Dear Financial Samurai,
Happy Independence Day weekend!
I wonder whether attending The College of William & Mary, founded in 1693, influenced my desire to achieve financial independence sooner. The school was already over 80 years old when independence was declared, and nearly 90 by the time the Revolutionary War ended in 1783. History and the importance of independence were hammered home every semester.
Maybe that’s why I launched Financial Samurai in early July 2009, writing about the desire to retire early. It can’t be a coincidence. The S&P 500 hovered around 1,050 at the time, up from its March 9, 2009 crisis low of 676, but still well below the October 9, 2007 peak of 1,565. What a blessing we’ve 7.4Xed since.
I have a feeling people who pursue FIRE share two traits:
- A low tolerance for taking orders from other adults. Being subordinate to someone for 40+ hours a week, then pretending to be equals when you bump into them at the grocery store, feels odd.
- A high sensitivity to the rate of time. The faster you experience time, the sooner you want to FIRE, because life feels shorter to you than it does to the average person.
This heightened sensitivity to time is why I wrote The Power of Doing Nothing: How I Lost $120,000 By Not Waiting. When you have the FIRE mentality, you want to get everything done ASAP. But sometimes that urgency comes at a cost.
Opening Up The Wallet A Little More
I’m writing to you from Honolulu, where I’ll be visiting my parents for the month. Unlike last year, when I spent five weeks of my vacation remodeling a rundown two-bedroom in-law unit, this year I plan to actually relax. Remodeling is one of my least favorite activities. Once you’re over 40, I’m against buying fixers to remodel for potential profit. The delays, cost overruns, and general frustration are not worth it.
But as I wrote a couple weeks ago about the incredible satisfaction of never giving up, the great thing about hard work is that one day, it ends. Eventually you get to enjoy the fruits of your labor. My family is doing exactly that in the in-law unit. Not having to share a kitchen and washer and dryer when you’re a guest with two kids is a blessing.
Along the lines of relaxing, I’m also focused on spending more. If you’re a FIRE enthusiast, you’re probably far more frugal than the average person. One of the biggest problems I see among retirees of all types is that they simply can’t get themselves to spend. I recently asked a couple of 80-year-old retirees how much their net worths had changed since retiring at 65. Both said they had more than tripled.
I don’t want to see my net worth triple over the next 15 years. So I’ve been diligently trying to spend and give away more. To help with this mission, I launched a Summer YOLO Fund (new post) to burn through over the next couple of months. It happened by accident, as you’ll read. But carving out a portion of your budget for splurging is as important as investing.
In fact, after 15 years of walking past the menu, I finally ordered two overpriced $29 cheeseburgers at my favorite oceanside resort for my kids. Of course, I didn’t order one for myself, because that would be nuts. Instead, I just had bites of my daughter’s burger to save money. They tasted like $8 burgers, but with $21 ocean views. Progress!
Have Some Fun Along the Way
Finally, most of us can agree it’s far easier to build wealth by earning more than by saving more. You can only cut so much, but earning potential is unlimited.
In this vein, if you’re still on the path to financial freedom, I believe it’s better to live and work in the most expensive city you can afford. It sounds counterintuitive, but cities are expensive for a reason. Either they’re amazing places to live, or they offer incredible wealth-building opportunities. Often both.
Living in an expensive city is playing offense. If you can geoarbitrage by working remotely from a cheaper city, you might be able to play offense and defense at the same time. In general though, I’d wait until after you’ve made your fortune before relocating somewhere cheaper.
Then again, maybe not. The World Cup reminds me of all the entertainment expensive cities offer, since the great events tend to stop by. Although more affordable cities like Dallas, Houston, and Atlanta have hosted games too.
Check out: Live In The Most Expensive City You Can Afford. Just know I’m completely biased. I’ve only lived in NYC and San Francisco since graduating from college in 1999, and I’ve been coming back to Honolulu since 1977.
Honolulu Vibes
It’s funny, but just being in Honolulu feels healthier. You’re naturally outside and moving around more. The default activity is a swim, a hike, or a walk after dinner, not another hour of screen time.
Nobody here is talking about grind culture, starting a new company, AI, or the next hot IPO. Back in San Francisco, you can’t order a coffee without overhearing someone’s AI startup pitch. In Honolulu, people are just living with whatever means they have. And from what I can tell, they seem happier for it.
I plan to follow their lead this month. Have a great rest of the weekend. Our kids start summer school on Monday, which means my wife and I finally get to kick back and do some damage to the Summer YOLO Fund.
To your financial freedom,
Sam
If you’re serious about achieving financial freedom, pick up a copy of my USA Today bestseller, Millionaire Milestones: Simple Steps to Seven Figures. The greatest gift of money is the freedom it buys, and the book lays out exactly what to do at each stage of your wealth-building journey so you can get there sooner.
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