In other words, do all the promises of a better life hold up?
First, let’s consider the traditional lifestyle, so you can understand what I mean by the word robust. Traditionally, you’re supposed to work to maximize your SAT scores, so you can get into a good college. There you will take on student debt while trying to maximize your GPA. You will do an internship every summer to complete your resume and land your first job. Once you get your first job, you will buy a car on credit. You will meet someone and marry him within a year. Together they will buy the largest amount of house they can afford. You probably have a couple of carpet rats. Soon after, you or your partner will be fired. You will have some financial problems and maybe a nervous breakdown. You will start fighting. Repeat that a couple of times and you might get a divorce too. You’ll withdraw the pithy 401k savings to pay for the repair of the car and/or roof when it caves in. Two years later, he files for bankruptcy. By 40 you’ll be on cholesterol-lowering drugs and maybe heart medicine and you’ll begin to wonder if a string of middle-management jobs was all there was to the glorious career you were promised. You are still working on your student loans and have $8,000 revolving credit card debt; you’re underwater in your house, but on the other hand you have good credit and just financed a new car; You just replaced your 32″ TV with a 36″ TV.
This lifestyle is robust. If you follow the standard advice, it’s likely to work this way. Or maybe even better than this, for example, a 40″ TV at the end!
Blogging for a living is an example of a lifestyle design that is not robust.
There are two groups of lifestyle bloggers. There is the geo-arbitrage blogger who lives in a poor country and makes money blogging about how you can make money blogging while living in a poor country. There are other bloggers who make money blogging on how you can earn a six figure income blogging.
The first is reminiscent of what we called backpacking in the 1990s: you’ve just finished college or high school and are genetically inclined to seek new territory. You pack your backpack, buy a plane ticket and fart until you run out of savings. The more enterprising types will find a job that pays very little (because it’s in an exotic location, dude!) or nothing at all (room and board).
Today there is a new breed called travel minimalists who are basically backpackers except they take pictures of the contents of their backpack; Count them and then talk about how minimalist they are. Yeah sure, if you have 47 things and live in a house I would consider that remarkable (in the literary sense, not the lifestyle blogger sense where everyone and their dog is “remarkable”), but if you have 47 things in your backpack, you are a random traveler with a big reflex camera and a strange obsession … No one in their right mind brings the f@#king kitchen sink when backpacking.
I want to bring to your attention a great article from The Salty Droid, and in particular I want to emphasize the Zipf law distribution (the one with the unicorn).
What this shows is that the people selling the dream of making a living as a blogger (or world conqueror or whatever) is that a few bloggers at the top make all the money. Most bloggers make very little money.
It is somewhat false to make money by telling other people how to make money on the Zipf curve, because the method is not sound. To achieve this, you have to displace the guy who is on top. If you try that, you’ll find it pretty easy to set up a blog. However, it gets harder and harder and harder… etc… oh, and harder to climb the curve, the higher you go.
Big blogs have a substantial advantage. They are often great, not because they are great (meritocracy doesn’t work very well in the online world!) but because they are early. Being early, they started building their network early and are therefore already well connected. This means that new people are more likely to find the network of old friends than the new blogger.
This is not simply a problem with blogs. It’s the problem with ANY lifestyle design that follows a Zipf law. eBay drop shipping is recent. It’s easy to set up. However, given that ease, you should also expect that once the methods become popular, the margins will shrink.
At this point, more money will be made telling people how to make money than real money.
So you have to ask yourself a question when considering a certain lifestyle: Do people today make more money telling other people how to make money? If so, be very careful! There are two rules. One is attributed to PT Barnum; I don’t know the origin of the other.
- Every minute a fool is born.
- If you don’t know who the fool is, it’s you.
So think about that before you hand over $87 for an 80-page inspirational eBook that promises to solve all your problems.
Of course, I must also consider my own case. I have a blog and I write about lifestyle design. Could I make a living doing this? Well, current traffic is around 150,000 impressions per month. Blogs that deal with personal finance can be monetized at about $1-6 eCPM. This means you could make between $150 and $900 per month on this one; I make about $100 per month, because I don’t like to deal with advertising; most of it is quite questionable in nature. Some would earn more, some would earn less, I am telling you what to expect. However, it would be disingenuous of me to sell you an early retirement lifestyle based on blogging about it. Because? Because you would have to scroll me or one of the other early retirement blogs. Well, you could try to displace someone else in another field (eg real estate or puppies), but that’s the same problem. Unless you can find an area to blog that NO ONE has thought of before, you’re fighting an uphill battle.
Also, particularly when it comes to financial independence using blog income, you need to make sure that you can stay on top for the rest of your life. I would consider it highly unlikely for anyone, even if they had a dozen blogs. It’s hard work to stay on top.
Now, I have also written a book. If it’s still selling like it is now (1100 copies in the first 3 months and about $7500 in royalties), I can certainly make a living from that too. If it doesn’t keep selling, then you could live on the profits for a year. However, it took 2.5 years to make it like this…
In that sense, an author who makes a living writing about how to “be happy without having a job” is Ernie Zelinski. He has written many books about it. However, I have never seen him encourage people to become authors to do what he does.
ERE is robust because it is not based on a Zipf law. The point is to reduce your expenses (see the 21 day makeover in the sidebar) the biggest benefit of which comes from lowering your housing and transportation costs. Such reductions are completely non-competitive. Your main battle is not with others but with yourself and how well you can adapt to spend less money. The paradigm shift and the skills to be learned will be difficult at first, but it is similar to how you learn to swim, when you compete against yourself instead of others.
Your savings compete in the investment market which is HUGE. It would take millions of ERE people to make a dent in current global interest rates. We don’t have to worry about what would happen if another 10,000 or 1,000,000 people “buy” just like you don’t have to worry about what would happen if another 10,000 or 1,000,000 people went to college. The job market is big enough to absorb them just like the stock market is big enough to absorb our savings. Zipf’s law is not a problem, so the ERE and college/career designs are robust.
Instead, you would have to worry about adding 10,000 bloggers trying to make a living blogging or 10,000 people selling plastic trinkets on eBay. Here, Zipf’s law tells you that you have to beat most of them to make it, but if you beat them, you will indeed be rich. However, this is unlikely, because only a few achieve it. There just isn’t enough space at the top. In particular, for every 1 success story (which will be heavily marketed in the next product launch) there will be 99 failures.
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Originally posted on December 21, 2010 at 12:23:21.