The Six Best Personal Finance Lessons for Someone Still Driving a Worn 2008 Toyota Yaris by Michael Lynn | Aug 2022

The tin shed on my four wheels symbolizes my entire financial strategy…

The author’s own image – can you feel my joy?

Cars are paid for with your time. Why trade time for a pile of metal that depreciates faster than the anchor goes to sea? — Tim Denning

I think happy My ’14 squeaks every time I turn the engine on.

I bought this spirit for $4,000 in 2018, and the screeching sound of my misfired timing belt (I’ll fix it) is a daily reminder of the bulletproof financial strategy I’ve built.

While most people my age overuse big houses they can’t afford (or need) and buy brand new cars to impress people they don’t like, I now make myself look poor to create a wealthy financial future.

That’s why.

Cumulative Assets > Cumulative Liabilities.

The tin shed on my four wheels symbolizes my entire financial strategy:

Invest in assets (and) reduce my liabilities.

For my net worth, I could easily afford a better car. But I choose to use any extra cash to invest the asset rather than another liability for cruise control.

Why accumulate assets? Well, because:

  • Assets put money in my pocket. Liabilities will take money out of my pocket.
  • Assets appreciate in value over time. Liabilities depreciate over time.
  • Assets make your life easier. Debt makes your life harder.

Common examples of assets:

  • Stocks, Bonds, Index Funds
  • Cryptocurrencies such as Bitcoin or Ethereum
  • leasing investment
  • Invest in online courses, books, podcasts, coaching

Common examples of liabilities:

  • the car you drive
  • the house you live in
  • most material possessions
resource: Accent investing via Twitter

My commitment to building assets means I never have to worry about retirement. My boring and lazy strategy also means that work will become optional until I’m 50.

The psychological freedom that this financial security provides means I can take more risks in my 20s and 30s.

I’ve started my own six figure consulting business, hired a subcontractor to help build the digital business, and I plan to create a suite of digital assets in the near future (more on that below).

Lesson 1: Spend your life building assets, time is your friend. Spend your life accumulating debt, time is your enemy. As my grandmother used to say, make more friends than enemies.

Photo by Ishan @seefromthesky on Unsplash

Most people don’t understand how to make money with Wifi

Most people are not taking advantage of an uncommon asset class: digital businesses and assets.

These include creating ebooks, podcasts, templates, checklists, newsletters and social media accounts that can be sold on the internet.

As Navy Ravikant put it:

“Code and media are unlicensed leverage. They are the chips behind the new rich. You can create software and media that work for you while you sleep.”

Digital assets are great because they:

  • Yes not entitled to. You can use the Internet to build a portfolio of digital assets. There are no gatekeepers and few barriers to entry.
  • one comes limited downside (i.e. only time) But unlimited upside (i.e. go viral). You can’t sell negative ebooks or get less than 0 listeners on your podcast. But it only takes one piece of content to go viral and change your life.
  • invisible and mobile. Create and sell digital assets anonymously while you sit on the beach. They’re low-cost, stock-free, and don’t require your physical presence.
  • Unlimited leverage and unlimited monetization. Digital assets can be created once for $0 and replicated a trillion times. Create once, cut many times. A blog post can be the script of a YouTube video, a Twitter thread, or compiled into an eBook.
navy marauder via twitter

Using digital assets, there is no guarantee that you will make money. But there is no limit to how much you can earn.

Don’t you think you can do it? Excellent…

If you’re composing emails, creating PowerPoint presentations, or recording Zoom meetings in your 9-to-5 job, you’re a digital asset creator. Congratulations.

Now, instead of making them for your employer, start making them for yourself.

Lesson 2: If you are not using the Internet to build a portfolio of digital assets (to trade financial assets), you are living in the Stone Age.

Maximize this value with your money, not your ego.

Instant gratification is your personal financial cancer.

Let it go and it will infect every part of your life. Not just your bank account. You will never accumulate wealth unless you learn the skill of delayed ego gratification.

I might drive a garbage truck, but it gives me financial options. Since I don’t have car repayments, I can use the extra money to start an online business or invest in assets.

Morgan Housel put it best in his book The Psychology of Money:

Wealth is created by suppressing what you can buy today in order to have more things and more choices in the future.

Photo by Morgan Hauser on Unsplash

Most people my age who drive great cars have become slaves to debt. Or, if repayments are manageable, they’ll be constantly concerned about where their car is parked, or if it’s going to be damaged or stolen.

I value my mental freedom too much to worry about expensive four-wheeled tin cans.

please remember:

“Every purchase you make today reduces your options in the future.”

– (resource).

Lesson 3: Use your money to buy your freedom, not beat your ego.

Be a rational Randy, not a rational robot.

In my 20s, I was able to invest in riskier products. But the thought of my investments peaking and dropping overnight gives me night terrors.

I choose to invest in vanguard index funds that are too safe for the long term. Despite what the world is doing, I rarely check performance and dollar cost averages into selected indices.

Rationally, this doesn’t make any sense. I should invest in riskier asset classes. If it doesn’t go well, I have time to recover. But I don’t want to be 100% rational all the time financially.

The Simpsons GIF via GIPHY

At the end of the day, I develop a personal finance strategy to support the lifestyle I want, not the other way around.

reasonable? maybe not.

reasonable? really.

Lesson 4: Develop investment strategies to improve lives, not destroy them. The best financial strategies are those that put you to sleep at night.

Focus on making more money, not cutting expenses.

A year later, I decided to drastically reduce my expenses.

I live on about $25,000 a year, and after a lot of hard work and sacrifice, I found a way to take a 10% cut. I stopped buying coffee and reduced the amount I eat out. I saved about $2,500 that year. good.

In 2021, I decided to focus on monetizing podcasts and investing in online writing first to make more money. I increased my $105,000 income to $140,000. I made an extra $35,000 last year.

This simple mindset shift tells me that cutting down on a $5 latte or mashed avocado on the weekends isn’t going to make me rich.

But making more money will. Plus the quality of my lifestyle doesn’t suffer.

Lesson 5: Rapidly cutting spending leads to diminishing returns. Manage your expenses. But spend most of your time and energy making more money.

Money is attracted to ownership.

“You don’t get rich by renting out your time. You have to own equity – part of a business – to be financially free” – navy marauder

When I was a 9- to 5-year-old employee, I had to beg, borrow and steal to get 10% of my annual salary. Once I got it, I felt like they were doing me a big favor.

“work= JUster Version Secondroke” – Robert Kiyosaki

My workload has doubled and my responsibilities have increased. When you think about that, I’m losing money.

By 2022, a 10% rate hike will barely cover the rise in inflation and interest rates.

Now that I own my own business, I increased my client rate by 15% and gave myself a 20% raise quarter.

If your financial trajectory can be dictated by an organization or a bad boss, you will never achieve financial freedom.

Source: Tim Stoddart Twitter

Lesson 6: Wealth is built through ownership, not rent. Become a money magnet by building equity and ownership in your business.

In summary

Don’t let anyone tell you money doesn’t matter. because it is.

But don’t let money rule your life either.

As Robert Kiyosaki said, “The love of money is the root of all evil. Lack of money is the root of all evil.”

Most people fail to accumulate wealth because they do not understand the rules of the game. Imagine playing basketball without knowing what a double dribble is.

Once you know the rules of the game, you have better odds of winning. Once you have won the game, you can choose to stop the game.

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