A Simple Guide To Managing Your Money.

You need to stop being so stupid with your money. You need to stop thinking that the money you earn as as an adult video chat model is somehow different than money earned another way. You need to understand the long term impact (and cost) of the financial decisions you're making right now. Personal finance has a lot to do with behavioral psychology and a little to do with money.

As you're reading this, please understand that I'm writing it knowing that the vast majority (read: 100%) of performers at Pandora Modeling did not come to us as independently wealthy private citizens that were looking for a thrill on cam. Everyone needed a way to make money, and here we are. You were probably broke, or nearly broke, when you started this gig. So was I. 

I never wanted to talk about money while I was broke. At least not about my money. It was uncomfortable. I grew up in poverty. I know what the envelopes for electric shutoff notices look like. I know how it feels to scrutinize the cashier screen at the grocery store as items get rung up to make sure you didn't accidentally go over your budget. Budget of course meaning the available balance of your checking account, that's always what budget means when you're poor.

"ONE WEEK became three weeks, and one month became five. From time to time, as I worked the streets of Colaba with my tourist clients, I ran into Didier, or Vikram, or some of the others from Leopold’s. Sometimes I saw Karla, but I never spoke to her. I didn’t want to meet her eyes while I was poor, and living in the slum. Poverty and pride are devoted blood brothers until one, always and inevitably, kills the other." -Shantaram

You don't want to talk about it. You don't want to focus on it. It stresses you out. You have anxiety about it. You just want it all to be fixed, for some magic amount of money to hit your checking account that will alleviate the conditions that cause your stress, and then you'll have a blank slate so you can finally start being smart about money. 

Tick tock. 

Look, there's going to be a little bit of awkwardness with this. You won't always feel great. But if we can right the ship with how you behave with money right now, your life will get better. It's that simple. It's not about making huge overhauls or grandiose plans that will soon be abandoned. It's about doing the right things today, correctly. 

This post is going to focus on strategies and tactics. I'm going to start by going through things sectionally, the areas people struggle the most with, and attempting to clarify each one in turn. At the end we'll tie it all together into an easy to implement set of steps for you to work on.

The Parts That You Think Are Hard Are Actually Both Simple And Easy.

Let's begin.

1. Exigency. Making Ends Meet.

When talking about exigencies I'm addressing your immediate daily, weekly, monthly expenses. Buying food, paying rent, utilities, walking around money, and so on. Your bills. 

Every day you spend some amount of money. I call it your daily burn rate. Just like calories, but with dollars. Think of it like your financial metabolism. Consistently bring in less money than you use in a day and you're on a countdown to broke (maybe the timer is already up and you're broke now). Consistently bring in more money than you use in a day and your net worth increases over time. I know this might be so simple as to not need to be said, but bear with me. 

In one day you have to pay for: 

  • 1/30th of your fixed monthly bills (rent/mortgage, phone, utilities, etc)
  • Your food for the day. 
  • Probably something else too. You know… Life. 

Just calculate your monthly spending for the past few months to get the average monthly spend and divide it by 30 to get your average daily burn rate, go with this.

Let’s say you came up with $70.

Add 15% to your average daily burn rate, just as a cushion, this cushion will save you with unexpected expenses every month. That brings us to $80.50. Then add 25% for taxes. That's another $20.12 for us today. That brings you to $100.62, let’s call it $100. 

Every day, you have to make $100.

Want to boost your savings account? Make it $125. Want a new car? Make it $145. Want a nicer place to live, make it $170. And so on and so forth, but you need to understand the daily burn rate that you’re at right now. That's where we have to start. 

What I really want to impress upon you is that if you skip logging in for a day. You lost. You’re behind. All of the money you could have made on cam that day is gone forever, you can’t get it back. You can make money tomorrow, yes, but that’s tomorrow’s money. You were going to make that anyways when you worked the next day. Losing today is a loss, there’s no other way to look at it. 0 = 0.

Maybe you want to take 2 days per week off, because you think that’s normal? Well, then you’re daily earnings will need to be $140/day ($140 x 5 = $700). 

Maybe you want to take 3 days off, Then it’s $175 in earnings for the 4 days you work. 

If you’re daily burn rate is $100. And you take 15 days per month off. Then your daily earnings need to be $200 on work days.

That’s all you really have to do to make ends meet. If you’re doing that, you win. You don’t have to be online more if you don't want to. Pay your way, live your life.

I find it really helpful to focus on this daily burn rate. It's too easy to let bills pile up and just try to have enough money to cover it when the time comes. That's how poor people operate. Things that you don't expect are going to happen every month, and you'll always come up with less money than you anticipated if you don't plan it out.

Doing adult video chat gives you a 24/7 accessible way to make money. You can broadcast 10 hours a week or 10 hours a day. It’s totally up to you.  If you’re living paycheck to paycheck, you're doing it wrong. If you're just making ends meet, you're doing it wrong. Letting it all pile up and then having to log super long days the last few days of the pay period to hopefully get enough in your check to be comfortable is the wrong way to do it. Just put in the effort consistently over time. 

Make more than your daily burn rate. That's how to unlock every subsequent step. 

There is a huge mistake that a lot of people make where they think that if they have any debt (student loan, credit card, car payment) then every spare dollar they have should go to that to get it paid off as fast as they can, because interest. So every dollar that comes in is already spent and they operate with 0 spare cash. 

This is dumb. You’re going to get a flat tire, you need a fucking savings account. 

If you have no savings, you’re in the majority, 69% of Americans have less than $1,000 in savings; 34% have no savings at all (Source: https://www.gobankingrates.com/saving-money/data-americans-savings/_

Make your goal to get to $1,000 as fast as you can. Maybe you can do it in a month with extra hours. Maybe it’ll take a few. But as soon as you have $1,000 in a separate (easy to access) savings account, you’re a top tier American, good on you. 

Then, try not to touch that money under any circumstances. This account is for "I'll literally die if I don't touch it" situations. This is your emergency account. 

Goal #1: Setup an easy to access savings account and save $1,000 as fast as you possibly can. 

2. Working Capital.

As an independent contractor, you’re a business. A business needs cash on hand, we call it working capital, without it you die. 

Tax savings are not working capital.

Let me address the difference between gross and net. Gross is the amount of money we send you (really gross in some cases). Most people get $1,000 from us and think, "Cool. I made $1,000." Wrong. Taxes. Always taxes. Always frickin taxes. 

As a general rule, set aside 25% of your payment for taxes (more on this later). High earners (5 figure payout people) need to set aside more. That $1,000 payment then is $750 net. Don't even think about the $250 as being yours, even for a second. As soon as we process the payment to you your tax liability exists. Just stash it away as tax savings and do the rest of the math from NET. 

From your net payment, take 20% to pay yourself working capital. Money into savings that just sits there until it’s needed. If it’s needed today, you need to make A LOT more money, fast. 

This is your personal working capital. It’s the money that pays your bills if don't broadcast for a while. It’s the money that covers unexpected expenses. It's different from your $1,000 emergency fund. Working capital is something you can touch, you can use, it's there for you to use. 

Ideally, you want to get your working capital to 6 months worth of expenses. So, if you spend $2,000/month on everything, that’s $12,000 in working capital. If you spend $5,000/month, that's $30,000 in working capital. 

My view is that 100% of your savings activity should go towards working capital until it’s established with 6 months worth of expenses. 20% off the top of your net earnings every pay period. If this is hard, make more money. 

If you are living payout to payout and just making it work, you should double your hours per pay period until you’ve financed your working capital account, minimum.

Stop watching Netflix, stop hanging out with people, stop sleeping 10 hours a day. Spend as little money as you possibly can, be a total cheapskate, scrimp and save every dollar you can until you have your working capital. You should be in emergency mode when you don't have sufficient working capital. 

You have to make more money every month than you spend, that’s how you grow working capital. You can try to spend less. You can earn more. Those are the two ways to affect it.

With working capital established, you then need to give yourself a minimum balance that you’ll let it get to before you go into emergency mode. If you get to 6 months of living expenses saved, then maybe 3 months is the cutoff time where you go lean, work your butt off, and build it back up to 6 months. 

If you don't have your working capital financed, you should be aiming to make double your daily burn rate on cam for the next 6 months until it is. 

Goal #2: Establish a working capital account with 6 months of living expenses. 

3. The Balance Sheet. Assets & Liabilities

Now we can talk about the serious stuff. Assets and liabilities. 

Liabilities (the right side of the balance sheet)

These are just debts. Credit cards, student loans, shit like that. It’s the money you owe people or institutions. You should always pay your debts

Know what they are, know where they are, know how to pay them. Try not to have personal debt for dumb things. Use credit cards, but pay them off every month, on time (hello, working capital).

Debts are bills. Just auto schedule to pay them every month. Once working capital is financed, you can take the money you would have saved towards that and put it towards paying down debts faster.  Start with the highest percentage interest rate items first and work your way down, that’s usually the smartest way. If you have some small debts that you can save for short term and payoff all at once, that can be helpful psychologically too, one less thing to worry about. 

As a general rule, super obvious, you want to have as few liabilities as you can. 

Assets (the left side of the balance sheet)

These are things that are a positive value in money. It’s the stuff you own. It’s your money, your property, your possessions. Things of tangible value. 

$1,000USD in a savings account is a $1,000 asset (+ some magical goodwill bonus points for peace of mind). 

A car that you own outright is an asset worth whatever Kelly Blue Book says it’s worth.

The goal with your balance sheet is simple. Get more assets, have fewer liabilities. Every month, once your exigencies are covered, the rest of the money you earn becomes an asset, you can use your assets for whatever you want. You should use them to make your life better and cooler, however you see fit, more on this later.

Once you have an emergency fund and a personal working capital account. If you earn an extra $1,000 in a month, here are a few ideas of what you can do with it:

  • Keep it. And have another $1,000 in working capital. Nice
  • Spend it on shoes. Because, you can
  • Invest it (Open an individual brokerage account at Vanguard, buy VOO, forget about it, in 40 years this $1,000 will be $15,000. Thanks to compound interest + time.)
  • Spend $1,000 remaking your cam setup. You can do an insane amount with $1,000. 
  • Support 33 people in extreme poverty.
  • Keep it. Really, you can just keep it.
  • Literally anything else that you can come up with to do with it. It's your money. 

Once you know your existence is financed for the next 6 months, you'll run into a familiar plateau. Every successful model has hit it. The "What next?" plateau. 

Goal #3: Open a Mint account and add all of your assets and liabilities to it, keep it updated to track your balance sheet over time. 

Mint: https://www.mint.com/

4. Building Wealth.

I actually already gave you the answer to this part. But we'll explore it in more detail and tackle the other existential things that come up at this stage. This is where we talk about investing, and why you need to start doing it right now. 

The Baby Step. If you've never invested before, but you've passed the $1,000 saved mark. You should download Acorns (iOS, Android) and either save your spare change or setup a recurring transfer. Tell it to save $15/day, add that to your daily burn rate, set it to aggressive, forget about it for 40 years, and you'll retire with $1,000,000. $192,000 of this will come from that $15/day in savings (over the long term, shit really adds up), $869,951.38 will come from earned interest (especially compound interest). That $1,000,000 will pay you $70,000/year in interest income.

Acorns has this really cool tool that let's you project the effects of compound interest over time. You can pick $X per day/week/month and see what that money will be at any point in the future. 

Acorns

You don't even need to Google the difference between a Roth IRA and a traditional IRA, you can just download Acorns and start, it's that simple. 

Working capital is just covering your ass. It's to help out on the months you get lazy. It's looking out for you so you don't overdraw your checking account or fail to pay your debts. But it's just sitting there, it has to just sit there. When you're making ends meet, and you've got your working capital taken care of, then all excess cash should be deployed towards building wealth.

With Acorns, when you get to over $5,000 in your account the annual fee is 0.25%. That's more than 6x higher than Vanguard, still a lot lower than mutual funds. In the short term (the next 5 years) this difference won't really mean a lot, especially if you're operating with less than 6 figures. But longer term, as you build your wealth account, I would switch to Vanguard eventually. I would however start with Acorns, just because it's so damn simple, that I will actually do that. You can set and forget with Acorns. 

Stepping Up Your Game: Vanguard

We <3 Vanguard. This page details why we love Vanguard. If you open an account at Vanguard and buy one of their funds, you own part of Vanguard. If you open an account at a normal mutual fund or bank, you don't own that company, someone else owns that company and will want that company to earn money from you, the client. As of now, Vanguard is basically the absolute cheapest way possible to invest in public markets. 

To explain why that's the case, let's talk about VOO for a second. The Vanguard ETF that tracks the S&P500. VOO is just the identifying code they use to track the fund in the stock market. 

Meet VOO

VOO

Don't let that scare you. You just need to look on the right side where it says Expense Ratio as of... And see that it's 0.04%. You then need to know that a typical mutual funds expense ratio is 1%. Math time. $1,000 invested in Vanguard VOO = 40 cents per year in fees. $1,000 invested with a typical mutual fund = $10 per year in fees. That's what matters. 

Fees are what kill returns over the long term.

The other good thing to know about Vanguard is that the company has $4,400,000,000,000 (that's 4.4 trillion dollars) in assets under management at the time of this writing. They're totally legit.

Open an account at Vanguard, open an individual brokerage account, use your checking account to fund it, buy shares of VOO, forget about shares of VOO, don't check the stock market, don't try to time anything, just consistently buy it over time. 

Long term the US stock market has averaged a 7% annual rate of return. That 7% benchmark is what I've used when I did every compound interest calculation above. When I said take $1,000, put it in VOO, forget about it for 40 years, and you'll have $15,000 that's just a simple calculation using a compound interest calculator

This is how you start. And this is how you can do it for a long time. You can't screw it up. I'm operating on the principle that the more complex this section becomes the less likely you are to do any of it. So the beginning and end of my investing advice for you is this. Buy as much VOO as you can, as fast as you can, and hold it for as long as you can. You don't need a financial adviser, you don't even really need an accountant, you don't need special accounts.

One thought on everything I'm NOT mentioning. The moment we start to talk about the difference between a Roth or Traditional IRA or a SEP-IRA is the moment everyone gets lost in the minutiae of these accounts and checks out ending up never saving a penny because money is too hard.

You don't have to use any of those. Once you've started, and put away a significant amount of money, you can talk with an accountant about account structures and what they recommend for tax purposes. You can open basically every type of account with Vanguard. And if you want to Google all of that stuff and ask your accountant on your first meeting, you totally can. But stressing about the optimum setup keeps everyone from starting. You have to start. Grind and put $1,000 into it a few times and you'll retire with a 6 figure nest egg. Do it a lot of times and it'll be 7. 

Goal #4: Download Acorns and setup a recurring investment.

5. Fuck You Money.

When do you get to be free?

What is the amount of money you need in order to never have to work again? The amount where no one can ever tell you what to do again? The amount where you can do anything, anytime, without worrying about the cost?

That's what we're playing for. Most people don't ever get the opportunity to even imagine it seriously. Some of us do. I want you to understand in completely real world terms what fuck you money looks like. 

One note on portfolios: At the fuck you money level, things change portfolio wise. You wouldn't have 100% asset allocation into Vanguard VOO. You'd have a mix of assets classes designed for security and protection, not growth. Basically, you'd own a lot more bonds. I.E, Vanguard BND fund. Bonds get a lower return (around 5%) which massively slows growth. Stash $1,000 in Vanguard BND right now and in 40 years you'll have $7,388 (versus the $15k from VOO). That's the difference between the 5% return of bonds, and the 7% return of stocks.

Why doesn't everyone just own stocks? One word, volatility. Stocks go up and down a lot more than bonds do. This matters a lot later in life.

If you have $1,000,000 stashed away in VOO and you retire and an inevitable stock market crash hits, you might lose $300,000 of your nest egg in a year. When you're living off the returns, that's a critical blow. You drop to $700,000, still have to pay your $70,000 of living expenses every year and when the market eventually rebounds you bounce back to a $600,000 portfolio instead of $1,200,000. 

That is a severe blow. Avoiding that is why Jack Bogle (the founder of Vanguard) suggests people should own their age in bonds. Others recommend a 15/50 rule, which says if you think you'll live more than 15 years longer, you should own 50% stocks, 50% bonds/cash. 

The point is that fuck you money requires stability. You can't lose half of it, otherwise all those times you said fuck you will come back to bite you in a big way. So you don't need a 7% return once you make it, you can just make more money and go for 4-5%, and it's all good.

Fuck you = ultra conservative. 

So how much are we really talking about?

Fuck You Money. 

Median Income in the US is just about $60,000. Let's go with that. $60,000/year buys you a good life with a nice house, money to vacation, and so on. At $60,000/year you'll owe about $11,000 in taxes, based on today's marginal tax rates. 

We're going to go with a 5% portfolio return for the reasons mentioned above. Now with a target annual income of $71,000. What number do we need? 

$1,400,000. 

1.4MM in a low-risk, bond heavy portfolio gives you a comfortable $60,000/year income in interest earned after taxes. Want to get there in 10 years? You need to put away $8,000/month. 15 years? $4,400/month. 20 years? $2700/month. 40 years? $528/month. 

Time is the asset here. When you do compound interest calculations, you learn that those later stages are where things really start to get interesting. The last few cycles of 7-10 years. This is why it's so important to start now. The dollars today are worth way more than the dollars you put in 10 years from now because they have all the extra time to grow. 

Maybe this feels unrealistic, or out of your scope. "Fuck dude. Maybe I could put away $528/month if I really really fucking pushed myself, but it'd mean not enjoying life at all ever, and plus I can't cam for 40 years, so what I do won't really matter."

This is a really fatalistic, hopeless idea. It hurts me to hear it. And I'm happy to report that it's just plain wrong. Put away $1,000 once and it becomes $15,000. That means that 40 years from now, you'll have an asset that will pay you roughly $1,000/year in income. Passive investing is buying an income for the future, and if you start soon enough, the results are insane. 

But it's not that just 40 years from now some magic thing happens and you're finally able to rest, be happy, and finally go to the movies. That's not the point. When you do this your life becomes the life of someone who is actively building wealth, it changes how you make decisions, how you live, what's important to you, and I think you become a better person. 

Most people can't make Fuck You Money on cam. If you're earnings are under $100/hr, it's just super tough math to imagine. $50-80/hr and diligent work and maybe you can over a decade. In any case, it requires a tremendous sacrifice. 

Maybe you don't need to though?

Maybe using this as a means to make ends meet is enough while you go to school, launch your career, and enter into the path that will be your true vocation. Maybe you can take the money you make from this gig and use it to seed the ideas you're intensely passionate about. The moonshot ideas that might get you to the next level. Build that app, open that store, try that thing. 

Maybe your adult video chat gig can give you situational fuck you money.

While you're camming and making enough money to make ends meet, you have situational fuck you money. You don't have a boss. You don't have to punch a time clock. You work for yourself. You can do it whenever you want, from wherever you want.

Travel, explore, try, fail, repeat. That's pretty damn close to fuck you capabilities.

Want to go back to school? Do it, make money for tuition on cam.

In school now and want to graduate, get a masters, and work in X? Make just enough money on cam to make ends meet and have some working capital and put all of your spare time into mastering your studies and networking.

Done with school, don't want to go back, want to start a business and live off of it's income? Fucking, do it.

Put in the work and you can do anything. Most of you won't make millions of dollars on cam. But you can make enough to take care of yourself while you prepare yourself for those big ideas. You can make enough to seed new companies, that in turn can make millions of dollars. You can make enough to give yourself the free time to practice, learn, and develop new capabilities. 

There is a gross undervaluing going on of this situational fuck you money. The notion that, because this won't 100% last forever, there's no point in taking it seriously at all. You're needing to have it all figured out. Needing to have the one answer that will bring you a good life however you define it. Needing everything to fit into a nice package. It's just having unrealistic expectations for life, and you'll always be disappointed. 

The fact that you probably can't cam until your 90, makes a lot of people choose to just not really give it a serious effort. And I watch individuals leave hundreds of thousands of dollars on the table, because they watched a lot of Netflix instead. 

There's also just a complete fallacy on aging out of adult video chat. If you want to still be doing this when you're 45, you could. If you don't want to still be doing this when you're 45, shouldn't you be grinding a lot fucking harder right now to save up money and be able to go onto something else. 

The options you'll have at any point in life if you have $50,000 in cash are a lot different than those you'll have with no cash. 

You can either put in the effort or be a broke loser your whole life. Putting in the effort is an easier life, and it's actually a lot more fun. 

Goal #5: Work to make fuck you money. 

6. Taxes.

This part scares a lot of people. Don't worry. It's easy. We're almost through it. Here's what you need to know about taxes. 

You are all independent contractors. That means you receive from us a 1099-MISC form in January of every year that reports the earnings we paid to you in the previous calendar year, we also send a copy to the IRS.

You are self employed

The IRS Guide For Self Employed Individuals: https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

If you're estimated tax payment will be more than $1,000 for the year, then you are required to file and pay your estimated taxes quarterly. If you don't file quarterly, you have to pay a fee on the annual tax payment. It's not a huge fee in most cases, but filing/paying quarterly is easy. So just do that. 

Seriously, this part freaks everyone out. Taxes, while simple (and too high obviously), present the biggest thing most people worry about and, "Fuck it, I'll just pay the fee" is how 90% choose to handle it. A lot of people also strategically make less money to make taxes less stressful. So here is exactly what you need to do.

Google: [your area] personal accountant.

Find one that you like the looks of, call them (you could also email them if you're shy) and say exactly, "Hello. My name is [insert your real name]. I'm looking for an accountant. I recently started a new gig where I'm an independent contractor and I'm a bit lost on taxes. I've never had to do anything with quarterly taxes. So I'd like to hire someone to handle this for me and make sure I'm doing everything right."

Every accountant can do that. Every personal accountant will do that. Doing that makes up a significant amount of the work that personal CPAs actually do. When I say personal CPAs I am talking about CPAs whose professional focus is on individuals, not businesses/corporations.

When you hire an accountant, they will plan the quarterly taxes, calculate the estimated taxes, and make the payments. Annual tax filing from a competent accountant is likely to run $200-300. Tack on a bit more for handling the quarterly stuff as well. It might come out to $500/year. 

This will be the best $500/year you have ever spent. It will buy you peace of mind. You see, accountants are so good at this whole tax thing, they're like ninjas. They know what form to use, what to write on every line, how to use calculators, when to use calculators, where to mail the checks, it's crazy how brilliant they are.

They can do that because, it's what they do. It's what they studied for years to learn how to do. It's the easiest part of their job. And they already do it for dozens or hundreds of other people, and you'll just be one more client in their to-do list that they'll be glad is increasing their annual income a bit. 

Seriously, call the accountant you like the looks of, set a meeting (most offer a free consultation), bring a list of every question you've ever wanted to ask an accountant, and just go through them 1 by 1. Make sure they're someone you can communicate with, that you like, and feel like you can trust. This trust part is important to feel because you have to be very open with your accountant. 

Meeting an accountant involves telling them exactly what you do for work. Don't hide it. "I am a model on an adult video chat site. So I work from home on the computer, and chat with people." They need to know. Mention it on the first call. 

Your accountant is a fiduciary. They have a legal duty to act in your best interest. 

I really just think everyone that's serious about this should hire an accountant. The $300-1,000/year it'll cost would cause a lot of you to go from making $15,000/year because you're bad at money to making $60,000/year. 

Bonus points: You'll then get to say things like, "I'll have to check with my accountant."

You can handle taxes yourself. It's easy. Click on the IRS link above and go through it. But if you can't. If it stresses you out. Dedicate a couple of logins per year to "Accountant Money." Save up a few hundred dollars just for that and hire an accountant to do it all for you so you don't even have to think about it. You'll be glad you did. 

Most people assume that they need millions of dollars to bother with an accountant (most poor people). That's simply not the case. Personal accountants aren't crazily expensive. In most cases, the tax fee you'd end up paying the IRS by not filing quarterly is more than the accountant would have charged to file quarterly for you. 

You can also discuss investments with your accountant. While some are registered investment advisors, all are capable of advising you on the different types of accounts to use (I'm talking IRA stuff now) for tax advantages and long term investing.

Goal #6: Hire a personal accountant to file & pay your taxes quarterly.

7. Guilt Free Spending. 

None of you need my permission to spend money on dumb shit. So I was hesitant to even mention this. We all do it, all the time, and it's fine. Enjoying life now is often a better driver for money making than "comfortable retirement in 40 years." Most of us probably expect to die in epic fashion before then.

But then I thought... Maybe some of you do?

One abrasive aspect of most financial advice for me rests upon the notion of lifelong penny-pinching austerity. Starbucks is evil. That $5/day, if invested properly, would be $344,000 in your portfolio at retirement. Every time you take a sip that's $10,000.

Personally, I like Starbucks. I like putting on my Airpods after I get dressed in the morning, turning the volume way up (lately the song is either Russ - I'm Here or Bruce Springsteen - Adam Raised A Cain) and walking down to grab a Venti Iced Cappucino (one of these days I'll switch to Americano I promise) then sitting in an armchair while I drink it and muse on life and business.

I like the Adidas Ultra Boosts that I have two pairs of. I like my iMac. I like my linen bedding. I like my Phillips Sonicare Diamond Black toothbrush.

I like living for today. Doing the things I like to do, with the people I like to do things with. Meals, shopping, movies, travel, whatever. I'm not patient enough to wait 40 years to do any of that and I don't think I should be.

What's cool about this gig is that you get to do both. You can have your cake and eat it too. You can enjoy life now and later. 

The 20% Rule.

If you're daily burn rate of $100 has you living in a situation you don't love, hack it, design a new life, find out what it costs, and establish your new daily burn rate.

Just as you increase your daily burn rate for exigencies like Starbucks or BMWs or new kicks, make sure to respect the 20% of net income saved rule. If $20 out of the $100/day is going into savings, you're doing great. Finding $80 more per day for the shit you really want in life will force you to put another $20 away in savings, increasing your overall burn rate by $100.

When you adhere to the 20% rule an increase your exigencies leads you to save and invest more overall. The $5/day at Starbucks becomes the impetus for the $5/day that gets invested and becomes $344,000 in the future.

This is what I call a positive constraint. It's one simple, basic, easy to follow rule that gives you the freedom to live well, on your own terms, now and always. 

I'll take another cappuccino, thanks.


The Action Plan.

  1. Calculate your current Daily Burn Rate.
  2. Commit to saving 20% of all net income.
  3. Open a Mint account to track your spending + assets/liabilities.
  4. Save $1,000 in an emergency fund.
  5. Save 6 months worth of living expenses as Working Capital.
  6. Download Acorns and setup a recurring investment.
  7. Hire an accountant to calculate, file, and pay your taxes quarterly. 
  8. Respect this 20% rule as you recalculate your ideal lifestyle for a new DBR so that increasing your personal spending increases your portfolio and you win/win. 
  9. Work on making Fuck You Money. 
  10. Spend the extra money you make on whatever you want, guilt free, enjoy your life.

The Podcast Episode On Money Management: https://soundcloud.com/pandoramodeling/6-personal-finance-a-simple-guide-to-managing-your-money

Disclaimer: I am not a financial adviser. I am not a financial professional. Investing in the stock market involves risk. I don't know what I'm talking about. Do not listen to me under any circumstances.