Monday, November 30, 2009

Why You should Never Get A Job

This is a quick edit and repost of something I originally posted a couple of years ago. It seems particularly timely right now with so many people being unemployed, and it just may give a few people the impetus to go ahead and start a small business rather than continuing to search far and wide for a new job.

Steve Pavlina has this article that I have read and re-read several times, because it contains such an insightful view of the "wage-slave" mentality. What he has to say about it is true, too. I saw a quote somewhere that "nobody ever got rich by working for somebody else"; and when you think about it, you realize that it would be pretty much impossible. After all, if someone is gonna get rich it will be the owner of the business, right? Therefore, I should be the business owner. Not of the larger business I (or you, or whomever) have been working for, but perhaps of a tiny, one-man business supplying a need to that larger company.
OK, so maybe "NEVER get a job" is a bit extreme. Having a job at a company may be the only way to spot the opportunity to supply a need for that company. Also, once you do spot the need and bring it to the owner's attention, along with your offer to fill it, you may have a better chance at getting the contract, since the business owner already knows and (hopefully) trusts you. Or maybe not.
The point is, even if you are currently a wage-slave, keep your eyes open for a good opportunity and hone your courage to grab it when it does come along. I think that is one of the important things separating entrepreneurs from employees.

This is a particularly good idea if you still have a job but have been watching the ongoing layoffs and are wondering if your job will be next. That is pretty much what I did. I was working in the engineering department of an electronics firm that was having problems and laying people off. I wanted to get out of that business and become self-employed in something totally unrelated, and had an idea for doing contract work for the company on a temporary basis. This would solve a problem for the company (the contract work that needed doing) and give me the free time to develop my business, while still having a steady income.

And here's a little secret, and one of the major factors in the decision: it also allowed me to cash in my 401k and use the money to pay off land and other bills, and reinvest the rest in things that I control, rather than the government or the company I worked for.
I used to believe in 401k accounts. I still do, if you have a company job and your company matches funds. In that case, invest the maximum that your company will match, because that is a guaranteed 100% return! But don't put a penny more into it; and if you quit, are fired or laid off, cash out as soon as possible. I think you have to act within 30 days, if you want to cash out. Don't worry about the ten percent penalty; you can make that back in a year with proper reinvesting. Of course, if you can leave the job at the end of the year or very early in the next year, you will minimize the amount of income taxes you will have to pay. Receiving a chunk of money from your 401k in the same year that you also earned most of a year's income could put you in a higher tax bracket.
And I wouldn't reinvest in any kind of tax-deferred account, either. I prefer a standard brokerage account that gives you the flexibility to invest in what you want to, and has as few governmental controls as possible.

Why am I saying this? A very smart man told me a few years ago, when I was investing in my 401k, that the government would eventually take over all tax-deferred retirement accounts. I didn't think he was crazy (I respected his opinions even when I didn't agree with them), but it did puzzle me as to why he would say such a thing. Now, I don't doubt the truth of his statements, one bit. I am now fully convinced that total nationalization of retirement economics is on the very near horizon. Right now they are busy fighting about health care nationalization, but retirement will be next, mark my words.

These statements are my opinion, and nothing I say should be construed as investment advice. I am not a tax attorney nor any other kind of attorney, and you should certainly consult one before making any major decisions concerning your life savings.

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