Leaders of the Free World

On the the Third Day of Christmas I gave you a very quick and brief introduction to options trading, if there were any gaps or anything you didn’t understand feel free to chime in with a comment. Part 1 was an attempt to spark your interest; this post is to show you the mechanics of how it works. Again, there’ll be plenty of screenshots that enlarge when you click them, so this article is best viewed online.

Before we dive into the details, a small disclaimer: If option trading isn’t your thing or the details get a bit heavy, feel free to read the previous 7 days of Christmas! Now on to the practical, I’ll show you a process from start to finish, what you can expect if you use an online broker, a comparison between options and shares and a couple of case studies: one of a successful options trade, and one that wasn’t so successful! (Losses are referred to as ‘learning experiences’ or ‘donations to the market’)

In the last week of trading I’ve said goodbye to a trade that I had stuck with through thick and thin (it was like saying goodbye to an old friend!). The next day I had the joy of the $1,200 windfall and I was briefly acquainted with ‘ENER’ (Energy Conversion Devices Inc.) before it dropped, hit my pre-determined stop loss and my trade was cancelled.

The US Market

So let’s start from the start, obviously. I trade the US market as there are more stocks, and more importantly more stocks with options attached to them. (Options aren’t available on all stocks) Also, the US market has more participants (buyers and sellers) so there are more stocks that are liquid.

Finding a Profitable Stock/Company/Option

All publicly listed companies put out an earnings report every quarter, this data is made available online (and to you and me) via several online stock screeners. Some of the more popular ones are yahoo, MSN Money and more recently I’ve been experimenting with Finviz. Plenty of information is available on combinations of financial criteria to use in your choice of screener, it’s a whole other article to explain the definitions of each criteria I use but the image below is an example of a screen that I use.

There are plenty of other ways to identify a profitable opportunity: listen to the news, keep your eyes and ears open, a technical analysis of charts & data (too complicated to explain right now!) or any of the following websites;

Reviewing Profitable Opportunities

The selection criteria I use identify profitable companies that are under valued or have taken a down turn in the last 12 months. From the screener I’ll look into each company, see if there’s any relevant news, upcoming announcements or see if they have taken a drastic dive and a due to slowly return to their previous 52-week high.

Options versus Shares

As an example, today Google is trading at $596 a share. Now remember from the Third Day of Christmas that an option has three components, the strike price, expiry and premium. If you wanted to have the ‘option’ to buy Google for $600 up until June next year, you’d pay $44.20 for this option. For less than 10% of the cost of the share you have the right to buy Google at $600 up until June 2010. If Google went up to $1,000 you’d have the right to buy it for $600, realising $355.80 profit ($1000 – $600 – $43.50 = $355.80) Check out the options chain below to compare strike prices and premiums for yourself.

Winners are Grinners

I’ll use a profitable trades as an example. Once I’ve done my screen, confirmed the company is profitable, investigated the news or its past performance, any outstanding factors etc. I’ll select my combination of expiry month, premium and strike price. Upon placing an order and having it confirmed, I’ll then place 3 more contingent orders. One as a stop loss to sell all of my option contracts if the stock moves down (or the opposite direction I’ve anticipated), a break even price that gets my initial investment off the table & sells 1/3 of my contracts, a profit target that sells another 1/3 of my contracts and credits me with some profit and then finally 1/3 of my contracts are still ‘live’ and have the capacity to increase in value.

The image on the left is of ‘Astoria Financial’ (AF). When AF was trading at $9.40 I bought an option on AF to buy at $10 (strike price), this cost me a premium of $0.99 and lasts until April 2010 (expiry). Since then AF is trading at $11.86, the premium I purchased is worth $2.10. Let me repeat this, it’s important – the stock went up to $11.86 from $9.40 (26%), the option premium increased from 99 cents to $2.10 (111%). Ok so the stock went up by about ten percent, but by using the leverage of options, I doubled my money.

An Expensive Lesson

I’ve been playing with options for the past few months and virtual traded for a few months prior to that, so I’m still in a teething process myself and developing my own rules to trading, with the main goal to preserve my capital and manage risk.

As I mentioned before, I put a contingent order on a stock as a stop loss, if the stock/option goes belly up, I’ll be stopped out of the trade, take a small loss and move onto another stock. The leverage I’ve outlined above (26% versus 111%) also applies to a loss! I put one of my first stop losses on the stock, so while the stock didn’t reach my stop loss of 10% the option premium plummeted to nearly zero! I held onto this stock and luckily the price moved right back up, at this point I could place a new contingent stop on the option premium.

One day after this stop bounced back up to the tune of $850, the next day it dropped back down! As I had a stop loss on the premium I took only a small loss and exited the trade.

Try It Yourself

Now this post has been a bit heavy in detail but don’t let that scare you! The leverage of options and the opportunities out there are too many to ignore. Start small, get onto an online broker and start a virtual account for free and start experimenting. Obviously there’s a lot more to trading options that I’ve been able to fit in two posts on the site. Any questions, suggestions or any successful trades you’ve had? Leave a comment.

Related Articles

• The Third Day of Christmas – US Options Trading Part 1
• The Fourth Day of Christmas – Who’s In Control?
• The Fifth Day of Christmas – Stocking Fillers & Re-Gifting
• The Sixth Day of Christmas – Research & Development
• The Seventh Day of Christmas – A Festive Guest Post

On the Third Day of Christmas My True Love Gave to Me, $1,200 Credited Into My Bank Account Last Night!

I’m very excited to be able to write about this today! I initially had ‘US Stock Options Trading’ as the 6th Day of Christmas to keep you in suspense, but last night’s windfall was too much to contain!

One of my Free World income stream experiments is US Options Trading. It’s one of the online streams of income that doesn’t involve blogging, building a reputation, getting subscribers or trying to sell anything. The results are based on you and you alone and is one of the primary ‘location independent’ revenue opportunities.

So this isn’t going to be a get-rich-quick scheme, there’s nothing to sell you at the end, but the idea is to show you what I’ve been tinkering with on the options market and that I’ve been able to make some small (but significant %) profits. (And that you can too)

I’ll explain a bit about Options Trading (it’s not daunting, don’t worry) and then about how to find profitable stocks and what tools you can use to kick things into gear. There’ll be a few links at the end of sites you can check out, sign-up for free online brokers and do some ‘virtual’ trading on your own. (not real money, but it uses the real results from the stock market).

Things might get a bit confusing as we go along, but I made $1,200 last night without lifting a finger so it’s worth you getting a cup of tea, having a good read once or twice, following the links, and if anything doesn’t make sense then either drop a comment or send me an email. If you’re viewing this post via the email subscription or RSS feed, it’s probably better to head to the site as some of the images enlarge if you click on them.

Introduction to Stocks & Options

Late last year I attended a seminar on shares, options and CFD’s (ignore the last one). This piqued my interest so I read a few more books and found that most of the information was readily available for free in books, none of the theories were new or top secret and what wasn’t available in books was available online. I got hold of a good course of DVD’s and CD’s and studied away, eventually starting up a free account and experimenting, reading more books and found that the whole game was about learning, getting some experience, risk management and not putting all your money on the table at once.

It doesn’t matter if you don’t know anything about the stock market, stocks or shares and all that jazz. The words ‘company’, ‘shares’ & ‘stocks’ all represent the same thing, if Ford Motor Company came out tomorrow with the flying car then their share price/stocks/company would increase in value. If their flying car crashed when you drove it then their share price/stocks/company value would decrease.

What is an Option?

So anyway, what are these options I keep going on about? An ‘option’ is based on a stock. An option has three components; time value, a premium and a strike price. Confused much?

Time Value

Like car insurance, you buy an option to last for a set amount of time; one month, two months, six months, a year, it varies. (Consequently the more time you buy, the more it costs) You’re not actually buying the ’stock’, in essence you’re taking out a policy that will give you the ‘option’ of buying the stock at a set price further down the track.

Premium

This is the ‘premium’ you pay for the option, similar to the cost of your car insurance. The backbone of options is that the premium is more often than not only about 10% of the cost of buying the actual stock. (Think about it, $10 stock that you control for $1, if it goes up to $12, you’ve made 100%).

It’s worth jumping in here to give you the textbook definition of an option to help clear things up; “An option gives the buyer have the right, but not the obligation, to buy or sell the underlying stock at a specified price (strike price) until the 3rd Friday of their expiration month (Time Value).”

Strike Price

From above, the ‘strike price’ is the price at which the buyer can buy the stock for. So if you buy an option on a $10 stock for $1, and your stock moves to $15, you have the right to buy that stock at $10 (and here you’d have $5 profit as the stock has moved to $15).

Hopefully you’ve just had a light bulb moment from the above paragraph and probably asked as I did “surely that’s not possible?” I probably haven’t done the greatest job at explaining all of this so head here when you’ve got the chance to read up on it.

Sales Pitch

So if you do a few google searches or even attend a seminar or two, you’ll hear/read a few of those gimmicky sales pitch catch cries to reel you in. Here’s a few I’ve put together that ARE true and should make you stand up and want to get into this for yourself;

• Options Trading will take a whopping 15 minutes of your time per day
• You can double or triple your money rather easily
• You can profit hugely from stock going down
• You can make money if stock goes sideways (neither up or down)
• You don’t have to know which way the stock is going to make money

Ok that’s the gimmicky sales pitch crap out of the way, and I’m not even trying to sell you anything!

The whole options trading thing is full of strategies, you can; buy, sell, make money on stock going down, all sorts of stuff, but to ease you into it I’ll work through some real examples that I’ve used myself.

If you missed the two screen shots within this post scroll back up and check them out. The first screenshot is of the daily account email I receive which outlines my overall position and the second screenshot is when one of my orders gets filled and I make a profit! If you want to learn some more right away you can google ‘options trading’ or go to one of the many online brokers and sign up for a virtual trading account, I’ve used optionsxpress and they were fine.

In US Options Trading – Part 2 I’ll show you a behind-the-scene’s look at how I find trades (companies), what to do with them once you’ve found them, and how to place trades.

Receive the Twelve Days of Christmas (and Part 2 of Options Trading) delivered directly to your inbox here. If you’ve got twitter it’d be great if you would retweet the article.  

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Hip hip hooray, we’ve survived the worst of the Global Financial Crisis… Wait, what? What crisis? Oh that’s right, consumers in too much debt, over their heads, and banks giving it to them. Or was it the media talking about a ‘looming’ crisis, so we stopped spending our money and guess what happened? – A crisis. Make a prediction, instil fear, sit back and watch it pan out, confirm prediction, rinse, repeat.

How does this help you and me and can we learn from it? So we’ve had the GFC, now I’m in the middle of a QLC – Quarter Life Crisis for those of you wondering. I think we can learn from big business and the state of the working world and embark on our own individual QLC, instead of sitting around and waiting for it to happen.

Are you stuck in a job you don’t particularly like? Your finances a bit out of control? Heading down a road that doesn’t look too appealing? You can stop it all and act now, or wait until you’re 35, overweight, sitting on your couch with your second husband/wife and three ‘miracles of life’ running around the house screaming their heads off.

Your own personal business (you) has assets, an income stream, has a research & development department (potentially) and you could (should) also have a business plan, your future goals.

Numbers Game

Let’s say you’re successful, worked hard, took time out to travel in between and managed to retire at 55. Now at 55, you can start enjoying yourself…

Sorry to spoil the party, but you;

• Worked for about 70,000 hours
• Enjoyed getting out of bed 1,700 times on a Monday morning
• Spent almost 15,000 hours commuting in peak hour traffic

And you know those annoying co-workers who gave you the shits? You’ve had to say hello to them every morning – about 8,000 times.

You must have REALLY enjoyed your job.

Hopefully, you’re a few years away from your own personal QLC, so you can ready yourself and be prepared.

The Alternative?

Let’s say you don’t mind a nice holiday, you could spend the next 6 months saving your butt off for your one month holiday, but why not spend the next 6 months setting up a location independent job/income stream and travel indefinitely? Sure it’s nice to go to Bali for a week because everything is SO cheap, but what if you could live wherever you wanted, spend rupiah/pesos/thai baht and continue to earn dollars or pounds?

You don’t know what you don’t know…

If you spent 20 minutes of your lunch break researching, everyday for the next year, that’s the equivalent of 80 hours full time study, two whole weeks! Imagine what you could learn about in two weeks? Here’s the kicker, and you might have to read this slowly for it to hit you, you don’t know what you don’t know. The ultimate chicken/egg conundrum.

Here’s a shortlist of what you could learn in two weeks;

• How to profit unbelievably from a company’s shares that plummet downwards!
• How to make money from a website/blog
• How to reduce your tax rate to around 12-16%
• How to make some pocket money easily using Google
• How to develop a website from scratch in an afternoon!
• How to control $27,000 worth of stock for $1,500.
• How to live a location independent lifestyle, turning your current employment situation into one of no fixed address…

The list could go on for a long while yet, but the idea is to inspire you to take some action! You really ‘don’t’ know what you don’t know, you should have been taught along the way, maybe at a… ‘school’? But hey, if you were taught how to make money without working, then you wouldn’t go to work, follow the ‘normal’ path or be under some sort of …. ‘control’? There’s something to think about! (And too much of an issue to delve into here!)

28 Days in the Free World

If and when you decide to ‘have a go’ and step out of employment, take a chance on yourself and see what it’s all about, you don’t have to tell the world! Or launch a website and tell everyone what you think of the working world! Unfortunately, or fortunately, I did?…

I could tell you that the free world outside of employment is all sunshine and lollipops, it will be soon, but establishing things does take some initial time & effort and in spite of everything I’ve read that clearly says “don’t quit your job first”, I chose to ignore that!

You know that feeling you get when you resign from one job, and are yet to accept another? Complete freedom, like a childhood summer holiday from school, 3 months off, sunshine, sleeping in… Well that’s never going to happen again! Once you make a commitment to pay yourself for a few months, now who are you ripping off if you sit around and waste time during the day, no more paid facebook unfortunately…

The first 28 days in the free world has been an eye opener, but very productive. There’s no longer a 5 day working week. Life, work, play, socialising and exercise, everything rolls into one….

Here are the highlights of the first month;

• ‘Finally’ figured out how to get free $ transfers to the US (options trading)
• Made $3,280 from a $1,200 investment (Very excited about the prospects of this!)
• Took some cool photos of my rather annoying nieces¹
• ‘Found’ Locationindependent.com (thanks Wayde!)
• Have had A LOT more time to work on the software development side project (coming soon)
• Got asked to write a guest post for website-in-a-weekend.net (about being a complete beginner but learning how to develop websites)
• Setup a small business for some summer pocket money
• Made my first ‘premium’ website!

All of the above was MUCH better than being stuck at work. This next month will be more of the same, possibly setup a photography side project¹, toy around with a few other websites, write a few more articles for the free world, who knows? But I do know that I won’t dread getting up on a Monday or have to commute in peak hour traffic.

If you’ve got a spare minute, head to Location Independent, they’ve got a truck load of resources and articles to read through. Read the last paragraph of ‘one idea’ and take a look at any of the free resources there.

I’d like to hear from you. What are you working on? What do you want to work on? Is work killing all of your motivation? Want anymore information or have you got any suggestions for article topics? Feel free to leave a comment, share this with your friends or send me an email. I’ve read more than my share of books & start-up guides, there’s a fair chance I’ll be able to help if you’ve got an idea you want to launch!

What else can you do? I’m going to focus my upcoming articles on a bit more in-depth ‘how to’ get involved in some of the things i’ve mentioned previously in this article, subscribe to the site (below) and you’ll receive the latest articles in your email.

And keep in mind, if you don’t initiate your own Quarter Life Crisis, you’ve got 1,700 Monday mornings ahead of you!

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You’ve either stumbled across this article from the archives or been directed from [Your Name Here] Inc. In this article we’re going to touch on budgeting and setting up an automated banking system. This is one of my less cynical rants and is more of a ‘helpful guide’, who would have thought?!

Ever since as early as late high school, you got a job and earned some money, passed your driving exam and finally had the freedom you’ve craved! Freedom enough to go out and try and get the newest hottest car you’d be allowed a personal loan for.

So there you have it, you were free from the time you passed your driving exam to the time you ‘bought’ your first car (with a hefty personal loan). If you didn’t follow the crowd, and bought rust buckets to drive around for your first couple of years of driving (or had a silver spoon from your parents) then you managed to avoid the trap.

What trap? You knew what you were getting yourself into. You learned when you were about 8 years old and your science teacher taught you about the water cycle; Evaporation, Condensation, Precipitation, Collection, repeat. A basic example of a repetitive cycle.

And so it begins…

What does any of this have to do with budgeting, money and getting caught in the rat race? I found that nearly everyone I knew had a hefty personal loan on a car, to drive themselves to work, to get their pay check to pay their loan on the car, which they needed to drive themselves to work, they needed to go to work to pay their loan, for the car, for work…. that was annoying. See what I’m getting at here? This mentality and way of thinking is why the world is screwed into obscene amounts of debt. It’s ok to NOT keep up with the Jones’s, your TV is fine as it is, and you don’t need a new flat screen. Imagine if everyone lived within their means, focused on what was really important and enjoyed the simpler things in life?

The Budget

Before you cringe at the term ‘budget’, it’s your money, no one is making you do this, but you’ll be surprised what you spend. Once you write down what you ‘think’ you spend your money on, you’ll wonder where the rest goes? Start by listing your expenses you’re aware of, such as;

• Mortgage Repayments
• Household Bills (Gas, electricity, water, Telephone, Council Rates etc.)
• Insurance (Car, Home, Boat, Life etc.)
• Grocery Bills
• Gas/Petrol Bills
• School Fees/Tuition
• Birthdays & Christmas Presents

As you can see from the above list, you can include whatever you like; you can go to the extremes of haircuts, toiletries, clothing etc. However much detail you include, it will give us a place to start.

In your weekly budget calculate all of your expenses in the same frequency as when you get paid.

Example:             Car Insurance = $500 per year, if you get paid weekly, $500 / 52 weeks/year = $9.60

In the example above you have to reserve $9.60 per week for your car insurance. We’ll apply this theory to the entire budget.

In my personal weekly budget I have the following categories; Credits (Gross Income), Bills (Automated direct debits), Expenses (Fuel, transport, Food), Spends (My weekly income), Savings, Trust (I put aside a few dollar a week for my younger nieces).

Now the key to all of this to make it work is to align your banking system with your budget. This isn’t hard and anyone can do it, it will however cause some people a bit of temporary pain to have to actually visit their bank! (Check the place out, chat to the tellers and steal some pens; it’s what you pay fees for.)

The Joys of Automated Banking

All banks these days allow you to set up multiple ‘sub-accounts’ within your bank account. You can choose where your ‘gross income’ goes into, and you can set up sub-accounts for your bills, spending, expenses etc. Most banks will even let you rename your accounts, so instead of having account no. 228374 you’ll be able to have your ‘bills’ account. Below is an example of how I have my accounts structured;

Automated Banking Structure

My gross income goes into my ‘credits’ account on a Wednesday afternoon from my employer (hopefully not for much longer!), on a Thursday morning I get to witness the glory of automation, and the money is distributed (you can set up automatic transfers) to my sub-accounts, giving me my weekly pocket money to spend, knowing that I’ve already put all my money aside for bills, expenses and savings. Going even further, to complete the ‘system’, a debit card is linked to the ‘spends account’ so your ATM card is linked to your pocket money account. You know that you have $150 (you define the amount) to spend for that week and once you’ve spent it, you’re done. If you ‘borrow’ from your savings account or bills accounts, you’re going to come up short at some point. This system is 100% better than seeing your ‘gross income’ in your account, going out with your mates on a Friday night, getting drunk and withdrawing $1000 to put on a bar tab and go to the casino!

Once you have your automated system up and running, after a while you’ll see your savings balance swell, be able to pay your bills comfortably and enjoy yourself spending your weekly pocket money. But hopefully at some point you’ll think to yourself, is this it? You’re saving $100 per week, that’s $5,000 per year, which if you work for the next 40 years is $200,000. Congratulations! That’s no mean feat, not many people would have the discipline. But surely this will make you realise that after 40 years you’ll only have saved enough money to by a modest home in the suburbs?

Is working hard and saving your pennies the answer?

Believe it or not you are your own little company, a one man incorporated. You have a cash flow, expenditure, company shares (grand total of one, you own the lot!) and some of you out there even have company assets (your house, savings, car etc.)

Here’s the kicker, your company is probably solely focused on staying afloat, cash flow only, and the vast majority of us aren’t doing a very good job and are cash flow negative. Luckily for us we don’t have to report to a board of directors or give an earnings report and pay dividends to share holders. So what? What I’m getting at here is for you to be a success, the more you look at yourself like your own little business the easier it is to break things down and prosper. How’s your research and development department ticking along? None existent? How’s your balance sheet? Are you always battling to keep your head above water?

Your Little Company

Once I’ve managed to convince you that you are the sole share holder in your company we’ll look at how we can improve things within your organisation. Here’s a look at what we’ll talk about;

• Expenditure - Household Bills, Groceries, Insurance, Social Money
• Balance Sheet - Your personal budget
• Company Assets - Your house, car, investment properties, shares etc.
• R & D - Your education, learning, seminars, books
• Business Plan - Personal Goals, where do you want to be in 5 years time?
• Your Balance Sheet

Before we can dive into building up your assets, freeing your time (employing another means of income) and looking ahead to the future, you have to start with your current situation – your weekly balance sheet.

Currently; most people earn their weekly wage, spend away at will and are then struggling to make ends meet when the electricity/phone/gas bill arrives, feel the pinch at Christmas and birthday time and live from pay to pay. You receive your pay, spend away, struggle with bills and expenses and then think about saving what’s left, but hey, you’ve worked hard so you can always save a bit next week?

Your Current Spending Pattern

Now that we’re going to look at things as a company things will be a little bit different. A company forecasts a yearly budget for all of their anticipated expenses. A company knows how much their employees annual salaries are (your spending money) and they know their profit targets for the year (your savings). Throughout the year things fall into place as per the business plan, and adjustments can be made along the way.

The key to this system is setting a realistic budget. I don’t care how much you want to spend on cigarettes, beers and going to restaurants, knock yourself out, but all of these luxuries fall under the ‘spending/income’ category of your company budget. Here we’ll look into a budget and later at an automated transaction system.

Your New Cash-Flow Structure

What? That’s not right, I earn $1000 a week and I’m only allowed to spend $200?! That’s all you can afford to spend or you’ll be broke! In a company structure you’ve allocated some of your money for your bills & expenses, you’ve put some money to the side to grow, you’ve bought a book or two and maybe attended a seminar (education is optional, but recommended) and then finally with the remaining balance, you’ve paid yourself some spending money.

I’ve set this up for several of my friends and colleagues, it’s not rocket science. I recently read a ‘get-rich-quick’ style book that was listed as a best seller on Amazon.com. I couldn’t believe my eyes when the focus of his book was budgeting and saving a bit of money! Are you serious? Surely the general population isn’t that thick. Ridiculous, how big can that book be? “Don’t spend more than you earn, also save a bit of money, THE END.”

What else are you working for? So you can keep working? Forever? Wake-up! Sure, you might only be able to put aside $20, $50, $100 per week, but you can build on that. To get ahead financially, here’s a crazy idea; don’t spend more than your earn?! Once you see where your money is going, realise how much you waste on fast food, junk and getting drunk, you’ll soon tighten up the budget and pour more into your savings. Once your savings account looks impressive, then you move onto investments, alternative income streams and making your savings work for you.

Yeah, and?…

Once you’ve devoured this article and possibly followed onto read about budgeting in the water cycle you can then start looking at your ‘company’ assets (investments, real estate) and Research and Development. Some of you might be a bit confused by R & D, but don’t you think it’s a bit odd how you were never taught about managing your finances, setting up tax structures and trading stock options? There’s never a better time to invest in yourself and learn something new.

So now we’ve got our company structure, hopefully you’ve seen the light and realise that you’ll no longer be surprised by a gas bill or mortgage repayment.

Millionaire Lifestyle

If only I could win lotto. The catch cry of millions, the catch cry of everyone really? I know I wouldn’t scoff at someone giving me a few million dollars. What would you do with a few millions bucks? Big house, car, holidays and maybe a new plasma TV? You’re chasing the ‘life’ of a millionaire, not to be a millionaire. Most of you would get bored not working, which disgusts me and motivates me to try and change your mind.

Here’s an exercise you can do right now; what’s your ideal lifestyle? You might be stuck in a rut at work, bills mounting, living in a dive, but just for a minute take some time to think about what you want. Not a million dollars, quantifiable things, real things.

I’ll give you a few of mine, for me to be ridiculously happy and even more smug than I am now; I want to be living in an apartment in continental Europe, put more time into photography, zooming from city to city on a nice old motorbike and enjoying the delights of Belgian beer with my girlfriend.

The Facts

Now here’s the next part, put some dollar figures to the running costs of your lifestyle; let’s have a look at mine. There’s the odd ‘purchases’ (like the motorbike) but the rest is a general cost of living. I worked out that my ideal lifestyle would cost around $250 per day. So now I’ve got a target and a goal to strive for. If I can generate $250 per day without being employed then as far as I’m concerned, I can live my dream lifestyle.

So let’s cut to the chase, what is financial abundance? I’ll spare you a fair bit of money and time in attending ‘wealth building’ seminars, motivational speaker conferences and trawling the internet for hours on end.

I’m the guy that’s spent thousands of dollars listening to ‘share trading’ gurus tell me that it’s never been a better time to get into the market! It only took me one seminar to realize the good money is in selling tickets to a seminar! (On a sidenote, educate yourself as much as you can)

Having a financially abundant mentality is believing that you’re not working for money, you’re there because you enjoy your job. If you want money you’ve got other resources & income streams up your sleeve. Multiple sources of income include; property, stock market, online marketing, businesses etc.

Too often I’ve had the following conversation with a co-worker;

Me –                                     *usually ranting on about money/life/work etc…*

Co-worker -                        “Nah I’m pretty comfortable with where I’m at financially”

Me –                                     “So what’d you get out of bed this morning for? Wouldn’t rather a sleep in?”

Co-worker -                        “Well yeah but there’s bills to pay, you know”

Sometimes, more often than not, the light bulb goes off at this point and they realise what I’m on about. If not then I’m usually wasting my time. People become either complacent or conditioned to what they are used to, don’t forget to dream and look at the bigger picture.

Getting Ahead of the Pack

Once you dive into the rabbit hole, good luck coming out and returning to the working world. As a bit of a background; I thought I was years ahead of the game – I saved all of my pennies from my first job and brought a rental apartment at age 18, went to university, brought my second house at 23 and now I’m ‘stuck’ (if you believe the masses) with half a million dollars of property debt and a 25 year mortgage hanging over my head. And all this by trying to ‘get ahead’ of the pack!

The attempted solution – Over the past couple of years I’ve tried the lot; Google adwords, affiliate marketing, online clickbank sales, selling an online eBook, share trading etc.  And I’m sad to say everything failed. I can honestly say that each of these schemes failed, not because I didn’t know what I was doing or flew blindly into a new ‘scheme’, the number one reason was that I just didn’t have the time. I was too busy with ‘work’ (for someone else) and I didn’t have the time to develop these other sources of income. Now that I’ve made the jump and landed in the free world I’m going to be focusing all of my efforts on trying something new and putting a lot more time into my own ‘research and development’ department.

The solution – I’m currently involved in month 7 of a lengthy project. A friend and I who were both working in the backward industry I mentioned in ‘The work life balance’ realised our industry was run by the old school and that the implementation of a bit of software would increase efficiency and simplify the whole operation. Not to bore you with the details, but we’ve invested some money and over the past year have been involved in; designing a new software product from the ground up, drafting a patent specification, dealing with overseas subcontractors, graphic design, company branding, business plans and website design. In the near future we’ll become heavily involved in importing, packaging, logistics and sales. It makes you laugh just a bit when the bank manager looks across the table at two scruffy guys and says “And sorry what are your current positions within the company?” to which we both look at each other a bit bewildered and answer “Uhh.. Company Directors?” Our friends look at us both a bit strangely, usually asking ….’how’. Sure we didn’t know how to set up a company, but I knew how to pick up a phone book and book an appointment with an accountant to ask him?

So there you have it, a director of a company. Once you know what’s involved and how easy it is to setup, you’ll be less impressed the next time you meet a ‘company director’.

Your Next Move

I can’t recommend this highly enough, in your next lunch break head to Steve Pavlina’s website and trawl through some of his articles. It’s from Steve that I’m going to ‘borrow’ his advice; with all of the get-rich-quick schemes and investments you can make, your best bet is yourself. Invest some money in yourself. If you’re confused by this read on.

“Pay” yourself $500 per week (possibly out of your savings) and now you’ve got 8 hours a day to delve heavily into research and development. Buy up on eBooks, there’s also plenty of free resources online & in libraries. If you can’t make the big jump, as some of us will have financial commitments we won’t be able to avoid, have a look at what you’re currently doing. Look around, look above you, who are you paying for; your boss, his boss, the admin girl, the payroll lady, the tax man, your superannuation (401k) fund? Everyone is taking a cut out of what you’re earning as a ‘total’ figure. Once everyone has been paid by your potential earnings, then they’ll pay you your $26 per hour. Feeling ripped off yet? Try and apply your skills and the value you add directly to your customer.

If you try and fail, what’s the worst that can happen? You’ll be back at work in another few months, doing the same job, reading my next article?

You’ve got nothing to lose and everything to gain! You have plenty of options; no one is going do this for you!