You’ve probably heard the expression that time is money. This article is about how the free person needs to break the link between the two – so that time is time and money is money – and leave the rat race behind.

The term “rat race” evokes an image of the lab rat furiously running through a maze which ultimately leads nowhere. Similarly, linking time and money means not enough of either, and just enough to survive.

The wage slave is paid a per hour rate. S/he sells time for money. Whilst this is a reasonable trade in that both parties are getting something that they want – the employer gets labour for a defined period at a set cost, while the employee receives money, it is not optimal if you want to live a very free life. Why not? Because you get less money than you could if you were self employed, and you end up with a lot of restrictions on your time.

A salary slave is not better off. The salary slave is paid on a basis that is theoretically not linked to time spent, but in practice there is generally very little flexibility. The salary slave can seldom decide that they’ve had enough for the day and go home at 1.00 pm or come in at 10.30 am. In fact, the fact that they are paid a salary generally means that they are expected to work overtime without financial compensation. At least the wage slave gets paid for the time they work.

Bosses who are caught in the neo-feudal mindset will get very annoyed at salaried employees who don’t do the requisite time sitting at a desk, irrespective of their productivity. I had this problem when I “only” worked 8 hours a day in a bank. I have found that the more ineffective managers tend to evaluate staff by the hours that they work. This is not a good situation for the free person to be in.

The problem is that exchanging time for money in a buyer’s market doesn’t leave enough time or produce enough money to break out of the slavery that most people willingly submit to. The idea that time is money simply reinforces the notion that there is a trade off between the two. In fact, there are many solutions that allow time and money to be decoupled.

For example, an author can write a book. Once they publish it, it can generate income from sales royalties without any further effort. For the author, time is no longer money.

Similarly, an Internet site could sell five copies of a product, receive payment, automatically order the stock, ship it to the customer whilst requiring no input from the owner.

An investor can take a position and close it out two months later for $100,000 profit. A property investor could buy a house and earn rent from it for no personal time input, and later realise a substantial capital gain.

The essential elements required to break the link between time and money are:

• Working outside of the labour market (the labour market is essentially an exchange of money for time)

• Taking control of your own income by being a business owner or investor

• Producing a return that is not proportionate or dependent on your personal input (using leverage of your time)

If you have a business that is like a job (requires a lot of your time to produce the income rather than having an automated system that produces the income), then that puts you in the position of time being linked to money. Your business must be able to produce income that is not linked to the amount of time you spend on it.

If you think you are an investor, but in fact spend a lot of time watching every move of the markets and take short term positions (so that you are in fact a trader), then you are again working in a similar way to a wage slave, but probably with more risk. The investor should rely on providing a small amount of personal input that produces a lot of income (preferably concessionally taxed through capital gains or dividends) rather than working hard watching the markets to earn every cent.

Once you start to decouple time and money, you will have more control and abundance of both of these.

Tags: money, rat race, salary, time, time and money, wage slave

This entry was posted on Monday, September 22nd, 2008 at 12:22 pm and is filed under Living free. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.