On Building the Life you Choose, not the one you get.

2017 August, 27

What I want to explain is the Cycle of Poverty that many fall into, the Middle Class Death Trap that awaits most who escape that cycle, and my thoughts on pulling yourself up, above both of them. This post is based on a few conversations I've had about building wealth, designing your life, and on poverty, with great people such as Danilo Vicioso, and Zack Jones (to name a few). Another inspiration is this wonderful piece on poverty I dug up from 2005: called "Being Poor", it is quite moving, and even many of the comments left over the past decade were insightful: I do recommend at least skimming it.

The main conundrum is that without enough time it is difficult to acquire money, but without enough money it is difficult to secure for yourself much time.

For example: those that work minimum wage must often work many overtime hours to get by, thus not having enough time to learn and improve themselves.

Those who can't afford to live near their workplace must spend money and many hours commuting each day. Thus your lack of money causes you to spend time (driving and being stuck in traffic), which means you have less time to make money, which you don't have.

Someone who is poor can't even take advantage of simple financial advice: How can you stock up on food that is Buy 1 Get 1 50% off if you are living pay check to pay check and only have enough money for 1?

If you are living pay check to pay check, you have no margin for error: How can you ever hope to take risks, no matter how small, when you have children relying on you?

If you have no money and are spending all your time just to get by, you have nothing left over to invest in yourself. You can't improve yourself and grow out of your situation, much less help your children grow up better. And so your level of poverty persists, and your children are likely to live through adulthood at the same level of poverty that they grew up in.

These challenges come down to the fact that if you have neither time nor money, it is hard to acquire any of either. You cannot invest a surplus in self improvement, because their is no surplus. This limits your choices, closes off opportunities, and stunts your life. However this is not a problem that afflicts only the poor, homeless, or those living paycheck to pay check.

Even for those who escape desperation, you can still easily become stuck in the Rat Race, also called the Middle Class Death Trap (MCDT).

The MCDT is a cycle of obligations that many fall into, which restricts their life choices, often without them realizing it. For a hypothetical example, take Cheryl.

Cheryl is a 22 year old who recently graduated college with a degree in accounting. She grew up in a family of professionals, who saved up some money for her college which, along with a small scholarship Cheryl got, was enough to put her most of the way through college. But in the last year and a half, Cheryl still had to take out loans, $60,000 of them, and now is burdened with those payments.

So, right out of college, she takes the highest paying job she can find (with an accounting firm in NYC) to quickly pay off her debts. But in order to get this job, she needs to find an apartment in New York, and living in NYC (or any big city) is not cheap. New York City has some of the highest income taxes (starting at 7%), least affordable housing, and everyday goods (food, clothing) is nearly twice as expensive as the USA average. Now, Cheryl could move to a more suburban setting, but the jobs in a smaller town don't pay as much, and it would take even longer to pay off her loans.

As it is, after rent, utilities, taxes, food, and loan payments, Cheryl barely has any money left to save.

Now, it may seem that all Cheryl has to do is pay off her student loans, and then she'll be in the clear, but sadly, this could take years. By that time, she most likely has gotten a house, and the student loans are replaced by a mortgage (and car loans). If she chooses, as nearly everyone does, to have children, she soon will find much more of her money (and time) devoted to child care.

This situation is certainly not the worst place you can end up in. In fact, many are quite comfortable and happy in this kind of life. I am not criticizing this lifestyle, in fact, it is the goal of many people in America and the world. Cheryl has a comfortable home, a high paying job, a family, and stability.

My fear with this situation however, is what if you want it to change? You may be happy with this life when you are 25 or 30, but how will you feel when you are 40, or 50? The problem is, you can't change.

If ever you want to move to a different city, good luck: finding a job is hard enough, selling the house and buying a new one, without ruining your finances, will probably be harder.

If you want to take a 2 month long vacation, no dice: few employers would even entertain the thought.

Want to pick up canoeing as a hobby? Where will you find the time? Between your 8 hours working, 2 hours commuting, and endless household chores and drama with the kids, it seems you barely have enough time to eat, let alone sleep. Living the way most people do today sucks away your money, your time, and your choices.

And in my view, that is tantamount to sucking away your freedom. For what are we left with without the ability to choose? Even if most find happiness in the life they have, how much happier could they be if they could live the life they chose, not the life that was given to them at birth, or the one they stumbled into before they were even old enough to be aware that the choice was theirs?

That is the trap I fear: the limitation on your choices caused not by your lack of ability, nor your lack of effort, nor even your background. In this trap, your choices are limited as more and more options are closed off to you, simply because you lack the resources and time to even consider pursuing them.

So how does one break free? How does one make more choices available to themselves?

That is not an answer I know with certainty: after all, I have not myself done it. However I have listened to and read of those who have done this, and am doing my best to adapt those lessons to my own life. I understand that the root of the problem is too little money saved away, and too little time to grow those savings or explore new opportunities. Thus the goal of any solution must be in expanding the time, money, and resources you have available. I have these goals in mind, and have adapted a few actions in order to push me along this path, such as:

1) Being intentional with your time

Blocking off time for activities and scheduling tasks has helped me take control of my time. Being in control of my time, knowing and choosing exactly when I do what, is one of my greatest satisfactions.

2) Invest in learning first

Beyond the classroom, taking the time to work through tutorials and pursue side projects, and even enrolling in online courses. Together, these activities have taught me more than the classroom.

3) Spend time thinking

Humans are unique because we have the ability to think, imaging a different future, and plan. The power of thought is truly amazing, and time spent deeply thinking is always valuable. For a really good dive into the power of thoughts, I'd recommend this recording by Earl Nightingale, Strangest Secret.

4) Question everything

Don't take anything at face value, learn to ask questions, understand not just what things are but WHY they are that way. Ask deep questions of your mentors, ask weird questions of strangers, ask personal questions of your friends. The more questions you ask the more you'll learn. Never let a question pop into your mind without asking it.

5) Develop passive income

This one's hard, but powerful. If you can earn money without directly working for it, you save yourself so much time. This can be in the form of royalties for books, rent on an extra bedroom, ad money from a YouTube channel, etc. The trick is to design your work so that you spend your time producing things that can give you repeated income, as opposed to one off jobs. This may sound difficult, but think about it: you have to work to survive anyway, why not work on projects that can reap long term rewards?

6) Think in decades, set goals in years, plan in months, act in the moment

Many people only think about what's right in front of them, or only the next step. Think beyond that. What do you want your life to look like in 50 years? How will your decisions now shape your life in 20 years? These are tough questions, but neglect them at your own risk. Of course you can't take action except in the present, but truly ponder how your actions now will set you up for success next year, and how those next steps will carry you through to the next level, and so forth, eventually reaching your long term goals.

7) Talk to the people who are living the life you want to live

Even better, talk to people who are living beyond what you want. Say you want to become a decent runner. If you learn how an award winning marathon runner trains and runs, and try to emulate them, then even if you only achieve 20% of what they did, you'll still become a pretty decent runner, which was your goal all along. Aiming high turns falling short into success.

Of course, these are still small actions, and more is needed. I will continue thinking deeply on these topics, I will continue trying new actions to expand my choices, and I will share what I learn. If you have any thoughts on this topic that you'd like to add, I'm eager to hear them.

Thanks for Reading!

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