Financial faucets and you

Those following financial sustainability know about faucets. We all have experienced the “drip-drip-drip” of a leaky faucet. It’s not only annoying, but if left unattended, it could add up to thousands of gallons of wasted water and a very large water bill. Losing money through not being mindful of small leaks is bad. Additionally faucets are a great way to collect money, and with enough of them you can be 100% financially sustainable.

Money comes in... money goes out.  Wealth is what you collect and hold.  It is that simple.  Despite common misconception, wealth is not how much income you make.  95% of all high income earners experience what can only be called "lifestyle inflation" in which their costs increase to meet their income.  Sometimes their costs exceed their income, even though they might make six or seven figure earnings each year.  Sure, everyone wants the lifestyle of the rich & famous, but that's just a TV show.  For most of us, it is a shallow and meaningless endeavor.

True wealth = Freedom

Freedom comes to those that don't waste money and don't waste time.  I was told once about the guitarist from the band, The Beatles, George Harrison.  He was always the "quiet one" in the band and yet his contributions were incredible.  Before he died, and after he had left his musical career, he was free to pursue his passion of Formula One racing, and would be a regular at F1 races all year round.  I had heard that each year, from February through November, he would travel with the F1 circus from country to country, race to race.  Each 1-2 weeks there was a new race event in a foreign land, and George Harrison would always be at each race.  He was as regular as any race officials, drivers, pit crew team, etc.  Having the freedom to do that is truly unconstrained.

I'm not saying you have to be a rock star to have that freedom.  But if you can't have the same freedom to make choices like George Harrison did, you are not unconstrained.  We should all aspire not to have the mega-wealth of the rock star (sure, that would be nice but it isn't likely to happen to most of us), but to have the freedom that George Harrison had.  To pursue our passions without restriction.

Installing new faucets

So if you want this freedom, you need to have an income stream that comes in without you doing anything.  You need a constant drip of income filling up your financial bucket you can rely on.  And you need to be sure that you don't have any leaks so that money is escaping without your knowlege.  So it takes some effort up front to create the income stream, and some ongoing effort to ensure that it continues and you have no leaks.  Let's look at some ways this works.

Income faucets

It doesn't take much effort to amass wealth if you have a small trickle of income that allow time to grow.  The power of wealth comes from compounding returns over time, and this can take decades.  But if you are relying on some 4% rule for income for the rest of your life and you choose to want to retire early (not exactly sure I agree with that, but for lack of a better way to describe it, let's go with that), then you understand that a small return maybe all you need for your own financial independence.  But what if the income came not from the return on the $1 million that you have amassed over time, but from nothing other than you turning a tap to bring in the money each month?  That you didn't need to save up all that money first to enjoy the income that you want from it to live off?

This is the key to having a lot of faucets.  Faucets are simply ways to general very small amounts of income, but to have a lot of them.  This way if one stops working, you have dozens of others.  Faucets work on the basis of small income streams that collectively fill up the well with money.  The Internet has been one of the greatest methods of creating small income streams like this and is a major part of any strategy towards financial sustainability.  It is your mission to seek out these faucets and turn on as many as you can get.

Where do you find them?  Well I'm not going to do your homework for you.  But I'll give you a few hints and tips of places you can generate income with little or no ongoing effort.  You might leverage on setting up these things in advance, and you may have to keep an eye on them over time, and possible adjust your strategy as external factors come into play, but here's a few you might want to at least look at:

  • Mining cryptocurrency, like Ethereum, where you can do this either on your own equipment or purchase/lease equipment in a "mining farm"
  • Reselling items on eBay, particularly collectables that you find at Thrift stores, etc.  Once you have inventory, the selling process is relatively painless - just involves listing, packing & shipping items.
  • Commissions that are residual - cell phone plans, for example, often offer some ongoing residual commission for selling something to someone up front, but the commission comes in over time
  • Amazon referral commissions - share links with your Amazon referral commission and you earn Amazon credit if someone else uses your link to buy something.

There are many more.  And they open up all the time.  A simple Google search revealed this:

Since the money is made on the Internet, it makes sense that the money is Bitcoin or some crypto currency since there is little or no cost to receive it.  Just get a hardware wallet to receive your earnings and start to build up your wallet balance.  You can use exchanges like Coinbase to cash out your crypto to your local currency or just keep it there if you have the desire to ride the Crypto bucking bronco.

Oh, and Coinbase give you $10 in BTC if you refer someone to their service.  My links here do that, so I would be grateful if you use them if you sign up for Coinbase.

See, faucets work.  If you had 20 of these working, and earning just pennies each month, you go do whatever you want in life, and you return to them and you will be surprised just how fast the bucket is filling up with money.

Expense faucets

Whereas Income faucets are great to collect money, if you have a leaky bucket and you are losing money that's not good.  The thing is that money lost often comes from just not keeping an eye on things.  The key first step to being unconstrained and financially sustainable is to know your numbers.  This means having a solid budget and tracking actual money in/out against it.  And I mean daily.  At least weekly.  It should be an enjoyable experience that you want to do, rather than something you find a chore.  The key is to make it enjoyable.

Tracking is super easy today.  All banks, credit cards, etc. have ways to automatically link into a master system that you can use.  You download the latest transactions, apply to the appropriate accounts and that is it.  I use Quickbooks Desktop software for this.  But you should seek out what software works best in your region.  Since Quickbooks allows me to produce financial profit & loss statements and integrates with Budgeting, it is a super solution for this.  I have it tied to all of my credit cards, bank accounts, etc. and I can see transactions immediately.  You will periodically see transactions you don't recognize and this gives you the ability to dispute those transactions before you just pay them without realizing.

But also since a lot of online services have monthly or annual fees, we tend to forget about them and just pay.  By constant monitoring you get the ability to really question anything going out.  Are you getting the best value for your expenses?  Do you need the expense?  Is there a better and/or cheaper way?

A popular method of reducing costs in the USA is "cord cutting".  This simply means you unsubscribe from any cable TV provider and find other ways to get TV content.  Since most people have some broadband/high speed Internet service coming into their homes, they are finding that video media content is available through the Internet as conveniently and sometimes more conveniently than over cable or satellite.  So they are ditching a $100 a month cable subscription (that's $1200 per year, or $6000 over 5 years of outgoing money) to get better content over the Internet.  But what they often forget is that since you get content from multiple providers over the Internet, the collective cost of Netflix, Hulu, YouTube TV, Spotify, Amazon Prime Video, etc. often would exceed their cable TV bill.  Yet since the content on those Internet services may not be available through cable TV, they are going to pay for them anyway.   Again, you have to look at what you actually consume and not pay just because you are used to seeing the automatic deduction coming out of your bank account.  That's a faucet going in the wrong direction.

Also you probably have a ton of services that you signed up for and just pay them without realizing you no longer need them.  If you are tracking this with laser focus, that is not likely to be the case.  But if you are not, chances are that that Christmas card Internet service you signed up for last year might just be ready to bill you again this year, and you will just pay because it is more effort not to.  This is how you become constrained.  Laziness is not the answer to wealth.  Vigillance is.

Other faucets that leak money are things like Insurance premiums.  Most of the time, when you sign up for new insurance for your car, home, health, etc. they give you a "smokin hot deal" to get you in the door.  But then the annual increases start to come in.  The thing is that insurance is a competitive business and all providers want your business.  So you need to annually review your policies and shop them around to other providers and you'll be surprised how much you will save.  It is not uncommon to see people saving $100 a month by shopping their policies around.

And also are you over insured?  Most people are.  They use fear as a justification to pay for policies that may never actually pay up in times of need.  Part of your research into insurance should be to use communal review sites like Yelp, The Better Business Bureau, etc. to check the efficacy of a policy.  If it won't pay you when you need it, then why the hell are you paying them?

Look at things like your car.  Is it costing you too much money in maintenance, but you are proud that you don't have a car payment?  Shop around for 3rd party mechanics that specialize in your vehicle and stop going to the dealership for service.  Again, use the Internet to research things.  That "warranty" you bought with the car may not be worth the paper it was written on as your mileage goes up and most of those 3rd party warranties (whether it be for your car, house, appliances, etc.) are scams.  But don't take my word for this.  You do the research before you give up money.  Just remember when they offer you the extended warranty, before you say yes you need to know whether it actually is worth anything and chances are you can't do that at the cashier in the store.  So you find out if you can buy it later if you want (most of the time you can) and you politely say No and go do your research.  Or if you are buying anything that is likely to have an early shelf life, then question whether that is the right product for your long term use case.

We leak money all the time.  When you eat out and they offer you a drink with your meal, the cost of the drink alone is probably 5x what you would pay for it in the grocery store or at the Kwik Mart or Gas station.  Maybe water is just fine and you pocket the money for later.

These things add up

Both income and expense faucets make a huge difference.  Apply the principal of compounding returns on the money, and it is a super generator of wealth.  I believe with little effort, someone could generate about $250 a month of additional income from faucets that take no real work, and probably save at least that in expenses.  So there is $500 a month of money that you didn't have before.  That's $6,000 a year.  So if you put that money into gold or some dividend generating asset, you can find ways to get at least 100% return on the money, or more importantly buying the assets with that capital generates more dividends.  The snowball effect begins.  Meanwhile your faucets just keep on working and you aren't doing anything about them.

You get your time freedom - you get capital to invest in assets that generate more income, and you can see the financial sustainability circle of life continues.

Who wouldn't want that?  And you can do this at any stage in life, from early through to retiree.  It may seem small, but by applying the snowball effect on this, it is HUGE.



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