THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE READ MY DISCLOSURE FOR MORE INFO.
The following is a guest post from Leo T. Ly, founder of isaved5k. He spent 12 years working for 3 of the 5 major banks in Canada before he started to pursue his passion for real estate. As a real estate sales representative, he has a strong background in this field and provides wonderful financial insight. Enjoy the read!
Not long ago, I was mostly motivated to build my website to grow my real estate business and to help my clients save money when I assist them with their real estate needs. I wanted to be the average person’s money saving Realtor. A few months later, that motivation morphed into something much more meaningful to me and inspired me to start a personal finance blog to educate people about how to take care of their personal financial health responsibly and effectively. I wanted to show the average person not only how to manage their financial affairs responsibility, I also wanted to share and demonstrate to them through my personal experiences that with discipline and hard work, the average person can build a healthy, sound and secured financial future.
Figure #1: Your football team.
In the personal finance blog space, there are many great bloggers sharing their personal stories and methods on how they got out of massive debt to living frugally and being debt free to paying off their mortgages in record time to creating a dividend income portfolio that will become their retirement income. While these personal stories are great and I do read quite a few of these bloggers’ posts and learned a lot from them, I feel that some of the strategies are quite one dimensional (hold your fire, don’t shoot yet, I’ll fully explain this shortly. After that, you can fire at me all you want in the comment section.)
Figure #2: The game of football
I am a huge NFL football fan so I am going to try to use a sport analogy to explain this. To be successful in the NFL for the long run, those successful teams need to have a great balance in three different areas of the game: offense, defense and special teams. The offense is mainly responsible for scoring as many points as possible and using the game clock to their advantage. The defense’s main objective is to prevent or minimize the opponent’s offense from scoring. However, at opportune times, the defense can also score too. Lastly, the special team is responsible for setting up an advantageous position for either the offense or defense to operate. Once again, at opportune times, the special team can also score. So what does football have to do with personal finance? Everything. I’m getting to it…
Figure #3: Coaching football
Another important part of the NFL game is coaching, an area of the game that seldom receives a lot attention or being explored publicly and not many people like to talk about it. The coaches of the game are like your generals/tacticians on the battle field. They come up with the game/battle plan, put the players in the positions that maximizes their talent and skill sets, making the calculated decision to either kick the field goal (being conservative) or trying to score a touchdown (being aggressive) and use their knowledge of the rule book to give their team any advantage over their opponents.
Figure #4: The one yard line.
The process of building a successful financial future resembles that of building a successful NFL football team that can content for the Super Bowl year in and year out. Your offense is like your income generating assets (just remember, you are one of your greatest assets) – they make most of the money. Your defense is like your debt, it can help you make money (good debt) or cost you a fortune (bad debt). The special team is analogous to the structuring/positioning of your assets and debts. When they are positioned advantageously, you’ll maximize their opportunity to score point – increase your wealth.
On the other hand, badly positioned assets (overpaying for something) or debts (high interest rate loans) can work against you just like when your offense/defense are being placed at your own one-yard line (for those that don’t know NFL football, your own one-yard line is the worst position that you can start on either offense or defense.) The equivalent of the NFL coaches in personal finance is your income tax strategy. If you know the tax rule, you can use it to structure/position your assets and debts in ways that can give your income the preferential tax treatment, maximize the deductions and ultimately pay less taxes. The majority of successful NFL teams had great balance in these three areas and great coaches.
So for an average person, building a secure financial future is a result of investing in great income generating assets, managing/utilizing debt responsibly, position your assets and debts so they can work efficiently to maximize your net worth and using tax strategies to keep more of your hard earn money in your pocket.
My goal is to show the average person how I built my Super Bowl caliber team (my financial future) with a balanced offense, defense and special team. Which means that I am going share with you how I acquired my assets, manage/utilize my debts and position them advantageously to maximize my net worth. At the end of the ultimate game, that’s the end of the Super Bowl game (to me, it’s the point of Financial Freedom), I want to be able to finish as a Super Bowl Champion (for those that don’t know NFL football, every team’s goal is to win the Super Bowl every year) and ride into the sunset with my Super Bowl (retiring at age 48. This would have been awesome if I was able to retire the year that Super Bowl 48 was played – 2014). I’ll be celebrating with my fellow personal finance enthusiasts. Hopefully, I’ll inspire enough of you to build your own championship caliber team – your sound and secure financial future.
Here are my offensive strategies:
Special team strategies:
Enjoy the road to Super Bowl LI everyone. Hopefully, your team is in it, and you are on the winning side.