There are days when I sometimes just completely doubt my ability to achieve the goals I’m setting out to achieve. These include financial freedom from a day job through cash flow investing, as well as personal goals in the context of my relationships and fitness. I know everyone has days like that, but I think the reasons for it are worthy of consideration.
Fear is one reason. We fear the unknown. We fear the uncertain. We fear changing our status quo. Fear is inherent to mankind and with good reason. If you didn’t maintain a healthy amount of fear when we were cavemen, there was a good chance you would meet an untimely demise. I feel like I’m pretty good at dealing with fear and it comes from working on “inner game”. I’ve found sources of confidence that have helped me overcome a lot of the fear that has held me back previously in life.
One of my primary sources of confidence is education. I’m not talking about my undergraduate or graduate studies here. While these have been useful, they pale in comparison to the confidence I get from seeking out financial education from sources outside of traditional academia. Reading dozens of books, listening to hundreds of hours of podcasts, and watching or attending a variety of seminars has given me a belief that I have the education that is required to be successful. Other sources of confidence that I’ve found stem from going to the gym, trying new things, meeting new people, and generally living life boldly.
Yet I still feel this nagging self-doubt. Every so often my mind just seems to be asking, “How the hell are you going to achieve financial independence that allows you to leave a day job and become a full-time investor/entrepreneur?”
The answer should have been obvious: I need a plan
Goals without a plan are desires. They are dreams. They might even be pure fantasy. They are wishy-washy and lack substance. Goals are desired outcomes that are backed by a plan of action. The reason I say this should be obvious is because I’ve been beaten over the head in military training with how goals (or sometimes objectives) are supposed to be set. The most fundamental lesson I learned about this in military officer training is that goals should be achievable, measurable, and have a time constraint.
Achievable doesn’t mean we shouldn’t set big goals, but it does mean that we should set short and medium term objectives in advancement of the long-term goals we have in mind. While I’ll never be 7ft tall and play in the NBA, achieving financial freedom is something that is very much doable because there is nothing physically holding me back from that outcome. Setting measurements depends on the goal. In terms of financial goals, there are many different measures. Net worth, income, expenses, sales, and every other financial measurement you can think of can be used as benchmarks.
For me and perhaps for you, net cash flow that equals or exceeds my desired lifestyle is the ultimate long-term goal. That is the equation for leaving my day job and starting a new life as a full-time investor/entrepreneur.
“So how do we get there?” I hear you asking. We get there by adhering to the following plan of action:
Step 1: The Budget
Every government and company on the face of the earth has one of these. You should as well. A budget doesn’t necessarily mean you need to account for every penny you spend, but instead it should be focused on creating a personal cash flow statement. That is a fancy way of saying a document where you record your sources of income and your expenses (to include debt payments). Some of these will be fixed income/costs, while some will be variable. Don’t get hung up on the variables. Estimate them as best you can to come up with an idea of how much cash flow you’re currently generating. If you’re happy with your current level of cash flow, then that’s the target for financial freedom. If you’re not happy, then determine how much more cash flow you would need. Perhaps there are some items in your expense column that can be reduced or eliminated, but this isn’t as important as expanding our cash flow from income.
Step 2: Goal Setting
What is it that you want and why? Perhaps you already know exactly the dollar amount you want based on step one, but it’s worth considering why. It will be your purpose that drives you to achieve the goals that you set. If you want to achieve financial freedom in order to sit on the couch watching Judge Judy every day, then you might find it hard to push through obstacles that will appear because daytime television is pretty awful.
I recently finished reading Bryan Tracy’s book “Goals!” and learned some helpful strategies for articulating our goals. His recommendation is to take a notebook and write a list of 10 goals for every aspect of your life. The goals should be written in the present and they should be positive. Instead of saying “I will someday generate $10,000 a month of income,” you instead say, “I generate $10,000 a month of income.” It’s not so much wishful thinking as a subliminal trick you play on your mind to get into the mode it needs to be in. Tracy goes on to recommend that you do this every day without referencing previous goals so that your mind becomes very focused on what it wants, but has the flexibility to change goals when appropriate.
Step 3: Plan of Action
I might have a goal to save $10,000 or lose 20 pounds, but without a plan it’s not going to happen. A bad plan is better than no plan in most cases. A plan gives you a template to follow and measurable milestones to keep you on track. Like goals, a plan should be written. Written plans often have a way of collecting dust on shelves. We witness this in large companies and government where plans are written, but then not really used. Don’t fall into this trap! Reference your plan regularly. Revise or improve it as needed. Most importantly, make sure you are following your plan.
Step 4: Take Action
This one might be the hardest step of all. Take action! A solid budget, specific goals, and a written plan are great individual steps. The final step is where the rubber meets the road and our goals get fulfilled. This step isn’t easy, but it’s necessary. Decide now that you will commit to your goals and your plan. Decide that no matter how tough it gets and how many times you have setbacks that you will persevere. To steal a quote from Rocky Balboa, “That’s how winning is done!”
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