Are you making the best use of resources available to you?

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This is an interesting and thought provoking question that brings up a whole host of additional questions. Such as, what is a resource? What is within my circle of influence that is not being used to its full potential? What is within my direct circle of influence? Are there currently resources that are not being utilized? Could those stagnant resources be exchanged for a more useful resource?

Although some of this article may sound very business oriented, it is being written for the reader seeking to get out of the rat race. I truly believe the thought process of looking at everything in terms of productivity, is such a fundamental habit for anyone that has the goal of escaping the rat race.

First lets better establish what we are talking about when we are considering resources. A resource for the purpose of this article is anything that is available to you in your circle of influence or possession. For example structures, vehicles, communication devices, research resources, tools and equipment, people, knowledge, etc. We can then file these resources into three primary categories; assets, liabilities, and capital.

Assets

Assets are going to be very simply defined as anything that is generating an income for you. We are going to consider things such as rental properties, stocks bonds, etc as an easily identifiable asset. However, other things such as people, knowledge, equipment, etc could be considered assets if they are indispensable to the production of income. We may find areas within the asset group that could be improved or possibly exchanged for more efficient ways to reach a goal.

Liabilities

Liabilities are anything that requires a payment or expense that does not create an income or creates less income than it costs to create that income(ie producing a loss). So some people, equipment, structures, etc would fall into this category. This category could contain easy pickings for getting the most out of your resources. We should also ask questions about this category to determine if things are truly necessary. Are there things in this category that fall into the “nice to have” group? Maybe they could be sold and effectively exchanged for something more productive.

Capital

Capital would be anything outside of the other categories that is just there, not doing anything except as an effective form of storing wealth. This would primarily be considered currency, gold, silver, etc.

My observation has been that people caught up in the rat race focus most of their time and attention on nonproductive uses of their resources. I would even go a step further and call most actions as counterproductive. If the goal is to escape the rat race by means of financial independence, i.e. our passive income generated by assets equals or exceeds our liabilities, how does buying a $15k new truck on a loan get you closer to reaching that goal? It doesn’t, it adds to your liability column without adding anything to your asset column. A nice car is not an asset, a house is not an asset. These things might be a necessary liability, but they are still a liability and should be treated for what they are. These things should be reduced to as little as possible without causing a reduction in effectiveness. I get driving around in a $1200 car, or renting a room in your house isn’t ideal or help you to keep up a country club image. But you cannot get a head until you start reducing waste in the liability column and start adding to the asset column.

So, how then do we answer the question, “Am I making the best use of the resources available to me?”. I would suggest creating a list for each of the 3 categories above, add anything to the list you can think of. Consider hobby items, people in your life(in a positive way of course), things sitting in storage, capital in your accounts, stocks, bonds, real estate, vehicles, gold, silver, anything you have influence over or possession of. Then go through each item, one by one, and give thoughtful consideration to each item in terms of its productiveness in helping you to reach your goals. Some resources might be tough to part with in exchange for something new, but this exercise will not only make you more efficient overall, it will also reduce clutter and waste which can be liberating in itself.

 

Remember “The rich buy assets, the poor buy liabilities” -Robert Kyosaki in the book “Rich Dad, Poor Dad”. This is a great book and I highly recommend it, if you haven’t read it already.

 

 

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