“Warning: Do not read this book unless you want to quit your job!”
With such a dramatic introduction to The 4-Hour Workweek
As I started reading Timothy Ferriss’s debut Wall Street Journal best-seller, I realised that his cautionary advice was not merely a great marketing plug. The 4-hour Work Week is not a recommended resource for employees who value the perceived security of their jobs. If you really love working for other people, this book may be too disturbing or intimidating for you.
However, if you yearn for personal and financial freedom and are willing to make the necessary sacrifices to get there, then you will find some innovative, slightly insane, but solid instructions on how to create the lifestyle of your dreams. Let’s look at some of the highlights of Ferriss’s thought-provoking recipe for living life on a higher plane.
What’s the D.E.A.L.?
From the outset, Ferriss explains that the strategies he shares are applicable for both overworked employees and entrepreneurs who are trapped by their own businesses. He declares that his principles can help you to “double your income, cut your hours in half, or at least double your vacation time”.
Ferriss’s concept revolves around attaining a designation which he terms the “New Rich” (NR). These are persons who are not prepared to wait until retirement to live out their dreams, but are focused on creating “luxury lifestyles” at any age. The NR do not value money as much as they crave time and mobility, which Ferris describes as the “the currency of the New Rich”.
The route to the NR lifestyle is outlined in a four-step process called the D.E.A.L. The first step is Definition, which explains the rules of the NR and defines relative and absolute wealth. The next phase, Elimination, allows you to instantly free up your time. In Automation, you learn how to create passive income, while Liberation will break the “bonds that confine you to a single location”.
Who are the New Rich?
Ferriss asserts that people who spend all their time working and postpone pleasure until they retire are actually deferring their lives for an uncertain future. The NR decide to go after their life’s priorities and purposes right away. He declares that the goal of waiting to enjoy retirement life is flawed, because it assumes that you dislike what you are doing during the best years of your life.
The NR lifestyle is all about having options. An employee who negotiates to work flexible hours off site can rearrange his schedule to produce the same results in half the time, and spend the remaining hours doing what he chooses. A business owner who outsources her operations and creates online sales channels can decide where and how to devote her energies outside of work.
Ferriss insists that being wealthy and enjoying a wealthy lifestyle are two different things. Someone who works 80 hours per week and earns US$500,000 annually may not be better off than a person who makes a small fraction of that income, but has complete freedom of when, where and how to live. These ‘freedom W’s’ that you control can actually multiply the value of the money you have.
Absolute vs Relative income
To determine your true wealth, you need to assess what you sacrifice in time and freedom in order to earn your income. For the NR, absolute income, which is measured by a dollar figure, is less important than relative income, which takes into consideration both the dollar and time amount. Ferriss provides a worked example of absolute and relative income:
Jane works 80 hours per week and makes US$2,000 per week, while John works 10 hours weekly and earns US$1,000. If they both work 50 weeks annually, Jane takes home $100,000 and John gets $50,000. But who is wealthier in relative income? Jane’s work effort pays her $25 per hour while John makes $100 per hour, so he is relatively four times richer than Jane.
However, Ferriss admits, “Your relative income has to add up to the minimum amount necessary to actualise your goals”. He then gives guidelines that can help you to increase both your absolute and relative income. Ferriss also shares details on how he went from working 80-hour weeks and earning US$40,000 annually, to making US$40,000 monthly with just 4 hours of work effort.
Some of Ferriss’s ideas may seem impractical or impossible for the average person, but don’t be afraid to test your limits. Depending on your appetite for adventure you can apply the suggestions which suit your risk comfort level. As he challenges, “If you try it, you’ll see just how deep the rabbit hole goes, and you won’t ever go back”.
Copyright © 2012 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, April 19, 2012
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl