This is part two of my Living The Dot Com lifestyle series. It’s based on a presentation I gave at Third Tuesday Vancouver call how to run a million dollar business on two hours per day. To read part 1 of this series, go here.
Rule 2 – Never Trade Hours For Dollars
Most people make money by trading hours for dollars. There are many ways to trade hours for dollar. The most common is call a job. You go to work for a set amount of time in exchange for money. Or you’re a professional, like a doctor, lawyer or social media consultant and bill your clients for the number of hours you spend working for them. Either way, you are trade your time for money.
If all you want is to have money, there is nothing wrong with trading hours for dollar. However, if your goal is to live the Dot Com Lifestyle and have both time and money, then trading hours for dollars isn’t going to work. As a matter of fact, trading hours for the dollar is quite possibly the worst method of earning a living one can make.
You Are Taxed The Most
If you trade hours for dollars, congratulation! You are the government’s biggest income source. And there is no way for you to escape it because the company you trade hours for dollars with will withhold the tax money from your paycheck. And speaking of taxes, you are number one! The more you make, the more the taxman takes â€“ up to 50% of every dollar. Of the three entities that are subject to income tax (individuals, corporations and trust), no other entity is taxed as highly as an individual trading hours for dollars. Give yourself a pat on the back for being the government’s biggest money train.
You Have The Fewest Tax Breaks
Not only are you taxed the most but you have the fewest tax breaks available. While a company can write off pretty much anything that is used in the course of their business, you have to use after tax dollars to get to work, eat your lunch, buy cloths, fill the gas tank, etc. About the only real tax break available to people who trade hours for dollars is the RRSP (IRA or 401K in the US). And the most amazing thing is, most people who trade hours for dollars don’t take advantage it!
You Only Earn Dollars When You’re Trading
Trading hours for dollar creates no residual or passive income â€“ if you’re not trading, you’re not making any money. It’s a tough balancing act. You want to earn a living but you also want to spend time with family and friends. It’s give and take. When you trade hours for dollars, you can’t have both. If you want more time with family, you have to trade less. If you want to make more money, you have to keep trading. But then you run into the next problem.
There Are Only 24 Hours In A Day
It doesn’t matter how many dollars you trade your hours for, you are limited to 24 hours just like everyone else. And it’s really hard to trade hours for dollars 24 hours a day. That puts a cap on your income. Even if you’re a high power lawyer that bills out at $500 an hour you still have a cap. And while you’re making good money, you’re still trading hours for dollar. The instant you stop trading, the money stops.
Eventually a time will come when you can no longer trade hours for dollars. This will happen either by you becoming sick, in accident or are forced to retired. What happens then depends on the decisions you made earlier in life. If you planned well, you’ll have enough to live on without trading hours for dollars. However, statistics shows that the majority doesn’t plan well and will be force to take some kind of social handout â€“ either by the government or family.
You Want Time & Money, You Don’t Want To Trade Time for Money
Now, I am not advising anyone who currently trading hours for dollars to quit their jobs. That would be stupid. However, I do want you to keep in mind that if your goal is to have both time and money to live the Dot Com Lifestyle, then a job is the wrong way to go about it. You want time and money. You don’t want to trade time for money.
To be continued.