In the last 23 months I have grossed over $1,975,000 online which generated me a pretax net income of around $823,000.
This means a few things. It means that my business margin is approx. 41% (which is pretty good). It means I paid a whole lot of taxes (around $300,000). It means I earn an average pretax profit of about $35,782 per month online, which when combined with my offline income is enough to make me top 1% earner in the USA.
But does it also mean I can enjoy the ‘internet marketing lifestyle’? You know fancy cars, big houses, expensive watches, designer clothes and working 3 hours a week from a laptop on the beach? Well. Not really. In my experience at least this is for sure not the real internet marketing lifestyle. Now to be fair my experience is partially by choice and partially by necessity.
First lets talk about the things that are by choice. The big house, fancy car, $10,000 watch, and designer clothes. All of which I could have, if I did not have good business sense that is. Below is a picture of the house I live in, and the car I drive. I just took it about 10 minutes before starting this post.
Ok so it is rainy and dreary today and it does look nicer when its sunny but you probably noticed right away that it is not a huge mansion. It for sure does not look like the home or the car of a top 1% earner. So what exactly are we looking at here and what gives?
Well what we are looking at is a modest 1400 square foot 3 bedroom 1 bathroom home in NE Pa. Purchase price: $58,000 + renovation cost after purchase $16,000. Total real world value, just about $72k. Here is a look at it from the inside (not a bad home, but nothing special):
Sitting out in front of it is a 2016 Kia Soal. Base model, automatic. ‘Out the door’ purchase price from the dealer: $17,200.
So why no fancy car? Why no big house? Well one thing I have told people over and over, and that many are finally starting to accept is that on online business is still a business. When you are a business owner, you get no regular paycheck. Besides paying your own taxes, comp and health insurance, you get no guaranteed income. Its not like job where as long as you go to work, you are pretty much guaranteed to get a pay check (unless you get laid off of course or don’t do your job). When your a self employed entrepreneur its all on you, and as with almost everything in life there are no guarantees. Just because you made money yesterday, or last month, or even last year does not mean you will today, tomorrow, or next year. Business’s fail every single day. In fact hundreds of them fail every single day. The smart business owner prepares for this possibility.
Now one way to prepare is to save. Savings is great and the standard school of thought is that a person should save approx. 10% of their income. But that school of thought assumes the person is employed at a normal job not self employed. When you are self employed you need to be extra careful and extra prepared. A declining business or one that is having a tough patch can quickly eat up the owners savings. So how do you be extra prepared? Well first of course you save extra. Second you minimize your monthly expenses.
Minimizing your monthly expediences is the primary reason I do not have some big huge fancy house even though it is well within my grasp to purchase one. Im talking about a mortgage to some degree, but even more so I am talking about property tax.
The home I live in is ‘mid level’ for my area. I purchased it with cash so there is no mortgage, but it has a annual property tax of $2200. This means I have to pay $183 a month to live in my own home. A higher end one in my area could be had for around $200,000 and I could have bought that for cash as well. However that would have eaten up a lot more of my cash reserves and more importantly to me it would have put a greater monthly burden on my long term finances in the form of higher property taxes. The annual tax on a $200K home would have been around $5200. It would have cost me more than twice as much to live in a higher grade home. But would that home have given me twice the value? Twice the enjoyment? Would it have kept me twice as warm in the winter? Twice as dry in the rain? Probably not. So to me, as a totally logical, forward thinking business owner it was not worth it.
What about my car? Well another thing business owners tend to become is practical. They tend to think of what they really need and what they really don’t. This again stems from the fact that they have no guarantees of anything and no one to depend on but themselves. My Kia was purchased new this year, also with cash, and while I could have gotten a much more expensive car I had to ask myself, from a practical stand point what would I be getting as far as ‘value’ if I opted for something more luxurious? None really. Its not going to get me where I am going any faster. A sports car will get me somewhere just the same as a base model Kia. In fact the sports car would cost more in the form of maintenance, insurance and fuel. Probably not a very sensible purchase for the forward thinking business owner.
What about clothes, watches and fancy things? Right now as Im writing this I am wearing a t-shirt I bought at WalMart for $7, a pair of jeans I bought at the same place for $14, a $30 pair of casual shoes made from anything but the finest leather and I do not own a watch at all. Why? Because clothes are to impress other people, something I have little interest in, and a watch makes no sense since my phone tells me what time it is.
While some people may buy fancy cars, expensive watches and big houses for me, as an internet marketer, that makes no sense. Being self employed means there is no guarantee of anything. No guarantee my business and income wont decline tomorrow. It just does not make sense to life ‘fast and loose’ when you can burn out at any moment. Also I know a lot of self employed people, both offline and online, and many of them think this exact same way. So if your just building your business, be prepared for the likely hood that your ‘practical side’ will take over.
Ok but what about the other half of the internet marketing life style? 3 hour work weeks from the beach?
Well, Im sorry to say that I have spent a total of about one hour on a beach in the last four years or so. As for three hour work weeks: I’m not exactly sure when that is suppose to happen. But it sure as hell has not happened to me.
In lieu of beaches and three hour work weeks I spend ten to fourteen hours a day in my home office working my tail off. Above is a picture of my home office, and I am in fact sitting at that very desk right now typing this post.
The thing about working for yourself though is that its not the same as working for someone else. When you work at a job the best thing that can happen from additional hours invested is some extra one time pay, and perhaps if your lucky a raise once a year. However when you work for your self your work is an investment in yourself. Because of this I find that I often do not mind the long hours sitting at my desk. Im not merely working for pay, Im building my business and my future up.
While in my experience the IM business has been less about Rolex’s, beaches and BMW I8’s and more about hard work, self discipline and forward thinking that does not mean that there are no rewards. At 38 years old I own my home free and clear as well as over half a dozen rental properties. I drive a brand new (though not flashy) car and ride a brand new motorcycle. Also my retirement account is better funded than that of many people 20 years older than me.
While I tend to be the frugal type of business owner I do occasionally splurge on a toy for myself, like the one in the picture below:
There are a ton of rewards and benefits to being self employed in general as well as in the internet marketing business however one thing I want to get people to understand is that it is not all ‘glitz and glimmer’. People like to show exciting pictures of their big house, their expensive watch, their fancy Italian sports car, but the truth is that this is a small part of it if it is even at all. They never actually show the hard work that is involved. While there are exceptions in my experience most marketers, like most business owners, end up being frugal, forward thinking people who would be very hesitant on wasting their hard earned money on a $200,000 car that gets really bad fuel economy and is not in any way practical. As for the dream of ‘working 3 hours a week from a beach’ I know many successful people both online and offline and I have yet to meet a person who has turned this dream into a reality.
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