From Paycheck to Profits

I gave a speech at toastmasters yesterday entitled “From Paycheck to Profits”.  It is about how we need to make a transition from earning our living by things we do to things we own.  You can listen to the speech.


And here are the notes that I made for the speech:

A hurricane hit Galveston.  Universal flooding.  Homes destroyed.  Decimated city infrastructure.  Disrupted lives and 8,000 dead, a massive blow for a town with 42,000 residents.  Unreal!  That was 1900.  The great Galveston hurricane of 1900 which destroyed everything and killed 8,000 people.

We did not have the weather forcasting ability.  We did not have the means or foreknowledge to allow us to move all the people out of the city.  And we were not able to have a quick rescue effort afterwards. 

Compare that with what happened earlier this month.  When Ike came, we had similar flooding and destruction as the Great Galveston Hurricane of 1900.  Today Galveston has a population of about 57,000. But instead of talking about thousands of deaths, we talk about dozens.  And each one is considered to be an unnecessary and avoidable death.  Each person laid to rest with the ceremony and honors.  Not the anonymous burying and floating bodies of the 1900 flood.  What was the difference? 

Why the difference? We could see Ike coming.  We could understand the damage that it could cause.  We knew something had to be done and we did it!

Now, I want to talk to you about a critical change that we need to take to prepare for another one of life’s hurricanes.  Something that can be just as painful as a destroyed house, and can feel as devastating as the loss of a city.  The loss of a paycheck.  You see, everyone of you will lose your job.  You will lose it because someone took it away from you, or maybe because of sickness or death, or perhaps you will lose by choice.  But one thing is for certain is that you will not work forever.  That paycheck will not come forever.  Like those lights before the hurricane that we never took second thought of, one day that paycheck, that source of support will disappear.

Like a hurricane, it can be unpredictable.  It could be next week or it might be 108 years from now.  We do not know what may come or when.  But one thing we should do is prepare higher ground so that we do not feel exposed on the day it happens.   It is a change that we need to make, one that is difficult to find, but one that we must attempt to make.  While I have no road to get you there, I would like to convince you that it is something that we should be attempting to pursue.  We must find a way to earn our living not by things we do but through things we own.  We need to figure some way to get to the higher land of financial security.

I have not successfully gotten there myself.  But I know we seldom find what we do not look for.  We do not achieve what we do not try to do.  We do not get to where we want to go by chance.  My friends, what I suggest to you, is that we should make this a priority.

I do have some observations, some ideas on how to get there.  I share with you my plans.  But they are untested, and have not yet proven to be successful.  But it is advice that is not unique and does make common sense.   It is advise I have heard from fellow travelers.

The first thing to get where you want to go, you have to know where you are.  I think this is half the problem.  Most of us do not know where we are financially.  And I believe this is just the first step.  How much do you really spend a month?  A year?  Finding that big number is the first priority.   I recently tried to do this by getting the account balances of my savings, checking, and credit card accounts for the first of each month.  Then I was able to take the difference in the account and subtract it from what my take home pay was.  This gave me my big expenses.  Now, I am trying to break that big number up into expense areas.  How much was spent on things that I had little control over, like the mortgage, and long term payments, things I had some control over like gas, electricity, etc.  And things I have lots of control over like eating out, buying things that I just have to have, but provide no long term benefits.  The next step  will be to try to reduce the costs. 

Free up some savings, and figure out some way to start getting that savings to generate income on its own.  Perhaps through investments, creating a business. 

But you know, you do not need much money to create some business these days.   Many of you have heard about my site.  Right now, I spend almost no money on it.  But I can see someday it being the vehicle for earning a living through selling advertising space, books/cds/and other things. Perhaps licensing out some of the content.  And while it is requiring a lot of effort today, and will probably require years of effort to get it where I want it.  It is none the less and investment in my future.

Friends, I wish I could give you a directions on where you need to go, and what you should do.  I can not.  But I think we should seek higher ground.  Try to transition from making a living from things we do, from a paycheck, and start trying to get money from things we own, from profit.  You find what you seek.

Let me close with some words from Bengamin Franklin, “All humanity is divided into three classes: those who are immovable, those who are movable, and those who move!”  Friends, we need to move!

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