m at a point at this exact moment where I don’t have much cash, and I’m not making a huge amount more than what I need to survive. I do have credit available, and I did just buy a business that will give me extra funds on a yearly basis.

But I’ll need to really think about where my dollars are going now, and how I can leverage them to trigger growth long-term.

As a follow-up side note: I don’t mean to imply that marketing initiatives that take up my time or can’t immediately be utilized or scaled up by spending more money aren’t worthwhile. There’s still room for a cohesive marketing strategy, and content marketing, SEO, and possibly social media advertising may still all end up being pieces of what I’m doing.

But they are all investments, and they need to be treated as such and possibly given money to be allowed to achieve their full potential.

I also don’t know exactly which options are going to have the best ROI for me. That’s part of what I’ll be working on over the coming months.

But if I can buy clients at the rate of $144 each, then that’s the metric to compare against. If I can find a way to acquire clients for less than that, it sounds like a good place to start dumping money.

And as a final side-note: for a typical client, I will likely make more profit than $144/year. So if my acquisition cost is less than that, it means that they’ll be profitable after a single year. And then after that, those profits could be used to acquire 1 new client.

Which means that technically, I should be able to double in size each year if I do things right.

Of course there are taxes and some other expenses that seem fixed will inevitably grow with the business, but even so, I should be able to grow very rapidly if I do this right.