We want things to be given to us.
If not given, we want them to be easy.
When things don’t go our way, we’re quick to externalize blame. It was his fault or her fault or their fault or traffic’s fault. Responsibility for self is waning.
It’s become all too easy to do the bare minimum and still lead a middle class existence.
If you’re willing to do some government paperwork, you can do even less and still get by.
There are handouts available to druggies, the uneducated, the perpetually unemployed, and to families or singles that continue to have children they can’t afford… to the tune of 50 million on Medicaid, 45 million on food stamps, 8 million on unemployment, and 1 in 6 receiving gov’t assistance.
What’s worse is when those on “assistance” use taxpayer dollars to free up money in their own budget for such necessities as neon acrylic nails or the latest Nikes. It’s amazing that you can be on food stamps and medical assistance and still have a $400 phone with a data plan.
But such is the world country we live in.
I’m not complaining… far from it.
In fact, my mantra has always been to make enough money that you don’t have to worry about pettiness like that.
Still, it’s worth mentioning the moochers now and again to help you stay focused on the prize: financial autonomy. After all, they’re going to be the ones who call you a rich elitist when you buy your second home.
My point here is that success isn’t elitist at all; it’s the compounding of preparedness and work ethic.
So with the mentioning out of the way, here are a few quick stories to help you focus on the goal — and be prepared when opportunity comes knocking.
Sweat Equity
My backyard has been soggy since I bought the place six years ago.
Not a swamp, but soggy — still spongy a week after it rains.
Last year, it was made worse by my neighbor’s construction of a patio. He tied his downspouts and sump pump into pipes that ran under the patio and empty a couple feet from my yard.
To keep from having to mop my floors every day, I’ve had to wipe my dog’s paws off every time he comes inside… not to mention that a soggy backyard doesn’t add to the ambiance of horseshoes or crab feasts.
Plus it’s annoying. The time I spent thinking about my wet backyard was detracting from my quality of life.
But how do you fix a problem like that?
Most people would just put up with it, either not having the funds or ambition to tackle it.
I found out fixing the issue involved hooking up to all my neighbor’s pipes and burying them in a series of French drains that empty into large underground holes filled with stone. Two estimates I got for the project were both over $5,000.
This past weekend, I did it myself for $1,248.54.
I rented a trencher, an auger, and a skid loader with a bucket. (Even with $4.00 gas, my 12.8 MPG truck is saving me money!) I got two scoops of gravel in the back of my dad’s larger F-250. I had 10 yards of topsoil delivered.
I dug the trenches in the soggiest areas, which I had previously marked by standing in my backyard during a rainstorm. Then I hooked into my neighbor’s pipes and buried them in the trenches, backfilled them with gravel, regraded with topsoil, and seeded.
My dad and I worked from sunup to sundown Saturday and Sunday. When it was over, we were sore and had a few blisters…
But I saved over $3,700 and got that rare sense of accomplishment that only hard work can deliver.
A Florida Keys fishing trip costs about that much…
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Your Own Tea Party
Toward the end of last year, I realized my capital gains could leave me with a sizable tax bill come this time of year.
No one likes paying taxes. No one likes where their tax dollars go. That’s not changing.
But you can change and hedge against how much you owe.
So I started an additional IRA that I’ll treat as non-deductible, funded with the 2011 maximum of $5,000.
Non-deductible means you already have an IRA and your income exceeds the limit for which contributions can be deducted. But while the contributions — or basis — aren’t tax-free initially, they are when you withdraw funds.
So if I double the money with short-term gains in that IRA from $5,000 to $10,000, I’ll only pay tax on the $5,000 gain when I withdraw the funds. If it were in a standard taxable account (Scottrade, E*Trade, etc.), the full $10,000 would be taxed at the marginal rate.
So I’m saving future tax by spending the time and money to open another IRA now.
It’s a bit more complicated than getting the government to pay for your food and health care so you can afford a 50” LED TV, but that’s a good problem to have.
Making your own luck isn’t easy. It takes research, diligence, and follow-ups.
Next week marks five years since my first column for this letter. I’ve written over 800 since (and part of a book), not only chronicling the energy market, but detailing my gasoline, electricity, water use, and offering macro musings via essays and parables as well.
My goal is that you use that information and insight to make successful adjustments and profitable decisions in your own life.
Remember, success isn’t elitist at all… It’s the compounding of preparedness and work ethic.
If you want it, you just have to make up your mind to get it.
Call it like you see it,
Nick Hodge
@nickchodge on TwitterNick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street’s Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor’s page.
