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Charting A Different Path For Yourself

19 May 2010 2 Comments

I love reading about individuals who chart their own path, going in a different direction than the herd.  While obviously we don’t read about the countless failures of this path, but typically only the successes (i.e. Timothy Ferriss “Four Hour Work Week”), it is still fun to read and think on such people and their paths.

Most of us view a “different path” as one different than a normal job/career lifestyle.  This “normal” existence typically means working some version of a 9-5 like job Monday thru Friday, with a few weeks of vacation each year where end up going somewhere stressful versus resful, we have lots of debt and lots of things.  Oh, and don’t forget the hefty mortgage payment.  All in all, the American dream, right?

So, what isn’t normal?  We’ll let’s look at the opposite of above.  A different path, therefore would be, not working a 9-5 job, having “time off” whenever you wish, traveling when and where you want to, no debt and few things.  Wait, Kevin, are you telling us to become hippies!??  No.  Ok good. I’m not a hippy but I am fairly frustrated with the American rat race.  I long for flexibility, freedom, and time to pursue things that matter to me.  My 9-5 job does not really do these things for me.

So, how might we pursue this different path.  It’s one thing to quit everything you know and start anew.  If you’re like me, that’s not possible.  Instead, I choose to make incremental steps towards this direction.  Let’s look at the steps that I’ve come up with.

Step 1 – Income Replacement

This can be tricky, because most of us are used to living off probably more income than we truly need.  If you make $80k a year and are used to spending $80k a year, you’ll have a tougher time than someone who makes $50k and lives off $30k.  So, first, identify what you really need while factoring in maybe a few nice-to-haves.  Maybe you make $80k, and figure you could live off $50k.  Ok, good, we’re making progress.

Now, you need to replace $50k (or whatever you need).  It’s time to start the income replacement process.  This means alternative income.  Your alternative income might come from a range of sources.  Think investment income, real estate income, or maybe starting a new business or revenue generating hobby.  For me, I always default to technology, specifically the web.

Check out my Online Income page to see how I’m doing.  Essentially, in a little more than a year, I’ve gotten to the point where I”m generating over $1,000 each month in alternative income.  The beauty is that this still has significant opportunity to grow.  I’m on my way to completing step 1.  Are you?

Step 2 – Assets: Yes; Debt: No

Paying off your debt (including your mortgage) and investing in assets is the key (other than alternative income) to this new path.  By eliminating debt, you’re decreasing your living expenses.  Think about living without a mortgage payment.  It’s beautiful.

Investing in assets will help provide income and stability during your next phase of life.  Whether it is dividend paying stocks (much better than non-dividend stocks in my opinion) or rental real estate, your assets will keep you financially secure.

To move forward in this area, you need two areas of action: actual investing and learning.  Let’s take learning first.  In order to successfully invest, you need to learn about investing and continue to increase your knowledge.  Don’t assume it’s too complicated and don’t assume you’ll just pay a financial planner.  It’s a waste of money.  Second, you need to start investing.  You need to build quality positions (new investors, consider a DRIP) and you need to continue to fund these positions and grow them.

Step 3: Plan The Next Phase Of Your Life

What do you plan to do with your new phase of your life?  What will provide satisfaction?  What will you do day-to-day?  These are impotant questions to ask now and brainstorm about now with you and your family. By thinking ahead, you’ll be ready should you succeed on steps #1 and #2.  Good luck.

2 Comments »

  • Ryan said:

    It's a challenge… that's for sure… some days I ask myself what the hell I'm doing and if I should just give into the 9-5 and give up the "dream" but I think that the satisfaction that comes with actually succeeding will be worth it in the end.

    I agree with your sentiments as well… anyone can do it… there just has to be a heavy dose of motivation and desire to actually take action