What’s in it For Me?
If you work a standard 8-5 office job, how many hours per day do you think people in your company are actually being productive? Do you really need 8+ hours a day to effectively accomplish your job? Although the title of the book should not necessarily be interpreted literally, Four Hour Work Week is a book about how to work smarter instead of longer and challenges the traditional lifestyle design. By leveraging technology and optimizing your skills and time management, getting out of the traditional rat race mentality of corporate America is possible, as proven by personal example from author Tim Ferriss.
In 2004, Tim Ferris was a workaholic running his own online supplement company and was on the brink of severe burnout when he decided to take an extended vacation and travel the world. While traveling, he realized he could run a profitable business from wherever he was with minimal effort. It was this lifestyle characteristic that he dubbed the New Rich (“NR”). Unlike the Old Rich, who are typically tied to a specific location because of work, the NR are geographically unlimited and in control of their time. The NR are not born into wealth, but achieved financial freedom by automating their income and developing a popular product that can be sold online. The Four Hour Work Week lays out a blueprint for joining the ranks of the NR.
The Big Idea
“What we fear doing is usually what we most need to do.” Four Hour Work Week, page 46
Many people put in long hours at their jobs, hoping to one day reach the coveted dream of retirement. The book challenges the concept of retirement, and instead recommends mini-retirements that can be achieved from the mobile work lifestyle of the NR. The acronym of DEAL is given as the process to becoming a member of the NR:
Definition: Describes the overall lifestyle design and replaces the self-defeating assumptions that most people have, such as having a distinct working career and retirement.
Elimination: Time management techniques are essential for working more efficiently. By removing yourself from the corporate office environment that is filled with pointless meetings and never-ending e-mail, productivity can be greatly enhanced.
Automation: Passive income is essential to joining the NR and can be aided by geographic arbitrage and outsourcing.
Liberation: Mobility is the final ingredient for luxury lifestyle design.
The book mentions the example of a man named Mark who managed casinos, gas station convenience stores, and accumulated a significant amount of wealth. Mark lived like a big shot, but unfortunately he felt dead inside. He enjoyed none of his jobs and his personal life was in shambles, experiencing two divorces. Instead of living an enjoyable life, Mark deferred, suffering 30 years of boring employment so he could live the life of luxury. The book makes the case that one does not have to be a millionaire in order to live like a millionaire. The activities people most often associate with the rich, such as extensive travel and elaborate hobbies, are really created through more freedom and more time. More importantly, one does not need a multimillion dollar savings to have more freedom and time. Read on to find out the prerequisites for having the ability to do whatever you want to do, whenever you want to do it.
Key Concept #1
Dreamlining
The first step in your journey to the NR is to redefine your goals. For most people, their current goals are likely aligned with common deferrer goals. For instance, retirement is seen by many people as hard-earned days of freedom after a 45+ year career. The NR reject this traditional lifestyle design and switch between intense phases of work and brief vacations (2 weeks to several months), referred to in the book as “mini retirements.” Logically, the NR approach to life makes more sense and will allow you to enjoy life significantly more. After all, climbing Manchu Picchu at 35 makes a lot more sense than at 65.
Dreamlining is the concept of goal setting using both a 6 month and 12 month timeline. Ferris recommends listing up to five things you dream of having (i.e. new house), being (i.e. a great cook), and doing (i.e. visiting Spain). Highlight the four most important/exciting dreams and determine the monetary cost of these dreams as well as the target monthly income needed to achieve the dreams. Lastly, determine three steps for each of the four dreams in just the 6-month timeline and take the first step now.
Key Concept #2
Pareto’s Principle and Parkinson’s Law
“The goal is to find your inefficiencies in order to eliminate them and find your strengths so you can multiply them.” The Four Hour Work Week, page 70
Chances are you may have heard of the 80/20 principle, which in the book is called Pareto’s Principle after the economist Vilfredo Pareto. Pareto observed that the distribution of wealth in society-80% of the wealth and income was produced and possessed by 20% of the population-also applied outside of economics. For instance, 80% of Pareto’s garden peas were produced by 20% of the peapods he planted. Fortunately, this rule can also be applied to improve productivity:
- Which 20% of sources are causing 80% of my problems and unhappiness?
- Which 20% of sources are resulting in 80% of my desired outcomes and happiness?
If you think about your personal life or business life though the lens of the two questions above, you will be significantly more likely to more efficiently achieve the results you are after. Tim Ferris applied the 80/20 principle to areas of his business such as advertising by identifying the advertising that was generating 80% or more of his revenue, and then eliminated the less effective advertising. The result was an increase in sales and nearly 70% drop in advertising costs.
Have you ever noticed that your ability to complete a task at work increases when you know you only have a day or two to complete it? The increased focus and commitment accompanied with this time pressure is considered Parkinson’s Law in the book. There are two approaches for increasing productivity that are inversions of each other:
- Limit tasks to the important to shorten work time (80/20 Principle)
- Shorten work time to limit tasks to the important (Parkinson’s Law).
Key Concept #3
Elimination
“First, limit e-mail consumption and production. This is the greatest single interruption in the modern world.” The Four Hour Work Week, page 92
Although it may seem nearly impossible in today’s corporate culture, Ferriss recommends checking e-mail only twice per day, once at noon or just prior to lunch, and again at 4pm. Most importantly, never check e-mail first thing in the morning, as this is typically the most productive time for most people, so use the morning to complete your most important tasks.
Interruptions are anything that prevents the start-to-finish completion of a critical task. There are three main types of interruptions:
1. Time wasters: includes things that can be ignored with little or no consequence, such as meetings, discussions, or e-mail that are unimportant.
2. Time consumers: repetitive tasks or requests that need to be completed but often interrupt important work such as returning phone calls, financial or sales reporting, or other necessary but repeated actions and tasks.
3. Empowerment failures: include instances where someone needs approval to make something happen. In running his online supplement business, Ferriss found it significantly more effective to empower his call center employees with the ability to make decisions without consulting him, as long as the decision was under a certain dollar threshold. The result was employees felt more engaged and the time Ferriss spent dealing with customer service issues decreased significantly.
Since most workplaces encourage activity and not effectiveness, no matter how little time it takes you to complete your work, you’ll always have to put in 40 hours. There are five steps to slowly vanishing from the office:
- Increase your value to the company
- Prove increased output when working remotely
- Quantify the business benefit
- Propose a trial period
- Expand the time you work remotely
Key Concept #4
Automation
To become a member of the NR, you need to develop a system to replace yourself. Ferriss hired a vertical assistant (VA) from India to help with many of the administrative tasks of running his business. The recommendation is to hire a VA firm or VAs with backup teams so that you get sufficient coverage.
In addition to automating your life or business tasks with the help of a VA, the book outlines several different methods to automate income: resell a product, license a product, or create a product. Although creating a product may sound like the most intimidating of the three options, Ferriss recommends specifically creating an information based product. Advantages of information products include the fact that they typically are low-cost to start-up, fast to manufacture, and time-consuming for competitors to duplicate. Many of the most successful television products of all time reflect the competitive and profit margin advantage of information products, such as Personal Power by Tony Robbins.
Key Concept #5
Liberation
“By working faithfully eight hours a day, you may eventually get to be a boss and work twelve hours a day.” –Robert Frost. The Four Hour Work Week, page 207.
The greatest fear most employees have, even those near retirement age, is quitting their job. Common fears are listed and addressed below:
Quitting is permanent. The author challenges this notion, particularly if it involves starting a business or creating something, as these are skills that can be of value to any employer. However, employees who quit while they are younger are likely to have an easier time finding a new job than employees who quit a few years before age 65.
Not having enough money to pay the bills. The book makes the strong argument that you should have a new job or source of cash flow before quitting your current job. It is also important to have emerging savings and a good handle on how many months of living expenses that savings can cover.
Health insurance and retirement accounts disappear. Although health insurance is a major issue and legislation currently is in limbo, it is possible to have similar medical and dental coverage through online exchanges. Shop around for prices and budget the annual cost of health insurance before quitting your job so you are prepared. Retirement accounts such as 401(k)s are easy to roll-over to Roth IRAs or other personal accounts of your choosing.
It will ruin my resume. If you quit your job and sit on the couch, you may have problems. But if you do something interesting, it is easy to explain gaps or even make uncommon items the very things that get you hired. The one catch-all response for explaining a resume gap: “I had a once-in-a-lifetime chance to do (exotic experience) and couldn’t turn it down. I figured that, with (20-40) years of work to go, what’s the rush?”
Apply It
- Think about how you can apply the 80/20 principle to your personal life or business life.
- If you had $10 million dollars, how would you live your life? This is a difficult question to answer, but what most people find is they really don’t need a lot of money to get started on achieving their ideal lifestyle. Is it really necessary to be a workaholic or slave to money in order to live like a millionaire?
- Many people work 40+ year careers and then find themselves either bored or miserable in retirement. What if you could use mini-retirements to sample your deferred-life plan reward before working 40 years for it?