“Flipping”

Flipping Expenses to Income or Savings

Why are broke people always broke?  I have talked about it all over this site, but one big reason is they are always giving their money to someone else.  With that, they rarely give it to themselves, and hardly ever have someone give them money.  All the while they do not realize how it adds up.  It takes the idea of Thinking in Terms of Hours. Not Dollars one step further.  In reality, when you buy certain things or take certain expenses, you are really doubling your cost since the money can not be put to use for you.  Add in compound interest and it is more than double.

Consider the Car Payment

As of September 2017, the average new car payment in the USA crossed the $500 mark, with a 78 month term. Yikes!  I bought new once in my life.  No feeling like driving that new car off the lot.  No feeling like seeing the odometer have less than 10 miles on it.  No cost, either.  Forget sticker price or drive-off price.  Lets look at the actual cost, which is all of the payments.

$500 X 78 = $39,000.  That is the cost.  If you make $19 per hour that is one full year of pre-tax income.  Not to digress, but you should not spend more than 6 months pre-tax income on a car.  The $19 is just something I put there to give real perspective.  But $39,000 goes right out the door.  Now imagine you drive junkers, or even get a decent car for $6,000 and get 4 years out of it, not a huge stretch.  In this case, you put $3o,000 aside, right in the bank.  ($39,000 less the first $6,000 car for 4 years then less another $6,000 car for half that time, being $3,000 in the period.)

You invest that $30,000 fairly conservative in mutual funds, $6,000 per year worth, and I’m not going to do all the calculations, but figure you end up with $35,000.  What do you have in 78 months?  $35,000 plus a worn out car.  What does the new car guy have?  $0 and a worn out car.  His insurance will be more but lets forget that, he may have lower repair costs, but also may not.  We’ll call all of that even.  Now what happens?  The cycle will repeat!  New car guy might even trade before he is paid off.  Forgetting car payments will be higher then, You will put another $35,000 aside, the old $35,000 should be $40,000, $70,000 in your pocket!  He goes to the lot to repeat his cycle.  See the point?

Hustle vs. Sitting at the Bar

Do as I say, not as I did.  First, I don’t begrudge anyone spending some time at the bar.  It is part of manhood, and really, you learn how to behave and how the world works as you spend time at the corner tavern.  How to interact with other men, and how your reputation gets built.  All that being said, you can blow too much time and money.  Well before I got the BPB vision, I noticed how much I spent.  Tired to keep it to $20 per visit, though I was making $12 or so per hour.  Each bar visit was 2 hours work.  One visit a week was $1,000 per year, and I hit it 1-2 times per week.  Most people would spend more than I did.  Even assuming my food order was dinner, just too much.

Instead of hitting the bar one more night a week, imagine a hustle that pays $50 a night.  Maybe you drive for Lyft?  Maybe you work as a bar back in the bar and are able to chop tips with the bartenders.  You could do like me and work the party entertainment circuit, making the money just not week in and week out.

You save $20 per week, or about $1,000 per year not going out.  You bring in $50 per week, or $2,500 per year.  That is $3,500 per year flip!  Enough to buy that $6,000 not-quite-a-junker car in 2 years then put the rest aside!  $25,000 over the 78 month car payment period (assuming invested), so with the car payment flip you are talking being $60,000 ahead of the new car guy who drowns his sorrows at the bar because he has no money to be a BPB!

Minimalism and Flips

This is the whole point of minimalism.  Little things add up and fast.  Even a $4 Starbucks a day is $1,000 per year.  Cable TV is $1,000.  This is why being a modern minimalist is the route to being a BPB.  Live as half-a-monk for 5 years and be set for life.  Not total, but such that you have > $100,000 in liquid assets.  That is not retirement money, though it is enough that you can tell any employer to drop dead and not take a lifestyle hit, assuming you are living small and not loaded in debt.

Go For It!