Being Out Of Touch With Reality Doesn’t Make Sense

Coaching tennis until dark

Coaching tennis until dark

The only reality is the one you know, which is why it’s odd for someone to ever say you’re “out of touch with reality.” To do so would imply your reality is superior to another’s reality, which is arrogant. But many people have commented I’m out of touch with reality over the years because of the way I view money and opportunity. So I’ve decided to slowly do something about it.

The tone of Financial Samurai has changed from one of defiance, to one of acceptance. I no longer rail against the government or argue with folks why a ROTH IRA conversion is a mistake. If you want to only save 10% of your earnings and work until you hate your job, go right ahead. I just like to put things out there now and let the community decide what’s best for themselves. I’ll go about doing what’s right for me, and if you don’t want to take my advice, no problem.

Part of the reason why I do write about wealth inequality and socioeconomic equality is because I recognize I’m lucky and I don’t want to take my luck for granted. And so I write and write and write to share my thoughts on boosting wealth in hopes of sharing my luck around. But with the largest personal finance blogs in the world focusing on frugality instead of making more money because it’s so much easier, I need to adapt to grow, even though I know many of you don’t want to eat dog food in retirement.

A SECOND PART-TIME JOB

The recent stock market correction resulted in roughly a $25,000 loss to my rollover IRA. Although my rollover IRA is considered my punt portfolio where I chase unicorns and supposedly don’t care about its amount since it can’t be touched for 25 more years, losing $25,000 still brings my spirits down. After all, real pre-tax money was originally contributed via a 401(k). (Related: Should I Rollover My 401(k) Into An IRA)

Instead of whining about my stupidity while letting myself get depressed thinking about how I could use that money to go on a great vacation, I decided to heighten the pain by doing something about my situation. I’ve taken on another part-time job to make up for my losses!

You’re now reading the proud words of Tennis Coach Sam! I love tennis and I enjoy teaching folks a game that can be played well into their 70′s. My new part-time job is coaching a fellow player’s daughter for 1.5 hours a week. Her team won the varsity city championships last semester, and she’s looking to keep up her game during the off-season in order to come back stronger for her final year of high school.

With about 10 years of teaching experience and 25 years of playing experience, I decided to charge $50 an hour, a deal compared to $95 an hour at private clubs. We keep it real by playing on public courts near her house from about 4:15pm until dark for 1.5 hour sessions.

But here’s where the mental pain begins. At $50 an hour, I have to work 500 hours to make up for my recent IRA losses. At my current pace of only teaching 1.5 hours a week, it would take me 6.2 years to break even! I enjoy exercising and helping young folks get better. But just knowing that I have a long road ahead to recovery crystalizes the reality of my financial loss.

In order to expedite my recovery in three years, my new mission is to now teach three hours of tennis a week. If by some miracle my stock picks recover, maybe I won’t have to work as long. Or maybe I’ll continue to lose more money as the markets correct, but for now, I’m shooting for three hours of tennis coaching when I’m not consulting at a startup for three days a week. Who knows, maybe I’ll do a great job and get many referrals to boost my coaching time to six hours a week. The only way I’ll know is by trying.

THE SEGMENTATION OF REALITY

Back to riding the bus to work

Back to riding the bus to work

It would be easier to dismiss my investment failure because I can’t touch my IRA until age 59.5. “Think long term” as short-term losers like to say. But my goal is to face reality in order to never take my luck for granted. I also always want to do something about a bad situation and not let it defeat me. By putting $25,000 in the context of coaching for $50 an hour, I’m going to be more diligent in my investments and more appreciative of hourly wage workers.

My part-time consulting role at Personal Capital pays 60%-85% less than what I made in banking, but it’s fun and reminds me of all the times I hated taking the bus to work. I look around at all the long faces waiting for coffee who must work at jobs they dislike in order to pay their bills and receive health care for their families. I want to feel that similar type of melancholy too in order to appreciate more of what I could do with my free-time.

I think the main reason why people say you are “out of touch with reality” is because they don’t think you know what their harder lives are like. I’ve been a burger flipper at McDonald’s who opened up shop at 6am before. I also spent time doing heavy labor as a mover. But those jobs were so long ago, and it’s all about what kind of suffering have you done for me lately to relate to another person’s hardship.

My day now consists of waking up at 5:30am to work online for three hours until I take the bus to my part-time consulting role from 9:15am until about 5 pm. I then spend another hour online catching up with stuff I missed during the day at night. During my off days, I’ll teach tennis for at least 1.5 hours until the sun goes down and then work with my personal finance clients one-on-one for however long it takes to get the job done.

In essence, I’ve got four jobs: a writer, a startup consultant, a personal finance consultant, and a tennis teacher, all at vastly different levels of income.

WHAT IS YOUR REALITY?

If a child grows up in the projects with parents on welfare, are we to say he is out of touch with reality for presuming it’s normal for people to be on welfare for years? If a child grows up in a 4,500 square foot suburban home, attends private school all her life, and lands a plum job through connections, are we to say she is out of touch with reality despite all her friends going the same route?

If you can still call someone “out of touch with reality” who takes the bus to work, owns a 14 year old car, went to public school, works four jobs, started off at McDonald’s, has a mortgage, grew up in third world countries, and is still saving aggressively in order to one day take care of a family of four, then you are right. I am out of touch with your reality because my reality is all I know.

The only thing that might be different from me compared to most people is that I put myself out there in my writing on a consistent basis. My book is more open than yours. Hence, to level the playing field it’s important to get everybody to share their stories so we can better understand.

Readers, why do you think people feel their realities are more real than other people’s realities? What is it that we are trying to project when we tell someone they are out of touch with reality? What is your reality?

Regards,

Coach Sam

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. says

    Not content to sit back and coast as a retired guy, huh!

    I think you nailed it in the last paragraph. When someone refers to “reality” they most often mean “my situation”. I’m sure someone living in a subsidized apartment complex in the Bronx would consider me just as out of touch with reality as someone living in a Beverly Hills mansion would. I think a lot of it has much to do with just how little most of us have to interact with people who aren’t just like us for the most part.

  2. Dividend Growth Investor says

    Apparently your examples of being out of touch with reality are not isolated ones. I once used an example of how someone can retire within a certain period of time by putting $3,000/month in dividend paying stocks given a certain rate of growth in dividend income and certain initial yields. I managed to enrage a bunch of people, who told me that noone could save $3000/month and most proceeded to tell me that I was out of touch with reality. When I asked each of these people how they can improve their odds of saving $3K/month, most of those who responded said ” you can’t do a single thing”

    I was so sad after reading those comments, because so many people seem to have given up on trying to strive for better financial lives. I think all that talk in the news about wealth inequality is really making ordinary people in the US to gain a very pessimistic attitude that they can’t do anything to improve their lives.

    I like your article, because you seem to be keeping busy – you use your existing skills to teach tennis, work at a start up, do your consulting, do this blog etc. Actually, you might be the opposite side of the scale – you are probably busier than your were at your job. I know we have disagreed on other items, but overall I find your story very interesting. I hope I get to live a similar retirement full of opportunity one day.

    Cheers!

    Dividend Growth Investor

    • says

      You’re definitely on the more extreme ending of saving and spending DM, so I can see how folks would question your lifestyle. When I was leaving my two cents, my main feedback is to just prepare for the unknown. Things change all the time, and saving X with Y estimated return seldom ever comes out the way you think.

      I think it’s great you are saving and investing such a large percentage of your income. Only when you experience a prolonged downturn in the stock market will you really understand your own risk tolerance. I would feel very optimistic too if I started investing during or right after the crisis.

      Good luck!

    • says

      Austin, I think you’re right in the way most people these days use the term “reality”. But I think it’s worth pointing out that truth definitely still exists, and there are plenty of real things that define a real reality.

      Great post, Sam, and good job at finally achieving your dream of coaching tennis during semi-retirement. :-)

  3. says

    Deep stuff, Sam. I think people get pretty populist when they’re talking about being in touch with reality: they try to argue for their version of the Everyman. The very successful are, by definition, going to fail that test. It’s too bad because I think most of these critics would much rather have the wealthy person’s reality, if they are being honest with themselves. So it’d be a lot better if they listened to that perspective and tried to get in touch with that other reality. But it’s easy to get defensive when someone’s suggesting that you make big changes to get big results. Monkey brain doesn’t want to hear about serious change: he wants a quick fix.

    • says

      Didn’t really think about being successful as by definition not being in touch with reality/majority. Good food for thought!

      Success is so relative. I think success starts with the mind.

  4. Alexander Davis says

    I think any intelligent, motivated and self aware person ideally eventually comes to terms with the fact that once you understand the landscape of the game, you realize that haves and have-nots are a fact of life, and you have a personal decision to work to get into the have camp. Once you have this realization there will always be a barrier with those who haven’t “seen the matrix” yet, because they are still operating under the assumption that “life events” control their money and not themselves.

    We live in an amazing time where just about any mixture of intelligence, work and discipline can allow someone to build true wealth in half a lifetime. The problem is if they aren’t applying all three of these things to their level of ability, they likely will not “get ahead”.

    I went from college dropout, to a year in Afghanistan fighting for my life. To a party school and now a cushy consulting job. My experience has taught me that where we want to go in life is much more in our control than I ever realized before going to war. I have a genuine desire to give back and start a foundation someday, but on the way I will do what I need to live in the “have camp.

    • says

      Thank you for fighting for us Alex! Perhaps you’d be willing to share your story and your perspectives one day in a guest post. I am very supportive of our military, and I don’t think we do enough to support our troops after.

      • Alexander Davis says

        I would be interested in contributing. I really enjoy the site. How would I follow up on this Sam?

        Thanks,

  5. Mysterious Guy says

    Excellent article. I agree with the ‘out of touch of reality’ bit… if it doesn’t mesh well with their certain version of reality, then it must not exist. It’s too bad that people don’t look at the difference of realities and see if there’s any steps to take so that out-of-touch reality becomes more and more their reality.

    My reality is to save as much money as possible, but given my recent situation I can see how easily people can spend money and burn their investments. Thankfully I have a rainy day fund and only needed to dip into that. I need to rein in my expenses again and start rebuilding my funds so I can continue with my goal. I’m far from where you’re at Sam, but at least I’m working towards that direction.

  6. Marcel says

    Congrats on the new tennis gig! Teaching, in any form, is awesome and will help you become more successful in all aspects of your life. Living in SF, who knows who your next student could be!

  7. Lexington says

    Long time reader, first time commenter. Love the blog; I get excited every time a post comes up because I learn something new. Your comment about being nostalgic about being miserable riding the bus is hilarious-I’m currently miserable riding the subway to work every day. I look forward to the day I look back on it fondly.

    As to the substantive point in your post-there is no way for anyone to not “be out of touch with reality.” I think all we can do is try our best to see things from perspectives other than our own, and perhaps that’s accomplished only by exposing ourselves to very different types of people. That’s the only way we can avoid being narrow minded.

    • says

      Always enjoy long time readers who finally comment for the first time!

      The misery of the subway now will make not having to ride the subway that much sweeter once you achieve your financial goals!

  8. Billv says

    Sam,

    My”reality” I employ 19 people, pay above average wages, above average benefits, above average work environment. I donate above average money to my favorite charities. Average Americans “reality” I don’t pay my fair share of taxes. I don’t need as much money as I make. I don’t give a high enough percentage of my money to charity.

    My “reality” I’ve achieved financial and work related success in my life. My rich friends “reality” my house is to average. My cars are to old.

    My “reality” My average house is paid for. My average cars are paid for. My average toys are average. My middle-class friends “reality” I’m cheap because my house is average. My cars are average. My toys are average.

    My “reality” I’ve worked my ass off to get what I have. My struggling friends “reality” I’m lucky to have what I have.

    Reality is not real. Reality is perception.

    Love the site! Thanks for my soapbox.

    • says

      Fantastic comment Bill. It would be strange and ABSURD to go after you with higher taxes and more red tape for employing 19 people. You are helping these 19 folks make a life for themselves and take care of their families.

      Why in the world would people want to put you down or discredit your efforts is beyond logical.

      So if it helps at all, I say THANK YOU for your contributions!

      Cheers, Sam

  9. says

    The best part of financial independence are the opportunities that come along. When you were employed full time, you could not take on these various opportunities. Embrace them because they will lead to other experiences. You can pick and choose without regard to how much you earn. What experiences do you want to accumulate or have for that next opportunity?

    • says

      I’m excited to learn about how the teenage demographic thinks about life. What are their hopes, regrets, and sorrows. I think being able to relate will make me a better uncle and a better writer.

      Teaching is a gift. And it is a joy if the student wants to learn. Her father isn’t forcing her to take lessons. She wants to get better, and I will hopefully help her get better!

  10. says

    The worst thing you can probably do, regardless of your situation/environment (call it your ‘reality’) is to try and cheat or evade reality. What I mean is, if you’ve maxed out your credit card, trying to cheat reality by convincing yourself that if you open another card to pay for some new shoes you just can’t live without, and definitely can’t afford, that it will still be ok, that it’s acceptable etc. Reality will then catch up with you sooner or later, so you can’t cheat it or pretend that reality and its rules don’t apply to you. In the long-term I think everybody’s reality is determined by how much they respect and abide by reality, if that makes sense!

    Thought-provoking post Sam.

  11. Ace says

    Sam,

    Interesting….. The pain of losing money is always so much worse than the excitement of an investment gain. I guess that is one reason an old guy like me, tends to keep heavy cash positions.

    Everybody perceives the world differently. Your perceptions (or reality) is based upon your individual experiences, environment, social contacts, etc.

    We all have individual biases which also shape our view of the world. As an investor (and as a human being), I try to expose myself to many different environments and view points. I recognize that if I didn’t, I would fall into the tendency of looking for things which verified my reality (confirmation bias).

    This is a dangerous thing for an investor (and also has a tendency to make you a judgmental human).

    I’m fortunate because I deal with a broad range of people, from the very wealthy executive to the person on Medicaid. It actually makes me feel lucky and content with my life. I’m not poor, but I’m not so rich that I can’t relate to ordinary people. I like being ordinary. I think this is because of my Midwest background.
    It’s ok to be ordinary, as long as you are a good person.

    Enjoy your time as an instructor. It’s always fulfilling to help people gain new skills and broadens your social environment.

    • says

      I definitely feel more pain losing money than making the same amount of money NO DOUBT. It’s way I have 25% of my net worth in CDs earning just 3.8% and going lower if I continue.

      This small market correction so far doesn’t sit well with me. I shouldn’t care, but I still do. I need to learn to let go more.

  12. Chris says

    I read all the time but have never commented but this post really struck a chord with me. I have recently started my 4th job (get paid for 3 but I consider the 4th a job). Multiple friends and family will ask me why I have so many jobs and I sometimes ask myself the same. For me my reality is this: I’m deathly afraid of failure. Success is not what motivates me but rather the refusal to fail is what fuels my fire. One of the reasons why I do have so many jobs, even though some of them pay minimally is because it increases my reach and expands my network and gives me a bigger safety net.

    My full time job is in customer support for an electronic information company putting in 40-50 hours a week. My other three jobs which are probably 10% of my monthly income are giving baseball lessons, writing about minor league prospects for a website and scouting for a Major League team. See the trend with those? I played baseball in college and professionally and this is my way to stay involved, bring in a little extra money and continue to increase my baseball network. This is my reality, someone who is petrified of failing, a baseball guy working full time in customer support while still hustling in the baseball world because that’s where I eventually want to be full time. Because at the end of the day no one is going to put the work for you, you have to make it happen yourself.

    Thanks for the fantastic material Sam!

  13. says

    That’s very interesting and a healthy way to react to a market correction. Normally, yes, I would say forget about it and think long term, but if you are motivated to earn extra during a correction instead of pulling out of stocks due to fear, I can’t criticize that at all! Sounds like the perfect reaction to me!

  14. says

    I give you props for taking on the challenge of doing so many things. I don’t think you’ll feel bored anymore! I have workaholic tendencies so I definitely feel more fulfilled when I’m doing a lot of things.

    I also really think you hit the nail on the head with the “out of touch with reality” comments. It is SO true that we each have a different reality. There have been many times when I’ve wondered to myself why so and so has no common sense – well, that’s probably because their reality never taught them what is generally considered acceptable or not.

    • says

      I think this is part of the reason why entrepreneurship is so rewarding. Your action and results are yours alone. There’s nobody holding you back, keeping you down, clipping your wings and intimidated by your work.

  15. MrB says

    Sam, the only time I would question your perspective is when you make claims that working harder automatically leads to financial success. I know plenty of people that work their asses off and yet go nowhere. Maybe it’s their lack of education holding them back, maybe a dying industry, maybe they have a disability holding them back, what have you. Something to be said for working smarter, wouldn’t you say?

    • says

      Definitely. Not sure where you got the idea that working harder “automatically” leads to financial success. A lot of it has to do with luck, and persistence. Working hard is just one ingredient.

      • MrB says

        Well I know you are speaking tongue-in-check (to a degree), but you often make statements to that effect. I don’t have time right now to dig through your previous posts but you often make the assumption that coming in first and leaving last leads to financial success. Do you not?

        • says

          The person who comes in first and leaves last certainly has a better chance for a promotion and a raise than someone who comes in late and leaves first.

          Common sense, but something I think a lot of folks who want to get ahead lack!

          • Alexander Davis says

            I won’t speak for Sam but I think I can shed some light Mr. B. I also work in Finance (consulting though not banking) and there is a key difference when you work at a project based job as opposed to a process based job.

            When a company hires someone on salary for project based work the salary is the fixed cost to the employer. The employer needs the employee to hit a certain “high water mark” if you will to justify retaining the employee. Beyond that high water mark every project the employee completes or significantly contributes to generates incrementally more return for the employer as the fixed cost becomes a smaller part of the equation.

            The variable cost is employee bonuses/early promotions/raises. If Sam spent more time at work and applied himself then odds are he got faster at his job. When an employee can complete a project twice as fast and bill the client the same amount their value rises tremendously above the high water mark.

            Compare this to a process based employee. You can be the fastest most competent person on an assembly line. But the constraint on your productivity is the line. In project based work, often the only constraint on an employee is how many hours they can be awake and focused in one week.

            This leads to the insane hours in banking, consulting, engineering (100+) and other project based fields because motivated employees begin to scale on two factors, more time and faster speed or ability to tackle more complex problems. Our assembly line worker can only scale on one factor. More time on the line. So while our assembly line worker can arrive early and stay late he will get about 20% “ahead” while our project based employee who is putting in the effort can double or even quadruple his value generation.

            I advise everyone who works in a process based field to get out and move to project based work. It is possible to automate processes, but people will always have problems. As we progress it will be infinitely more valuable to become the best problem solver you can regardless of field. So in a roundabout way I agree that yes, putting in hours will lead to success but only if other factors align such as leveraging your knowledge or scaling on more than one factor (hours at desk).

            On a more cynical note, there are plenty of workers who come in early and leave late purely for face time and people always can tell who is really producing after enough time.

            • says

              Very well said regarding process based field vs. project based work.

              I would still get in early for a process based job in order to try and get promoted. We all know that we can work harder at our jobs. It’s whether we choose to our not that makes a big difference.

              This blog is an example. Post 3-4X a week or not. If not, then I won’t grow as fast.

  16. David Michael says

    Sam…Thanks for a great website. I enjoy your comments and insights based on your experience and your reality based on Wall Street.

    I am on the other end of retirement, having been retired for 20 years (age 77). We expected to have plenty of money for our retirement ($10,000 a month) but a few things happened along the way that depleted our nest egg. One of which was my wife’s annuity company that went bankrupt, thereby robbing her of the $650,000 she had planned for at age 65. That would have contributed about $2000 a month for life. So we have invested ourselves into fascinating ways of work over the years for usually five years at a time, followed by a five year break usually travelling or living abroad. It’s been a marvelous experience despite living on about 30% of my professional salary.

    This past Christmas season we worked at Amazon in one of their warehouses called Fulfilment Centers. It was an eye opener, even for me with business and college teaching experience, as we did hard physical labor for 50 hours a week for three months, getting up at 4 AM, driving through snow and ice, and working from 6 AM to 4:30 PM, five days a week. We weren’t alone, as 400 other senior workampers joined us as we toiled away in the new American factory environment.

    Our previous reality about the American success story was shattered by the number of middle class people I met who had worked hard all of their lives, hit the 2008 Financial recession, lost their homes and much of their savings. I was amazed at the numbers who had walked away from the homes, their equity, and were forced to take money from their stocks at the worst time because it was all they had left besides Social Security. This is the new Working Retirement that is swiftly embracing the USA. Approximately 47% of the working population is now working in the service sector earning $12 an hour or less. Many of the new retirees will join this new reality as they age.

    If you want to see the other half of the working-retirement equation, I strongly suggest you work for Amazon in one of the 89 warehouses as a seasonal employee, primarily for the experience. It’s a whole other side of the Street and face of America that is rarely described in the media from the reality of the person working and toiling in this environment, day after day, year after year, growing prematurely old and slumped over, to simply put bread on the table and provide the basic necessities of life. It’s a total contrast to the reality that nearly every congressman is a millionaire and has little appreciation for the disappearing middle class. It’s hard for me to envision an America with a positive future when there are such strong divisions between class and wealth.

    • says

      David, thanks for sharing your story! I can’t believe the $650,000 went *poof* just like that. I didn’t realize there was no recourse to recovering annuity money. Is there no protection or guarantee? One of the companies I like is USAA. If they go bankrupt, does all money money really disappear? I’ve got to give them a ring and ask.

      It’s great you and your wife are a team working things out for the better in retirement. I may very well have to try my hand at one of those Amazon fulfillment centers to see what it’s like!

      Best, Sam

  17. David Michael says

    In reply to your question about annuities…They are complicated and unpredicatable. I can only relate to my wife’s experience but it lends a tale of caution to annuities as a retirement vehicle. This is how I understand it went down.

    As part of a divorce settlement and trying to figure out what to leave her for retirement years, her former husband (surgeon) and attorney came up with the idea of an annuity that would be worth about $650,000 at retirement age of 65. He bought the annuity for $80,000 and over a few years it did increase to $130,000 at the reported 10% rate annually when interest rates were sky high. The company was Executive Life Insurance Company, the largest insurance company in California at the time (about 1992). Then, Michael Milkin happened onto the scene, sold a bunch of high yield junk bonds to Executive Life, and the famous collapse eventually took place that sank the company and the fortunes of many of its clients. Michael Milkin eventually served two years in jail for his infamous transactions. In the two or three years after the State of California took over the company, they eventually transferred many of the policies to a French owned insurance company, which itself had monetary problems. Long story short, she was offered $35,000 rather than the promised $650,000 at age 65. She took the cash because she had lost all faith and trust in either insurance company or the state. Something was better than nothing at the time. Not sure what would have happened if she held onto the annuity as it transferred into French hands. At the time, it seemed everything was sinking into a black hole.

    I have done research on annuities at different times, and I think the bottom line is that nothing is guaranteed in the world of finance except Treasury Bonds (by the Federal Government). And, if aliens or terrorists took over the government, I guess they would go down the tubes as well. As the French are fond of saying, “C’est la vie”.

    • says

      Thanks for the thoughts David. Scary how things could just go *POOF* one day. Part of the reason why I have 25% of my net worth in various sub $250,000 CDs is for this oft chance something bad happens.

  18. says

    I have no idea why other people think their realities are the most “real.” I suppose it is due to lack of experience. Everyone has their own reality due to their upbringing and environment. I can relate to a few things you have done in the past (working at McDonalds), but not the others, such as high finance. I doubt you can relate much to my work on a prune farm when I was in high school, or writing real-time code for the Air Force’s Airborne Laser. That just makes us different.

  19. says

    I have thought about doing something like this. Except with appliance repair. $50/hr to fix your washer, dryer or dishwasher? Quite a discount compared to $89 service calls plus labor to actually fix something plus the parts! Maybe when I have more free time.

  20. nbsdmp says

    I hear that a lot too…it’s funny though Sam, because where were those people when you were busting your ass working countless hours to earn the $ that now allows FI? My friends thought I was a nut case or a workaholic for leaving a big company job & putting in 100+ hours a week at a small company that I am an owner of…now I’m out of touch as well because all those years of saving and investing and living vastly below my means I do crazy out of touch with reality stuff like pay cash for cars and boats and houses and rental properties. Face facts…we are the weird ones! Normal is plodding through life on the treadmill of hand to mouth existence…sacrifice is hard so most people just don’t do it.

    One more comment on your mention that losing $25k in one of your accounts bummed you out…I totally used to feel the same way…I guess that is why once I got over my $ ever extra dollar went to debt (which there hasn’t been any now for about 10 years)…including the house. I know it is not the smartest money move by the book, but I never even think about when the market goes down, because everything I want or need is already paid for…leverage is a great wealth building tool…but it can sting a little at times as well.

    • says

      I’m wondering if there are two separate feelings though? I’m bummed out about losing $25,000 in the market, but it’s not due to any fear of not being able to pay my debt (mortgage). It’s focused solely on not being able to better position with a few clicks of a button and the lost money in not being able to do something else.

      If I had no mortgage debt, I would still be equally bummed!

      • nbsdmp says

        Yeah, I’m with you…I know the smart money move is to have leverage, I just think that at some point you get to where you are ok not trying to squeeze the extra 4% after tax return on the money you are deploying. You have to make 10% to bring home 7%…you are making a guaranteed 3% by not paying on the mortgage…I get the whole tax side, I’m just saying it really doesn’t move the needle enough to change your lifestyle, so why risk it?

        I guess put it this way, instead of having your $1M tied up in a paid for house…2008 happens again (an event that was meaningful enough that it caused you to leave the financial industry), and the market goes down 30% and your losses are $300,000 of real after tax dollars…your pain would be significantly greater. Different ways to look at it though is what makes the world go around!

  21. Justin Williams says

    Long time reader, first time poster. All I can say is thank you for all the great advice that you give. Whenever I try to talk to someone about Financial Independence, saving money, investing, etc., they look at me like I am speaking a foreign language. No one sees all the hard work behind the scenes and the fact of the matter is that most people are not willing to live below their means or go the extra mile at times for the payoff down the road. You are not arrogant, just smarter than most, and I appreciate everything that you do to try to make life easier for the sheep. I have been called arrogant as well for the same thing. I laughed when I read your post. Keep it up!

  22. says

    The mind of a teenager is excellent writing material!

    So, you get to consult for a startup you think is awesome, and play more tennis for money? Sam, sounds like you’re retired to me ;)

    • says

      Should be interesting! But she’s an excellent student who will likely go to a good school, so I’m not sure how much interesting info there will be.

      Sitting here in the office on a Monday isn’t that great to be honest. I drank too much at my super bowl party yesterday, and would rather just sleep in!

  23. Dan says

    The vast majority of topics you write about and advice you give relates to probably 5-10% of Americans. I think that when people tell you that you’re out of touch it is because you are in a tiny group of people who can’t comprehend the realities of the other 95% of Americans.

    • nbsdmp says

      Gosh Dan, that’s a little harsh…I think Sam very clearly understands the realities of the other 95% of the people out there, the difference is that he is in the 5% who choose to do something about the situation and better themselves through delayed gratification and hard work. He didn’t come from a trust fund or hit the lotto…he earned it! Many in the 95% are just looking for somebody else to solve their problems.

      • Dan says

        If it were as simple as delayed gratification and hard work more there would be many more people in that class, but it isn’t. In reality the idea of making it to the upper 10% is nearly impossible for the vast majority of people. A very few people make it on their own but for the most part the people in this class are born with extreme advantages (or “luck” as many here say). An analogy of making it to this upper class would be running a 100 yard dash. Except in this analogy 90% of people start from the starting line, are blindfolded, have their shoelaces tied together, are carrying a 100lb sandbag on their back, and are spun in circles when the gun goes off. The other 10% starts five seconds before the gun, 10 yards from the finish line in a car on autopilot.

        The growing anger and frustration towards this class isn’t envy at all. It is the continued refusal of this class to simply be honest and acknowledge that the vast majority of them got to where they are because of advantages they were born with. I know it has to be hard to admit that it wasn’t all due to “hard work”, but it’s the truth as painful as it may be. Resorting back to the old “you just aren’t working hard enough” line and labeling 9 out of 10 people “victims looking for others to take care of them” doesn’t help matters much either. If this is how you truly see things then it just further proves how out of touch with reality you really are. I guarantee you that the masses would much rather hear you say “Yeah, I was born with a head start and a lot of advantages that got me to where I am today” instead of “You’re all just jealous” and “You didn’t work hard enough and it’s all your fault”.

        • nbsdmp says

          Dan, if by “being born with a head start” you mean, loving parents, a great work ethic and a (very) little bit of brains…then I would totally agree with you. I’m 43 years old, was born into a very normal family of farmers in the Midwest and I’m sure my fathers income growing up would be considered lower middle class. I paid my own way through college, actually worked the entire time…then when I graduated I worked to learn as much as possible and further my own situation.

          Fast forward 20 years and I’m a multi-millionaire from hard work, prudent investments, delayed gratification and a willingness to take chances and believe in myself. I was given nothing, zero, ziltch… If anything like Sam, my parents tried to persuade me against doing what allowed me to be successful. My brother and sister struggle with everyday life and finances, but they also never had the drive or determination that I did.

          If you think you can’t do something you won’t, you my friend have already given up because you think the cards are stacked against you. I know many wealthy and successful people and the vast majority are guys and gals just like me who decided to change their situation and lot in life vs. accepting what was in front of them.

          Remember…you make your own luck in life!

  24. says

    Coaching is awesome, I recently retired from it ;) but I was coaching girl’s volleyball for 10 years during college and after. Plus I was an IC so everything was deductible, it was fun, all my friends did it, made some great connections(you’ve gotta be pretty wealthy to play club vb!), etc. Private lessons were even better though, $60-$100/hr for tossing some balls around, sign me up!

  25. says

    I have to disagree with your premise that it would take you 6.2 years to get back to break even (assuming no change up/down to your portfolio from the -$25,000). The reason is that you’re only using part of the apple since you have the additional income from the Personal Capital gig and monies earned on your websites. It’s probably more like 6 months given those other incomes.

    With that being said, my reality is somewhat warped since I still have a bit of that “I want my cake and eat it to” bug. I did bump my 401k up by another 1% again which when combined with my HSA contribution increase gets me to the point of saving 11% of my salary. We’ll see if I can increase that by another 1% in another 2 months.

    • says

      Chris, you’re kind of missing my point. It’s not such much the 6.2 years it will take to make up for the loss, it’s the goal of not sitting back and doing nothing about loss. Furthermore, it’s about getting in touch with the “reality” of someone who has to teach tennis for a living, or a teenager who is looking to get better while facing the outlook of college etc.

  26. says

    While on the surface I agree with you.
    Keep in mind that education isn’t the only thing it will take to turn the tide. It’s called “free will”. You see, simply explaining the mechanics behind the math like they typically do in high school, and spending all of 20 minutes during an entire school year explaining how terrible the negative choices can affect them, is where the disconnect it.
    I know that my parents simply tried to continuously say “save, save, save” (while they didn’t do that themselves), and while I was very good at the mechanics of math in school, I failed to expand on the implications of those bad decisions that I would make.

    • says

      Chris, could you expand upon this “free will”? Are you saying you did what you did due to free will and basically stopped due to free will? In other words, everything works out in the end no?

  27. Dave says

    Ah, love your ‘melancholy’ observation. But sitting in the library today at lunch break, I took in the melancholy of retirees with no real purposeful job to get back to after lunch! The place was swarming with them…cuts both ways…

    & Thanks for all your posts, enjoy your point of view.

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