Declaring All Out War on My Debt

When I knew that my income would be relatively fixed and I knew I had a debt I had to get rid of or I was going to pay through the you-know-what interest I knew I had to get rid of my debt.

I had to get rid of my debt no matter what it took, NO MATTER WHAT IT TOOK, NO MATTER WHAT IT TOOK.

So I declared war on it. For ammo I had my 401K plan, what was left from the funds from the sale of my car, and social security and a small pension.

I saw these could handle the overage, so I did a bail-out.

I cashed out my 401K plan, took a huge hit, and paid off my master card bill. I had already stopped adding to the amount on my card but I had to something about the pile itself. I also dedicated the amount I had gotten from my car to retiring the overage.

It decimated my finances but had to be done. I've never looked back and never regretted it. Now I'm starting to build back up, slowly because interest rates on deposits are crap.

(To be continued)

Selling my car, part II

(Continued from yesterday.)

I had a couple of options. I could sell it to a dealer. I took it out there and he looked at me down his nose and had a mechanic look at it and offered me almost nothing for it. I said thank you very much don't call me I'll call you.

I talked to a friend who said I should sell it on Craig's list and that he would do it for me for no charge. I said fine and waited for him to do something.

Meanwhile a friend called and said she was looking to buy a car. I told her I was trying to sell mine but she said she wanted a new car.

Two weeks or so later she called and asked if mine was still for sale and how much I wanted for it. She offered me less but enough and I said I would sell it to her but didn't she want to test drive it. (I had told her I'd just had it inspected, which I had) She said no problem she'd be in with the check.

I probably could have got more on Craig's list but I wanted to get rid of it right away. I took the money and put it in the bank. Turns out it helped me get clear of my debt left over from RE.

Converting an under-used asset helped me immensely in getting financially stable.

Selling my car

A few years ago I shrunk my real estate practice. Rather than run all over the city I focused on my market area where I was likely to get sales worth the effort. One day a warning light on the dashboard of my Corolla came on.

I took my car to my regular garage. They were good honest guys and always had worked hard for me and never charged me much much. They worked on the light and it went off.

A few days later the light came on again. I took it back in and they worked on the light again and it went off again.

A few weeks later the light came on a third time again and the car started to not start on hot days. Once it happened when I was supposed to transport a client to a closing. Not my shining moment as a realtor.

Finally it started and after the closing I took it back to my favorite garage. They said it was some kind of environmental sensor and they had run out of tricks so I had better take it to the dealer who had equipment to deal with it. My guys meant they didn't want to do any more work for me for free with no result. So I took it across town to the dealer who fixed it and charged me $327. I had never spent anything on repair and wondered if this was the tip of the iceberg going forward. I had no more trouble with it but I began to wonder if I really needed the car at all.

So I went home and figured how much the car was costing me to run. The answer was $300 per month for parking and insuring not counting repair, upkeep, gas and oil, parking tickets, and yearly inspection. And because I really wasn't driving it much this $300 per month was mostly wasted.

I decided I didn't need it any longer and decided to put it on the market. (To be continued)

Causation and Correlation

I find correlation more interesting than causation. I take correlation to mean: two things are correlated to the extent that two phenomenon occurr at the same time. Like age and wealth. Most people get wealthier as they get older. One does not caus the other. They may both be "caused" by an underlying cause.

Causation is tough. One thing is caused by another if the first thing wouldn't have happened with out the second thing happening. Take away the second thing and the first thing wouldn't happened.

For example a commonplace is that slavery is a cause of the civil war. It's true that slavery and the civil war coexisted. Would we have had the civil war without slavery? A matter for historical debate.

Or the rise of Hitler caused WWII. It might have happened anway but differently.

Fiinancial Stability (Continued)

Once I got my revenue stabled, applying for social security I knew I had some work to do. So I had to figure out where my money was going.

I'd made some investments in my real estate practice was a thing of the past, I looked at all the automatic payments I was making to that support that practice would no longer be valid. So I did my best to get rid of those. Some I could just bail out on right away. Others I was contracted for a little longer so I had to put up with those payments.

By the end off three months time or so, all my payments for real estate things, like lead generation prgrams, web-based tools, etc. were things of the past. There was more work to do, and I'll tell you what I did next after that.

Financial stability

First I wanted my undiscovered country to be financially stable. That meant I wanted positive cash flow every month. Every month. Not up one month and down the next. But my revenues exceeding my expenses on an ongoing basis.

First, I had to get my revenue solid and consistent so that I would know what it would be. I was 63 at the time. Real Estate was giving me nothing anymore and with the great recession at full bore with unemployment pushing 10+ percent and no immediate prospects of that turning around my first job was to figure out where my money was coming from.

I could wait on applying for social security or I could do it right away. The upside of waiting was that my monthly payment would be higher if I put off applying for Social Security until I was 65. How much more.

I got the figures each way and did a little time-sequence analysis. I found it would be a good 20 years before my delayed income would make up for what I was losing by not signing up. So I signed up. My other salary potential is capped, but so far no other outside salary is likely to come along in the near future so not to worry.

More on this next time

The Undiscovered Country

Star Trek calls the future the undiscovered country. Each of us has our own undiscovered countries. "What is the future that I want?" I had to ask myself. What will I want this undiscovered country to be like after I discover it? Our president talks about winning the future. What future would I win and how would I want to win it. Well, I first asked what future I wanted to win.

No big deal. That's what I thought.

But to get to this country I had to go through 9 months of research and analysis about myself. And I had to burn the boats on the shore.

I'll share this with you one post at a time.

Sunk Funds

Sunk funds are money I already spent and won't ever get back. Some of the money I sunk into my various ventures helped; a lot of it didn't. The key to differentiating one from the other is if I see some positive results. I have to make sure I sink funds in productive areas so that I get a result at least equal to what I sunk. Some money I had to spend--food, clothing, shelter, safety.

The way I figure if I'm getting back anything for the funds I've sunk is to write down and account for every swinging thing I spend money. At the end of each day I categorize. $2.50 for coffee at Starbucks; $29.50 for a book on marketing; $1.50 to take a bus; $8.00 for a movie; $58.56 for dinner with friends.... So on and so forth.

If I'm diligent about it I will start to see some patterns in my spending. And I can have a conversation about what I am spending and what I should be spending on. I do this every day now and it has given me a more productive life. My spending patterns have changed, and I'm more interested in making my numbers than in spending everything I spent. And I know that what I am spending my money on is what I should be spending my money on.

Technologies

I find that there are three technologies that most people don't think of as technologies but are.

Technologies are the tools, techniques, crafts, systems or methods of organization in order to solve a problem or serve some purpose. They help us accomplish things.

We think of things like computers, the Internet, telephone apps, and so on.

What most people don't think of are thinking, speaking, and writing. These are three technologies we all need to keep updated on. Forget all that other stuff. If we can't do these three things, all the computers in the world will not do us any good.

Developing habits

Key to achieving my goals are developing useful habits. I determine the direction I want to go in and the goals I want to achieve in my life. Then, I try to develop a habit that will support my achieving it.

That is, if I want to return to playing chamber music, I have to develop a habit of practicing my viola it. You know when you have a habit when some little bell goes off in your head somewhere that you're missing whatever it is you have a habit of doing but you've not been doing.

I developed a habit of stretching every morning after my daily shower. Up, fix coffee, shower and shave, stretch and do my exercises (to shift my weight from around my middle to my chest and shoulders where it's safer to carry it), then go to work. When I don't stretch my legs out, they complain about it.

When I say habit, I don't mean an addiction to alcohol, nicotine, or other drugs. Those are destructive habits. Get rid of those by not doing them for a period of time until not doing them feels more natural than doing them.

In fact, if you are doing something all the time that you think you can't do without, try doing without it for a while. A week or two weeks. Then maybe you don't need that habit.

Keeping my my skills

A skill is a thing someone can do. Some people can talk. Some can dance. These are skills, things that are learned. Like knitting. Or writing. Or singing. Skills are a subset of human capital. Actually each of these is a cluster of skills. For example to be a skilled tennis player you have to be able to run, hit a ball, think, be physically fit, etc. Each of these abilities is a cluster of other skills and so one and so on. Skills are based on talents or abilities which ate things you are you born with.

Anyway, one of the skills I have learned is to play the viola. A viola is a musical instrument, a member of the violin family. It's bigger than a violin and sounds five notes lower. It has a more mellow and subdued tone which I really love.

I learned to play the viola when I was young. First I learned to play the violin and switched to the viola in 8th grade. I can play well enough to add enjoyment to my life. I can play in tune most of the time, have good relative pitch, an excellent musical memory, and reasonably good coordination so I can put my fingers in the right places and operate a bow reasonably well. Nothing fancy or fast or virtuosic.I could never (even if I wanted to) make a living off of my playing but I might have been good enough if I had worked at it when I was very young.

My greatest enjoyment is in playing string quartets. One of the instruments in a string quartet is a viola, along with two violins and a cello.

Well for a number of reasons I stopped working on my viola a couple of years ago and have played virtually not at all, since. I've been listening to some great string quartets lately and have decided that if I want to be able to play that music, I have to work on my skills or I will lose them.

The things I have lost are the pads on the ends of my fingers. I have to build them up so I can play without the ends of my fingers getting sore. That's the first thing for me. I've worked on it two days in a row now. I could tell the difference from the first to the second. Now I just hope that I don't weanie out.

Yes, skills can be learned. And they can be lost. Playing the viola is a skill that helps me in my life. I don't want to lose it.

Causation

I pulled out of my grab bag a thing on causation. Turns out I already blogged on it. Here's waht I said last August.

"Causation" in real life is different than in statistical life. In real life, "A" is said to cause "B" if "A" would not have happened if "B" had not happened first. A man gets drunk and gets behind the wheel of a car and runs over a man killing him. The accident is said to have "caused" the death of the man.

In statistical life, "causation" means "correlation" or "prediction." "A" predicts "B", or "causes" "B" if knowing "A" helps us reduce the uncertainty that we have about "B". For example, increasing age in a global sense is related to increased wealth.

Not all wealthy people are old and not all old people are wealth. But in society in general, you get wealthier as you get old. Therefore age "predicts" and "causes" wealth. If you don't work and invest well as you age you won't be wealthy.

As entrepreneurs we need to know about causation in both senses. We need to know the effects of what we do as business leaders and starters. We need to know that if we don't devise a partnership agreement we can have all kinds of problems. We need to know that if we are mean to our employees and don't respect them they will leave and it will be hard to replace them and our business will suffer.

We also know that our success is caused by generating cash. And we need to know the cash drivers and how they "cause" our success.

We need to know both kinds of causation.

Tell me what you think.

Clarity and Relentlessness

To things I will need, and in spades, I figure, are clarity and relentlessness. I'll need clarity in seeing the road ahead and relentlessness in order to reach mo goal.

I think I see the way ahead now. My goal is to have a book out on the Curtis String Quartet, to be supported by a regular round giving of speeches and talks and seminars and to have a non-profit organization that will help at least partially fund the effort.

Now I need relentlessness for me to achieve these things.

Market

I found an article on "market" in my grab bag. This is kind of interesting.

The term market has a double meaning. It means a "space" in which buyers and sellers interact. That's a market, i.e. the "real estate market," the "automobile market," the "stock market, the "bond market," that place is a "meat market," blah blah blah.

To market used to mean "to go shopping," as in "I'll go to the market." The food store or food market. You still find that once in a while.

Sometimes I would encounter this when I was cold calling and asked for the director of marketing and the receptionist would hand me off the head of the purchasing department. The first time this happened I wondered why they did that, but it dawned on me they had an older definition of marketing in their minds than I did.

There's a big bunch of stuff written about markets. If I just think about a market being a place with buyers and sellers, I'll be okay.

Link Rot

"Link rot" comes from computerese and refers to the process by which links on a website stop working over time as their sponsors go out of business, change their business focus, disappear, or suffer the thousand other slings and arrows websites fall heir to.

It happens to my cable box sometimes. My cable sometimes just stops working. I disconnect and then reconnect it and, PRESTO CHANGE-O, up it comes again.

Sometimes my printer stops working because the connection "got stale." It happens. Same thing. I disconnect it and reconnect it and it works.

"Link rot" also undermines my professional network. It happens as people move, change jobs, get older, alter their lives, have kids, divorce and remarry, die even. I've had that latter thing happen more than once, but I'm in that demographic group that is closest to my date of mortality. More on that later.

I try to avoid this by keeping in constant contact with all my contacts. I haven't done so good lately as I've done a couple of pivots. But if I can't do it with a phone call I at least try to connect with them by email so they remember who I am. It's tough because I have a lot of contacts which means I have to be constantly driven to do it and have to strategize about who to keep closest in contact.

I try to avoid link rot whenever possible.

Cash Flow

What I've done is to figure out how to keep my cash flow positive. It's been a struggle because I had to radically change the behaviors that made my cash flow go negative too often.

What's important to me about a business is how much cash it brings in. Profit is an accounting artifact. Cash is where God lives. And because right now my business is living, so I daily track expenses and income to make sure that I'm never in the red. I'm on social security so I watch my cash outlays like a hawk. I've got my cash flow so that it's positive by reducing my expenses down below my income. Now my job is to get more income.

I never spend anything I don't have to without being sure I'm going to get back more in value than I spend. It might be supplies that I need to run my business or it might be a cup of coffee so I can go off to a caffeine den or think or read away from the office. I try to keep the caffeine trips to a minimum.

I record everything I spend. Even if it's 5 cents. Really, I do. It's amazing how your behavior lines up if you watch the money. Last summer I got lazy and didn't keep timely cash flow records. I lost my shirt. Now I have expense it back.

What I've done is to set up a spread sheet so that I know exactly how much I have left at any point of the day. It's simply monthly income - monthly expenses = balance. I can watch that balance seep out of my accounts every day and stem the tide when I do. I don't wait until the end of the week or the end of the month or the end of the quarter. It's too late by then.

Entrepreneurial Economics

I reached into my grab bag and found a copy of a Wikipedia article on Entrepreneurial Economics. The gist of the argument is that the faillure of traditional economics to account for entrepreneurship means that traditional economics is floored?

Why is that? Maybe traditional economics is flawed but not for that reason.

To me, entrepreneurship is an attitude or frame of mind. It means you take life as a challenge not as a reason for whining. It means you look into your heart and find your passion and filter that through your brain. It means you dedicate yourself to something positive that will improve the world around you.

Economics is just economics. Eh?

Adopter Categories

It's pretty much agreed now that in terms of how consumers respond to new products introduced, consumers can be lumped into these five groups: Innovators (2.5%), Early adopters (13.5%) Early majority (34%), Late majority (36%) Laggards (14%).

Innovators and Early Adopters look at new products differently than the others. They want to see what's new regardless so they buy the first things out of the shoot or they want to own the latest and the coolest and sexiest product on the block.

The middle group wants to see how well it works, who else is using it, what it will do for them, etc. Will it save them time? be more accessible? save them money? They don't care so much about the bells and whistles.

The last group only buy new things when the pain of putting up with dinosaurs exceeds the pain of getting new stuff. Then a good portion of them tend to jump to the newest or nearly newest thing.

I'm a laggard. I bought my first IBM Selectric typewriter 3 years before they stopped using it. I don't like to buy new stuff when what I'm using has worked well for me. But rapid market change means I'm sitting on a sand bar watching the tide come in around me. I can only hold out for so long. But I became an early adopter regarding the social media. I'm about to de-laggard myself over texting.

Where do you fit on this continuum? If you're making a new product, make sure you now how you're going to make sure your product can cross the gap between innovators and the others.

And keep in mind that people can fall into different groups depending on the product. A person may be the first person on his block to buy one thing, but the last person to guy another type of thing. I can't come up with examples, but I hope you know what I mean.

If you want more on this read Everett C. Rogers, Diffusion of Innovation, and Geoffrey C. More, Crossing the Chasm.