The concept of a mobile lifestyle can mean different things to different people. But however we interpret, it?s becoming increasingly necessary. Many of the economic problems we?re facing today relate to the fact that the world is changing faster than we?re adjusting. The pace of change is accelerating in the 21st century, but many millions of people are still stuck back in the 1990s, wishing it were still the order of the day.
Folks, the 1990s are gone forever ? we probably will never see an economy like that again in our lifetimes. There are so many reasons why, but here?s a short list:
Technology. It often seems as if technology is changing for changes sake alone. Whatever the reasons, it?s almost impossible to lock into a given technology. Either it will be replaced by something new, or it will rapidly evolve into something that looks nothing like what it did two or three years ago.
Global forces. Economically speaking, we are no longer competing with the shop next-door, but with businesses from all around the globe.
Changing job responsibilities. Because of technology and global forces, individual job responsibilities are changing rapidly. Your job is what ever it needs to be today – past parameters no longer matter.
Changing nature of jobs themselves. The very nature of jobs is changing. The old reliable full-time, fully benefited job-for-life is quickly being replaced by contract or temporary jobs, and increasingly by part-time positions.
Debt. Perhaps the biggest change in the economy over the past 20 to 30 years has been in the amount of debt. Virtually all levels of society ? individuals, businesses, state and local governments, and the federal government ? are floating largely on a sea of debt. The interest on that debt is a drag on the economy and it affects everything. Even if you have no debt yourself, big picture debt is having a major impact on your economic survival.
Political paralysis. Amid all the chaos, the governing authorities are doing little better than keeping things afloat. Fundamental improvement seems to be beyond their capabilities. There are so many issues that no consensus ever seems to develop as to what needs to be done.
Creating a mobile lifestyle is a proactive way to deal with the economic obstacles we face. Once you have a grasp of those obstacles, you can see that digging in too deep ? the usual human reaction to change ? just makes those obstacles bigger. We can?t change the obstacles, but we can develop a mobile lifestyle that enables us to do an end run around many of them.
What does a mobile lifestyle look like?
The mobile lifestyle and housing: Rent vs. own
The shelf life of many careers today, and especially individual jobs, is becoming notoriously short. How much sense does it make to buy a house with a 30 year mortgage when you?re in a career that might not last 10 years, or a job that may only last two or three?
In today?s fast changing economy renting a home, rather than owning, maybe the safer path. It will enable you to pick up and move to pursue a new job or career in a different part of the country, or even a different part of the world.
Still another possibility is to buy a house with income potential. This idea goes back to before World War II. You buy a house that is not only a place to live, but is also a source of potential income. If you do, the loss of a job or career will be less of a blow.
Staying out of debt
How much easier would it be to deal with a career crisis if you were debt free? The idea of using debt ? and a lot of it – as a way to buy what you need, whether it be a house, a car, a college education, or a vacation, is now a dinosaur from the 20th century. The financial uncertainty of today no longer supports the concept of debt reliance. During the financial meltdown, the federal government came to the aid of the banks who issued the mortgages, not the underwater homeowners. That should be a sign that the golden age of debt is over.
Today?s lower and less certain incomes can no longer support high levels of debt. Rent a house, pay cash for a used car, send your kids to a community college, and don?t buy anything you can?t pay for right now. Staying out of debt is part of a mobile lifestyle that makes it easier for you to react to change, and may be the single most important survival strategy going forward.
Saving as a way of life
Up until World War II saving money was a critical survival strategy. For at least three reasons, it needs to be again:
- A healthy level of savings is the best way to avoid debt, as discussed above.
- It?s the best form of insulation during an income disruption. Periods of unemployment are no longer two or three months – they?re often six months or longer, and can easily exceed a year.
- A large amount of savings is proof that you are living on less than you earn, which is yet another outstanding survival skill.
Saving money needs to become a lifestyle once again. Savings equals liquidity, and liquidity provides mobility. The old rules of a three-months living expenses in an emergency fund if you are employed, or six months if you?re self-employed, no longer apply. A full years worth of living expenses should be the goal. This is true even if you have a salaried job, since jobs are harder to replace than ever.
Invest for the not-so-distant future
Creating a mobile lifestyle should also apply to investing. That means building flexibility into your investment portfolio. Most investments today, especially those commonly used by the middle class, involve a heavy dose of limited access. That won?t serve you well in a near-term crisis.
For example, the emphasis up until now has been to invest for retirement. I think it is more important to invest for income disruption. In the brave, new economy we’re in that can happen several times before you reach retirement.
That might mean being more conservative in your investment strategy. If you are investing for retirement, you can be as aggressive as you like since you won?t need the money for another 30 or 40 years. But if you can envision needing it in one or two years ? and you should ? preservation of capital becomes much more important.
That doesn?t mean that you completely abandon growth stocks, but more that you emphasize investments that provide an ongoing cash flow. Income-type investments tend to be more reliable, particularly in the short- to medium-term.
This might also mean that a larger percentage of your investments need to be held in non-retirement type vehicles. If you need to tap them before retirement, you won?t have to worry about tax consequences and penalties. Bonus: if you never do touch the money before retirement, you?ll have a tax-free source of capital to supplement your tax sheltered accounts.
Keep your career skills on the cutting edge
Career emphasis should shift from holding a job, to keeping your career skills sharp on a continuous basis. Nowhere is a mobile lifestyle more important than with employment. Jobs come and go, but skills can keep the income flowing.
Stay on the cutting edge with your job skills, and even work on those that will help to land the next job. YouTube is an excellent source of training for just about any skill you want to learn. At a minimum, you can start learning a skill from YouTube, then dive as deep as you need to in order to perfect it. This may lead to taking a course or two at a local community college. And if any skills interest you, you should pursue them with a vengeance. The combination of relevant skills and personal passion is almost unbeatable in the economic marketplace.
Which is an excellent lead-in to the next component of a mobile lifestyle?
Embrace self-employment
A person who can make a living from self-employment doesn?t need a job. That?s the highest form of a mobile lifestyle, and an increasingly important one as the job market becomes more risky and demanding.
Having your own business is fast becoming more secure than a traditional job. It?s not that being self-employed is less risky than it used to be, but mainly that jobs are now much more so. The risk/reward equation is moving in favor of having your own business.
You can also build a side business, which has several advantages:
- An extra source of extra income, especially to build savings and get out of debt.
- As a bridge into a full-time business.
- As a lower risk way of becoming self-employed.
- It can be a component of a portfolio of income streams (see below).
- As a needed income source in the event that your job is downgraded to part-time status due to Obamacare or some other factor.
Whether self-employment is your primary occupation or a side business, it will provide the flexibility needed in the uncertain economic times we live in. And since mobility should be a factor, try to emphasize a portable business – the kind that you can bring with you where ever you go. The internet is making that easier to do all the time. You owe it to yourself to investigate the possibilities, and to take action as soon as possible.
Develop multiple income streams
We just touched on developing a side business while holding a job, but there?s a lot more in that arrangement than meets the eye. Since it is so difficult to rely a single income today, it?s becoming increasingly important to develop multiple income streams. By doing this, you will not only increase your income security, but you?ll also be giving yourself the ability to make more money even if your primary job won?t allow it.
Having multiple income streams can be a matter of balancing a full-time job with a side business, a full-time business with a part-time job, or even two or more business ventures at the same time. You can also have a small income from investment streams, such as portfolio income, or rent income from a border or a second unit in your home.
Since jobs are becoming less stable and less generous, we should think of earning a living using the portfolio method ? the same way as you would with investments. In the absence of reliable employment, we can emphasize multiple income sources instead.
While it is true that this will likely involve working more hours than you would in a traditional job, it will provide flexibility, mobility, and even higher income than traditional jobs do now. These are lifestyle changes, and that will involve trade-offs.
But what alternatives do we have in this economy?
If I were 18 years old today I would invest in myself and avoid debt at all costs. I would put college on hold until I had the money to attend and I would dig deeply into entrepreneurship on the Internet and beyond. Of course, I would also live at home with my parents as long as I could while building my business. Smart, right?
The last thing I would do is take out college loans (I’m still paying those off years later, what a joke!). I would eventually rent a house or apartment so I wouldn’t have to make so many costly repairs as I have watched my parents do over the years. To survive, you need to map out a plan and stay smart. I wish I could go back in time!
Hi Sandra – Your advice is spot on, but I wouldn’t limit it to “if I were 18 again” ruminations. We can all get better at this from this point forward, and that’s the point of the article.
Life is happening right now, and we can help ourselves navigate it by making positive changes. If you notice, not many of these suggestions are in any way revolutionary. Most of them have been done by humanity – at least up until about 50 years ago, when it seemed as if all the rules were changing.
The rules haven’t changed, and they’re now reasserting themselves. We have to go back to saving money, staying out of debt, and if necessary, building our own jobs from the ground up.
Thanks for the insightful comment!
Great post Kevin, totally agree with the mobile society and really like the way you articulated the rent vs own dynamic. It is so true, I think with the lack of economic growth for the forceable future, the owning part of the equation will take a back seat. Renting will be a popular housing choice, especially…especially when interest rates go up, and that has to happen sometime soon!
Thanks Jim! I didn’t want to go into higher interest rates, that’s virtually a doomsday scenario for housing. Consider that housing has only been limping along with historicly low rates. Just returning to the historic normal range of 6-7% will likely freeze the market.
Seems as if there seem to be two realistic options being discussed…Being nomadic as necessary or digging in deep for the long haul with a house that can make and save you money by being a base of operations.
Another thought is familial consolidation. As a nation we have spent a lot of time and money on “a place of our own’ over the last several decades, in the belief that life is not golden unless you have your own place, be it apartment or house. However, in an era of rising costs, sharing housing with family members may be a way to go in the future. This can both help to save on costs (For example, several family members purchasing a larger house together allows all the space necessary but distributes the costs) Allows space to invest in productive enterprises (A much larger house will have a bigger lawn for gardening and perhaps a garage where you can have a small auto repair business or something) And allows a younger generation to have a home base in the event they turn nomadic for a few years. Years ago having 3-4 generations under the same roof was common, now not as much. If a lot of families consolidated due to economic necessity, there would be a huge shift in the current economic paradigm.
All excellent observations Jared! I agree that housing is one of the achilles heals of Americans today. Compared to other countries, and certainly other times in history, we’re way over-housed. The slavish devotion to the suburban homestead has lead to a chain of expenses that are now much more difficult to sustain than in the recent past. You have to buy furniture and cars to “fit” with the house and the neighborhood, and those make the cost of living go way up.
I agree, some forms of communal living may become the alternative in the future. If that’s the case, and I think it’s already starting, the large houses so many people have could be perfect spaces for multiple occupants.
Never game much thought to the “nomadic” label, but having that option isn’t bad at all!
Our increasingly mobile society is changing our career paths, income levels, hobbies and overall lifestyle. Because the world is constantly changing, it is hard to predict financial security and certainty. As the article suggests, consider saving as part of your overall wealth building and debt elimination strategy. You never know when unexpected expenses will come up or if you will be unemployed and need a survival fund to live on.
Hi Leslie – So true, what ever you’re doing or plan to do, a well stocked savings account will always help.