New goal

It’s time to set a new goal for me. I haven’t set goals for a long time, because I did not have the time, confidence and energy to commit myself to them. And I also did not really believe in goals anymore. So why would I set goals? It would be utter pointless, since I would only fail in achieving them.

I’ll write another time about how and why I lost the time, energy and confidence to work on goals, that’s too long a story for this post. For now I can simply state that I found them back again. As far as regaining faith in goals … well I’m still not totally convinced yet. But again, that’s also too long a story for this blog post.

Ironically, I intially started to use both angles as an introduction for this post, but both of them became too long and distracted attention away from my main point:

I have a new goal!

So for the purpose of this post, I can simply say that I found the time, energy and confidence back to work on a goal I believe in, without elaborating on those. I’ll do that in other posts :-)

Goal. Singular.

In the past I had a tendency to work on several goals at the same time, and by doing so I discovered that it was difficult to work with more than one goal simultaneously for several reasons. I’m not going to do that again. Just one single goal.

Value = Energy

The goal should also give me energy. I’ve found that the best way to accomplish that is by making sure it complies with the following two things:

  1. Align it with my personal core values
  2. Getting positive results

If you’ve been following me on this blog for a while, you’ll know that I like to use my personal core values as a guideline to set goals. I have five core values, and the more values I can serve with a goal, the greater the probability that it’s going to be successful, and that it’s going to give me energy.

Seeing progress is also giving me energy, but in a way that one aligns with my value Growth too. The progress is something I need to visualize though, and that’s why I’m choosing a very measurable goal.

So what’s the goal you may be wondering by now?

My new goal

To reach financial freedom on a basic level by the end of 2013.

Values and definitions

What values do I serve with this goal? How do I keep track of progress? And … what do I mean exactly with this goal? Those are all valid questions. let’s answer them.

Values served

This goal serves several of my personal core values, directly or indirectly. First and foremost it servers my value of Freedom. Financial freedom is something I really want to achieve, as it gives freedom by removing limitations of options in life caused by expense levels (who in turn are a result of choices in the past).

But it also serves Growth.  I need to grow on several levels to achieve this goal, and as such there’s a growth factor involved, which in turn aligns with my values.

The other three values – Fun, Love and Authenticity – are not served directly by this goal. I need to make sure to guard those, and not go into negative territory on any one of them. Lack of growth is acceptable, but moving into negative territory is not.

Specifying the goal in more detail

Since it’s not really a measurable goal in its current form yet, I have to do some more detailing. Let’s start with defining some of the terms that are related to this goal.

Financial Freedom

First, my definition of financial freedom is when you don’t HAVE to work to pay your expenses. Or – more along the lines of what Robert Kiyosaki uses in his book Rich Dad, Poor Dad – it’s when the sum of passive and portfolio income is equal or greater than your expenses.

That leads us to two new terms to define on the income side, passive income and portfolio income. Investopedia defines passive income as earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved. Wikipedia has a defintion that’s a bit broader: income received on a regular basis, with little effort required to maintain it. Portfolio income as defined by Investopedia is income from investments, including dividends, interest, royalties and capital gains.

That leads us to the expenses side of financial freedom. Expenses in my book is all the money flowing away from you in a way that does not translate into property. Expenses range from simple expenses for groceries to big expenses as mortgage payments.

Buying a car however is not an expense, because a car keeps at least a part of its value, and that value may be released again by selling it. Cars usually aren’t a good investment, because they lose value really fast, and in turn they cause all kinds of expenses, ranging from taxes and insurance to several (high priced) tanks of gas.

… on a basic level …

A final term to define is one of my own: the basic level. I stated that I want to achieve financial freedom on a basic level. So what is that basic level? For me that basic level is defined as all the expenses that are related to my home and living there. So this basic level is made up of mortgage payments, insurance, energy, and home related taxes.

As a result this goal translates into acquiring an income stream that is not a “paid-per-hour” type of income, but a low maintenance income stream that covers the expenses for being a home owner.

So that’s it. A new goal serving my values, focused on financial freedom with respect to being a home owner. I’m excited to work on it, and I’ll be sharing progress reports and more on this goal. I have some headway on this goal, as I do have some passive  income sources already, but not nearly enough to cover for my housing expenses.

I’m excited! And I sure hope this new goal and the progress reports on be an original will also be of value to you.

Posted in counting beans on Sat 2011.08.20

{ 4 comments }

Ferry August 20, 2011 at 10:06

I wish you a lot of success with your goal!

Would love to read more about the “how to” side of the story and progress.

Lodewijk August 21, 2011 at 15:57

Thanks for the encouragement Ferry!

I will give monthly progress updates, and write about what I do to get there, and about what works and what doesn’t. I’m not starting with entirely nothing, so my next update will be about where I am today, with respect to passive and portfolio income. And of course where I am on the expenses side.

Sharyn Dimmick August 29, 2011 at 01:29

What an exciting goal, Lodewijk! I enjoyed reading about your values as well, although reading and thinking about values usually gives me the willies. I look forward to reading more about what has happened since you posted this.

Lodewijk August 30, 2011 at 21:37

Thanks Sharyn,
Since this post I’ve been digging into my expenses to see what the exact level is that I intend to reach with this goal. I’m writing a post about that right now :-)

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