Step 2 - Create a Cash Flow Engine
Module 1: Earn All You Can
This module starts Step Two: Develop a cash flow engine for yourself.
Earn all you can
One of the main ways to develop cash flow engine is to earn as much as you can. Now if you take a look at this chart you can see in red, your current job over time. You had these income earning years where you are getting promoted and you’re doing more work, and you’re getting more experience, and your income goes up. Then, there’s a range of time when you move into the retirement phase. As you move into the retirement phase your income would reduce and could be just as much as a retirement check, or this could be continued work with a lighter workload or maybe a conversion to another level of employment that you actually enjoy more, but that provides less compensation. But for now, you’re at your peak earning years, and for now, it’s time to develop Earn All You Can.
One of the ways to supplement would be to have a second job for a period of time, or to have your spouse work. Now, a lot of people have considered, “Well, my spouse working might actually reduce my income.” That may be true. You need to do the analysis. If the spouse is working there’s possibly a childcare issue, depending on the age of the children and the availability of other family. There could be extra transportation needs, extra clothing, maybe you would have to eat out more often since you wouldn’t have the food preparation time. There are all kinds of things that would tend to reduce the effectiveness of the spouse working. That’s why this blueline is not the same thickness as the redline. Because, net, after you subtract the additional expenses related to the spouse working including income taxes, is really not a doubling but an incremental improvement; however incremental helps, all of it helps.
Another option would be for you to get a second job. If you can get a second job or if you could freelance, or do some additional work, that’s a good way to develop more of a cash flow engine to accelerate developing your own income producing assets after you wipe out your debt, and thereby reducing financial family stress.
The third category deals with a college or a small-business. Over your lifespan, if you invest in additional education you can actually earn more income for your family. However, I need to caution here. Just because you’re going to get additional education doesn’t necessarily mean you’re going to generate additional income. There are lots of college and technical schools that provide all kinds of courses, but there’s no jobs waiting at the end of the graduation. So you need to make sure to do your research and homework that whatever these courses are they really will more than pay for themselves over a higher income over time. The other trap you fall into is you become a professional student and all you end up doing is just taking loan after loan and course after course after course, because you would like to stay in denial and not actually have to work for a living. So you need to avoid that trap as well. But as long as you’re in an educational area that would lead to a job or profession where there’s a strong demand at compensation higher, then that would be a good investment for your family.
The other issue is small-business. Again, small business is not for everyone. We have a module in this program that helps you determine whether you’re a good fit to actually move into the small-business. It’s really only designed for five or 10% of the public because there’s a lot of special skills a lot of additional stresses involved in being a small-business owner, and quite frankly, I think you need a little supernatural passion in order to overcome all the obstacles to getting into small-business. But as you can see from the green, once you are in small-business there’s potential for higher income for your family unit.
We’re going to have to look at that once you get your cash flow engine going and you start developing income-producing assets. You are going to need to be studying this along the way, and these newsletters every two weeks are going to present different ideas about small businesses to see whether or not you really cut out for it and to see whether it would really be something that would help you, or just put more pressure on you.
So that’s pretty much the graph of Earn All You Can. A lot of people really are underemployed. A lot of people really like a specific job, or really like doing something bu in actuality they could be doing something else with the talents and skills they have for a lot more money, but they just voluntarily choose this because they like this and it’s low stress and really nice. You need to take a look at that as well, because if you really can earn more money you need to be earning more money and especially with this new economy with all the rules changed. You’re going to have to get out of consumer debt quickly, and staying in a job that’s a lot of fun but doesn’t pay as much is really the long way out, and is potentially a way to slip into the lower class rather than stay in the middle-class.