Growing one’s money

I am gonna take a step back from ‘empty vessels’ and move onto something else that I would like to blog about.

Yes. Growing one’s money. So many ways. Easily said, but yet very hard to achieve.  First of all, one needs a regular income. Let’s face it. Unless you hit the lottery or someone willed you a huge sum, chances are you were not born with half a million bucks in your account. So you need that, somehow. Technically the 2 ways to start things off is to either increase your income, and/or decrease your expenses.

I was with Jay and some other familiar faces last weekend, playing a board game with a slight twist. It has a game master and follows the rich dad poor dad concepts. The goal of the game is to simulate actual day to day living scenarios relating to income and expenditure. Basically, the aim of the player is to get out of the rat race. How does one achieve it? It’s a really good game and I think everyone should have a go at it. Every player stays within the ‘wheel’, where one gets regular income, has opportunities to buy stocks/property etc, and the opportunity to sell them. No one knows what the next card is and that’s life. Multiple scenarios with many twists and turns along the way. How to get out of the rat race? When passive income, exceeds your expenses. Notice I said passive income, and not just pure income. Once a player has achieved it, they move onto stage 2 of the game. It was obvious that in the 3 hours we played the game, despite all the strategies we had, none of us had passive income exceeding the expenses. Expenses somehow rise as we went on (through no fault of ours and it is just the way life pokes us) and in some players, their passive income was negative! How so? For example, when the property one bought has a mortgage repayment that exceeds rental income. One could argue the property prices should increase. Perhaps, but this game simulates a monthly pay check cycle. As I always say, a gain is not a gain till realised. You could be sitting on 100% profit on your property’s valuation but till it is sold delivered and signed, it is not taken into account.

We ended the game at around 6 but we sat around and chatted till past 1am! Thanks Fred and his wife for the hospitality! We lamented over the latest HDB rules, and mortgage rules in general and how it has impacted our plans, created new strategies, and generally talking about anything and everything under the sky… including aliens! I quipped “What if, in this world, we are the real aliens?”

I digress.

People around me always ask, what will I do if I have $xxx.  I have a friend who gives us all a treat when he hits a milestone in profits. Let me give everyone a little insight to what’s in my head. Very simply. Say I have 80 grand. Say I need a car. Should I just buy the car in cash? Or in installments? For me, if I could make the 80k work hard enough, double its value, I would be able to keep my capital of 80k, and have that 80k for the car which literally is ‘free’! Sure there is no such thing as free when you factor in opportunity costs etc (which the game also took into account by the way) but you know what I mean. I had 80k, I bought an 80k car and I still have my 80k. Very simple way of looking at it. I know this friend of mine would likely do something similar, but instead of an 80k car he would get an 8K bike instead (10% of 80k).. *grin*

In short, my way of controlling expenses, is to use profits to pay for them, leaving my monthly and passive income base to accumulate. This of course is a very simplistic view and is ideal in an.. well.. ideal world (which we do not live in) only. I have other variables added into the ‘equation’ but in the gist that’s what it is.

Remember I said, to grow one’s money ,we need to have that money first. If I don’t have any money, how do I grow anything? Gambling, speculating etc, aside.

This friend of mine wrote “ Do not shortchange ourselves.  If we are worth more than $2k a month, find people who are willing to pay us more. ” He doesn’t have any idea how close this is to what that has been in my head for a while now. I was out for drinks with colleagues and ex colleagues. Without going into details, let’s just say ever since the boss has left, the team has seen a very high attrition rate. Let me give you another hint. Prior to his departure, some were actually asking if it was possible to be retrenched. When staff ask if they can be retrenched, what does it tell you?

I am taking my ex boss and colleagues’ advice very seriously. If the higher management isn’t serious about their staff, we as the dudes on the ground just need to look out for ourselves.  I won’t divulge too much details but let’s just say, I have my plans, and my strategies. So to my dear friend, your post and that line of yours, couldn’t have come at a better time.

I have my goals and plans when it comes to passive income.  If there’s anything I have learnt from the game, as long as your passive income is above one’s expense, you’re out of the rat race. You’ll then work to keep that going, and finally, growing one’s money is a lot easier to achieve.

My take? To break out of the rat race, one has to break out of his/hers comfort zone. Break away from baselines. Break away from asking ‘why’. Instead, ask ‘why not?’.

Trust me when I say, comfort zone wasn’t the main reason why I am still where I am. I stayed, for people. Naturally when people leave, the one chain that held everything together breaks. What results, is a chain reaction (no pun intended). Unlike some of my colleagues my actual work place is not in a ‘comfort zone’ and there is no real reason to hold me back anymore. What I am looking out for is the right opportunity. With the right people. Fortunately I have some very good people around, seniors who appreciate me for who I am. Seniors who could either link me up with the right people in the areas I want to get into, or seniors who are looking to rebuild a team. Either way, I have some tasks that I would like to complete first.. thereafter I am ready to break away and make my first true step to being out of the rat race.

Are you still in the rat race? If so, what do you intend to do about it? If you have escaped from the wheel, congratulations!! Any advice for me?

PS: Jay will be on reservice although he might have a post or two when he is back at night.  The last trade I entered was Genting SG on Wednesday. Didn’t get anymore on Thurs and with the surge on Friday I decided not to add onto my positions as I still have others. I like the idea of the first trading day being nice and green, although I am still looking at the overall volume and the price movement from the heavyweights.