Eight Numbers That Can Change Your Life
Today I was reviewing some notes from a course I have been taking called “The CashFlow Academy – The Four Pillars” taught by Andy Tanner. It’s a fabulous program with great content.
In this course, he talk’s about the “Eight Numbers that can Change Your Life.” Here is a brief summary of this concept. I hope you find this helpful and it makes you think.
1. Income
– Active Income – income from your JOB where you trade time for money
– Portfolio Income – income that grows from capital gains
– Passive Income – income that cashflows monthly
2. Expenses
– Taxes
– Necessities – things we need to have
– Luxuries – things we want to have
– the fastest way to decrease your expenses is to decrease your taxes
– the goal for money spent on….
– taxes – decrease these
– Necessities – keep these the same
– Luxuries – increase these
3. Cashflow
– Income – Expenses = Cashflow
– Surplus – this is great – we like this
– Deficit – this is not good – we need to deal with this and avoid it
4. Assets
– stuff you own
– income producing assets
– capital gain assets
– An asset is something that puts money in your pocket
5. Liabilities
– stuff you owe
– promises you’ve made
– good debt / bad debt
– A liability is something that takes money out of your pocket
– good debt is something you don’t have to pay off – somebody else does
– bad debt something you have to pay off – nobody else does
6. Net Worth
– your assets minus your liabilities
– positive
– negative
– cashflow is much more important than net worth
7. Buying Power
– liquid assets
– institutional credit
– private money
– this is the life changer
– if I come to you today with an opportunity, could you buy it and how much of it could you buy?
– it’s so much easier to borrow for buying power than to save for buying power
– the number one ability of an entrepreneur is to create Buying Power or in other words Raise Capital
8. Credit Score
– payment history
– % credit used
– derogatory marks
– accounts age
– # of accounts
– hard inquiries
– credit scores don’t matter for raising private money
– credit scores matter for institutional credit
– 850 is the perfect credit score
Final Thoughts
1. In my opinion Cashflow is the most important number to focus on
2. It is important to look at these numbers and determine where your personal finances fit in to this model
3. Setting goals around these eight numbers is what can be life changing
4. Spend some time reading this over a few times and ask yourself “What needs to change to improve my financial picture?” Then take some action and seek out some solutions to resolve what you discover.
I am always available to offer help with any questions regarding these Eight Numbers
Here’s to financial education!!! I love sharing this stuff with you.
PS . I will attach a filled in chart for you to print and save to understand the power of these numbers in more detail.
Kind Regards,
John Heeney
Glenroe Lending
“We build LEGACY to create TRANQUILITY”
john@glenroelending.ca
519 808 7370
