A Programmer's Guide to Wealth?

What separates us from the rich?

Lately, I've been very interested in something that never interested me before. It was, it used to be, just a necessary evil, something I acquired and which then disappared again shortly thereafter. I needed it, but I didn't wont it.

It is, of course, money.

Now I still don't think "money" is such a very good idea. It is really rather fucked up. The whole economical system is based on everything always expanding. For today's economy to work, we always need more, no matter what it is, we need more of it. We have to make more, and people have to buy more, and then we have to make even more, or else the economy collapses. Yes, it collapses if it doesn't constantly expand.

This is really silly.

Now, I am no revolutionary. I like quiet time. Reading a book, snuggling up with my fiance. I can't be bothered changing the world. (If you can, good on you. Stop reading and start changing.)

And I enjoy working, and working hard. But what I hate is having to work. I don't want to have to work. I want to work because I enjoy it. And if I one day don't enjoy it anymore, I want to quit.

Simple, really.

So what is it that separates us normal, working people, who receive a pay check once or twice a month, and the rich, the "economicaly independent" -- the ones who don't have to work? What do they do differently? How come we are fighting for the bread crumbs from the rich people's tables, when there is so much money out there. How do the rich do it? I'm talking about the ones who built their wealths themselves here, not people who inherited money (I'm talking about their great grandfather, maybe, but not them).

This is information people pay for. I'm going to give it to you for a little less than that. Actually, I'm just going to write it down, and you can have it for the cost of the energy you use to read it.

There are several ways to wealth, and I'm going to talk about one thing here today. It is often referred to as "what the rich buy on pay day" or something like that. Robert Kiyosaki (the man who wrote the Rich Dad / Poor Dad books) talks about his own definition of assets and liabilities to say the same thing.

Well, this truth is easy, but it may still take some time to get used to, if you're not in the habit of thinking like this.

What is an asset? According to Kiyosaki, it is something that puts money into your pocket. Simple. It is something that puts money into your pocket.

And a liability? Well, it is something that takes money out of your pocket, isn't it?

In standard financial teachings, your house (if you own a house) is considered an asset, maybe your biggest asset. But does it put money into your pocket? No, on the contrary. So your house is a liability.

Maybe you have monthly downpayments on your car. Then your car is a liability -- it also costs you when you fill it up with gas, and pay the insurance.

Now I'm not saying that you shouldn't own a house or a car, I am defintively not saying that. What I am saying is that they are costing you money.

So what kinds of things are assets, then? I mean, really, concrete examples of assets. I'll just give you one for now, and you can see if you can come up with more. Also, I'll get back to this over the next couple of weeks. We're not really in a hurry, are we? We haven't even developed a game plan yet. Things do take time, so please be patient with me.

The asset example is:

Real estate.

"What?" I hear you say. "You just said my house was a liability!" And yes, I did. And I meant it. But if you own an apartment or a house that you can rent out, it is an asset. It puts money in your pocket. Just because you own it.

Now I can hear you saying that you can't afford an apartment, or a house, to rent out. And that's okay. We'll take it slowly, there are plenty of other, low-threshold ways of making money. I just wanted to make a point. The money you get from renting out a place is so-called passive income. You don't do much to get the money, after the initial work is done (financing it and buying it, and making sure you have well behaved tenants). The money just arrives. Every month. You do the work once, and get paid again and again.

So this is the answer the the question "what do the rich buy on pay day". They buy assets! They accumulate things that put money in their pockets.

If you have more passive income than you have living expenses -- you become financially independent. You don't have to work if you don't want to.

But it is going to take time, and it is going to be a lot of work. My plan is this: Today is Tuesday December 7th 2004. In 10 years time (yes, TEN years), I want to be financially independent. I am going to have more passive income than I have expenses. And yes, that vision includes the expenses of my bride-to-be.

My vision also includes you. I want you to become financially independent too. I'll tell you everything. What I'm doing that's working, and what isn't working. Maybe I'll let you in on projects -- I don't know yet. Time, though, will tell.

Because I have some skills as a programmer (I've been programming since I was 10), I'll see if I can put my skills to use to create passive income streams.

Income streams. Plural. Yum.

So probably, if you're a programmer, these pages are going to be extra interesting to you. But as this is a bigger game, many thoughts shared here will probably be of use to many people.

Maybe it won't work out. Maybe I'll fail miserably. At least, I'll give you someone to laugh at. Remember what I said at the beginning - I don't really like money all that much. In and of itself, it is not important. Love is, and green grass is. Money is silly.

But we live in a system controlled by money. Let's see if we can have money work for us, instead of us working for money.

Will you join me on this journey?

Sten, Oslo, Dec. 7th 2004