September 19, 2012, 4:35 am

How Much Do I Need in 30 Days?

by: The Financial Blogger    Category: Alternative Income,Career
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How Much Do I Need In 30 Days???

 

This very question has been running through my mind for the past week or so. There is that small voice running around in my head. It feels like being stuck in a Nine Inch Nails song (yup, this is my kind of music).

 

I told you I like creating chaos. Well, today I’m going deeper into a “chaotic scenario”….

 who needs a job

What I Would Do If I Lost My Job Today

 

 

That’s a pretty good question isn’t it? I know I won’t lose my job today, tomorrow, in two weeks and not even in two years. The market needs people like me… for the moment anyways. But I have to know how much I need if I ever want to retire before the age of 35, right? After all, we created our company, M-35, for something!

 

So the best way to plan for that day was to think about losing my job tomorrow morning. It’s like doing a stress test (a financial test we run on banks’ financial statements to see if they can make it through a major recession) on my financial situation. I think everybody should do this once in a while to see what they would do.

 

#1 Sell My RX-8. As much as I enjoy driving my sports car, this is definitely not a sane expense to have if you have no income coming in. Plus, my Tribute is the newest car (it’s a 2009) so I have less chances of having to pay for significant car repairs. I guess I would get roughly 5K on the market (I see similar cars to mine for sale at 6-7K at the moment). In addition to the money provided by the car, it would help me reduce my gas and car insurance expenses.

 

#2 Sell My Employer Stocks. I put about $600 per month aside in my employer stocks and use it as an emergency fund. Without a job, I couldn’t stomach the risk of seeing the stocks drop. I would use this money as my emergency fund combined with my car sale. It currently stands at 3K in value.

 

#3 Cut Dining Out to $0. I would cut down my restaurant expenses to a minimum. Since both my wife and I are pretty good cooks, I would simply concentrate on making more food. And I would also cut out the wine, probably set it to a maximum of 1 bottle per week (we usually drink 2 to 3 bottles per week… ).

 

#4 Keep My RESP Contributions. This is the future of my children and in no way will cut on that. I would rather eat less than compromise my kids’ education. In fact, I think I would probably keep similar expenses for most of my budget.

 

With these modifications to my financial situation, I would probably be able to sit on $8,000 or so as an emergency fund. Is it good? Is it bad? I need to calculate how much I need in the next 30 days to know the answer…

 

How Much Do I Need in 30 Days?

 

When I look at my budget, I expect my expenses to be around $4,200 per month. To make sure I have enough to cover everything (I’m not the best guy at budgeting apparently), I would aim for $5,000 net per month. This would cover everything up to my vacation. But at $5,000 per month, I would feel comfortable. I could probably live with $4,000 without having to sell my house. Under that amount, I would seriously need to consider selling it. But since my house is enough to wipe out all my debts, there is no point in considering selling my house to correct the situation. It would almost feel like cheating. I like a little bit of challenge ;-).

 

So the magic number is between $4,200 and $5,000. With an emergency fund at $8,000 plus roughly $1,000 that sits in my account, it only gives me up to 2 months worth of living. It’s definitely not much as most planners would suggest 3 to 6 months of savings! But wait… I have another plan where my emergency fund is actually equal to 4 to 6 months’ worth of living!!

 

How I Would Find The Money

 

I’m pretty sure you know where I’m going with this… directly into my online company! Without touching my expenses, I can draw $3,000 per month from it. Therefore, I only need between $1,200 and $2,000 to keep my lifestyle *almost* intact. I would want to keep my writers and VAs as I highly value their work and feel responsible for them. In a worst case scenario where I’m really going into the deep, I could cut my company expenses by another $2,000 per month and then, be able to fully pay my salary. But I don’t think I would go that route… I told you, I like challenges.

 

I would not sit on my $3,000 per month as income either. Since I almost quit my job last year, I know exactly how I would double this income in the next six months:

 

–          Create 1 niche site per week generating at least $100/month (goal is to make at least $2,000 per month in six month)

–          Promote my articles like I never have before in order to push my traffic through the roof

–          Take the time to write awesome articles

–          Create at least 2 more blogs generating $500/month each (in order to make another $1,000 per month)

–          Write 1 small eBook per month in order to sell 5 copies each monthly at $9.95 (very feasible)

 

In order to do all this, I would certainly work like a maniac. Just the simple thought that I have no income makes me want to work 10 hours a day on my sites! The good thing is that I could easily do it without hurting my family life. There is a huge advantage at working 50 steps away from your bedroom!

 

In the meantime, if my emergency fund is not enough, I could also consider withdrawing from my RRSP. Since I have almost $30,000 sitting there, I could probably hold two years if I combine my current online income to my emergency funds and my RRSP. How can two years not be enough to reach financial freedom? Seriously.

 

The Plan Seems Solid, What is Holding Me Back?

 

Yeah… I’m writing this article and I’m really trying hard to find what is holding me back.

 

It could be fear. There is definitely a bit of that. But after setting up this plan, I wonder what kind of catastrophe could hit me and burst my plan. I mean, I would need my 10 sites to crumble at the same time to kill my plan. Not sure how this is possible. Fear is part of the explanation but it’s not all of it…

 

Going Unconventional. I’m getting closer to the real reason here. It takes guts to run across the crowd when everybody is going in the other direction. I don’t like to be a sheep and I consider myself as a free thinking individual. However, I’ve *followed* a few accepted concepts such as having a nice house and a mortgage with the wife and kids. I would not trade my family for anything else in this world as it’s the most precious gift life has given me. But it feels like a big burden as I don’t want to see them missing anything. I don’t want to have to sell my house or cut down on food or activities because “we need to make sacrifices”. It’s a bit of an unreal dream that I am pursuing right now but I want to keep it alive. Because I can.

 

Failing People. My clients, boss, colleagues are all counting on me. I know… in three months they won’t even remember my name. But still, I’m a loyal and honest man. I’m having a hard time considering quitting on them because of that. It would feel awkward to look them in the eye and tell them that I quit one of the best jobs of the world. Who would do that? A fool like me I guess…

 

Pressure. Don’t get me wrong, I love pressure. I’ve been putting a lot of pressure on my shoulders since Day 1 of my career. However, I truly enjoy every single minute I put into my online company. I LOVE writing, I love connecting with other bloggers and picking their brains for projects. I love thinking about strategy and building new concepts. Would all of this still be fun with the pressure of making money? If I quit a 6 figure job, it’s because I intend to make a 6 figure company. There is no point for me to earn $5,000 per month from my online company. I would need to eventually make $10,000, $15,000 or $20,000 per month to consider that I’ve succeeded. With such pressure would it still be fun?

 

It would certainly be fun if I make it so. I know people who are making such incomes and I’m not referring to Pat Flynn or other famous internet moguls. Some of my college friends are making such income at this very moment. So I know it’s possible. But I know it’s a lot of work…

 

The Ultimate Question

 

I’ve been debating this issue for a while and I feel that I’m getting closer and closer to an answer while not being ready yet to open my eyes to the real world yet. But I’ve asked myself the ultimate question. The only question you need to ask yourself about anything in the world when you are facing a dilemma:

 

WILL YOU REGRET IT 5 MINUTES BEFORE YOUR DEATH?

 

I know the answer to this question. Now it’s only a matter of making sure I don’t die in the next few years… I’m still not ready to open my eyes to the real world yet…

 

 

 

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Comments

I like this question just from a budgeting perspective.

What do I need in 30 days? It’s a different way to set your expenses instead of having a $dollar figure and working your way down. You list what you need and find out what it will cost.

NIN Rocks! – Saw them live a couple years ago!

Yeah! another NIN fan! I saw them at the Bell Center a few years ago too, wow, It is probably the best show I’ve seen!

I’ve enjoyed doing the exercise in order to rationalize what would happen if I was going to lose my job. I think it’s important to see what your options are before it happens. I’ve seen my parents losing their jobs long time ago and there is too much emotion involve to clearly see your options when it strikes!

Sorry to be off-topic but…. did he have that crazy electronic screen? one of the best things I’ve seen live.

On topic: I saw my parents lose their job as well so I’ve always had a backup plan. Just a word doc of things to sell, where to move (if I need to) as well as keeping a backup trade (I bartended a lot) The plan combats the emotion of rejection or loss so you feel prepared. As a result, the sunny side emotion of possibilities comes earlier.

For every famous mogul out there, I wonder how many more are successful but spend less time in the spotlight? 😉 Startups often use a burn rate : how much do we have before we crash & burn!?

I love that we share the same interest in Music. I love Nine Inch Nails song too.

Stocks do NOT count as an emergency fund.

If you unexpectedly got laid off tomorrow without severance, do you think it’d be because your company is doing WELL? It’s only $3k so it’s not a diversification problem. If this worst case scenario played out, don’t count on getting much out of the shares.

But the fact that you only have a $3000 emergency fund is certainly disconcerting.

Given your exceptionally high cost structure and the probability you’d face EI clawback, I think $8 grand is drastically insufficient.

If you paid off all of your debt, you’d face a lot less risk because you wouldn’t have a leveraged lifestyle.

If I read this right, it sounds like you’re working on ways to be more involved in your business 🙂 There’s no question you have a great job now and it suits you well, but when you have two great choices you have a hard choice to make. It sounds like you have enough plans to grow your business and make it successful, so you just need to figure out if/when/how to move. If you had just started your job last year (and were getting a similar income) would you be staying with it this long?

by: The Financial Blogger | September 19th, 2012 (11:27 am)

@Ottawa Guy

off topic; yes he had that crazy screen in front of the scene, this was SICK!

I think that if you know where to go and what to do if it ever happens, you just fall on automatic pilot and follow your emergency plan until you recover and can fully function. I guess you would not panic as well seeing how many months you can hold before going bust!

@Invest it Wisely,

I’m pretty sure there are tons of people making a few hundeds of thousands online and nobody knows about them. I know a few people like that for a fact 😉

@Fox,

nice! I have to NIN fan on my blog! this is by far the most inspiring music for me!

@Joe,

I have this highly leveraged financial structure because I am in a business where there is a huge lack of good employees and because I work in a very healthy business. It can sure in 3 to 6 months and I would look like an idiot, I give you that. However, I’m failry confident about my situation right now. The fact that I have a diversified source of income helps me a lot. 8K is definitely not a huge stack of money for an emergency fund but keep in mind that I had to use 10K since the beginning of year from my emergency fund!

@Simply Rich Life,

I’m actually questionning myself to see how I can do it. I love my job but thinking that I could make *potentially* twice my income if I work on my own is incredibly tempting. At the moment, I think I will take it slow with my kids.

Instead, I will start working harder on my company in ordrer to boost it up to a higher level. I thought that if I could work more hours (I currently work 10-15 hours/week only), I can generate more income and see if gonig full time is feasible.

I don’t want to go full time and slack my writers and VA’s so I need to push up my revenues first 🙂

I also really like Trent Reznor. NIN.! I stopped listening to it, because I didn’t want my kids to hear it. I miss it so.

It sounds like Financial Blogger just needs a little push to be out in 6 months. If I had a six month emergency plan I would break the glass and start it up now!

I would like to hear more details on your income growth plans Like I mentioned in the last post, I am better at the reducing and paying down side. I would like to soak up some of your knowledge on the income growth side.

When you have enough sites to keep you and the VAs busy it will make things easier since you’ll know what you’re giving up by staying in your job, so trying to “overwork” yourself now might be a good way to see if you can build up the company enough to jump. It can be hard to tell when you’re at that point though… it always seems like the “safe” option has one more reason to stay! I usually find it’s like that until I give up the safe option and discover that it really is much better on the other side.

Plus if you do find yourself staying at home with nothing to do that might lead to other options to generate a minimum income. When I look at this I always look at what I could start doing if I wasn’t working.

by: The Financial Blogger | September 19th, 2012 (12:36 pm)

@Derek!

nice! it seems that I have a whole crowd listening to NIN. Great minds think alike!

I’ll certainly hit the income side of my business on this blog, don’t worry about it! I’ll also start reporting my income from my new authority site (from the authority site duel). this will be interesting 😀

@Simply Rich Life,

after writing this articles, I gave some more thoughts and ended-up thinking that I’m better off starting to work 20-25 hours a week on my sites to see how much more I can make while keeping my day job. then, the choice will be quite easy to make!

I am more of a traditional e fund Guy but as long as you have a plan that you are 100% confident would get you enough to get by in any situation you have to do what works for you!

Sounds like you’ve got the itch Mike! Good luck! Spending more time on your site while working a day job is definitely the way to go. I did it for about three years, and I’ve seen a lot of improvement just from when I engineered my layoff. Not easy, but very doable.

Interesting post. You think you could create a few new blogs on a whim that could rake in money like this one does? It might take even longer than a few months to get readership and start making money off of them, although that is a good idea for a job if the situation did arise. I like your take on this whole dilemma though- never cutting back on the happiness of your family, but rather giving up personal luxuries. If you had to only survive for 30 days without income, it’d be possible. But in this economy, would it be that easy to find another position?

Great article. You had some very interesting points. The point that stood out to me was : “You have to make real money. It’s very noble to want to change the world or do something that matters. However the reality is that you still have to make real money at some time”.