I appreciate how open this post is. The cash crunch section struck a cord. For anyone considering starting something on their own: build a buffer. Build a bigger buffer than you think you'll need.
I started three years ago, out of school. I'm not a hacker, and didn't have an immediately monetizeable skill. I saw an opportunity to build recurring revenues (through e-book sales with a partner) and pursued it as fast as I could.
The strategy worked. Those recurring revenues are wind under my wings, and gave me the skills to expand my business into other areas.
But man, that was a tough couple years. I was constantly short on cash. Historically, when people guessed my age, they guessed [biological age - 3]. Once in this rough period, people guessed my biological age!
2013 was the year my business took off. In the final six months I earned enough to pay off my loans from school, my taxes for the year, and build a savings buffer. That was from being almost bankrupt in June.
What a difference. I feel relaxed. People now guess [biological age - 1 or 2], so the decrease in stress must be having an effect. I look more rejunvenated to myself in the mirror.
I can see and pursue opportunities much more effectively. And it's all because I have a relatively small amount of excess dollars in a bank account. That surplus allows you to raise your head and look around.
Build a buffer.
Some time ago a HN member posted about maxims he uses to guide his life, and he ended up making a daily maxim site. This one came up yesterday, it's quite relevant:
Thanks, I should have pointed out the second part. I should have lived more cheaply than I did. I frittered away money here and there that could easily have tided me through a couple of short term crunches. And I could have more easily pursued several medium run goals had I had such a buffer earlier on through saving.
I've found tracking spending has made me a lot more conscious of where the money goes, and doesn't take much effort. My spending fell naturally once I knew where it was.
I also incorporated more of those hidden liabilities patrick talked about into a spreadsheet where I have an estimate of finances at month's end. Seeing my total net worth on this sheet rise has been highly motivational. It also helped me accurately assess what margin of savings I'd need at bare minimum.
Note: I tried mint, but found it didn't produce the same effect as entering data manually.
I started three years ago, out of school. I'm not a hacker, and didn't have an immediately monetizeable skill. I saw an opportunity to build recurring revenues (through e-book sales with a partner) and pursued it as fast as I could.
The strategy worked. Those recurring revenues are wind under my wings, and gave me the skills to expand my business into other areas.
But man, that was a tough couple years. I was constantly short on cash. Historically, when people guessed my age, they guessed [biological age - 3]. Once in this rough period, people guessed my biological age!
2013 was the year my business took off. In the final six months I earned enough to pay off my loans from school, my taxes for the year, and build a savings buffer. That was from being almost bankrupt in June.
What a difference. I feel relaxed. People now guess [biological age - 1 or 2], so the decrease in stress must be having an effect. I look more rejunvenated to myself in the mirror.
I can see and pursue opportunities much more effectively. And it's all because I have a relatively small amount of excess dollars in a bank account. That surplus allows you to raise your head and look around.
Build a buffer.
Some time ago a HN member posted about maxims he uses to guide his life, and he ended up making a daily maxim site. This one came up yesterday, it's quite relevant:
http://www.maxims.us/build-superreserves/