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May 2014 Newsletter: 30 Seconds to Undestanding Financial Success 1st Details on Creating Wealth
June 29, 2014
Hello to all my frugal friends:

Our summer is trying to get here, but with several inches of damaging hail just a week ago, I'm wondering whether winter is having its last say in the matter. Nevertheless, I'm busy getting the chicken yards improved and building a new coop for them. There are always dozens of projects in the works here at Best of Both World, my place in the country that is also conveniently located near the town of Cheyenne, Wyoming.

In between planning and working on summer projects, I managed to find time for experimenting with making my own hard cider. Taste testing shows that I might be a natural at this art...I sure hope so. More details on that in a future newsletter after I've let it mellow and have it bottled up for proper evaluation.

I'm following the same pattern as the last several months, two articles you won't find on the site, so let's get to it.
The first article this month is one in which I'll give you my version of 30 second of advice as to how one might go about building security in terms of income, accumulation of wealth and personal finances in general. It's a quick "lecturette" that I gave to a guy one day, at his request, and I think it bears repeating to others who have an interest. I've had more than a few people tell me that they're waiting to find out how such advice might be condensed into such a quick presentation. Like my friend Stan once said, "I can hardly wait to hear what I have to say about that."

The second article deals with the series I'm writing about economic and financial preparedness. Since we've already had the overview about creating wealth, preserving it, and making good use of our money, it's time to dive into some of the details. This month, and for many to come, we'll look at the details about creating wealth. This first detailed article is about making higher income as the employee of another. I start with this because most of us are employees, not self-employed, so it seems to be a good place to start off talking about details associated with creating wealth.


Financial Freedom Explained in 30 Seconds – One Man’s Approach

by Clair A. Schwan

Having freedom when it comes to our finances is a funny thing. How do we know when we’ve reached it? What exactly is it? I think it means something different to nearly everyone, and there are many people out there who would like to know how to get some for themselves.

Not too long ago, I ran into a guy who was talking with someone about making ends meet, paying bills, supporting his family, and all of the familiar lamentations about the cost of living. Although I wasn’t a direct participant in the conversation, my proximity, and the occasional glance my way, told me that I was a welcome listener. Near the end of the conversation, the discussion turned to early retirement and personal finances. As the man turned to leave, he said, “If you know anyone who knows how to achieve it, just let me know.”

That was my cue. I said, “If you have 30 seconds I’ll tell you one way to do it.” The man immediately stopped, snapped his head to attention, and fixed his gaze on me. That was my second cue. It was now time to explain in 30 seconds how to achieve financial success – to a complete stranger. This is the 30 second explanation that I gave him.

"In a nutshell, here's how it can be done:

  • Start with a professional job, much like what you now have now.

  • Work hard at learning the trade and understanding how the business is run.

  • Jump ship with that knowledge and strike out on your own.

  • When you do, you can offer lower rates, and your overhead will be next to nothing as a “one-zee.” And, your income will likely double, immediately, especially if you take time before leaving the mothership to set up relationships that will allow you to naturally roll into a business of your own.

  • Build up a big pile of money, watching carefully what you spend, and focusing on saving up a small fortune.

  • When the time is right, assuming you’re in a place you’d like to stay for a while, pay off the house.

  • Then, get back to making that big pile of money even larger. Again, watch carefully what you spend because your income is less important than the money you “blow” on useless things.

  • When you’re completely debt free and have plenty of money in the bank, that’s the freedom you seek, and with that, you’re free to decide when you’d like to retire.

That's it in 30 seconds."

He stood there with wide-eyed amazement. I knew that my brief explanation was cogent in his eyes, as I spoke with a tone of experience. I knew the question he was ready to ask, so I saved him the trouble by adding, "That’s how I did it."

He thought for a while and then asked, "Do you have any children?" I shook my head, and he noted that was a big difference between us. I added that while I didn’t have children, I had a bankruptcy to pay off to the tune of roughly $100,000 before I started in on the creation of wealth. To be sure, it’s not the same as having children, but then, I was doing this on my own, and he had a life partner to help with the children and perhaps even help bring in additional income.

Keep in mind that this is only one approach to consider. No matter what approach you might take, doing this requires what all good managers do, they "take the long view."

And, I might add, try your best not to invent roadblocks that could make you fail to even start thinking about opportunities and planning for success. This man imagined that having a wife and kids would be a hindrance. Many years ago another guy told me that his money didn't go very far because his wife wasn't employed, noting, "I have two mouths to feed." Neither men were looking at things from a "can-do" perspective...having a life partner means you have help and quite possibly twice the income earning potential that a lone individual does. A spouse and a family also gives you more brain power, a built-in cheering squad, and all the more incentive for working hard and being successful.

Likewise, don't let this example of success in a profession persuade you that it can't be done with a skilled trade or even simply a job that's mostly labor. I'd be willing to bet that most of the landscape maintenance, lawn maintenance and snow removal organizations in your area were started in a very similar manner; master the work, learn the business, and strike out on your own.

Whether you’re trying to avoid debt, get out of debt, become debt free or achieve freedom from worries of a financial nature, you need to employ similar techniques and mindsets; have an important and meaningful objective, create a reasonable plan, implement the plan with tenacity, be your own best cheerleader, ignore the crowd because they’re usually going nowhere fast, hang tough until after you’re well across the finish line, and then get yourself another meaningful objective lined up and do it again.

And, like anything else in this world, there are many paths to take. Only you can decide which one might be right for you.

Economic and Financial Preparedness – Challenge Yourself to Earn Higher Income as an Employee

by Clair A. Schwan

When it comes to economic and financial preparedness, I’ve suggested that we have a three legged milking stool: creating wealth; preserving wealth; and, spending it wisely. Let’s get started with the first leg, creating wealth. I’ve offered six suggestions in the introductory article as to how one might go about earning more and thereby start to accumulate more wealth.

Here is my first suggestion, and I believe that many of us can do this without too much trouble.

Challenge yourself to rise up through the ranks – taking on more responsibility at work and demonstrating good performance and leadership on the job. All of this can lead to promotions and higher levels of income. A higher level of income is one half of the equation when it comes to building wealth (earn more and spend less).

It’s always easier to accumulate wealth when you double up at both ends...earn more and save more. To be sure, spending less is under the control of the individual, but there are lots of things that can be done to earn more. I find a good starting point is to begin thinking less like you’re in a job and more like you’re in a career. Also, start thinking and acting more like a supervisor, manager, project lead, team lead, or whatever is a notch or two higher than your current position. Think and act as if you’re already promoted.

Here’s why:

  • Stodgy organizations promote based on performance and time in service, with better performance, you’re halfway there.
  • More progressive organizations look largely at performance and care very little about how many years you’ve put it, so with those organizations, you’re much more than halfway there.
Either way, enhanced performance puts you in a better position for higher pay.

Think like the manager who might be responsible for promoting you (not simply giving you a cost-of-living raise). At some point, that manager has to recommend to his/her manager that you be paid a higher hourly rate or salary. And, the first question the more senior manager is going to ask is, "Why should we promote this individual?" If you’re already doing the job that you’d like to be promoted into, then the justification is easy…you’re already performing at that level, so it’s simply a matter of your boss adjusting your pay upward to match your performance.

Taking these actions also gives you a nice bargaining chip. If there is resistance to higher compensation, then you can always reduce your performance to match your current pay, as this is only fair. Fair or not, it’s something that I’m sure management won’t want to see happen. More importantly, you now have additional experience (a beefier resume) that will enable you to compete outside the company for a position with additional responsibilities and higher pay, the type of job that matches well with your new skills and experience.

Smart organizations are constantly recruiting. They never know when they’ll stumble onto someone who is just right for their enterprise. Smart employees are constantly seeing what’s available in the marketplace…jobs that pay more, provide more room for advancement, and have compensation at a level that is better aligned with the level of responsibility and performance expected of the employee.

When doing all of this, make sure you keep in mind that things need to be win-win, just like any other good deal in the free market. The employer has to feel good about the additional money they’re paying you, and this comes from enhanced on-the-job performance by you. You also have to feel good about the additional income being deserved based on the effort you’re putting into your work. Keep fairness in mind as it’s hard to argue against it.

Every organization is different, and if you just can’t see being promoted, perhaps you’re in the wrong organization. Assuming for the moment that you are in a suitable organization, one that endorses the concept of pay for performance, then you should consider the following actions to help get you better positioned in terms of compensation:

  • Make your work products a cut above the norm
  • Participate in career advancement training opportunities
  • Make it known that you have interest in advancement
  • Become a work lead
  • Train yourself to be a specialist in a given area, preferably an area of growing need
  • Take on the role of project manager, even for a small project
  • Hire an employee or two and voila, you’re a supervisor
  • Take on projects or tasks that others shy away from
  • Solve management problems, reduce their burden
  • Understand the big picture associated with your work

And, here are some things you should avoid:

  • Making waves in your organization (ripples are fine, but waves are usually not welcome)
  • Increasing management burden (without good cause)
  • Deliberately and repeatedly going outside of established channels
  • Making end runs or engaging in behavior that may appear devious
  • Trying to take away someone’s job (instead focus on creating a new one for yourself)
  • Hurting the feelings of others
  • Being aggressive (when polite assertiveness will work just fine)

Use common sense, establish a mindset of advancement, and keep an eye out for opportunities. When opportunities present themselves, you can move forward with your mindset of career advancement.

The key to remember is to keep your best interests in mind, and that means keeping the best interest of the organization in mind as well because you’re part of their success. Would you promote someone who isn’t on board with promoting company interests? Of course not. Those are the employees who are most likely to be dismissed. Likewise, what employee wants to stay associated with an organization that doesn’t treat their employees fairly, doesn’t recognize their achievements, or has no room for talented employees to excel and attain even greater levels of accomplishment?

You can’t build wealth and secure your financial future in a reasonable length of time by being an average employee working a job, even multiple jobs for many years. You must excel and get paid for being head and shoulders above the rest. You have to be recognized as a success-oriented and career-oriented individual, not just someone working a job. With this comes higher pay, staying power in your chosen endeavor, more opportunities to shine, and peers in your field who recognize (and pay for) your added-value. Ultimately, higher income provides you with greater financial resources, and that provides you with more and better options. As the economy self-destructs and people struggle to keep their heads above water, you’ll fare much better because of the options that higher income and wise use of financial resources can provide for you.

Next Month

In upcoming issues I'll provide more articles that I think are of interest to those with a frugal mindset, and at least one of the articles will be a continuation in the economic and financial preparedness series.

In next month's newsletter I'll provide an article about getting out of debt by focusing on the "big chunks." It's the only sure way that I know how.

I'll also provide another article in the economic and financial preparedness series. This time I'll provide suggestions about getting skilled up so you can make more money at work.

Thanks for being here with me at Frugal Living Freedom. I hope you enjoy the articles and can put them to good use in your own life to better your financial position and enhance your own peace of mind.

All the best to you and yours,


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