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Assets and Liabilities

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Think in Terms of Assets and Liabilities

Simple definitions: Asset = things that put money in my pocket, Liabilities = things that take money out of my pocket.

Rich don’t work for money, they buy assets and make them work for money. Some examples of assets: house with rental income, paper investments – stocks, funds, etc., car that will be used to bring money to your pocket – like Uber, a small business, etc. These resources can be classified as “tangibles”.

Equally important are the “intangibles”. Degrees and diplomas, skills, professional networks, money spent on upgrading your physical appearance. Then there are also things that boost your morale – like vacations, family time, friends, etc.

It is important to purchase assets and not liabilities. More over, it is important to do this early on. The principle of Compounding is an important one. The Universal law of entropy dictates that time will always increase. Which means that getting an early start will allow assets to compound.

Turn your liabilities into assets. This is challenging to do, but not impossible. Be creative. For example: you have a thick accent. Rather than shy away from public speaking, you could use this to your advantage – speak publicly and be known as that guy with the thick accent. Use this as marketing for yourself and focus on the content you wish to deliver to your audience. This is what Arnold Schwarzenegger did, and the rest is history.

Familiarize yourself with the “Balance Sheet”. The balance sheet will have to balance. On the left-hand side are all the assets you own. On the right-hand side are all your liabilities. Then on the bottom of the left-hand side under your liabilities, is your “Equity”. This is your net worth, calculated by the difference between your assets and liabilities. This should be a positive number. Try to grow this number.

A very simple practical exercise to tie all this together. On a small piece of paper, write all the things that you own. Put this in your right pocket. On another piece of paper, write all the things that you owe. Put this in your left pocket. As long as your right pocket is a bigger number than your left pocket, you will have a happy life.

Sources:

Rich Dad Poor Dad, by Robert Kiyosaki, 1997

Financial Intelligence for Entrepreneurs, by Joe Knight and Karen Berman, 2008

Lord of the Gaps

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Lord of the Gaps

In science and technology, energy is carried by either a charge, or by a “Gap”. This is called hole carriage. This framework is the reason we have semiconductors, which is the reason we have our beloved tech gadgets.

Achieving any goals is life if not a “journey”. This idea is tossed around a lot: “it’s a journey, let’s just start and see where it leads us”. Sure, this is a good way to get started, but I am afraid it accomplishes little after that. The better approach would be to look where you want to go and then find a template to base your path off. Find people that have taken this path and learn what they have to share. Start with the end in mind.

Part of this process is the Gap. By creating this circumstance for your desired outcome, you are in effect forcing your environment to carry you to your desired end point. It is beautiful.

Crisis is a form of Gap: it takes you out of your comfort zone and you must discover your “hero’s journey” to find a solution. You can create mini-crises to simulate this end goal in an efficient manner. Put yourself in a challenging situation and learn from it. As an exercise, try to do one thing that scares you everyday. This can be as little as asking someone out or as big as swimming with sharks.

Conversely, if one slacks off, then undesired Gaps are created by the Universe. These Gaps will be filled by others more capable of deserving the opportunities. It is one form of survival of the fittest. Be aware of this and Stay Frosty!

 

Writing Thoughts Down

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The brain is like a computer, I know people say this all the time, but what I mean is more technical than just the expression. Computers have a limited cache and RAM. Before you can process new information, the cache must be cleared. This is only done by storage on a HDD.

So, to clear your brain’s cache, you need to either write your ideas down on paper (or computer) and store them for later processing, or execute the idea so that it is done and over with. This is the only way you can have new ideas.

One of the subtlest inventions of our modern times is the “sticky note”. Post-it® is the most recognized and popular brand of sticky notes. The discovery of this invention here.

I am an avid user of this technology. I would strategically litter my work area with these notes that serve multiple purposes: reminders to do things; my daily checklist, which I carry with me during the day; inspiring quotes; Scrum-ing tool — what is Scrum is best explained in this video.

But I take it a few steps further. I use the sticky note in my car. I would note down important ideas and notes when I listen to audio-books. I note down places that I want to visit when I drive by them (for my sales prospecting job). Of course, writing the actual note when the car is safely parked.

In the washroom, I have a water-proof notebook which I often take into the shower. Like most of us, the best ideas come when we are in the shower, and what a shame that as soon as we exit, the idea is washed away. There are products you can buy to “write in rain”, but I like to keep it simple with a cheap and reliable water-proof notebook and a pencil.

I have sticky notes apps on my desktop PC and my cell phone. I use “Simply Sticky Notes” as it is one of the simplest app out there.

The idea is to get rid of the stickies asap by completing the task — put them in the recycle bin. The act of trashing the sticky is a satisfying dose of endorphins, which further reinforces the habit.

You can keep things old school by carrying a notebook always — which I also do — but, the tactile nature of the small piece of paper adds an additional dimension to the habit.