The rat race.

First, an amazing Youtube item on a related topic: http://www.youtube.com/watch?v=ERbvKrH-GC4

Now… I think I got it wrong in my book review of Rich Dad Poor Dad.  This should have occurred to me immediately, but usually I need time to let things sink in.

As the author strenuously reiterates throughout the book, the point is realizing that you are in the rat race, and understanding how to get out of it.

His secret to exiting the rat race (a.k.a the 9-5 working world) is “minding your own business.”  For as long as you are still in the rat race, you actually need two jobs: your profession, and your business.  It is implied throughout this book that you will most likely never get really rich, like retire super early rich, by just having your 9-5 job and saving your money carefully.  You need to take your money and make it create compounding passive income for you.  That is the only way to get ahead of the rat race quickly enough to get out early.  Your source of initial earned income is your profession, but your source of passive income is your business.

This idea led me to an interesting conclusion: for now, my business is taking future money away from Sallie Mae and putting it back in my own stylish future-pockets.  At the rate of 4.12%.  They always say that if you have debt, paying it down is the highest rate of return you will find.  It’s nice to think of debt crushing as a valid business with ROI.

But post-debt (a.k.a. approximately April 2014) I will have to convert my cash flow into a positive passive income business.  Even more than running a successful debt-paydown business, running a passive income business such as investment or real estate requires all available resources.  That means all your time beyond 40 hours a week.  So I won’t be racing to the roof to see if I can be the best insurance broker like in the video.  I will be investing my total resources (time and self) in designing and building my lifestyle.  For 40 hours a week I will focus on being a fine engineer within my profession.

Before I learned about the world of passive income and early/alternative retirement, I assumed you had to work until you are very old and should just make the best of it.  When I first started working I labored under this academic notion that you should spend your professional years becoming an expert at your field, published and wizened.  Then I decided there is not enough money in that, and dreamed of climbing the ladder to leadership.

Then I went and read about Mr. Money Mustache’s early retirement, his enjoyment of his mostly free time with his wife and young son, and his very part-time, self-owned real estate and carpentry corporation.  It ruined everything!  Admittedly, moving away from my Protestant work ethic and my commitment to optimizing the Grind is leaving me with a bit of an identity crisis.  I finally converted my Bachelor’s in Philosophy into a solid job in Engineering, and now I will go off and be a.. landlady??

But the beauty is that working double-time with both a profession and a business should provide the wealth to eventually let you do what you want.  You could stay at your job but part-time.  Or do what you do as a consultant.  At home, with your dog!!  Or if you really work hard at the real estate business, you could quit your job and have nearly all your time to play with your children, do volunteer work, or pursue some other career or education.  I would love to counsel high school kids in financial topics or have more time to organize fundraisers in my dad’s memory.  But for so many of these things you need to be free during business hours.

I used to be convinced that my purpose in life is to be a good engineer to help people.  But there are so many ways to achieve your purpose.  Is there any downside to giving this a whirl?

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