My First Quadrant
In many of the books Robert Kiyosaki has, he mentions the 4 quadrants. These are the 4 ways of earning money. And he labels them E, S, B and I. Which are the following:
- E - Employee, you work to earn money. You are paid for the amount of time you work.
- S - Self-Employed, these are refered to the working professionals with their own practices based on the skills/knowledge they have. This can be a simple plumber, carpenter, to the doctor, dentist and lawyer.
- B - Business Onwer, owns a company, has some people working for you for better and faster productivity, that can generate more sales.
- I - Investor, buys investments and makes money work for them.
One half of the ways to earn money is the E and S, and the other half is the B and I. And to have financial freedom, Robert Kiyosaki highly suggest we seek to go to the B and I, and if you just stay in the E and S quadrants, you will be still stuck in the rat race and never get on to the fast track.
Unfortunately, for those with not much money, we will all start at our first quadrant, the E quadrant. And that is where I start. A brief history of myself is I graduated with a Bachelor of Science degree in Chemistry and took up my Master of Science degree in Chemistry as well. I worked as a chemist in the laboratory and taught chemistry in well respected university at college level. I was an employee. I was an employee as a chemist right after my college graduation in 1993 up to 1998.
During those days, I was mainly inspired by my neighbors that started with nothing, but after some years, they became very wealthy. The house in front of where I lived as a kid, is like a big mansion, with a lot 4 times bigger than our house lot. And I learned that the owner just finished second grade, and was forced to live as a construction worker in his teens and studied the system and eventually became the owner of a large construction firm.
My next door neighbor, had a small house until the eldest among the brothers and sister, decided to arrange terrariums. Small bonzai arrangements in aquarium tanks that look real good and pleasing to the eyes. He made a business out of it and t eventually started adding in more products, like paper weights and other stuff for your table, novelty items, stuff toys and other stuff, and eventually it became a big gift shop that was in every major mall in the country where I lived.
I saw the pattern and told myself… it is the business people that become rich, not the employees.
So I decided to start my own business, since computers were part of my hobbies, I started a computer shop with 2 high school buddies where we put in some money from our respective earnings. It was my first business, and to cut the story short, it was a failure. It did not really lose money, but it was not earning a significant amount either. It was ust break even for a long time and many things done were wrong. But I could not have realized those, if I did not try doing it. So it is not a failure at all, but it was just like tuition and fees for my enrollment in business school.
Business was not easy after all. I knew I had all the computer skillsets to make the business run, but running a business was not only about my product and service. There is sales and marketing, accounting, management and all other stuff. Everything I had to learn the hard way, but I guess that is the best way to learn.
My computer shop turned into a web site designing and development company that now offers hosting and domain name registrations. And that how it still is today. And I have only read Rich Dad Poor Dad by Robert Kiyosaki in the middle of 2005. But the lessons learned changed how everything I have been doing. I realized all the right stuff I have been doing, but I also realized the things I am wasting my time on.
As I have read in Retire Rich, Retire Young also by Robert Kiyosaki, check this following levels:
- Poor - Earns $25,000 or less per year
- Middle Class - Earns $25,000 to $100,000 per year
- Affluent - Earns $100,000 to $1 Million per year
- Rich - Earns $1 Million or more per year
- Ultra-Rich - Earns $1 Million or more per month
I guess it is also assuming that the person is living in the United States at the current economic situation of the United States. Current, I am living in the United States since July 2004 and has a job paying me around $38,000/year as a web developer and is self-employed doing the same stuff from web design, web development, web hosting, domain name registration and search engine optimization (SEO) which makes me earn, an estimate of $5,800/year.
This puts me in the middle class, my exit strategy from the middle class is putting up a business and making my self-employed work into a real business and will enter into advertising. Mainly for domain name registration and web hosting. Although I offer web design and development and SEO, I will not advertise them right away since this consumes a lot of time. Domains and web hosting is like an apartment, income is passive income, once you got it set up, you collect and collect the hosting fees and domain name renewals. When enough is generated through advertising, and more earnings can be used for employees, that is when a marketing budget will be given to web design. And the same pattern goes on for web development and SEO. More earnings, more services.
Right now the processing of my business entity is currently in the works and should be done by next month. I still have to work on my income tax return filing this month. And when that is done, it is a whole new ball game again.
