Cashflow: Part 2

"The wise have wealth and luxury, but fools spend whatever they get."
Proverbs 21:20 (NLT)

In my mind there are two things necessary to be "wealthy." First you need cashflow (income). How much are you bringing in a month, a year? Every one needs cashflow. But cashflow is not everything. After all, I know lots of people who make double, triple, or even quadruple my sad monthly cashflow but yet they lack wealth. Why? Because they either spend more then they make (negative cashflow) and/or they don't have any of the second part to wealth; assets. Here's my amateur formula for wealth:

Positive Cashflow + Assets = Wealth

Assets. To become what I consider wealthy you need to get assets. The easiest way is to buy them is with your cashflow. It takes a lot of discipline to take some of your hard earned cashflow and buy assets. But they are essential so that you have something to fall back on in case your cashflow someday is interrupted. And the best assets appreciate in value and actually add to your cashflow. For instance some stocks pay dividends and some real estate pays monthly rents.

Most people focus on increasing cashflow. Cashflow is sexy. But assets are just as important. Eventually some day you won't have any cashflow (or the reduced cashflow of a pension). What do you depend on then? Easy, you sell some of you assets. That is if you have any. It's best to start getting assets when you are young and when you have lots of disposable income. It's never too early to start of course.

For the past two years Team Westman has focused on getting some assets. We bought two properties and bought and sold a small business (a candy route) for a small profit. Luckily we did this with mostly my bank's money. I figured that if I was going to be a poor (in terms of cashflow) student we might as well use the equity in our home to buy some more assets. But lest you think I'm boasting I actually have a pretty serious problem right now: low cashflow. Several years of neglecting this area is now catching up with us. Just as a business can't live without cashflow, neither can a family! As I move from waitering/being a student into counseling thing are getting super tight. It's time to increase the cashflow quickly. . . or else. It's tempting to just sell all of one's assets, but hopefully we won't have to do that. Here's hoping I can build up a clientele quickly!

The stress of cashflow problems is enormous. If you are in a negative cashflow situation, you know what I'm talking about! Just the thought of being there causes me stress. My sleep is not as good, I worry, and I think it even affects my health and my relationships. With credit cards and lines of credit people think they can live a negative cashflow life - but they can't. Eventually it will catch up to you. Being in negative cashflow situations is bad also for your spiritual life. Does God judge us according to our cashflow? I think not. But the stress of not making as much as we are spending will usually do something to us as it relates to God. Some people think that a spiritual person does not discuss money, that such talk is "worldly." If this is true then Jesus was a worldly person. The Gospels are full of Jesus teaching on it. Money should not be our master, but we need to use it wisely and generously. To do this, you're going to need some . . . money that is . . .

May Light increase!