Reaching retirement early is all about leveraging your time. Time is the ultimate commodity.
Life isn’t fair, but we all get the same amount of one very important resource: we all get 24 hours a day.
Many people are still trading time for money.
It’s up to us to make the most out of those 24 hours to reach retirement. If something is important enough, you’ll make time for it no matter what.
Stop trading time for money…
One of my good friends has been working like a dog for the past six months. He works for a private company that is being sold to another company.
Let’s just say there is a lot of due diligence work when one company buys another. Over the past six months, he has had to work weekends, late every night, and is a little stressed out.
The worst part is, he had to fight for an exit bonus when the company is eventually sold (they weren’t planning on giving him anything before he asked for it)!
I asked him why he’s working like a dog for just a one-time five figure bonus. He said it’ll totally be worth it as he’ll be saving the money and investing it for retirement.
That sounds great, but trading time for money is a really inefficient way to reach early retirement (not saying it can’t be done though). Frankly, active income sucks as the income is not recurring.
If you stop working, no income comes in! In contrast, passive income will keep rolling in even if you don’t work at all!
Becoming more efficient with your time
I’m always trying to be more efficient and it’s a pet peeve of mine when people don’t respect your time…
- People come late to meet ups
- They stand in the middle of busy lanes at the grocery store
- And they try to talk your ear off when you’re running errands!
A lot of people understandingly want to make more money. However, they go about it the wrong way: they trade time for money.
Here are some of the common ways people trade time for money:
1. Drive for Lyft/Uber
I would say 2017 has been the year of the sharing economy. Services like Lyft, Uber, and AirBnB have only gotten bigger and bigger.
In fact, I see Facebook ads all the time. They advertise something like: give 50 rides as a new driver and earn an extra $1,500!
Now, I have nothing against Uber/Lyft. I think they’re great services and I use Uber most weekends. I like to use this time to talk with some of my drivers.
Most of them say the same thing: I just want to make some extra money on the weekend.
Lyft/Uber is fine for making a few bucks on the weekend, but it’s not going to help you reach retirement faster. Trading time for money will only get you so far.
If you stop driving on the weekend, you don’t earn any money! Don’t driver for Uber or Lyft to earn extra money (even for the new driver bonuses).
In fact, I bet the average Uber driver makes around $12/hr after factoring in gas, car depreciation, and taxes.
Instead, you should be building passive income side hustles.
2. Low-end consulting businesses
A lot of people have a lower end consulting business as a side hustle. This may include doing taxes for people during tax season. Helping a local business with Quick Books. Or even plumbing or home services.
Don’t get me wrong, sometimes a consulting business can be very lucrative…if you’re charging $200+ bucks an hour.
However, many people try to go for lower end consulting businesses that just end up trading time for money.
If the business isn’t scalable you just “entrepreneured” yourself into another job.
Don’t get me wrong, working for yourself sure is a hell of a lot better than working for someone else! However, it’s still not the same as earning passive income!
3. Get a second job
One of the top ways people earn extra money is to get a second or part-time job. In fact, I know a few people at my local gym who do this (both out of necessity and just to earn extra money).
Working a second job is hard. You have to be at a certain place at a certain time. And there is no flexibility! Worst of all, you are still trading time for money. That won’t get you very far towards retirement!
Instead of getting a second job, most people should get a side hustle. That’s what I did two years ago.
One of my most successful side hustles is actually writing erotica. I make around $20,000 a year with this side hustle!
And I only work a few hours a week on this business!
So, what should you do instead of trading time for money?
Here are three ways to leverage the power of time!
1. Leverage other people’s time
The best way to get ahead is to leverage other’s people time. By this I mean “borrow” time from other people to perform jobs that aren’t necessarily important to you.
- Small errands
With the rise of the sharing economy, you can basically hire anyone to do all of this stuff.
You can hire someone to run your errands on Task Rabbit. You can order food with Uber eats, Lyft, and even Amazon in certain cities.
Leveraging time allows you to focus on your side hustles to generate passive income.
2. Focus on passive income
Building passive income is the key to stop trading money for your time.
With active income, if you stop working, the cash flow dries up. If you don’t work, you don’t get paid!
That’s why passive income is so much better. Even if you don’t work, the income stream comes in and almost never ends. Plus, you can re-invest passive income into other passive income stream (it compounds!)!
Don’t know how to generate passive income? Check out this post: 7 Simple Ways To Earn Passive Income Today To Retire Early
Here are a few ideas to build passive income:
- Write eBooks
- Sell erotica
- Build online courses
- Build a niche site
- Invest in dividend stocks
- Invest in rental real estate
3. Scalability is key
A lot of people start a business or side hustle that isn’t exactly scalable. They can’t scale their time. They don’t have enough capital. Or the market is just too small.
One my friends started re-selling Nike shoes online. However, he’s hit several roadblocks.
First, he doesn’t have enough storage space for the shoes. His one bedroom apartment isn’t big enough.
Second, he doesn’t have enough money to buy more shoes. Most of his money is tied up in inventory and he has to wait for it to sell through before getting the cash and reinvesting it into inventory.
Finally, he isn’t leveraging his time. He has to drive 35+ minutes most days to get to the outlet mall to refill on inventory.
If you can’t scale a side hustle or a business you just entrepreneured yourself into getting another job!
Reaching early retirement requires you to leverage time. It’s very hard to retire early by trading time for money (unless you’re a C-Level executive!)
To reach early retirement I would suggest:
1. Building a passive income side hustle
2. And investing all active income into passive income
Readers, what are your thoughts on this topic? Is trading time for money worth it in some cases? Or it is better to try to pursue passive income streams? Let me know in the comments!