Progress Vs. Perfection

 
twit1There are a couple of trends I’ve noticed among those I follow on twitter recently. The first is a belief that passive income is the path to success. That one isn’t wrong but it isn’t as easy as it sounds either. The other trend is the choice (maybe a false choice) between progress and perfection.
The Truth
It is true that if you wait until everything is known, until there is no risk and everything is perfect, you’ll never get started. Paralysis by analysis as it’s called. But that doesn’t mean you should settle. Strive for perfection while moving forward.
The Reality
In What Next I talk about the ability (metaphorically speaking) to hike or travel two or more paths at the same time. This is working a day job while pursuing a business idea you have, for example. Well the same is true with progress and perfection. Keep moving forward and when you fall short of perfection ask why and modify your course.
Simple Sells
The reason progress or perfection is presented as a choice or passive income is presented as the solution to success is that they’re simple. These choices let you off the hook. You don’t have to work hard because you have passive income – well that’s bull. It’s ok not to strive for perfection because at least you’re moving forward – also bull.
It may not be the simple solution you want, but the truth is, success is hard. If it wasn’t, you wouldn’t be reading this and other similar posts. Don’t let yourself off so easily, dedicate yourself to doing the hard work and find true success.


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Are You Ready?

 
Breaking-News-1I work in the frenetic world of television news (luckily it’s not the every-single-bit-of-information-is-breaking-news world of cable). While I’m no longer in the trenches of a daily broadcast, I remember the deadlines, the last minute changes, the real breaking news events that required us to shift into a very high gear and sometimes stay there for hours or days.

When the news was slow and predictable you could rest, but one of my managers would always ask, “are you ready?” The question would catch me off guard but the answer was always yes. Yes I was ready for breaking news, ready to spring into action, ready for the pressure, the intensity of the job.

So my question for you is, “are you ready?” Are you ready for the intensity of life, the sudden and unexpected turns life can take?

What are you doing to get ready? Are you being passive, waiting to react or are you being curious, trying new things, practicing? Following a single path to success isn’t enough any more. You have to branch out and explore the tributaries of life.

I was asked my advice on how to take a chance and follow a different path – my answer was to treat every new idea, every new adventure as a hobby. Don’t quit your day job, don’t rush into anything. Start small and try it out. If you enjoy it, if you find success you will be able to accelerate but if you fail, if you find it more difficult than you expected, stopping won’t be devestating.

Here’s an image I saw but I’d like to modify it a bit to fit the idea of being ready.

Definition of entrepreneurship

My change? Be ready: Avoid instant gratification now to exploit real opportunities as they come.

BeReady

What are you doing to be ready? Share your thoughts below and get the conversation going.

 


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Passive Takes Work

 
hammockIf you know anything about me you know that the title of this post has nothing to do with being lazy or taking it easy.

Instead this post is about passive income but, unlike most articles, books, and blog posts about passive income I’m going to tell and show you that passive income is difficult, it takes work. There are a lot of financial bloggers who promote real estate as a panacea for wealth creation but I’ll tell you they’re wrong. At the same time I’ll say that real estate has been a great success for me. That sounds schizophrenic but the reality is that for real estate to generate income it takes work and smart decisions, there is no easy way and while some people will have great success with real estate others will struggle or lose everything.

As promised this post is a followup to some of the numbers in my post titled Manage Your Money Don’t Let it Manage You. Specifically I said that, in 2013, dividends and interest accounted for 14.75% of my gross income. That’s a high number, imagine making an extra 14.75% of what you make right now – it would be nice, right? Well this does vary year by year and here how’s its gone for me: 2007 – 12.59%, 2008 – 7.08%, 2009 – 3.45%, 2010 – 5.57%, 2011 – 10.15%, 2012 – 9.68%.

Passive income indeed but it is highly variable and you can see that the recession years had very low numbers that reached a low in 2009 and have been (mostly) growing since. I expect 2014 to be lower than 2013 because I don’t expect the stock market to do as well (Update: I was wrong. 2014 saw dividends and interest at 18.67%). Let’s also not forget that you may owe taxes on those dividends and if you reinvest those dividends (which you should) you’ll have to come up with that money yourself. I say may owe taxes on the dividends because it’s only true if the stocks, bonds, mutual funds, or ETFs that generate the dividends are in taxable accounts. Most of our dividends come from our retirement accounts, 401k and IRA.

Over the years I’ve read a lot of self help books especially with a financial bent but most weren’t very helpful which is why I wrote my own. One book, however, stuck with me. It’s called Your Money or Your Life and puts forth the concept of passive income through dividends and interest eventually replacing your salary allowing you to retire. But it takes a while and requires aggressive savings. I liked the idea so much that it is a major part of my retirement plan but as you can see, even with my aggressive savings, I’ve got a long way to go.

Now to real estate. In the same post I referenced above I pointed out that my rental properties represent 6.11% of my income but they also account for 9.09% of my expenses. In other words I’m losing money on the real estate. Not to mention the time I devote to overseeing and renovating those properties. Anyone who has rental real estate knows the income is anything but passive, it takes a lot of work. But there are several things going for me: first, I get to use those properties while I’m there to oversee and renovate them (they’re vacation rental properties and so are a literal pleasure to visit), second  I will be able to deduct the money spent on renovations, repairs, and improvements when I sell the property (income limits called passive income rules prevent me from doing so now), and third, and maybe most important is that the properties have increased in value over the years and I’ll be able to sell them for more than I paid. Like any investment these are long term commitments.

When people start talking about passive income like it’s easy, come back here and read this for a little balance.

Do you have experience (good or bad) with passive income? Add your comments below!

 


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