"The Quadrant Continued – Examples through my Own Life"
by Eddie Patin
(from the Financial Freedom and Achieving Business Success article series)
The Cashflow Quadrant, designed by Robert Kiyosaki and explained in his book, “The Cashflow Quadrant” (as well as in my last article) is a powerful tool for understanding the mindset needed to achieve financial freedom. In this article, I’ll tell you a bit about what I’ve done in my own life, and my plans for the future, then describe how it relates to the Cashflow Quadrant. If you plan on learning about yourself and mastering your finances, you should think about how every job you’ve had, every plan you’ve set, and your hopes and dreams likewise relate. Doing so will give you a good perspective on where you’ve been, where you’re going, and what alterations you may need to make to your plans.
Here we go ...
Over the last decade+ of my work-life, I’ve worked many jobs in several different industries. Somewhere around the end of 2005, I was fed up with serving tables and working for charity, so I decided to get into something that would be productive, a valuable service, and pay me directly for my efforts. I quit my job at (a restaurant) and studied to become a personal trainer. Two months later I was finished with the certifications and got a job at my favorite Las Vegas gym. In order to train my own clients without paying the gym a commission, I had to work a certain number of hours a week (for peanuts-pay) training gym members with ‘personal trainer’ packages. I made good money training my own clients, but the pickings were sparse. They would have been better, like I said before, if I recognized that it was ‘okay’ to sell myself, but I was stubborn and determined to fail.
After a year at the gym, and not making enough to pay my bills, I quit and went to a vocational school to learn heavy equipment operations. I figured it would be a great day-job that I could always fall back on, because at that time I had decided that I was going to start writing novels as a career. Unfortunately, I picked a bad time to learn to be a heavy equipment operator, because the economic downturn and construction crunch was just starting to hit, and I couldn’t find work anywhere. I looked for months. During that time, I scraped by on doing some in-home personal training, and computer repair services. I also taught English-Second-Language classes part-time some evenings, but it was never enough.
Halfway through the year, my wife and I were looking at moving to Colorado Springs. My idea of writing novels had also bloomed by then into studying and making plans for becoming a freelance copywriter (commercial writer). So, I was focused on getting a day-job, and starting a writing business in my spare time, while doing scant personal training and computer repair in the meantime.
Just before we moved to Colorado Springs, I had an offer from a heavy equipment operating company, so I had a great job that I started the day after we arrived. While working that job as an operator, I worked so much over-time that I had no time at all for working on my other endeavors. The season ended in September, and I was out looking for work again. For several months, I couldn’t find work as an operator. Again. I did a few small jobs here and there, but the winter was coming, the economy was hurting all of the builders, and there was no work.
During the time I was searching for work, I continued to develop my freelance writing business, but I understood that, with my wife and I living on credit and suffering financially as we were, I wouldn’t be able to afford to launch the business until we were more stable. I also began to seriously study investing, and I actually went to a Rich Dad Stock Investing seminar in Denver that was quite enjoyable. I continued my search for work, and at that point, I was looking for anything that was ‘secure’. I fell back on my previous skills of service, sales, management, etc., but it was ridiculously futile to find anything at all—even jobs waving signs on the street corners. Everyone that put out ads on Craigslist, in the paper, etc., were immediately flooded with hundreds of resumes (most of them unqualified), so it was nigh impossible to stand out.
I started curb painting again (painting address numbers on the curb in front of houses). My plans were to get a day-job as a secure (though likely small) income, while developing my freelance writing business to launch when ready. I had also come across a very interesting Network Marketing company called the “Independent Profit Center”, and researched the company as much as I could, but could not justify the starting investment until I had ‘rent money’ covered. My plans were, once I had writing business off the ground (after having enough saved up to cover several months’ expenses), I’d systematically pay off my (huge) debt while gradually getting into stocks trading. In the future, once I have enough clients in the writing business that I could start focusing on my fiction-writing again, I should have a nice, solid financial platform between the commercial writing (bread and butter), fiction writing (royalties), and investing.
Today, I have a day-job. I finally found one, running an office for a computer repair service. As I write this, I am preparing to enter Network Marketing with the Independent Profit Center. I’ll get more into that later. I am also still focused on building my freelance writing business, writing fiction (my passion), and trading stocks for income and passive income. On the weekends, I am also working in a very profitable independent contractor position, marketing for a construction company.
So ... How does this all relate to the Cashflow Quadrant?
If you were thinking about where everything belongs in the Quadrant as you were reading, you would have seen something in all four. And a gradual shift from the left to the right.
Obviously, my jobs serving tables, and everything else I didn’t go into detail before personal training were ‘E’ jobs. In my past, I was never satisfied working for someone else, especially if I thought that I could do some things better. That was the ‘S’ trying to break free.
When I quit the serving job and went into personal training, that was a conscious shift into the ‘S’ quadrant. Mostly. At the gym, working FOR the gym, I was an ‘E’. But, training my personal clients, marketing and selling (or lack of selling) my own services was an ‘S’ position. Some of the trainers at the gym did extremely well with the ‘S’ side, a few making three figures. Of course, if they ever stopped training, the income would stop with them.
When I decided to go into heavy equipment operations, I was choosing an ‘E’ position that I could always fall back on in tough times. Of course, in these tough times, it hasn’t proved much of a fall-back position. The idea, still even now, however, is that if businesses 'go south', if the stock market crashes, whatever, I can always fall back on that, as long as we still have diesel and power and aren’t thrust into the dark ages.
My desperate attempts to pay the bills with computer repair services and curb-painting were total ‘S’ positions. When I needed more, I just worked harder. More time marketing, more time pounding the pavement and spray-painting numbers.
When I moved to Colorado Springs, I had a very nice ‘E’ job that paid the bills and then some for a while. But, like all ‘E’ jobs, it was only for a while. And, like most ‘E’ jobs, I gave it all my time. I worked 12-14 hours a day, which didn’t leave me any time at all to work on my other streams of income. I relied completely on it, traded all of my time for money, and when the season was over, it was gone.
Now, I have another ‘E’ job. It’s not quite enough to pay the bills, so I have to work a second job. My second job, as an independent contractor, is an ‘S’. I get exactly what I put into it, and I get to do it my way. But if I don’t show up, I don’t get paid.
And then, there’s the ‘B’. Network Marketing. The Independent Profit Center. As I write this, I have done all of my research, found a good mentor, and I’m ready to launch. Later this week, I’ll be making the $249 investment, and getting started. I intend to keep this website up to date with my progress with the Independent Profit Center, so you can all see that it’s real, it’s really making me money, and that any ‘E’ or ‘S’ can cross over into the ‘B’ through Network Marketing in a way that’s inexpensive, full of good business training, and profitable for the long-term. Or not, if it turns out to be no good. However, from everything I’ve found, and from the people I’ve talked to, I am feeling very confident that this will be a great ‘B’ business that will provide me with a steady stream of passive income and an unlimited potential for profit from the work I’ll put into it.
My plans, described above, can be classified into the Cashflow Quadrant thusly:
E: A fallback day-job (heavy equipment operating) will always be an ‘E’. This is the foundation for everything else as long as I don’t have any living expenses socked away that I can rely on. This is the bottom. If I had living expenses saved away, I’d be able to launch an ‘S’ without having to get an ‘E’ job.
S: Freelance Writing Business is an ‘S’ that will give me the greater income needed to go into the ‘I’ quadrant. This will support me and my family quite comfortably, but it’s still an ‘S’ and I am required to do it if I want to see any income. During this phase, I’ll be able to systematically pay off my debt (reduce expenses to raise cashflow), and channel excess income into the ‘I’ quadrant.
B: The network marketing (Independent Profit Center) is a ‘B’ that I am getting involved with NOW. I chose to wait to get involved until I had extra money to put aside for the initial investment (risk capital), and I’ll let you all know how the program is doing. If it operates as it is advertised, it might have been a better decision to take the risk and get involved as soon as I was comfortable with the validity of the program. Everyone I’ve talked to have made sales in their first week.
B: Another ‘B’ for later down the road: royalties. In a later phase of my plans, once my ‘S’ business is well off its feet and my ‘I’ investments are doing well, I should be able to ease off of the ‘S’ enough to write and publish my fiction. Those royalties will be multiple streams of ‘B’ cashflow.
I: Once the ‘S’ business is off the ground, and I’ve set aside some capital for investing, and I’m comfortable with my level of investing education to begin, I’ll start trading (Stocks).
In the beginning, I started with an ‘E’. And a small ‘B’ (network marketing). And occasionally a small ‘S’ or two on the side.
Then I start a real ‘S’ (Freelance Writing) and eventually leave the ‘E’.
When the ‘S’ (and the ‘B’) are doing well, I delve into ‘I’.
Once the ‘I’ starts doing well (along with the ‘S’ and the ‘B’), I start easing off of the ‘S’, focusing more on the ‘B’ (the royalties, that is).
In the end, I’m left with most of my cashflow coming from the ‘I’ quadrant, a good bit coming from the ‘B’ quadrant, and maybe just a little coming from the ‘S’ quadrant (but not because I have to—because I want to).
That is an example of how to move from the left side of the Cashflow Quadrant to the right side, particular to my set of skills, experience, and career choices. Anyone can do this, and anyone can come up with ideas of how they can be successful in the ‘B’ and ‘I’ quadrants. However you do it, make sure to focus on using those ‘E’ and ‘S’ quadrant jobs only as a vehicle to get you over to the ‘B’ and ‘I’ side. There are many other creative ways to make the transition from the left to the right side—the one above works for me. You can find more in Kiyosaki’s book.
One thing is certain, though. No matter what your skill set, no matter how you develop your ‘S’ quadrant (if you even want to), or get into the ‘I’ quadrant (through stocks, real estate, etc.), a part-time ‘B’ business is something that can make you passive income with little time invested, and is worth getting into right away.
If you don’t have the money for buying a Pizza Hut franchise or a McDonald’s franchise ($650,000 and up), and you don’t have the ingenuity or drive to start the next Ford Motor Company or Microsoft, then you should read on to learn about Network Marketing. There really isn’t an easier way to get into the ‘B’ quadrant, and for the little money you put into it in the beginning, you could actually replace the income you’re making at your ‘E’ day-job. If the Independent Profit Center turns out like I hope it will, I may very well quit my ‘E’ day-job, and focus my efforts on furthering my other goals.
By the way, I make a lot of references to the materials written by Robert Kiyosaki and his business. I believe in the sanctity of intellectual property, so I’ll quote where I need quoting, and I won’t try to pretend I created any concepts I didn’t. In fact, if you go to my links / suggested reading page, you can find direct links to his website, and links to purchase his books and board-game, “Cashflow 101”. His books are excellent, if you take the parables with a grain of salt. There is a lot of knowledge to be gleaned from them.
