Financial
"The answer to all known problems is revenue." - Eric Schmidt, Google CEO
Dave Ramsey teaches the Path to Financial Peace
Jenny Blake teaches how to plant for pivot, and fund your runway:
Change is challenging without financial pressures because it places a choke hold on your creativity and options
You need a sense of which risks you can afford to take and when
Save 3-6 months income to be able to test your hypothesis about what will bring you professional happiness and enough income to support you and loved ones
Business and Finance Terms (Visit www.Investopedia.com)
Monthly nut = how much do you need to earn each month to cover your basic expenses?
Minimum needed: to cover rent, ultilities, groceries, and basic expenses
Nice to have: meals out, hobbies, weekend trips, ability to fund long term savings
Jump out of bed with glee: lifestyle, travel, luxury purchases, an abundance of resources for charitable donations or to support extended family
Ideal Monthly Nut = 3.4 times monthly rent or mortgage
Parents Monthly Nut = 5 times monthly rent or mortgage
Frugal Bootstrapper Monthly Nut = 2.5 times rent
Yearly Nut = 41 or 50 times your monthly rent (more if you have debt)
Runway = How long will your savings support you if you do not earn any income?
Burn Rate = Monthly Expenses - Monthly Income
Cut back on nice-to-have lifestyle indulgences, like eating out or shopping, to buy you more time to strategize and build your business or land your next gig
Bridge Loan = short-term commercial real estate financing, meant to be paid back quickly, bridging the timing gap until additional financing
Bridge Income tides you over while making a change, but is not your desired primary long-term solution
Savings are a finite resource, and the more you spend, the more you may stress out, and impair your ability to think creatively
Bridge income creates stability as you test other income avenues
Figure out a source of bridge income and steady cash flow to get you to positive monthly cash flow
Financial Power in your hands will make you more confident and agile
No matter your current employment status, if you suddenly became self-employed and had to survive for 12 months, how could you add value to any market?
"So you can breathe" income: hourly wage, possibly projects below your skill level
Mid-level: monthly retainer, steady cash flow, part-time work
Big bets: high income potential, big contracts, big clients, or job offers, income sources with longer lead times and greater reward
Side Hustle = Earning income on the side while maintaining a full-time job
It's a Creative Sandbox to play in outside of your main revenue-generative vehicles.
"You should always know how to support yourself." - Jenny Blake's Mom
Always make a point to know where your money is going, how to bring a steady income, how to invest wisely, how to pay your bills, and what your backup plans are.
Monthly Income = Your Main Paycheck + Your "Hustle" Checks
Side Hustles represent a calculated risk where you willingly invest some of your spare time (and maybe money)
Identify Bridge Income within your Side Hustle = the marketable skill, product, or service that will pay the bills most consistently
Four Criteria To Develop a Strong Side Hustle:
Cash (Flow) Cow: Demonstrate a monetary return on your investment
You will invest time and sweat equity for little pay. In his Startup School podcast series, Seth Godin calls this "front-loading."
Market Reach: Offer a solid amount of growth potential
If you love teaching underwater basket weaving, but there is no one interested in learning it, then you have a hobby, not a side hustle.
Enjoyment: Emphasize your strengths, makte you excited to work on it, whether you have 15 minutes or 5 hours to spend that day
I enjoy "playing coach" every day.
Super Skill Building: Help you learn or improve skills
What skills would serve you well if you took these activities full-time?
The Last Safe Investment Is You teaches you the best Super Skills
Make-Or-Break Marker: Image all hell breaks lose. You lose your job and your biggest client in the same week. Your car breaks down. Your bank account is running on fumes. Your Pillars of Life are crumbling all around you. You feel the walls caving in like your inside of an intergalactic trash compactor. It's uncomfortably hot. If you've hit rock middle, then it's time to objectively rethink things before you hit FUBAR (Fucked Up Beyond Any Recognition) rock bottom.
Pivot Paradox Caveat: Sometimes rock bottom is the beginning of breakthrough, and tough as it feels in the moment, it forces a new way of thinking, acting, and reacting.
I hit rock bottom with Waveborn, Inc in the summer of 2016 when I found myself in shady business situations trying to borrow money from anyone or finding any way to make a quick buck to pay off overdue invoices, service providers, supply chain partners, investors, and debt collectors for a total of more than $1,000,000. I did not like the person I had become or the look of my reflection in my own mirror. Moral lines had become blurred, and I was in desperate need of an eye exam to get my vision and moral compass corrected.
On July 26, 2016, I had a come to Jesus conversation with Dave and decided to shut down Waveborn, Inc and file for business bankruptcy. Making that decision lifted a tremendous weight off of my shoulders.
I could breathe again. Fresh air filled my lungs for what felt like the first time in months.
The decision to file for business bankruptcy led me down a new path, one that included more than 15 months of humbling phone calls to investors who received no financial return on their investments, online research about Chapter 7 versus Chapter 11 bankruptcy filing, completing 50 pages of bankruptcy forms, lawyer meetings to review the forms, and anxiously awaiting 341 Meeting of the Creditors court dates before finally hearing the bankruptcy cases were discharged.
After months of research and financial data collection about the business, I signed the paperwork on 12/30/16 and submitted them to the MD District Court. It was imperative that the paperwork be submitted by this date, so our 27 investors could claim capital losses from their investments in Waveborn, Inc on their federal tax returns for 2016.
Compartmentalization has saved many lives. I kept all the bankruptcy paperwork, processes, and stresses stored in a very tight compartment in my brain. I did not open that compartment near any loved ones or colleagues. It was a dark force for me to tackle on my own.
After completing the entire business bankruptcy process, I prepared the 50 pages of personal bankruptcy forms to sign on 7/7/17.
Today, as I write this, it is 7/7/18. It's one year after signing my name, crossing the T's, and dotting the I's to file for Chapter 7 personal bankruptcy because of more than $350,000 of personally guaranteed debt from my endeavors with Waveborn. This was after I had already gone through the entire process of business bankruptcy due to more than $700,000 of company debt with a mere $1,000 in the bank account.
When we actually shut down the company, it wasn't nearly as bad as it had been during earlier financial struggles in the sunglasses company's six year history. We were flush with cash each summer, and we went broke (literally) each winter for four years. I once survived 126 straight days with a negative bank account balance in my personal checking account.
For more than 45 straight days, I did not have a single piece of plastic with any positive account balance. Cash Ruled Everything Around Me. Literally. If I didn't have a spare $20 hidden anywhere, then I couldn't leave the house. What if I needed gas? What if I needed to pay for parking? I once settled for getting a $30 parking ticket in Baltimore while at my coworking space, Betamore, because the city's parking meter only accepted plastic. I didn't have any plastic that would be approved, so I left my car in the parking spot and accepted another one of many parking violations that I could not pay.
Hitting rock bottom may be necessary for you to learn how low you can go (and don't ever want to go again) to be able to learn what safety nets you need to build in the future to prevent ever falling so far again. Keep reading to learn more about financial safety nets and training your mindset to be able to build safety nets in each Pillar of Life.
The saying, "this too shall pass," has come true. I'm on the other side of two bankruptcies. I learned a lot through my own experiences getting into $1,000,000 of debt and listening to the audiobook of What I Learned Losing $1,000,000.
The fact that you are reading this right now is proof that I survived and can continue planning and preparing to thrive. I just completed Q2 2018 which was potentially the best quarter of my entire life - less than one year after going through bankruptcy.