The First Step & Goal for EVERYONE Who Wants True Freedom: Have a Financial Cushion of 12 Months Cash in the Bank
I was listening to the always excellent and entertaining “Not Investment Advice” podcast with special guest Ric Burton. Lots of great crypto stories there. But the biggest thing that caught my ear was this great discussion on finance. He got 10,000 ETH back when it was pennies in 2014. Despite the life changing money, he admitted it made him crazy and he did misspend a lot of it. But it was a game changer for him as it gave him a taste of exponential wealth.
“Everyone focuses on getting rich. How about just getting 12 months in the bank. So many people don’t have 12 months cash in the bank. So what do you know, when you have a crazy downmarket, or an abusive partner, or you have someone fire you? Having that cash that just sat there? The level of confidence? F — YOU. Just chill on the couch for 9 months, I could just be scratching my knees and I’d be absolutely fine. That’s why I always have cash on hand. You learn the lesson of how insane you go when you don’t have it. It Drives you Mad.”
Wow, I had to stop and process this. This is exactly what REKT me in 2020. Not having that extra cushion of liquidity, when my tenants stopped paying me & when some clients/partners could not pay the accounts receivables. This literally drove me mad.
Despite a fairly successful career, whatever you think your net worth is, if this net worth is NOT liquid, it’s NOT true net worth as many formerly successful people learned the hard way.
Having 12 months of liquid cash, not investments, but liquid cash, is critical. You have to be honest with yourself. Can you access this right away? Ie. Can you get that cash NOW.
Make sure you manage your runway very carefully.
Quoting Ric Burton again: “What’s Your runway. And you have to be honest with yourself. By runway, I don’t mean what assets you can sell. I mean how much you got in physical cash in a safe and debit card cash that could pay your expenses. Under twelve months I don’t think you can think as clearly as people who do have that.”
In my view, the biggest priority for everyone, especially if you are a salaried worker, PUT as much money aside. Whatever it takes, even if you have to scrimp and scrape and sacrifice for a short bit. (or even a year or two). Don’t spend stupidly if you can. I feel like throwing up everytime i think about ALL the stupid things i’ve wasted my money on. LITERALLY wasteful. But this is how you learn I guess, you learn the hard way. (And for any WOKE a–hole calling me privileged, I came to the USA 22 years ago with almost no money, literally slept on a friends couch for first few months and had less than 1.3k CANADIAN dollars aka pesos in my bank, with no credit in the 2nd most expensive city in America).
Coupling a 12 months runway of cash in the bank with a low cash burn lifestyle and as many diversified revenue streams as possible IS the only sustainable path to financial freedom. Financial freedom leads to true freedom. It’s taken me a LONG time and lots of pain to get here. But I do not do any work I don’t want to. I pick and choose who I partner with. I don’t do business with anyone I don’t respect or trust. I work wherever and whenever I want. I can say whatever I think without fear of being cancelled in the stupid & spoiled and spoiling West. I’m never going to be put in a position again where I have to tolerate stupidity, incompetence, dishonesty or Bull Sh-t.
I hope everyone gets to experience all of this themselves. But you have to earn it with personal responsibility, discipline and hard work (and a little bit of luck).