In Step 2 we looked at ways to kick-start the journey to get out of the red zone. We saw that reducing our expenses and increasing our savings are good starting points. Let's continue the steps that help us the most in getting to the blue zone.

Goals

Our goal in step 3 continues to be to get us out of the red zone and into the blue zone. We'll adopt a few more strategies to accelerate our progress. We need to mention that this step is also the one that requires most effort — finding higher/additional sources of income.

Actions

In this step, our action items are to:

• continue to find ways to reduce our expenses;
• explore ways to increase our income;
• once our income increases, also increase our savings target accordingly — to 20 to 30 percent of our income.

Sources of Higher Income

Though at this stage, we cannot yet depend on investments to generate income, we can look at other ways to make more money: a higher-paying job, or a side business/hustle.

Higher Pay

Consider this: irrespective of the type of work, most of us work the same 40 to 50 hours a week: a store clerk, a cab driver, an IT person, a doctor, or a lawyer, all work equally hard in their respective jobs. But their incomes are very different. This tells us that there are some areas that inherently pay more than others, for the same effort.

Research and identify a higher-paying job or project that appeals to you. This could be a different project in your current workplace; a job in the same area but in a different company; a new job in a totally different area and/or company. Select one that'll give you the most bang for the buck — highest potential income, in the shortest time and cost to get there.

For most of us, finding such a job won't happen in a few days. So, create a goal that helps you start working towards finding this job. For example, if time is available, use your savings to enroll in courses in the new area. Or take a second job in a company in that area — this will let you get a foot into that area. You need to give yourself a reasonable time frame (months or even a few years) to get there.

Some factors to consider when selecting a potential job:

• The job takes you to the next level in terms of income.
• The job is definitely something you can do, with some additional skills.
• The cost of learning those skills is affordable (or free).
• Learning the skills can be achieved in a reasonably short time.
• It doesn't cut too much into your daily life and doesn't cause undue stress.

Use your judgment and take time to compare a few options before deciding what's best for you.

Side Business

Similar to looking for a higher-paying job, a side business that you can do in your extra time is also an option. Just as in a job, not all businesses are created equal. Some inherently yield higher returns than others; some require a bigger overhead than others.

As an example, consider the side business of cultivating some plants to sell them. Consider these:

• A pound of herbs (e.g., dill, basil, oregano, ginseng) fetches a higher price than a pound of spinach or lettuce, even if we put in the same effort in growing either.
• Certain plants grow faster and yield more or earlier than others.
• Certain plants may be more suited to where you live.
• Similarly, some businesses require more attention/presence than others. Example: creating art requires you to be there, whereas plants grow even at night when you're sleeping.

As we can see, in every business area, there are factors that give you a higher return. If the side business path appeals to you, research the different available business options just as you would research a potentially higher-paying job.

Higher Income — a Case Study

Jill (not her real name) was a checkout clerk at a supermarket. She wanted to get out of the red zone she was in. She figured that if she could become a manager in her own store, she could earn more. A bit of research showed that being a manager required her to work with spreadsheets and write letters and reports. Jill was already using her home computer for email, but had no spreadsheet experience. She found enough resources online to make her feel comfortable that, if needed, she could learn the required skills on her own in about six months.

She widened her search a bit and found that a coffee shop with four locations in a nearby bigger town was looking for a manager for all their locations in that town. Jill learned that being a single manager for four locations would pay more than what a store manager in her supermarket would. The company was finding it difficult to hire a manager; the hiring difficulty was mainly because one of their locations was open 24x7, requiring the manager to visit that location at night once a week. Jill decided that the extra pay was worth working the night shift once a week and also the commute (25 minutes each way). She applied for the job, told them about where she stood vis a vis the computer skills, and convinced them to hire her on a trial basis for six months, at the end of which she could demonstrate her progress.

Being a manager for four locations mostly entailed traveling between the branches to interact with the employees and also managing the stock. Jill found enough free time to learn the required computer skills such that she quickly came up to speed; in six months she was out of the trial stage and was made a regular employee.

Takeaways

• Jill was driven enough to look around for a source of higher income.
• She searched and researched until she found a job that provided the best return for her investment (learning time, commute time, working nights).
• She demonstrated her enthusiasm, sincerity, and flexibility during her interview, which helped convince her employers to give her a chance.
• She worked hard to qualify for the job, and once on the job, to fulfill her commitments.
• Equally importantly, Jill didn't tie her identify to what she was doing at that moment: she didn't view herself as a supermarket industry worker or a coffee industry person. She was focused on the higher purpose of "finding a path towards financial independence" which freed up her mind to be ready and flexible to learn any necessary skills to get there.

But Wait, There's More!

Jill didn't stop there. She began to realize that her success was tied to the success of the stores and the success of the stores in turn depended on the revenue the stores brought in and on how much money they saved.

The stores stocked coffee blends from 14 different countries. Customers could ask for a brew made with one or more specific blends. Jill observed that the request for specific blends varied with the season, time of the day, and even with the customer's age. She printed a blank grid with this information and posted it next to each cashier's stand, instructing the cashiers to check the appropriate boxes after each sale. Each night she would enter this information into a spreadsheet. In six months she found she could somewhat predict which blends would sell more than others. She appropriately modified the orders her stores placed with the head office. (Until then, the head office simply used the size of a store and whether a store was urban or rural to decide how much coffee each store needed, and split that amount evenly across the blends.)

At the end of the year, Jill generated a report showing the increase in sales and reduction in unused inventory, across all the four locations. The report was well-received by the company and resulted in a (small but welcome) pay raise for Jill.

But it didn't stop there. The company decided to implement this at all their locations and to automate it, by adding the grid to the cashiers' screens so that the cashiers didn't have to deal with an additional paper sheet. Jill was asked to be a consultant to their IT analytics team to help them design this. She spent a year and half in this role (IT departments move slowly).

Three years after she started, Jill is no longer a store manager. She now manages the "Business Performance Analysis" team at her company. Her pay is close to five times what she was making as a supermarket clerk, and she's well on her way towards the green zone.

Needless to say, not every experience will be similar to Jill's. The lesson here is that opportunities and initiative are often two sides of the same coin.

Summary

Let's summarize the steps to get us away from the red zone and towards the blue zone:

• Continue to reduce our expenses.
• Explore higher/additional sources of income.
• Choose the one(s) that result in most benefit for the least effort (time, money, etc.)
• Increase the amount we save.

Our goal here is to increase our savings to 25 to 20% of our income consistently for at least six months. Once we do that, we can truly congratulate ourselves on our focus, determination and diligence. We are well on our way towards achieving financial independence.