How To Overcome Money Addiction: A Never Ending Struggle

Battling Money Addiction

I've got a confession. I have a money addiction. My money addiction is partially why I started Financial Samurai in 2009 and have written 2,300+ words since! I wanted money then, and I still want money now to take care of my family.

There's only about two weeks of living expenses left in my bank account before I go broke. It's very unsettling that I may have to ask for a loan to make ends meet in case something bad happens. Dad, are you reading this?

In need of some therapy, I discussed my tenuous financial situation with a tennis buddy on the public court one afternoon. He told me to hang in there and revealed a rough patch where he once racked up $50,000 in credit card debt. He felt like he was drowning because he could only afford slightly over the minimum payment each month.

When I asked him what made him go into so much credit card debt, he confessed he has a gambling addiction. Like me, he loves playing Texas no limit hold'em. But unlike me, he decided to venture into the bigger $10/$20 no-limit games where the average player held roughly $5,000 in chips. He got bad-beat one too many times and resorted to withdrawing cash from his credit card at a 24.99% interest rate to feed his poker addiction.

I don't know how much my tennis buddy makes, but I can't imagine he makes much more than $65,000 a year working at the San Francisco International Airport. It took about two and a half years for him to get rid of his credit card debt after a family intervention made him stop.

What Happened To All My Money?

So what happened between the time I published my Investment Tracker Spreadsheet in January and now? Like most addicts, I couldn't control my urge to invest the remainder of my cash balance in a variety of stocks, bonds, and real estate deals. I went from having a cushy ~$150,000 cash in the bank to less than $3,000 in a matter of weeks!

And part of why I feel like I'm broke is because I treat my investments as expenses. Because I spend almost all my money on stocks, I often face a liquidity crunch.

Here's a weekly spending and investing e-mail update I get from Empower which shows me blowing over $100,000 on investments in December. I ratcheted down spending in the first half of January until I went crazy again with my investments at the end of January and early February.

Addiction to investing in a graph

In the post, The Case For Bonds, I mentioned I wanted to build a $250,000 California municipal bond position over the next 12 months. My goal was to start buying CMF aggressively once the 10-year bond yield hit 2.5%. Well, my target was hit in the second half of December and ran all the way up to 2.6%, so I decided to press without any regard for my liquidity!

Here's a snapshot from my Citibank wealth management account. Before Trump's victory, I had $0 in California municipal bonds. Now I've got a ~$276,809 position.

I knew from past experience that having much less than six months worth of living expenses starts feeling uncomfortable. I begin to worry about my future. I lose some patience. And, I start hoping that no major investment opportunities occur before I replenish my nut. The whole idea of having enough money to not worry about money goes completely out the window once I get into these addictive phases.

But what's more, in addition to my new $276,809 CMF new position, I also invested $25,000 in the S&P 500 and $25,000 in an Austin, Texas multi-family real estate crowdfunding deal since the beginning of the year. The market kept showing signs of strength so I wanted to keep participating.

I basically deprived myself of all spending beyond my mortgage in order to invest e.g. “you spent $42 this week” per the e-mail above.

Gambling And Investing Parallels

You may think playing at the poker tables is completely different from investing in the stock market. But you're wrong. The poker player sits down with the mindset that he has the potential to make a return on his capital.

By making high expected value bets, the poker player should win in the long run. This is exactly how I think before deploying any new capital. However, even if you are an 82% favorite to win with pocket Aces against pocket Kings pre-flop, you still have an 18% chance of losing.

A good poker player will realize he can sometimes run bad. He's disciplined enough to protect his bankroll to fight another day. A bad poker player who cannot control his addiction to gambling will overly commit his bankroll until he runs out of money exactly like I have done. An addicted gambler will resort to borrowing money to keep on playing!

And guess what? Borrow money is what I did. I asked my wife to lend me $10,000 to invest in a particularly attractive real estate crowdfunding investment in Austin, Texas. 

I barely had the minimum ($15,000), but I borrowed $10,000 from her so I could invest $25,000 instead. If I had more money, I would have probably invested up to $100,000 in this particular deal because I'm all about pressing into the heartland!

Austin, Texas real estate crowdfunding opportunity
The Austin property I bought a piece of in January

As an money/investing addict, I see an ENDLESS amount of good investment opportunities. Further, once I believe in a winning idea, I sometimes press to the detriment of proper risk management controls. After all, I did borrow $1,220,000 at the age of 28 after putting down $300,000 for a SF property I purchased at the end of 2004. In retrospect, that sounds nuts!

Knowing my tendency to go “all-in” is the reason why I've at least limited most of my public equity and bond investments to large index funds. In the past, I may have bought $200,000 in one stock. Now, I'll buy $200,000 in an index like the S&P 500, with the understanding I may lose 12% to make 12%, instead of potentially losing 35% to make 35%.

I've also become more open to investing in actively managed public or private funds, which do the investing for me. Private funds help with diversification and force me to set aside capital due to my commitment.

Confining myself to index funds is one step in mitigating risk, much like confining myself to playing at the $1/$2 no-limit tables where the average player only has $100 – $200 in chips. But that still leaves my occasional inability to manage liquidity risk.

The Importance Of Liquidity

I've got to be much more responsible now that I plan to start a family. Instead of only thinking about myself, I've got to think about my wife, a helpless baby, my parents and my in-laws.

In the past, if I went broke, I knew I could subsist off of water and ramen noodles while working a minimum wage job for months until a better opportunity came along. With so many people potentially depending on me, it's totally irresponsible to be left with so little cash.

We all know the importance of having enough emergency cash to pay for unexpected medical, auto, and housing expenses. I am pleased that ~98% of you can handle a $400 emergency cash expense without having to go into credit card debt or borrow from anyone.

But the other reason for having emergency cash is to take advantage of massive irrational sell-offs! There's my investing addict talking again. When you have cash, you develop liquid courage.

Financial Samurai CA Muni Bond Holding

The Positives Of Being Cash Poor

Despite investing irresponsibly, there are some positives for being cash poor that might help boost your net worth over time. As such, you may consider forcing yourself into cash poor situations from time to time.

1) Money becomes much more rewarding. 

Thanks to my municipal bond purchases, I noticed a nice $1,000 in tax-free income hit my money market account at the end of January because I only had a balance of $3,000. A $1,000 injection is a whopping 33% increase in the balance of my account.

When I had over $100,000 sitting in my savings account, I wouldn't even notice a $1,000 dividend. What's the difference between $167,000 and $168,000? When you aren't excited about money, you start taking money for granted. Now, every dollar that comes in feels rewarding.

2) Sensitive about who owes me money. 

After going cash broke, I realized a corporate client still owes me $6,000 from three months ago. I had assumed they were just going to automatically pay me within a month. After all, they have all my deposit information on file from a previous deal. Now I'm going to follow up like a bounty hunter to collect what's rightfully mine!

Here's a list of all the past due money that's owed to me:

Corporate C: $6,000

Corporate S: $5,000

Corporate Q: $700

Affiliate F: $450

Affiliate P: $306

Affiliate R: $148

Affiliate W: $72

Personal Consulting Client: $600

Total: $13,276, or more than 4X what I have in my savings account.

3) Motivation to earn increases. 

Having no money reminds me of the days when I had to flip burgers for six hours straight for just $4/hour. My feet were constantly aching and I felt bad sweating bullets on the disgusting burger paddies. But hey, how else was I supposed to make any money to take a girl to the movies?

Thanks to being almost broke, I recently locked myself up in my place in Lake Tahoe for 10 days and wrote 50 articles. 50 is a ridiculous number for me since I only post about 12-14 articles a month. During my solitary confinement, I also had a money making epiphany that may very well bring in an additional six figures this year. We shall see!

There is no entitlement mentality now. I want to get a job again after buying a dream house to replenish my liquidity!

4) More appreciation for what you already have. 

Like many Americans, I have too much stuff. I've been actively giving away things to the Salvation Army and Goodwill for five years in a row and I still have too much! It's like having a bottomless stomach at an all-you-can-eat buffet table.

As a cash broke guy, I began to appreciate the clothes I haven't worn by wearing them again. Instead of spending money going out to eat a $60 dry-aged rib-eye, I decided to cook myself some vegetable soup to not only save money, but to eat more healthy. Instead of paying $20 to go watch Rogue One in the movie theatre, I opened up an old picture album and began reminiscing about the good ‘old days.

What I couldn't believe in the album was that I have pictures of myself and the co-creator of the hit HBO show, Westworld, hanging out in Beijing in 1997! Such a small world. She's now married to a famous producer/writer and they're probably one of the most in-demand creators today. Maybe she'll be willing to do an interview here. That's an example of how new post ideas keep on popping up on Financial Samurai.

The Return To Riches

What drives my money addiction? I think it all started when I was 12 years old living in Kuala Lumpur, Malaysia. The dichotomy in lifestyles between my rich friends and my poor friends was astonishing. It seemed completely unfair that one friend lived in a mansion with three housekeepers and a chauffeur, while another friend lived in a 300 sqft studio with his parents and sister.

I also remember giving one ringgit to a beggar at a Buddhist temple in Penang. As soon as I did, I was swarmed by 15 other women and children who almost dragged me to the ground in order to have whatever was left in my wallet. At age 12, my money addiction gripped my mind because I feared poverty. As an adult, I fear that without enough money, I'll somehow become a deadbeat father.

I forgot what it was like to live paycheck-to-paycheck, and I'm sorry to all of you who have to go through this experience more frequently. I'm always focused on sending the message of abundance, but sometimes bad things like gambling, accidents, medical emergencies, theft, and robbery have a way of beating us down through no fault of our own.

With a lot of introspection, I hope to gradually ween myself off of this never ending desire for more. In the meantime, I'd like to ask for your understanding when I sometimes go off the rails and seem clueless about the plight of others.

Steps I've Taken To Beat Money Addiction:

1) Admit my problem to myself and to others.

2) Write things out in a series of posts such as this one.

3) Left my well-paying job to make 80% less for two years.

4) Focus on work that I enjoy, not work that pays me the most.

5) Try to understand the root cause of the addiction.

Related: Overcoming The “One More Year Syndrome” To Do Something New

Invest In Private Growth Companies

If you're a money addict, consider diversifying into private growth companies through an open venture capital fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment. 

Check out the Innovation Fund, which invests in the following five sectors:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!

The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. You can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.

Stay On Top Of Your Money With A Free Tool

The best way to grow your net worth so you can eventually be free is to track your net worth. I've been using Empower's free financial tools and app to optimize my wealth since 2012. It is the best free money management tool on the web.

Just link up all your financial accounts to measure your cash flow, x-ray your portfolio for excessive fees, calculate your retirement income, and more. There's no rewind button in life. Therefore, you need to do your best to optimize the wealth you have now.

Planning for retirement when paying for private grade school
Empower sample retirement planner calculator. Are you on track? Click to find out.

About The Author

104 thoughts on “How To Overcome Money Addiction: A Never Ending Struggle”

  1. Wow, so much in this post really resonates with me. For the last year, I’ve been cash poor in order to maximize investment capital. I want to build up cash reserves, but I obviously don’t want it badly enough, because I always end up with about a two week cash reserve because I dump as much as possible into investments instead. The idea of selling investments to pay for expenses just kills me, so I end up never doing it and continuing the cycle.

    100% of my Bonus is invested immediately.

    I max out my 401K and HSA, and never touch a penny from either account.

    RSUs are liquidated immediately and I put 100% of the value into other investments.

    ESPP contributions (maxed out at $25K) and corresponding profits have previously been liquidated immediately and then 100% reallocated into other investments. For my last batch though, I’m trying a new technique of setting a long term stop loss order with the goal of hopefully holding for 12 months in order to get the (60% and still growing) profit to a state of long term capital gains (15%) instead of the regular income bracket (33%) before I liquidate and reallocate to non company stock. If successful, the tax savings will also be reallocated at 100%.

    I guess most of this behavior is based on the idea that investments feel more untouchable, while cash feels too accessible and therefore easy to spend. By being cash poor, it forces an extra level of scrutiny before I make any unnecessary purchases. It does however, lead to added stress, and forces me to manage things a little closer so I don’t get stuck. As you mention, it also provides less flexibility for unplanned big expenses or investment opportunities.

    Overall, it’s not a terrible problem to have, but it is a problem if not managed correctly over the long term. I was hoping it would get easier to let go as I hit more of my targets, but your article has me thinking that’s likely not the case. Great post, really thought provoking, thanks for sharing your situation.

  2. Ooh Sam this is a tough one for me! Being in my position (“starting out” at 25, having student loans and now a mortgage), I definitely feel like I do have an addiction to money only because it’s my “means to an end” – a life of total freedom over what I have now.

    I have been told by several readers and people who know me that they think my only concern now is accumulating money. I have a sense that they are right and I find it hard to think otherwise – although some days when I’m most grateful about my life are easier than others. I think that the closer I get to my goal, the easier it gets to take the focus off of money and I was hoping to follow that plan. Do the best I can to be grateful while still hustling towards my dream lifestyle. What do you think?

  3. Great article Sam. I struggle with the same money addiction, every cent of disposable income gets allocated to investments before my wife has a chance to see it.

    I even took it so far that I opened a HELOC on my primary residence with a 100k limit. With rates so low, plus the seemly never ending promotional rates on 1 year cash advances (1.99%), I’ve been using my HELOC to feed my addiction for more investments. With it I’ve managed to fund multiple notes netting ~12%, a development Syndicate investment (preferred return of 15%), and a land entitlement Syndicate investment (preferred return of 25%). All these deals I would have had to pass on given I didn’t have the cash at hand. ive been using the promotional rates for the last 3 years, taking a new one out to pay of the unpaid balance and fund the next deal. Even with rates on the rise, I’m still able to get sub 3% rates.

    Of course, both my wife and I are salaried and have a stabile bimonthly income that we can count on showing up right on time. So for us, I only hold a small buffer of cash. If something major did come up, we could easily liquidate our stock holdings to cover the emergency.

    One additional benefit to feeling cash poor that you didn’t mention, we live like we are on a tight budget day to day because we don’t see the money sitting there to spend. Which just gets us to our goals that much faster. However, once we reach that goal, I’m going to need to train myself how to spend and enjoy!

  4. Brad Spencer

    You know…I love this post.

    I actually have gone through this plenty of time in my ~10 year journey in Entrepreneurship. Been super flush, super crushed, and 90% of the time somewhere in the middle.

    For me, the last 6-9 months have been really good number wise but the feeling behind the “money in the bank” was wayyyyy more empowering.

    I realized with a background in finance ( I didn’t get to enter the field upon graduation back in 2008) that I am more focused on thinking of “business and investments” in monthly cash flows.

    Big “windfall” type profits make me nervous and while I love money’s energy in getting what I want…these always add more work b/c then I feel like I have to convert the windfall into cash flow.

    So, I decided to focus on creating business assets and instead of saying “this will make $XYZ per year” as the goal…I converted everything into “monthly dividends.”

    So now, I design stuff where I can say “hey this work this week will lead to $200 a month every month for years” and start letting those accrue.

    This has completely shifted me away from worrying about what’s in my account at any given moment and more toward thinking in “how can I create a cash stream?” with my operations.

    Even when we do large sales and bring in a lot of sales in a relatively short period, I always convert that into a monthly amount. So…let’s say in a weekend special promotion for our business we bring in $10,000 in sales. That is an “$833.33 per month” income stream (as an example).

    That way, I “feel” like it’s cash flow even if it isn’t. It’s a bit of a mind trick but helps me to always be focused on those “dividends.”

    Even though they’re not “dividends” by saying that instead of “profits” when I analyze my goals for some reason it just becomes a “game” rather than measuring up or worrying if I will have enough to do whatever.

    Just a lot more freeing from that beast of “money.” I enjoy the game and feel a lot better than I did years ago when I had tons of cash laying around and would get slightly lazy for a few months then boom…money would dwindle and I would be back on the chase. Now it’s just “work and do these 3 things this week to add $400 a month in ‘dividends’ to your portfolio”.

    I convert all my businesses into “investments” as if they were high paying dividend stocks then it’s just a video game in real life.

    Weird but it’s been a lot more fun building :)

  5. Sam-

    We are in a similar position. We had about 80k in cash, 100k in 401ks, and owed 400k on a house that appraised for 800k in So cal. My wife and I are both 30, with no kids. We have been looking at rentals and found a deal too good to pass up on, 297k on a condo that had an existing tenant that wanted to stay, renting for $1900 a month.

    Initially we intended to purchase it with 25% down, on a 30 year 4.12% loan. Got into escrow and owner occupancy rate came back screwed up.

    Took a 6.875% loan on the rental for 5/1 arm to get the deal done with 20% done. Yes a horrible rate, but we had managed to get an accepted offer before two all cash offers came in at 10 and 15k higher than we paid.

    The day we close on the rental we opened a Cash out Refi on our house, and locked a rate of 4% (locked the day before the election). We were at 3.875% prior to the cash out Refi.

    In short, here is where we ended up at:

    Paid off (only made 1 payment on the crazy loan before paying it off) Rental Property worth 310k that produces $1900 a month of income, net of about $1350 after taxes, HOAs, etc

    640k loan on our primary residence that is worth about 800k

    100k in 401ks (un touched)

    Paid all property taxes on our house and rental

    4k in cash.

    Like you, this scares the s$&t out of my wife and I.

    We have no debt besides mortgage and $500 a month in total car payments. Between the two of us we make about 21k a month plus the rental income. So we will replenish quickly, however it is a very uneasy feeling.

    Did we plan on spending 300k a month before the election? No. However, sometimes you have to go “all in”!

      1. Great question! I can tell you that the similar properties in the complex are now going for 320-330 for a similar unit. We got this deal during the election “uncertainty”. I do think that played a part in getting a quick deal done, the seller was a foreign investor overseas in the Middle East. Never know where your next opportunity will be!

  6. I once threw about 95% of my cash into a real estate deal, leaving next to nothing in emergency funds. Unfortunately, major repairs came up and at the same time the tenant in my other property stopped paying.

    I ended up borrowing about £3k from my Dad to cover the costs, then forced myself to make no further investments fort 6 months whilst I fully replenished my emergency fund. It’s been full ever since!

    As a side note I once heard Elon Musk spent so much money on his new venture post PayPal sell-off he too had to borrow money for rent – so at least we’re in good company!


  7. I love tools like spending trackers, or if you are like me and buy most of your items on Amazon, even the order history is helpful. I perodically look through my order history over the past year and ask myself – Did I really need this item? Did I use it? How many? Did I get my money’s worth? When I first started doing this, I was shocked at how many I was spending on things I ultimately didnt end up using much. It’s gotten much better over time. Do I still make the occasional frivilous purchase? Absolutely. Sometimes I think I will have more free time to enjoy that new video game, when I never end up having the time. But my spending has become much more efficient.

  8. Brad -

    While I do think you need a nice big fat cash reserve as an aggressive investor (as I do, because I also am) – I wouldn’t say you are “blowing” money investing. It’s an investment, not an expense. Do be careful with the liquidity though until you’ve built up some nice cash reserves.

  9. Liquidity is why most businesses fail. Companies which make profit but because they don’t maintain liquidity can quickly fall into troubles.

    Same goes for personal finance. Have some cash together and when the right opportunity come along invest. You can also get better deals with cash instead of on credit. Cash is king.

  10. hey Sam, you still play poker? Saw some live vids of the Silicon valley rich tech dudes playing, Chamath, Calacanis, with phil hellmuth. probably too big stakes for you though!

  11. Gambling isn’t “no fault of your own.” It’s precisely a fault of your own. Apparently, it’s a genetic fault too. Hope you don’t pass it on when you start your family.

    But what do you expect in a society that cut itself adrift from value production and is now totally organized around financial parasitism and speculation (which of course is simply another form of gambling)?

    1. You’re right. I hope I don’t pass it on. I realize I have a problem and am trying my best to get better. Step 1 is to admit I have a problem.

      Do you have any tips for me and any other people with gambling tendencies? Any wisdom you can provide is much appreciated. What’s your background? Thanks

  12. Sam – of course you are addicted to money! That’s why you are the Financial Samurai and write this blog! If you weren’t nobody would take you seriously and read all this wonderful content.
    Seriously though, many of us suffer from the same problems whether we are constantly invested, or have everything in cash or whatever. We worry about money, whether we have enough for today and the future. I have found the only way to tackle this problem is to take desire, materialism and try to achieve contentment. Why do we need big houses with 6 bathrooms each with a direct ocean view? Why do we need a Range Rover to drive around in? There is no end to how we can spend money. But there can be a point where we can find contentment.
    You are about to start a family and will soon realize that your greatest assets are not in some real estate investment or ETF or bank account! Kids change everything. All the math, all the priorities and all your goals in life, but in a wonderful way! Enjoy.

  13. Love the Poker Analogy.

    I have daydreamed about playing poker for extra income. Maybe hit up my local casino and play in the 1/2 no-limit games on weekends…

    Am I being foolish?

    1. 1/2 will kill you for the rake, depending on where you play. Live poker at those levels is pretty much gambling, no one folds anything!

    2. Honestly I stopped playing poker as soon as I became interested in investing. You can make a lot more money over time investing compared to poker.

      I used to grind out a ton of poker in my college days, when I calculated how much money I was making per hour, it was very low. Poker is very streaky!

  14. At certain levels of net worth & proper allocation strategy & diversified income stream, one doesn’t really need an emergency fund, in the traditional sense.

    For ex, many people have large stock and bond portfolios in after-tax account. So, if things get really bad, to the point that you can’t use a credit card with 0% interest for 1 month to get by, you can always sell some bonds and/or stocks to get buy for a month. Of course, there is the risk that you sell during a crash (although that’s why bonds are helpful as they don’t crash as hard usually). However, if someone has 10 yrs of assets in these liquid accounts, selling 2 months of assets will not change anything drastically, particularly if you have another 20+ yrs in illiquid assets as well.

    Also, if you have income coming in from 5 different sources and can get by on more than 1 or 2 of them, it also makes the odds rare that you will experience any real hardship.

    On the flipside, I like cash because if the markets crash, I get a better deal. I think this is the more critical issue for people with lots of wealth. It’s also why there are people with $30m that always have maintain cash positions up to 20-25% of their wealth.

    1. It’s true. The more income streams you have, the less of an emergency fund you need. This particular episode of getting down to less than 2 weeks of living expenses feels a lot like gambling to me. It’s like living on the edge, hoping there is no massive downturn or personal financial calamity.

      In a way, I also feel more financially ALIVE. I’m super aware about my expenses and accounts receivable now b/c I need to be. It is thrilling….. which is EXACTLY how it feels to gamble at the tables!

      Maybe what I’ll do is this…… force myself to be cash poor once a year at least for 2-4 weeks. Perhaps sort of like a money fast.

          1. I understand, I have never touched mine either.

            But my point is let’s say you need heart surgery and your insurance doesn’t cover it. And they send you the bill and expect payment in 30 days. Are you going to claim bankruptcy for a $200k bill? If not, then the concept that you don’t have emergency funds is a bit different than the traditional notion.

            Although I suspect you know this (and it makes for less exciting/interesting writing, prob why I still haven’t started a blog yet lol).

            1. I am about 1/3 cash, 1/3 stock/bond (~40:60), 1/3 real estate cash-flowing properties (some of the deals don’t flow currently because we are repositioning for refi). In the cash bucket, it’s much larger than usual because I’ll prob finally buy an apt in NYC this year or the next. After that is purchased, I will keep ~2 years of expenses in cash on hand going forward. I’m not including my private businesses as I value them as 0, but they are where the majority of my NW is.

              I think going forward, after accounting for safety cash, I will be investing every new dollar approximately 50% real estate, 30% public funds (prob just VINFX or VT) and 20% bonds (likely munis, for tax reasons). I will sell bonds to buy real estate or stock if there is a crash. I am also willing to go down to 1 yr in cash if something great turns up. If something exceptional turns up, I’ll go to $0 in my savings and checking account, because worst case, I can always sell something in an extreme circumstance. I haven’t touched capital or investments in 20 yrs though so barring any crazy scenario, I would be ok. Although I like having safety cash around just in case. If the market dropped 20-30% in 3-6 months, for ex, I’d like to have some $ on hand to buy.

  15. I’ve had the unfortunate experience of living paycheck to paycheck the majority of my adult life. Only recently have I started making enough money to not have to worry about making ends meet. I guess the one benefit of living a paycheck to paycheck life for so long is that I’m very cognizant of my spending, so much so that I don’t have to use a budget anymore.

  16. I have been sorely tempted to invest too much but have recognised the temptation and managed to resist. I think it’s fair to draw parallels with gambling because it is addictive when you get bitten by the bug.

    We got addicted to paying down our mortgage. I don’t know if that was necessarily a bad thing, but some months I left our account much lower than my comfort levels, in favour of a bit more towards the mortgage capital. Right now, it was worth it, but something could have happened that made us regret it. We’ll all make mistakes I guess, you just gotta bounce back if you do :)

  17. Debbie Pelloski

    I have an article idea I would love you to tackle with an open mind: whether husbands and wives should share finances and how it affects the marriage. I will state flat out that I think everything should be shared and that I am a bit alarmed that you ‘borrowed $ from your wife’ although I don’t know your situation, I just want you to succeed, marriage and all, especially with all the baby talk on this blog as of late:) I hope you don’t take offense, as I have never looked into any surveys or studies on the subject, but I know several people whose marriages have ended and many of them kept seperate accounts. It just seems like (to me) the two becoming one should mean everything! Anyways, I know if you took on a subject like that you would approach it scientifically and interestingly and it would probably generate a ton of comments and maybe some traffic to your blog. If it does adversley affect marriage in general, then it doesn’t seem worth it to me, as people who make their marriages last have a huge financial advantage (I have seen studies to this affect). Anyways, I would love to see a post on it!

    1. Sure, it will be a fun topic. We have a master joint account and two separate accounts. The goal is to make her independently a multi-millionaire (without me) so that no matter what happens, she and her family will always be taken care of, even if the master account, my accounts, insurance policies, etc go away.

      Hypothetically speaking, let’s say you have $3 million in your individual account and $10 million in a joint account. What do you think are the downsides of trying to create another $3 million for your spouse’s account so that s/he has a feeling of financial independence beyond the feeling of financial independence with the joint account? I would think that providing a spouse the sense of financial independence is a gift.

      I’ve interviewed A LOT of women who’ve had husbands who were responsible for 80%+ of the family wealth tell me they’d love financial independence and feeling like they DON’T have to rely on their husbands for anything. Many have revealed guilt for spending money on something, and the annoyance of asking for permission. Instead, they’d rather just spend money they’ve earned. Gives them a sense of pride as well.

      See: Poor Little Rich Women by The New York Times

      1. Debbie Pelloski

        I can see the advantage of having a little money to do what you want, as my husband is the breadwinner, but most people don’t have that much $. Isn’t a lot of your readership working towards these goals? We for one, don’t have even close to a small percentage of what you listed. And I think if you have that much, what is stopping either spouse from doing what they’d like with it? The one point, at least from my perspective, would be in case one spouse got sued, in order to shelter assets, and there are probably others, I just don’t have the kind of assets that would neccesetate looking into it. But I would still love to see an article on the marital side of things for people that still worry about money and have not reached FIRE. In the case of divorce, unless there is a pre nup then one spouse’s assets wouldn’t be completely sheltered, and having one of those in place seems to be a pretty distrustful way to start out to me.

        1. Debbie,

          The thought process is the same with: $100,000 in each individual account, and $500,000 in the joint account.

          The biggest gift one spouse can give another is the feeling of financial independence. To be supportive in his or her endeavors to build his or her own wealth. There’s a tremendous sense of satisfaction that goes with knowing one created their own wealth.

          Glad you enjoyed the article. I’ve spoken to literally 100+ women over the years who’ve felt money guilt and annoyance they don’t have their own financial accounts.


      2. Debbie Pelloski

        Wow! That article doesn’t even closely relate to the past 8 uears of being a sahm or any other women I’ve met! You should do a survey!

  18. Hi Sam,

    I know I couldn’t sleep at night with such a low cash position!! I currently have 10 years of expenses in cash or cash equivalents. My expenses also include a 50% savings rate so I guess in reality I have 20 years of expenses put away. I will save till the day I die so I always include savings into my expenses. Yes I know that I could make far greater money than the 1 – 2% I’m currently making on this cash.

    I do this for a couple of reasons. First, at one time I had 90% of my net worth tied to my business. The stress was unbearable. Second my cash position is roughly 30% of my overall net worth so I do have a substantial amount in investments. Third, and probably most important is that I’m content with what I have. That doesn’t mean I’m not always on the lookout for new investments. Indeed I am, but knowing I have enough cash on hand to cover anything life throws my way more than makes up for anything I’m leaving on the table.

    P.S. My stomach size has definitely increased with my cash position. A person definitely gets lazy when they have no sense of urgency

    Thanks, Bill

  19. The thing that strikes me most in this post and the subsequent comments is how there is no discussion as to returns on all this money?

    No calculations, no stratagy – it seems like rampant finance consumption.

  20. “blowing over $100,000 on investments in December”… LOL man you’re so irresponsible FS!!

    But it is so true that you realize the value of $$$ when you don’t readily have access to it and it does motivate you to acquire more. By the way, I’ve given away more stuff in 2016 to Goodwill too. You get a tax break and I KNOW I won’t be using these items (new VCR printer and a ton of clothes).

  21. Fiscally Free

    It’s funny you write this. We were cash poor in December for a number of unusual reasons (mostly caused by Volkswagen) and I’m planning to write about that soon. I’ve never been in that situation and it was incredibly stressful. I can’t imagine living that way all the time, but I know that’s how a whole lot of people operate, which blows my mind.

    The other thing I found interesting in this post is that you mentioned borrowing money from your wife. My wife and my finances are completely merged, so the concept of borrowing money from her is ridiculous. Have you written about how you and your wife deal with finances and why you do it that way?

    1. Not yet! But perhaps one day. Why not build three fortunes? A fortune for each spouse and a combined fortune so that no matter what happens, each spouse will always be financially independence. It’ll be a fun topic to discuss!

      1. Fiscally Free

        For me, the main reason to combine everything was for simplicity sake. It’s easier to manage one big fortune than three smaller ones.
        I think how couples manage their finances says a lot about their relationship, but that is a complicated topic.

        1. Cool. I definitely look forward to the judgements the article will produce about how people should live their lives, manage their finances, have X amount of kids, etc.

          Can you imagine not building up a nice nest egg for your spouse so that no matter what happens, she’ll always be OK? I know some guys who retire way early with less than seven figures to their name because they are selfish. They’re just thinking about how to enjoy their own life and don’t have the patience to continue working. They put their family at risk in case something happens to their finances, or there’s a divorce, an accident, etc.

          It’ll be a great discussion!

          Related: The Dark Side Of Early Retirement

  22. Thank you so much for sharing this story. My brother has been a gambler his entire adult life. It has caused many people around him heartache and it’s difficult to help someone with an addiction, unless they’re willing to be helped. He now does well for himself, but needs his fiance to control his money. Otherwise, he won’t have any and worse, she wouldn’t have any.

    I’ve been fortunate to not have to deal with any addictions like gambling or alcoholism, but I do go through obsessions. I believe my FIRE journey is part obsession with accumulating a ton of money. I have lived paycheck-to-paycheck before, but only because I was supporting myself, my daughter, and my mother. Now things are much better, as I’m married to a wonderful man and we are focusing on becoming debt-free and building massive wealth.

    I also obsess over the accumulation of real estate. Our plan is to have paid off rentals that provide enough passive income to replace our working income. Why rentals? Because I grew up in a trailer and all I ever wanted was a house. So now, I collect them. Thankfully, my obsessions are pushing us in the right direction, financially. But are they healthy? Not sure I can say yes to that question.

    1. Very insightful about all you’ve ever wanted was a house since you grew up in a trailer. I can totally understand the desire! Everybody needs to do some reflection to figure out why they are doing what they are doing. What is the root cause of the obsession? Find out, and it makes things a little easier to deal with.

      Perhaps visiting a friend’s mansion and then another friends shack the next week is one trigger that made me want to own a place of my own so early on as well. Just seeing so much abject poverty growing up in Asia scared me straight in school.

  23. Hey, long time reader here…I can relate to this feeling of being cash-strapped, albeit on a smaller scale than spending $150K in a month! We cash-flowed our kitchen renovation 6-months ago ( and definitely had a few “you spent $42” weeks ourselves.

    Personally, I did not handle the anxiety that accompanies a low cash balance and was happy to get back to a 6-months safety. For me, the benefits whether that’s motivation etc. did not outweigh the worry of living cash poor.

  24. IBFRee @ saveinvestbecomefree

    Like you I dislike having a cash sitting around and not working for me. However, I’m currently sitting on the biggest cash cushion I’ve ever had. This is mainly to manage the “sequence of returns” risk as I look at a potential early retirement.

    I’m also leery of being too greedy….my investments have done really well the last few years while valuations are high and interest rates are moving up. Things could easily keep going up for a few more years but the risk of a big drop in investment values is high enough that I’m comfortable with more cash (for now). But I’ll be much more comfortable putting it back to work when I see better investment values though!

    Note: I’m focused on stocks as my primary investment vehicle so the muni bond and real estate opportunities that you and other readers see right now are outside my focus. In early retirement I hope to have more time to expand my investing scope!

  25. Ms. Conviviality

    Readers:  This comment is not related to the post so skip it if you want to read something relevant.  Being that it is Valentine’s Day I thought it was the perfect time to share how fond I am of the Financial Samurai.

    Dear Financial Samurai,

    You had me at “FIRE.”  Who knew I would fall for you so hard and so fast?!  My life has changed dramatically ever since I met you online a year ago.  Though, I feel like I’ve known you since the beginning because, after all, I’m close to reading all your posts and comments…input from others was really informative.  I found myself going to the gym more often and staying there longer just so I could indulge in your posts while working out on the stationary bike.  Your work is insightful, thought provoking, entertaining, humorous, inspiring, and so helpful!

    I took lots of your advice and have made great progress to my net worth (according to Personal Capital, thank you very much!), became a 3.0 tennis player within a year, and picked back up on the mortgage payments (for a rental that’s 63% under water), that I had welched on for over a year, because deep down I want to be financially honorable.  At the time I had stopped making mortgage payments, it was costing me 13% of my net income to keep the place.  Buying the place was my most regretful financial move.  Actually, letting the place go and seeing my 780 credit score take a nose dive was a worse move.  Instead of getting bogged down by the situation I should have gotten defiant about it.  You taught me to take my failures and regrets and work towards eliminating the regret because anything is possible with effort.  I have always felt bad about asking for more rent but did increase it to a fair rental rate during the last renewal period, I launched a website for my side business, saved $4,000 in annual interest from paying down CC debt, and modified the loan terms on the mortgage which has eliminated the 13% “income loss”.  On top of those financial improvements, I was also promoted 6 months ago with a 10% pay raise…which reminds me of your post on how being positive brings about opportunities.

    It was an awful feeling to lose hope that my financial situation would ever change because my previous efforts didn’t seem to provide much reward.  Because of your advice I was able to see progress and that’s when the hope and visions of a wonderful future came back.  Thanks to you not only am I in better shape financially but I now have killer legs, too!  I’m looking forward to continuing this love affair so please don’t stop blogging anytime soon…and please, no more April fools jokes like the one you pulled last year ;).  Plus, don’t you still have a secret to reveal next February?

    Happy Valentine’s Day!

    Ms. Conviviality

    1. Dear Ms Conviviality,

      Wow! My first Valentine’s Day note in maybe, forever! Are you sure you’re just not saying this to all the other PF bloggers out there? If so, I understand given a unique part of the population does believe bloggers are some of the sexiest people on Earth.

      I’m really glad you’ve reclaimed hope and are making tremendous financial progress. Making financial mistakes happens to all of us. Owning up to our mistakes and taking steps to improve our situation takes a lot of courage.

      Congratulations on your promotion and raise as well! Getting recognized for work well done is so sweet. But perhaps most of all, congratulations on your killer legs. When you have killer legs, life gets much easier!



      1. Ms. Conviviality

        Took me a moment to figure out why my killer legs would make my life easier. I can’t argue with that comment because while I was hustling last year I gave modeling a try and got cast for two jobs. The pay wasn’t bad, about $200 for a 6 hour job. However, it was the industry norm to wait up to 90 days to receive the payment!

        1. Ms. Conviviality

          Aha! I think I know what your secret is, Sam! You were going to reveal that you reached FI in 2018 except you did it at warp speed and beat the goal date by 6 years. Am I right?

  26. quantakiran

    I’ve always believed that investing in uncertainties (like stocks, etc.) is gambling. And I can’t bear losing money that I’ve earned from toiling in absolute agony.

    My parents lived paycheque to paycheque for all of their lives and it was terrible growing up. But like the lemming I was raised to be, I thought once I get a good job that pays enough (and work as hard as an ant), all of those days will be over. But when I finally realised how uncertain the job market is, how infuriatingly political the workplace is, I started making financial plans (too little, too late if you ask me).

    I now live on dry bread and water because I’m saving as much as I can. But at this point in time, that light at the end of the tunnel is so faint, I can hardly see it. I hope I get through this.

    At least you have money coming in at the end of the month from your new job!

    1. “But when I finally realised how uncertain the job market is, how infuriatingly political the workplace is, I started making financial plans (too little, too late if you ask me).”

      This point you make is KEY. I could not believe how difficult it was to navigate the workplace land mines without blowing myself up early on. I had one close call of losing my NYC job in 2001 before I proactively took another job in SF before they could fire me.

      Then I dodged some bombs with the dotcom explosion, then some more bombs with the 4-7 rounds of layoffs a year in 2008-2010… I just felt my lives were close to over. Might as well save like hell all those years to prepare for life after work.

      If you can survive off just water and bread for a while, then you’ll build that endurance. Everything else will be upside!

  27. My paycheck to paycheck period was after grad school. The bottom of my market fell while I was in the program. I made it in my home for 6 months before moving in to a family member’s basement. The rent was significantly lower. This period taught me that my ideal job could not be so public interest focused that I could not afford to live in my high COL area. Definitely changed how I viewed money and what a job should supply. A job that makes you feel good about your contribution to the world, but forces you to eat ramen in perpetuity is not a good job.

  28. I’m so relieved to know that I’m not the only who suffers from this addiction to be “cash poor.” I often over-invest to the detriment of my current self. It does cause me to stretch to make ends meet sometimes, but I guess I’m a little addicted to investing. Thanks for helping me with the self awareness!

  29. Hey Sam – you may be Cash poor but equity rich! So No worries.

    How funny this post reminded me of when my GF and I use to go to Tahoe on 1 day trips coming back to the City with enough gas money and bridge toll. Haha the good ole days.

    Now, it’s on to the Casino of Wall Street. The action is back – but atleast a more calculated risk.

  30. I have the largest pile of cash of my entire life sitting in my savings account, but I need it to stay safely there for the down payment on our house! I probably sold funds, etc., too early given even more gains over the last month, but my tolerance for risk with this big upcoming purchase just became too small.

    I still have a decent chunk in our retirement funds though and, as you’ve pointed out, few things beat that upcoming military retirement!

    Now if I could just settle on what to do in my next chapter…

  31. Jack Catchem

    Hmmm. There’s some that say you haven’t truly been an enlisted man in the military until you have lived off of saved MRE military rations to make ends meet.

    You can always tell. It’s usually the Private First Class carrying a box towards his barracks or car with a set look of determination.

  32. Interestingly enough my post today was on using credit cards to get around cash flow issues. The cause of my rare cash flow issues? Aggressive automatic and manual savings amounts. Your not alone in your addiction I guess. We should create something like money anonymous.

  33. Towards the end of your post you mention has this self-inflicted cash strapped situation keeps you more focused on earning a higher income. I think this is key. Save/invest enough so that it hurts and that you do not become complacent :-) . I think I learnt this from you…

  34. We’re also self-imposed broke right now — borrowed $60,000 on our house (which had been paid off for years), so we could do some repairs and put it on the market. Bought a 30-foot trailer, which is currently sitting in our driveway, with some of the money. We still need to find the truck to pull it with.
    But looking at that trailer, and knowing that we’ll be able to go wherever we want, is immensely freeing. It makes it much easier to sell and donate stuff I got for pennies, anyways.

    My secret vice: the thrift shop. If I can find it at a real bargain there, I’m much more apt to buy that piece of furniture, painting, etc. Even if we don’t need it, or don’t have space for it. Shame on me.

  35. Great article and points. I do this as well.. I keep wanting to put more and more money into investments.. and end up with very little cash to pay the bills..

    You mention real estate crowdfunding: do you have a suggestion/site to look at, or do you have an article about this?

    Curious to look into those for investment purposes as well!

  36. As a Auditor with an MBA, I approach my personal finances from a business perspective. Part of any healthily Balance Sheet is cash. Cash is king. It is a company’s first offensive weapon for expansion and first defense in a contraction. A cash position is key. On a side note, rapidly expanding companies often find themselves in a cash constricted situations as they are continually buying assets in order to expand production to meet growing demand. Stock tip, this is why Tesla is showing a profit yet.

  37. Smart Provisions

    I’ve never quite lived paycheck to paycheck, except maybe during college, but I still had my parent’s support while working. Every time my parents would deposit money into my account to cover my expenses, it would feel heart-wrenching, because I knew they were living paycheck to paycheck to be able to send me to college.

    Nowadays, I just want to have enough to support myself and my family. I don’t need much more in my life other than being to provide just enough.

  38. This morning I had to change my credit card payment to be $1k lower because of my automatic investment triggers from Vanguard. Now when I get paid tomorrow, I need to go back and pay the leftover $1k on my bill to not incur interest. I definitely am in a liquidity crisis at the moment as far as cash goes. I did have around 10k sitting in my bank account for a long time and I didn’t invest it because I wanted to keep around a buffer in case anything happens. Well, nothing has happened except for lost opportunities. I put around 5k in CMF and I can expect that to not get hit harder than 5% over my lifetime. It’s as good as cash as far as I’m concerned (though it may take a bit longer to pull it out). I’ve been saving $3k a month for the last 6 months and pretty soon I’m going to move it up to $4k a month. It’s really gratifying to see that balance jump every month. I’m happy to see that I’m not the only one who doesn’t have enough cash/gold in case the bomb comes. I’m looking to diversify and increase my cash flow soon. My rent is too high ($2700 isn’t THAT bad I know) and it’s really affecting my ability to save. Something has to change. I’m convinced that the money I spent on startup options is as good as dead. I’ve started a blog and I’ve been posting on different mediums (Medium, LinkedIn, AskADataScientist). Though I think it will be a few years until I can get real traction. Happy investing.

  39. I guess we have the opposite problem. Have a lot more cash right now sitting earning next to nothing but feeling scared to invest as all the markets seem very high. we are maxing our 401 k but other than that have not invested much in the last year.

    By the way how has your experience with RealtyShares been so far?

    1. My experience with RealtyShares has been good so far. I was at a diversified investment panel they hosted along w/ Lending Club, Circle Up, and a solar company in February and got to meet several VCs, investors, FS readers, the RS CEO, and more.

      They surpassed the $300 million transaction milestone in January and will likely raise a new Series C round of funding by 2Q2017 if I were to guess. I’m bullish on the company and the genre, and it is one place where I think I’d like to consult/work. But, I already have a new job as a high school tennis coach :)

      See: How Is RealtyShares Doing In 2017?

      1. Glad you are happy with the investment and are bullish on the company.
        This is one area we are looking at to invest. Will probably invest in the next few days.

  40. Let’s be honest with ourselves Sam and just admit that you have more than enough “liquid assets” to live for the rest of your life probably. I do not mean this is an insult, just that you likely have investments you could tap if things got out of hand (which they likely won’t.)

    The worst thing that could possibly happen is you would need to pay some short term capital gains. Is that really so bad?

    1. Nope. All I got is two weeks of savings for now that counts as liquid assets. Drawing down investments is a sign of liquidity mismanagement. There was plenty of that happening during the 2008-2009 downturn.

      My goal is survive until the next pay cycle and liquidity event. I’m bullish the money will keep coming in, but you NEVER known until the checks actually clear. Highlighting $13,000+ in accounts receivable is an example of this. That money should be in my bank account already, but it’s not for whatever reason.

  41. RetireOnDividends


    Like you, I often find I have many more ideas (investing ideas) than cash. If you gave me a large amount of cash, I’d have no problems investing it in about 10 ideas I have at the moment. I think it is important to make sure you are never a forced seller of your assets as this puts you in a weak negotiating position or you may have to sell when the market is very weak. I comfort myself by knowing that I always have a cashflow coming in from various sources and I know that in the future (just like the present) there will always be opportunities somewhere. They may not be the current opportunities though!

  42. Since I left my job, I have been loving life. But part of me keeps wanting to go back to work. I do miss my friends at work, but money is more of the draw. We have enough, but I still find myself thinking about money a lot of the time. I keep pondering different ways to invest, or businesses to start. I don’t think I will every be able to completely stop worrying about money and thinking about how much cash I’m missing out on by not working.

    One thing that has helped me, is thinking about where I want to be in 5 years. I could go back to work and pad our net worth by several hundreds of thousands of dollars. But after 5 years of chasing money, what would I do different from now? There will always be opportunities, and money falling from the skies. I’m trying to do a better job of considering what chasing that money is costing me, and what would be the goal behind piling up more than we need.

    1. That’s a great way to think about money and your future.

      I’ve struggled with this situation:

      In a bull market, do I work to the MAX to try and make the most money possible while the times are good? OR do I kick back more because I don’t have to work as hard since my investments are returning higher amounts?

      I haven’t been able to kick back as much due to this bull market. There’s always SOMETHING that draws me to do more. Hard to say no b/c I have seen multiple downturns and they are always depressing and ugly.


      1. At current market prices, I am satisfied sitting back and enjoying the ride. I think it will be more tempting for me to get back to work if the market corrects and stocks are on sale. In that case I would be tempted to shore up our portfolio, and with fire sale prices I would get more for my effort. We’ll see, not working a corporate gig suits me well :)

  43. Gen Y Finance Guy

    There are worst additions to have :)

    Things went a little nuts for our cash balances as well over the past 40 days:

    1 – We wrote a check for $105,000 for equity in the company I work for.
    2 – We wrote a check for $33,000 to put my brother in rehab program.
    3 – We spent $13,000 to put wood tile throughout the entire first floor of our house.
    4 – We sent another $5,000 to our Rich Uncles investment account (commercial REIT)
    5 – We sent another $3,000 to our Peer Street investment account (hard money lending)
    6 – We sent $4,000 to my 401K
    7 – All of this in addition to our normal burn rate of about $10,000/month

    I think I have been reading your content for too long. I didn’t know addiction was contagious, but it is so obvious now that it is.

    Wow, $173K leaving our account in a little over a month.

    But I took my addiction (that I now blame you for) a little two far. Not sure how to make the cash flow work, I was desperate and took a loan of $27,000 from my 401K.

    Geez, maybe I should had checked myself into rehab with my brother???

    Fun post!

    Thanks for making the comment so fun as well.



    1. Dom,

      Investing ~$150,000 in 40 days based on your ~$550,000 net worth is even more extreme than my story over the past couple of months! I don’t want to joke about money addiction… so all I can say is that you might want to talk to someone to serve as your sounding board.

      I do like that you helped your bro out though. Especially if he comes out of it a better person. Best money spent!

      I hope you pay yourself back in your 401k!

      After 8 years of writing, of course I have a viewpoint on borrowing from your 401k here: Only Petulant Fools Borrow From Their 401k!


      1. Gen Y Finance Guy

        You sound so serious on your response…having a hard time reading you on this one.

        Either way, I do fully intend to repay the loan over the next couple of months. It’s not the first time I have tapped the 401K for a short term bridge loan.

        I tend to view the 401K much differently that you do. To me it is just another bucket that I can pull from if/when necessary. The fact that I also had a bunch of idle cash sitting there made it a very easy decision.

        The 4.5% on the $27,000 will cost me about $100/month in interest…that of course I will pay myself.

        This is the 3rd time in 8 years that I have tapped my 401K for a short term loan. I have always paid it back within 3-6 months.

        I think it is awesome to be your own bank!

        1. Very interesting you’ve tapped your 401k three times so far. If you don’t think it is a systemic problem, then all is good.

          The trick is to really not be a problem because many addicts don’t think they have an addiction! :)

          It may be similar to the person who has dozens of credit cards and always trying to balance transfer. Could be a smart way to go, or it could be a sign of something else.

        2. Finance Patriot

          There is a small tax problem with 401k loans where money is taxed twice. When you pay yourself back with interest, you are using already taxed dollars to do this. When you withdraw this interest later on, it’s taxed again upon withdrawal.

          1. Gen Y Finance Guy

            Yep, I am well aware of this. But keep in mind that this is a short term loan (6-months max). So those tax implications are so small they are not worth considering in my opinion.

    2. Jack Catchem

      On the upside you get to pay yourself interest for the 401 k loan! The Oroboros rises again!

      Or it’s a sneaky way to get a very reliable return on some of your 401 k.

  44. Yikes, that’s very low liquidity. You have very good income so I’m sure you’ll build it back up in no time. I don’t think I can invest down our cash account that much, though. She doesn’t check that often, but if she go to the ATM and see our balance at $3,000, I’d be in huge trouble. She needs some cash to feel secure. If I was single, I’d be more willing to go with low liquidity. I can always put it on the credit card. :)

  45. I feel sick if I go under $100K in cash, I couldnt imagine two weeks of spending money.

    I feel like $50k is my absolute minimum buffer

  46. The Green Swan

    I’ve never lived paycheck to paycheck, however I do find myself appreciating the value of money (with material possessions and such). It is always nice to have a reminder here and there though. Sounds like you have definitely had that experience which I like how you point out as a positive. Add in your world travel and first hand experience with rich and poor, I’d say you should give yourself more credit.

  47. Does Austin really qualify as “the heartland?” I guess it is in Texas, but judging from real estate prices alone (on HGTV house hunters) it seems to me to be more of the coastal tech world than the rest of Texas and Trump’s America.

    I have the same problem. Cash burns a whole in my pocket and I itch to invest until the level of liquidity discomfort.

    1. Mos def. Austin looks like it has Silicon Valley explosive potential with its current ecosystem, diversity, no state taxes, and network effect.

      I guess we shall see in 10-20 years!

    2. TheCollegeInvestor

      Speaking of liquidity discomfort… I have less than $100 cash at the moment. All my spare money gets invested. But I get paid later this week, and soon enough I’ll be cash poor again. Is it wrong to think about early retirement when you are 20?!

  48. We are in a self-imposed broke situation- at the end of last tax year we maxed out our retirement accounts and drew down our excessive emergency fund. So far this year we have been living paycheck to paycheck. We haven’t reduced our savings or debt paydown though, so there is a light at the end of the tunnel, but it is eye-opening to say the least. We are blessed to have the ability to save more than we spend.

    On another note, I may have a reading/writing personal finance blog addiction.

  49. DurianLover

    Sam, you won’t need to worry about money if you now move back to KL, you will be living in a mansion with 5 house keepers. i am planning to retire in Sabah.

  50. I lived paycheck to paycheck throughout my college days, since I had to work 30-40hrs/week to attend. I hated that feeling, and it definitely drove me to solve my financial issues early on in life.

    I’m not sure if it’s money addiction or fear/guilt, but I have a real issue walking away from money making opportunities. This includes my job, which if I keep investing more time in, would continue propelling me to higher positions, including potentially a C-level suite role. I think the solution is coming up with a hard number that represents “enough”, and then having the discipline to get up from the table with no regrets.

    1. I’m in a similar boat. I put myself through college working part time living in a rented room in a run down mobile home park. While the paycheck to paycheck part was stressful, looking back I was probably happier in general than I am making six figures with a $400k house and three cars. Now that I’ve found my “enough” number (which was surprisingly less than I expected) I’m ready to quit my job and devote my time instead to helping make the world a better place.

  51. Go Finance Yourself!

    I actually get more apprehensive if I have a lot of cash sitting around doing nothing. But then again I have a steady job as does my wife which brings in steady income well above our expenses. I seek to maximize my dollars by investing most of my savings. But I stick to mostly index funds and mutual funds rather than picking individual stocks and putting my eggs in one basket. Much like your analogy of playing the small tables vs the bigger buy ins where more is at stake during one game.

    My tune will likely change once I retire. But for now I’d rather take on a little more risk for more return. I can always tap my after tax investment accounts if worst comes to worst.

    1. I’m curious about how you define “a lot of cash” sitting around? Do you keep a standard emergency fund and consider anything else to be cash sitting around? Or do you take the approach of investing it all due to your steady incomes? I find myself in a similar situation based on your description, so your comment grabbed my attention.

      1. Go Finance Yourself!

        I keep a few thousand dollars sitting around in cash. My wife and I both have steady well paying jobs. Any moderate unexpected expense that pops up like a new a/c unit or something like that we can easily pay for. I also have a line of credit at 3.5% that I can tap if need be, as well as my taxable investment portfolio. Then there’s also equity in our house if worst comes to worst. In all, we have about $200k that we can access relatively easy and penalty free if we need to, and a very small portion of that is cash.

  52. Other than the usual college subsistence experience, it was being run over on my motorcycle that turned me into a money addict. But not in the addicted to investing way, but in the playing it safe way – large emergency fund, dividend stocks, etc. But I suppose I do have the risk taker in me since I also invest in p2p lending.

    Considering I was just laid off last month, I’m glad I’ve played it safe all these years, for myself, my stay at home wife, and my infant sons. It’s a whole new world when you’re the sole breadwinner with a whole family depending on you. Can’t imagine living paycheck to paycheck like that.

    1. Sorry about the layoff. What are your plans? I guess the good thing about being unemployed for 5 years is that there’s no worry about ever being laid off!

      I already feel the stress of being the sole breadwinner, but for two generations now. It’s probably largely self-imposed stress at the moment, but it is still stress all the same. Responsibility!

      1. I hear you. I’m fortunate that both my parents were state employees (college professors) and have state employee pensions, at least for now, so there less worry there.

        As far as my future, definitely ramped up the job search. Going self employed at this time would just be too stressful…

  53. I used to have a TV addiction that totally consumed my time and definitely cut into my ability and motivation to side hustle and be productive. Acknowledging my addiction was the first step to overcoming it when I actually forced myself to count how many hours I was watching each week on average, which was about 38-40 hours at my peak. I didn’t shake it overnight, but now I watch a few hours here and there as a fun perk not as an addiction.

    As far as money goes, I get very uncomfortable if I drain my cash down too low but I have had problems of sitting on too much cash in the past. Now, I try to invest at least $10k a month regularly so I don’t sit on too much cash. Having a ball park dollar amount goal also helps me from getting too aggressive in investing from one month to the next.

    I like your list of benefits of being cash poor though. It definitely helps with monitoring cash flow. I definitely notice when I get cash dividend deposits much more often when my cash balance is on the lower side versus higher side.

    I think you’re taking all the right steps to manage your money addiction and it’s good you’re actually investing your cash into assets versus spending it on frivolous things with little to no value. You tend to be very methodical and thorough when making your investment selections, so that’s also good.

    1. 38-40 hours a week is A LOT! Just think about how much you could be producing each month if you flipped the switch from consumer to producer?

      Glad you kicked the habit!

      1. Addictions, are not bad as far as they are identified and mastered. Plus a bit of humor I think. I am also addicted to money, because I think that’s better than drug, tobacco or alcool. My best investment so far, due to my money addiction, is to have never married… (I am 56)

  54. Erik @ The Mastermind Within

    Sam, you sly dog with your bait and switch in the first few paragraphs! I was confused if that was you or your tennis partner!

    Pretty insane to invest over $150k in one month, what is your record for an investment in a month?

    In college, I was down to my last $40 at the end of the semester one time.. that was rough for me, but since I’d already paid for tuition, books, and the meal plan, I wasn’t in too bad of a situation. In the past year, I’ve been fluctuating between 5k and 20k in cash, paying down debt, improvements for my house, investing, etc.. I’m looking to invest in real estate so I’m trying to gauge what level of cash would be optimal and which investments I could leverage to grow my money wisely.

    1. Sorry for the confusion. Didn’t realize it was confusing that I consulted w/ my friend about my money addiction, who proceeded to share and empathize with me about his gambling addiction. I thought it was a interesting way to weave in a parallel on how to fight financial related addictions.

      Your feedback helps me strive to write more clearly. Any specific tips are always helpful .

      1. Hey no worries. I’m glad your buddy was able to eliminate his debt and move on with life.

        I enjoyed the parallel and thought it was intriguing; I’ve read your content for many years and it seemed oddly similar to the April Fools post you put out when you said you were done posting!

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