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. A landmine-filled upbringing has also embedded in me the necessity to save.
If it's not an investment mistake, it's a career mistake. If it's not a career mistake, it's a lifestyle mistake. Now that I'm in my mid-40s, random health issues are slowly popping up. Gotta save!
Over time, the self-inflicted mistakes have declined in frequency. However, I know they will still keep coming now that I'm a father to two young children. Parenting is tough.
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 dreamworld my wife and I have been living in will come crashing down on us. Need to save.
Always Question The Sustainability Of Your Good 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 for me 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 black swan global event, etc.
This is part of the scarcity mindset at work that's hard to break. But this is also adopting a “tragic optimism” mindset, which actually helps people bounce back from bad events and feel happier.
Sudden Bad Luck With The Pandemic
The pandemic began just 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.
Most of our wealth is mainly due to luck. To start thinking our wealth is mostly due to hard work and skill will likely set you up for disappointment in the future. Don't be fooled into thinking you're a wunderkind.
Why We Rationally Save So Much: Unknown Failure
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, but also your parents, you save and save some more.
When life is good, the tendency is to not save as much.
There's no need to prepare for the unknown. 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, manageable inflation, and accessible education for all.
Why bother saving more than you have to? Move to India or China, and the national savings rate zooms over 20% because life is much harder!
And then we see what happens when hard times do come. Out of nowhere, a pandemic hit and the U.S. personal savings rate reached an all-time high in 2020. Life got tough, so Americans decided to save more.
We rationally save more to improve our chances of survival. The harder your life, the more you will try to save. The easier your life, the opposite will likely be true. It's time to look deep inside to figure out why your saving rate is at the rate that it is.
Now, in 2023, the personal saving rate in America is back down to about 3%. That's no good as consumers are lulled into complacency when a recession could hit the economy hard.
Meet The King Of Perpetual Failure
Here are all my failures since college. There are many more than listed in this post.
Failure #1: No Job Offer After College
When I graduated from public school at 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. It wasn't until a month after graduation that GS finally welcomed me in. I must have been the last person to get an offer in my Equities class.
I thought the job 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. 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 was cheaper than Manhattan. But the main reason for saving more 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 Severance eBook 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 jobs to negotiate a severance and find freedom to do what they really wanted.
I entitled the book, “How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye.” 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? 11 years later and multiple revisions to incorporate the best severance negotiation strategies, I'm still only selling about 40 books a month. But that's about $4,500 a month, so not too shabby.
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 business. 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 have needed to entertain going back to Corporate America. Working for yourself is pretty amazing despite the loneliness of being a solopreneur. But my site's growth rate slowed.
Let's look at some more failures from 2015 alone, when I originally first wrote this post. At the time, I was really wondering whether I should go back to work because my wife had just negotiated her own severance. That was an interesting moment in time as another safety net finally got removed.
Now I've stated I'm sadly giving up on early retirement by 2024. This is not so much failure, but a desire to be more productive now that both my children will attend school full time.
Lots More Failures In Just One Year
* 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. That company turned out to be Upstart, which ended up going public and increasing in value by at least 15X!
* 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. Funny enough, in 2021, I decided to invested money is his new venture capital fund. Strange how we forget bad things so easily.
* I lost the remaining three years of stock options promised to me as an advisor to a company after our agreement was terminated in November. At least I get to vest 1.5 years worth of options that should be in the money. Holy crap, the company was sold in 2020, and I would have made at least $150,000 more if I had been able to keep my other options.
* 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!
And The Disappointment Continued…
* An advertising client decided to suddenly terminate our business arrangement, despite having a contract in place. While another just shutdown and decided not to pay for the work I did for them. But they paid their employees for the month. How is that fair?
* 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.
In 2017, I damaged my health by working too much. 2017 was the time to finally relax because my son was born in April. However, I was overly worried about being able to provide for my family as someone who still didn’t have a day job.
My wife didn’t have a day job either. Therefore, I decided to work more 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 out of chance since we kept bumping into one of the teachers at the science museum. We did end up getting off the waitlist for two more schools. But by then, it was too late.
Getting rejected by so many preschools is likely a harbinger for plenty more school rejections in the future. These rejections may eventually translate into my children not being able to get a secure job. Merit-based rewards is declining. Therefore, I will save and invest for them.
Bought A House A Year Before The Pandemic!
In early 2019, I bought another house because I thought I got a great deal. However, then the pandemic hit just 10 months later, leaving me wondering whether my home purchase was a wise one.
For several months, I questioned whether this was me buying near the top of the market again, like I did in 2007. Thankfully, the real estate market held up well.
Then I learned from a reader in 2H2020, that he felt like I left $655,000 on the table. I sold my rental property in 2017 via a pocket listing rather than though the MLS.
Today, I'm sure the house I sold has appreciated by at least $500,000. However, at least I reinvested the proceeds and the money has grown.
Looking Ahead Past Failure
2021 and 2022 were exhausting years as I kept up my regular writing cadence and simultaneously finished writing a 300-page book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. The book is now out and it became a #1 Amazon Bestseller and a Wall Street Journal Bestseller!
It's nice to know I'm not a failure in everything. Buy This, Not That is going to help a lot of people get straight with their money and make more optimal decisions.
Now that my book is out, I want to re-retire in 2023 and take it easy again. But that feels like a letdown when I have two young kids and a wife depending on me to survive. But I'm so exhausted from all the hustle that I just need a break.
I admire parents who can keep on working hard at work while trying to raise children. Please teach me how! The endurance needed to do both is Herculean.
Wanting To Let Go Of The Grind
Today, my continued main disappointment is not being able to completely let go of the desire to make more money. I'm trying to understand why I'm not more satisfied with what I have. That said, I have entered the decumulation phase of my life and have begun to spend more freely and give more to charities.
I've crunched the numbers over and over again. We should have enough, especially after the surprise surge in investments since 2020. Yet, I'm still grinding away more than I like. It is a befuddling problem that needs to be resolved. I think the source of all our stress is giving a damn!
Failure Makes Not Trying A Tempting Path
Rejection hurts. Failure is embarrassing.
It's often easier to 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 needed a chance. But feeling the pain of failure and rejection is exactly what I want so I never take anything for granted.
Look, I know it's not all bad. I've got my health and my family who are always supportive. The Financial Samurai community is still rocking after more than 12 years. However, it’s the unknown I’m trying to prepare for.
Having money is all about having the freedom to choose. A large cash cushion is what will help us get through the inevitable dip. Even better is having F You Money so you can do what you want!
Seek Rejection To Get Yourself Motivated
The next time you start feeling a little too good about yourself, perhaps 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.
When I hit my 10-year mark, there weren't any fireworks but I kept on going: The Secret To Your Success: 10 Years Of Unwavering Commitment
You'll feel bad at first when you get hit with rejection. But after a couple days, your motivation meter to save and work harder will explode through the roof! Put your hopes and dreams in you.
Life continues to be uncertain today. Therefore, our saving rate will continue to stay at around 50%, as it has been for 20 years. But as soon as we’re fully back to normal, my saving rate will decline.
For those of you who are feeling down on your luck, things will get better if you keep on going. Just continue to always build your savings buffer. It is the perfect counterweight for a mysterious future.
For more nuanced personal finance content, join 65,000+ others and sign up for my free weekly newsletter. In the newsletter, we'll discuss how to make more money and utilize our money to live more free. Perpetual Failure is a FS original post.