12X Your Hourly Rate
“I don’t like working extra hours; the more you work, the more they take out of your check!” I was confused at first. But, I would soon see what my co-worker really meant.
A real estate investor shared my co-worker’s thinking. Overtime, in his opinion, is a waste of time. It is wasted effort for the employees and wasted money for the employer. Many studies on working additional hours support their opinions:
“Productivity is not linear… Companies who regularly enter ‘crunch mode forget to consider that their employees are humans—susceptible to fatigue, burnout, resentment, unhappiness—and not robots…. the extra output will be pretty low, and at a high cost.”
OVERTIME: How to Lose Your Employees and Kill Your Business https://lengstorf.com/overtime-hurts-productivity/
Another mentor said he could hundreds of hours of work done by hiring people. Instead of working overtime, invest.
What if you spent 20 hours creating an asset that gives you $400 every month? You’d make $20 per hour. But the next month, you get another $400.
$400 + $400 = $800
$800/20 hours = $40/ hour
Your hourly rate doubled. You didn’t work extra hours. Over 12 months, you get a total of $4800 and an hourly rate of $240 per hour! That’s 12X the pay rate you started with in the first month!
When I worked only 2 hours of overtime, I wanted to compare my efforts to an investment I’d made like the example above. I knew that my gross pay would be bigger, but I wanted some numbers to prove my former co-worker’s observations.
Only two hours of overtime reduced my net hourly rate. I was taking home $1.00/hour LESS working 42 hours!
Overtime should be considered carefully. There are times when it’s needed, but it should not be your only option for more cash.
Find a cash flowing asset such as real estate (notes or rental units) or even dividend paying stock. Also consider selling digital products. What can you think of to 12X your hourly rate?