Money Actions, the second level...

If you're reading this, it means you're budget is in the positive position and you're doing fine with your finances. Hey, congrats! (If you didn't read the first Money Actions post, click here.)

You can technically stop here and live a decent life - as long as your budget and income holds out. It won't be too exciting or too boring either. It'll come down to your mindset and how you see yourself in a capitalist society. Some people despise themselves, think themselves to be poor while others enjoy the luxury of less. I personally live with a "less is more" mentality. Regardless, there's a good chance that if you're reading this, you're planning on creating a decent, financially positive future for yourself and your family. There's also a good chance you're hoping to maximize your money's ability to help you. This is what this post is about.

Now that you've built your budget, you need to do the following to stay with your finances:

First, monthly reevaluate your labeled spending items. In the last post we labeled each of our spending items into three categories, "E" for essential, "L" for luxury and "P" for product. All of these labels can be rearranged to help you decide what items are truly essential and what items that help you build more products for your future.

Essential items are items you simply cannot live without. A roof over your head, running water and electricity are some examples. One of the biggest challenges is associating essential items with other people's essential items. This mindset can inadvertently harm your budget all for the sake of your ego. A good example is a car. Many people feel the need to owning a car. To some it's a symbol of status, to others it's a quicker way to get to work. But to me, a car is a luxury. If I really built an alternative for my transportation, I can buy a bicycle, take public transportation or even walk. The point I am trying to make is that all these label you, as the consumer, therefore you are in control of the situation. Don't worry if your essentials are different from others, my advice is to disregard the others. Every budget is different according to the individual.

A personal story: I've lived with the luxury of not having wifi service in my home for the last three years. I was getting tired of seeing a hefty bill even though I had access to the internet and free wifi almost everywhere I went. In 2016 I shut down my wifi service. Do I have cable TV? No. Do I have a smart television that uses a myriad of apps? No. Do I play online video games? No. Do I have subscriptions to streaming services? No. To others, they may dread not having wifi - instant access of the internet at their fingertips. To me, wifi is completely a luxury. When I use it, I'm conscience of that luxury. My alternatives include my workplace, the public library, friend and family homes and the occasional restaurant/shop that provide free services with a purchase. What I've learned is that not only am I saving about a thousand dollars a year, I'm learning about my community, I'm maximizing my resources, I'm building stronger relationships with family and acquaintances and I'm getting out of my house. Not to mention I still have a cell phone, which is just a small machine to connect me with the rest of the world. I'm not left in the dark, to be honest I'm more aware about society and news than most of my coworkers and family! All of these outcomes are worth more than the luxury of home wifi service. Is it inconvenient? Maybe to you but not to me. With a little planning, Googling for nearby wifi and change in my behavior, I've set myself up to turn a thousand dollars of bills into products, future investments and offset my emergency fund. That's a major win for me.

Second, condense your spending on each labeled item. A few examples could be changing your cell phone plan to a lower service price or finding an entirely new service altogether, driving less or biking to work to save on gas, cooking at home and taking your lunch to work, join an auto pay service to stop monthly reoccurring fees. A great tool that allowed me to check my spending was my banking app on my phone. If there's one thing you should be doing now that will forever help you with your spending, it's downloading your banking app. Since the time I've downloaded my bank app to now, I realized I had quietly changed my behavior on how I see money. I now don't care about the amount of money I have in my account, instead I care about where my money is being spent and how can I strategically use that to my advantage. I was fascinating to see how much money I spent on a particular listed item, like food or how little my overall utility bills were. I won't lie about this, many people avoid looking at their daily spending. With the experience I have now by using it, I figure if you lie to yourself, you'll never really know your true worth and value.

Third, build and execute plans to eliminate items off your list, starting with any debt. Maybe your website isn't worth the extra money to keep up? Maybe your car payment is too much and you are considering a trade-in for a cheaper vehicle that you can pay in full? Or maybe you're just a few payments away from paying off your credit card debt? This step requires you to plan, using both a calculator and a calendar. Determine your accumulated interest if you DON'T pay off debt. Determine how much money you save when you DO pay off debt. Use your calendar and mark when you're hoping to pay off your debts. Not all items can be eliminated, like utility bills and cell service, but don't be afraid to reevaluate each item. Remember, it's still all your money and you are responsible for however you damn well spend it.

Fourth, plan and execute to build a future product. Now that you've got some savings, what you going to do with it? To be honest, the first thing people like to do with it is use it for vacations or use it to buy a "big purchase" item. I don't like to do those kind of things. Instead I look at the stock market or cryptocurrency trends and instabilities. In fact I do have a personal attraction toward how a company grows - especially when they start off small and work into our regular lives, playing meek to their influence.

The definition of a future product is a product that allows you to keep your wealth and grows in time. A future product could be a cart to sell ice cream, a truck to haul away lumber, tools to help you run a labor service, digital tools to help you run an online business. It could also be stocks, index funds, investments in real estate, a 401(k) plan, a CD. They in turn become more valuable in time or help you accumulate more wealth overtime.

Some of my future products:
  • My pawn shop Aspire Win 10 laptop: used for doing general business, web connection, upgradable, digital storage machine that I purchased for less than $100. Since I have knowledge of CPUs I knew what I was purchasing and knew exactly what I needed. Although it was manufactured in 2011, it still gets the job done. The laptop gets more valuable as I bring in more clients every year.
  • My Canon 6D camera: Bought used for photography and video. Manufactured in 2012 but still is at par with the the 6D Mark II (minus the touch screen and a few additional megapixels). It's my workhorse machine for doing photography gigs, video productions and it also is a networking catalyst. Not only has my camera been paid up, its allowed me to be part of very interesting and lucrative situations, increasing my wealth.
  • My stock portfolio: I have a set percentage of income going toward my stock portfolio. Each year I recalculate and adjust that set amount. It isn't a big fat portfolio but I'm proud to keep tabs on it personally. If you work with a reputable company there's a chance you have options of contributing toward an index fund or be part of a stock option program. If you haven't done it, please do it. I don't need to remind you that many people today can't even afford a round trip flight these days without going broke. Having participating in a stock portfolio or any program will help you with your future ten fold. Start as fast as you can and teach your children to start as fast as you can. Be part of something, anything! The only thing we know about the future is that it comes, and quick!
  • My house: I was proud to purchase a home in 2015. It was a fixer-upper and it was horrendous but nonetheless I figured out how to remodel a few items and the rest is history. The modern generation has access to libraries of information - some of them includes remodeling. I took advantage of videos, articles and instructions on how to build and fix up a house. The knowledge alone has saved me tens of thousands of dollars in construction and labor. I'm proud that I was able to tile my living room for less than $500. Not to mention this information stays with me. The experience stays with me. So down the line when I'm about to buy another house, I know what I'll have to do to make it a home. Not to mention you're not dealing with a slum lord or rental company. You only deal with the bank - that's fine by me. The value of my house has nearly doubled. I'm proud to say that's all my money.
  • My education: I'm not talking about my bachelor's degree. I'm not talking about my HS diploma. I'm talking about my continuous education. I cannot stress enough that ongoing, self discovery and education is a healthy attribute for a happy life. The quote I remember from Derek Bok, "If you think education is expensive, try ignorance." Your efforts for learning new things everyday will pay off galore. But if you're reading this post, I don't think you're the type of person that needs such a reminder.
Congratulations on being in this level of financial action.

Disclaimer: I am not a financial advisor. I have no proper training in finance or consider myself an expert in money and finance. This blog is just my personal journey in gaining control of my money, my life and sanity. I don't expect you to get rich but I hope you will turn out successful with your finance management. I hope these tools, tips and strategies helps someone out there as much as they have helped me. Please contact me for any concerns. - Adam


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