Personal Money Management

I have always been an avid investor. I recently read this article from Jon Carlton and he eloquently says what I have always known. Here I have quoted his whole article because it is just awesome. I hope you enjoy this....

Reno, NV

John Carlton

“… keep your hands offa my stash…” (Pink Floyd)

Howdy…

Let’s talk about money.

Do you have enough?

Do you know how much “enough” is, for you?

Most folks are pretty clueless about moolah. They desire it, they fear it, they respect and hate and love it… and they assign all kinds of magical powers to it.

So here are a couple of observations… from a dude who’s been broke, been rich, and seen the awesome potential as well as the destructive nightmares that money can wield:

Big Damn Observation #1: Money really can’t buy you happiness.

But you know what? It’s still more fun to find this out for yourself, rather than take someone’s word for it.

For me, it was well worth keeping this nugget of wisdom on a note tacked to my office wall. Because happiness was definitely on my wish list of life-long goals… but so was success.

So I kept track as I moved up the socio-economic ladder from slacker, to decently-paid freelance writer, to obscenely-paid “A List” professional.

And guess what?

It’s true. Making a ton of money didn‘t turn on the Happy Faucet.

However, it didn’t turn on the misery faucet, either… which, for me, was a moment of enlightenment.

Happiness is in your head. It’s a state of mind, which doesn’t require cash… unless the lack of cash moves you off your game.

Which lead to the one big realization that helped me clarify what “success” really meant, for me:

Big Damn Observation #2: Money will only solve those problems that not having money creates.

People usually blink back at me the first time I share this with them. It seems too obvious to qualify for “wisdom”.

For me, though, it’s freaking profound. The problems that ate me up during the first half of my life… when I was lost, directionless and kept ending up sleeping on people’s couches (because the business world kept spitting me out) (and my girlfriends kept leaving cuz I was such a loser)…

… were all specifically related to not having enough money to get a toehold in life.

Rent was a problem. Getting a speeding ticket was a major financial blow that could crush my entire budget. Any adventure that required new clothes or new equipment or a long trip was completely out of the question.

And that was okay for a while… I fancied myself a carefree bodhisattva living off the land (so to speak) while cruising through the culture unblemished by having to bow to the The Man.

Then it got real old, real fast. And I realized it was time for me to find my place in the world, and go for the gusto.

At that point, I finally understood that not having enough dough to cover the basics (and the fundamental luxuries that made life worth living, like concert tickets) was a major sticking point.

The answer, for me, was to figure out the age-old wisdom behind the professional’s concept of a “nut” — that specific amount of cash necessary each cycle to allow you to operate without worrying about missed payments or sudden expenses.

Everyone’s nut is different. But it’s basically your rent, food, transportation and other bills, along with a certain allowance for clothes and whatever else you need to live your life. Including dating costs, bowling league fees, piano lessons, a night at the opera, whatever tweaks your notion of a good month.

Most folks never figure this out. They lurch from paycheck to paycheck, regarding each incoming expense as an alien invasion (“What? Another phone bill?”).

Saving any money for a rainy day is out of the question. (Americans are among the most clueless savers in the world.)

I’ve been there. Floating just above the baseline of Maslow’s Hierarchy of Needs (that infamous low-end list of necessities, like food, shelter and safety)… so I technically qualified as a civilized person.

However, the constant desperation of being one lost paycheck away from living out of my car again kept me from daring to dream beyond whatever fun I could squeeze out of a weekend binge on cheap booze and easy virtue.

It sucked.

So money was constantly on my mind.

Figuring out what I needed to cover my monthly nut relieved me of aimless worry. I had a number to use as a goal. I could finally get a handle on what extra money might do for me.

As a budding freelancer, I now knew how many jobs at a certain fee I needed each month. And I knew when I was finally getting ahead of my nut… so instead of month-to-month, I actually had the next three months’ nut covered. And then the next six months. And then the next year.

This knowledge of my financial situation allowed me to move up a few rungs on the success ladder, too.

But I did it following…

Big Damn Observation #3: Pay in full as you go.

Now, I have a mortgage. It was a calculated decision, and I’m happy with it.

But it’s the only debt I have, or have had for the last 25 years.

I pay cash for all my cars, guitars, trips, computers and everything else. The credit card gets paid down to zero each cycle. (The banks hate me for that.)

I’ll tell you something — it was PAINFUL learning to wait until I could afford what I wanted, early on. Especially with that credit card burning a hole in my wallet.

I drove a rattletrap ’80 Celica liftback (ugliest car on the road, ever) that required a gallon of water every morning in the radiator (slow leak), and which was often mistaken for a vehicle bound for the Demolition Derby across town.

I’m not proud of this, necessarily. Nevertheless, that car met my needs as a struggling early-career freelancer. (I just made sure clients didn’t see it.)

And when it finally went on life-support, I bade it a tearful goodbye (I loved that old wreck) and wrote a check, in full, for a luxury-edition Camry.

Debt sucks, folks.

It’s willingly allowing shackles to be welded onto your ankles. It pushes your nut far out into the future, limits your ability to move fast when opportunity knocks, and (worst of all) gives you a false sense of accomplishment.

Now, sometimes you may go into debt for something (like a house) that you can justify. Sometimes. (I may yet pay this nasty thing off all at once… but for now, I’m at peace with having a mortgage for this love-nest.)

Just make sure you do it consciously. And not because it’s your habit to never pay as you go.

Side story: I have a standard reply for anyone who considers going into debt to afford a high-ticket product or seminar or something else they feel they “need right now”… but can’t afford.

My advice: Don’t do it.

Instead of hocking grandma’s jewelry, or maxing out six credit cards, or rolling the dice in any way…

… why not try a truly radical approach. And save up the money to pay for it on the barrel-head.

Instead of looking for an easy, immediate, debt-stupid way to get around not having the cash… just earn the cash beforehand. Stop partying on the weekends for a year — just a single year (trust me, it won’t kill you) — and take a part-time job dedicated to filling up your “continuing adult education” fund.

Save every penny from that second job. (Which you can, because your day job covers your nut each month, right? Especially now that you’ve ceased dropping a bill every Saturday night at the slosh pit.)

Put it in a savings account. Don’t touch it. Don’t dream about it, don’t consider it for any other situation…

… except your quest for getting the knowledge and coaching you want so you can move ahead in life.

Even a minimum wage gig, two days a week, can net you several hundred bucks a month. Any higher wage is gravy. At the end of a year, you’ll have a pot with a few thousand smackeroos in it…

… which you can then lay out for that seminar, or course, or coaching, or whatever you’re drooling over.

No debt. You earned your entry fee. You paid your way. You didn’t have to beg, borrow or steal.

And you know the value of every buck you laid out. Which means you’re gonna consume whatever you buy, and put it to work in your life asap.

Scoff if you want. Most folks do.

But the pride of knowing you paid your own way instantly pumps more honest value into that purchase than you could ever imagine. You’ll appreciate the adventure, and (key point) suck every drop of value from it.

The adventure of a life well-lived is funny that way.

Let others haggle and plot and concoct elaborate schemes to get around the simplest path to earning your own success.

There’s a lot of risk inherent in creating a successful life. Most entrepreneurs operate with no safety net. Going for the gusto means exposing yourself to the dangers of adventure and accomplishment.

But that doesn’t mean that burying yourself in debt needs to be one of those risks.

Of lot of people well-established in the business world will argue with me. That’s fine. I understand the advantages of using OPM (other people’s money), and investing cash and resources to maximize potential.

But that’s all a little further down the line for anyone just starting the adventure.

Smart leveraging is one thing. Blindly piling up obligations beyond your nut is something else entirely.

Before you can be a Player, you gotta be a foot soldier in business.

Travel light, and avoid all “tails” (obligations, like debt, that restrict your freedom) for now.

Big Damn Observation #4: And… I think that’s enough for this post.

I do have one last piece of financial advice for anyone after a better life.

It’s a cool little tactic that seriously changed my life almost immediately…

… allowing me to become one of the top freelancers in the game…

… and opening up amazing new opportunities (like mentoring with Gary Halbert) that would have never happened otherwise.

Let me know if you’d like to hear this last lesson… and I’ll put it in the next post.

I gotta get ready to travel some more here.

Love to hear your comments, stories, opinions and whatever below on this topic of moolah (and the love/hate thereof).

It’s the main sticking point holding folks back from getting what they want out of life, you know. Money. It’s a gas.

Stay frosty,

John

As I stated at the beginning of this article this is from John Carlton's Blog. He is not a financial advisor, he is a freelance writer/businessman but this is some great advice.

Here is his 4th Rule which came out in his next Blog Post.

The Quiz, Resolved. And Prize Awarded…

Tuesday, 4:06pm

San Francisco, CA

“I left my heart…” (Tony Bennett)

Howdy.

By the time you read this, I’ll be back home in Reno… a better man for having spent a week in San Francisco.

Even though it was all business, I still get invigorated just from hanging out in that city by the bay. It’s one of the few things California did right (though they’re working hard at ruining it). (Bastards.)

And while I was gone, the last blog post went freaking bonkers. Nearly 200 comment posts (most of them well-thought-out and elegantly delivered, too). (With the occasional funny disruptor, of course. It wouldn’t be a good Quiz without a big healthy dose of irreverence.)

So, a big “thanks” once again to Robert Gibson (SWS veteran teacher and all-around good dude) for being ring-leader while I was off.

And congratulations to the winner. Who we’ll announce here in a second.

First, though, let’s clarify what the answer is.

The question was: What’s the 4th big observation about money that changed my life so dramatically… that an avalanche of good stuff followed (including the phat opportunities to work with Gary Halbert)?

Now, let me remind you that this is MY observation. This is not a hard-and-fast law of nature, like gravity or death and taxes. It’s what I discovered, and followed through on, early in my career…

… that changed the way I moved through the world at a cellular level.

There were a ton of good answers in the last post, a smattering of nonsense, and a lot of pure guesswork…

… but, as I said, everyone essentially won just by firing up the cognitive process in your brain. We don’t spend enough time in critical thinking mode. Giving those muscles a work-out is ALWAYS a good thing.

The answer was, indeed, scoring what I called “Screw You Money” (in one of the several get-your-act-together chapters in “Kick-Ass Copywriting Secrets of a Marketing Rebel”)…

… which is also known as “Fuck You Money” in harsher circles.

Someone even quoted the exact passage from KACS, which I found startling. I get ripped off a lot, but being actually quoted like that doesn’t happen very often. Makes me feel all fluttery and embarrassed.

And, of course, the correct answer was nailed in the first flurry of incoming posts. And multiple folks got it right throughout the threads.

This gives me hope.

Now, a few things must be explained here for the people unfamiliar with the concept.

First, don’t get sidetracked by the harsh language. The concept comes from savvy veterans in the front-line trenches of business… especially salesmen working on commission and entrepreneur-freelancers working without a net. These dudes know how to turn a memorable phrase. (And any opportunity to insert filthy shock-words is a big bonus.)

However, the “screw you” part is NOT about being an asshole, or running around with a tough-guy attitude.

It’s quite the opposite, in fact.

By putting aside enough money to take the pressure off having to score an immediate paycheck…

… you simply become more confident…

… and more CHOOSY about who you work with.

When you’re starving, or absolutely depending on that next payday to make the rent, your options are limited. You will take a job you might turn down in better circumstances…

… or get involved with someone you might otherwise stay away from.

However, when you have a stash set aside to cover your butt, then your options explode.

And, when appropriate, you can say “Best of luck to ya” to any potential gig that rubs you the wrong way… and happily traipse off to go see what else the universe has in the way of adventure.

Tip: While you may imagine it would be joyful to actually say “Go fuck off” to someone who has insulted you, or who is too slimy to work with…

… the truth is that — once you feel real confidence in your life — you never have to utter those words.

It is MUCH more satisfying to rise above petty insults, and to simply say “No”… and move on with your life.

In fact, this subtle, non-aggressive attitude often carries MORE oomph than you can imagine. Many of the too-rude-to-live psychopaths you’ll encounter in your career got into the business world because they crave power.

And, for most of the folks they deal with, money equals power.

By having the real confidence of being able to turn down a bad biz gig (because you really don’t need the bastard’s money)…

… you take away ALL of his power.

He won’t believe you’re walking away from a payday, and if you’re lucky you’ll get to see him sputter and clutch his evil heart as he struggles to avoid fainting. Nobody walks away from money. It’s an outrage. It’s… it’s…

… it’s turning the world upside down.

And, as you calmly stroll away (never letting the door hit you in the butt), you have the double-treat of enjoying his impotent rage…

… as well as savoring REAL freedom.

You don’t need his money. You don’t need the grief of that job. You are (as much as a human can be) in charge of writing the script of your life’s adventure.

No one else — including the government — will give you a safety net anywhere near as powerful as knowing you’ve earned a stash, which is set aside to watch your back.

There are few “rules” to getting this Screw You Money together:

Rule #1: You gotta earn it first. Which means, if you’re now living paycheck-to-paycheck, you need to start setting aside 20% of everything you make. I don’t care how much you’re pulling down… if you spend it all, you’re an idiot. You’re guaranteeing yourself financial slavery.

Learn to save.

Rule #2: The amount you put in this stash is up to you. I recommend at least 6 months of your nut as a starter amount — so, if you never earned another penny, this dough would cover all the expenses to continue living as you live now.

(Side note: If forced to tap into your stash, you also know you could back off living high on the hog, and stretch it out longer.)

The amount you need is individual, however. Lots of folks get nervous about a 6-month cushion, and require a deeper safety net. That’s fine — figure out what you need to feel confident enough to walk away from a bad but well-paid situation and not freak out.

That’s your Screw You Money.

Rule #3: This is where people get confused.

This stash is NOT a savings account. It’s not a rainy day fund. It’s not “mad money”.

It is a REAL TOOL for a serious professional. When you consider the “ammo” you want in your bag of tricks for a great career, confidence is a nuclear bomb.

You “win” when you never touch your Screw You Money. You want to die, peacefully in a comfy bed (with whatever other details you want involved in your Happy Ending), and be able to whisper the location of your stash to your heir, who will be the first person to access it since you put it together.

Got that? You can’t think of this stash as “money”. That will confuse you, and you’ll obsess on it…

… and spend it on some “emergency”.

This isn’t money. It’s a tool. It’s the support system for your professional confidence.

Don’t put it into investments. Don’t put it somewhere you can easily access after a few beers (and the inevitable “great idea” that always seems to occur in a bar, late at night).

Figure out where it needs to go hide, so you half forget about it (but still know where it is).

Then go live your life with gusto, and earn so much and have so much fun that you never have to even consider dipping into your Screw You stash.

Live bold, and confident.

Here’s how this tactic affected me: I worked hard, in the first years of my career, to claw my way into the tight little list of writers working with the largest mailers on the planet (like Rodale, Phillips, Agora, etc).

I was climbing the hierarchy with a bullet, and enjoying the ride…

… but I knew there were other adventures out there, too, in biz.

When Gary Halbert started his newsletter back in the mid-80s, I knew I had to pursue a relationship with the dude. I weaseled my way into the edges of his biz, and liked what I experienced.

With the large mailers, the money was huge…

… but the markets were limited to health and finance. I was getting bored.

With Halbert, the money was a roller coaster ride (from zero to vast fortunes)…

… and the client base was totally entrepreneurial. A never-ending adventure filled with whacky people, novel-worthy story-lines, and always The Unexpected.

It could get scary, but never boring.

So I walked away from a gig with the big mailers that was on track to bring in millions…

… and hitched a ride on a new life in the entrepreneur’s lane, with no guarantee at all where we were headed or what was about to happen.

It was one of the easiest decisions I’ve ever made.

And knowing I had my stash set aside made it a no-brainer. There was zero fear that I was putting my life-style at risk (even though I was taking a HUGE career risk).

It was excellent use of the kind of confidence that comes from Screw You Money. And I didn’t have to say “Screw you” to anyone.

I just pursued something that sent surges of excitement, exhilaration, and adventure through my veins.

I have no idea how you, or anyone else, will use this tool.

It may never make a big difference for you.

Still, the bed-rock confidence of having it will influence your decisions, big and small.

Especially since most people will never understand this level of confidence, or have a clue how to attain it.

Make sense?

Good.

The winner is the 4th one to comment (Robert made sure I recognized this). Eric Transue.

Other posters came real close, but Eric nailed it.

Again, great job to everyone who chimed in.

My over-worked assistant, Diane, will be getting in touch with you, Eric, about delivering your prize.

That was fun, wasn’t it. We’ll have to do it again soon. I love giving away prizes, when they’re well-earned.

Hope your summer’s going well.

Stay frosty,

John