It’s that time of year when we try to show the people in our lives how much they mean to us by buying them gifts we think they would like. Normally that would have a great feeling associated with it, but for some, it is a stressful time of the year. As much as they love their family, and are thankful for their friends, and want to let them know how much they mean to them, the thought of spending money they just don’t have is a great source of stress.
I feel for these people because I have been there myself. Living month to month, paycheck to paycheck does not work when large unplanned expenses come up, and if you are a late gift getter like me, the Christmas season comes up faster than we ever plan. When this would happen, I would find myself wondering which bill I can put off in order to afford the gifts I wanted to buy, or checking to see which credit card was not maxed out.
But that was when I was broke. Things are different for me now. Now I can think of the gift I want to send someone, find it, buy it, and send it. All without checking my bank balance because I know I have enough. And no credit card required because I’ve learned to live within my means. No more paying off last year’s Christmas gifts this year for me.
I wish I could say this was my key motivation for wanting to get out of debt and save for a rainy day, but the truth is it never crossed my mind. Yes there, I admit it. When it came to saving, it was all about me, me, and me. But I am happy to see a side effect of saving has been to create a situation where I can gladly get gifts for those in my life who mean a lot to me and who I want to let know I’m thinking of them.
If you are currently closer to my former self and the gift-giving season is a source of stress for you, take comfort in that old saying that it is the thought that counts. This may not work as well for younger gift receivers, they want what they want (don’t worry they will understand in time), but for our adult friends and family members normally it does. I know Dave Ramsey has a scorched earth policy of no gift-giving until all debts are paid off, but I guess this is another area I disagree with him on. Going the five to ten years required to pay off all of your debts without sending anyone in your life a gift might lead others to believe you just don’t care about them, and once such feelings are created they are hard to reverse. Even a nice Christmas card with a $25 gift card to someone’s favorite store will at least let them know you thought of them during the holiday season, and for most people that is enough. That is a small price to pay to maintain healthy relationships in your life. And maybe, for now, you have to limit it to your immediate family and have to hold off on including friends and others on your gift-givers list, but it’s only for a time and in a few years when all your debts are paid off, it will feel so good to get to include them too.
So, don’t worry. Be merry. As in Merry Christmas. Be honest with yourself about how much you can wisely afford to spend this Christmas gift-giving season, and then put together a list of the people you know you need to include on your list, like your spouse and children, and get each the best gift you can afford to give this year, and if you have a little left over, gift cards and boxes of chocolates for the rest. Before you know it your financial situation will improve, and you will enjoy seeing the amount you can afford to spend and the number of people on your list grow. And you will give yourself the best gift of all, the gift of giving itself.
There is a piece of paper hanging on my refrigerator’s door. It has two columns crudely drawn on it. At the top of the columns are the titles of “Date” and “Amount”. The first date seen on this piece of paper is 1/1/14, and the first number next to it in the Amount column is a big fat Zero.
Seven years ago today, something prompted me to take a blank piece of paper, the kind you find in printers, and to make a heading for the date and another heading for the amount I currently had saved and to put it on my frig. I might have had a few hundred in my bank account, but to be conservative, I started things at zero. And from that date until now, I have gone from having zero savings to having saved over $100K.
I decided on a set of goals. First, I decided I would save $1000, and second that I would then set the goal of doubling my savings on a yearly basis. This piece of paper would be my score card where I would record the date at which I achieved each of these goals. I wrote in the amounts $1000, $2000, $4000, etc. all the way to the final goal of a million. I even wrote on the page my goal date to reach a million in savings, 1/1/24. I picked that date based on the fact that if you double $1000 ten times you reach a million. I did not know that at the time and found that fact empowering. Something about knowing that has driven me forward. It no longer feels like an endless journey. It feels more like a marathon. Sure its a long way to run, but it is a finite distance and you can take it one mile at a time.
If I had to pick one reason why this has helped me, I would have to say it was the fact that I decided to set the goal of doubling my savings versus a percentage or a set amount. Something about the goal of doubling triggered something inside me that had not otherwise been turned on. Doubling feels like a step change. 10% or a given amount feels random or insignificant and did not have the same effect for me.
The beautiful part of the goal of doubling your savings is it doesn’t really matter what you set as your initial amount to save and then double. I tested this by creating a spreadsheet where I had several columns with different starting amounts of $20, $50, $100, $500, and $1000. And believe it or not, there is only a difference of about 5 or so years in how long it takes to reach a million. I would encourage you to do this exercise yourself. Seeing is believing.
I can’t say what exactly prompted me to I started my journey to financial recovery and to pick 1/1/2014 as the date that I officially started recording it. Maybe it was a New Year’s resolution. I wish I could say it was a very well organized plan I launched into action on that date. The truth is it was just a series of separate events that occurred slightly before then. I guess you could say I had reached the point where I was simply sick and tired of being broke.
I still have debts, but my financial situation is far better than it was. I use to check my balance constantly to make sure it was not approaching zero. Now I don’t check it before paying my rent because I know there is enough to cover it. And with the current issues we are all going through, and the effect it has had on our economy, the concern of not having a job comes to mind, but I no longer have to wonder how I would get by if that were to happen. I now know the answer to that question. I can’t tell you how good that feels having spent so many years of my adult life living paycheck to paycheck.
There have been ups and downs. The dates between some entries are noticeably further apart than others. But on the average I have approximately doubled my savings on a yearly basis, something I would have thought was impossible. I still find it hard to believe. I sometimes make myself take a moment and just slowly read through the entries noting the dates and amounts and the increase year over year as a way of proving to myself that I did it. I actually went from Zero in savings on 1/1/2014 to having $100K in savings on 1/1/2021.
I still have a long way to go. Still have to pay off my student loan. Still need to save up for a down payment so I can afford at some point to stop renting. Still have some credit cards balances to pay off. But my current situation is orders of magnitude better than it was on 1/1/2014, and I can honestly say I have the simple piece of paper shown below to thank for that.
Edit [9/4/2021] – A few months later I was able to reach the next goal of $128K on my sheet and wanted to add a follow-up picture showing that along with the original posted above:
So what are you waiting for? Get yourself a piece of paper, a pen, a refrigerator magnet, and start your march to a million. It’s double or nothing from now on. You can do it!
Note: In the picture there is a note about including available credit. I did that at the time to encourage myself to pay down my credit cards. I currently have enough that I could pay off my credit cards and still be above 100K in savings.
When I was a kid, my buddies and I would get together and ride our bikes all the way across our neighborhood to the big church. And after playing around in the parking lot for a while, we’d take a break and step inside where there was a coke machine. We’d pull a quarter out of our pockets and buy an ice cold coke or sprint. Other times we would take the adventure to the next level and go further up the street and across a main road (hope my mother is not reading this) and go to the small grocery store and buy not only a coke but some candy to go with it. After finishing it we would fly back home on a sugar fueled power high, pedaling as fast as we could. If we had the money to buy that coke and candy we were rich, if not we felt poor. Back then, that was our definition of enough.
In high school I had a part time job working at Radio Shack. Back then in 1987 the minimum wage was around $4. (Somewhere there is a millennial reading this thinking to themselves “I was not born in 1987… and what is a radio?”). So, my 20 hour a week part time job got me around 80 to 100 dollars a week before taxes. When I got my paycheck every two weeks and there were three whole number in front of the decimal point, I felt like a rich man.
Well, high school is long behind me, along with the 80’s. And as time has gone by the amount I seemed to require to make me feel OK financially has grown with the times. As I have been working to pay off debts and to save money for both a rainy day and retirement, I found myself recently thinking about what amount I felt I would require today to feel OK. As I thought of that answer, the idea of a new “Zero” came to mind. What amount would I need to have on reserve so that if I was above that amount I would feel confident, and if I dropped below that amount I would be concerned. To my surprise the number that immediately came to mind was larger than I thought. $100K the little bike riding kid in me whispered in my ear and I could see the slightly geekier version of me standing in the middle of a Radio Shack with his cheap tie on smiling and shacking his head in agreement.
Reserve. That is a good word for it. When I was a kid I had a three wheeler that had a small reserve gas tank with just enough fuel to get me home if the main tank ran dry. If that happened, I just turned a switch and was back in business. When planes fly from one city to another, the ground crew doesn’t put just enough fuel in the plane to just get them there. They go beyond that and add an extra amount just in case the plane has to circle the airport waiting to be cleared for landing or maybe has to be redirected to land in a different city due to bad weather.
What amount would you need to have on reserve to feel confident that you would be able to make it through a bad financial storm and still make it to the runway and land safely? $100K? $50K? Whatever the amount your 13 year old self whispers in your ear, get to work on saving that. Once you have it, you will have a sense of piece that just isn’t there when you don’t. I am very close to my new Zero, and already I can see a big difference in my piece of mind where money is concerned.
Life is just better when you, and your inner child, know you have enough.
I must have been 12 or 13 years old. I was at the skating ring and the disc jockey was playing records. For you young people, those were these big plastic things that had groves in them and went round and round and a needle made the music come out. Well, The DJ guy was giving away a prize to the first person to name the song he was about to play. I readied myself. He played the song. And I knew the answer. In my little voice I said the answer as loudly as I could, but he did not hear me for all the background noise and other people guessing incorrectly. But an older boy standing near me did hear me. He turned and looked at me, thought for a second, and then realizing the guy had not heard me, turned and said the same answer as if it was his original thought, and of course he won the prize. An older girl standing next to us had heard me and saw what the older boy did and tried to speak up on my behalf and explain that I was the one to first say the correct answer, but the record guy didn’t care. After all he was only getting paid minimum wage, what did he care who won.
I can’t remember what the prize was, but I remember the correct answer to the question, “The Gambler” by Kenny Rogers. And from that day forward, that song offered me two life lessons. The first was the lesson within the song itself, and the second was the lesson I learned in that moment as I watched that older kid collect my prize, some guys will do anything to win. But it is the first lesson, the one within the song, I would like to focus on.
You see in that song Mr. Rogers, or I should say the character of the gambler he invented in it, explains to a younger man that, in life, sometimes we will face difficult moments that call for us to make an all important decision regarding how we respond. He lays out the choices for us by explaining that you have to “know when to hold them, know when to fold them, know when to walk away, and know when to run”.
“know when to hold them”
It’s hard sometimes to just sit still and do nothing. That is doubly true when the circumstance involves the money we have worked so hard to save. As I write these words our country is going through a very difficult time and over the past two weeks we have watched the entire gains in the stock market of the past three or more years completely wiped away. In such a moment it is tempting to call up our financial advisor or log onto our company’s 401K site and sell everything. But to do so would just make things worse because we would be selling at what is most likely the bottom. So what do we do then. Well, as Mr. Rogers suggested, we hold what we’ve got. We don’t go crazy and take out a second mortgage to try and buy stocks while their cheap, nor do we do as we mentioned above and sell everything we own. We simply stay the course and live life one day at a time and trust that very soon our patience will pay off in a very good way.
“know when to fold them”
I must admit, the folding them option was never as clear to me as the next two, but I think I kind of sort of know what it refers to. Folding them is the equivalent of someone who maybe has decided to sale a stock but not to give up on investing. Or maybe its a situation where you have decided the position you are in is not right for you but you like the company and have decided to stay but make a change.
“know when to walk away”
Walking away sounds like the easy one. It sounds so relaxing. But to anyone who has ever dealt with a situation involving sunk cost (that’s a fancy term I learned while completing my MBA. It means money you spent that you are never going to get back or have anything to show for it.) walking away is painful sometimes because for a very long time the thing you valued so much is still within sight. A good example might be a business idea you were excited about and had spent the past year working on and a sizable amount of your hard earned money trying to make it happen, but you still have not sold a single one of the product or service you were offering. We tend to fall in love with our ideas and walking away from them can feel like walking away from a relationship with a person we really liked and spent years with. But sometimes you just have to admit that its time to walk away.
“know when to run”
Have you ever experienced a moment when something came at you out of nowhere and while logic would say you should run as fast as you could or jump as far out of the way as possible, for some reason you just stood still and watched what was happening as if time had slowed down. Well, I’m sure you have. I know I have. Looking back it is clear that whatever was happening was just so unexpected that my mind didn’t have an answer or response to it. Kind of like when you are on one of those automated calls and it does not understand your response and asks you to try again.
Most of us wish we could go back and relive those moments and do exactly what we know we should have done, or say what we should have said. Well, we can’t do that, but we can learn from those experiences and be ready for the next blind side type event that will come our way, and trust me it will come. It’s out there waiting on you. Some bad driver just waiting to jump out in front of you. Some company that decides the fact that you gave them the best 30 years of your life means less than them saving a few extra thousand on overhead to make stockholders happy. Something will happen. And when it does all you can do is be ready to run. Be ready to live off savings while you figure out what’s next. Be ready to pay cash for another car to avoid taking on a new car payment when you last car got total. But the best example of all is the Pandemic we are all living through now and the effects it is having on our economy and peoples’ ability to hold on to their jobs. I would be willing to bet that of all the excuses of having a company lay you off, you never thought it might include “the world is going through a pandemic right now, so we’re going to have to let you go. Sorry.”
“you never count your money when your sitting at the table. they’ll be time enough for counting when the dealing’s done.”
I almost forgot the last lesson of the song, the one that most directly ties its self to matters of finance. After all, it mentions money, I’d call that direct. A couple of things come to mind, but the one that I think is most relevant is the problem that most of us develop when we try to save money. We start checking our 401K balance every day. I’m guilty of that one. I have a spreadsheet at work that I update each day. When what we should be doing is deciding on our long term plan and simply putting it on autopilot and forget about it until about a year or so before we plan walk away into the sunset and move to Florida (I’ve already done that). We start to second guess ourselves. We listen to that “sell … sell… sell..” thing Cramer on CNBC likes to yell and some of us do exactly that in the worst moment we could, when our country is completely shut down due to a pandemic. Make your decisions about how you will handle you money when things are what might be called normal. Then in the best of times you want be tempted to overspend, and in the worst of times you won’t be tempted to sell and lose it all. Nope, you will just ride it out and know its time to “hold em”.
Ps. I had started writing this blog post a few months ago but never finished it. I saw the news this past week of Mr. Rogers passing away and thought it would be a nice tribute to finish it and get it posted.
I am a spender. It is hard for me to not spend money when I have it. I have gotten better in recent years. One of the tools I have used to stop spending money unwisely is what I call the “10 times as much” rule.
Would you pay $50 for a magazine?
Let me explain this by using an example. I love books and magazines. And I cannot step into my local Barnes & Noble without walking out with one. A few years ago, it was common for me to walk out of one with $30 to $50 worth of books and magazines. And then they would just end up being added to the stacks of unread books and magazines I had already bought.
But I have gotten a lot better. And here is the way I did it. Anytime I saw a book or magazine I thought I wanted, I would ask myself “would I still buy this if it cost 10 times as much”. If I saw a magazine and was considering buying it, I would look at the price. It would say $5. I would then ask myself, would I still want to buy this if it cost $50? If the answer was not yes, then I put it back.
Is it a need or a want?
Applying this technique has helped me separate wants from needs. Do I really need that book? Would I pay $200 for it? If so it’s a need. If not, it’s a want. More times than not the answer was no. I would let myself take a picture of the book and add it to my wish list in case I later changed my mind. More times than not, I just end up deleting those pictures later on.
What if you had 1/10 as much money as you have?
This technique works the other way too. Not only have I treated wants like they cost 10 times as much, but I have also treated the money I do have as if it were 1/10 as much. This has helped me really save and increase my balance in my checking and saving accounts. In the past, if I had a few hundred I would find myself spending that on things I did not need, just to turn around and find myself short of money when I needed something like a car repair. Now, I take my current balance in my bank account and divide it by 10 and I have found that mental exercise helps me revisit the urge to spend money just because it is in my bank account. Doing this has resulted in my current bank balance being about 10 times as much as it use to be.
So, next time you are tempted to go crazy and just spend spend spend, say like when it comes time to buy Christmas presents, ask yourself if you could still afford to buy a gift if it cost 10 times as much and treat your current bank balance as if it were 1/10 as much as it is, and you will find you do a much better job of avoiding zeroing out your bank accounts and maxing out your credit cards. Best of luck. You can do it.
A few years back I had just made the mistake I promised myself I would never make again. I was offered the honor of getting not one but three new credit cards and as soon as I had them I maxed them out. I told myself it was ok because I did so in a misguided attempt to fund a website I was trying to build for a project I believed in. But I forgot that debt is debt and this kind of credit card debt came with big interest rates, which just added insult to injury.
Around that time I decided to start listening to Dave Ramsey on the radio. And while it was painful to hear all the stories that sounded just like the dumb mistake I had just made, I kept listening because I knew it was the medicine I needed to hear.
Then came a point and time that I felt the need to go against Mr. Ramsey’s advice and to start saving by putting some of each paycheck into my 401K. I started slow with a few percent of each paycheck and over the next two years slowly worked up to 10% by increasing it by 1% every few months.
Which brings me to my current status. I still have a lot of debt to pay off. That’s the bad news. The good news is I just reached the point where I had a balance in my 401K that was about the same as my yearly take home pay. Why do I bring this up? Well it is because it gets to the heart of what Mr. Ramsey spends a lot of time talking about, financial peace. I completely agree with Mr. Ramsey that it is important to pay off debt, and I am currently paying down my credit card debt. But at the same time I am still investing 10% of each paycheck into my 401K. Why am I do that? Why am I going against what Mr. Ramsey teaches? The simple reason is that I came to understand that, as important as it is to work to be debt free, I was not going to be able to sleep at night until I reached a point where I knew I had enough money put aside to live off of if I should lose my job.
Now I’m really about to piss Mr. Ramsey off (not that I want to), but I also did one other thing he says not to do. I took out a 401K loan. I will wait while Mr. Ramsey stops yelling at me for being stupid. Why you ask did I do something that dump? Simple. I gave it a lot of thought and just as I concluded that saving enough money to live on if I lose my job is more important than paying off debt, I also decided that having a portion of that savings on hand and available immediately and not have to submit a request to withdraw my 401K after I lose a job was very important. So, with that in mind, I took out a loan for what I felt was enough for me to live on for four to five months. Some of that money went towards paying down my credit card debt, but most of it is still sitting in my bank account. I kept the credit cards for now ( I think I hear Mr. Ramsey yelling at me again ), but put them in a box in my desk at home and will only take them out and use them if I find myself without a job and need to pay an unexpected big bill like a car repair or medical cost etc. Once I have two years of take home pay saved I plan to cut them up.
Why do I share all of this? Because after going through the stress of losing a job twice in the past ten years and having to go six months without a paycheck, I can speak from experience that the stress of knowing you don’t have enough cash on hand to cover living expenses if you lose your job is far more intense than the stress of knowing you still have debt to pay off. Knowing that I now have enough cash on hand to cover my living expenses for about five months and that I have more in my 401K that would get me through the rest of a year if worst came to worst has greatly reduced my stress. If I had followed Mr. Ramsey’s advice in the order he prescribes I would still have debt to pay off and would only have $1000 on hand. Considering my rent alone is $1100 a month, that means I would not even be able to keep my roof over my head much less keep the lights on and food in my stomach. So while I admire Mr. Ramsey and understand why he gives the advice he does, I would encourage you to be honest with yourself about what the true root cause of your money stress is at this moment. And I’m going to go out on a limb and guess you are a lot like me and have the more immediate concern of being able to cover your living expenses if you should experience a job loss. If so, allow yourself to make your goal this year to correct that and get that fixed. And next year you will be sleeping well at night and ready to wipe out that debt that Mr. Ramsey is right to tell you to get rid of once and for all. Best of luck. You can do it.
and that’s ok. I keep seeing all these different things about how to retire by a certain age or within so many years. I keep seeing advice that if I only had the will power to live on beans and rice for the next ten years, I could pay off my debts and retire. But what if they are wrong. What if I spend the next ten years living on bread and water and watching grass grow for my entertainment and then I still don’t get to retire?
The concept of retirement was born in a time and age when most work required some type of physical labor that was not possible to continue into your 70s. It was also born in a time when the average life expectancy was a lot short, which means people started to develop serious illnesses earlier in life and there was nothing doctors could do but recommend lots of rest.
Times have changed. If you are reading this and are curtaining in your 40s and are reasonably healthy and have a profession based a college degree that does not require large amounts of physical labor, you could easily continue to do that job into your earlier 70s and you should expect to live long enough to do so.
And here’s the kicker. The people who say I’m wrong and plan on the whole early retirement or even normal retirement thing, and are busy calculating how they are going to live on 4% of their retirement savings each year (sounds like fun), have over looked one thing. While we are going to live a lot longer, we are also going to develop a number of health issues a long the way of getting there. And if you think medical costs are high now, wait till you see what they are twenty years from now. Bye bye retirement savings. The hospital is calling, and they want their money.
So, as I was saying, retirement is dead, and that’s ok. Because we are going to be able to remain productive into our 70s, and because someone currently in their 40s should expect to live into their 80s, that means there is only around a ten year period where you should expect to live completely off of savings and not off money currently being earned.
So relax. It’s going to be ok. You have 30 years to correct course, pay off your debts, save for that special “live of your savings” decade, and enjoy life along the way. No beans and rice for us. But no steak and lobster every night either. Something in the middle and life is good.
Oh, forgot to address the people who are saying “but I don’t want to work into my early 70s, I want to travel the world”. A couple of things on that. We are adults, and as adults we have learned to accept that we don’t always get what we want. Like I hinted above, the people who think they are going to get to are going to find that the money they saved for that will be eaten up by hospital bills. You, being the smart individual you are, are going to keep working into your 70s at a great job that has health insurance and covers 80% of that cost and allows you 3 to 4 weeks vacation each year in return for your years of service and as a result you will be have time to travel the world each year and have the money to do so. Meanwhile, those other people are going to be stranded in some third world country having to have their emergency surgery done by some doctor that doesn’t speak English. Oh, and they’re going to have to pay cash.
So, by now you’re thinking this guy is so negative and this version of our future sounds so depressing. Let me address that by saying that I am excited for our futures and you should be too and that is my whole point (just in case you missed it). My point is not to make you feel bad that you are going to have to work until you are 70. My point is that because we live in a time where a 70 year old who has developed special skills as an engineer, doctor, tax adviser, or teacher can still contribute at that age, we are in a much better situation than our great grand parents who only had options to pick from that required hard labor that only a 30 year old could handle. The other reason I am excited is that because we are having this discussion now when we are in our 40’s or early 50’s, there is time for you to plan ahead and incorporate into your career plan any transitions into other types or work you would enjoy more and would not mind doing when you are 68 or even 70. And for those with an entrepreneurial spirit you have not yet tapped, you have time to plan whatever business venture you would like to do and start it now on the side and grow it into a full time endeavor when you are at that age, and do it while you enjoy full time employment at your current job.
So relax and take a deep breath and be happy. Retirement is dead, but the future is bright ahead. Enjoy your life and plan ahead so that you will be doing the work you enjoy when you reach 68 or 70. And start now to contribute to your 401K so that you will be prepared for that small period of time in your late 70s and early 80s when you will need it. Go make the second half or your life the best half. You can do it.
On July 3rd, 1997, twenty-two years ago today, I started my first full-time job. I had just finished my master’s degree and move far away from home from Memphis to the Pennsylvania mountains to State College to work at a research lab connected with Penn State. My parents had helped me with the move since it was such a long distance, and they had left that morning shortly after I left the hotel we had stayed at the night before to head off to my new job.
I remember that as I was getting ready for work that morning I heard on the radio that James Stewart had just died. I guess I should have taken that as a possible omen for my career (smile). I remember after work that evening heading out to eat at a Chili’s restaurant that happened to be nearby in the downtown area. It was cold, cold enough that I had to wear a coat the day before the 4th of July. I guess I should have considered that an omen too.
Focus on the good and gravitate towards it
I wish I could say the twenty-two years since have all been laughs and smiles, but the truth is it has been a very mixed bag of tricks and treats. Some of the people I have had the pleasure of getting to work with were some of the finest people you could hope to meet, and some were not. I don’t think I am special in that regard. I think that is the case for most of us. The best we can do is focus on the good and gravitate towards it.
I call today my halfway point because today marks twenty years of full-time work for me. (I took off 2002 to 2004 to try for my Ph.D. and I don’t count those two years). And since I plan to work at least another twenty years, we are halfway there.
I plan to use tonight and this weekend to reflect on the past with the hopes that I can gather some helpful lessons learned (some learned the hard way) to ensure the next twenty years are as positive as they can be.
Are you halfway there yet?
Where are you in your career? Are you halfway there yet? Are things going as well as you would like? If not, what could you do to move things in a better direction? Who in your work life is having a negative effect and what could you do to distance yourself from them, and if it requires changing jobs how could you make that happen. Who do you trust to talk with about your concerns about your career and future and what could they do to be of help to you.
If we hope to make the second half the best half, we first must understand what made the first half less than what we wish it had been. Something for me to think about now that I’m at my halfway point, and hopefully you will think about it too.
In 2007 I discovered audiobooks and began listening to a lot of business and self-improvement books. One of the first that I discovered and listened to with great interest was a book titled The 4-Hour Workweek by Timothy Ferriss. For one thing, the book was well written and the narrator was great. I enjoyed the book and felt I learned a great deal.
Over the years, I have listened to the book several more times. On one occasion in October of 2014, I was driving to a customer’s site for a meeting and listened to it on the way. At the time I was in a job that was not going well. I liked the job itself because I was getting to focus on a topic I liked, but there were a lot of negatives about the job. The two men I was reporting to were terrible bosses. One was a bully who constantly called me up (I worked in a remote office) and threatened my job and the other was his spineless passive-aggressive sidekick who would constantly be paranoid about whether or not I was going to do something to make him look bad in the eyes of the first and get his job threatened. As I drove down the road listening to The 4-Hour Workweek, I became convinced I needed to find something I could do on my own that would someday provide enough income that I would never have to stay in such a work situation again.
It was a Friday, and after the meeting, I decided to take advantage of the fact that I was near one of Florida’s nicer beach areas to stay at my own expense for the weekend and have a short weekend vacation. After I arrived at the hotel and checked in, I grabbed some dinner at the resort restaurant and went up to my room to relax. As I watched TV in my hotel room at the resort I had checked into, I began to think about what kind of project I would enjoy doing in my free time. I thought about how I had always thought I would have enjoyed teaching. It was then that I came up with the idea to start working on a project in the form of a website related to online tutoring. I got excited about the idea. I bought a domain to use and made notes about the project on the small pad the hotel had provided on the nightstand. The next day I relaxed on the beach and thought more about my idea. On the ride home at the end of the weekend, I finished listening to The 4-Hour Workweek, and the more I listened, the more convinced I became that it was time to start something.
In the months that followed I continued to work on the project. I had a nice logo made. I hired a developer to develop the first version of the website, and when that didn’t work out I taught myself how to build websites and Android apps and built a second version myself. I also started a blog as part of the project and wrote the first few blog posts myself on different educational topics. In the years that have followed, I have devoted most of my free time to this project and have enjoyed doing so.
In a few months, I will have been working on the project for five years, and I am planning on continuing. It is still a work in progress and is not making any money yet, but I can honestly say it’s not about the money anymore. It has become something that is important to me to finish and see become successful. I hope at some point it will turn into a source of income, maybe later on in my golden years I can do a little work to manage and maintain it while it rewards me for my years of hard work. But more than that, I feel it could help a lot of young people be successful in school and continue on to college and have great careers and lives, and for that reason, I carry on using my free time to work on it.
So, I share all of this to share a very important insight I have learned from the combined experience of listening to Tim Ferriss’ book The 4-Hour Workweek and then devoting the past five years to work on the project that was born from my having done so. And that insight is that most things in life worth doing take time to complete. If you think about it, most of the things we accomplish in life that add value to our lives take time. It took me five years to finish my BS college degree and another two and a half to finish my MS degree. I started taking guitar lessons in 2009, and it was not until 2013 that I felt confident enough to take part in a guitar recital where I played in front of other people. Things worth doing take time.
This realization helped me let go of a lot of things that I really wasn’t willing to devote that much time to in order to be successful. What things in your life are important enough to you to devote another four years to in order to succeed? Of the people in your life, which of them would you still want to be in your life four years from now? Do you love your current job or career enough that you would still want to be in that job or career four years from now? These are the questions I asked myself, and it helped me refocus my time and energy on the select few that I said yes to. I hope you ask yourself the same questions because I know the effect on your life if you follow through on the answers will be nothing but positive in the long run.
There is a video on YouTube that I have watched at least a few dozen times. I find the overall message and content of the video that helpful. So I thought you might find it helpful too. You may have heard of Mr. Money Mustache. He is the guy who is famous for his blog about how he retired a few days before he turned 31, so technically he retired at 30. For years he has posted blog posts about how he achieved that. In the video I mention above he starts by listing what he calls “3 Amazing Facts That Will Make You Rich”. His message is mainly directed at a younger audience who are interested in doing what he did, retiring at a young age. But the three amazing facts he starts off listing are actually as helpful, and maybe even more helpful, to someone like myself who finds himself at middle age and needs to make up for lost time due to past mistakes in order to make the second half of my life the best half.
Mr. Money Mustache’s 3 Amazing Facts That Will Make You Rich:
Almost Everybody Sucks at Money
Getting Rich Enough to Retire Only takes about 10 Years
Work is Better When you Don’t Need the Money
Almost Everybody Sucks at Money
This one helped me a lot. I felt like it was only me that had screwed up and not avoided the big money mistakes people make, and it feels like I have made them all. I took out a student loan in 2002 when I attempted my PhD, and not only have I still not paid it off the balance has actually gone up not down. I have bought new cars with loans that had huge interest rates. I have ran up credit card debt and spent years paying the interest instead of paying them off.
Getting Rich Enough to Retire Only takes about 10 Years
When I was watching Mr. Money Mustache’s talk and he got to this point, I thought to myself oh sure, if I’m willing to live off nothing. But he may not be wrong. I have had an interesting experience over the past few years. I decided I was going to start doing a better job of saving money, and with that in mind I came up with the idea of setting the goal of trying to double my savings every year. I took out a piece of paper and made two columns. The first column was the date I achieved the level of savings and the second column was the value of savings itself. I decided to start with the goal of saving $1000, so that was the value in the first row under Savings. I then doubled that number for the rows below it, resulting in values of $2000, $4000, $8000, etc. If you do this you will find that by doubling $1000 ten times, you end up with just over a million dollars. Do I have a million dollars? No. But I am happy to report that so far I am come very close to my goal of doubling my savings each year. Some have taken less than a year and some have taken a year and half to two years, but on the average I am not far off from my goal. The interesting thing I have found about this is that by setting a more aggressive goal of doubling my savings each year, rather than the standard 10% advice we have all heard, I can honestly say I have found it easier to stick with it. The 10% is so small I never felt like I was making progress, but each time I get to pick up a pen and walk over to my refrigerator where my piece of paper with my table I created is held up by a small magnet and get to write that day’s date next to the next value on the table because I just reached that amount of savings it feels so good I find myself energized to get started on the goal of reaching the next level. And if I stick with it, I may have enough to retire in ten years, even though that is not why I’m doing it. So, Mr. Money Mustache may be right after all.
Work is Better When you Don’t Need the Money
I ended the last paragraph by saying the reason I was trying to double my savings each year was not really to retire in ten years. The real reason I am doing it is this one. I have been working for almost twenty years, and I have to attempt that during most of that time I was constantly living paycheck to paycheck. And I’m tired of it. I am tired of constantly worrying about what I would do if I lost my job and could not pay next month’s rent. So, I decided to get serious about saving as mentioned above. I am far from a million dollars, but I have reached the point where I have enough saved that I could live off of my savings for up to a year or more easily if I had to, and it feels good. And I am happy to report work is better now. Mainly because I no longer feel at the mercy of my employer to be able to pay next month’s rent. That within its self is a huge improvement.
What if you don’t want to retire?
Mr. Money Mustache starts off his summary of his 3 amazing facts by saying that what he cares about is not so much our personal finances but “how much better a world we’re all going to get to live in if we all become a bit more rational with our money”. He wraps up his short summary of his facts by addressing those people who love what they do and might not want to retire in ten years or ever. He points out that if that is the case for you, that you will probably continue to work, but will begin to do a different kind of work, the kind you enjoy. He points out that being able to make that change to the kind of work you really want to do makes doing what he describes still worth while, and I agree.
How to be rich, happy, and save the world
I thought I would wrap up by including a link to the video I watched (I’ve watched a few dozen times by now) that includes these three amazing facts. The talk Mr. Money Mustache gave was titled “How To Be Rich, Happy, and Save the World”. The summary of his 3 amazing facts is given in the first 3 minutes, and his overall talk is around 30 minutes long. I think you will enjoy the whole talk and get a lot out of it. I know I did.
