A little too late you may say. “If your money is your business why do you write so much it”? No, my money is my business as in: it is my place of business, it is there to generate our income.
A modest income at that. My business isn’t running that well to be honest. The year I took the helm (the year I retired), SPY saw a high of $208.44, yesterday SPY closed at $209.28. In that time span we’ve also seen SPY drop to a mere $182. Since my business is build on a foundation of mostly SPY one might say we’re off to a rocky start. As any other proud business owner, I have faith business will pick up.
Why am I telling you all of this? Well since our business started I’ve found myself saying things like “We can’t afford that” or “Now is not a good time to buy…”. Most recently I’ve had to apply for financial assistance in relation to medical bills, that will now keep coming our way for the foreseeable future.
I initially felt ashamed of having to say “I can’t afford…”, I had tears in my eyes when I went through the financial assistance options with our hospital. All of this seems contradictory to having a portfolio such as mine.
Well the shame didn’t last and here is why: my investment portfolio is my business, just like our neighbor has a Home Inspector business and just like someone else who owns a restaurant, I’m in the business of investing. Granted, my business today takes less effort than those other businesses. In my defense, I worked my ass off, flying economy and living out of hotels for close to 20 years. All to get that business started. I paid my dues.
In order to succeed financially one has to divorce him/herself from the idea that money is there to buy stuff. Money, should be there to generate more. Only once you start seeing returns on your money (investments) that can support your lifestyle can you truly say your financially independent.
Here is the distinction between having a lot of money and trying to run a business with money: Having a lot of money to buy stuff can be achieved by making a lot of money. This tends to happen through hard work. The problem is, in order to maintain that lifestyle you’ll probably end up working hard for the rest of your life. That is, if you have the opportunity to keep working hard for the rest of your life (jobs, even the great paying ones aren’t guaranteed for life).
Like a restaurant generates revenue selling food, my business (mostly investments) generates revenue via dividends and appreciation. The investments are there to do just that: generate revenue that provides an income that is enough to support our family. Any profits made above that (yet to happen) are to be reinvested back into more investments; back into the business.
I could take money out of that business to pay for the hospital bills but that would be like the restaurant owner selling a chair to pay for his bills. Do that a few times and the restaurant won’t be able to seat its guests. As a matter of fact that’s exactly what I did last year when we were faced with over $12,000 in medical bills. I sold 57 shares of SPY and paid my bills in full. That was a mistake. I sold a “chair” from my restaurant and I shouldn’t have. With a return of 8% a year those 57 shares (worth $11,319 at the time) could have been worth close to $50,000 in 15 year and could have generated over $8,000 in dividends.
You may have heard of the term “business hemorrhaging money”. That is what happens when we spend above our budget.
So there you have it, my money is my business. I make no secret of it. It’s not as exciting as you might have thought it was. It’s not there to show the bling-bling, it’s not there to buy whatever my heart desires. It’s there to generate an income. It’s the brick and mortar of my business. Come to think of it, my pre-tax accounts (401(k) a IRAs) are almost literally the brick and mortar. It’s contributing to my business and its revenue but I can’t touch it until I’m old enough to sell my business. Think of the rest of the investments (after tax accounts/property) as my tables, chair, linens and silverware (yes I run a classy business). I could sell them but that would be just bad for business.
If you want to learn more about building a business like I did check out my post 5 Keys to building wealth. Maybe something in there will help you get on your way.
Good luck reaching your financial goals