Resources.

When embarking on a goal, one of the first things you need to do is evaluate your resources. I remember the old MacGyver series on TV where MacGyver would find himself in many situations where he had to bring together scarce resources to make something happen. (It could probably be watched today as it was very woke for the mid 80’s.) 

We have mentioned many times that self-reliance is a culture more than it is a process. In the 21^st Century we tend to start a project by listing the resources and equipment we need and then setting about procuring them, probably online. Generally, to be self-reliant we find that either we do not have what we need or cannot afford it, therefore we have to make do with what we have plus what we can beg, borrow, or steal from friends and family.

So let’s kick off our discussion on resources with financing.

Financing.

There are three major sources of finance. Family, debt and equity. All three comes at different costs at different times. There are volumes written on financing starting with Mum and Dad, moving to Business Angels, onto Banks, then to equity markets and later capital raisings.

If you need finance learn what is available, where to get it and what you are going to pay.

Expertise.

It is sometimes hard to make a call on whether you should ask for expertise or whether you should gather it yourself. There are many good reasons for you to gather as many skills as possible, on the other hand there comes a point when the time and effort required to gain a particular expertise is unwarranted.

There are many issues at play that you need to work through if you want to be self-reliant.

1.There are certain skills you wouldn’t even try to learn yourself. 

2. There are skills you may only need once and therefore it would be unproductive to spend time and effort learning.

3. There are skills that you will need all your life and therefore it may be viable to learn them for yourself.

Outsourcing.

Outsourcing needs to be used when it is more efficient than you doing it yourself or it brings in expertise that you do not have within yourself.

Having said that outsourcing is one of the greatest stumbling blocks to you becoming self-reliant. 

It wasn’t that long ago that settlers came to Australia and were given blocks of land in the country and sent out there to do everything by themselves. Whatever you needed to do you did it yourself.

Fast wind to today and it appears the default position is to outsource just about everything. If you want to be self-reliant you need to add up the cost of outsourcing. 

It is very important to analyse your outsourcing on all levels. A first port of call can be the cost. If you are a salary of $60,000 per annum your marginal tax rate is 32.5%. The average person works 48 weeks per year or 240 days minus holidays and sick days means you work about 220 days per year or 1,760 hours. You earn $60,000, which means you earn $34.09/hour or $23.20 after tax.

That means if you are getting someone to mow your lawn or clean your house you need to work for about 2 hours to pay them to work for an hour.

Dining out is a whole new story. In our house it costs on average about $50 to cook a meal and buy a bottle of wine, with left overs for lunch. The cost of dining out is about $150 plus travel.

On that basis the average graduate must work for 4 hours to fund a night out at dinner.

A few year later you are earning $100,000 per annum and working 2,000 hours. $50/hour or $31.50 after tax. Now you only must work 3 hours for the night at dinner.

Later you are on $200,000 per year you are probably working 240 days or 2,400 hours per year. Your marginal tax rate is 47cents per $1. Which equates to $44.17 per hour, and the night out only costs two and a quarter hours work, but by then you will want the $80 bottle of wine and the meal will add up to $250 plus.

The point is why spend two hours at work to pay for someone else to mow your lawn.

There are times where outsourcing makes sense. I tell the story in The Parallel University of painting rooms that were wooden VJ boards painted in bright colours. It was going to cost me $200 in materials and many days of work. The painter quoted $220 and it took him one day. 

Our culture seems to have moved to a default position of outsourcing. We work long hours and race around in cars to drop children off at all sorts of activities we could probably do at a fraction of the cost.