An Antidote to Normal: 8 Phases to Reach Your Dream State

My hope is that by the end of this piece (assuming you aren’t already living your ideal life) that you will have dreamed big dreams and maybe even started to lay out a constructive plan to reach them before the typical retirement age.

Let’s start with a story**….

A successful American businessman was on the beach in a small coastal Mexican village when a small boat with just one fisherman pulled up.  Inside the small boat were several large fish.  The American complimented the Mexican Fisherman on the quality of his fish and asked how long it took to catch them. The Fisherman said that he was only out for a little while.  The American then asked the man why didn’t he stay out longer to catch more fish? The Fisherman said he had enough to support his family’s needs. The American was confused and asked the Fisherman what he did with the rest of his time? The Fisherman said that he typically slept late, fished a little, played with his kids, took siestas with his wife, strolled into the village each night to sip wine, and play guitar with his amigos.

Now here’s where things got interesting….

The American perplexed said, “I have an MBA and I think I could help you. You should fish more and with the profits buy a bigger boat. With the proceeds from the bigger boat, you could buy a few boats, eventually, you would have a fleet of fishing boats. And instead of selling your catch to a middleman you would sell directly to the processor, eventually parlaying all those profits into opening your own cannery. At that point, you would control the product, the processing, and the distribution. Then you can kiss this small coastal fishing village goodbye and move to Mexico City, then LA and eventually New York City, where you will run your expanding fish empire.”

The Fisherman asked, “But Senor, how long will all this take?”

To which the American replied, “15 to 20 years.”

But then what would I do?” Asked the Fisherman.

The American laughed and said, “That’s the best part.  When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!”

“Millions – then what?”

The American said, “Then you would retire.  Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

The point of telling this story first is this…if you are currently living your “ideal life” then don’t change a thing. Own it. Defend it. And don’t let the opinions of the world around you push you away from it. If you have found complete happiness then there is no point in losing it just to go find it again. You can stop reading here. But if you feel like you could be doing better, that you could be doing more then I encourage you to keep reading.

There has been no better time in human history for a person to reach the financial goals they have for themselves and their family.  I’m going to lay out a high-level roadmap; incidentally, this is what my wife and I are following. It is just one possible path, and depending on your current situation you may be able to do multiple phases at a time OR it may take years to just complete one of the phases.

1. Dream
2. Expense Reduction
3. Income Growth
4. Small Emergency Fund Creation
5. Debt Elimination
6. Large Emergency/Savings Fund Creation
7. Inflate Savings Rate
8. Dream State

Phase 1: Dream

Start with the end in mind. What’s your finish line? Don’t just think about “retirement” in your 60’s. Push the date in. Give yourself a challenge.

Think about if ALL your monetary needs were taken care of. Envision it. Sit down with your significant other and talk about it. Maybe even create a dream board. There is no reason to start this journey if you don’t have an end state in mind. Where would you live? What would your lifestyle be like? What are the types of things you would do? Start/run a non-profit? Work for free? Sit on the beach? Spend time with family? Travel?

Phase 2: Expense Reduction

This phase has two primary goals:

1. If you can shift funds from paying for expenses to one of the later phases in this post then you are going to increase the velocity of reaching your “dream state”.

2. If you learn to live on less then the amount of Income you need in your “dream state” is going to be less. This will also help you increase the velocity to reach your “dream state” more quickly.

Here’s an expense reduction example. Every dollar matters. And how much you cut really depends on how bad you want to get the momentum going for the future phases.

Phase 3: Income Growth

You should be focused on this phase throughout this whole process. Why? Well let’s be honest, cutting expenses is only going to get you so far. You MUST increase the income side of the equation to get to your “Dream State”

If you are in a career already, then you need to do some research to determine what your salary ceiling is, how quickly you can get to it, and let’s be honest will you like the work you’ll be doing when you hit that ceiling. Maybe career growth isn’t in the cards for you either by choice or you know where your personal skills ceiling is and you just don’t see yourself climbing the corporate/career ladder. That’s fine. Then you need a Plan B….

You need to start a business, get a 2nd job, or develop a side hustle. This is the easiest and quickest way to increase your income. And there are so many ways to do it.

Here’s an interesting thought, what if you develop something that you truly loved. Maybe it is even location independent. You could then quit your day job and reach your “Dream State” significantly faster.

Phase 4: Small Emergency Fund Creation

Having an emergency fund is extremely important. The size of your initial emergency fund is going to be based purely on your personal situation. I would say in most people’s case it is likely between $500 and $3,000. This fund should be an amount that can cover a car repair, an unexpected bill, a rental deposit if you need to move, or anything else “Murphy’s Law”  could throw at you.

Phase 5: Debt Elimination

“…the borrower becomes the lender’s slave.” – Proverbs 22:7

I could have included this as part of Phase 2: Expense Reduction, but it’s so important I think it deserves its own phase. Ultimately, if you owe someone money it’s an expense with interest associated with it. When you owe someone money, you’re actually borrowing from the money you hope to earn in the future. You are stealing from your dream.  Decide what debt elimination strategy is best for you, and implement it immediately.

Add bonus, if you complete Phase 2 you can use those “newly discovered” funds to start rapidly paying down debt.

Phase 6: Large Emergency/Savings Fund Creation

Creating an emergency/savings fund serves multiple purposes:

1. It should at a minimum cover 3 to 6 months of expenses in case you lose your job or a major issue comes up in your life.

2. It could be as large as 7 to 18 months worth of expenses so that it can become your complete risk mitigation strategy for leaving your job to start a business or trying something else completely new.

Phase 7: Inflate Savings Rate

As you make more money through your career or side hustle, it is imperative that you lock in your lifestyle. Do NOT spend your new found money. Instead, invest it!!! Start putting that money to work for you. What if you could save/invest 50% or more of the income you are making? This is achievable if you lock in your spending and consistently increase your earnings!

In no particular order, here are some examples of where you could put the excess funds, depending on what your specific dream is….

• Invest back into your side hustle to grow it
• Max out your Roth IRA
• Max out your 401k
• Max out your SEP IRA (if you started a side hustle, then that makes you self-employed and allows you to utilize a SEP)
• Invest in after-tax mutual funds
• Invest in real estate

Phase 8: Dream State

The hardest decision to make is to commit yourself to this process and maintain the habits necessary to complete it. But almost as difficult is the decision on when to pull the plug. How much is enough? Deciding when you have acquired enough resources/funds to make your ideal life a reality is pretty hard. Only you (and your significant other) can truly decide that. And even once you reach it, it will be pretty tough to take that leap of faith.

Maybe it’s a benchmark. A paid off home and $900k in investments. Maybe you plan to sell everything when you reach a $1M in assets and move to a lower standard of living country near the equator. I can not decide for you.

At a minimum, I hope this piece got you thinking. And maybe even dreaming a little!  Are you willing to share your dreams? What’s your “dream state”? Would love for you to leave it in the comments.

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** The Mexican Fisherman story has been told many times around the internet. I have not been able to source it. It is NOT an original story by me.