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What Does It Take To Get Ahead? (Poor to Rich)

The Price We Pay:

Positive Indicators:

What is the price we pay for living and what does it take to promote us from Joe Schmo to Pro? The answer lies in the data. Every year, the cost of living increases while employment fluctuates according to season. For many of us, cost deltas are unpredictable and force us even deeper into the hole from where we were initially. Reading this article should hopefully give us the tools necessary to overcome these hidden costs and take us to the next level.

Cost Delta: Every year cost of goods increases by an average of 2%. This means that you are getting poorer by 2% every year. If you don't increase your gross income by 2% or more, you will get poorer and poorer. These metrics aren't that simple because the prices of goods are averaged. Some change seasonally either up or down, like oil prices; Others increase variably upwards such as rent. The main portion of costs that directly effect peoples' personal finances is rent. Due to the nature of rent, and how most real estate investors leverage debt to finance their properties, short term rates directly effect the pricing of rentals yoy. This means that most rentals almost always increase their prices every year. Based on data from rentjungle, over a period of 10 years, with the average of each individual input being rent costs from January and December, the average rent increase was 5.7% for New York City "All Beds". This means that, based on Pareto Law and if rent were to comprise 80% of your income, you are losing 6.56% cash liquidity per year. This cost delta would be different respectively to your location of course.

Supply and Demand as well as regional differences also account for cost deltas as well as income deltas. As you see from the graph, West Urban regions tend to have the highest consumer prices, whereas the other regions tend to keep in line in current years. This means that aggregate supply and demand of jobs may actually lag behind cost, especially considering that non-farm payroll is seasonal; is updated monthly; and is a poor indicator for under or over employment. According to the Social Security Administration, every year average wage tends to increase as well as with average number of workers. However, the variable wage percentage increases still fall below the conservative cost delta which I calculated, of 6.56% for NYC. Furthermore, job supply tends to fluctuate per month as non-farm payroll has fluctuating numbers according to seasonal work. This shows that people are underemployed and that fixed jobs are finite as opposed to variable jobs. Aggregate wage data is also skewed due to the salary discrepancies. When a CEO of Nestle gets paid $20 Million in fiat, the supply of jobs goes down due to the opportunity costs. Because of the finite number of stable jobs, there is a fight for such prestigious jobs that also have a hurdle cost of education.
1 Month Employment Change over 10 years 

This means that employment and wage statistics are bullshit. Because supply of jobs are variable according to demands set by corporations, or with government programs that artificially create more jobs with tax incentives, income delta is set by the individual. You are responsible for creating a pathway that enables you to live above the 6.56% average cost of money, and being able to have multiple streams of income should the others dry out. This also means, that unlike the plebs, you have to live drastically below your means so that on the off chance you have a bad year where income falls below 6.56% (or whichever percentage metric you use), you will have room to cushion the blow. Fixed job supply (jobs that are stable and non-seasonal) are finite. The first step is to create your own pathway and find the job that you want by selling yourself to the employer to get it. Or, you can choose the path of least resistance by purposefully finding a shit job with the most demand, and which also pays the most. You have a whole bunch of options to fight inflation, but it is capitalistic. 

My Theory: In my opinion, kids must plan for their future by finding out what they want out of life, what they are passionate about, and most importantly create a flow chart to get there. I believe philosophy and psychology plays a part in this because every person has their strengths and weaknesses, and they have their own biases to overcome in order to choose their career paths. 

Option 1) Choose the job or lifestyle they are most passionate about 

Option 2) Choose the path of least resistance for short term deferred gratification

I believe these two options are the most prevalent to make because of the scarcity of time. If we choose option 1, there is low upfront payout but longterm fulfillment if done correctly. If we choose option 2, there is a high upfront payout, but longterm resentment and unhappiness. This is assuming both of these jobs maximize your productivity and are catered to your strengths. When you tradeoff passion for money, you invest tons of time and labor in generating wealth at the expense of knowledge, experience, or other ancillary gains. When you tradeoff money for passion, you invest tons of deferred wealth for fulfillment and time for personal growth. You can become a wealthy 60 year old black belt in Jiu Jitsu by choosing option 2; or you can choose to be come a 30 year old competitive black belt in Jiu Jitsu and a millionaire by 60 by choosing option 1.  All of the variables are in your court by creating the flow chart conducive to your goals so long as you have an income delta above the cost delta yoy. 

Check back in with me as I go through a career change. New blog post coming soon on that. Check out my ultra secret personal development website as well by subscribing below.

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