“I realized that on a scale of 1-10, 1 being nothing and 10 being permanently life-changing, my so-called worst-case scenario might have a temporary impact of 3 or 4…
Keep in mind that this is the one-in-a-million disaster nightmare.
On the other hand, if I realized my best-case scenario, or even a probable-case scenario, it would easily have a permanent 9 or 10 positive life-changing effect.
In other words, I was risking an unlikely and temporary 3 or 4 for a probable and permanent 9 or 10, and I could easily recover my baseline workaholic prison with a bit of extra work if I wanted to.”
–The 4-Hour Workweek by Tim Ferriss
PARADIGM SHIFT
Leveraging the Power of Part-Time
As my past clients would approach retirement, I often saw an inclination to begin by cutting back on working hours.
Whether they were afraid of quitting cold turkey, or they simply enjoyed work, the part-time option was a popular one for many.
But here is my question. Why should part-time only apply to upcoming retirees?
In fact, going part-time much earlier could be the greatest thing you’ve ever done financially.
Why?
Because if you’re disciplined, you can use those extra hours to dive headlong into building your own side hustle.
Trying to build a small business while also working 40-50 hours per week can easily lead to burnout, sleep deprivation, and put a strain on family life. Granted, some people manage to juggle it all. But I’m a huge fan of part-time work instead.
The key is to plan ahead and invest wisely so you can subsidize that part-time work and float expenses for about 3-5 years while you build up the small business.
For example, imagine you’ve saved $100,000 in liquid cash or investments. Drawing $25,000/year would last four years. Could you take on a 30-hour per week job to cover the remaining expenses?
Alternatively, you could go even more part-time and draw $50,000/year from the bucket for two years.
Sound a bit scary? Don’t forget, a good adventure usually involves uncertainty.
Using the additional 10 hours per week, could you build up a side income of at least $20,000 over those 2-4 years? A $100,000 investment in something earning $20,000/year indefinitely is an attractive return. Depending on how soon that income starts to build, and how long it’s likely to last into the future, you’re looking at something between a 15%-20% internal rate of return. That’s far better return than you’d expect to average on just about any other type of investment!
Even if things don’t pan out as fast as you expect, having any sort of passive income on the side will allow you to recoup those early expenses and build wealth faster than you otherwise would have. Plus, the education along the way will pay huge dividends in itself!