If you’ve read the previous chapters, you may have noticed a flaw. I’ve been poking holes in the so-called “assets” most of us lean on for retirement. But what am I advocating as an alternative?

When I say “make your own assets,” aren’t I just inserting another major, pain-in-the-butt step? The answer is yes. This book is not the easy way, only the best one. It’s based on my conviction that the investment gurus come up short, promising market conditions the economy is not going to provide.

Most folks plan for retirement over decades and cross fingers, hoping that historical rates of return (10 percent) will seem them through. I don’t see it that way. I happen to think that global trends like the weakening dollar and inevitable shortages of water and fossil fuels (not to mention the fallout caused by those shortages) are a big threat to economic growth, and thus to retirement planning.

Combine that with the instability of employment in a globalized job market, and it’s clear: “save a little each year” isn’t going to cut it. If we’re going to beat the system, we have to hit some home runs. We’ll do that by owning marketable assets, but even those assets won’t mean anything if we don’t have a comfort level with financial statements. Crunching numbers is how we identify which of our projects are profitable. It’s also how we spot self-defeating leaks in our spending. Money means a lot more when we realize we’re not doomed to a treadmill.

With that motivation in mind, let’s take one more look at financial statements and how they can help us.

Here are some numbers and “metrics” that have big implications:

One metric: What percentage of our non-retirement income comes from areas other than our jobs? What is the improvement from year to year?

Obviously, the higher that percentage is, the better off we are. The less we need our jobs, the more we stand to get out of them.

Another key metric: What is our “nut?” How much do we really need every month to pay for our expenses?

This as our “walk away” number, as in: How much do we need each month in order to “walk away” from our jobs? Example: when/if my book income matches my monthly “nut,” I have hit my “walkaway” number. At that point, I have the option of “firing” my clients and concentrating on my own books. Or I could keep my clients. But my flexibility just shot through the roof. From that point forward, I don’t have to put up with much “client BS.”

Another key number: Once we establish our emergency fund, how much do we have left for our own ventures? And how much has that number grown from year to year?

The emergency fund is a tough call. I hear the phrase “six months in expenses” a lot. Sounds ok to me, though if I had waited until I had six months in living expenses saved, I would still be treading water. However you calculate it, beyond that emergency fund lies the “venture fund.”

The scope of those ventures is entirely up to you. You could buy into a business, start your own, or team up with a friend on a real estate purchase. You could even hire your (hopefully) brilliant sister to write a screenplay for you to market, or you could buy studio time for your buddy’s band in exchange for a percentage of CD profits. (be careful with that last one!) Other self-investments might be more career-oriented, like enrolling in a certification program so you can break into a new field.

Combine the last two numbers: You can use your “total savings” number to help you with your “walk away” plan. For example, let’s say your employer provides an option to reduce from full to part-time work. If you switch to part time, you’ll have half days to devote to a new career in voice-overs and radio work. But you’ll need to make up the gap in income somehow. You can use your “venture savings” to fill that gap. All you have to decide: how many months do you need covered before you take the plunge? Let’s say that you arrive at a figure of 12 months – you need a year’s guaranteed income to make the move. If the income shift from full to part time is $2,000 less a month, then $24,000 in cash will make up the difference.

Once you have that amount saved, you can make your move. Obviously, having the cash doesn’t eliminate the risk. It’s helpful to remember that there is risk in not making the move also. And you can minimize the risk by ensuring the number you need to live on each month is well-researched. We’ve also talked about managing risk by carefully choosing which assets to develop, striking the best balance between what is marketable and where our passion lies.

As for the financial statements, I take my medicine every week. It’s not always fun to run the numbers, especially during months when my debt goes up (travel and car repair are recent culprits). I try to live as lean as I can, while still investing in the ventures with the biggest upside. My approach won’t necessarily work for you. When we measure life on multiple factors, from cash flow to personal happiness, there are plenty of tradeoffs to consider. Sometimes a pricey vacation is non-negotiable even if it sets us back.

But while we must develop our own approach, these guidelines won’t let you down:

- live lean until you have the money to buy the time to do what you most want to do.

- control expenses BUT ALSO strategically invest in yourself and your ventures.

- spend time increasing revenues rather than seeing your income as “fixed.” (When we see our income as fixed, we tend to fall into “do it yourself mode,” changing oil and clipping coupons as opposed to leveraging our greatest skills for higher income.)

- use debt (including credit cards) ONLY for emergencies and business financing (such as replacing the plumbing in a house we are about to sell).

- use financial statements to track our progress and set realistic goals from year to year.

- maintain the best credit rating you can and make sure to use credit lines attached to our business and house (as opposed to personal credit cards) whenever possible.

- plan for taxes and retirement but don’t run from good income opportunities just because that income will be taxed.

- remember that when we are carrying high interest debt (credit cards, car loans, etc), each expense is costing us more because the interest from the debt is constantly setting us back. Make every effort to pay off high interest debt as a way to reduce the monthly “nut” and make each dollar go further.

If we strengthen our “business of one,” developing new income sources and plugging expense leaks, we’ll be less dependent on our jobs. Hopefully we’ll be firing our employers sooner rather than later. Then we can choose work that is not only more lucrative but more meaningful. There’s more than one way to free yourself from pink slip culture, but financial competence is at the heart of all of them.

Want to buy Free From Corporate America or see reviews of the final published version from readers like yourself? The printed book is now available on Amazon.com with product reviews.

You can also get a discounted version of the final book in eBook (PDF) format, or you can pick up a copy on the Kindle. The published version of the book is significantly enhanced from the web version available on this site.