Thread: Define Your Dream - Plan to Get There!

Great post...and totally appropriate- I was just thinking about this concept- and voila, here it is in writing!

I like the clarity which you have spelled everything out with. I have often wrestled with which comes first cashflow or capital. It makes total sense that building a business or buying something for capital gain to jumpstart CF purchases would be a great way to go.

This post gave me a lot of clarity. Thanks! ++rep

I've been doing some writing lately, and ended up expanding and revising the post I made above. Thought I'd post the revised edition... (The three phases have turned into six! lol).

1) Define your Dream Life.

The very first step is to realize that you don’t have to be confined by your current income or how many hours you are required to work. Unfortunately, this is how most people have to live today. For example, the decision to take a vacation is made within the boundaries of available vacation time and available funds (whether this comes from savings or credit cards.)

Defining your dream life means – if only for a moment - learning to look at life without the restrictions of job and money.

One of our favorite family activities is to read novels out loud. On a recent road trip, my husband was reading a young adult fantasy novel out loud as I drove. The characters in this novel were having extended adventures and got caught up in a cause they care deeply about. They traveled when they need to travel, fought when they needed to fight, and made decisions based on their desires and passions. They were completely free of the time restraints of a job and the they never held back because of lack of funds. In fact, I don't think money was ever even mentioned in the book. As I was driving down the highway, I was inspired to think of my life as if I was in a novel.

When we first got started on the path of financial freedom, we spent a lot of time dreaming and brainstorming with each other. Eventually, we settled on a picture of our ‘dream life.’ I encourage you to take some time with loved ones to dream of a life without restrictions. Here are some questions to get you started.

As you answer these questions, don’t be restricted by the restraint of time or money. Keep them out of the equation. Imagine you are living in a novel.

• What does your dream day look like? Does each day look the same, or are they different?
• How often would you travel if you had unlimited funds and time available to you? What are some of your dream trips?
• Where would you live?
• What are you interested in learning about.
• What are you interested in doing (become a pilot, write a novel, learn Italian)
• Describe your ideal home and family atmosphere.
• If you had unlimited money and time, how would you give back?
• What kind of legacy do you want to leave?

As you think about and dream of your idea life, write it down.

You can create a vision board, make a vision video, draw a sketch, make a collage, or simply write an essay or a list describing your dream.

2) Get Specific.

Now that you have taken some time to dream, let’s put some numbers to the idea. How much will this dream life cost? Make yourself a ‘dream budget.’ Write out your real budget on a sheet of paper, or print it out. (You do have a real life budget, right?) Then, go down each line item and make your dream changes. Remember, don’t worry about your real life financial obstacles. How much will your mortgage payment be? How much money each year will you spend on travel? How much money will you want to earmark for a charity or a cause? How much play money will you want access to each month, in addition to your monthly obligations? Once you have your monthly number, multiply it by 12 to determine your Target Annual Income (TAI). Write it down.

In addition to defining your TAI, set a timeframe. How long do you want this to take? 3 years? 5 years? 10 years? Decide now. Set a date. Write that down too. (Don't let that little voice in your head convince you it will take 32 years).

Now, your ultimate goal is freedom from the JOB. This means, you need passive income. We will get to that later, but for now lets focus on the numbers. For the purpose of this exercise, let’s use an interest rate of 7%. Later, we can explore different investment vehicles, and you can change this return as you choose, but for now, lets go with 7%.

We will use this number to figure out what your Target Net Worth (TNW) is. Get out the calculator and do the calculation:

Target Annual Income / .07 = Target Net Worth

You now have your TNW. Take a deep breath and, yes, write it down.

3) Realize that it is Realistic!

Now you have: A target lifestyle, A Target Income, and A Target Net Worth. Do you believe it is possible? Do you believe it is obtainable? This is easier said then done, I know. I’ve been through it too. For us, this happened gradually; over a period of years. But I can tell you, it is imperative to believe it is possible. If you don’t integrate this belief and this feeling into your life, it will be impossible to create your dream. This step is very similar to step 1. Get rid of your limiting beliefs. I am going to make some statements, and I want you to pay attention to your gut reaction as you read them.

• It is possible to earn 200% on your money per year.
• It is possible to create money (and no, I’m not talking about counterfeit) out of nothing.
• It is possible to retire five years from today, regardless of your age or your current net worth.
• It is possible to live a life without the constraints of a job.

How did this exercise go for you? Was your first impulse to mumble under your breath ‘impossible.’

If this was a challenge for you, think about this... you have the power to choose!

Final 3 Steps Coming Soon....

AWESOME!

speed +++

Looking forward to the next installment.

Great Post!!! +speed!

Watch those F-words round' heya!

Wonderful stuff...Think And Grow Rich is my bible...

Expanding your mind is good, but you can actually expand it too far also. People who think several decades ahead usually get in serious trouble because of their expanded mindset. I have seen cynics get further, really. I don't know why that is. Just something I have observed really unscientificly.

Building networth is also good, but personally I don't use any great deal of money to build a company. What I do instead is building "company value" that I can then later on use in some kind of a private placement. That way you don't have to give away your company. Most of the company value is paper contracts etc (long-term agreements usually).

Cashflow is important. Without it, everything fall sooner or later. But networth building is the first part to getting cashflow to live of. Agree.

Originally Posted by AroundTheWorld

This phase can be characterized by the make-it-or break-it attitude. To aggressively accumulate networth – leverage is often employed. Hard work, long hours, stressing about how to cover the leverage induced bills, and ramen and rice may be found during this phase.

Thanks for bringing this back to the top and adding more to it.

I'm currently stuck in what you classify as phase 2 in your origional post. I'm in this rut where i've found myself in a comfort zone of hitting singles rather developing the "make-it-or break-it attitude" you talk about above. I've been trying to water down this step by merging it with what you call Phase 3 - Convert to Cashflow.

After reading you post, i'm thinking phase 2 consists of the homeruns, while phase 3 consists of the singles.

Originally Posted by Edge

After reading you post, i'm thinking phase 2 consists of the homeruns, while phase 3 consists of the singles.

That was the same realization I had a couple of years back... I was hitting hits with my SFHs, but in order to make it I needed homeruns, thus the switch in focus.


ATW, excellent post.

Agreed. This is very thoughtful. Good work. Rep+.

Step 4: Educate Yourself and Choose Your Growth Vehicle

Up until this point, the steps have included a whole lot of thinking, but not much action. Believe it or not, you are already half way there. There are three action steps remaining:

• Educate yourself and choose your growth vehicle,
• Build to your Target Net Worth, and
• Convert to your passive vehicle.

Educate Yourself and Choose Your Growth Vehicle.

There are several ways to build your net worth. If you ask 100 people what vehicle they used to make the first million, you could get 100 different answers. Take a little time to explore the different options and figure out what will work for you. The options are truly endless. You can invest in multi-family properties, self storage facilities, or NNN commercial buildings. You can start an E-Bay business or find a niche for an internet business. You can write books and earn royalties. You can start a service business or a niche newsletter. Take some time and learn a little about a lot of different vehicles.

WARNING: It is easy to get caught up in the net of this phase for years and years. Before you know it, your beard will be longer than your tie and you still haven’t moved on to the next step. Set a deadline for yourself, and stick to it. Are you suffering from Analysis Paralysis? Get some ideas for overcoming the problem here.

Here are some more tips:

• Forget the Money! We have talked about the money. Now you need to forget the money. What you say? Forget about the money? We just spent all this time figuring out the money, and now you want me to forget it??? Go read MJ's Premise post for more on this!
• Look at the Potential. Is this a $1,000 dollar idea or a $1,000,000 idea. How much potential is there? You are looking for the home run here. It is make it or break it!
• Remember Your Competencies and Interests. You will be happier if it is something you enjoy.

Now - - - pick a vehicle. (Yes, you must choose one)
Take a breath.
Write it down.

Step 5: Build to Your Target Net Worth

EDUCATION: Once you have picked your vehicle, it is important to continue your education. Find all the books you can on the topic, visit online forums and websites, join local networking groups. Education is something that never ends – the vehicle that you have chosen will require your ability to change, grow and continue to learn as time goes on.

FOCUS: Focus is an essential ingredient of this phase. As your mind expands and your paradym shifts, you will start to see opportunities all around you. “Oh, I could make $100,000 selling sinks on ebay.” and “Oh, I could make a quick $10,000 by flipping a car from Canada.” or “Oh, someone could make a killing in Denver right now!”

YIKES! Go visit Steve O’s One Trick Pony, quick!!!

Having said that, there are a couple of exceptions to the focus rule:

1. If you are starting of with very little, or with a negative net worth or negative cash flow, there exists the need to create some quick cash. There are numerous ways to do this, but these ways might not be the long-term-high-potential vehicle you decided on. Sell some items on e-bay, get a short-term second job, birddog for an investor, etc.
2. If you are on a path that is failing, you need the ability to re-assess. What is working? What isn’t? What is the market telling me? What are they (customers, or market trends) telling me? Don’t let your focus make you ignore these important issues.

FAILURE: To obtain financial freedom, one needs to understand that failure is found all along the path of success. This seems to be a really difficult concept for many in our culture to accept. We learn to fear, shy away from, and be ashamed of a failure. We shout our successes from the mountaintops and hide our failures in the basements. There are two ways to handle failure:

1. Try. Fail. Quit. Never Try Again
2. Try. Fail. Learn. Repeat. Succeed.

Check out Biophases: Do we ever really fail?

I can pretty much guarantee to you that you will have setbacks. You will have plans or ideas that may not turn out just as you hoped. You may have false starts, and yes, even losses. Adopt a new attitude about success and failure and it will help you through these times.

LEVERAGE: If your net worth goal is a big one, and your deadline to get there is a short one, leverage will likely help you along your journey. Make use of good debt, partners, outsourcing, and other forms of leverage. But, do remember, leverage multiplies in both directions. Have your plans, controls, safety nets and contingency plans in place.

Index funds may serve you well as a form of passive income.