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How to apply the 80/20 rule to earn more, work less, and dominate

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Today, learn how to apply the 80/20 rule to eliminate meaningless work from your life — and focus on what really matters — to earn more, work less, and spend time doing the things you love.

Below, you’ll learn…

  • How to work 2 fewer hours/day
  • How to double your salary (at age 26)
  • How to take a $12,000 around-the-world trip for $297
  • How somebody named Jamie earned $11,000/month working 20 hours/week

What do all of those have in common?

The 80/20 rule.

Most of us complain how busy we are, whether it’s with work, our family, or just the basic upkeep of life. Yet there are others — who have exactly the same amount of hours as we do — who do remarkable things. How?

In fact, if we actually analyze our time spent on any given week, we’d find that the vast majority of the actions we take have very little impact.

A bleak conclusion? Perhaps. But if you can tweak your actions and focus on the actions that really matter, you can leapfrog your peers and live a remarkable life.

For example, people often believe that they can do everything when it comes to personal finance. Pay off debt! Save more! Invest! Stop spending on lattes! Earn more! Shop frugally! Make your own dinner! JUST DO IT!! AAAAAAAAAHHHHHH!!!!!!

The truth is, we are cognitive misers and we have limited cognition and attention. That’s why it’s critical to focus on the most IMPORTANT things, rather than everything. That’s why I write extensively about automating your finances. It’s also use the Tripod of Stability in my life.

Below, in an extensive guest post, Tyler Tervooren shows you several examples how to focus on the things that matter (along with some fascinating charts).

I have to add one thing. When Tyler pitched writing a guest post for me, he had a little too many examples of me, even when you factor in my extremely large ego. I sent it back and told him to tone down the praise. So below is the edited version. It’s like hearing your own voice on a recording — uncomfortable and weird. But the rest of the material is gold, so check it out.

Tyler, take it away…

* * *

Applying the 80/20 Rule to earn more, work less, and dominate

Tyler Tervooren tests the boundaries of reality and writes for a team of highly skilled risk takers at Advanced Riskology. You can follow him on twitter at @tylertervooren.

Do you know what people like Ramit, Tim Ferriss, and Erica Douglass do that you don’t?

Nothing.

Yep, nothing. When it comes to day to day living, these guys are just like you and me. Ramit had to create a budget before he realized he was spending 70% of his money on food. Tim doesn’t always pick the perfect investments. Erica has bad days just like the rest of us.

Most people don’t see it like that, though. They just see a couple of people who somehow worked harder, got a little bit lucky, and made it further than them.

Most of us think Ramit, Tim, & Erica have just straight up beaten us at life. Well, they have, actually, but not by working harder or getting lucky.

You see, there’s this thing about humans that everyone knows but not very many people acknowledge and even fewer actually take advantage of:

They’re lazy.

Human beings are inherently lazy and the few people that take it upon themselves to rise above the bar that’s set, well, pretty darn low, enjoy a lot of benefits for doing so.

Ramit, Tim, Erica – they don’t really do anything different than the rest of us. They just do the things that actually matter a lot better.

And that’s the ironic part about this universal truth. While I certainly wouldn’t call any of them lazy, in the end, these guys enjoy the benefit of less work because they’ve improved their life processes so dramatically that they don’t have to work nearly as hard to kick ass anymore.

Over time, they’ve built up what I call “compounding awesomeness” while the rest of us stick to comfortable things that don’t work or reinvent the wheel every week with no idea if what we’re reinventing actually works or not.

Don’t believe me? Try this exercise for an example of what I’m talking about:

Pick out your 5 closest friends that say they care about personal finance and ask them how many hours they spent last week optimizing their budget or their 401k allocation. Then ask how many hours they spent watching TV.

Let’s move on.

Truth is, what Tim, Erica, and Ramit do that’s propelled them above the rest doesn’t take genius, but it does take work and sustained effort. It takes a little bit of measurement every day and an undying focus on improving things that work and dropping things that don’t.

It takes some creativity. It takes some ingenuity. Most of all, it takes some strategy. Here are few strategies for you to chew on.

Strategy #1: Ctrl+Z 80% of your life

Ah, the good ol’ 80/20 rule. Maybe you know it as Pareto’s Principle, which demonstrates that in most things you do, 80% of your results come from 20% of your efforts. Pretty cool.

But not so cool? It also means that 20% of your results come from 80% of your efforts.

Do you see the incredible opportunity here? You can do more than just eliminate 80% of all your hard work; you can take the remaining 20% and scale up to even better results.

But what the hell does that even mean?

Let’s say you’ve just started a side gig as a freelance dog walker and you charge $20 per dog for a 20-minute walk. Maybe you’ve even kicked ass and gotten yourself 10 clients.

Pretty soon you realize that 8 of your clients have just one dog and are paying you $20 a day while the other 2 each own a dog compound with 10 dogs a piece. They’re each paying $200 to walk the pooches.

A 20-minute walk is a 20-minute walk whether you’ve got 1 on a leash or 10, right? Your dog compound clients are making you far more money and using up much less of your time than the single dog owners. You want more clients like that, but you’re exhausted and don’t have time for them.

So what do you do?

You freakin’ drop all 8 of those single dog owners, quit taking new clients with only one dog and you start looking for just one more client that has at least 8. She’s harder to find, but you’ve got plenty of time now because you just dropped 80% of your commitments and didn’t lose much.

And you don’t have to stop there. You can keep looking for clients with more and more dogs and dropping the smaller ones. This is what we’re talking about:

Let’s take a second to look at some real-life examples.

How Jamie makes $11,000/month working 20 hours/week

Just a few years ago, Jamie was working full-time, making decent money, and hating her job like any good American. Then, she had a baby.

Now, I don’t know anything about these “tiny humans,” so I had to take Jamie’s word that having one changes your life. It changed hers anyway, and she decided to quit her job to start her own business and only work part time so that she could be the mom she always wanted to be.

She also decided that she didn’t really want to give up much money.

Now, cutting your hours down by 60% and maintaining your income is completely possible (It’s Tim Ferriss’ claim to fame after all), but it doesn’t just happen.

Jamie had to take a super hard look at how she did her work and find the little bits of her coaching business that were working well for her – the 20% – and leverage the hell out of them so that she could flat out stop doing all the little stuff that was taking up her time and giving her little in return – the 80%.

After looking at the numbers for her business, it was pretty obvious that going to networking events wasn’t bringing in many clients (sound familiar?), but her limited speaking engagements were doing great. Rather than try even harder to make the networking events work (almost always a bad idea) she quit going to them entirely and started focusing on doing more speaking, which took up even less time.

She didn’t stop there, though. Jamie also decided to quit traveling to meet her local clients so that she could spend less time helping more people.

From Jamie:

Early this year I decided to stop pursuing local clients since I realized traveling to networking events and my clients businesses took up many hours each week. Since I live in Maine and it takes a long time to drive anywhere, I decided that I couldn’t take up 6 of my 20 hours driving each week. I’ve since changed my local clients to over the phone.

She calls these her “bold actions” and while the business professionals out there will argue incessantly about the right or wrong way to run her business, Jamie just had her first $11,000 month.

More money + less time = Domination of the 80/20 Rule (and domination of your friends).

Why I love writing articles like this one

I’ve seen the exact same results when I do my own 80/20 analyses. I launched Advanced Riskology in June and spent the first 2 months chasing every strategy I could think of to grow it. Naturally, there were a few that worked very well and a whole bunch that didn’t.

Here’s the actual break out of where my site traffic comes from vs. how much time I spend on each promotional outlet:

Rather than spend hours every day trying to suffer through the process of keeping up with tactics that didn’t do much, I just dropped them and now spend far less time, maybe 10% of what I was before, focusing on the promotion tools that work incredibly well for me:

That’s why you’re reading this guest post today. I’ve found that writing awesome articles for huge blogs gives me one of the best returns I can get for the time involved. The only other strategy I use is interviews/media mentions that I spend about 15 minutes a day working on.

The result? Explosive growth – almost 2,000 subscribers in the first 3 months for less than 2 hours a week of “marketing.”

I’ll take that over constant frustration any day.

Strategy #2: Travel, get married or do anything else awesome… for free.

I always endeavor to be a supportive friend that doesn’t offer too much unsolicited advice, but it drives me nuts to hear people talk with near desperation in their voice about all the things they want to get out of life and then hear them dismiss it all because they assume they need Scrooge McDuck’s vault of gold to do any of it.

That’s why this strategy has to do with finding creative ways to do really expensive and extravagant stuff either cheaply or completely free. I’d be willing to bet that for every $10,000 dollar dream you have, there’s a way to do it for less than $100 if you’re willing to use your brain juice.

Will work for travel

My friend Sean Ogle got fed up with his corporate job in finance and wanted to do some traveling. When his boss turned down his proposal to work remotely, he just up and quit.

He had some savings, but not enough to make it for long with a home base in Portland, so he bought a 1-way ticket to Bangkok and set up shop over there where it’s far cheaper to live – geo-arbitrage.

Sean found a part time gig when he got over there, and after 6 months hanging out in Thailand and visiting the rest of SE Asia, he came home with the same amount of money that he left with.

Free 6-month vacation. Nice.

A worldwide adventure for $297

Next year, I’ll be flying to Africa and Eastern Europe to climb two of the tallest mountains in the world as well as run a marathon or two. Those are long flights and I’d like to be comfortable, so I’m planning to fly business class. That’s about $12,000 in airfare – not something I could afford even when I had a “great job.”

But, I’ll be flying for no more than the cost of taxes by using frequent flyer miles and some travel hacking strategies that I spend about 10 minutes or less a day learning. Things like:

  • getting tons of miles for free flights through credit card offers without lowering my credit score
  • booking tickets on partner airlines so that I can go anywhere with relative ease, and
  • scheduling free stopovers in hub cities so that I don’t have to book multiple trips

Just to hit that point home, here’s what that looks like:

If you think your dream vacation is too expensive, you’re probably not looking in the right place yet.

Free Mickey Mouse matrimony

Just the other day I talked to a gal named Tracy that got married at Disney World (her favorite place on Earth) for free. She and her fiancé were taking a joint vacation with their families there and thought, “hell, why not just get married while we’re down there?”

Of course, for everyone else, that service costs at least $5,000 and quite a lot more if you want guests and good food. So, instead, they hired their own minister and paid his way into the park to perform the ceremony for them.

I asked Tracy how much work it took to put that together and here’s what she said:

I only mentioned it because in Disney-fan circles it’s a huge no-no and people think it can’t be done, so it just cracks me up that we did it – effortlessly. We could have done it anywhere we wanted – in a hotel, on a beach, in a pool, on a ride, etc.

When you’re willing to work a little harder and a little smarter, most of the things in life that you thought were too expensive and out of reach are actually right within your grasp.

Give it a shot if you’re inclined, but there is a downside to using this strategy: it’ll get harder and harder to listen to your friends complain about all the things they’ll never do because their excuses are insurmountable.

Speaking of working a little smarter…

Strategy #3: Become an executive by 25 and quit working so many damn hours

Enter Matt.

By 25, he’d worked his way into an executive finance position with UPS and just a few weeks ago, at the age of 26, said goodbye to that job in order to double his already fantastic salary and move to Europe for a change of pace with a certain online book retailer.

The funny thing about Matt is that you’d typically think of a guy like that as a dorky pencil pusher that spends his days in front of his desk and his nights underneath it.

Thing is, he really doesn’t work that much harder than anyone else with a little ambition. In fact, he recently told me that he works about 55 hours a week. That might seem like a lot to some, but consider that at least a few of those are at home watching sports while he chips away at new projects.

One other thing we should clear up is that Matt isn’t the heir to some business throne. It’s not like Daddy was the boss and gave him a management job when he graduated from high school.

When I met Matt in 2003, he was loading boxes into the back of a UPS truck at 2:00 in the morning.

So how did he work his way up the ladder so fast? I asked him, and here’s exactly what he said:

I focus on figuring out how systems work and where people’s motivations are coming from. Understanding how and why something works the way it does is amazingly powerful. This is my fundamental starting point for working smarter. Investing the time to build relationships, dissect processes, and asking why builds a solid platform to base all other activities off of.

 

Here’s a guy who makes well over $100k/year and the #1 thing he does to be effective at his job is understand people’s motivations and why they do the things they do. That really hammers home the power of psychology when it comes to earning more and mastering personal finance.

And he works in finance. How many people typically lump finance and psychology together? Hopefully a lot more now.

How much further could you get in your own career if you spent more time understanding your boss’ motivations?

How to work less every single day

Before I left the construction industry, that’s exactly the same strategy I used to cut about 2 hours out of my average workday (watch out, here comes another 80/20 anecdote). Rather than spending countless hours half-assing all the work I was supposedly responsible for, I just started working extra hard on the stuff that was really important and quit doing the stuff that wasn’t.

I didn’t need any permission to stop doing it. I knew that if I knocked it out of the park with the important stuff, no one would really care that the stuff at the bottom of the pile didn’t get done. And it paid off.

If you graphed my work schedule with my productivity over time, it would look like this:

And check out what Matt, our Gen Y exec, had to say when I asked him if putting in more hours is a good way to climb the corporate ladder:

My view is that the hours will not necessarily help unless they’re for the right things. I view a job position as something that you have a certain amount of resources for.

The challenge with an entry-level job is that at least 50% of the work is administrative or something that others don’t fully use or understand. I see this as the opportunity area where an individual can look at these tasks and evaluate what the real purpose is and find new ways to do them more efficiently (you will also find that many can be eliminated or scaled down). Doing this will easily free up 10% of the week (4-5 hours).

Now the trick is not to just do “more work”, it is to find out what your boss or team members are frustrated with at the moment and develop a plan to fix it. Keep repeating this and you will build up a reputation for doing so.

 

There you have it – straight from the horse’s mouth. Working hard is a fine trait to have, but if it’s the only tool in your bag, you’re wasting your time. The real breakthroughs come when you get into your boss’ and colleagues’ heads and actually find ways to fix the problems that are causing them pain.

That’s how you get somewhere fast.

Back to Being Lazy

Remember all that talk earlier about how humans are naturally lazy creatures? Well, it’s still all true, but the beauty of all this is that if you actually get off your ass and use some of these strategies, you’ll get to enjoy more laziness in the long-run, too.

That’s double domination. Not only do you get to flying jump-kick your friends in the face by living it up while they complain about never getting what they want, but by getting better at using these strategies you end up creating less work for yourself down the road by finding the most effective and efficient ways to do the stuff that’s important while everyone else keeps toiling away because “that’s the way it’s always been done.”

And that is how you beat your friends at life.*

*Of course, if you’re a half decent person, you might consider teaching them rather than rubbing it in their face.

Tyler Tervooren tests the boundaries of reality and writes for a team of highly skilled risk takers at Advanced Riskology. You can follow him on twitter at @tylertervooren.

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87 Comments

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  1. Great post, Tyler. I love that you referenced Scrooge McDuck. I’m trying to figure all of this out as a senior IT manager (which pretty much means: tired, stressed, and overworked all the time). I know that I have 80% of crap to get rid of, this type of post gets me re-motivated to do it.

  2. The idea of tracking your time, and then evaluating the results has a lot of merit. I’ve tried to do this as well by asking: “what is the ROI on this time investment?”

  3. wooooooooooooooooooooooooooooooooooow.

    What an epic post, Tyler.

    The info is priceless, and the graphs kick-ass, too ! I have some time management problems, but these tips help me focus on the what’s super-important and brings the most results !

    thanx so much man !

    • I couldn’t agree with this sentiment more. I just subscribed to Tyler’s email list and downloaded the ebook — can’t wait to read more of this guy’s ideas.

  4. I just got a promotion and a 13% raise, without asking or negotiating. Tyler summed up my work style perfectly:

    “I knew that if I knocked it out of the park with the important stuff, no one would really care that the stuff at the bottom of the pile didn’t get done. And it paid off.”

    I took a step back to evaluate what I’ve been doing “right”. I realized I work smart/hard (not long/hard), I do a great job on the important stuff, and more importantly I know what’s important. I am always trying to solve problems for my boss and I’m always doing valuable work–so much so that no one cares if the shit work get’s done. It’s obviously paid off.

    What also paid off is I don’t walk around with a sense of entitlement, always looking to take from the company. I HAVE asked for things that are important to me, none of which were monetary.

    Another note–a marketing director I know told me she’s suspicious of those who work extra long hours. It doesn’t tell her they are doing more work, it tells her they can’t get the work they are given done in a reasonable amount of time.

    Great guest post!!!

    • Erin, you make two really great points. First, the obvious – as Tyler so eloquently advocated, work on the important. Second, and perhaps even more critical – put yourself in your manager’s (customer if you’re in business for yourself) shoes and work on what’s important to them.

      And your marketing director friend is right. I figure after 9-10 hours efficiency drops off dramatically. Beyond that, it’s just a manifestation of insecurity.

  5. Awesome post man! spending your time in a cool manner is very nice. that’s why it’s always good to work on things that worth it than to spend your time on things that don’t. thanks for sharing bro.

  6. This is the most simple, helpful explanation of the Pareto Principle I’ve seen so far! Excellent! The example of the Dog Walker is excellent.

    My own experience: We used to sell Art Products to about 500 retail stores. It required employees, large warehouse, and I couldn’t take time off ’cause I had to babysit the biz.

    One year we decided to SHUT DOWN our wholesale business and go entirely into licensing the art instead.

    We went from 500 retailers to working with 30 licensees. Fired all employees, moved into a smaller space, and we take 2-3 months vacation a year now!

    It was a bold, scary move. And I thank God every day that we did it.

    • That’s a big transition, Maria. Did you have to work harder to maintain your income or was it a smooth transition? Was moving to licensing just that much more lucrative? Good move.

    • Tyler, yes, it was a huge transition. The hardest part was MAKING THE DECISION to WORK SMARTER, NOT HARDER. It was hard to CHANGE, essentially, but once we did, it came together.

      To answer your question – it was a lot of work to transition into licensing, in the beginning, but not any more work than we were already doing, maintaining 500 retail accounts and employees.

      Now, our profits are way higher, and our time required to maintain it is way less. You could say we now “live the dream life” of doing what we love (creating & selling art) and still having freedom to travel the world and work for ourselves.

  7. Tyler,

    As I’m a fan of saying – we don’t need to work longer hours, we need to work smarter hours. Working for longer periods of time means that we’ll get burned out, even if we’re doing work we love.

    Breaking work into chunks also does wonders for my productivity. Taking a lot of breaks helps me designate times to be “non-productive”, which makes my “productive” hours more, well, productive.

    Also: what if we stopped arbitrarily splitting our work into hours and days, and instead viewed everything as a continuum? All the projects we do will take a certain amount of time to get done – 30 hours spread over a week is the same as 30 hours spread over a month. Planning projects on hour counts instead of working on them on arbitrarily defined days has helped me out a ton.

    Ace post, as always!

  8. [...] Here’s another killer article on the Pareto principle by @tylertervooren. [...]

  9. My problem is that I work for myself as a freelancer, therefore, I constantly understand my ‘boss’” motivation, however, I can’t exploit those effectively as you state above….

  10. These are some pretty sexy graphs!

    But seriously, great information. You do a good job of adding some life to a principle we all know, but few act on. Looking forward to seeing how your $297 trip goes!

  11. This is an absolutely great post on actually applying the 80/20 rule. As a full time employee who’s trying to move to freelance work this advice will help to focus on where the results are coming from and simply forget the rest.

    Great graphs and images too! Really explains it well :)

  12. Great information – I think the hardest adjustment to make is letting go of the 80%. You’re so used being busy and occupied that you’re afraid of what will happen when you drop. I was, but I decided to do it anyways- the world didn’t collapse and I suddenly had more time to take projects that I enjoyed (and paid better).

  13. Fantastic job, Tyler. And a happy birthday as well. :)

  14. Hey Tyler, great post. Would love to hear more about how you got the plane ticket for cheap. Any of your old blog posts you can point us to?

  15. Great guest post here Tyler. How was the birthday plane jumping?

  16. [...] I Will Teach You to Be Rich readers. Thanks for stopping by from my guest article, How to apply the 80/20 rule to earn more, work less, and dominate. Today’s my birthday, so I’m jumping out of an airplane. I hope you have big plans, [...]

  17. Love the graphs. They really bring your point to life and make it oh-so-easy to get why you’re rockin it right now. I’ve amped up my guest posting efforts significantly in the last two months and it has really taken my blog to a whole new level. The biggest ones are yet to come. Can’t wait!

    Good luck on the jump today.

  18. I love this post, thanks for sharing here.

    The most important point, however, I got from Ramit’s intro: “we are cognitive misers and we have limited cognition and attention”

    Its so important to realise that and don’t waste a second of your attention because your energy gets used up so so quickly if you’re not mindful.

  19. I have a question about the 80/20 rule and how to apply it towards non-monetary projects (or at least projects that won’t be money-gathering at first). In my case I’m trying to learn new skills, partly through practice and self-teaching, and partly through formal teaching. Can the 80/20 principle be applied to learning too, to avoid burnout while maximizing learning ability?

    • Hey Kim,

      Yes, it definitely still applies, but you have to be a bit more critical in how you apply it. When you’re learning something new, it’s hard to tell right away if what you’re doing will work or not. You don’t want to give up on something because you didn’t give it enough time, but you can progress a lot faster if you can spot the stuff that won’t work for you quickly.

      I think the best thing to do is to set a goal or an expectation as soon as you decide to try something new. Have an idea of a realistic time frame that you want to accomplish whatever little piece of the puzzle you’re trying to learn.

      The trick is in setting a good, solid expectation and making sure that what you’re learning is measurable.

  20. The great thing about 80/20 thinking is that it can be applied to nearly everything. I’ve written several posts about it on my food blog to help people make preparing and cooking healthy food an easy part of their lives. I’ve used it to strip down aspects of my life that weren’t effective, and I’ve used it to help me magnify the results I’ve gotten in many areas of life.

    But I did say NEARLY everything. It can be a laughably useless rule at times too. In Richard Koch’s “The 80/20 Principle” (one of the key recent books on 80/20 thinking) there’s an accidentally amusing chapter applying 80/20 to investing. In essense, Koch says “80% of your returns will come from 20% of the stocks you own. You should own more of those stocks and sell all the rest.”

    Um, yeah. Just tell me which stocks–in advance!–are going to represent the bulk of my returns and I’ll be sure to buy only those. Good one.

    It’s a great way to think about the world, but don’t expect it to always work everywhere.

    Dan
    Casual Kitchen

    • Dan,
      I am very doubtful if Richard Koch’s “The 80/20 Principle” will work. In essence, he is advising you to sell low and buy high. If you’re evaluating stock, you’re 80/20 would be understand how to read a profit and loss statement to see if the stock is profitable, undervalued, low debt, etc. then buying the stock and holding it for many years.

      Most people don’t have the skills to evaluate stocks properly so it’s better to stick to Mutual Funds.

  21. My problem is that after reading things like this, I get super insanely excited to do something about and then 90 seconds later that feeling has passed. I am horrendously terrible at following up on information I read about. I should probably work on that, but I’m probably gonna go play playstation instead. :<

  22. Excellent summary and post Tyler.

    Another verification of my belief that many people make A LOT of money online, and most of us just don’t tell anyone.

    Tyler, tell us more about what you’re pulling in since you wrote this post. Are you too at $10,000+/month like many others highlighted?

    Cheers,

    Sam

    • Hey Sam – no, I’m nowhere near that. Granted, monetizing is not at all my focus at the moment. I’ll ramp that up over time, but for now I’m mostly concerned with building a community of awesome folks. :)

  23. Awesome post– I love all of your examples. You’ve encouraged me now to start guest posting after seeing your results.

  24. @Tyler – Cool. I’m interested in seeing you apply the 80/20 rule you write in this post and see if you can make the big bucks!

  25. I really like this post. I can’t believe you are able to highlight those. Your topic on 80/20 rule seems like so interesting but I have to admit it’s pretty long but that’s fine with me. In this case I guess prioritizing your responsibilities is the key other than anything. We can all earn more and work less if we know how to value our time and maximize every seconds of it. It’s not easy to do but if you get the right technique then you’ll probably indeed earn more and work less.

  26. Wow, incredible post Tyler!

    It looks like I need to dump about 80% of the crappy blogs I subscribe to and actually FOCUS my attention on things that help make more money (and more sense)!

    Thanks Ramit for introducing me to Tyler!

    Great stuff guys,

    - Josh

  27. I constantly do this at work. I’m in an entry level position and it’s my first job out of college. I’ve already gained the reputation for getting things done effectively and still have time during the day to read your posts and other entrepreneur blogs during work! I must say it works, because they are offering my 2nd raise in less one year being here at the company.

    This entry is very, very valuable. I am slowly trying to apply this on my goal to pursuing freelance on the side. You are very inspiring. Props for making a very complex idea understandable and attainable for all of us.

  28. But what about a job like mine? I work at a helpdesk (IT) that requires on to be “on call” for certain hours a day (and sometimes after-hours too. :c ).

    I feel really inefficient here, even when I push myself to try to get things done, sometimes the day drags on and I’m here when I could be somewhere else doing something productive/something I like.

    • Judy,
      could you look at what are the top 5 or top 10 most common questions and issues, and then either write up the answers or create a 1-minute video tutorial to help the end users? (not sure from your post if you are supporting internal customers or external.)

      K

  29. Dude, I’m blow away!

    I really liked this post. Reasons:

    1. I love the 80/20 rule. It helps me a ton make decisions
    2. I flipping learned something. So much fluff out there, this is the real shiznit!
    3. You’re a cool dude, and Ramit, Tim and Erica too.

  30. Very interesting post, Tyler. I can always use a reminder to focus on my work for a few hours rather than letting everything draw out to take up 8 hours

    It seems to me that your pie charts at the top of the post aren’t quite accurate, since results and efforts are two distinct entities rather than parts of a whole, i.e. 80% results and 20% efforts don’t add up to 100% of one thing. Try substituting a similar number for 80, say, 78% of results come from 20% of efforts and it becomes more evident that the principle doesn’t depend on the two numbers summing to 100. Thus a pie chart isn’t really appropriate here, unless I’m missing something.

  31. Thanks for the solid post!

    When I worked a corporate job, this kind of thinking helped me rise up the corporate latter quickly. I doubled my salary in less than 5 years. I focused on my bosses’ and the company’s goals and made sure that my goals were in line with it. I would take on projects that co-workers said they didn’t have time for. I would find the time by passing all the day-to-day work off to them.

    Here’s a great tip. I used these projects as an excuse to work for home. I would tell my boss that it requires additional focus and that the work environment was to distracting. Working from home allowed me to put my out of office reply on and send the everyday work to co-workers.

    Important… make sure that you are very clear with your boss what you are going to accomplish at home and get it done. This builds trust with your boss and shows that it’s very productively spent time so they will allow future work at home days. My most productive time is between 7 to 10 and I usually got more done in that time then I could in a whole day at work.

    In my 6 years with this company, I used this method to get four promotions and my raises were over 10% every year while my co-workers all enjoyed cost of living raises. I still remember getting an 18% one year and 25% the next and having my boss apologize that it’s so little and that I was worth more.

    BTW… if you are receiving cost of living raises, most likely they are telling you that everyone is getting one, but in fact, they probably are giving you less so that one of your co-worker can get alot more.

    Tim

  32. Tyler – I’ve used the 80/20 rule a lot in my work and writing etc, and never applied it to this ‘most important’ concept. Thanks for this, it is excellent!
    cheers
    Michael

  33. Thanks Tyler,
    I use something similar with my personal training clients. They come in asking about eliminating rice from their diet while still eating junk food and not exercising. It’s far easier to get results with a few small changes to your life style than with some complicated diet that you won’t follow for more than a month.
    Gal

  34. [...] 80/20 Rule I recently read an awesome post on the 80/20 rule. See it here: How to apply the 80/20 rule to earn more, work less, and dominate | I Will Teach You To Be Rich What struck me after reading it is how inefficient some of the goals I set for myself really are. [...]

  35. Great article. I just wanted to add that Sean Ogle didn’t get a “free vacation” – he was working while he was there. You said so yourself in the preceding paragraph.

    And for all Sean’s bluster about “location independence” and “entrepreneurship,” he ended back up exactly where he started: Portland, Oregon, working for someone else. He got a great vacation out of the deal, but he’s hardly a shining example of a successful way to live.

    • Kevin – Sean is my friend, so it’s hard for me to be impartial, but the point I was trying to make is that most people would love to experience extended travel, but assume that they can’t do it because they 1) couldn’t get the time off from work and 2) couldn’t afford to go without pay for so long.

      Sean found a way to get out of the job he hated, travel for 6 months, and work just enough to come home with the same amount of money he started with. Most people overlook that option or just aren’t willing to think outside the box and realize that vacationing can mean more than just sitting on a beach all day.

  36. Awesome post! Tyler, keep doing guest posts like this and you’ll get your loyal following.

  37. I think there is some sound advice in this article, and it’s definitely nice to read things like this once in a while to get some additional motivation and re-focus on important things. Having said that, there are some holes in some of these examples.

    For one, your friend that went on a 6-month’ vacation’. Doing something like this, i.e. moving somewhere and breaking even, is probably possible in many places, but seems fairly easy in less developed areas where everything is dirt cheap. While you get what some would consider a 6-month vacation with little actual money spent, what about all the opportunity cost that comes with it? It would be interesting to hear what your friend ended up doing upon his return, since there is an obvious gap in his employment history, and saying you did some part-time gigs in thailand may not carry much weight.

    In terms of your adventures, I’m curious how you get miles via credit card offers that don’t impact your credit score. It’s well known that applying for credit cards negatively impacts your credit history, via hard inquiries, and average time-length of credit. Granted these aren’t permanent but if you go on a rampage to get some miles you may be paying for it in the next 7 years if you apply for any type of loan.

    • It would be fairly easy to get miles and not impact your score if you did it the right way. First, in most cases, applying for one or two credit cards only dings your score a few points. You could pick one card with a good rewards program and go from there with very little and only temporary penalty.

      Second, having multiple cards that you’ve only had a short amount of time doesn’t hurt your credit much. As long as you have one “aged” card or credit line, your average time-length of credit won’t be affected by new cards.

      Also, Tyler suggested that people buy money and use the money purchased to pay the card off. You wouldn’t be “paying for it in the next 7 years” if you follwed his advice to PAY IT OFF. If you disregarded his advice, stopped paying your bill, and let that line of credit default and go into collection, then you would have jacked credit and have to wait out the 7 years for that to fall off of your history. This is valid and worthwhile advice, not a hole.

    • Granted, I wasn’t very clear, but the point wasn’t to accumulate CC debt, but rather the time it takes to nullify the affect it has on your credit score, assuming you close the account immediately after you receive the reward miles. This certainly is decent advice if you have no plans to apply for a loan, but saying that you can get “tons of miles for free flights through credit card offers without lowering my credit score”, is simply not true.

    • Hey Tom,

      There are all kinds of ways to do it wrong and get dinged and I’m not saying I have *all* the answers, but in my own case, I have two aged cards and have applied for and received five additional ones since beginning my mileage binge 4 months ago. I watch my credit pretty closely and in that same time frame, it has actually improved by 20 points.

      It will take a hit, I’m sure, when I cancel the ones that I no longer want, but the net result may actually be *positive.*

  38. Tyler this was a really great post! It’s something that we probably all think about in the back of our heads, but rarely take action on.

    I do have a question. You mentioned cutting out networking events in order to free up time because they don’t monetize well. If someone is just starting out do you think networking is still an important factor in the beginning for expanding their reach and meeting new contacts they could use in the future? I can see how if you’ve done it for a while its good to cut back. Usually you’ll run into the same people at many events. But what are your thoughts on avoiding it before you even get started?

    • Tyler, Ashley, perhaps you could refine the suggestion on cutting networking to apply Pareto to networking as well. Be selective and focused on the number of contacts you interact with and the new people you reach out to.

      I’d guess that like everything else, 20% of your network efforts generate 80% of your results, i.e. sales.

  39. @Tyler:

    Don’t get me wrong, I admire Sean for following his passion. I’m just saying that it a) wasn’t the huge gamble he made it out to be, and b) it wasn’t without consequences.

    a) It wasn’t a gamble because he had a lot of factors in his favor. He’s young, healthy, male (that’s a big one when travelling alone internationally), white, intelligent, speaks English, and is personable. A married, middle-aged mother with Chron’s disease taking the same trip would be a risk. For Sean, it was just a vacation.

    b) He may have broken even financially, but he’s lost valuable time in moving forward in his career and building retirement savings, which would have compounded into huge sums.

    I’m just saying rings a little hollow for someone so young, with so many factors in his favor, to be preaching to the rest of us about location independence and entrepreneurship, when he ended up back in Portland, depending on someone else for his income. All he did was take a 6 month vacation and blog about it. He’s definitely NOT “location independent,” and a few hundred bucks a month in AdSense revenue does not make one an “entrepreneur,” while he clocks in a 9-5 job for a real paycheck.

  40. KEvin, how do you know Sean is back at home “depending” on someone else? I can’t tell.

    I’ve had lots of 3 months vacations before traveling the world (i.e. summer vacation). But a nice 6 month vacation is sweet!

  41. [...] I Will Teach You To Be Rich: How to apply the 80/20 rule to earn more, work less, and dominate. [...]

  42. @Samurai:

    Your question is a great one. Sean’s blog is notoriously thin on financial details. However, after he returned from Asia, one of his posts alluded to full-time IT work he’s doing for an employer in Portland. He didn’t mention any names, or hint at how much money he’s making, or how many hours a week he’s working for them, but nevertheless, he did reveal that tiny tidbit.

    I don’t understand how someone who is so thin on financial details is able to retain so much credibility as an “entrepreneur” from his followers. The only explanation I can think of is that his followers are so few that they’re basically just his personal circle of friends in Portland. Reading the comments on his posts suggest it’s just a bunch of shallow back-patting, rather than any actual critical commentary.

    • I think you guys have made your point. Now it’s getting to be inside baseball. If you want to have a conversation about some third party, please take it offline.

  43. That was long but helpful.

  44. [...] How to apply the 80/20 rule to earn more, work less, and dominate – this is a really long post, but it explains the 80/20 principle really well and how to focus on what gives you the most return with the least effort. [...]

  45. Love this… How would this apply to a teacher?

  46. very nice tyler . . . . cut the fat, then farm out the rest. that process has worked wonders for me. i maintain two VAs, one for business and one for personal chores. today, my income from side gigging is double what i make at my most recently accepted corporate gig, which in itself is in the six figure range. very good and helpful post to remind folks to incorporate Pareto in their day to day lives

  47. @Kevin – Sean is a good guy who is living it up. He may not be “successful” in the monetary sense, but at least he’s taking risks and making sure he has no regrets.

    Tyler has done a good job describing his feelings as well, even though he’s not killing it online and is still young. He’s sharing what he know and feels is right.

    The point is, we are all heroes in the online world and we all have the ability to say what we want and share a story. The best communicator wins.

    Sam
    The Yakezie

  48. I glad to see your gave Pareto his due. So many people throw out the 80/20 rule and have now idea of its history or actual principles.

    Brad Tanner
    Cloud Source Network
    You Exercise! Get Sponsored.

  49. [...] How to apply the 80/20 rule to earn more, work less, and dominate There is a completely different 80-20 rule out there, also called Pareto’s Principle, that has been around a lot longer than Google, believe it or not, and in this article, the author describes how you can take advantage of that principle to spend less time doing more effective work . [I Will Teach You To Be Rich] [...]

  50. Getting a little irritated by the constant “Join the free newsletter to get rich” popups.

    • Once you sign up or click “Cancel,” you are cookie’d so it doesn’t show up. If your cookies are off, it may keep showing up.

  51. Awesome post! It’s great to get some perspective on what can sometimes become drudgery. By taking a step back and looking at the important things one can really make huge strides. I, unfortunately, still get stuck in minutiae!

  52. Great advice! This couldn’t come at a better time. My husband and I work long hours running our own letterpress paper goods company, and we’re about to have our first baby. I’ll be putting the 80/20 concept to work as well as I can.

  53. [...] she invested — and where she cut corners (and still does, to this [...]

  54. [...] Find those 20% and pound them home. [For a more in-depth discussion of the Pareto Principle, see this guest post over on I Will Teach You To Be [...]

  55. Hi Tyler! This post is fabulous! I think I’m going to print it out and post it by my desk! Can you post a link to Jamie’s website or something though? I’m really really curious about her coaching business since I’m training in that field now.

    Thanks again! Great Job!

  56. Yeah, that was a dumb mistake on my part. You can find Jamie’s coaching website at http://idaka.com/

  57. Great post Tyler. Good reminder on the 80/20 rule. I’m starting a new membership site and will keep that in mind as I build it and my list… to focus on what really gets the best results.

  58. Great story Tyler. I am a huge believer in the 80/20 rule. Working less and earning more is a principle that should be taught in business schools across the country/

  59. Great article and some great ideas. I work for the federal government, so the strategies that might work for a corporate environment often do not translate over, since many government employees in the same field have the same starting salary and regularly scheduled promotions. Also, there is little to no support for flexible work schedules or working from home– in fact, there is a huge emphasis on “putting in all your hours” and “being at your desk” to prove it (which is funny, since many of my coworkers tend to apply the 80/20 rule in this way: work 20% of the time, do personal crap on the job 80% of the time). Hence, no real “free time” is gained when applying the principles beyond what one can reasonably accomplish while pretending to do “real” work (albeit, taking care of your personal finances and taking online classes is one method). Any advice for that kind of application?

    Recently, I moved over to a lab environment, which carries another caveat for this idea. We spend an inordinate amount of time aligning optics or ordering and then installing parts, taking data (entailing babysitting entire systems as data is collected to make sure nothing breaks)… basically, a lot of dead time. Any advice for this type of environment?

    In short, it seems this concept works well for corporate environs and those who work from home or own their own business, but for those who work for the man or for a service-oriented company (like electricians or plumbers) this may not apply. I’d be interested in learning about how you would apply it in those scenarios.

  60. great information… but why is it all about sticking it to your friends all the time? do you just not like your friends or something… as i succeed i like to see them succeed too

  61. [...] Doing this kind of purge on a regular basis is an excellent way to slowly optimize your life. [...]

  62. Hi–I loved reading this article. I have 1 question. I’m a nurse, what gives? How do you work less when you are on a scheduled shift? I’m in school for my masters degree to be a Nurse Practitioner, but I’m trying to understand how you would apply this to the healthcare field, if at all. Thanks! :)

  63. Emily poses some good questions. I’m in a similar situation. When I’ve completed all my work and then some -but am still required to put in the hours for optics reasons- I use the time to brainstorm new actionable ideas for revenue generation, personal growth, or other interests. When your in a situation that doesn’t reward performance more than clock-punching regularity, you ultimately will have to move on to something else. Use the spare time to figure out that might be.

  64. Awesome. I would LOVE to hear more about setting up the travel. Side note: the beginning pie charts and the sweet spot graph don’t work. Love the graphs in the middle though.

  65. Good post, but I’m not sure how these concepts can be effectively applied to many corporate jobs like mine. I’ve worked at the headquarters of a major retailer and as an IT consultant, and in both of those jobs I’ve been required by corporate policy (not the whim of my boss) to work a standard 40 hour week (on site). If I cut the crap and get everything important done in 20% of the time, I either end up with 30+ hours of being forced to stay at the office with nothing to do or more work on my plate to fill the void. Additionally, there are yearly raises (within a fixed range) and set promotion schedules. Basically, this means my increased productivity can only earn me a slightly larger promotion and/or a slightly accelerated promotion (maybe 2 years instead of 3 years). I’m guessing that most jobs aren’t this regimented, but do you have any advice for someone like me or someone in a similar situation?