Have you ever been sitting at your computer day dreaming of all the cars, boats, and holidays and just fantasizing about what it will be like when you finally “arrive” only to get struck down by the realisation that you have to go to work the next morning putting all you life goals on hold.
What gets us to this point is our desire for improvement, I think it was Brian Tracy who mentioned that even since the days of ancient babylon people have always bought the same thing, improvement. And I’m sure you will agree with me that a nice fancy car will surely be an improvement to your garage. There is however and inherent flaw with this type of thinking as it distracts you from the more realistic and attainable goal of financial freedom or what T. Harv Eker calls “Winning the money game”.
When you are broke your desires are extreme, when you are rich not so much. This was certainly my experience. I recently found an old goals list that I did back when I was 17 and to my suprise there were things like $2 million a year income, be in a 20 year long term relationship, buy a house with an 8 car garage and now that I have made huge progress towards these things those extreme desires have all but deminished in intensity. Now my ideal lifestyle is living in Thailand where the cost of living is less than $1,000 a month with friends and doing fun crazy stuff as much as we can.
So what is the money game?
The money game is your dependance on work or active income to live comfortably. If your living expences are $50k a year then you need a passive income (this word is key) of at least $50k to consider yourself a winner of the money game. Your number 1 priority needs to be winning the money game BEFORE the millions and billions, remember you win the game when you are free.
What is passive income?
There are 2 type of income, passive and active. Active comes in the form or working, selling, fixing, running or some other “activity” that you must to on an ongoing basis to make an income.
Passive income on the other had is that which requires no work or there abouts. Passive income can be devided into 2 classes, the first we will call interest bearing. You will find this type in morgages, term deposits or CDs, private lending, and anything that requires capital to gain access to.
The second type of passive income can be found in the form of real estate rent, licencing, royalties, a passive internet business, advertising fees, etc. The difference here is that you sometimes don’t require as much money as the interest bearing income, yet the time requirement may increase a lot.
Now here are the 3 action steps to get you closer to winning your own personal money game:
1. Define how much a comfortable lifestyle will cost for you in an exact dollar amount.
This can be as big or as small as you like just remember the smaller you make it, the sooner you will achieve it and there are many levels after this one. This is not the time to dream big, just comfortable.
2. Simplify your life
This step can give you the highest leverage of them all, for ever $1,000 per year you cut off that speeds up dramatically how quickly it will take you to get there. Some tips, downsize your accomidation or get someone else to move in with you, cut bad and disempowering habits (smoking, drinking, etc) when you get rich you don’t want to have these, or change country (third world countries like thailand and bali are my fav) what you are paying in rent now may cover your entire cost of living.
3. Take stock of how close you are to winning the money game
Introspection can be one of the hardest things, yet funny enough one of the most rewarding tasks you can ever do. Write on a piece of paper with a pen or into a spreadsheet everything you own paying special attention to any passive income sources (no matter how small).
Take this advice and go kick some ass.
Mike McMahon
P.S. Please give me feedback on my style of writing in the comments below, im new writing and need it
