Looking at the Bright Side of the Lock-Down

Now that we’re getting ready to re-open the economy it’s time to look at the bright side. Even if your company has decided that it will reduce pay and allow workers to choose their location… that means you have no excuse for a second form of income. In addition, you have a chance to choose the people you surround yourself with (no excuses if you decide to move to Antarctica and live in an igloo). The main benefit is undoubtedly the ability to work on your second income stream with zero and we mean ZERO excuses. So we’ll start there. 

Second Form of Income: Once the lock-down started, anyone with an online presence saw massive numbers. Every day felt like Black Friday/Cyber Monday and you were able to generate a half of year of income in a single month (or less). This then declined (as expected) but remains above normal levels in 2019. 

With the preamble out of the way, this means the “total market opportunity” is now larger. It doesn’t matter if the economy opens up tomorrow, a chunk of spending has moved online for good. Some individuals and companies will decide to work remote permanently. This means more people will browse products online and more people will shift spending from retail to online. We doubt there is much argument against this, outside of the initial spending ramp when people go and party to celebrate the end of the lockdown. 

Take a big picture view of this. If you know one market is going to be bigger due to a work from home environments… which one should you enter? The one that’s growing or the shrinking one (Online Retail is around $600B and Total Retail is around $7,750B)? Isn’t really a competition. Follow the money. Not only do you have zero commuting time (1-2 hours for many people, 5 days a week) but you also have significantly less oversight. Hard to micromanage someone from a different office/home. In fact, we wouldn’t be surprised to see people reporting to individuals located in entirely different cities long-term. Oh and as an added bonus, you have access to all of your personal devices which removes all possible complaints/excuses forever. 

If you are making money online and your investments are also liquid… You’re in an incredibly advantageous position. States will compete for the best companies and workers which means you can pack up and leave without a single tax form to worry about. This is directed at the older readers. If you were illiquid before, you probably want to be more liquid for the next 5-10 years. 

As a final message, if you’re serious about getting rich you should always choose to work from home at slightly reduced pay. Why? This gives you more than enough time to work on your side projects. While you will likely lose some career progression (office politics), the upside of equity in your own business is 1,000x more valuable. It isn’t even close. 

Significantly Expanded Options: Before, we recommended fixing watches, iPhones etc and using this to fund your internet venture. Congratulations. You can now do all three without skipping a beat if you work from home. This is beyond easy at this point. During those pointless corporate conference calls you can fix a phone or watch and make sure that you listen for key words during the “catch up”. This is an incredible opportunity as you no longer have to juggle everything behind the scenes. Before, you had to bring a personal laptop with a hotspot and use it during dead times. You had to hit the classic “windows + D” button rapidly to hide your screen and you needed to hit “Alt + Tab” to rapidly change to fake business PDFs that you were “reading” while on the clock. 

All of that is now out the window. You can easily work a regular white collar job, work a time for money exchange while on the clock and on top of that… You can fund your online venture. We know that some people are working like dogs as their managers ask them to do hundreds of tasks while they try to keep their jobs… but… this is going to normalize at some point. When it does, you should be ready to go with either a e-commerce/internet business ready to ramp or a time for money exchange if your cash flows are too low. 

Reduce Recurring Expenses: This is another major benefit. While you may balk at the initial pay reduction your employer offers, you should do the math on a post tax basis. Look at the following: 1) commuting, 2) gym memberships, 3) dining out expenses, 4) annual tax payments and 5) dry cleaning/other daily work expenditures. While these may seem like small amounts of money, they will *more* than make up for the reduction that the Company offers. It’s pretty difficult to offer a massive reduction in pay if you are trying to encourage people to work from home (the employees should be smart enough to realize the firm profits by reducing operating expenses). 

Expenses are also reduced through a higher variable cost structure. If you’re fresh out of college and you work 60+ hours a week, it is difficult to keep the budget in-tact and maintain a normal/fun social life. At this juncture, even if you’re down 15% or so, you can take your food costs down and maintain (or increase!) variable entertainment expenses. 

Increased Health and Autonomy: Once the economy opens back up, many will find that they didn’t “hate” their jobs or careers. They hated the constant micro-managing, the politics and the inflexible work schedule. This will change and we wouldn’t be surprised to see a happier work force. The one downside is that the average person will become lazier and more obese/out of shape. 

Huh? Didn’t we just say increased health? Well we put them together because we’re referring to the readers of this blog. If you’ve found this blog and were able to take action as it relates to improving your life, the chances of you being out of shape is actually lower. Yes you, person reading this blog. In a scenario where you are now working from home, the number of excuses you can make for staying out of shape goes to zero. So if you were in mediocre shape before, you’re going to be in great shape now. Cardio is now changed to calm walks in the park while on a work phone call. This improves your health as you focus on your basic at home gym set up as well. Can’t get much better than that. You’ve cut commuting costs to zero while simultaneously replacing that time with healthy living. 

Improved Social Life: While the current environment is difficult, we predict healthier social lives after the lock-down. This is because you’re going to have more control over who you hang out with and why. Before, many workers complained that they “had” to go to these after work events or happy hours etc. Now? Not so much. Difficult to have chatty drinking hours when you’re at home. Zoom/web based meet ups will certainly exist, however, they are likely going to be shorter as each individual has to talk until there is an awkward pause. 

Now many of you may be thinking “how do i meet new people”. Well in that case the news is even better. Since you won’t be forced to go to events anymore, it means that you will choose your social destinations every single time. In addition, if you’re doing networking right (which means become valuable and avoid all networking events), you won’t need to go to many conferences in person as many will move to a virtual format. This is simply incredible. 

You can build your own platform at home, go to the local bar/club that attracts “your type of people” and reduce travel expenses until it is absolutely necessary. If you took advice from this blog and have any sort of affiliate income (at minimum) you’re going to make more money, save/invest more of it and see an increase in your quality of life over the next 5-10 years. As usual, when we look at the standard of living over 5-10 year frames, it goes up. This time? You’re going to get that increase in a single year or two. A “Step Function” in lifestyle improvement. 

Shift to Clear “KPIs”: A KPI is a “key performance indicator” which is a fancy phrase for “how do we prove this person is generating value”. Since we can track performance by sales/results in a more digital world, this means you get to show off all of your skills. Instead of having dead-weight in an organization, the firms have realized that a large chunk of their workers were quite literally doing nothing. This is a great opportunity for you to show your worth and prove that you’re generating profits for the firm through clear signs of production. 

For those that already have an online business, this is similar to online advertising. As you know, online ads are hundreds of thousands of times better than any other form of advertising. Not because of its effectiveness but because of its transparency. Instead of wondering if a campaign had impact you have proof. Click, convert. If it does not convert and the cost of the click outweighs the sales… It’s time to fix it or move to a new idea. This doesn’t work when you’re advertising on TV or with billboards. There is no accountability in those situations. 

Increased Privacy: For the younger readers this is less important. Younger people are more interested in hooking up, going hard and attracting as much attention as possible. As you get older and wiser, this changes and you prefer privacy. Or at minimum, the choice of privacy (even extroverted wealthy people own a Cabin for ski trips or a vacation apartment on an island). 

Upward Mobility: While most will focus on the near-term headaches (pay cuts for moving to lower cost areas), we have to take a 5-10 year view. Keeping it simple, if rent in the major city was $3,000 a month and outside of the city it was $1,500-2,000 a month… Eventually this spread will tighten up. Major cities will likely claim rents that are still higher, say 25-40%, however, it won’t be the 50-100% difference that we see today. 

What is the conclusion here? As cost of living across the USA balances out, it means that the perception of working from home will also decline. So while we agree that the first 3-5 years will negatively impact people, the years after that will cause companies to adapt once again. Difficult to claim “cost of living” reduction in pay, when the cost of living becomes more balanced across state lines. 

Concluding Remarks: Are you excited? You should be. 1) better quality of life, 2) more autonomy, 3) more performance based work, 4) easier to control your schedule, 5) ability to cross state lines, 6) ability to maintain better tax structures and 7) significant long-term reduction in office politics if you’re in that position at this time. If we wanted to be ultra competitive about it, we’d highlight loss of competition as a lot of people have to start over but that’s over the top (it is a true statement, many smart people got wiped out). If you thought it was easy to get ahead in 2010 to 2020… Wait till you see 2020-2030. 

Newer Readers: For those that are unfamiliar with our blog we have three high quality products in order: 1) Efficiency, 2) Triangle Investing and 3) Spending for Maximum Return. In order, you learn how to make a good amount of money (a million liquid within 10 years or so), how to correctly invest it and finally how we’d avoid blowing it all with intelligent spending and PED use to improve quality of life. We hold Q&As 1x a month for purchasers only.