Is a Fixed Income a Sucker Bet?
I was just reading an article by Steve Pavlina which starts off saying that having a fixed income (i.e job) is dumb. You may or may not agree with that but there’s some other great stuff in the article and I highly recommend reading it.
Anyway I wrote a comment in the forums and realised it would make a good blog post.
Positive Affirmation Posters
There was some talk about putting up positive affirmation posters at work and what colleagues might think. So I posted about my experience as follows:
I put up some positive affirmations at work about being highly productive and loving working on my current game and making the best games in the world etc. and got a funny look from at least one person, but I don’t care because it works for me. You do have to break through a certain amount of social embarrassment if you do something like that though.
Hire an accountant
I was doing a talk last night at the Vancouver Film School to a load of Game Design students about my Indie game developer days and I mentioned some key things that Steve mentioned today. One was about hiring an accountant because they save you time and money so are totally worth it. I don’t want to fill out boring forms, I’ll delegate that to an expert so I can do what I do best. I’ve used an accountancy firm for 7 years with zero regrets.
Speculate to Accumulate
Another thing I mentioned at the talk was “Speculate to Accumulate” in relation to spending money on a business venture. Normally people have no problem spending money on stuff that depreciates in value like a car or a huge TV, but when it comes to investing money in something, fear kicks in and they don’t want to spend the money. In 2006 I decided to spend about $2300 on a game I was making and I reasoned that the worst case was I’d loose it all, a middle case was I’d loose some or break even, and a best case was I’d profit by anywhere from $0.01 to infinity. Turns out the game has made $23,000 so far, nearly a 10x ROI, and it only took me 5 weeks to make, so I’m pretty pleased with that. Also, I constantly receive royalties for that game so the figure goes up every day 🙂
Why am I employed right now?
You may have noticed from my post above that I’m now employed instead of Indie (self-employed), and yes that was a hard transition but I did it for the experience of moving to another country and learning from the best in the industry, and to get paid loads. I still own my company and it still makes me passive income, which is nice.
So, who knows what the future holds? (Well I guess I probably do as I have a 5 year plan – do you? But things can change.) Most likely at some point I’ll run my own company again after building up more skills and contacts. Some people would worry about posting stuff like that on-line, but it’s the truth and don’t believe in having two personalities i.e. public and private like people do on facebook, how lame – and that’s a topic for a whole other post. Besides whilst I’m still an employee, I’ll be a damn good one because I want it to be win-win for me and them.
Anyway, that’s my thoughts. Hope they are useful to someone.
September 11th, 2009 at 5:39 am
Depends of course size of “fixed income”…
Good article by the way.
September 11th, 2009 at 6:14 am
@Juuso: re: Depends on size of fixed income. Yes, that’s seems like a sensible response… but is it really true? The whole point is that a fixed income is fixed, whereas a variable income has no upper limited and has a fixed lower limit (unless you manage to loose money which I guess is possible if you are not careful enough). So let’s say someone who is very skilled gets a great fixed income. What if they ran their own business using the same skills (and a few more business related ones)? Maybe they could earn tons more and they’d be more in control of their own destiny than if they were an employee? Just a thought.
September 11th, 2009 at 6:44 am
the real irony of course being that the worst possible position to put yourself in is working as an employee for a company. For some reason, people mentally associate it with “job security” when it is the complete opposite.
The company can still terminate you at a moment’s notice AND you’re not in control of anything AND you’re developing / promoting the company’s brand and IP instead of your own.
September 12th, 2009 at 7:36 am
@Jake:
Well… if my fixed income would be 7billion per year, I think I’d be okay with that limit. 🙂
And… Well, Steve has “I’m earninng $100,000 per month” plate in his office (well, had). Isn’t that fixed income too? Why 100K? Why not 1M? Is Steve limiting his thoughts when it could be unlimited income?
Isn’t it same as why $75/h is as bad as having $50/h since it “fixes your mind”? (like pointed out in his “earn $10K in 2 hours article). Then naturally it follows that $100,000/mo is equally *fixed* thinking. I think people can think first going from $50 to $75… and then to $100 and $200 and soon they are in $10K or something – if they want. Trying to take a too big leap can hurt your groins 😉
Of course there’s differences between “having a fixed income job” versus “having variable income job” versus “owning the company”.
Nowadays most companies have bonus programs (if things go well, you get bonuses – if things go really well – you get bigger bonuses) and possibilities to buy shares (you become the owner) and whatnot.
So…. I guess that fixed income thing and “having a job” aren’t really the same thing.
(Please notice: I’m all favor for variable income!)
….
Let’s put it this way:
– I have very close contact with couple of guys who earn more than 100K per year.
– It’s mainly fixed income (70%+ at least I think).
– They aren’t complaining that company brand is getting promoted – they can also ride with the company brand in the future… 😉
– Nor are they complaining that “they could possibly get tons of more if they had their own company”
– They are pretty darn happy about their gigs! 🙂
So…. the bottom line in my opinion is:
– everybody should own the company (at least partially)
– not everybody should found their own company.
– variable income is what I’d encourage too (generally speaking, but not necessarily always)
I think variable income is usually much better than fixed income… but I think it’s pretty old thinking (or pretty old company!) if it doesn’t have any possibilities for “variable income”. People can have jobs and have variable incomes…
Just my 2 cents…
September 12th, 2009 at 7:31 pm
Interesting thoughts thanks Juuso. Whenever I did my $X per month as an intention it was always worded like “I am earning at LEAST $X per month”. That way only the lower end is fixed. Probably that’s what Steve was thinking (at least I hope so).
Yes it’s true that better jobs have bonuses (as long as the basic rate of pay is good too and the bonus is not in place of a decent basic rate, like in some sales jobs) but often the bonus is really just a fraction of the true profit that the company makes. Still it serves to motivate people.
Even if you own some shares in the company you work for, it’s unlikely that you’ll get any say in how the company is run (unless you are in upper management) so you are still giving your power away to the company to do with as they wish. I guess some people are fine with this and others are not. It depends on if you are OK with taking orders to do something that you disagree with or don’t want to do, or if people above you can talk disrespectfully to you (hopefully you don’t do the same) or think it’s fine to keep you in the dark about things. Of course not all companies are like this and hopefully you can work for one who’s goals (and management techniques) are completely in alignment with yours, but I bet they are not that easy to find… Disclaimer: Please note that I’m talking generally here, not about any particular company such as the one I work for.
So it’s not all about money, it’s about the freedom to choose your own destiny instead of being controlled. That’s the real issue I see here, where there possibility to earn more money is a bonus.
September 14th, 2009 at 3:44 am
Yeh, I know you are talking generally here. Same with me 😉
Intentions:
– Well, I kind of feel that then the manifestation might lose focus! 🙂 I’ve kind of thinking that as long as you don’t stick with anything too long, then it’s not “fixed” in a long run. Even if it’s first $100…. and then $200 and soon $1K and more.
– Giving power away (to company): I think this depends…. I’m kind of always thinking “doing stuff on my own” but I wouldn’t necessarily say that companies couldn’t provide many number of opportunities. I guess it depends. And… as long as the company vision is going in the same direction where you are heading, then I guess it’s okay to stay there. If on the other hand company wants to do something else (and isn’t providing you enough opportunities) – why hang there?
– “not about money”: Yeh… although I was just thinking that automatically saying “fixed income” to be bad is like… guruism ;-9 (well, at least if saying that everybody should have their own company).
But anyways. Good stuff.
September 14th, 2009 at 4:44 am
For sure if you are not happy working somewhere it’s worth remembering that you choose to be there and can choose not to be. Interestingly the same thing applies to running your own company too 🙂