Too little pay on the job? Owning your own production may be the answer.


Having a hard time getting ahead? Is your salary getting you down? Increasingly, this is all too common and unfortunately, it is by design. Only so much wealth can be created by one individual’s work. Past that point, additional wealth must be generated off of the efforts of others. This is the guiding principle behind any corporation and if you can align with one that pays well, then there is no issue. However, this is an exception to the rule as companies rarely pay a worker more than they have to.

And why should they? It’s a problem in economics. There are two concepts of interest here; marginal cost and marginal benefit. The marginal cost represents a small increase or decrease in the cost from the initial starting point. The marginal benefit is the change in benefit achieved by the change in cost. The two are combined as a ratio to determine how much benefit the next dollar buys. To a corporation, a worker’s marginal benefit will run out quickly at any cost beyond market rate. Why, because the corporation could have just as well hired anyone else at market rate.

For the individual, the problem of marginal cost and benefit is reversed. A person who owns their own production, in the case of a sole proprietor or single person corporation has an interest in maximizing their own total benefit. This is the point in which the income that they bring in is built up to the point where the marginal cost equals the marginal benefit. This is the maximum point of income generation at which beyond this point any additional work results in a loss for the individual. It is in this principle, that many self-employed have come to appreciate the liberating feeling of their work “on their own terms”

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The magic number for retirement

Its a common topic. The question: “What is that magic $$$ number needed in order to retire?” There are many models (we provided an example earlier) to figure this with each one being restrictive in its application, ours included. A retirement plan needs to provide a solution unique to each individual. This is the FPO concept.

First, there isn’t a magic age that one can or should retire. It could be anywhere from the mid 30’s to the mid 70’s. Also, is retirement defined by the point of where you completely quit the workforce or just go to part time? Is part time 20 hours or 30 hours a week? Due to this ambiguity, it is recommended not to think in the term retirement because it puts too much definition on goals. The principle of “work whenever, fish forever” is sufficient. It’s simply going from where you are to where you want to go.

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