Dum and Dee

People don’t need to be Productive Assets. Yet we know it costs money to live. You can’t opt out of reality. “Asset Liability Matching” (ALM) is a tool used by Actuaries to manage the risk of future obligations. If you know you are going to have to pay a variable amount in the future, it helps if the assets   put aside to pay that amount vary in the same way. The “Lifestyle to which you are accustomed” is lazy man’s ALM. You spend whatever you earn. When the month’s money runs out, you self-isolate till pay day. The only discipline required is to earn more money. The only solution available is income and work. Doing more. But you can also reduce risk by initially building a buffer (Emergency Funds) and then gradually building an Engine (Capital that can earn money by working). This requires new types of discipline. The money is “there” but not there to be spent. Your Lifestyle has to be within self-regulated constraints. Spending chunks of the Engine is firing your money. Our primary liability is the money we have to spend. Matching that to your income will mean you have to be a Productive Asset. Matched to your spending. Detachment is the first step to freedom.

Don't match your Income and Spending