Carlos On Web :: Going techie without going broke

First: Raising A Red Flag

For Employees and Self-employed individuals, this article may come as a big surprise. This group of people is used to earning money by trading time for it.

When introduced to the concepts of leverage, residual income, and the like, many of them are so closed-minded that they automatically equate such concepts as a scam. And when they meet an ordinary guy (especially young and under-schooled) earning income that can only be describe as extra-ordinary, the guy is downright branded as a scammer.

What a wrong headed thinking!

Raising The White Flag Of Financial Education

I’m not sure if Robert Kiyosaki was the first to expose it, but his book entitled CashFlow Quadrant is instrumental to my understanding that there are basically four quadrants or ways of earning money each of which is represented by groups of people this way:

• E – Employee: earns from his job
• S – Self-Employed : earns by practicing a profession; may also work on his own business
• B – Business : earns by owning and running a business system
• I – Investors : earns by using money to make money

If you have not read the book yet, I recommend that you grab yourself a copy. Your local bookstores usually have it on the shelf, but of course you can always get one from Amazon.

Three Types Of Income

Linear Income – This is the type of income that is directly proportional to the amount of time you put into your work. Here are some examples:

• You work 8 hours, you are paid 8 hours
• More clients and projects, more money
• A 5-minute late for work means a deduction on your hourly salary… Blame it on the traffic… Grrr
• All sub-ordinates always earn lesser than the boss … ouch!
• Absent or in vacation means ZERO income

Leveraged Income – A business makes ample use of leverage by hiring people to work for the company or business and paying them for the time and talent spent to get things done.

Franchising (widely considered as scam a long time ago) is also a form of leverage. By inviting franchisees to run a business using a tried-and-tested set of methodologies, the franchisor is able to expand its brand and therefore makes it more valuable.

Leverage is making use of resources, talents, efforts of a team of people. Paul Getty, sums it best when he said, “I will rather earn from 1% of 100 people’s effort than from 100% of my own effort.“

Passive and Residual Income – This is the type of income that is worked out once and reaped several times over a long period of time. To generate this type of income requires creativity, talent and smarts. Here are some examples

• Royalties – artists, musicians and authors still earn even when they are long retired
• Rental Income – From commercial buildings and others
• Sales Override – Possible through affiliate marketing and network marketing (another one that’s deemed as a scam.)
• Investments – Essentially, the use of money to make money. Stocks, mutual fund, real estate, etc.

Which Type Of Income Is Best?

Notice that of the three types of income, it is only in the first type (Linear Income) that you are directly exchanging time for it.

Going back to Robert’s CashFlow Quadrant, Linear Income is generated by those in the E and S Quadrants. Leveraged Income and Passive Income are generated by people in the B and I Quadrants.

Take note also that anyone can be in any quadrant. It is even possible to belong to all of the Four Quadrants.

So, in other words, the answer to the question, “Which type of income is best?” depends entirely on you – your level of comfort, the talents you bring into the table, your own desires and your willingness to pay for those things.

I Love Money

But… Isn’t the love of money the root of all evil?

Sorry folks, I beg to disagree. I just disproved it.

I love money. There is no denying it. Contrary to what has been embedded in most people’s subconscious, money (or the love of it) is not the root of all evil. It’s the lack of money that is the culprit.

Imagine Haiti without money pouring into the island after the disastrous earthquake. It would be a terrible world indeed.

I Love Time

I love time — lots and lots of it. I’m talking about free time.

Free time allows me to stroll around any place I want while the rest of the my friends are sitting on their office chair waiting for 5:00 PM to tick so they could punch the time card and so that they could stroll around like I do after a long day’s work.

Free time allows me to watch my kid growing right before my eyes. Unlike a remote control dad, this activity is so important to me that I am willing to give up all the business deals in the world just to have time playing with my little monkey.

Time and Money Dilemma

But time and money are not always best of friends like man and dog.

Let me explain it this way.

How do you make money?

For most of us, we make money by exchanging our time and skills for it. In other words, trading time for money.

A programmer makes money by coding, analyzing business processes, and following instructions from the development manager. An accountant makes money by scrutinizing financial information and making intelligible conclusions about it for business decision making. One of the ways a lawyer makes money is by playing the devil’s advocate, finding faults, and dissecting the Law to protect the client from potential punishment.

In all of the examples above, a person is trading time for money. For most people, this is the default business model, so to speak, they follow to earn money. In many cases this is fine – you get paid for what you work for.

And, ideally, this leads to…

• More work means more money
• More projects mean more money
• More clients mean more money

More money means more happiness, right?

Wrong!

Here’s why…

• More work means more money, but less time spent on other activities like:
  • a cup of good coffee with a friend
  • a good physical exercise
  • relaxation and meditation to remove the stress out
  • creative thinking
  • just plain do nothing
• More projects mean more money, but there is a limit on the number of projects you can handle.
• More clients mean more money, but clients are people — and people can mean problems. You can only entertain a few of them before your sanity explodes.

Of course, the less time you spend working means less money in the bank account.

This is the consequence of trading time for money. Since time is limited (a mere 24 hours in a day), it is not always a good idea to exchange your time for money. Exchanging time for money is bad for you. And it limits your happiness up to a certain point.

Time-Money Solution

Is there a way around this problem?

Of course there is.

First, you need to understand that time is more important than money. As a matter of fact, time is more valuable than money.

Money can be made from ZERO, but lost time can never be recovered.

In the next article, I’ll show you some of ways money can be made without trading time for it.

Stay in touch and I encourage you to subscribe to the blog so you can get updates delivered to your email box. Thanks for Google FeedBurner! Click here to subscribe and join the other subscribers who enjoyed the few articles on this website.

This is short post and one that makes reference to a previous entry on the series of Self-paced PHP Tutorials I haved started for beginners. I apologize for being lazy and submitting a sort of half-baked article on PHP Control Structures. I didn’t realize a lot of beginners would actually be interested in that.

This time, I have improved it and have provided a challenging problem at the end of the article. I’d be glad to hear your comments.

Cheers from your Lazy Blogger,

Carlos V.

The Christmas Season holds a special place in the hearts of the Filipinos; the Philippines being a predominantly Christian country. They Philippines is considered to have longest Christmas celebration that lasts for more than 30 days! Here, Christmas is celebrated with the different sounds of fire-crackers, never-ending parties, drinking seasons with friends and attending an early-dawn mass know as the “simbang gabi.”

Such is true for the rest of the places in the Philippines, except in Davao City.

Read complete article »

Call it a personal journal or a diary, but with a little twist. In this Blog Category, I will be expressing my personal views and opinion on various topics and issues that interest me. I will be sharing my thoughts on Politics, Science, Religion, Travel, etc.I could have named this Category as Miscellaneous, Uncategorized, or anything, but naming it Personal seems to fit.

This section is really intended for my personal use. This should be the last section to browse (and only if there is nothing more to browse) since this is the only category that has nothing to do with technical work whatsoever.

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