A New Guide Book for PerlMUFF is on a night out on the town with his mate DO.IT.WITHOUT.THINKING and his trainer PLAN.AHEAD
DO.IT.WITHOUT.THINKING has been MUFF's mate for years. He is great fun to be with. Always up for a good time on his over draught, has all the latest gadgets on his credit cards and goes to lots of exotic places with his personal loans.
PLAN. AHEAD: "MUFF we need a strategy for your next fight" he was looking and sounding serious"we have been flying off the cuff with a few of you opponents and you have been caught with some nasty blows you won't last long in this game if you keep that up!"
DO.IT.WITHOUT.THINKING: "Come on PLAN.AHEAD; MUFF is a natural man! He dances like a fairy and stings like vinegar on a cut.... MUFF dosen't need a strategy, MUFF's the best!"
PINT 1 - Night out with the lads
In my last post on PERL, version 2.0 of MERP (MUFF Early Retirement Planer) was launched. It includes some of MUFF's investments he hopes will perform as we go through these tricky times. MERP will be included in the final version of PERL. This practical post is about creating the strategy section of the PERL planning tool (including the financial strategy building) and an introduction to its NEW! accompanying guide book:
- What are PERL's objectives
- What PERL cannot do (Realism is important as much as a positive attitude..)
- New! PERL guide book starting with the introduction, contents and STRATEGY sheets
- A more in depth discussion on strategy
MUFF sincerely hopes this is of interest for you and you can spare some of your precious time to look at PERL and hopefully create your own plan for the future.
PERL is a tool and source of information MUFF has been toying with for the past 13 years. MUFF has asked himself was there a way of taking all of the knowledge built up over that time; the books, business skills, blogger rants, investing mistakes, kids tantrums, living arrangements etc.? It must be USABLE and ideally used on a FREQUENT basis. Looking at the long list of topics PERL covers and knowing that "boy life is complicated", can a simple framework (using a spreadsheet, whiteboard, calendar, notepad and pen) provide an easy to use tool and reference library? From the initial work on PERL MUFF is confident and humble at the same time.
The idea of focusing attention on the important things in life is not new. You can find endless positivity blogs, self improvement websites, and financial books. It is natural to "perfect" a topic area and be "the expert in that field" in MUFF's opinion this can be myopic as LIFE is HUGE and everything is interrelated. For instance neglecting your health would ultimately lead to financial ruin, the lack of energy for self improvement activities.
PERL will never be the expert in any field nor should it. It would become unusable very quickly. Why try to re-invent the wheel in a cooler way when experts are available? PERL will therefore be used to call on the BEST of the web for information and guidance.
PERL is a tool to encourage action and tracking on a regular basis. It should be very interactive, visual and engaging. Utimately PERL should help to make and stick to decisions for better or worse, forging ahead into THE FUTURE confidently and assertively.
As PERL is in a spreadsheet format it is infinitely customisable so if you think something is missing or not of interest you can easily amend, hide or delete its contents. Go ahead knock yourself out (not literally) :)
The noise of life is always going to be there, everyone's noise is different. How do we muffle the big noises in our lives? - MUFF
PINT 2 - Enjoyable: What are PERL's Objectives?
- A financial planning and tracking tool towards Very Early Retirement whilst considering risks.
- A big enormous life goal building and review tool - for you to set your own targets for to achieve your personal and family aspirations and happiness.
- Part of a regular review process to focus on the widely important issues and make decisions happen.
- A celebration tool - list of your achievements and completion of goals - you are winning!
PINT 3 - Tipsy: PERL Is Not
MUFF's ambition has no bounds, so he has to constantly review the content of PERL to make sure the question "Is it really needed?" is regularly asked. Spreadsheets can grow very quickly and can easily become unweidly and unusable. It is always useful to define bounds and consider what the protagonist cannot be:
- There is an endless procession of books on, finance, life, self improvement, business skills, career planning. MUFF has read an awful lot. The challenge has been to take the best bits from each one, which tend to be one or two action items, and actually do something about it.
Books tend to (and have to) describe actions over entire chapters such as investing options for retirement. Unfortunately you cannot carry around all of that information in a bag or even in your head and quickly reference the information.
So the PERL spreadsheet is not a library of information but it will link to it. It will not provide in depth reasoning in the tool or detailed advice on how to use it in the spreadsheet.
- Everyone has different goals in life and everyone has different ways of reaching them. PERL is not going to define your goals. That is up to you. PERL is one way of approaching life you can change PERL to meet your needs as it is just a spreadsheet. What PERL does, in this respect, is provide a platform that has been proven to work in a ruthless corporate business environment to WIN.
- PERL is a tool that is going to evolve and change down the years. It is a learning process - what works is a fine balancing act between too much content or not quite enough. What can be hidden (equations and calculations) and what needs to be shown? What flexibility is required for someones own personal circumstances.
For example the budget sheet is very simple. MUFF has seen very very large individual itemized budget lists that go on for many pages. In MUFF's opinion you should lump items together such as Insurance (house, car, life etc) if the pot is too large then have a look at it in detail elsewhere but there is no need to show the detail in PERL. A higher lever lets you see the "wood from the trees" and make decisions. Too much detail and you are lost and make no decisions too little and you can make the wrong decision. Balance is key and is a fine art and it will be fun to work out where those line lie.
So perhaps PERL becomes a chocolate box maybe some different templates (early in life, mid life and end of life). You can choose the best bits and leave the rest behind. MUFF looks forward to its evolution in the coming years.
PINT 4 - Happy: CREATE A STRATEGY
“To win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill”A key part to PERL is defining end goals and a strategy to get there. MUFF has been trained to work backwards. Strange? Actually this makes alot of sense. Spending quality time to make sure you know where you are going will save an incredible amount of time compared to stumbling along to your end point.
― Sun Tzu, The Art of War
So without further ado lets have a look at the PERL guidebook for STRATEGY :PERL Guidebook
Strategy Sheets Observations (initial setup and yearly review)
- Life Strategy - What are your needs in the long term?
- Define your goals for health, education, family and community. The Goals need to be SMART (business term sorry! for Specific Measurable Achievable Realistic and Timed) the importance of goal setting is
- It clarifies the end point you want to achieve
- How do you know you are going to achieve it e.g. Be able to run a mile in 5 minutes in one years time.
- Check versus needs and wants. If the goal is skydiving; that is not really a need but a want.
The sheet checks the goal versus the topics in Maslow's pyramid of needs. Skydiving does not really classify as a need but that is up to you. Learning to meditate as an alternative can be classified as good for the body and mind.
Finally the grid on the page helps check that your objectives covers the majority or all of the needs. You can ask the question am I missing something and do I need to re-visit and add new challenges in the future?
- Build final objectives - revisit your objectives clean them up and make sure you are happy with them and the timings. These will be added to the short term planning sheets for regular review. The strategy sheets can then be re-visited periodically as needed.
- Finance - How can you be Financially Free?
- Working out early retirement numbers - a calculator is included here to carry out some basic early retirement calculations. There are a huge number of factors that can ultimately affect the time frames. Hopefully your investments will flourish and the calculation is too pessimistic when it comes out with 10 years to retirement! See ERE and MMM for lots of articles on the magic numbers.
Just to set your expectations: the following will all have an amazing impacts on "time to retirement":
- the less you spend and the more frugal / savvy you get with your living costs
- obtaining a higher income from your job
- becoming a savvy investor \ asset buyer will develop over time. the 30 years number to retirement may quite quickly drop to 15 years or less if you make some tough decisions!
- Strategy for investment ideas - they say you learn from your mistakes and MUFF has had his fair share of failures. MUFF will link to as many useful articles and websites as possible to help on this topic.
"I am not so much concerned with the return on capital as I am with the return of capital." - Will Rodgers
- 50 Truths About Investing - a very good list highlighting some of the mistakes MUFF has made down the years. All good common sense advice.
- High Yield Portfolio Grow your income with dividends from high yield shares: HYP Part I and How to choose a good high yield share for the long haul: HYP Part 2 and Diversifying your high yield portfolio: HYP Part 3 and Selecting the shares for your high yield portfolio: HYP part 4 all of these articles are from Monevator and are a good starting point to screen for high yield shares
- Growth Portfolio - You can use stock screeners again for Growth stocks. In my opinion this is a difficult area to spot opportunities and ideally you want to find a bubble and ride it to the top. For instance the technology stocks of the late 90's or event recently the gold bull of the last 10 years.
- Protect Portfolio - See Financial Armageddon 4 key protection ideas and Investment Challenges for MUFF's take on protection. Monevator and Jlcollinsnh aging have lots of good information on ideas for "safer investments"
- Build Final Objectives
- SMART objectives again! Is your objective for Financial Freedom a number (e.g. $400,000) or a multiple of your yearly expenditure (40 times $20K - at the point of retirement)?
- Don't lie to yourself. It is best to start with a small easy list that can be crossed off achieved and added to the achievements log (for later discussion). If the objective is early retirement break it down into steps e.g. I will save $2000 by the end of the year, Next year I will save $20,000 and invest half of my savings in 3 passive income shares. Set yourself up for success, build your success habit! Then add difficult objectives - you have proven to yourself you can do them.
- Try setting some challenges for example:
- A week without spending anything or without the car
- Make a present instead of buying one - it is more personal and the person receiving it is likely to remember it better (hopefully for the right reasons)
- Turn off all electrical devices for a weekend
PINT 5 - Too Much..... Bar Brawl!
CHIP.ON.SHOULDER: "Hey your MUFF that poof from the boxing right?"
ONE TOO MANY MUFF: "I'm not the one in hot pants"
DO.IT.WITHOUT.THINKING "watch your mouth you are talking to the MUFF!"
PLAN.AHEAD: "Now boys calm down, calm down we've all had a good evening"
CHIP.ON.SHOULDER: "Ah B****** you old fool"
And promptly swings and misses PLAN.AHEAD who has ducked out of the way anticipating the cheap shot. Unfortunately that wound up DO.IT.WITHOUT.THINKING and has jumped on the guys back and is banging him on the head with a beer mat! the whole place erupts in a bar brawl.....
PLAN.AHEAD: "I could see THE FUTURE coming. Look I have moved us to the end of the bar by the exit - off we go!" To be continued....
NEXT UP HOW PERL IS BEING DEVELOPED FOR SHORT TERM PLANNING
MUFF says Cheers!
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Muff recommends ERE (Early Retirement Extreme), A Good Day To Live and MMM Mr Money Mustache