Young Folk

I look at young people walking around these days, and they look so bright, so energetic and so full of ambition. Well, at least some of them are - the others are just having fun while they can. Anyway, the sad thing is that after these young people have enjoyed their lives and finished university, they'll go onto the sad world of the workplace. At their dungeons of employment, they'll be forced to do menial tasks and to climb rungs of some metaphorical ladder. This will be the case for most of these people, and some will enjoy their climb, while others won't. It's all the same, however, as the outcome is the same: getting old, having children and having them repeat the vicious cycle. Even the ones who enjoy it don't really enjoy it - they're chasing phantoms, they're chasing material wealth which really brings them nothing in the end. Sure, actually betting with money at the casino makes it more exciting, but what does everyone know? Yes, that most people come out losers! It's no different with life.

The fact is that you can't go into a casino expecting to come out a winner. Even though there are those lucky individuals and those that really know how to play the system; most people come out losers. You shouldn't think to yourself that you can overcome such huge odds, because c'mon, they're HUGE odds! Obviously, some do come through, but that is a very, very, very, very, very (I can't emphasize it enough) small percentage. Even the godfather of economics nags us over and over that people always beleive their luck and fortune and skill to be better than others. C'mon, stop fooling yourself! The sooner you understand that you aren't lucky, the sooner you can actually escape the casino.

The trick is not to even go into the casino in the first place! Life is about living, right? And what is living? Living is lifestyle, and if you can have the lifestyle you want, there's nothing more to ask for. Teachers and professors have got it figured out, I think. They are people that understand how to play the games at the casino, can play the games themselves (and might be good, or might have played the games in the past), but have figured out that it's not worth it to gamble. Why not just teach others the rules of the game, understand how to play, and get people's chips? This way, you can have a great lifestyle, earning enough to keep you well fed and keep life relaxed and a little interesting... but no need to kill yourself at the tables trying to make the next buck or it the jackpot.

Other people forgo the casino altogether and have figured out how to live outside the casino, while everyone else tries to make their way amongst the tables and slot machines. Maybe they'll put up a slot machine or two in the casino of life and live off the money that generates. Or maybe they'll rent out a spot in the casino where other people can put up a table and hire workers to work the tables...

Income Units

I bet you've heard the term "economic unit," which basically means each one of you! Yes, you are an economic unit capable of producing economic output. Of course, nobody wants to be called that, because the world and our lives are about much more than just mere economic capability. However, you do know that practically whatever you do is input into the economy, right? You take the bus in the morning: you've just paid for part of the bus driver's wages and the wages of the multitude of people it takes to service the bus and the roads it plies. No small feat! You buy breakfast and coffee - same thing. You read a newspaper, use your computer, etc. This is all economic input. Even putting your savings into the bank is economic input! It's inescapable!

Anyway, let's talk about income units today, rather than economic units. Economic units normally focuses on the amount of output that the "unit" can contribute to the overall economy. I want to discuss what is relevant to the individual: which is "income units." You yourself are an income unit, eh? In fact, for most people they only have one income unit, which is theirselves. Well, most people, but I'm sure that most middle-class people have a few other income units - but still, their own self is most likely the major income unit, with the other income units just making up a small percentage of total income.

So, what is an income unit? An income unit is something that is capable of earning money (the equivalent of labor) all on its own. It gives its master (hopefully, you) some money every month, week, year, etc. You yourself are an income unit, because you go out there all on your own and earn and income through some type of activity. Now, for many people, that's where it ends. One income unit, and only one. Commonly, however, there is the stock or share income unit. You own a couple shares in a publicly traded company and that is an income unit for you. Of course, it's still people down there ultimately generating the income, but they're generating for both themselves and for the shareholders. If you have a great stock, it'll go up in value all the time (capital gains) and pay you a dividend (a portion of the company's profits). There you go: income unit.

But, for the more ambitious (if you don't trade stocks or futures or options full time), there are other types of income units available. You have a home, right? Sure, you spend tons of money on it every month in the form of mortgage, maintenance, upkeep... but if you were to own a home that you rented out - ba-da-bing, ba-da-boom - income unit. Ultimately, it is people paying you that income, out of their own wages, but who cares?! It's income and money in your pocket for something that they need. Real estate is a powerful income unit, because like stocks, they can go up in price, pay you dividends... but the most powerful thing about real estate is that you can borrow maybe 80% of the total cost. Of course, the lender (the bank, usually) will make a percentage profit in the form of the mortgage, but everything above that, you keep... even though you only paid 20%. Over time, that gets paid off by the renters, too... so you own more and more of the real estate (equity). AND any increase in value is all yours! Decrease is also yours, too, just to let you know.

More income units? Well, you can own a van and rent it out to a delivery company. As long as you've got your books in order and are charging appropriate rent, you've got income from that investment. How about a burger joint? If you run it correctly and have taken yourself out of the management picture, that equals income unit. My neighbor's friend has three "Harvey's" burger joints in Toronto somewhere, and supposedly, that guy spends about an hour each day at each of his locations and collects about $300 per unit, per day net profit. Not bad income units!

More income unit ideas: vending machines, coin laundries, convenience store, etc. Of course, owning stock in a publicly traded company amounts to the same as owning your own business (and is a heck of a lot easier), but you only own a part of the business. But anyway, that's not a bad way to go, either.

Hourly Wages Worth It?!

Imagine if you will, a secret government organization that wanted to raise soldiers right from birth. Basically, after they somehow acquired the baby, there would be so much investment into that child before he could grow up and become a useful soldier. The government organization would have to educate the baby in all the various fields of knowledge they would wish him to have. They would also have to feed him everyday of his life, without any repayment, until the day he could work and produce returns for his masters. Lodging would also have to be provided; in order to make sure that their investment was protected from the elements. Furthermore, they would probably have to provide him with entertainment and leisure of some sort, for the human species cannot endure for very long without such sustenance.

Think about the above scenario for a moment. Sounds crazy, doesn’t it? Sounds like the movies, “Star Wars: Clone Wars” or “Soldier,” doesn’t it? Wait… it even sounds like slavery! Well, if you must know – it was just a story about you! That’s right, you. Each and every one of us who is working for someone else right now is pretty much being treated in the same way.

Do you think “your company” is paying you a fair wage? They have benefits, yadda, yadda, yadda?! Well, they are the ones that are benefiting and not you. It is very rare (although they do exist) for a company not to just use you like a slave. The situation is even worse in Asia, where workers work six or seven days a week and maybe 10 to 12 hours per day. Imagine the torture!

People like to think that they’re being paid “per hour” or are paid a “salary,” when in fact the truth is that the hour you just spent doing that report or making that sales presentation was the culmination of your entire life. Yep, “your company” is paying you peanuts to do something you spent a whole lifetime to learn. PEANUTS. And who knows? If you don’t meet their expectations, you’re out the door… and even if you do, they might boot you out anyway, because there’s another sap waiting in line to do what you do for half the pay! (Of course, he’s a sucker more than anyone else.)

The point here is not that you should demand more wages or stage protests over beef imports from the U.S. or cry for subsidies or do some other ridiculous, pointless, nutty thing. You should strike out on your own, doing something you love and benefiting from it. You shouldn’t turn over a large portion of your output to others – what you do should be totally for your own benefit and advantage.

I must address another point. Some of you may argue that part of our wages are used to pay for things that we need; such as food, clothing, cars, shelter, etc. Hahaha… do you think that it is only we who need the food that we put into our bodies? Food is fuel for our mind and bodies, and if you weren’t working such a stressful job with jerk co-workers – do you think you’d need ten cups of Starbucks coffee a day? I think not. Would you eat more if you were lounging under blue skies and on white sands, or would you eat more in a gray office in front of a droning computer terminal? The answer is obvious. Would you even need a car if you didn’t have to leave your family farm by the tropical seaside? Of course not!

So don’t be a sap and don’t get fooled. Your hourly pay probably really only contributes a small portion to what you need to get by (I’d estimate 20%); whereas the rest is for the benefit of the company (or for crap you don’t need). Why work your butt off developing the next BMW M3, just to buy an iPhone 2.0, when the guy developing the iPhone 2.0 is working his butt off to get your BMW M3? It all just doesn’t make sense… reduce your wants and reduce your stress. And most of all, don’t let “your company” take you for a ride.

Hourly Pay

Is going to school just to get a crappy job really, really worth it? Most middle-income people think so, while lower-income people want to but can’t necessarily, and upper-income having mixed views. What is the right answer, anyway? Well, the answer is that there is no right answer and that one must consider him or herself as an individual; what are your goals, ambitions and aspirations? Do you know what you want to be doing everyday Monday through Friday for the rest of your life? Would you enjoy doing that day-in, day-out? Will you feel like killing yourself?! These are all options you’ve got to consider.

I was once told by one of my university professors (yes, I took the go-to-school route… but the thing is that I like school!) that having a university degree opens a lot of doors. Obviously, he has a biased opinion. Not only is a Ph.D. holder, but he’s a university professor with tenure! How can he not be biased? As for me, I can say that I feel less biased, but I can’t be sure. Anyway, if you’re reading this, I’m sure you’re interested in my humble opinion – IMHO – yes, get some web jargon in there.

Anyway, I love reading and I love school, so it wasn’t hard for me to choose to go to school and study something I love. I choose “undecided major” in my first year, and I subsequently chose to pursue “East Asian Studies.” Originally, I was apt to choose some type of business studies, but luckily I didn’t get into my university’s business school… and I also discovered something that I loved. I really do love East Asian Studies, and I read books about it even now, two years after graduating. But, do you know what I was not thinking about while I was in school? I wasn’t thinking a damn thing about money! What a mistake.

The mistake is that I studied what I loved, but I didn’t at the same time study things that would make me money. Now, I don’t mean you have to study “how to make money” in school as part of your academics – I just mean that you must learn in any way possible how to make money! I totally encourage you to study what you love in school, but I also totally encourage you to learn about money when not in class. If I had done that, I’d definitely be waaay ahead of where I am now in terms of personal finance. Remember folks, freedom in this already-democratic society means money. Freedom = financial freedom.

I think I went off-topic a little there. Actually, the main point of today’s post was to talk about much people get remunerated in each of their jobs. Sure, it looks like a doctor is getting paid wads of cash – but he or she had to attend almost a decade of post-graduate study! And sure, maybe a university graduate starts off by making more than a mere high school graduate, but the university graduate had to attend at least three years more of school. And yeah, yeah, there are tons of studies out there showing that a “college graduate” makes much more than a “high school graduate” over a lifetime… but do you really want to be spending your lifetime working?! Do yah??

Anyway, think about it, a really smart high school graduate could start off by making $30,000 per annum as, say, an administrative assistant. He or she could save that money and pour it into assets, thus generating passive income and thus having the ability to buy more assets, which generate more passive income! A typical three-year university graduate would have to spend about $5~10,000 per year for three years on their education… so that starts them off with a debt! There’s also no guarantee that they’ll get a job much higher paying than $30,000 (with a liberal arts degree, that is). Let’s say it’s an engineer; that first salary could be about $55,000 – not bad. Let’s look at the doctor now: four years of undergraduate at the same price mentioned above, followed by four more years of post-graduate at $10~15,000 per year. Once the doctor gets out, he’s just an intern making $60,000 a year for 2~3 years with a massive debt! Well, let’s say that both the university graduate and the doctor pay off their debts within two years – that’s fantastic. But now they’re two more years behind the high school graduate.

Anyway, I’m not trying to preach anything here; basically, I’m just saying that higher earners actually put in a lot before they started their jobs. That means when they’re working, they’re not only getting compensated for their time now, but they’re getting compensated for their time before. Of course, the longer they stick to their chosen field, the higher the compensation for now time is, and the less it is for before time. With high school graduates (taking it as the minimum mandatory education), he or she is getting paid completely for now time. Of course, there’s no stopping a high school graduate from learning just as much about anything as a university student – and he or she has the advantage of being able to earn now money, which is worth more than later money.

Everyone is Doing Physical Labor

People have only their bodies, right? That’s what most people erroneously think. It’s of course the truth when they’re young, as they’re discovering the world with all that they came into it with. However, as one grows older, the error is in the education our parents and our school system give us. But, who can blame them? They know no better than what the generation before them taught them.

If you observe society on any day of the week and at any time, you’ll see people using their bodies in all manner of way. And basically, that’s all you’ll see. People using their bodies to serve other people, so that they can in turn be served at another time by someone else – a ridiculous cycle. There are the people “lower” than those who really use their bodies; such as construction workers, cleaners, handymen, etc. Lastly, there are the people who think they’re better than others and are using their “minds” not their bodies. The foolish thing about that is that firstly, the person you are is merely a manifestation of the physical thing that is your brain; and secondly, even if your brain wasn’t physical, it would still need the input of your eyes and ears, and the output of your mouth and hands. You see – everyone’s going about things in the wrong way. They’re using their bodies just the same as the first human to have evolved from an ape.

Shouldn’t we be evolved past this concept of merely using our bodies for our goals in life? Sure, there are many things that we use our bodies for that is enjoyable, but what about the things that aren’t enjoyable? Why do we continue to use our physical labor? Or, a question that hits closer to home: why is our contribution towards our money-making endeavors so linked to time? Why do our bodies have to be somewhere for a certain amount of time in order to be considered productive? Most workers these days must commute to work, thus dragging their half-awake bodies up from bed just to get to some place to use the equipment there and to interface with other workers. It’s good, however, that there are some workers who know that their body doesn’t have to be in a physical place and at a certain time in order to get things (menial, still) done.

It’s like the revolution of the music industry. First, there were magnetic tapes, which were long magnetized strips wound around two spools. You inserted your tape into your walkman and you got music. But, wasn’t rewinding and fast-forwarding tiresome? So, the next revolution was the CD. The CD was great, not only because they were more durable, but because they were much less physical. Yes, physical still, but much less so. The CD just spun and spun and the laser would travel a really short distance. Amazing! No more tape to be tangled up and ruined. That’s an amazing improvement over the overly-physical cassette tape. What happened after that? Well, we all know that the MP3 took over. A completely non-physical way of music! There are absolutely no moving parts in an MP3 player! Just copy your music on over to the flash drive in the MP3 player (the flash drive doesn’t move), and the music magically goes to your ears from the stored file. It doesn’t move! That is a triumph over the physical.

Now, if you want to get ahead in this world, you’ve got to stop thinking physical and think like the MP3. How do you go from dragging yourself out of bed everyday to staying in bed as long as you want and having your “daily quest” completed for you? (Oh, and having someone else do it, or a robot do it is a great thing, but it’s not a revolution, since it’s been done before. Not to say that you can’t profit from such activities; it’s just merely non-revolutional.)