Building wealth is a long game. It's sometimes very easy to get discouraged as a result. Despite a lucky investment when I was 22, I felt very little pleasure having a large savings account in my early 20s. Money degenerates to just numbers on a screen that provides no utility unless spent.
I was actually considering quitting my newfound job in San Francisco after two years in 2003 to live a vagabond lifestyle in Hawaii. Surf in the morning, massages in the afternoon, and Mai Tais in the evening can't be that bad. Thoughts of buying a Eurovan VW to go road-tripping across the continent as I took showers at rest stops also crossed my mind.
It's dangerous to receive a financial windfall so early in life because there's a risk of saying fuck all to everything. You suddenly think building a sizable financial nut is so easy, when it's clearly difficult in a short period of time. With a sudden injection of wealth, you may never achieve your potential because you simply don't bother trying as hard.
After much deliberation and a perpetually drunk upstairs neighbor, I decided to buy my own property to “get rid” of my money. I was sick of renting and I was also unmotivated to work for money, a big problem if you work in finance! As soon as I plunked down the six figure check I felt a sense of relief. Having no money never felt so good!
Finally, I'm working for something more, I remember thinking after paying my first mortgage payment. Living in a nicer property instead of a dingy one bedroom was a reward for four years of hard work and risk taking. Slacking off was not an option because if I did I might lose my home!
Perhaps the real reason why I love property so much is not so much for the returns, but for the refocus it provides. Mortgage debt saved me from being another know-it-all kid who throws his life away at the age of 26 due to a lack of patience and perspective. A mortgage was the anchor that kept me from blowing away.
Years later at the age of 32 my enthusiasm for work once again began to fade. 10 years raced by after college but I was afraid to go out on my own because work was all I knew. The Dark Side Of Early Retirement was penned to make sure I wasn't falling into the same trap without any purpose. When the post was published, I was immediately bashed over the head by the early retirement community if you read the comments. Little did they know my goal was to purposefully bash my own crazy thoughts to make sure I wasn't missing anything before deciding to take the leap of faith two years later!
CELEBRATE MORE OFTEN PLEASE
Although I only made $1,400 from my Apple structured note, I could very well have lost $10,000 if Apple closed below $415 on the June 17 strike date. The stock is currently trading below $400 at the time of writing this post. Is avoiding a loss a win? I think so! With the small Apple win, I've decided to spend a good portion of the $10,000 I might have lost on seeing the world again.
Travel is in my DNA. When you grow up living in six different countries before your 14th birthday it's impossible not to want to continue seeing what's out there. There's nothing better than picking up local customs and learning new languages even though I'm pretty horrible at linguistics. It's the idea of pretending to be someone else in a different land that excites me most.
Each year since college I've gone on some international adventure. Last year was Amsterdam, Helsinki, Copenhagen, Brugge, and St. Petersburg to understand the happiest people on earth. The year before that was Rome, Barcelona, Malta, Santorini, Olympia, and Istanbul. This year I'm visiting Mallorca, Spain to understand how to find happiness within a country that has a 20%+ unemployment rate. Along the way I'll spend a week in Switzerland to learn about their neutrality. On the way back, I'll stopover in Frankfurt for a day to experience German precision, beer, and bratwurst of course.
There is a part of me that believes the US is slowly turning into Europe due to the growing size of our government. Structural unemployment will stay stubbornly high, tax rates will go up for everyone, and there will be less innovation as Americans learn to kick back more and live the good life. When was the last time something big came out of Europe or Canada? Exactly.
I've seen the future of America through my experiences in Europe, and I've got to admit the future looks fine. If you don't have to worry about egregious health care costs you'll be more adventurous. If you've got a huge government safety net that will provide you 70% of your last year's pay for a couple years no matter how much you make, you'll never need to engineer your layoff to protect your deferred compensation. We'll all be one big happy family that's full of socioeconomic equality.
Before your criticize me for my optimism, I encourage you to spend at least a month in Europe and see for yourself. I'm a realist who accepts things for the way they are. Who doesn't like chocolate, cheese, beer, red clay courts, bikini clad beaches, and a tradition of afternoon siestas? The European lifestyle is wonderful.
MONEY IS MEANT TO BE SPENT
There's really no point making money if you don't spend it on things you love. The key is to figure out how much you can afford in order not to come up short. Enter my savings guide by age to help keep you on track. Identify purposes for why you are saving money. Examples can include travel, a child's education, a dream property, a charity, or an around the world cruise for your parents. Financial freedom as a reason might not be specific enough.
Everyone has to find their own balance. There is a risk you just might accumulate more money than you ever thought possible at a young age and pull the rip chord too early. By the time you realize it would have been better to balance out your spending and savings habits instead of going to either extremes it might be too late!
Wealth Management Recommendation:
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Photo: Life is like a bucket of cherries. Eat too many and you'll be sitting on the throne for a very long time. Brentwood, CA, 2018.