Whenever things are going well for an extended period of time, I begin to worry. Where did all the bad luck go? Something must be wrong. I’m not sure why life has turned out OK when there are plenty of smarter, more deserving people out there who still struggle. Maybe the exhausted fumes of good karma from a past life?
The longer you live, the longer you realize nothing good lasts forever. Something bad is bound to happen – a break of an ankle, a bad investment, a friend who disappoints, a boss who lies, a disease that debilitates. Instead of waiting for disappointment, I like to seek out failure to knock some reality back into my life. Getting rejected is also a great way of keeping the ego under control.
WHY I SAVE SO MUCH
Ever since I got my first paycheck in 1999, I’ve saved over 50% of my after tax income. I didn’t care about living in a studio with another fella the first two years out of college because I needed to save. Over the years, people have asked why be so frugal? Work to live, especially while young, right?
They asked whether I thought extreme savings was learned, or part of one’s DNA. I always responded that extreme savings is due to circumstance. When you know you won’t be able to last in a brutal work environment for an extended period of time, you save. When you know tax cuts are temporary, you save to pay for the inevitable hike. When you believe it is your duty to not only take care of your immediate family, but also your parents, you save and save some more.
When life is good, you don’t save. There’s no need to prepare for the unknown. I believe the good life is the reason why the savings rate is so low (~4%) in America. We’ve got a stable government, fresh air, the internet, cheap electronics, an abundance of food and water, Social Security, stable inflation, and accessible education for all. Why bother saving more than you have to? Move to India, and the national savings rate zooms over 20% because life is much harder!
If I drill down even further as to why I continuously save so much after all these years – from flipping burgers at McDonald’s to early retirement in 2012 – the real reason is because I’ve perpetually FAILED at so many things.
KING OF FAILURE
When I graduated from William & Mary, I had no official job offer (failure #1). How embarrassing it was to have nobody believe in me after four years of studying and working at internships. I told the Economics department I got an offer at Goldman just so I could have their name next to my name in the graduation booklet, even though I was still in the middle of interviews. It wasn’t until a month after graduation did they finally welcome me in.
I thought the offer was a fluke because it came in e-mail form while I was visiting my girlfriend in Tokyo, so I decided to save like crazy just in case they made a mistake. After all, William & Mary wasn’t a target school, I didn’t have rich parents as private wealth clients, I got into trouble with authority, and I didn’t have any connections to keep me employed. They never did retract the offer, but I certainly wasn’t a prized analyst like others.
Because the dotcom bubble burst in 2000, I knew my job was at risk. I overheard a conversation my supervisor had with another Managing Director about how I probably was going to be let go in the next round of layoffs (failure #2). As a result, I frantically interviewed with a competing firm in San Francisco and left the firm before they could let me go!
At my new shop, I began saving even more than 50% of my paycheck partly because San Francisco is so much cheaper than Manhattan, but mainly because I felt like I had escaped a firing squad back East. Two years after I left, only about 25% of my analyst class remained. Further, surely my new firm would soon discover I wasn’t any good and retrench me during the next Last In First Out layoff round. After all, I was just a 24 year old kid who wasn’t bringing in any business, yet.
What I was experiencing in my early 20s was “The Impostor Syndrome.” I was making decent money, but felt I really didn’t know what I was talking about. Why the hell would/should older, more experienced clients listen to me about investing in international equities? One client called me “green as a gourd” when I traveled with him to India. Another client asked if my senior colleague could cover her instead. Confidence shaken. So, I saved and saved some more.
When I failed to make Managing Director in 2012 after four years as a Director and three years as a VP (failure #3), instead of navigating through the maze of corporate bureaucracy for one more year, I decided to create my own luck by leaving. My active income immediately took a 80% dive (failure #4), and once again, despite having negotiated a severance package, I found myself worried about my financial future.
During my time away from Corporate America, I decided to write a book about severance negotiations. Given there weren’t any books out there about the topic, and there still aren’t, I thought my book would be a runaway success! After all, who doesn’t want to walk away from a job with more financial security during a time of great uncertainty? Three years, and one huge 50-page revision later in mid-2015, I’m still only selling about 30-40 books a month (failure #5).
Between the first edition and the second edition of my book, I attempted to create a personal finance advertisement network in 2013. I brought on a partner, and we gave it a go for six months. Her goal was to bring in the advertisers. My goal was to bring on the bloggers. She ended up finding full-time employment, and I realized brokering transactions was a supreme PITA! The project was shut down a couple months later. (failure #6)
And now, partly because I have doubts about the sustainability of my online business, I decided to look for full-time work again. If my business was a runaway success, I wouldn’t entertain going back to Corporate America because working for yourself is pretty amazing despite the loneliness of being a solopreneur. But my growth rate has slowed to about 50% in 2015 from 120% in 2014. If I don’t do anything significant to improve the business, surely my business will slow even further in 2016 and beyond (failure #7).
So far you’ve read about seven large failures over the course of 15 years. There are many more failures during this time period I could share, rest assured. But over the past three months, I’ve experienced a tsunami of failures that no longer have me wondering how I could be so lucky.
Let’s enjoy them all!
NINE MORE RECENT FAILURES
Over the course of three months, the following happened:
* Didn’t get the job I spent 10 hours interviewing for at a fintech consumer lending company. They decided the scope of the work was too narrow for me, and they didn’t have the capacity or desire to pay more.
* Interviewed at a buddy’s firm for an hour, and the person didn’t even bother to e-mail back or follow up with any closure after I thanked him for meeting up. I have no plans to inquire further as I’d rather not mix friendship w/ business.
* I lost the remaining three years of stock options promised to me as an advisor to a company after our agreement was terminated this November. At least I get to vest 1.5 years worth of options that should be in the money.
* Didn’t get into a startup fellowship program after spending ~3.5 hours on the application. Yes, there were 6,500 applicants for 22 spots, but still, there was a chance!
* An advertising client decided to suddenly terminate our business arrangement. We also had a contract in place. Now I wonder about their business model going forward and whether they’ll be able to raise a next round of funding to survive.
* A business partner changed the way they are tracking conversions, so I’m now making 30% less with them, even though I’ve made no negative changes on my side.
* Got rejected from a local incubator program after spending five hours filling out the application and another couple hours going down to Redwood City and giving the pitch. This one particularly hurt because I thought I sold my value proposition well. But now that I see who got in, it’s clear that incubators no longer incubate ideas, but companies that have already been around for years and have received funding. For example, one company that got in already raised over $1.2 million and has a viable product for years already! I’ll write more about this in the future.
* My site went down for a whopping five hours on a recent Monday the most trafficked time of the week and day because some construction worker accidentally hit up a fiber cable that took down my entire datacenter. WTF. There was no backup. This outage easily cost me at least $1,000 in lost revenue and I’m waiting to hear if there is any remuneration.
* I just lost $16,750 in income from one partner I worked so hard on. I wrote two 2,200+ word posts focused on them, and published two newsletters to my 25,000+ e-mail subscribers about their product. When it was time to settle, they said the amount of leads I generated according to the dashboard they provided was wrong! If I can’t trust the numbers they gave me, then what can I trust since I have to rely on their back end data to remain whole. I followed all their guidelines and still got screwed.
The total revenue lost from all these failures is probably about $220,000 over the next 12 months! Granted, I would have had to put in hours of work at the day job and the incubator to earn that money. But still, it would have been nice to have been given a chance.
DEPEND ONLY ON YOURSELF
Do you know what $1 million dollars buys you? Only about $25,000 a year in freedom income since it’s good to not touch principal if you want guaranteed freedom. That is nothing if you have a family or live in an expensive city like San Francisco. Given we all know that $25,000 is barely enough to live a comfortable life, the only solution is to save until you have an amount that’s equivalent to provide you 100% freedom income e.g. $4M for $100,000 a year.
Rejection hurts. These past three months remind me why it’s easier to just not try. If I think about the rejections too much, it will make me mad because I know I can run circles around my competition if I just got the chance. But feeling the pain is exactly what I want so I never take anything for granted. Now I’m motivated more than ever to prove my detractors wrong!
Look, I know it’s not all bad. I’ve got my health and my family who are always so supportive. The Financial Samurai community is rocking. And I’ve grown a livable passive income stream that provides for flexibility. But all this doesn’t matter to other people, because they don’t know the details.
Having money is all about having the freedom to choose. A large cash cushion is what will help you get through the inevitable dip.
The next time you start feeling a little too good about yourself, seek out rejection from a person or an organization. Better yet, spend hours of your time trying to create something of your own only to realize nobody gives a damn. You’ll feel bad at first. But after a couple days, your motivation meter to save will explode through the roof! Put your hopes and dreams in you.
Updated for 2017 and beyond.