We all know what we make per hour when we're working. If you're paid hourly, they tell you up front. If you have an annual salary, drop three zeroes and divide by two to get a reasonable approximation. For example, if you make $50,000 per year, drop three zeroes to get $50, then divide by two to get $25. You make about $25/hour while you're working.
The problem with the traditional job is that you only get paid while you're working. Also, that annual salary conversion trick only works if you work 40 hours a week. I assure you, I work more than 40 hours a week, mostly because keeping poor people out of prison is hard and doesn't lend itself to 9 to 5 hours.
My father once told me that his goal in life was to become "gainfully unemployed." That is, to make money without having to work for it. It's a simple goal, but a profound one. Getting paid for breathing more than it costs you to live. This goal is attainable, but it takes effort and discipline.
The nice thing about having your dollars work for you is that they are earning money 24/7/365, not just the 40 hours you're at work every week.
As a motivation, I thought I'd break down what I currently get paid for breathing, not counting any of my salary as a public defender:
- Lending Club (peer-to-peer lending) pays $11.45 as of last month in interest.
- My non-retirement stock accounts paid $62.40 in dividends last year.
- The house we don't live in, that I rent out, $2,740.17 after expenses in rental income.
- Interest on various savings and checking accounts was $12.89 for last year.
$0.34 per hour is about how much I get paid to breathe.
It's a horribly low wage, but I get paid it every hour of every day, whether I'm awake or not. Every dollar I invest pushes that number up a little bit higher. And at some point, some day, I will be gainfully unemployed.