Last November, I blew all my savings to take a trip to Antarctica. We crossed the Drake Passage in a boat and spent nearly 2 weeks with twice-daily landings on the continent. (All Videos Here)
In addition to allowing to me officially check off every continent on my world trip, it was an experiment. Going against all my ‘investor’ principles, I spent nearly all my non-IRA savings. I wanted to know what would happen once I got home seeing as I’d blown all my money. (‘Home’ being Santiago, Chile at the time…)
What happened to my finances after I got home? Here’s my 3-part answer.
1. Quality Of Life Did Not Decrease… Because I Owned A Business
If you own a business, then you live off of the cash flow of the business, not the equity. The money I spent on this trip was ‘free cash’, like a dividend paid for owning a stock. I blew my dividend on the trip, but the equity in my company, or the ‘value’ of the company, remained intact.
In fact, the business kept making money for me while I was in Antarctica. When I got home, the goose continued to lay the golden eggs. A few months later, I am making huge inventory orders and investing thousands of dollars into terrible dividend-paying stocks. No long-term damage… because I owned a profitable business.
If you own a stable business, cash flow will continue even if you blow all the money you have today.
Pre-Trip Tip 1: Hire a manager! It can be either a freelancer from the Philippines or someone in the USA. They only need to work 1 hour per week, doing the small 15-minute checks that you usually do. It is critical that they have the experience to see problems, and solve them.
2. Financial RISK Increased
While I was on this trip, without Internet, I found myself thinking “I hope my business is doing OK.” When I got home, I thought “I hope my business keeps this up so I can accumulate some money in the bank again.”
Hope is never a good plan, especially when it comes to money.
I realized that I was, at that time, completely dependent on the business I had previously built. I didn’t have free cash lying around for new investments, or to solve a big business crisis. I was hoping that it would continue to generate income for me. Rather than having an investment plan… I just had my fingers crossed.
While quality of life wasn’t affected directly, I was more aware of my dependence on the business, relying on it completely to rebuild my personal savings, hoping nothing went wrong. I felt safer moving into much cheaper accommodations for a little while.
Pre-Trip Tip 2: Do a test run with a fake-absence before taking a real trip. Spend 1 week or 1 month solely monitoring your business accounts and employee/freelancer communication. Don’t fix ‘little things’ you see in the account, and don’t intervene when someone on the team has a crisis. You can still fly in to save the day if necessary, but avoid the temptation. Let unsolved problems sit for a few days. This allows you to test the real-absence situation, without any real risk.
3. Business Growth Is Absolutely Slowed Down
I’ll never know the ‘opportunity cost’ of my trip. I had 2 business projects I also wanted to invest in, but I waited, choosing instead to pay for Antarctica.
First, there was a ‘License Your Product Ideas’ course I hoped to implement into my business model. Second, I wanted to develop some software. These together cost about as much as my trip down south.
I eventually completed both of these projects, but only 4 months later, once I had again stock-piled enough cash to pay for them. In a business that’s changing so quickly and that is very much in the ‘Wild West Gold Rush’ days… a 4-month delay is a long time!
Pre-Trip Tip 3: Have a detailed plan for how you will invest money once you are home. Make sure that your next big expenditure is a business investment.
Final Thoughts… Should You Splurge On Your ‘Trip’?
You probably have some ‘big non-business thing’ you’d like to splurge on; a trip to some distant location, some new toy, an upcoming wedding or stag party? If you choose to spent, just make sure your business is positioned to remain profitable while you’re distracted.
I would recommend not spending to your limit, like I did. It is stressful to have low savings, even if it’s only for a little while and even if your business is consistently profitable. Don’t rely on ‘hope’.
There are consequences even if your business continues to make money. With less money to invest, your growth will be slowed down while you wait for the treasury to re-fill.
Knowing this, you built the business to free up your time and your life… Sometimes, it’s very worth it to splurge on that life, like I did when I went to the Big White Continent. Today, I am very glad I went. 🙂
