SPOFs, storms and shelters

You’re vulnerable. You have a job, a family, a mortgage, bills to pay. You’re vulnerable.


Because, if you’re like most people, you have one job. One single source of income. You have a single point of failure. Wikipedia describes what this is:

“A single point of failure (SPOF) is a part of a system that, if it fails, will stop the entire system from working. SPOFs are undesirable in any system with a goal of high availability or reliability, be it a business practice, software application, or other industrial system.” Or a family.

If you can’t provide for your family, what happens? If you get fired, or the company you work for implodes, what will you do?

First defense? Eliminate SPOFs altogether. You do this by creating multiple income streams. Google what they are. They’re critical.

Second defense? Have redundancies. Reserves that you can call upon in times of need and disruption. An emergency fund. Cash. Liquid assets. Ideally, this should be enough to sustain your current lifestyle for anywhere between six months to two years.

This is not a paltry sum. But if you can’t resist the temptation to splurge on a down-payment for a house or other illiquid investments, you strip away a critical line of defense against turmoil. By having such a large redundancy, you give yourself time to rethink and reinvent.

You can do a lot in two years with a little money and a lot of time.

The third defense is to have a plan. As James Altucher notes, even “a bad plan is better than no plan.” Ideally, you should have multiple plans. Follow the “3 Plans Rule” and remember the acronym PACE.

Primary. Alternative. Contingency. Emergency.

“All this is exhausting. Can’t I just have a good job and raise my family?” Not anymore.

As the world we live in grows in complexity, we are exposed to more stress, more uncertainty, more risk. You can either take action to protect yourself against it, or leave yourself open to damage.


Eliminate SPOFs by building multiple income streams. Create redundancies you can fall back on. Have plans. One for when things go well. One for when they don’t. One for when they go really bad. And one for when the world starts to collapse around you.

Don’t be a sucker and wait for the storm to hit before you build a shelter.