Reality Check
I sent this message today to someone who’s been a friend of mine for over 25 years. Thought I had better post it up for my own benefit as well.
Hey,
All these years its been wrong.
Books, TV shows, magazines and self-help tapes all focusing on our net worth and saving for retirement and “how much will we need” and how much are we putting away. Are you contributing the maximum to your 401k and what about your Roth IRA? This morning I realized it’s all bullshit.
If you get hit by a truck tomorrow and you are laid up in a hospital for two months or cancer returns and I spend the next dozen weeks doing radiation and chemo, net worth and savings are as good as gone. What matters - what should matter MOST, is residual or recurring income that is not tied to our daily work activities.
Why is it that we know about this concept, but we don’t focus on it? If someone owns a home, free and clear (unlikely), and lets say its worth $300k and that is almost their entire net worth, what happens when something goes wrong. And its never a matter of IF, but when - the older we get the better the odds. So then what? You sell your house in order to pay medical bills, cover food expenses, taxes, etc.? “Hello Mr. Homeless! I have a nice trailer I can rent you for the next 20 years, make yourself comfortable.”
We need a new measuring stick - a new metric. Net worth is nearly as useless as measuring success by what kind of car you drive (or lease!). What we need to really track is HOW MUCH INCOME ARRIVES EACH MONTH THAT IS NOT TIED TO OUR DAILY WORK EFFORTS? Given the current state of the real estate industry, foreclosures and low interest rates, why aren’t we collecting income producing properties like baseball cards? Given my 20+ years experience in franchising and creating successful business concepts (both retail and online), why aren’t we launching a new pilot concept every six months? Why don’t we know venture capitalist by first name and reputation?
What are we waiting for? A truck? Cancer? Why don’t we know more about limited partnerships? Are we afraid - is this about fear? We should own interests in car washes, laundromats, vacation condos with rental programs and other local businesses - something, anything that provides some level of income each and every month. Fucking gum ball machines would be a start! And yes, some investments will fail, but we will learn from those and move on. We were supposed to be retired by now, remember?
The point is that we need to start today and begin measuring this recurring income stream each month from now until the end.
Are you in?
-pjc
—
We are turning into a nation of whimpering slaves to Fear—fear of war,fear of poverty, fear of random terrorism, fear of getting down-sized or fired because of the plunging economy, fear of getting evicted for bad debts or suddenly getting locked up in a military detention camp on vague charges of being a Terrorist sympathizer.
-HST (2003)