Are You Safe?

You probably have a job.  Jobs are good, at least many of them are.  If you have a job, you get paid to come to the office or job site, spend your hours working on tasks, and at 5:00 you get to go home.  If you’re really blessed, you get to work with people you like and do tasks that are interesting and challenging.  Your job is a blessing, even if it doesn’t feel like a blessing at times, as it brings income into your household.  But for many, and perhaps for you, the one source of income creates a dangerous and precarious position.

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It Wouldn’t Happen to Me

How many people have to decide they don’t like you in order for you to lose your job?  Even worse than that, how many people have to decide that your department is overstaffed, and you are the most logical person to eliminate?  Unfortunately, in most cases, as few one may decide to give you your pink slip.

Companies who lay people off aren’t bad or evil—in fact, if they refuse to take such measures they run the risk of running the business out of business and causing all the employees to lose their jobs.  The answer to the tough reality of being an employee is not to get mad at companies.  Instead, why not protect yourself by diversifying?

Employee, Self-Employed

Working as an employee is only one of several major ways to create income.  It has the advantages of typically stable income (your paycheck is the same each week) and fringe benefits like insurance.  Disadvantages can include a cap on your income and a disconnect between productivity and compensation.  Some people create income through being self-employed.  They are still an employee, trading their time for money, but they have the added benefit of a larger income potential, as the money they earn is theirs, and the more productive they are, the more they make!  This can be a good option, but is tough to pursue without making a big change, quitting your job, and giving it a go.

Using Money to Make Money

Since our purpose is to diversify income, we’ll focus on the following two ways of creating passive income:  investments and business systems.  First, investiments.  You’re probably familiar with things like stocks, bonds, and real estate.  These assets are a great way to diversify your income, because instead of having to trade more time to get more money, as you do with a job or a self-employed opportunity, you use money to create money.  As you save and invest, your portfolio grows and grows, so that each year a larger and larger percentage of your total income is capital appreciation.  This is a great way to protect yourself from having your entire financial life being in the hands of one person.  You could still be laid off from your job, but now you lose only a percentage of your income, rather that the whole thing.

Creating a Business System

Another great way to create income is to build a business system.  You may not think you know about this concept, but if you’ve eaten at McDonalds you actually do!  The history of McDonalds, as the history of any fast food chain, began with one man’s good idea.  Ray Crock opened a hamburger stand, serving burgers and fries for 10 hours a day.  He figured out how to run the business well and made some money.  He wanted to make more, but didn’t want to stay open longer.  So, he created a business system.  He showed a friend how to open a burger stand just like his on the opposite side of town.  Then he did it again with another friend. And another, and another.  After a while, the new stands spawned more locations, and the franchise began to multiply.  Each new person who wants to own a McDonalds location is trained in the right way to run the place, and the system grows and grows.  Everyone wins here, from Ray Crock, to each business owner, down to each and every customer.

So What?

So how does this knowledge help you?  Is it only relevant if you want to open and run a McDonalds?  No—you can use this same model to diversify your income and lower your dependence on your employee income.  At TotalThriver.com, we not only help people thrive in the areas of fitness, finances, and faith, but we also show budding entrepreneurs how to start a business of their own.  Like other franchises, we have a proven system for getting a new person profitable in a business moving high-quality products that people in your network use every day.  Sound like something you’d like to check out?  Send a message to our Facebook group (ThriveMart) and get some info diversifying your income today.  Your tomorrow can be better than today; are you willing to put in the work to make the dream a reality?

Are You Busy?

We are busy people.  If you’re like most of us these days, you fill your plate to overflowing with activities, work, fun, family, church, sports, and many many other things.  Often, these things bring benefits to our lives, although they can sometimes make us feel overwhelmed.  Worse still, we’re not always too accurate in our estimation of how many hours a new commitment will require, and this can lead to a schedule packed full of activities that might not quite line up with our dreams, desires, and priorities.  Is there any way to gain control of our schedules?

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Money and Time

Just as it is with money, time often gets away with us.  Without intentional planning, the loudest cries for our attention get our time and money first, leaving other, more important priorities lacking.  A telltale sign of this is when we fine ourselves saying, “Oh, I’d love to do something like that, but I just don’t have the time!”  It doesn’t take too much reflection to realize how preposterous this statement is.  As if any person is given any more or less than 24 hours each day!  We all make choices each day how we will spend our hours.  It’s ok if you don’t want to prioritize a fitness regimen in your life, but don’t fool yourself by saying you don’t have time to go to the gym.

Be Real with Yourself

Think of it this way:  you, just like the rest of us, have 168 hours each week.  Typically, work will consume something like 45 of them and if you sleep 8 hours a night, that’s another 56.  So, how will you spend the other 67 hours?

Just as with budgeting money, budgeting our time will help us elevate our highest priorities first, and let the things that matter least fill in the gaps.  Instead of spending 24 hours watching TV this week, why not reduce it to 20 and invest those 4 hours into growing your marriage or relationship with another important person in your life?

You Can Have It; Are You Willing to Pay the Price?

It’s pretty easy to fall into the trap of wistfully wishing for things we’d like in our life, but failing to take any action in pursuit of those things.  What do you really want?  Can you make a decision today to spend three hours next week pursuing it?  Maybe all you can do during those three hours is some research.  But guess what?  The following week, you’ll be armed with the info you need to take the next step, then the next one, on and on until you reach the place you want to be.  The journey to success may be long, but what’s that to you—you’ve got time!  😀

Is Success Once Success?

One day, a little boy decided he wanted to learn to ride a bike.  He found his dad and asked him all about how bicycles worked.  His dad told him all about the history of bicycles, the parts that make up a bicycle, and the technique required to ride one.

Victory!  Or Is It?

The boy and his dad began working diligently on learning to ride the bike.  As the boy practiced, he gradually improved, until one afternoon, his dad released his grip on the back of the seat and the boy rode under his own power for a full block.  Happy and proud, both man and son returned home and parked the bike in the garage.  The bike stayed in it’s spot in the garage all night.  The next day, the bike also stayed in its place.  So too the third day, fourth day, and fifth day.  In fact, the bike stayed put for weeks, followed by months, and then years.  The boy never again took the bike out for a ride, though he walked past it nearly every day.  Now the question: did this boy learn to ride a bike?

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Technically, the boy learned all about the bike.  And once, he did manage to ride it a ways.  But did he benefit?  Did anyone benefit?

Assimilate It

You see, you and I are often like that foolish boy.  We undertake a worthy venture, like eating healthier, beginning a fitness regimen, or connecting with God in Scripture and prayer, but we fail to continue and create a permanent habit.  In so doing, we miss out on the benefit of the venture, just as the boy missed out on the joys and benefits of bicycling around his neighborhood.

Today’s the Day!

Can you think of something you know you should be doing, something perhaps that you’ve even successfully done on occasion, but that you’ve never gotten consistent with?  What benefits would you enjoy if you made this behavior a permanent habit in your life?  It could be that the only thing separating you from the greater level of success or achievement that you desire is the simple consistent application of something you already know how to do!  Will you take the steps today to make a new habit for your own success?  Make a commitment, let someone know about it, and enjoy your journey to the top!

Invest or Save

In today’s post, we’ll explore the important distinction between saving and investing — two terms that, though often erroneously used interchangeably, must be treated in distinctly different ways on your path toward a thriving life.

Be Prepared for the Unexpected

Saving ought to be done first — and for a specific purpose.  As we’ve discussed previously, one of the first milestones you need to hit as you pursue the thriving life is to save a full emergency fund of 3-6 months of expenses.  The emergency fund is not an investment; rather, it exists to protect you from the unexpected expenses that will most certainly come your way.

Damage car

Great places to keep an emergency fund include savings accounts and money market accounts (fnbodirect.com is a great place to get started).  Though the interest you’ll typically earn on such accounts is quite low, they provide a few important benefits that you need for emergency savings.  First, your principle is protected.  This means that your value won’t go down in times of economic recession.  This is important because oftentimes unexpected drains on your cash will come during times of economic hardship nationwide.  With your savings in an account at a bank or in a money market account, you can rest assured that the $10k that you put in will be there when you need it.

Make Your Money Make Money

On the other hand, an investment ought to involve significant growth.  While a savings account is earning less than one percent, a good investment should earn in the neighborhood of ten percent.  But here’s the catch: that 10% rarely comes linearly.  Unlike a savings account which will return 0.5% per year, every year, an investment may earn 5% one year, 30% the next, and -15% the year after that.  The returns are a function of the market you’re invested in (e.g., the stock market or the housing market), so you never know how the investment will do in a given year.  But, you can look at history to draw reasonable conclusions at what the investment should do long term.

Exhibit A

Take for example a mutual fund we’re quite fond of here at totalthriver.com:  Fidelity Contrafund.  This fund is primarily comprised of stocks of large U.S. companies such as Google, McDonald’s, and Coca-Cola.  The following chart shows the return for each of the last four years:

2008 2009 2010 2011
19.78 -37.16 29.23 16.93

As you can see, 2010 was a great year for this investment, and 2009 was a lousy one.  Of course if you knew that ahead of time you could make a killing!  But since none of us have such knowledge of the future, we must simply follow the averages.  This fund in particular has averaged 15% per year over the past 3 years, and 8% per year over the past 15 years.

Time Horizon is Important

Because even good investments like this one can fluctuate violently, most financial experts only recommend investing when you plan to leave the money alone for five years or more.  Generally, this is a long enough period to ride out the turbulent ups and downs of the market, and give yourself a high probability of making money with your investment.  For short-term savings (e.g. for a newer car or living room set), you’re usually better off to take the guaranteed 0.5% of your money market than risk losing 20% of your money should the market take a bad turn one year.

Make It Happen

In closing, it’s very important to recognize the difference between saving and investing.  As you make progress toward your financial goals, you’ll need to be very intentional with which of the two you’re doing.  Will you be using the money in the next two years?  Open a money market.  Will you be leaving the money alone for the next five years?  An account with scottrade.com or a visit to your local financial advisor (see the “investing ELP” section at DaveRamsey.com) are great places to start.  And as always, be sure to check back at TotalThriver for help along the way!

 

Seeds of Success

When you decide to pursue success in an area of your life that needs improvement, you’ll face many large obstacles standing in your way. Perhaps the greatest challenge of any new journey on the path toward thriving is keeping your resolve when the results you want aren’t coming.

Typically, the first few weeks of a new fitness regimen will be filled with excitement, enthusiasm, and passion. But by week 3, all you are is tired, frustrated, and wondering if it’s all worth the trouble. You have the testimony of those who’ve gone before you that this program will make you look better, feel better, and help you thrive in all areas of life, but that’s not what you’re experiencing right now and there’s a strong temptation to give up.

In these times, I find it helpful to take a moment and consider my position. First, have I done the things that my mentors have recommended? In the case of a fitness regimen, am I doing the workouts as prescribed? Or, do I skip the parts I don’t like, or not give my full effort?

If I am doing what I’m supposed to, yet still not experiencing the success I expected, I’ll do well to step back and reconsider whether my expectations were reasonable. Oftentimes, the instant success I imagine on day one is simply incongruent with reality. Growth takes time, and as long as you are moving in the direction of success each day, you’ll get there in time.

Finally, and perhaps most importantly, I find it helpful to remember a poignant example from nature—the simple vegetable garden. I keep a small garden in my back yard, planting seeds around mid-April. To date, I have spent many hours tilling the soil, measuring and planting rows of seeds, watering, fertilizing, and weeding. For all this time and effort, done skillfully and with the help of experienced experts, I have harvested nothing but one bowl of salad. A green pepper grows on one plant, and tiny tomato flowers have sprouted, but I have tasted nothing but a few leaves of lettuce.

As in my garden, many great things in life require hours and hours of effort, guidance from good mentors, and time. If I will take this view on new ventures I pursue, I will be able to resist the discouragement that comes in the early days of hard work and few results. The effort I put into my venture today may not produce results today, but as I grow and God grants me His blessings, they may just turn into delicious fruit tomorrow.

On this point, here’s a curious fact from my garden story: the lettuce I’ve harvested this year did not come from my efforts this year—I didn’t plant any lettuce this year! Rather, this plant sprung up of its own accord near the spot that I had planted last year! When I tilled the soil and planted those seeds in April 2011, little did I know that I’d be satisfied by that produce in May 2012! Perhaps the seeds you’re planting today will surprise you in the future at just how great a harvest they’ll bring!

Mortals Only

For those of you who aren’t invincible, today’s post will show you one vital practice for demonstrating your love to your family.  It is important that we express our love and affection verbally, but oftentimes it is our actions that truly show our hearts.

First some bad news:  you’re going to die.  You knew that, right?  Now, I can’t tell you when it will happen, but I will tell you  one thing–that day is one day closer today than it was yesterday!

Of course we all think that our final day is way off in the future, and for many of us, it will be.  The problem is that for some of us, that day will come quite soon, perhaps even before our kids are grown and our retirement portfolio is sufficiently large.  We need some way to guard our loved ones from the compounding diffiulty of a parent’s premature death and an impossible financial situation.

Thankfully, generations ago, our forefathers instituted insurance programs to protect their families as well as future generations like us.  Insurance companies collect premiums from large groups of people, most of whom do not die while the policy is in effect.  But for those few who die in the prime of life, the revenue generated by everyone’s premiums is paid out to the family of the departed.  And thanks to significantly improved technology and business models, today most healthy people can obtain this protection for next to nothing.

Between my wife and I, we have a 20-year term policy for close to $1,000,000 which cost us less than $40 per month.  For less than what many people pay for cable, we are protecting our children and each other in the event that death comes sooner than we expect.  Over the next 20 years, it is vital that we invest aggressively, building our portfolio to a large enough value that insurance is no longer needed.

For those who do not have the discipline to save an invest, insurance companies also offer “whole life” policies.  Unlike term policies, these insurance products do not expire at a set date in the future.  Rather, they are a policy that you plan to pay into for the rest of your life.  In addition to the insurance coverage built into these plans, they also have a savings account inside.  So instead of paying the $40 like in our example, you might pay several hundred per month.  Some of the extra money you pay goes into a savings account that you own, which grows over time.

Many people like the whole life policies because they have a built-in way of forcing you to save money.  However, these products often carry significant fees and underperform compared with a good mutual fund or a 401k.  Therefore, it is our recommendation that you purchase a sizeable (say $500,000 for an average person) term policy on a 20 or 30 year term.  Plan to invest at least 8% of your income into a 401k or Roth IRA during that time, so that at the end of the term you will have become self-insured and will no longer need life insurance.

Taking these few simple steps is the difference between leaving your family vulnerable and destitute or loved and financially secure.  Make the time today to investigate rates at a few different companies before purchasing, and rest confidently knowing that your family is being loved well.