One of the reasons why I continue to save so much is that I’m a perpetual failure. I’ve made so many mistakes in my life that I need a financial buffer to constantly bail me out.
Even after negotiating a severance and leaving Corporate America in 2012, I still save most of my passive income and online income each month.
It feels like eventually, this early retirement dreamworld my wife and I have been living in will come crashing down on us. In 2020, it almost did to the global pandemic.
Always Question Your Luck
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, a coronavirus pandemic.
The global pandemic began months after our daughter was born. Then, preschools shut down. Then, stocks crashed in March 2020. If there’s one thing 2020 taught us, it’s that anything and everything can happen!
Instead of waiting for disappointment, I sometimes 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.
I believe most of our wealth is mainly due to luck. To start thinking our wealth was mostly due to hard work and skill will set you up for failure.
Why I Continue To 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. I wanted to achieve financial independence even on a modest income.
Over the years, people have asked me 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. If you believe it is your duty to not only take care of your children and your parents, you save and save some more.
When life is good, you don’t save. Or at least you don’t save as much.
There’s no need to prepare for the unknown. I believe the good life is the reason why the savings rate is so low 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!
And then we see what happens when hard times come. Out of nowhere, a pandemic hit the world and the U.S. personal savings rate reached an all-time high!
The coronavirus pandemic is an extreme circumstance as tens of millions of us are unemployed or underemployed. As of December 2020, the saving rate has declined to a more normal ~10%. But still, people save more when bad things happen.
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.
Meet The King Of Failure
Failure #1: No Job Offer After College
When I graduated from William & Mary, I had no official job offer. 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 Sachs just so I could have an employer’s name next to my name in the graduation booklet. This was even though I was still in the middle of interviews and receive no offer. It wasn’t until a month after graduation did they finally welcome me in. I must have been the last person to get an offer in my Equities class.
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 to hook me up. And I got into trouble with the law while I was in high school. GS never did retract the offer once they dug deeper into my background. But I certainly wasn’t a prized analyst like others.
Failure #2: On The Chopping Block Two Years Later
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. 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 the main reason was 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.
Failure #3: Could Not Get Promoted
When I failed to make Managing Director in 2012 after four years as a Director and three years as a VP I decided to create my own luck by leaving. I didn’t want to navigate another 1-3 years of corporate bureaucracy partially because I knew I probably would never get promoted.
My overall income immediately took a 80% dive, and once again, despite having negotiated a severance package, I found myself worried about my financial future. I started saving my passive income and severance income like mad because I was so uncertain of the future.
Failure #4: My Book Didn’t Take Off
One of my ideas after leaving Corporate America was to write a bestselling book. I dreamed my book would help millions of Americans who disliked their job, negotiate a severance and find freedom to do what they really wanted.
I entitled the book, “How To Engineer Your Layoff And Be Free.” 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? Eight years later, and one huge 100-page revision later in 2019 and another update in 2020, I’m still only selling about 40 – 50 books a month.
Failure #5: Online Advertisement Network
In 2013, I attempted to create a personal finance advertisement network. 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: Considered Going Back To Work Full-Time
In 2015, I started having doubts about whether being unemployed longer than three years in my 30s was a good idea. I had failed at creating an advertising network. Further, I didn’t think having my existing retirement income and online income from Financial Samurai was good enough to support a family.
As a result, I decided to look for full-time work again. If Financial Samurai 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. I had to do something to kickstart growth.
So far you’ve read about seven large failures over the course of 19 years. However, over the past year (2015), 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 Failures In Just One Year
Here are some more failures in 2015 alone.
* 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. Will they be able to raise a next round of funding to survive? Doubtful.
* A business partner changed the way they are tracking conversions. Therefore, I’m now making 30% less with them, even though I’ve made no negative changes on my side.
And The Failure Continues…
* 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. Instead, they incubate 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. Monday is my most trafficked time of the week. Some construction worker accidentally hit up a fiber cable that took down my entire datacenter. WTF. There was no backup. This outage cost me over $1,000 in revenue.
* I lost $16,750 in income from one partner I worked so hard on. I wrote two 2,200+ word posts focused on them. I also published two newsletters to my 25,000+ e-mail subscribers about their product. When it was time to settle, they said my revenue estimate 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.
More Failures Up To 2020
In 2017, I destroyed my mind and my body by working too much. 2017 was the time to finally relax because my son was born in April. However, because I was overly worried about being able to provide for my family as someone who still doesn’t have a day job, I decided to work at the expensive of my happiness, sleep, and relationship with my wife. This was truly a failure of not being able to let go of the endless chase for money.
Between 2017 – 2019, we applied to seven preschools. We got rejected by six of them. Luckily, we were accepted by our neighborhood preschool.
In early 2019, I bought another house because I thought I got a great deal. I did get a great deal at the time if you look at comps. The property assessors office even e-mailed and called my 5X asking. They asked me to explain with evidence how I was able to get this house for the price I did. But then, the 2020 global pandemic hit, leaving me wondering whether my home purchase was a wise one.
Then I learned in 2H2020, that I left $655,000 on the table. I sold my rental property in 2017 via a pocket listing rather than though the MLS.
Failure Makes Not Trying A Tempting Path
Rejection hurts. Failure hurts.
It’s often easier to just not try so we can avoid this pain. If I think about the rejections too much, it will make me mad. I know I can run circles around my competition. I just need a 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 after more than 11 years. Finally, I’ve been able to grow 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.
Life Update 7/22/2020
I originally wrote this post on 11/30/2015 when I was at a crossroads regarding what to do with my life. Three years is a long enough time away from Corporate America to decide whether you should go back to work or live an alternative lifestyle. Any longer, and employers may shy away from hiring you.
I never did end up going back to work full-time. I just continued to focus on building more passive income and growing Financial Samurai. More than 11 years later, Financial Samurai is still alive and kicking.
Life is very uncertain now. I expect more failures along the way. Our savings will still stay above 50% as it has been for 20 years. However, I’ve better learned to deal with failure now. It’s not as painful as it once was.
For those of you who are feeling down on their luck, things will get better if you keep on going.
Updated for 2020 and beyond.