I’m Investing 100 Percent of My 2012 Income

I’m changing careers. Well, sort of.

About two years ago I became a full-time freelance writer. At the time, I thought life couldn’t get any better: I make my own hours, I never sit in traffic, I award myself exorbitant vacation time, and I spend almost every day in my pajamas.

But I’m troubled by one little fact: I’m trading my time for money.

I may “work from home,” but I’m still a glorified employee.

In fact, I might even say that I’ve been selfish. I’ve created a job for myself, but I haven’t created jobs for other people.

I work alone, rather than with a team of talented people. My impact is limited by my time and skill, instead of being multiplied by the talent of my team.

“Great things in business are never done by one person; they are done by a team of people.” – Steve Jobs

So here’s my career goal for 2012:  I want to stop being “self-employed” and start being an “employer.”

The old stereotype says that immigrants (like me) come to America to steal jobs. Well, I’m going to turn that around: I want to CREATE jobs.

I’m Investing 100 Percent of My Income

How can I afford this? (I can afford anything!)

I’ll continue my current freelance writing work. I’ll earn a little money from that.

Since I believe in being frugal with my time, rather than my money, I’m investing every penny I earn in 2012 into my website and real estate ventures.

That’s right: I’m investing 100 percent of my 2012 income.

Will and I have agreed that we’ll live on his (modest) salary and invest all of my income. It’s our ultimate “couple money” strategy – live on one income and invest the other.

If you’re misled into assuming Will earns a big salary – I assure you, he does not. He’s a 32-year-old who lives with roommates. One of our roommates – a middle-school teacher – earns more than he does.

Will also doesn’t receive any benefits – no 401k, no health insurance.

It’s a stretch to support two people on his income. But it’s important to us to invest every penny into building assets.

I’m splitting our investments three ways:

• I’ll invest the first $10,000 into our Roth IRAs ($5,000 per person).
• I’ll use the rest to hire people on Elance who can help with behind-the-scenes website tasks. This will support both Afford Anything and several smaller websites I’m developing.
• I’ll buy and repair more rental homes in Atlanta.

Why Am I Doing This?

The best path to wealth is through owning the means of production. That’s Economics 101.

There are four ways to own the means of production:

• You can own stocks, which create income by dividends and capital gains.
• You can own houses, which create income though rental payments.
• You can give out loans, which create income through the interest you receive.
• You can own businesses, which create income by selling a product or service.

Stocks and real estate are “slow growers” of wealth. They’re good for the long run.

Owning a business provides you with the best chance to rapidly grow your wealth. But my business is also slow-growing. It’s limited by one major bottleneck: me.

To grow my small business, I need time and money. My time is limited, but I can amplify it by converting my money into more time.

What’s the Worst-Case Scenario?

Before I make just about any decision, I ask myself: what’s the worst that can happen?

In this case, the worst that can happen is that I “lose” every penny I earn next year. My return-on-investment will be zero.

But I won’t be in any debt.

In other words, the worst-case scenario is that Will and I will live more frugally than we need to.

Given the potential upside, that’s not so bad.

UPDATE: The year 2012 is over!! Check out the results.

Thanks to The Cleveland Kid for the photo.