Get Rich Quick – The BNL Way (part 1 of 3)

I get a kick out of the advertisements all over the internet offering a short cut to “get rich quick,” usually implying a job where they work just a few hours a week (from the comfort of their own home, of course).  They draw this scenario of a stay-at-home mom sitting around on her laptop while her kids play, logging into her computer, and using some magical “system” to build massive amounts of profits without any particular skill or experience required.  Then they’ll typically show a picture of that mom on a cruise ship or next to a brand new Mercedes-Benz.  Or course, the “system” is available via a $37 ebook, and the only one getting rich is the guy with the sharp copy write skills selling to the fools that buy the book.

I could probably join the crowd and write my own ebook on how to get rich quick the BNL way, except that the only people open to my philosophy wouldn’t pay $37, and the guys that would spend $37 on an ebook have a different definition of “rich.”  Alas, I’ll just have to give my ideas away for free as part of this 3-part series.

Step 1 – Redefine “Rich”

It might seem like a cop out to say “get rich quick” then change the definition of rich, but hear me out.

Most people have a radically different definition of “rich” than I do.  As I see it, the commonly accepted definition of rich is defined as some absolute – as if we all have the same needs and desires (i.e. what is “rich” to me is different than what is “rich” to you).  As if some monetary value of savings such as $1M or $5M is what it takes for someone to be rich.  I completely reject this idea.  Money in a savings account or brokerage account is nothing more than paper.

Instead, I view richness as as a ratio of your passive income generation compared to your desired expenses:

Richness = Passive Income / Desired Expenses

Once that ratio becomes greater than ‘1’ then you are rich by my account.  As it approaches ‘1’ you are approaching richness (of “financial independence”).  If your monthly passive income is $3000/month and your expenses are $2800/month, then by my definition you are rich.  And this makes sense if you think about it.  Without having to work, and with the ability to do what you want, when you want, you are able to fund your lifestyle.  How could that not be rich?

Compare that to a hard working Wall Streeter working 100 hours/week and making $25,000/month, but spending the vast majority of it on an overpriced apartment, fancy cars, and fine dining.  They have no time for family or leisure, and therefore are still not rich until their passive income grows enough to compensate for their high expenses.

But I think there is one flaw in my original equation.  There are financially-compensating tasks out there that people love to do and would do it for free.  For example, when I first started as an engineer (no wife or kids) I loved my job.  I remember one night I was in the lab at about 10PM, working on a problem with my lead engineer.  We got to talking about our long hours, and he asked me if I’d do this job for a fraction of what it paid, just because we both got such a thrill of making such cool products.  We both agreed that we would.  I think that made us both very rich at the time.

Similarly, I really enjoy writing on this website when time allows.  I make a little money from ads, but not nearly enough that it even comes close to a good financial return for my time.  But I do it anyways, and therefore I define this as “enjoyable income.”  It’s money you make doing things you’d happily do for free.

There are many other forms of enjoyable income.  Through this site I’ve been emailed from many people who say they have no desire to retire because they love what they do (artists, actors, engineers, and even someone working long hours on Wall Street).

So I wish to modify my definition of “richness” to take this “enjoyable income” into account.

Richness = (Passive Income + Enjoyable Income) / Desired Expenses

You don’t have to accept my definition of “rich,” but I hope you’ll check out Part 2 and Part 3 of this series, where I’ll be offering up dozens of ideas on how to control the variables of the richness equation to become very rich, very fast.  I’ll provide many ways to increase passive income, seek out enjoyable income, and to reduce expenses.  I hope this will allow the plethora of people who feel they are decades away from being “rich” and financially independent to realize they are not so far off from their goals, if they open their mind to a new way of thinking.


33 Responses to Get Rich Quick – The BNL Way (part 1 of 3)

  1. hear, hear! That’s my definition entirely.

  2. Poor Student says:

    I agree with your definition, but when your richness ratio is 1 I would still have more to do.

    Right now my income is very tiny and in comparison so are my expenses, but I love saving part of my income. The more my income increases the more I can save.

    So I would either include savings in my expenses making the number higher or wait until the richness ratio was higher at like 1.2 or greater even. The difference would be that the extra would less likely used saving for retirement, it would be more likely spent on a large charitable donation, or a family trip.

    • I chose a ratio of 1 because that’s when you’re financially independent. You can chose any target ratio you want. If you want a target ratio of 1.2, 2, or even 10 so you can continue to amass more money for other causes, I applaud you. I actually have similar goals.

      Or, as you said, another way to look at it is to include your desired or discretionary expenses (donation, luxury travel, etc) as part of your expenses and keep the target ratio of 1. That’s how I’m looking at it. Perhaps I should change the definition from “expenses” to “desired expenses.”

  3. krantcents says:

    There seems to be insatiable appetite for quick solutions to problems. Whether it is weight loss, hair loss or money problems. Anything worthwhile takes time, effort and work to achieve. It does not matter what the number is there is no magic solution. I agree rich is enough (passive) income to exceed your expenses. The problem is your expenses change over time.

    • “The problem is your expenses change over time.”

      Yes, but so does everything. Your income, your desires, your wealth, your health – but it’s not always a negative change.

  4. I like your definition, but I wouldn’t call it rich. I would call that comfortable and it’s my goal. I guess it depends on how you define expense too. Expense is just what it takes to be comfortable for me.

    • Yeah, but “get comfortable quick” doesn’t have the same exciting ring to it. :)

      Seriously, you can call it what you want, but the point is that what I’m describing is what most people ruly want (especially those on this site vs. most “personal finance blogs”). And I get a lot of emails from people saying they appreciate my posts that aren’t about early retirement because ER seems so far away to them.

      My point is, most people want financial independence so that they can do what they want, and over the next two posts I’ll be offering up a quick path to achieve that without having to accumulate millions of dollars over a 20-40 year time span.

      • Value Indexer says:

        It’s true that it doesn’t make you super-wealthy, but it does free up your life. It’s almost like getting out of debt in that sense. Maybe you could call it “getting out of dependence”. Then you can go around asking people if they have a plan for getting out of dependence soon or if they just want to be stuck in it for the rest of their lives :)

  5. Matt says:

    This is a great definition!

  6. Patrick says:

    Well I guess I think of being “rich” in a few different terms these days…..one of them is what you present here, with the passive income exceeding expenses. I have come close to this FI crossover point and I believe if I pinched even harder with frugality that I would be “fully there.”

    But I don’t want to pinch that hard. I could sell my car and get a roommate, but I don’t necessarily want to make every single sacrifice right now. I want to go drink caramel frappucinos from fancy coffee shops. And so I have the mix….I write freelance for now, and it pays the bills and let’s me keep adding a bit more to the nest egg.

    The price of being “rich” is a bit too high for me right now….I would rather mix in some “spendiness” and have a little fun, while still working for it. I am fully conscious of the trade off and I know that if I tightened up my spending and made a few sacrifices that I would be fully retired now at 36. But I have too much energy, I enjoy the writing on the web, and I make good money doing it. And I still have fun spending it. So for now, I feel very wealthy indeed…..I have a large cushion, but I can also work a bit and spend a bit and not feel cramped.

    These are the kinds of trade offs and discussions that make personal finance worth talking about. Fantastic post!

  7. Josh says:

    Just stumbled upon your website. I loved the core principles of BNL, and am now eager for this series! :-)

  8. Jeff says:

    A man is rich in proportion to the number of things he can afford to let alone.

    — Thoreau

  9. Philip says:

    I’m glad you included the enjoyable income part. I suspect that once you “retire” you’ll in effect move from work you have to do, to work you want to do (I can’t see you sitting on the couch for the next 70 years!). My own journey has been to create a company/job I enjoy to make becoming financially free a bearable journey. Same variables, just arranged differently.

  10. Mike says:

    Bingo on the enjoyable income part. So many people leave this out– when I have a job that I enjoy, working long hours becomes far less objectionable, though family demands always alter the equation!

  11. Brian says:

    That’s a great definition! I was sold at the first equation, but adding enjoyable income makes total sense.

    I think I’ll go off and compute our BNL richness ratio now!

  12. Tyler says:

    “Richness = (Passive Income + Enjoyable Income) / Desired Expenses”

    So simple, but very insightful. Thanks!

    FI calculations and safe withdrawal rates are very helpful for understanding finance, but miss that last “enjoyable income” part of the equation which is actually a very big factor for early retirees.

  13. Sean says:

    Wow, I’ve just started a series on this exact concept. I’ll be sure to link to this in my next installment.

    Great post – I love the simple formula especially.

  14. This has me smiling. You have quantified something that I already knew – I am filthy rich! Love my life, am comfortable, and working on making some much needed financial adjustments for my future – but rich none the less. Thanks!

  15. […] As I see it, there are two solutions for this.  The first is to retire as early as possible, making room for your passions.  Because I’m so close to retirement (9 months), this is the path I’m following.  Unfortunately, this is not possible for many people (at least until they get rich quick). […]

  16. I smiled when I saw your comment on the get-rich-quick product at $37, because I knew exactly what you’re talking about. I hang out with some of these people. The best of them truly concentrate their energies on producing a valuable product which, if you follow their teachings and put the work in, will likely bring you at least some return. Most people don’t, though. They spend the $37, read it and put it to one side. They’ve had their thrill, dreaming about the good life.

    But there are tons of these people who don’t provide value and are just in it to rip people off. Every now and then they get big enough for the FTC to notice and there’s another well-publicized bust. Oh well.

    I agree with your concept of riches. I know a man whose name literally means “rich life”. He can never forget his goal; he sees it every time he writes a check!

  17. Matthew says:

    I love your definition of rich! I stumbled across your blog yesterday while reading up on Lending Club and now I read this post talking all about Passive Income and getting rich. I’m now addicted! Passive Income is my ultimate goal – and now I look forward to the day that I can tell everybody I am rich, based on your definition.

    One thought about the enjoyable income though. I work as a trucker at my day job and enjoy it very much. The problem though is that the hours are very long. Usually at least 10 per day. I don’t wish to complicate your equation, but how can that figure in? Enjoyable income/hours worked?

  18. renee s says:

    where are the other parts? haha I cant find them!

    • Sorry Renee, parts 2 and 3 are still locked up in my thick skull. Eventually, I will get around to writing them… I promise. :)

      • tim says:

        Any chance of a look-see into that “thick skull”?

      • Tim –
        I’ve moved this up in my article “queue.” I usually only write articles that I feel inspired to write in the moment, so I can’t tell you exactly when these will show up. Hopefully soon, since I have a new goal to post at least once per week.

  19. Insourcelife says:

    I think you nailed the definition of “rich” for me as well. As soon as my passive income covers my expenses I will too consider myself “rich”, since at that point I could pursue whatever is it that interests me at the time.

  20. Bit late to the party on this but totally with you on your thoughts! Nice equation as well for the geeks out there.

    Part II is 1.5 years in the making, that’s longer than a film sequel nowadays :) Hope it’s worth the wait!

  21. process says:

    Where is Part 2 and 3?

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  23. […] change in approach is heavily inspired by my revised model of wealth, and something you might want to research and consider if you’re on the same path.  I […]

  24. Anon says:

    This post is great, but I think a lot of your typical cubicle occupiers would says that they are happy living in their cubes.

  25. […] Brave New Life –Get Rich Quick – The BNL Way […]

  26. Rakhi says:

    That’s an inenuiogs way of thinking about it.

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