You’ve heard me mention Positive Cash Flow number of times during previous lectures on Early Retirement. Positive Cash Flow is the key to retiring young. As someone who understands the value of time, it became clear to me early on that the goal is not to score big financially. Aiming for a big payday puts everything into way distant a future. To retire rich, you may be faced with decades of tight lifestyle before hitting jackpot, but to retire early, you may need as little as positive cash flow of $50 a day. The former will keep you stuck in the office until you’re too old to enjoy yourself to the fullest, the latter could send you on your way to endless adventure in a few months.
My Positive Cashflow
I got my positive cash flow out of the websites I’ve been running for years. I set up my personal photography website back in 2003. In 2004 I added ten more websites to my portfolio but they were each more of a hobby, rather than a business venture. I had a little bit of income through promotion of affiliate networks, but it only amounted to about $50 a month. As years went by, I learned a thing or two about SEO (Search Engine Optimization), learned a little bit of web programming and by 2006 I already had a network of 20 sites running.
I’ve been working on them diligently every day and come 2007, the popularity of some of them grew to a point that a server upgrade was needed. I was still only making pennies a day even after investing a lot of work into them on daily basis. I was doing it because I enjoyed it. There was a little bit of money, but hardly anything to reasonably compensate for the work put into it. Continuous growth resulted in complete necessity to switch to a fully dedicated server in 2008. I was getting a lot of traffic but kept failing in monetizing on my sites. The cash flow was vastly negative at this time as my monthly cost for the server was $199 yet income from my sites was only in the $100 neighborhood.
As the traffic kept growing, I was forced to upgrade my server once more in the beginning of 2009. This time my traffic amounted to half million unique readers a month and that required more powerful server with more available bandwidth. Monthly cost just went up another $100 draining $299 out of my pocket each month for just webhosting itself. Negative cash flow ruled, but I kept financing it out of the money I was making at my government job.
My life was awful. I spent whole day in the office, then when I got back home I worked on my websites. Yet cash flow remained negative. At that time I started to travel again and the phase of my spiritual awakening was initiated. I started to question the premise of going to work until retirement and bit by bit, these pieces of scrabble that combine into a complete picture as presented here in my blog, which opens you up to the life of enjoyment and abundance came together and made me see things I was brainwashed to ignore. I realized that I’d wasted too much of my precious time as a corporate slave and started to work my way to early retirement. There was one and a half month lag between full awakening and my departure.
I used most of that time securing myself with positive cash flow. I knew the websites with lots of traffic were there. After years of putting so much work into them I was faced with the biggest challenge of my life. I’ve realized that 20% of my websites make 80% of all the money. The rest either didn’t make any money, or only very little but together amounted to very high server costs. The idea of getting rid of those websites was extremely difficult to swallow. I put years of work into them and believed that they were on their best way to make it big. If I only stuck with them for a bit longer, I could really hit the pot of gold and become financially secured. But that was exactly the issue – there was a possibility of it happening one day in the future. And as I have come to realize, focusing on future instead of this moment makes you waste your precious time. You don’t live, you enslave yourself because you believe that one day in the future you will get the reward.
I understood it clearly. Happiness is a journey, not a destination and this 20/80 principle is something that accompanies everyone throughout their lives. I worked really hard to get those websites to grow and become popular and now I was playing with an idea of dumping them. I had an option to stick with them, continue doing what I’m doing and look forward to one day in the future when someone with lots of money notices my sites and offers me several figures just like that. Or I could just let them go, quit waiting for something I hope will come, render all the work I put towards them over the years useless, but gain positive cash flow that could set me out on a journey of a lifetime within a matter of weeks.
Since you are reading the blog about Early Retirement with entries from my adventures around the world, you know what came next. With biggest sites gone, my server and bandwidth costs decreased significantly and my negative cash flow changed into a positive cash flow literally overnight. But that’s not all – those biggest sites that were eating most bandwidth and bringing least money were also biggest eaters of my time as maintenance of such busy sites required a lot of dedication. By freeing myself from the clutches of busy but negatively performing sites (in terms of cash flow), I gained more time to focus on sites that previously made 80% of the money.
Within days, I was able to end my $100 negative cash flow and turn it into a $300 positive cash flow. One and a half month later, I quit my work and sat on the plane to South East Asia. During initial weeks of my early retirement I lived frugally but not cheaply and I put some work towards my money making sites, increasing positive cash flow to $1,000 a month. And I just went with it from that point on.
The only trouble was, that my life instantly turned from this miserable rat race in the office to an exciting adventure that never ended and I was enjoying myself every day to the fullest. Early Retirement rocks. But because of that, I’ve been only putting a few hours a week towards growth of my online business so my positive cash flow has not increased significantly since I’ve reached the $1,000 a month net income. My monthly Early Retirement costs fluctuated between $600 and $700 so the cash flow remained positive even after all of my expenses. And this is all I could need. I’m having the best time of my life. I’m enjoying myself every day. If I did not go for it, I’d be in the office right now, doing what my boss tells me, fixing other people’s problems. Then when the paycheck comes, I’d go and spend it on something because that’s what consumerism we are brainwashed into by the media is all about. We enslave ourselves by dedicating the best days of our lives to working for corporations and end up spending our compensation on material things we don’t actually need to be happy.
I don’t own that much right now and I’m way happier than when I owned all the crap in the world. I have my laptop, my digital camera, few things to wear and a whole world to explore. Would I be better off if I continued focusing on retiring rich when I’m 65? No way. I’m perfectly healthy right now, I’m enjoying myself while I still can. The whole world lies before my feet and I explore it unhindered every day.
My goal is to increase my positive cash flow within the next 6 months so I have enough back up and I would also like to diversify the activities so I have some positive cash flow from different sources. Retiring rich puts the lifestyle you desire in indefinite future. Retiring early enables you to get the lifestyle you desire as soon as your positive cash flow reaches the level that meets or exceeds your comfort level.
The quest for cash is a fool’s errand. Rich people can become poor on any given day and all you have worked for will be gone, but once you have the positive cash flow happening, you don’t concern yourself with whether you’re rich or poor. But that still doesn’t matter, because if you build up the positive cash flow and use it to retire early, you will have lead rich and fulfilling life full of amazing moments to share with your friends and family. Don’t save your life’s enjoyment for the end of your journey on Earth. When you are on your death bed, you will wish you had spent less time with your boss in the office and more time with those who matter to you. The life is now. Instead of giving yourself reasons why you can’t, give yourself reasons why you can and make it happen. Go with confidence in the direction of your dreams. Live the life you have imagined.
“The minute you choose to do what your really want to do, it’s a different kind of life.”
— Buckminster Fuller