Developing your plan

This is where it gets real. You’ve set some lofty goals for yourself, and now it’s your responsibility to come up with a plan to achieve them. You want your income to exceed your expenditure. You want your assets to exceed your liabilities. You never want to see a bill printed in red ink again. How are you going to make that happen?

There are specialists who write in great depth about specific strategies, and for now, I will only touch on those I have first-hand experience of. The long and short of it: no matter what your goals (unless they are to get poorer or into more debt), there are some pretty universal things your approach needs to address (not necessarily in this order):

+ Increasing: income and assets

- Decreasing: expenditures and liabilities

Johnny Mercer got it right: you’ve got to accentuate the positive, eliminate the negative.

Increasing income

• Primary employment
• Secondary income streams
• Interest and dividends

Increasing assets

• Checking and savings accounts
• CDs and ladders
• 401k
• IRA
• Real estate
• ETFs

Reducing expenditures

• Accommodation
• Food
• Medical expenses
• Entertainment
• Utilities, other bills

Reducing liabilities

• Credit cards
• Personal loans
• Taxes (nothing shifty, just making sure you get all the deductions and credits you’re entitled to, and paying what you owe, but not a penny more)

Think it over. Some of these items may not apply to you, and there are plenty of possibilities I haven’t listed, but your answer to the question “how will I get there?” will need to involve strategies for increasing the type of items on the first two lists, and reducing the type of items on the second two. We’ll get into these in more detail later, after we introduce the final question…