Debt to Wealth
Hobbies that Make You Richer
If you’re like me, your spare time is precious and in short supply. We all know that there are only so many hours in the day, and there’s never enough time to do everything we want to do. So, every day, we must make choices. But even the most insignificant seeming choice can have a major effect on your wealth.
When it Come to Building Wealth, Every Choice Matters
Think over all the various activities and hobbies you love. Chances are that some of those activities make you poorer, while others actually make you richer, whether you know it or not! Here’s a brief sampling of hobbies than can help you grow wealth:
- Gardening - Growing a vegetable patch, an herb garden, or some fruit trees is fun and relaxing, and will also save you money on your grocery bills.
- Exercise - Pick your favorite kind. The health benefits cannot be overstated, and they will save you enormous sums in medical expenses over the course of your lifetime.
- Fishing - Catch a free dinner from time to time. I’ve recently taken up crabbing, myself. There’s nothing like homemade bisque, especially when you caught the crabs yourself!
- Crafts - Make your own furniture, drapes, blankets, quilts, or anything else you enjoy making. You’ll save a bunch of money, and love the stuff you make far more than anything bought in a store.
- Blogging - Most any blog with a decent readership can earn at least a little income from ad placement.
- Hiking - pick up a book on edible plants
and harvest some free food while you’re out in the field.
- Brewing - If you’re a beer lover like I am, make your own.
- Cooking - Cooking is very relaxing, and home-cooked meals are almost always cheaper than prepared foods or restaurant fare.
- Online Poker - It can be very profitable if you’re good.
This list is by no means exhaustive. Chances are you can think of many other fun things to do, that don’t feel “financial” at all, that nevertheless make you wealthier in your pocketbook as well as your soul.
Now here’s a sampling of activities that make you poorer:
- Video games - They cost money and eat up precious time. (This one is a personal weakness of mine. I am working on giving them up.)
- TV - There was a great article published recently called How to Earn a Million Dollars by Not Watching TV. Tell your cable company to shove it, and throw your TV in the trash where it belongs.
- Movie Rentals - They may be cheap, but they’re not free, and take up a lot of time.
- Eating Out - Expensive and unhealthy.
- Online Poker - Very expensive if you don’t have the skills or discipline.
Now I’m not saying you should give up every single activity that you love that also costs money. But it comes down to this — when faced with a choice about how to spend your limited free time, why not give preference to your hobbies that actually make you richer? You’ll still be doing what you love, while taking one more step on your path to personal financial freedom.
So now what?
I have grown tired of reselling used books. While I’m quite certain that I could easily use this method to get up to a pretty big stake, it’s a hassle to find, post, wrap, and ship them, and it’s getting boring, so it’s time to move to something new.
I have $6.04. In a sense that’s a pretty extraordinary sum - I have increased my starting stake by over 6000% in a very short period of time. That’s the power of trading value for value. But as you can see, I’m starting to run up against one of the inherent limits of any business - time. You see, if it takes me an hour to do all the work necessary to buy and resell a single used book, I am really only earning an hourly wage for doing so, and a pathetically small one at that.
The Magic of Leverage
So how do we get around this problem? The answer is leverage. We must find a way to work once, but be paid many times for it. There are many ways to achieve this. Having people work for you is one - you do the management job once, while being paid for the work of many. However, $6.04 is not going to get me very many employees.
Another method is to use debt - you borrow someone else’s money, and invest it in a way that generates more profits than the interest you pay. In a sense this is another way of profiting from the work of others, in the form of the money they have been paid. Using debt is not against the rules, but you must be able to pay the interest out of your stake, and again, I don’t see any banks lending against $6.04 any time soon.
The Ultimate in Leverage
So how can we create leverage with so small a stake? The answer lies in the Internet. The vast fortunes that it has created are due to the fact that it is the most efficient creator of leverage in the history of human civilization. How does this work?
The answer is that if you write something once, then publish it on the Internet, you can create and distribute what is for all intents and purposes an unlimited number of copies at little to no cost. If you provide advertising or promote a product on that page, then so long as some non-zero percentage of your visitors clicks or buys, each page view is worth a certain amount of income (on average). Now it may be (and probably will be) a very small amount of income, but the power of leverage is such that even the tiniest amount of income can make you very, very rich if it’s leveraged sufficiently. In other words, if you can grow your traffic sufficiently, a single Web page can generate practically unlimited income. Don’t believe me? Check out Million Dollar Homepage. The creator of that site found a way to work once, and be paid $1 a million individual times for his efforts.
Archimedes famously said that with a large enough lever, he could move the entire Earth. We need not be so ambitious. We’re only trying to double a $6 stake, here. And I have a plan for how to do it. More to come soon.
Stop buying stuff!
You’re destroying the planet, you’re keeping yourself poor and miserable, and screwing up your life. Don’t believe me? Watch this. Think about the true costs of the useless crap you buy every day that fills up your closet and eventually ends up in the landfill. Learn about, study, and ponder externalities. How many are you (at least partially) responsible for?
Ask yourself this, and answer honestly: Would you really be all that bad off if you gave up everything you own except basic kitchen fixtures, a bed, and a modest roof over your head? (Ok, you can have some more basic furniture and a simple wardrobe, but you must buy it all used at thrift shops. And you can have basic utilities, so long as you don’t overuse them.) Would that ruin your life? Would it really have any appreciable effect on your well being at all? Most people derive 90% of their happiness from their family and friends. And to fill in that last 10%, you can get unlimited entertainment, enough for a lifetime, free at any local library, along with a free Internet connection.
Now consider how much money you’ve blown over the years on items that aren’t on that list. Imagine if you had saved it all, and invested it at a modest 8% return. Seriously, run the numbers and see. For most middle class Americans, the result would be more than enough to create a lifetime of financial independence.
It’s not too late. You can just stop. You really can!
In fact, I ought to launch another site called “Million Dollar Closet.” The rules would be the same, except your starting stake can come from selling crap you already own on eBay or Craig’s list. The hook - no buying ANYTHING new until you have a million in the bank. You can buy food (but not at restaurants), pay your bills, and pay to repair stuff you already have, but that’s it. I’m confident most people could get rich in much less time than they imagine this way. So why not do it?
Time is Money?
We’ve all heard the phrase. However, the notion is a dangerous one. The truth is that time is infinitely more valuable than money. Surely everyone reading this will agree. Every precious moment that slips away and will never return again is a tragedy if wasted.
So I will put a hard question to you: if time is more valuable than money, why are you trading your time for money? Whether your hourly wage is $7 or $700, is it really worth giving over so much of your life? I don’t care who you are, the answer is no. Not for its own sake. Not by a long stretch.
If you are one of the few people fortunate enough to have a job you love, then you need not concern yourself. If you are supporting yourself doing something that brings you joy and satisfaction, then count your blessings (for they are many), save for retirement, and don’t worry after that. Most people hate their jobs, however. To spend the majority of your waking hours away from your family and the things you love, trapped in a job you hate, is a terrible waste. As one friend put it, “it’s no way to live a life.”
Here’s the real test for any job: If you had a billion dollars, would you do your job for free? If the answer is no, then in my mind it just isn’t worth it, not matter how much you are being paid. At the end of the day, it’s only money, and your time is priceless.
Most of us are trained from an early age to believe that time equals money, that we must work an hour to earn an hour’s pay. It’s deeply ingrained in our society and culture, and it is utterly false. If you ever want to be wealthy, you must free yourself from this lie.
The truth is that there are many ways to grow wealth. Trading hours for money is only one, and it is by far the worst option out there. Yet is it the only option that we’re taught about in school, and many people never use any other method their entire lives. That’s why you are not allowed to use a single penny of pay from hourly work in this game.
Find another way. The world is full of ways to make money. All that is required is for you to find something someone needs or wants, and give it to them. But don’t give them the precious hours of your life. They should be yours, and yours alone.
How to Make Money From Nothing
At the risk of violating Rule 6, check out this post from money smart life. It discusses using leverage to profit on eBay. The strategy need not be limited to eBay alone, though. Using this method, you can profit while putting zero (literally) of your own money at risk. Like my first sale, the trouble with this strategy is time. It works, but it’s hard to scale up to make serious money with it. However, it’s a great way to build up a stake for more lucrative opportunities. Food for thought.