Boy, does it feel good to get a paycheck, especially when you can spend most of your money on yourself. This fantastic feeling is a trap that takes years or even lifetimes to overcome.
Two years ago, I wrote, “How Would Your Life Look Without a Paycheck.” I have spent the last two years asking myself this question and preparing my life for the answer.
If you ask yourself this question early enough, you will take drastic measures to ensure you can survive and thrive without a W-2 job. Let’s explore the paycheck trap and how to overcome it.
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Why we love paychecks. My favorite Robert Kiyosaki quote is, “The rich do not work for money.” Simple words, complex concepts.
Robert Kiyosaki’s rich dad did not pay him to work inside his store. After some time, young Robert figured out how to make income without a paycheck. He charged kids an entrance fee to read through a comic book collection in the store.
I found myself in a similar situation with my son last summer. He turned 15 and wanted to work as a lifeguard on base.
I allowed him to complete the lifeguard training but not work as a lifeguard. He can’t drive yet, so ferrying him around would be a huge strain on my wife.
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Also, he would get caught in the paycheck trap early, as I did. I worked at McDonald’s from 16 to 18 before joining the Marines in 1999.
I am finally retiring and will never have to earn a paycheck again. My love of paychecks started during those golden teen years, but it should have been a love of income.
Paychecks versus income. Our love of paychecks is vastly different from our need for income. Rich people love income, not paychecks.
So, what’s the difference between income and paychecks? Income takes education, while paychecks take obedience.
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Let’s say my 16-year son earns $15 per hour as a lifeguard and works 20 hours a week. His monthly paycheck would be $1,200 for 80 hours of work. His take-home would be $900.
Now, let’s say he learned to rent one of my cars on Turo. He took the time to learn the Turo rental car system, how to improve his rating, and quickly clean the car for fast turnarounds.
He earns $30 per rental day and rents the car 20 days out of the month. His cash flow would be $600, and perhaps his take home would be $450 (I’m guessing).
The power of compounding thought. He earns home half the pay but works 25 hours instead of 80. Even better than the savings in hours is the critical thinking of building your own income stream.
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Let’s say he obtained another car. Now, his income is $900, and he works 50 hours. He adds another car, earning $1,350 total.
He then hires my younger son to do the cleaning and car preparation. This out-sourcing reduces his hours to 30 and his income to $1,000. This equates to $33/hour for the young man.
My son then trains other college students in the art of renting cars. Each session pays him $50 per student, $500 extra a month.
Finally, he puts together a five-hour video course explaining the ends and outs of the program. He sells it online, and it nets him $20 per purchase. He sells 100 courses a month for $2,000.
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Between renting cars ($1,000), teaching ($500), and course sales ($2,000), he is bringing in $3,500/month and “working” 80 hours a month. That equals $43/hour in the labor force.
Time to become a thinker. Creating an income stream is not about money but knowledge, education, experimentation, and learning. That’s why most people prefer to have a job.
Being a lifeguard is honorable, and I would be proud to have my son perform these duties and responsibilities. However, it’s not worth the cost of not becoming a thinker.
The more you build your income without a job, the more you see the world through a different lens. Writing is my income stream of choice because of the flexibility.
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Along the way, I learned how to create book covers, operate a blog, and grow an audience. I have bigger plans to flesh out as soon as I retire.
Hiding behind a paycheck. Have you ever talked to older W-2 employees? Maybe you talked to your parents or someone you know who worked for 30 to 40 years.
If you ask them to try something new, they usually have tremendous fear; they specialize in one or two core duties and keep those same tasks for years.
You might recommend they move to a lower-cost-of-living state or get a part-time job writing online to make some extra money. They will avoid and deflect because they have massive limiting beliefs they never overcame.
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The education system promotes this behavior by telling people there is only one correct answer. Even worse, they tell us the teacher ALWAYS has the right answer.
This mindset leads directly into the workforce, where our boss pretends to have the correct answer. After a few years of mentally fighting back, we let them have their way. Congratulations, we are mentally brain-dead and do not think critically about things now.
With our minds shut down and in “la la land,” we continue to grind through the years. The joy of receiving our paychecks diminishes yearly because the “let it slide” mindset becomes more challenging to overcome.
The bonds of debt. We would be able to break free but for our debt. Our new car and big house keep the chains around our necks.
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It is challenging to break this cycle; it takes extreme measures to get free. We must become critical thinkers, but this time for our personal incomes.
The simplest question. What is the bare minimum amount I need to survive without a paycheck? Ask this question to yourself every day.
The lower the number, the sooner you can free yourself. Say your freedom number is $4,000/month, and you find ways to earn this income outside of your W-2 job.
I am a massive fan of income investing to achieve financial independence. You would need $600,000 at 8% to reach $4,000/month in dividends.
Inflation vs. Dividends
However, you can mix and match your passive income. How about $1,000/month from roommates, $1,000 from renting cars, $1,000 from driving Uber, and $1,000 from dividends?
Think outside the box. Now you only need to find a way to replace your Uber money with passive income. You can write books, record videos, or start a blog.
Ultimately, being financially independent of a W-2 job comes with free thinking. You can’t think in a straight line and expect a multi-faceted lifestyle.
I climbed the corporate ladder in the military. I went from E-1 to E-9 over twenty years. However, everything changed when I learned about financial independence in June 2019.
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In June 2019, I was $77,000 in debt. Four years later, I am positive $300,000. My job didn’t significantly increase my pay, so how did I save the extra money?
Conclusion. Our minds are creative and want to think critically. We must give them a chance to achieve greatness by building something daily.
Suppose your ONLY goal is to climb the ranks: associate, senior associate, shift manager, general manager, and regional manager. In that case, you may want to start changing your mindset.
Having a job is great for paying the bills, but not much beyond that. Whatever fears we hold, we pass on to our children.
Instead of working as a lifeguard, my son started a YouTube channel. Once he gets a car, he can work as a lifeguard, but he will have YouTube passively working in the background. That’s how you prepare for a life of abundance. Good Luck!
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