I made up a new word: CASHFLOWNAIRE!
Cashflownaire: A person who has the positive cashflow of a million (or multi-million) dollar net worth.
As you probably know from previous posts, my financial strategy changed dramatically with the big 2008 market crash. My focus today is on monthly cashflow instead of wealth (net worth).
I don’t care about being a millionaire.
I do care about being a cashflownaire.
Having a million dollar net worth may, or may not, change your life. The reason why is the majority of your wealth will be locked up in your business, your home, or in other illiquid assets. It’s hard to eat your home equity unless you borrow it. It’s hard to eat the equity in your business unless you sell it. I sold my real estate company back in 2007 to unlock the equity trapped in the business. I sold the business for 7 figures and financed a significant portion of this sale providing a check for around $8,000 a month. Life was good!
Then the buyer defaulted and the checks disappeared.
My large net worth and monthly income vanished providing me with an opportunity to really think about what I wanted in life. Did I want to rebuild the business? Did I really want be a multi-millionaire? Did I want to work 7 days a week? Did I want to hire, train, and manage employees? Did I want the massive overhead and pressure of a large business?
Slowly but surely, I realized that I didn’t want to a large net worth. What I really wanted was the income from a large net worth. I wanted the $8,000 a month.
This realization was life changing for me, because I no longer had to build a big business. Up until that point, the only path for me to a large net worth was to build a business with a value of a million, or more. By letting go of the goal to become a multi-millionaire, I was also able to let go of the need to build a big business. This was immensely liberating for me because I really didn’t want to build another business. It’s definitely not as fun as most people think it would be.
Instead I could simply focus on recreating the income provided by a million dollar net worth. In other words, I could just recreate the $8,000 a month of income I had when I sold the business. Financing the sale of the business ended up highlighting what I really wanted, even though the buyer defaulted on the purchase. Opportunity really does hide in adversity.
When it comes right down to it, we really don’t want to be millionaires. We want the income flowing from a million (or multi-million) dollar net worth. The income gives us what we’re really after, which is freedom. Freedom to work, or not work. Freedom to travel, or not travel. Freedom to do what we want when we want to do it.
Think about it…
Would you rather own a home with a million dollars of equity, or have $8,000 a month of recurring positive cashflow?
It’s an important question, because your answer dictates where your focus should be. If you really want to be a millionaire, you’ll probably have to build a business worth a million dollars. Or you’ll have to buy highly leveraged real estate and work to pay down the mortgages over the next 20 to 30 years. If you really want the monthly cashflow, you can sidestep a great deal of the work, stress and risk required to build a large net worth.
Life typically gives us what we truly ask for.
Be sure to ask for what you really want.
This is why I’ll be changing the name of my site to Cashflownaire over the next few weeks.
I’m no longer a renegade millionaire.