As I've crossed through the various stages of transforming myself into a self-made success, I've been challenged by a few people in my life to live my life differently. As one of my favorite radio hosts, Dave Ramsey, is fond of saying: "If you live like no one else, later you can live like no one else."
That's easier said than done. Whether it's driving a clunker, or couch surfing instead of renting your own place, the necessities of making the entrepreneur lifestyle work can look like failure from the outside. But the bridge to success is built with sacrifice; personal and financial.
Getting That Killer Car
When my friends graduated college and got their first jobs, many of them splurged on a new car. After all, the majority of car dealerships love to throw out special incentives for recent college grads. And who doesn't love that new car smell?
But I quickly remembered that a car was a consumption item. As reported in one of those clever infographics, "Just by driving the car for the first time as a new owner, it decreases in value by 11%." Ouch! I want my investments to add at least 11% to my net worth every year. A car isn't an investment, and as an entrepreneur (especially in the early stages), consumption has to be minimized at every turn.
But what about impressing clients and making a killer first impression?
A car that is owned is a consumption item. Or, if it's for business, it needs to be the most cost-effective solution you can find to solve your problem. So, in my case, I ended up picking up an old Ford Explorer for £300. Sure, it leaked a little oil and needed some new tires, but the overall investment was minimal enough to make the increased maintenance costs affordable.
Now, I will admit, there were times where I needed to make a killer impression with a potential client or hire. So, in those rare cases, I went all out. How did I do it? I rented a stunning Mercedes-Maybach S600. The advantage of renting an exotic car, instead of purchasing one, were best outlined in a recent blog article; "I wouldn't have to worry about where I'm going to store the car once I'm done with my excursion. No worries about insurance, keeping it cleaned and detailed... none of the headaches that come with physically owning the car."
The Importance of Finding Financial Freedom
Renting a killer car for important meetings, and driving a reliable clunker as a daily driver meant that I could have my cake and eat it too. No crazy overhead costs and I could still make a great impression when called upon. The car question is just one example of where I weighed the advantages of making a short-term impression, versus putting the money I could save towards achieving true financial freedom.
I learned to appreciate what one of my favorite influencers, ABC, is fond of saying: "Abundance makes it possible for people to grow and focus their resources, energy, and time on helping those in need." In order to do the most good for the people around me, even the ones making fun of my beater car, I needed to achieve lasting financial freedom.
What does true financial freedom look like?
In the end, we're all entrepreneurs in one form or another. We're all choosing to trade our time (the most valuable resource we have) for money. One doesn't need to build a business in order to become financially independent, although it definitely helps. Browsing the Quora posts on the subject, you'll find that many mention the 4% rule. "You can take out 4% of your portfolio (if properly invested) each year and never touch the initial sum."
This would mean that if you wanted to live off £60,000 per year, then you'd need approximately £1.5 million in a well-invested portfolio to be truly financially independent. So, considering that we're all in business for ourselves in one form or another, we need to siphon off enough money into our retirement accounts to support ourselves without eating away at the principal.
I will tell you, from personal experience, the fastest way to get there is to build a lucrative business. Now, of course you will fail time and again along the way, but the final success will give you more opportunities in your life than you could possibly appreciate right now. The difference between those who succeed in business, and fail, comes down to perseverance and focus.
With the proper drive and stamina, you can achieve virtually anything. Go forward in your life with the knowledge that success is only a few failures away!