Don’t Be A Lifestyle Slave and You Will Be Much Happier

Being fully present while observing this beautiful sunset doesn’t cost a penny. Image courtesy of Jean-Marc Buytaert

The Matrix was an amazing movie. Yes, the entertainment value was excellent. But what really made it special was the way the concept got people thinking. It can apply to so, so many areas of life. The Red Pill community has literally based its name on the movie, and with good reason. The concept of unplugging oneself from an entire system of intentional, insidious deception, whether living in an entirely virtual world, as in The Matrix, or in a feminine dominated reality that is blindly accepted by almost everyone in our society, is powerful. Today I want to challenge you to do it with the supposed connection between consumption and happiness. And what better time than just before Christmas?

Look around you. Everywhere you go, someone is trying to convince you to spend your Christmas dollars with them. And everywhere you look, someone is rewarding that effort by doing just that. There are literally people taking out loans or loading up their credit cards because of the social pressure they feel to participate in this annual spending orgy. And these poor decisions aren’t just being made on an individual basis; to the contrary, this is a movement of self destruction that has a nearly religious fervor.

Don’t get me wrong. As a member of society with family, friends, etc, I participate in all of this to some degree. It is definitely possible to derive joy from the act of giving. But my giving is entirely grounded in my ability to do so. If I were living paycheck to paycheck, struggling to pay down a mountain of student loan debt, unemployed, or in any other form of financial difficulty, you can bet my efforts would be focused on putting out that fire. I happily give out gifts at this and other times of the year solely because I have excess available to dedicate to that purpose.

But save for a short, unfulfilling period of my early twenties, I have never completely subscribed to the “buying more crap will make me happy” mentality we see all around us. Bigger houses to fill with more and fancier furniture, more expensive vehicles, stuff galore, it doesn’t matter. The theme permeates everything. More is better. But there’s just one little problem. It isn’t. In fact, quite the opposite has been true for me. And I don’t believe I’m alone in that.  

I lived a relatively simple life before I moved from Wisconsin to Texas. My commercial quality home gym was by far my most prized set of possessions. But I still had to get rid of over a thousand square feet worth of stuff before I could move because I had decided to live in a nice, but small apartment while I got acclimated to my new home. Every item I had accumulated over the years was something I had just had to have when I originally bought it. And most of them had seemed too important to get rid of at any point before that. But when suddenly forced to get rid of all but a small, carefully chosen selection of my earthly possessions and move into a much smaller space, a funny thing happened. I felt better.

Today, I have almost no desire to buy or rent a larger home in spite of the fact that I could easily afford to do so. In fact, the mere thought of doing so stresses me out. If I bought a house and suddenly had more space, I would almost certainly fill it with similarly pointless possessions to the ones I had previously thought I wanted, but had felt liberated by getting rid of.

Now let’s look at the other side of this equation. By avoiding being one of the many people whose very life embodies an obsession with the word “more,” I’m able to save and invest over half my income. This has given me something intangible that no “stuff” could: peace. For example, my industry is currently in a deep, ugly recession that has destroyed jobs, businesses, and even lives. And at the moment, no end is in sight. But I have over a year’s worth of living expenses in cash alone and much, much more in other forms.

Is a man like me likely to be unemployed for an entire year? No. Unemployment is extremely low and I’m a high achiever. And besides, already growing very weary of the sucking dick for money that is most W2 employment, over the last year, I’ve already taken the initiative of starting three businesses. One was a fairly quick failure but another has been a modest success so far and will likely continue to be that at a minimum. And I believe the third, and latest one, has a strong possibility of not just paying my expenses, but replacing most, or even all, of my current income by the end of 2020. So in the midst of relentless job attrition in my industry, and even within the smaller world of my employer, I sleep great at night. In fact, if I were offered any sort of reasonable buyout today, or forced to take one, as is the more likely scenario, I would gladly take it. I’m confident that between my currently small, but rapidly growing business income, my investment income, my cash, and if all else fails, getting another job, I will be just fine. To me, that is worth more than almost any possession I could possibly have.

But this isn’t just because I’m good at making money. It’s also because I keep my expenses reasonable, thus setting myself a low bar to clear. With the combination of the two of them, I’ve set myself free from the shackles that keep most people trapped in enormously stressful lives that are so far from ones they would truly love. And you could do the exact same thing. But it would probably require challenging some assumptions you’ve been programmed to believe – like “more is better” or that any worthwhile people might love you less if you don’t give them the right gifts.

So this Christmas, why not enjoy some time with the people you love while also being thankful for free will? Why not use that free will to start questioning your expenses one after another – are they really making you happy in a way that you wouldn’t be without them? Are they really worth more than the step closer to freedom that money could be instead? It’s your life. You have every right to live it the best way you can find. What a tragedy it would be to spend the entire thing as a plugged in consuming machine without ever even trying anything else.

How Much of Your Life Will You Spend Working for Free?

Someone paid an awful lot in taxes en route to buying this beauty!

The FIRE movement is everywhere these days and at times it seems like every possible related topic has been covered. But somehow, I haven’t seen a lot of discussion of the topic I want to cover today. As a finance guy, I’m all too familiar with how taxes work. When I was younger, that was one of the reasons I wasn’t too keen on getting a high paying, high commitment job – although I eventually found myself in one anyway. What my younger self saw, and what will ultimately lead to my much earlier than average exit from such a situation, is that there is a diminishing return effect. And that is especially true when you consider that in most cases, making more money requires working more hours. Those hours are literally the building blocks that make up our lives.

The more you make, the more of your money is taken away. It can seem fairly innocuous when you’re working forty hours a week and making an income somewhere in the average realm. In fact, all things considered, many people are breaking even or even getting more than they put in to begin with. But someone has to pay the bills, and if you’re working closer to eighty hours a week and making six figures (or more), that someone is you. For some folks, the reality is that when all taxes are considered, about half the money they earn is gone before they ever see it. So in another way of looking at the situation, they’re working twice as much, but only being paid for half the time.

Why would anyone take that deal? Sure, some people are workaholics. Some truly love what they’re doing to such an extent that they would be doing it even if it paid nothing. But for the vast majority of us, we do it because we want the money because we have expensive lifestyles to pay for. But what good is an expensive lifestyle if you’re spending well over half your waking hours working? What good is it if you don’t even get paid for a lot of those hours when all is said and done?

The cheaper your lifestyle, the less you have to work for free. Let’s say you only spend about $20k a year, as my ex-wife and I did when we were first out of school and clinging to the student lifestyle for a little longer so we could pay off our student loans quickly. If all you needed was $20k a year, you could work a job paying just a little more than that and live very nearly tax free (actually, you would almost certainly be getting back more than you paid in). In another way of speaking, your income efficiency would be at or around 100%. If you could tolerate that lifestyle, there would be an incredible upside in terms of having to invest very little in it. But now let’s say you spend $50k a year, which is actually still below average for United States households I believe. There’s no way you’re going to make that much without paying taxes. So your income efficiency goes down and your lifestyle costs you more of your life. And the trend continues until you’re well into the six figures and your income efficiency gets to be as low as roughly 50%. It can go even lower than that in places like California. And lifestyles tend to be a tad expensive there too, so it’s no surprise that those people are fleeing to Texas in droves.

It pays to keep your lifestyle expenses as under control as possible – quite literally. And remember, to the extent that more money correlates to more hours worked, you are literally paying for your lifestyle by working more hours (in other words, giving away part of your life) for free. This brings me back to the title of the post. How much of your life will you spend working for free? The foundation of the answer is in the cost of your lifestyle.

So next time you’re considering spending money on something, you may want to try framing the question this way. Would this purchase bring enough value into my life to compensate me for spending even more of it working for free than I am now? In some cases, the answer is going to be yes. Most of us have decided that being able to drive where we want, when we want, in a safe and reliable vehicle, is worth it. But you have to decide where to draw the line. Most of us aren’t driving Ferraris, for example. Today my suggestion is that you take the portion of your life you are literally giving away into account as you make these decisions. You only get so many hours before your time is up.

Happy Friday! An Update on My Situation

A view from the cockpit of the venerable Cessna 172 – a plane countless pilots have gotten their start in

Happy Friday, folks! As most of you probably know, employers often do their firing on Fridays. Recently, mine followed that same philosophy, firing over twenty percent of our sales force and some office employees as well. We all knew it was coming; or at least we should have. There were ample signals from management in both words and actions. And even if there hadn’t been, it’s common knowledge that revenue in most of our industry collapsed late last year and has not improved ever since and our “numbers” have reflected that. Simply put, it wasn’t if, but when. But here comes the plot twist. In spite of almost certainly having been “on the list” at one time, yours truly not only survived, but wasn’t the slightest bit concerned about whether he would. There are two reasons for this.

First, since being personally warned that attrition was coming, I’ve been able to produce literally the best numbers of my young career in spite of the state of the market. I’ve gone from somewhere in the lower middle of our division to one of the company’s top performers in the entire world. How did I do it? Sure, I started pushing myself a little harder. But mostly, I kept doing exactly the same thing. I had always been working diligently to develop my new territory – even when the results weren’t reflecting it. It takes about two years to do that successfully and my employer is well aware of that. Had management pulled the plug early, they would have been making an extraordinarily expensive mistake. But economic stress often forces companies to make decisions from a very short term perspective. Luckily for all involved, my territory has absolutely exploded with production over the last couple of months to the point where the mere notion of me being fired would be absurd. At this point, it’s all I can do to keep up with the business I have. If the market recovers even a little bit, look out.

But there is another, more important reason for my lack of trepidation over my job – I don’t need it anymore. The minute my boss broke the news to me, the wheels in my head were already turning. He did me a solid by giving me a warning. But nonetheless, before the conversation was even over, I had mapped out my plan. A key part of it was to replace employment income altogether in my life. I have always harbored a healthy hatred of authority; and alliteration aside, I don’t take that word choice lightly. After spending my life watching reliance on employers result in devastating consequences for so many people and finally having it threaten me as well, it was time to act. My real estate business was only in its early stages at the time. But no matter. I decided it would be paying all of my expenses by the end of the year and began ramping it up aggressively. And today, it appears that goal is going to be accomplished ahead of schedule. Admittedly, the fact that I keep my expenses low means that wasn’t as high a bar to clear as it may sound like. But still, success is sweet.

Make no mistake, I still want my employment income. I want to see my real estate business cover the bills and then some for at least a year or two before I take the plunge. So the plan is to kick ass in both areas for the time being and see where it takes me. However, to commemorate the occasion, I must admit I’ve adopted a rather expensive new hobby – flying. This is the first thing in my life I can think of that I’ve done without any plan or goal in mind, but instead, simply because I enjoy it. I am taking lessons and hope to have my private pilot’s license by around the end of this year. From there, we’ll see what happens. As long as I’m enjoying myself, I’m happy. But if I can’t keep an awful lot of money flowing in, I won’t be able to afford to fly as much. So that should keep me hungry for a while.

The moral of the story? Believe in yourself. If someone doubts you, be thankful. It’s just more fuel for your fire. If you know you have a good hand and someone bets against you, be happy. The size of your payday just increased. And if times get tough in your life, get excited. This rough patch may be exactly what you needed to convince you to take things to the next level. Happy Friday, folks! Have a wonderful weekend!

Living Intentionally: A Much Better Alternative to Both Financial Ruin AND Frugality

These are shrimp boats, but any boat would be more effective than a car in Houston right now! – Image courtesy of Jean-Marc Buytaert

I wasn’t always where I am now with money. As a newly minted adult with a full time income that seemed substantial at the time, I thought the world was my oyster. I had zero respect for the value of the dollars in my possession. If I saw something I wanted, even a little bit, I bought first and asked questions later. If my friends and I were bored, dinner and/or drinks would solve the problem – maybe with a movie or a round of golf thrown in for good measure. And if I had a bad day, setting some money on fire for any reason, or even no reason at all, seemed to ease the pain. I probably wasted tens of thousands of dollars on almost literally nothing productive in just a year or two. Had I continued along that path, my financial life would be an unmitigated disaster today and I would have been part of the multitude of people who are woefully unprepared to retire in spite of living in the richest country in the history of the world.

Of course, this wasn’t healthy behavior and after I realized I had been working for a few years and had virtually nothing to show for it aside from some stuff that was mostly worth pennies on the dollar I had paid for it, I wised up pretty quickly. But as a relatively wealthy, still young adult, I’ve noticed that most people seem to have either missed that lesson or skipped it intentionally. Maybe they weren’t blessed (seriously) with the harsh reality of financial scarcity when they were kids like I was. Maybe they simply can’t bear to admit the truth about what they’re doing to themselves. Or maybe they simply prefer the bird in the hand of doing what is easy today to a much more prosperous future that isn’t 100% guaranteed, even if it is extremely likely. I really like the way my new Houston real estate mogul friend explained the concept in this post.

Whatever the reason, I see people driving their financial cars with the e-brake on almost everywhere I look. I’ve long since learned not to be “that guy” so I neither give unsolicited advice, nor ask any questions that might lead anyone to the unpleasant experience of looking in the figurative mirror. In my experience, if people want help, they ask for it and if they don’t ask for it, they don’t want it. But I often have to stifle a strong urge to try to help people anyway when I see them destroying their financial futures because I know how much pain it will cause them in the long run.

Don’t get me wrong; I don’t consider myself even remotely frugal and I hate everything about the term. There are very few aspects of my life where I’ve chosen to spend the absolute minimum possible, or even close. I live in a luxury apartment that costs more than double what a bare bones living arrangement would. My car has leather seats, almost 300 horsepower, more electronics than the spacecraft that took the first astronauts to the moon, flashy 18 inch rims, and so much more; and I’m probably going to make a huge upgrade from that in the next year or two. I eat and drink what I want, when I want, where I want. If I wanted to take a vacation, there would be no practical limits to where I could go or what I could do and given how difficult it is to find the time, I wouldn’t be likely to waste the opportunity by going cheap. I could go on and on but the point is that I’m in no way deprived of anything I could imagine wanting in life.

So how am I different than my young adult self in the way I handle my money then? Aside from having tons more at my disposal, everything I do is intentional. Spending money is a means of accomplishing some specific purpose – not a pastime or a figurative drug I use to tamp down unpleasant emotions. If I get the notion to spend money, I think about it first. Is it necessary? If not, it’s a want, not a need. If it’s a want, is it something that will truly contribute to my life in a positive and meaningful way? If so, what, exactly, is my goal in spending this money? What is the best way to accomplish it? What is the most cost effective way? Where does it make sense to be on that spectrum in this particular context (between maximum utility and maximum cost efficiency)? Sometimes, I buy the best. Other times, I go with the cheapest option that accomplishes everything I want it to. On very, very rare occasions, I go with the absolute cheapest option. The important thing is that if I’m spending money, I know why I’m doing it and why I’m making the specific choices I am about it. And the good news is that while it may have seemed tedious when I was starting out, over time, this thought process has become almost automatic for me.

This may sound pretty obvious and to some of you, it probably is. But there are tons of people out there who seem to have no clue why they’re making the financial decisions they are. And there are tons of people who are totally broke. And both groups are large enough that there is almost definitely substantial overlap between the two. For anyone who resides in both, you need to make some dramatic changes if you want to improve the situation. Being intentional with your financial decisions, both large and small, will almost definitely help. Not only will your finances improve, but you will probably find yourself feeling calmer and happier. Have a wonderful weekend, everyone! And if you’re in Houston, hopefully you either have a boat or know someone who does – because that’s what it’s going to take to get very far down the road pretty soon if this rain doesn’t let up.

The Most Important Blog Post I’ve Ever Read

Proximity to this beautiful lake is just one of many things I love about my new home – and no, I was not there on the frigid Sunday I describe below.

This weekend I opted to get everything that required leaving home done on Saturday since Sunday was going to be unacceptably cold (a high of fifty fucking eight degrees). That is literally below Houston’s average January high and it was March 31. Since moving here, my tolerance for temperatures below eighty has gone from very low to nonexistent. The lifers bitch about summer constantly while I wish it lasted all year and wonder how much further south I would have to eventually migrate to make that a reality. So anyway, to register my outrage with the universe, I did not leave the comfort of my apartment on Sunday and yes, the heat was on. Utilities are incredibly cheap here and that means temperature is not a required area of compromise. So how did I spend my Sunday? I did the kind of office work I hate doing when the weather is good and I also spent some time being purposefully lazy. I think it’s important to experience that novelty every now and again.

As part of this process, I read some now vintage Mr Money Mustache posts. If you’re reading this and you aren’t familiar with Mr Money Mustache, please stop reading this, drop whatever you were planning on doing for the next three months, and go learn from the absolute best. As a guy blogging about finance in 2019, I’m benefitting from “standing on the shoulders of giants” and triple M is undisputedly the biggest and best there has ever been. If finance bloggers were musicians, he would be the first guy who started hitting sticks together in rhythm because something about the sound intrigued him, proceeded to design and build tons of instruments, and somehow also became both Mozart and Beethoven. The man is a living legend in finance blogging because he both created and perfected it. He doesn’t post as much as he used to but his past posts amount to more than enough to take anyone from zero to hero with their finances.

As I worked my way through these now classic posts, I happened upon this one. MMM has a way of cutting through the bullshit details that will trip some people up and distilling a concept down to the absolute essence necessary to get the ball rolling. And in this post, he pretty much does that with all of personal finance. As I read through it again, I thought about my own financial history. I’ve worked hard, made mostly good decisions, fought through some significant setbacks, and benefited from many examples of good fortune along the way to reaching a roughly 70% savings rate using MMM’s methodology. Barring a collapse of almost biblical proportions, I will a financially independent millionaire by 40 and consider myself incredibly blessed. But still, I couldn’t help but marvel at how much better I could have done. My biggest failure was waiting until my late twenties before I started doing things the right way. Had I reached the 70% savings rate in my early twenties, I could have already been financially independent for a while now instead of half a decade away. Had I read this epic post when I was younger, my life may have actually transpired that way.

That’s when I realized something; if you could only read one financial blog post, this one should be the one you choose. No, it doesn’t go into detail on how to achieve a high savings rate. But that simply requires re-evaluating your expenses one by one, making small but key changes, and continually working on increasing your income in the background. It’s one of those monumental tasks that forces you to focus on one small, easy step at a time until you suddenly look up and realize you’ve climbed a figurative mountain. However, this post does something far more important than to show you the steps; it lights the fire of motivation that will get you in the game, keep you there, and keep you aware of how you’re progressing. In one very simple metric, it sums up your entire financial life and then visualizes it on both a graph and a chart.

So if you want to do one thing today that will have an enormous impact on your finances, read the post I linked to above and then spend some time thinking about it. Start working on calculating your expense numbers. It probably won’t be as easy as in MMM’s case since just like his posts, simplicity seems to be a high priority in his financial life. But once you’ve done it, it will be much easier to do again. And more importantly, I can almost guarantee you will have at least one insight in the process that will cause you to dramatically alter what you are doing and save tons of money in the long run. So if the weather spits in your face some day as it did on Sunday in Houston, I recommend turning it into a huge win by checking out the best financial blog post of all time.  

My FIRE Problem and Why It Doesn’t Matter – At Least Not Right Now

Something is definitely on fire in the distance; picture taken at the battle site of Sabine Pass

More and more folks have likely heard of the FIRE movement. Lately it seems to be a popular target for potshots from mainstream media personal finance hacks who want the average person to keep reading their recycled bullshit advice and fueling their viewer/reader numbers without ever being able to graduate to something better. And FIRE advocates have “fired” right back. Sorry, it had to be done. FIRE stands for Financial Independence Retire Early. You might be surprised to learn that I am not 100% on board. I had been at one time. But my perspective has evolved a little over the last few years.

I love the FI in FIRE. In the richest society in the history of the world, we can all aspire to be financially independent if it is a high enough priority. Sadly, it will never happen for most people because shiny objects, slick sales pitches, lifestyles they feel obligated to live or provide, neighbors that have to be kept up with, etc, always seem to be more important. But for anyone who ever wishes he could say no at work with zero fear of potential consequences, financial independence would make it possible. For anyone who wants to go on vacation without planning it months in advance or having money be a limiting factor, same thing. I could keep going but I think you get the idea. There is nothing you can buy on this planet that is quite as satisfying as knowing you will never again have to make a decision based on such a crass factor as money. Or put another way, if you can think about money for long enough, you can reach the point where you never need to again. The FIRE movement is mostly about reaching that day as soon as possible so you can enjoy the rest of them more.

I think most people can agree that financial independence is a worthwhile goal. But many seem to object to the RE part. There is even a lot of disagreement about the exact definition of the term. Some FIRE detractors say it’s cheating if you work in any way, shape, or form after retiring early. Others say it’s not worth “living like you’re poor” your whole life just so you can retire at a young age. My take is that the term can be useful to anyone regardless of exactly how you choose to define it. If it makes sense, you can think of it as “retiring” from money being the most important factor in what you do – or a factor at all, for that matter. I would also say that your living standard is your choice and no one else’s. If you are happy and you aren’t hurting anyone, tell them to go pound sand. The FIRE community welcomes people all along the spectrum, from one extremely disciplined, analytical blogger who lives on about $7k a year all the way to another rather neurotic one (I mean that with love, Sam – and yes, it takes one to know one!) who seems to fear that even the $200k+ his investments earn annually, combined with his incredible intellect, might somehow not be quite enough.

Bottom line, FIRE can be whatever you want it to be. Unlike with religion, where it could be considered a little hypocritical to be on the ala carte plan, this is a very open and welcoming school of thought. Take what you like and use it to make your life better; ignore what you don’t. I enjoy hanging out with a local FIRE group and some of them take frugal to a level I would never want to approach. Others seem to live higher on the hog than a man of my humble origins is likely to ever want to – although I reserve the right to change my mind on that point. It doesn’t matter. Everyone brings something to the table and everyone benefits from both building relationships with similar minded people and from being exposed to a wide range of ideas and insights.

What is my personal FIRE struggle? At some point in your life, a guidance counselor probably asked you what you would do if money didn’t matter at all. That’s it for me, right there. Unless I veer pretty far from my current path, I’ll reach financial independence in the next five to ten years but I have absolutely no fucking clue what to do with my life when I get there. My job has its tough moments but it is also incredibly rewarding on many levels. Should I keep doing it and simply start finding ways to spend more money? I suppose a mansion or two, a garage full of high end vehicles, or any number of possible luxuries might grow on me. Or if I didn’t want to spend the unstoppable excess on myself, I could give it to causes I care about. Altruistic or not, that could be a great way to maximize the financial value of my life and put that value into whatever I want to impact most. After all, the argument could be made that if you can make a lot of money and benefit humanity in some way in the process, you should. Or maybe I should tell the boss I’m retiring when I’m roughly twenty years his junior and still younger than the vast majority of people who do my job in any territory, or at any company for that matter. I don’t hate the man by a long shot but something inside me wants to correct him and say “no, I’m not resigning; I’m retiring” and demand a gold watch, or at least a cake. And of course, there are a few choice people within the company who I would absolutely love to see turn some shade of green at my party.

But what would I do then? Sure, this is a good problem to have and I am immensely grateful for it. But that doesn’t make it any easier. Sometimes it feels like a personal failing that I have a difficult time deciding on a way to spend roughly half of my life without money being a factor. Sure, I could go lay on a beach and drink beer somewhere or I could travel the world and see all kinds of amazing things. But I have a feeling I would get bored pretty quickly. And I’m not alone. Studies regularly show that this can be a problem for lots of people – even at more traditional retirement ages. One’s sense of purpose tends to get a little wrapped up in something if you spend half your waking hours doing it year after year. And I think that’s to be expected. If I had to guess, I’d say that there are probably a lot more mes out there than there are Elon Musks. And a sense of purpose is an enormous part of what makes life worth living, no matter who you are.

So I wrestle with that problem all the time and until I get it figured out, I’d be lying if I said I don’t use it as an excuse to justify the occasional large expense. After all, there’s no sense rushing to get to a destination if you don’t know if you will like what you find when you get there. This was a lot easier when I was in love with someone and genuinely wanted to spend the rest of my life with her, no matter what we were doing. Even if I meet someone who means just as much to me somewhere down the line, I don’t think I can ever put that much stock in another human being again – and that’s a good thing. But it’s only one more thing I’ve realized does not answer what will probably ultimately be the most important question of my existence.

But all that said, my general financial philosophy is currently that as long as I stay on the path to be financially independent by 40 at the latest, I doubt it will lead anywhere bad. I consider staying open minded, especially about trying new things, to be a crucial investment in my future. My advice to anyone else is really about the same. I’ll end this post with an excellent quote from Martin Luther King, Jr: “You don’t have to see the whole staircase, just take the first step.”