If you look at this image, you’ll see where real wages have been going for the last 50+ years in America.
Nowhere.
Of course, because inflation makes paper money worth less and less every year, the illusion of progress is created. “I’m making nearly twice the salary I did 15 years ago!”
But the extra money buys no more than it ever did, so a person’s standard of living stays the same.
In a regular drone-job, every person is paid approximately the same amount based upon their job title. A company with ten accounts receivable clerks likely pays all of them about the same. The supervisors all get a bit more, and so on.
How Long to Double Your Income?
The question is, how long does it take one of them to break out and make double his or her current salary?
Well, with a typical 3% annual raise, after 14 years he’ll be halfway there and making 50% more than today. Fourteen years!
Here’s what’s worse. All his eggs are in one basket. Maybe he’s making a comfortable $60,000 per year and is willing to stay in an unsatisfying rat-race job for another 14 years to get to $90,000. But the day the big boss decides on some cutbacks and downsizing, his salary can drop to zero overnight.
Many of us have been there.
In fact, there are tens of millions of Americans, Brits, and Canadians who are there right now. Boom. Bad economy. You’re gone. Thanks, bye.
Not to be gloomy, but the fact is, that’s exactly where a lot more people are heading. Inexpensive technology, cheaper robotics, and massive computational power are all eliminating human jobs at an unprecedented rate.
The 2020 pandemic cost tens of millions of jobs worldwide. As the economy recovers, those jobs come back very, very slowly.
And millions of them will never come back because those companies wanted fewer employees anyway – and the options to replace them get better and cheaper every year.
Here’s a podcast from The Expat Money Show where Mikkel and I talk about safely leaving the rat race by starting an online business!
What If You Owned Your Job?
When you own your own nano-economy in the form of an online business you have several very significant advantages most people never have.
- You have more freedom to increase your income. By simply increasing the number of people who see your product or service you will increase the number of customers you create. All things being equal, twice as many visitors to your website means twice as much money in your bank account. Does it take 14 years to get 50% more people to your site? Nope. It would be better to think in terms of months or maybe even weeks, especially when you are starting out. Geometric growth rates are common just because of the way the Internet works.
- You have more freedom from a catastrophic loss of income. A conventional, rat-race job involves, for example, one person who pays you $60,000 per year. An online nano-economy might involve 1,000 people who each pay you $60 per year. That’s the same $60,000 of gross income but it’s 1,000 times more resilient because it’s distributed between so many people.
- You have more freedom from annoying co-workers and bosses – because you have none. And if a customer gets unreasonable and demanding, it’s a simple matter to refund his $60 and say goodbye forever. Problem solved. Zero stress.
- You have more freedom to lower your taxes and keep what’s yours. Salaried and hourly employees are the low hanging fruit for tax collectors. In fact, they get your money before you even see it. And let’s just say that tax rules never favor the little guy. Income from a business, however, is subject to much more flexible rules. And the more you make, the more flexibility you have.
- Here’s the big one for Escape Artist readers. Your source of income is completely portable. You have the freedom to work wherever you want. Any town in your country. Any country in the world.
Personally, I believe this is the shape of the future. Old economy jobs are not expanding, they are diminishing. The answer over the long term is to create, own and operate your own ‘job’ and leverage the advantages that have always existed for companies; income diversification, risk reduction, and reduced tax exposure.
When you combine these advantages with doing something you love and having maximum geographic flexibility, it’s a solution perfect for a person who values living life on his or her own terms.
The Takeaway
Conventional, rat race employment stacks everything against the little guy. It offers stagnant wages, maximum tax exposure, risk of catastrophic loss of income, demand to live in a specific place, not to mention the added daily stress of working with other unhappy people who feel trapped in the same situation. Owning and controlling your own source of income delivers fundamental freedom that remedies the risks and lack of reward common to the rat race.
Ready to Create Something of Your Own?
Are you ready to live life on your own terms – create your own online income? Reach out to us at Safely Leave The Rat Race. We are committed to helping you get from whatever point you are right now – to the point of earning a regular, predictable online income while living wherever you want.
I hope you enjoyed Escape to Freedom #5: Freedom Of Income. In case you missed them, here are
#4 – Escape to Freedom #4: Freedom to Create
#2 – Three Levels of Expat Online Income and
#1 – What is Your Freedom Lifestyle?
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