If your reading this blog then chances are that my life isn’t so different but then again, you are the minority. I have read books such as Tim Ferriss’s Four Hour Work Week and Robert Kiyosaki’s, Rich Dad, Poor Dad. What I have taken from these it not so much the ability to only work four hours a week or determining the difference between an asset and a liability. I don’t believe these books are designed to give you the direct answers but rather to stimulate thought and ideas regarding ways you can live the life you want to live as well as having sustainable financial freedom.

What is my take on supporting your lifestyle? Its not particularly complex but this is my method. Over compensate for your liabilities using your assets. First I guess we need to clarify the term liability and the term asset. This isn’t particularly complex either as I’m not an accountant and won’t be taking their definition of what an asset and a liability is. My definitions are inline with that of Robert Kiyosaki and it’s quite simple:

Asset: Something that leads to money coming in.

Liability: Something that leads to money going out.

Wow… how complex is that? It’s not your traditional definition of the terms by any means, probably far from it but I don’t care. My accountant’s job is to get all technical regarding these terms. My job is to put them in a form that is understandable so I can create structure for how I want to live my life.

Once we have an understanding of these two terms we can lead on to supporting your lifestyle. To support any lifestyle you want, no matter how elaborate it may be, it can be done by simply by getting this equation to work: Assets > Liabilities. Assets are greater than liabilities.  It’s as simple as that. If the money coming in is greater than the money going out you can do whatever you like.

It may seems that I have just stated the obvious but you would be extremely surprised by the amount of people who just don’t get this concept. They rack up credit card bills and go out on extreme nights out only to find themselves strapped for cash with weeks to go until their next paycheck. Yes of course this could be just down to not being able to manage money correctly but if you had assets that overcompensated for your liabilities then you would not run into this problem.

First you need to find out what your lifestyle really costs. If you like to go out and party then factor that in, how much does it cost you to go out every week? Do you have a passion for traveling? How much money do you need for your traveling? If your not sure about how to calculate your expenses then I would recommend you do so by using Tim Ferriss’s lifestyle calculator.

Once you have calculated your lifestyle cost then what you need to do is find assets that will generate enough income to pay off your liabilities. What I do not recommend is finding one cash cow which you believe will pay off all these expenses. By doing this you are developing a mentality of “have a job/asset/income that pays well and then spend as much of it as you can”. Sure if you can find an cash cow or passive income that generates $5k a day then fine, but the likely-hood of this is minimal.

I believe the key is to determine your ideal lifestyle then set up assets and income in order to support it. This is alternate to the usual approach of taking an income then determining the lifestyle that you can lead from it. By determining your lifestyle first you are telling yourself that this is the life you want to lead and you will find a way to lead it. You are telling the world what you want and in turn the world will deliver. The standard method forces you to conform to influences around you, rather than getting them to conform to you.

For example, you may like to eat out a lot and buy new clothes on a regular basis. Say this costs you $500 per week alone. Build an income stream in order to support this particular aspect. You may also own a house and need to pay a mortgage of say, $2500 per month. Ideally what you would want to do is find a passive income that generates about $3000 (you always want a buffer). Maybe you want the car of your dreams which is another $1000 per month. Set-up and and build another passive income so you can afford your dream car then purchase it.

It’s much easier in my opinion to create a few income streams that generating $2000 per month that it is to generate one bringing in $7,000 but that’s not the important thing to get out of this. The important habits you develop is that of a millionaire mindset. You learn that to support any further expenses you don’t need to limit yourself to what you already have. There is no need to take out from your current assets as you know you can create more revenue opportunities to support any new expenses by purchasing or creating good assets.

Don’t be afraid of turning the tide and creating the lifestyle you want to lead without thinking about the restrictions. I am talking about lifestyle expenses from a purely monetary point of view. You may just determine that you wish to do more “doing” things rather than simply “having” more things. Now you have the option. Determine what you want then devise a way to achieve this. Do it the traditional or “normal” way and your only really limiting yourself.

So the question is, do we really need to complicate things even more? Well of course we do! That’s what Internet people do, they make things simpler and quicker by complicating them. Sort of anyway. They take a simple concept and funk up the name so you need to spend hours researching what it is only to find out you knew what it was all along, however through another term coined by someone else.

Lets take DoFollow and NoFollow links for example. The first time I laid eyes on these terms I thought here we go, another way to drive traffic or optimise your site to get an extra 3 visitors per year or give you brownie points for the search engines (also known as “page rank juice“). I decided to ignore it and move on yet these silly terms kept popping up all over the place. The funny thing is no one ever bothers to explain them, they use the term like its assumed knowledge by dropping them in and moving on. Or if they do explain, they explain them like it was some new uber feature leaving you perplexed and contemplating whether what you have learnt so far needs to be discarded to make way for this new mega-concept.

How about this:

DoFollow Link: <a href=”http://www.xxxxx.com”>Link</a>

NoFollow Link: <a href=”http://www.xxxxxx.com“ rel=”nofollow“>Link</a>

DoFollow is a normal link that search engines will regard as a link back to your site. A NoFollow link is a link where a search engine will disregard the link back to your site. DoFollow is better for search engines and page ranks (aka page rank juice). NoFollow not so great for search engines and page ranks. Use NoFollow to ensure best optimisation and value for paid links from your site.

Now why do we need this jargon to clutter up the net? I understand the need to term a “NoFollow” link as it is different to the standard link but why the “DoFollow”? Its a normal link!!! The problem arises when people, bloggers in particular, start refering to forums as DoFollow and NoFollow forums. Or DoFollow and NoFollow blogs. I feel sorry for the NoFollow blogs because they have been branded as “No – Follow” which to the untrained and relatively normal brain means that you “should not follow them”.

I’m calling for simple organic meanings to stay like that, simple and organic. If they are special then sure, name them, but for the basic and clean  terms keep them as is, it’s confusing enough as it is.