Ever felt like you’re living the same day over and over?
Wake up, scroll your phone, eat breakfast, go to a job, work off assigned tasks, eat lunch, work off more tasks, come home, eat dinner, watch TV, scroll your phone, fall asleep.
You cycle around this lifestyle like a spacecraft orbiting the Earth.
To travel to Mars or beyond, though, that spacecraft needs to break free from the grip of Earth’s gravity.
To attain new heights in your life, you need to break free from the grip of your expenses.
In this letter, we talk about how to do just that.
Let’s dig in.
The need for speed
For a spacecraft to orbit the earth, the only thing that matters is how fast it’s going.
Imagine a cannon perched on a mountain above the atmosphere.
That cannon blasts a cannon ball out at a certain speed.
The cannon balls fall back to earth under the pull of gravity.
Now, put more gunpowder into the cannon and fire the ball out at a faster speed.
It goes further, but the pull of gravity eventually causes it to hit the earth as it falls.
Let’s add even more gunpowder.
In the sketch below, you see that a cannon ball shot out fast enough will continually miss the earth as it falls.
This speed is called orbital velocity.
A cannon ball traveling at orbital velocity circle the earth indefinitely.
I use the idea of orbits as a analogy for life.
You are the cannon ball.
Your expenses are the Earth’s gravity. They have a grip on you that causes you to repeat the same routine day after day.
Your income is the cannon ball’s speed. If money is not coming in fast enough, expenses pull you crashing back to earth.
The gunpowder in the cannon is the effort you make to change the trajectory of your life.
Orbital velocity is what you achieve once your income exceeds your salaries.
Most people put in just enough effort to achieve this orbital velocity (go to school, find a job). Once there, they quit trying to change.
They live paycheck-to-paycheck, making just enough money to survive.
The high-paid employee
Maybe that’s not you. You put in extra work to change. You went to college or have been learning new skills to make yourself more employable.
Fair enough. Let’s add more gunpowder to the cannon and see what happens.
Shoot the ball out even faster and it travels further away from the earth as shown below.
But, earth’s gravity still has a grip and pulls it back. The cannon ball will continue to travel this more elliptical path year after year.
This is the life of high-paid employees.
They get some time away from the stress of meeting their expenses (e.g. a couple weeks of vacation), but they always have to return to their regular life.
To infinity and beyond!
To escape earth’s gravity we must increase our speed beyond orbital velocity.
As shown below, this speed puts you on a trajectory to other planets.
This speed is called escape velocity.
Escape velocity is what you achieve when your passive income exceeds your expenses.
This passive income that what allows you to work a few hours each day, spend time with your family, workout in the middle of the day, and travel the world.
Financial escape velocity
How many of your fellow employees do you see retiring at 30 or 35 years old?
None.
The hard truth is that the salary you earn from a 9-5 job is not sufficient to achieve escape velocity.
No matter how many raises you get.
Just as a rocket must attain enough speed to break free from Earth’s gravity, we must generate enough passive income to break free from the gravitational pull of our expenses.
When the income from your job exceeds your expenses, you’ve reached orbital velocity.
When the income from assets (i.e. passive income) exceeds your expenses, you’ve reached escape velocity.
Once passive income exceeds your expenses, you now have 8-10 additional hours per day to focus on how to increase your passive income income further.
This isn’t about accumulating wealth in the traditional sense but redefining true wealth in terms of freedom.
True wealth is measured in days, not dollars; it’s the number of days you can sustain your lifestyle without relying on active work.
This perspective changes your life into one of exploration and adventure.
A life of abundance rather than scarcity.
Launch Sequence
Achieving financial escape velocity might sound like a feat reserved for the few, but it’s accessible through incremental actions. Here’s how you can change your trajectory:
1. Check your gauges: Begin by understanding your current financial situation. What are your monthly expenses? What is your monthly active income? What is your monthly passive income? What percent of your expenses are covered by passive income?
2. Fuel Your Rocket: Identify passive income streams that align with your skills and interests. Consider my Rocks, Paper, Scissors framework. Rocks are real estate, Paper is stocks / bonds, Scissors are a one-person business. I recommend starting a one-person digital business as quickest way to accumulate passive income.
4. Launch: Start, then learn. You can’t see the second step until you taken the first, so you need to take action and go from there.
5. Stay on trajectory: You goal is to build passive income so that it exceeds your expenses. You must keep expenses low in order to achieve this quickly. Avoid lifestyle inflation until you achieve escape velocity. First, get to the point where you can avoid selling you time at the pawn shop you call a job.
6. Reach Your Escape Velocity: Celebrate when your passive income exceeds your expenses, but don’t stop there. Expand your orbit by reinvesting and exploring new passive income streams. Every increase in passive income at this point can be accompanied by an increase in lifestyle.
3-2-1 …
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Warm regards,
The Edupreneur
