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”….
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…
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!!
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.
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…
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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