A new year’s resolution …

2 doorsThe New Year brings new choices … think of each choice or decision as two doors, and you have to choose one to step through.

Choose the wrong door and it seems you have changed the course of your life forever … but, will it change for the better or worse?

My son has finished high school and now has to choose from his top two college / course choices. What decision will he make?

Will it even matter?

I’m not stressed for him, even though he may be – facing such seemingly life-altering choices – because I remember that I made a few – and, really important – ‘wrong’ choices in my Life’s Journey, yet here I am today.

You see, I now believe that I would have arrived at roughly this point, no matter (within reason) what choices I would have made – or, decisions I would have taken – along the way …

… and, if you implement just one key change in your life, you will come to see that, too.

First, you need to understand that when you choose to go through Door A or Door B, as my son is now, that’s not the end!

There’s always another two doors behind Door A, and yet another two doors behind Door B

Door A

What are the correct choices to make, when presented with these two new doors? How will you know for sure?

The answer lies in knowing your overarching goal: if you know your Life’s Purpose, then you will have a compass that will guide you back to the right course, even if you choose Door A, when perhaps you later realize that you should have chosen Door B.

Door B

Life is really just a series of decisions and choices that we need to make – or, doors that we need to go through. Our choices can sometimes be difficult … as a result, our decisions can seem random or less than optimal. Sometimes, we make the out and out wrong choice.

But, when you have the compass that is your Life’s Purpose, then it will guide you back to the correct path through later and later choices.

With your Life’s Purpose to guide you, no matter whether you choose Door A or Door B, you can end up living your Life’s Purpose; your choices along the way may affect exactly how you get there and what you will be doing when you finally get there …

… but, it will be close enough.

For example, I now know that no matter what path I would have taken, I would ultimately be sitting here and writing this blog post for you.

How do I know this?

Simple. Because I would not have stopped choosing doors until I got here!

So, I’m not sweating my son’s choices … neither should he.

And, neither should you sweat the choices that you make this year.

May it be a good one!




A personal finance hieroglyph …

Screen Shot 2012-12-10 at 7.05.04 PMIf you left a review on Amazon for my new book, then your personal, signed copy is on it’s way!

[There’s still time: if you downloaded the Kindle version, please leave an honest review at Amazon and I will send you a personally signed, printed version as my way of saying ‘thanks’]

Inside the front cover, along with my ‘AJC’ signature, you will find a scribbly hieroglyph much like the one above …

… hopefully, it’s not too difficult to translate; it simply means:

Your Money is not your Life!

Too many of us live our lives as though money was its sole purpose: we work more than 1/3 of our life away; we constantly argue with our spouses about it; and, we spend much of the remaining time simply worrying about it.

I haven’t been immune; this was me until a critical date in 1998, when I discovered my life’s true purpose. Without getting all New Age’y on you, I’ll give you a hint: it had nothing to do with money.

My Life’s Purpose was all about how I really wanted to live.

But, I quickly discovered that money does come into it …

… but, only as a means to an end.

My first book (co-written with Debbie Dragon) shows you how to separate your money from your life; but, it doesn’t shy away from the subject of money. Because, as I discovered, money is the key enabler of a fulfilling life for many of us – not all – but, certainly for me.

Probably, for you, too.

So, the real purpose of my book is to help you find out how much money you need in order to be happy. Simple!

If you want to understand a little more about my journey and how I think about money and its real (subordinate) place in life, check out my video interview; it’s with Jaime Tardy at Eventual Millionaire:

Screen Shot 2012-12-14 at 3.41.21 PM

And, if you can, leave a comment to share how you think about your Life … and, your Money!


The only personal finance chart you need …

When I’m not blogging, you can often find me hanging around on Quora, the brilliant question and answer site …

… and, that’s where I found Chris Han’s personal finance chart (to the left).

Chris says:

  1. Wealth is the shaded area in the diagram.
  2. You can increase the shaded area by increasing the slope of the green line, or by decreasing the slope of the red line.
  3. Decreasing the slope of the red line becomes significantly harder over time as you grow accustomed to your lifestyle.

Chris is right, but he needs to add a 4th bullet-point, and it’s the same observation that I made when I used a similar chart in this post to explain how businesses should manage their finances for growth:

4. Notice that it is easier to grow Wealth dramatically by increasing the slope of the green Income line than it is to decrease the slope of the red Expense line.

So, let’s break this down …

Regular personal finance will tell you to concentrate on the red (expense) line.

These authors will say that frugality, paying yourself first, and debt reduction (thereby, reducing your interest expense) will increase your wealth through the combined effect of:

– Decreasing expenses, and

– Time.

Decreased expenses allow you to save more, and time allows the full effect of compounding.

Voila! 40 years to fortune!

But, I think that you give up too much for too little, if you follow their advice:

First of all, you give up too many of life’s little pleasures now for little-to-no-reward later (if you can’t afford the lattes now, you sure won’t be able to in retirement).

Next, you have to wait – hence work – for far too long.

Instead, you should focus on the line that they are missing: the green (income) line. If you take my advice, you will concentrate on:

– Increasing your income,

– Using that increased income to build up a larger investment pool, quicker,

– And, aim to get better returns (hence, even more income) through better – and, more leveraged (i.e. using even more debt) – investments

Of course, you can’t simply ignore expenses, but they are best kept in control through delayed gratification, which means:

– Waiting to make purchases; the more major, the longer you should wait, and

– Not increasing your lifestyle (hence expenses) as your income increases.

It is this combination – increased/reinvested Income and controlled/slow-growth Expenses – that can quickly create a huge wedge of Wealth.

This is a very useful chart … you will do well to remember it.

What if money did not matter?

In my new video interview with Jaime Tardy (EventualMillionaire.com) I talk a lot about finding your Life’s Purpose. Now, here is an even stronger argument for finding your Life’s Purpose before working out your financial plan …

Note how the philosopher, Alan Watts, suggests that if you do what you love, the money will follow!

Failing that, do what you need to, but only for a short period of time, so that you can put aside the money that you need in order to do what you want. That’s why I came up with my original ‘$5 million in 5 year’ target (that eventually became $7 million in 7 years, achieved) …

What would you do if money was no object?