Net worth vs cash flow

net worth vs cash flow

In the net worth vs cash flow discussion, we ask, what is more important? And, I give you the worst possible answer. Both.

Yes, you need both.

Net Worth

First, let’s define each one. Net worth is adding up all your assets and subtracting your liabilities. You’ll take what all your cash, real estate, bitcoin, stock, bonds, cars, paintings, etc are all worth today and you’ll subtract that number from your mortgages, loans, credit card debts, student loans, and what you owe Uncle Bob.

Everyone has a fuck you number, where you have enough money that you don’t have to put up with shit. If you’re not there, you need to get there.

Everyone also has a retirement number, a number that’s so big you’ll never have to work again and still maintain the lifestyle you want to maintain. Unfortunately for this number, the vast majority of people retire due to old age and bad health rather than reaching the number they shot for.

Cash flow

Cash flow is what you bring in vs what you spend. If you make $20k a month but spend $21k a month, you have a negative cash flow. You’ll eventually run out of money unless your net worth is through the roof.

However, if you have a cash flow of $20k a month and you spend $10k, your net worth will build continually and you’ll never run out of money. It’s this group you want to be in.

Net worth vs cash flow – real life

Unfortunately, I have both a decent net worth and a good cash flow. I say unfortunately because my cash flow is dependent on consulting. I wish I was smart enough to make more money online. I’d be so much happier if this were a travel blog and it was making enough money online to fund my lifestyle.

Therefore, my net worth is good, but I haven’t reached that retirement figure yet. My cash flow is good, but dependent on a job, rather than myself and my investments.

I want to be in a position where either my net worth is eight figures, so no matter what happens, my investment cash flow is infinite. My wife and I love traveling, which costs a lot of money. We’re not thrifty travelers. We go all out.

I’d really like to be in a situation where I can take my best friends. If you’ve been reading this blog for awhile, you’ll know I’ve had the same friends forever, and I’m working class. I’m not middle class like most blog readers. I grew up with physical labor friends who still do physical labor today, bad backs and all.

So yes, you need both

If I can increase my online cash flow, I could quit my consulting business. I like it. I’m extremely good at it (upper 1% – that’s why I make the big bucks). However, I don’t love it. I fucking love writing and painting. Note the difference.

And for those people who make fun of people who want to do what they love, why? Why do you make fun of people who want to do things they love? There’s only one truth in life, my friends. We’re all going to die. You get one shot at this.

So net worth vs cash flow – they’re both important. If I could go back in time and tell my younger self – I’d tell him to work on cash flow first. Make sure it’s a big positive. A positive cash flow will increase your net worth. A negative cash flow will eat away at it.

Ways to increase your net worth

Buy real estate low and sell it high. I no longer am a landlord as I hate dealing with other people’s bullshit. However, we still strategically move every two years. That’s when you can make the money and not deal with taxes.

Once you start making the big bucks, you’ll become obsessed with taxes. Until of course you make the huge bucks. (Then you no longer care). We’re big bucks, not huge bucks yet.

Buy stock. The stock market is not gambling. Only stupid losers who don’t know how to make money in it say that. Like anything else, you buy low and sell high. I’ve talked about being boring and simply buying the DOW many times. I have some stock, but mostly indexes. Yes, I’m boring. But yes, I make a lot of money in the stock market.

Buy bitcoin. I’m the absolute last person to discuss this as I’ve never even done it. However, I know two people now who have made decent money flipping it. Note that they’re way younger than me. Maybe I’m too old or too stupid to figure it out. Whatever. I just know people can make money doing it.

One of them will be a traveling buddy in the near future. That’s one thing that sucks about having more money than all your friends – you can do fun shit but you’ll be going alone. Yeah, you might say “then get new friends.” I don’t throw people away. But you’re right. I’m working on adding some.

Online – once again, I’m the wrong man to ask. I’m still trying to figure it out myself. But I know several people who are doing it so I know it’s possible. One of them has well under 50 IQ points than me, so if he can do it…

These are just ideas. There are millions. Figure out what you love and get good at it.

Ways to increase cash flow

Get better at work. Yeah I know. The cool thing online is to make fun of people who work. However, my paychecks are usually bigger than their online money. I know this because I say “let’s go to Italy next month” and they’re like “I don’t have enough money.” Of course, a lot of these people are exaggerating or just downright lying. That’s why I say, get better at work. My paychecks are huge because they need me and can’t find a replacement even half as good.

Stocks. Yes, once again, stocks. You’ll get to the point where you actually have fat dividends. It takes at least a decade (unless you succeeded with a startup or something along those lines) to accumulate that much. But you’ll get there.

Rental properties. You need to be a Nazi. On the nice vs Nazi scale, I swing too far towards nice. That’s great for the renter. Bad for the investor. I’ll never do rentals again. However, if you don’t mind being an asshole, look into rental properties. You can make a good cash flow this way. I know since the people we went to Colombia last year with do this.

Online. Still trying to figure this out. I suck at it and I’m in no position to give advice this. I just know a few people who are pulling it off and soon will be making enough to be our travel buddies.

Curtail spending. I hate misers. But, you also have to keep your spending under control. You’ll need to figure out that balance.

I tell you the truth

It’s funny. So many people online are liars. I can tell you this because when I call someone on it, I get crickets.

I got money. When I want to do something, I do it. Other people put up this front like they’re swimming in money and I say “cool, let’s go to Chile then” and they start making excuses. If you want to know if someone is legit, don’t be afraid to call them on their bullshit. And don’t take advice from liars.

I tell you straight up what I kick ass at and what I suck at. Call people on their bullshit folks. I love it when people do that. I have no respect for liars.

I’m getting smarter and wiser every year. Every year, this blog will get better as I can give you better and better advice. I’ll tell you when to listen to me and also when I don’t know what the fuck I’m talking about. I care about my integrity. I’d rather say “I have no idea” than lie to you.

About the featured image

My wife loves Game of Thrones so we visited some sights in Croatia to see where they film it. If you like Game of Thrones, you’ll immediately recognize that picture. Yes, that’s what you think it is.


Roman is an artist, composer, writer, and travel junkie.

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