I am not an investing professional or expert. Everything in this article are my opinions and experience. Understand that they may not be appropriate for you or your portfolio. Moreover, investing conditions change constantly and it is up to you to make your own decisions and seek any financial advice you deem appropriate from an expert you trust.

Can’t I Just Index and Forget It?

In the past I have discussed, Why You Won’t Beat the Market But Still Can. In short, it is extraordinarily hard to try to beat the total market index through long term investment picking and market timing. Even if you could somehow outperform the market over 40 years, in the end you may not be any richer than someone who just focused on their career, maintained thrifty spending habits, and put their money in a total market fund like VTI (see Mr Pink in this article as an example). So why would it make sense to keep tabs on the markets, the economy at large, real estate, interest rates, bonds, etc? The answer to this is that if you can understand how all of these things are related, you can get a sense of risk adjusted returns across different areas of investing and business and make creative personal finance decisions.

An Evergreen Lesson For Investing and Personal Finance

The risk adjusted return is not always the same across different investment options and this creates opportunities. The investing environment today is a great example of how something boring like interest rates can become really exciting. I will use this example to show why it pays to understand risk adjusted returns and market inefficiencies to create opportunity. So let’s dive in to how something as boring as interest rates has made a six figure impact on my portfolio over the past few years and driven me to sell all of my rental properties.

When Risk Adjusted Returns Go Haywire

This chart above shows the interest rate yield of a one year treasury.

From around 2009-2016 one year treasury yields sat below 1%. This is pretty boring to me. During times like these I don’t spend much time trying to optimize where the fixed income part of my portfolio is. Why would I? My only focus is to park my cash in something with a positive return that keeps it liquid in case I want to move that cash if something happens. Rates bumped up a little and then the Covid19 pandemic happened pushing rates close to zero from late 2019 through mid 2021. During much of this time I earned more interest in high yielding bank savings accounts than I could have in CDs, treasuries, and even some corporate bonds.

Some inflation adjusted bonds actually went negative in yields during this time (see an article I wrote around this time titled “Investing In Difficult Markets Like This One“). It seems crazy but I was actually taking less risk, had more liquidity, and made a higher return by keeping the fixed income / emergency fund part of my portfolio in a high yield bank account rather than in CDs, treasuries, or bonds during times like that one of very low or even negative interest rates. I also took advantage of it in another way.

When Debt is the best thing in the World: My 1.99% Mortgage

In 2021, mortgage rates hit the lowest they had ever been in US history. In early summer of 2021, I took out a 15 yr fixed rate mortgage on my home at 1.99%.

I did this not because I needed the money but rather because mortgage rates seemed artificially repressed by monetary policy. Mind you, the inflation adjusted average annual return of the stock market over the last 90 years is around 7% and I get to borrow money at less than 2%?! WTF?! I can pay this mortgage off any time I feel like it but in the mean time I get to control all that cash for 15 years and only pay 1.99% to do so (plus mortgage interest payment tax deduction).

If the markets actually do match that 7% average annual performance I could end up with more than a 100% return on this mortgage over 15 years. Of course nothing is guaranteed but even as I write this in October 2023, a 15 year treasury yields just under 5%. Understanding that interest rates were at an all time low kind of sucked for the fixed income emergency fund part of my portfolio but it created this mortgage opportunity. Sometimes boring old interest rates become very exciting.

Interest Rates Suddenly Get Interesting

Let’s look back at that chart of one year treasury yields up above. What has happened from mid 2021 to late 2023? Interest rates have shot up to around 5.5%!! This is very interesting to me. For one, I need to pay more attention to the fixed income part of my portfolio. If your cash is sitting in a bank account yielding no interest it didn’t matter much in 2021 or 2022 when yields were less than a quarter of one percent. However, today you would be losing over 5% annual return by neglecting your cash management.

Why I Sold All of My Rental Properties

I am happy to have locked in my low mortgage rate back in 2021. However, I have also been running single family rental properties for the past many years. Nationally, home prices have more than doubled in the last 10 years. My rents have not doubled in the last 10 years. If you are a landlord I would ask in the comments if your rents have doubled in the last 10 years?

Moreover, let’s say I had sold a property to a single family getting a 30 year fixed mortgage back in 2021 and their mortgage payment was $1000 per month (2.65% mortgage rate). Today two years later that same mortgage payment would now be $1715 per month (8.56% mortgage rate). What effect does this have on potential buyers to pay over 70% more on their mortgage? In an efficient market, one would think that the price of a single family home would have to go down but it has actually gone up at some of the fastest rates in history over the past year and a half:

Over the past year and a half I have unloaded all my rental properties. Interest rates are a big reason for this. I am happy with my decision to sell and lock in some capital gains after years of active income as well (not exactly passive). I also have some local issues with my rental market and am happy to free up my time for other efforts. Housing prices may continue to go up. Rents may shoot through the roof. However, I am certain that housing does not look as strong today as it did two years ago. In fact interest rates are doing all kinds of weird things.

Yield Curve Inversions: When More Risk Gets Less Return

Today is also a great example of how risk adjusted returns sometimes get weird. Usually interest rates for borrowing or lending are higher the longer the term of the loan. This just makes intuitive sense. However, during the government stimulus response of the pandemic, interest rates were held low and stimulus handouts flowed. Now we have high inflation as a result and the federal reserve must raise interest rates to combat it.

As I write this article, the 10 year treasury rate sits at 4.83% while the 6 month treasury rate sits at 5.52%. All other fixed income rates of course follow suit. This means that I can make more money on shorter term loans than longer term ones right now and have more liquidity in my investment. It also suggests that bond traders are putting their money behind interest rates falling in the future and/or are perhaps concerned about a recession.

Investing When The Boring Becomes Exciting

Ten years ago no one talked about interest rates. Today they are the elephant in the room. Boring old interest rates made me more money with less risk when I kept my fixed income / emergency fund in a high yield bank account instead of bonds or CDs for most of 2009-2016 as well as 2020-mid 2021. When Interest rates dropped to the lowest they’ve ever been in US history, in 2021 this sucked for the emergency fund / fixed income portion of my portfolio but presented an opportunity to lock in a 1.99% mortgage. Not boring at all! Now as interest rates are spiking, I am making money in a shorter term treasury ladder with less risk and more liquidity than longer term treasuries or bonds. Lastly interest rates were a large factor in me selling off my real estate portfolio and you can all laugh at or praise me for that decision as we see what the next few years look like.

The Timeless Lesson: A Deeper Understanding Pays

While interest rates are interesting to me now, in 5 years it may be tax policy, corporate bond structures, or a transition to stock picking over indexing for example. The broader lesson that I hope this article conveys is how a deeper understanding of the markets, the economy at large, real estate, interest rates, bonds, etc, can create investing and personal finance opportunities even if you are not a market timer and a stock picker per se. The risk adjusted returns of different investment options fluctuate. A deeper understanding pays.

What do you think of me selling all of my properties and these other moves I made? Am I missing Something? Do you agree with the broader lesson about how a deeper understanding can pay even if you are not a market timer or a stock picker? Please chime in on the comments section below 🙂

I’m passionate about financial independence, happiness, success, and adventure. Consider subscribing below to get occasional emails directly from me with a few thoughts and latest articles. It’s totally free and totally worth it, I promise.

The post I Made Six Figures Off of Boring Interest Rates first appeared on Life Outside The Maze.

Is Frugality Toxic?

The straw man reads as follows, the world is good at teaching us all to save money but the real problem is that most people suck at spending it well.  Hence, they amass huge piles of cash and sit there hoarding it like a miser.  Those advocating a path toward early financial independence love the word restriction like someone who likes to pick at scabs.  They wrap themselves in spreadsheets to keep themselves warm at night.  I don’t hate them but… so goes the straw man narrative.

There are horror stories of multi-millionaires who drive all over town to save a few cents on gas and others who can’t even vacation where they want to because they must use their miles on an airline that does not fly to that destination. Moreover, these wealthy scrooges say that they want to change but they actually really don’t. 

What if we flipped the question and asked, “Why pay less money when you could pay more money?”  Also what if you 10X your spending on things that you really love?  How great could your life be? What joys are you missing out on?

Anyone who challenges this narrative is either a foolish restrictive scrooge or financially illiterate and therefore poor and hence unable to appreciate the problem of actually being in a position to spend more money better.

Frugality & The Financial Independence Community

Surprisingly, many in the financial independence and retire early communities seem to be making large purchases and embracing this narrative recently.

One podcaster that I have much respect for recently ran an episode where he talked about spending more money.  

After years of being admittedly overly frugal, he came to a realization that he was not using his money to maximize his life.  He met with a coach who urged him to spend way more. This spending thing is incredible, he claimed while describing how he bought a really nice coffee maker and was kitting his house out with stuff on Amazon.  He questioned what he had been missing out on for the last 40 years of his life and remarked that his money coach would be proud because he has doubled his spending over the last two years.  He acknowledged that he had made a lot of progress but still had a ways to go.  It would after all be a great tragedy to die with millions in the bank, he asserted.

Much of this talk seems to fly in the face of frugality as a strength, stoicism which so many once championed on the road to financial independence, fifty years of research into hedonic adaptation, as well as much research around the link between happiness and money.  So what is going on here?

Recency Bias Post Financial Independence?

I jokingly want to call this trend of rejecting frugality, “everyone in the FIRE community turned 50 at the same time,”  because this sort of toxic frugality rhetoric seems a product of recency bias among those who have not adjusted their spend into later middle age as their portfolios have swollen over a historically phenomenal stock market run. Now these folks are newly opening their wallets and experiencing so much of the convenience as well as dopamine spikes that most average consumers do on the daily.  One well known coach is seizing this moment to inherit their audience and denigrate their original message while getting thanked for it.  So let’s unpack this.

Frugality & Money Coaching

First off frugality is of course not toxic. It is simply a mindset, a practice to look at spend versus value rather than consuming as a reflex. After all, we are hardwired to consume. It is in our DNA and your drive to consume is what makes capitalism work which kinda makes the world go round today. In fact being a money coach that helps wealthy but overly frugal people spend money sounds like a great job. Convince people to do something that they are hardwired to do but have been habitually avoiding sounds a heck of a lot easier than say getting them to worry about, save, and invest money for 10 years so that they can be in a place of financial independence and then not have to worry about it at some point in the future. I am in the wrong line of work. Also as a money coach, you know that your clients can pay you well because they have boatloads of money that they need help spending. Maybe I could even accompany my clients on some spend coaching sessions where we live it up Lifestyles of the Rich and Famous style with caviar and wine that I can’t pronounce. Please sign me up for this job. Ok jokes aside, there is an opportunity for empathy and learning here.

When Frugality No Longer Serves You

Any strength over used or mis-applied can be a weakness. It is easy to fall into habits that once served you but no longer do. I certainly have my own overly frugal vestiges and need to nudge myself here and there to update my thinking. I am also a firm believer that spending habits should change based on your stage of financial independence and covered this topic in depth some months back. Certainly a 50 year old with millions in the bank should be spending differently and making different money decisions than a 20 year old who still has student loans and does not yet have compound interest working in her favor. I can see how it might feel like a revelation to someone who has been frugal for years to realize that this frugality has now put them in a position to be able to do exactly the opposite. Yes you now can buy that fancy bakery bread, that fresh $6 salsa, that chunk of fresh Alaskan halibut for dinner. Moreover, money can buy convenience and can be spent to save time in some instances (I have been working on that one in particular). If you have the finances to support it by all means go for it. That is the very reason you put in the work, so that you could live your financially independent life. However, realize that it is no more virtuous to spend than it is “toxic” to practice frugality. Spending twice as much money is not “progress,” it is just spending more. The notion that an optimized life means spending in accordance to your wealth is kind of silly.

Optimized Spending?

The straw man argument is that you are living a deprived worse life if not spending commensurate with your means.  By this logic, someone like Bill Gates is living a deprived or under utilized life if he does not spend at least $12.6 million dollars a day.  Clearly this seems ludicrous and it is.  Research suggests that beyond a point, more spending does not mean more happiness.  Moreover, hedonic adaptation research pretty consistently indicates that while someone who buys an expensive coffee maker and just loves pushing the knob and grinding the beans may have some short term euphoria around the new freedom of buying lots of stuff, this same guy will very quickly adjust to that new level of consumption and will experience it as just another cup of coffee after 6 months or so. Again this is not a problem when one has the extra cash to afford it but it is also not a virtue either.

Is It Actually a Tragedy to Die With Millions?

As someone who faced the prospect of dying with millions in the bank, I can tell you that it was not a tragedy in my mind at all.  While the money gave me security through cancer, it did not solve my problem nor did I fear the tragedy of having not spent enough.  The tragedy was the possibility of not being there for my kids and the missed experiences as opposed to whether I wore a $30 sweater or a $300 sweater.

What do people on their deathbeds actually regret? These five common regrets of the dying do not have anything in them about making sure you spend all of your money or about optimizing some money, time, consumption equation, however, they may yield insight into how one might spend money well to help meet more meaningful goals:

1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.
2. I wish I hadn’t worked so hard.
3. I wish I’d had the courage to express my feelings.
4. I wish I had stayed in touch with my friends.
5. I wish that I had let myself be happier.

Is Money The Barrier to Your Rich Life?

Let me reiterate that from a pure financial planning stand point there is nothing wrong with lavish expenditures that you can afford but there is also nothing right about it.  In this past year, I have eaten at perhaps the most acclaimed restaurant in the USA (the French Laundry), rented a private villa, and dropped crazy cash on the beaches of Hawaii:

 These things cost a lot of money and were great. I have also taken my kids to a show at perhaps the most famous opera house in the world for 15€ each, and stayed in an extraordinary palace for the price of a hotel room. One of my best days of this last year was a magical afternoon just skipping rocks and biking by a river with my family.

These things cost very little money and were also great. My point here is three fold:

1. Spending more money does not necessarily mean a richer life.
2. Great experiences need not cost lots of money.
3. Living your rich life can be done with currencies other than money such as time, relationships, and timing.

I have found that time and intention have been the bigger barriers to realizing my Life Outside the Maze than money has. Sort of like where there is a will there is a way to do some version of what you desire and it is possible within your means. These are profound truths to me that I have experienced post financial independence and this is why I felt compelled to write this article.  In fact I talk about some of this at great length on episode 109 of the Ordinary Sherpa podcast if interested in hearing more.  Another problem with spending more for happiness is that it is a truly a bad message for the average American.  

What Is the Barrier To a Rich Life For the Average American?

Is the real problem For the average American that we are all taught how to save but not how to spend well?  Nope, not even remotely.  The real problem is that we suck at saving and investing.  Look at the data, household debt is high and rising, only about 1/3 of Americans own stock outside of their retirement account, and most Americans are not saving enough for retirement.  

Is it harder to teach people to spend well than it is to teach them to save and invest well?  Clearly, the data above and common sense experience indicates that it is a bigger concern to get people to financial independence than it is to get them to use their money better once there.  Moreover, with higher inflation and headlines these days of households taking on debt simply to buy groceries or even taking on debt to buy school lunches, it feels irresponsible to be putting out a message to spend more and spend better in order to be happy or have an optimized lifestyle .  

Financial Independence & A Rich Life

I love the idea of harnessing people’s emotional aspirations toward a great life to get them to take action with their finances.  Perhaps this more inspiring sell has not been focused on enough in the financial independence community.  However, I have been active in this space long enough to see multiple opinionated gurus take shots at it for the sake of growing their own platforms and differentiating their message.  I hate it, hate it, hate it.  It plays well to be provocative and when everyone else is an idiot you set yourself up as the one true voice.  This concerns me.  Let’s stop furthering the myth that more spending will make you more happy ad infinitum.  This is simply not true.  While the idea of spending 10X on something you love is exciting, it is not a solution to the things that actually create a good life any more than wrapping oneself in the warmth of a giant bank account balance is. The truth is that careful application of money, time, and intention to doing something meaningful to you in the company of people you care about along the way is a better way to think about things. Having financial independence gives you freedom to focus on that. Spending 10X may sound alluring but research suggests that it does not create sustained greater contentment or wellbeing in one’s life. Increasing spend may be marginally easier, more convenient, and/or save some time, however it is not necessary to live a rich life.

What do you think? Feel free to chime in below in the comments.

The post Toxic Frugality and Financial Independence first appeared on Life Outside The Maze.

Oh man this couldn’t be more fitting.  I just left my 6 month post treatment follow up blood draw.  As I run these trails around ponds and past the Breckenridge Brewery, Machines in a lab will whir and eventually the blood markers will confirm that I remain cancer free six months after chemo.  It has been a hell of a year!  I am truly truly elated to be here.  I spontaneously decide to write this post in my head as I jog along.  Today couldn’t be a more perfect fit.  

The Worst Year…

I started off year 4 last October thinking about relationships and mission quite a bit.  How can I make both a bigger priority in my life?  As I carefully stacked these dominoes and considered the pretty design that I could build, suddenly a big snarling dog busted in and tore up the room slobbering all over everything.  Oh well all you can do is laugh…but not really.  I found out in early December 2021 that I had testicular cancer.  By mid December, I had been through surgery and found out that it had metastasized into my abdomen as well. 

Rather than focusing on optimizing my relationships and considering lofty coffee sipping ideas like “mission,” I had to quickly become a cancer expert and navigate the perverse payer and provider carny shell game that we call the US healthcare system like my life depended on it… it may have.  Soon I would become something of a zombie for a couple of months. Later I would come out of the other end of chemotherapy as a “cancer survivor.”  It still overwhelms me to use that phrase out loud.  Maybe it is a mixture of emotion and some fear at tempting the fates by claiming victory.    

…Turns Into The Most Manic Year

When I finished chemo, I couldn’t walk a city block without wheezing from exhaustion.  I also found out that I had gained weight while eating to stave off nausea and my liver enzyme levels had spiked to levels that indicated early stage liver failure right after treatment.  I was told that I either have chemo induced hepatotoxicity or else early stage fatty liver disease.  A funny thing happens when you just went through the possibility of losing all of your health. You start to care about it immensely. So I stepped away from drinking any alcohol and I decided to be like Forest Gump:

“I just felt like running”

Forest Gump

At first after treatment I could hardly walk around the block let alone run:

I ate as healthy as I could. I gave up herbal teas and started drinking coffee. I tried to trim out fat and sugar. I ran along the Kona coast and down beaches on Kauai.

I ran right through a march to end gun violence and also along the pride parade route while in Washington DC trying to show my kids something about freedom and the American ideal.

After losing about 20 pounds post chemo my enzyme levels fell more than the 2022 stock market. Within 3 months, I was back to normal ranges on everything! Looks like it was the chemo after all. My liver started to work again and I even got the green light from my Hepatologist to celebrate with a drink or two. So I ran through the hills of Napa and Sonoma:

I even jogged along the Bridger range in Montana (bear spray in hand):

All the way back to the Red Rocks of Colorado

Which brings me to this morning as I run about 6 miles down the South Platte trail. Everyone smiles at me as I pass and I wonder why until I realize that I am grinning like a fool most of the way. Look at that I even have hair again:

Reasons To Celebrate

Just as I wound down treatment and my boys wound down school, my lady left her job and shifted into an advisory role. She had been working post financial independence for reasons beyond money. However, after 6 years of hard work toward a mission she believes in, the startup has really grown. In fact if it exits some day, our finances could dramatically change. She worked hard to set up her organization for continued success prior to this transition while also stepping up during my treatments. She went through the cancer as well while basically holding the family together and being the only functioning parent. She was ready for a much deserved break. So there we were both not working, realizing a moment of her leaving her job and I am also cancer free (knock on wood). Let’s celebrate! We did in the most ludicrous over the top fashion that I could imagine.

We went to Hawaii and saw lava erupt from Kilauea:

I dove with giant manta rays. We jumped off of waterfalls, explored little known lava tubes, kayaked, and floated along perhaps the most beautiful coastline in the world (the Napoli coast):

We went to the Whitehouse and stared at the Declaration of Independence and the Constitution from just inches away. I read MLK’s type written “I have a dream” speech and toured the monuments.

I caught fish with good friends and family and I got off the grid

“Live in the sunshine, swim the sea, drink the wild air… It is not the length of life, but the depth.”

-Ralph Waldo Emerson…via TM shirt 😉

We went to wine country and did it up huge. We even hit up what may be the best restaurant in the world which I will write about soon. I wore ridiculous clothes, learned about wine even though I am more into beer, and stayed in a chateau complete with a private pool:

I thought the wine trip would be more for my lady, a celebration of all of her hard work and a few days to declare a mini victory of sorts. However, I may have had just as much fun as her or even more. I also may have snuck away from vineyards to hit up Russian River Brewery as long as I was in the neighborhood:

This was all straight up joyful and fun. A weird and manic year where the worst winter and spring was followed by maybe the best summer. While the summer was a great celebration, it wasn’t jam packed with growth or learnings. So what did I actually learn from the year?

All and Nothing

You can have it all and have nothing. After 3 years away from traditional work, our net worth had reached more than double what it was when I left my job and claimed financial independence! A combination of a 65% gain in the stock market over those 3 years, a huge appreciation in housing while I ran rent generating rental properties, and continued income from my lady working along with some tiny income from my funemployment as would be college professor.

Coming into last December, my lady had been talking more about perhaps leaving her job to focus on some other things for awhile. The world seemed to be our oyster. We would have some time together living parallel lifestyles instead of living different ones. All the possibilities. Then everything shifted. The early days of my diagnosis were especially hard. Everything was put into jeopardy in the early stage ambiguity of my prospects. Did my lady make a poor trade on her time if the cancer proved to be more advanced and we had little time left together? Had I been focusing on the right things?

I wrote about what a great comfort and safety blanket financial independence was for me in this time. While you just saw some glorious pics of our celebrations from the summer, they are not the most impactful. They are not what I am happiest to have back.

The Most Most Glorious Things in my 4th Year

A serious health problem is a challenge to your philosophy. I feel like mine held up. The most important things to me coming through this are time and health to spend with family and friends. What you don’t see in the pictures above is that they were with me for every one of my experiences this year. My lady, my kids, my family, and my friends. Some of my greatest times of the year have been the laid back morning discussions I have had with my lady over coffee. When I finished chemo, it was awesome and ludicrous to live it up in California wine country but what I hold more dear was being able to be there for my little brother’s 40th birthday. The look on his face when I surprised him and catching a hockey game with my siblings. And of course just health. Hearing, eating and tasting, brain working, body working. A reminder that life is a miracle truly a statistical one in the universe and a fragile one just a blink through time.

Lessons From Cancer

I am still learning and processing these lessons but I can tell you that the things that we worry about mean nothing and the things we take for granted mean everything. I have learned that PTSD is not really a D at all and it’s not just for soldiers or victims of intense violence. We are all the cumulative experience of large or small traumas that we carry whether we know it or not. I have things to process. Maybe we all do.

I have also learned that security is of course an illusion. My cancer could come back. But I could also get hit by a car or get jumped by a mountain lion on the trail. Whether it is financial fears or health fears, I must live life inside this uncertainty precisely because it is precious and uncertain.

What I Learned About Money After 4 Years Outside The Maze

I mentioned above how our financial position has strengthened over the last 4 years. While this is faster than average, it is not exceptional to have more money over time after reaching financial independence (FI). It is important to remember that while I planned conservatively using things like the 4% Rule, the median value of a 50/50 stock and bond portfolio after 30 years of living off of the 4% rule is about triple its initial value. In addition, all of the habits, skills, relationships, and systems that you have set up to get to financial independence do not just stop once you hit a number. They keep yielding value and keep compounding. This is not a plea to just recklessly claim FI before you have hit your number, especially in this volatile stock market time with a historically high CAPE ratio and inflation challenges (as I write this in October 2022). However, my learning is that wealth is easier to accumulate as the returns on your existing wealth, knowledge, relationships, and habits continue to compound. My message is to get compounding now! Small gains become huge over time.

Changing My Money Mindsets

To some degree, money is of course a tool and a requirement of modern life. I think that many also believe that money is the barrier to so many aspects of their “better life.” As I look back over the last 4 years away from traditional work, it is not spending big dollars, but rather the reduction of noise in my life, more time availability, and more commitment to other things that have allowed me to do most of the things, pursue most of the personal growth, and pursue most of the adventures that I have. While this has certainly been empowered by money indirectly through reducing my financial worry and freeing up my eight to five, it usually has not required a great deal of spending. This summer was a bit different.

I recognize that this summer was one of some particularly extravagant adventures. Perhaps the very kind of things that motivated me early on the road to building my financial independence. I likely would not have done these things the same way 10 years ago while saving toward FI. Maybe they were appropriate for us this year? They were certainly within our means. Paradoxically, the habits that got us to FI may be different than what serves us going forward. The focus areas for claiming FI and recognizing that new found position may be different than those post FI when preparing for a later stage life of purpose, identity, or connection. Hopefully one that lasts ’til I am 100 😉

It is fascinating how my money mindset has changed over the different stages of FI (saving to get there, realizing my financial independence, and post financial independence) and I plan to write more on this topic soon.

We Are The Story We Tell Ourselves

Earlier this year, I got some advice from a friend, Carl Fismer, who I dove for treasure with awhile back. He told me to make sure that all of my doctors know that I am going to beat this cancer. The stories we tell ourselves matter. Carl, now in his 80’s has beaten multiple primary cancers in his life.

I could tell myself that I am extremely unlucky to have gotten this cancer (about 1/15,000 per year in the USA), or I could tell myself that I am extremely lucky to be a cancer survivor. I could tell myself that I am healthy now, or I could tell myself that I am unhealthy and the cancer could return at any moment. I could tell myself that bad things are temporary but generally I make good things happen. I make good decisions. I am honest and I do right by people. I work hard and I always deliver. I am a renaissance man. I can do anything that I want as long as I am willing to put in the effort. I am a good friend and business partner. These are in fact the stories that I do tell myself. These stories that we tell ourselves have a huge impact on our outlook and values which in turn drive every decision and action day to day. This in turn can set one’s trajectory though life. We become the stories that we tell ourselves.

Looking Forward To Year 5 Outside The Maze

As I make my way toward a bridge, I pass the same 2 deer along the river:

I am almost back to my car and I suppose I am winding down this 4th year summary as well. You haven’t heard from me much this year compared to last. Part of that is because I had more pressing concerns. However, part of it is also by design and was one of my goals coming out of last year’s reflection. I plan to continue to write when I feel that I have something useful or interesting to say. At the same time, all of us have better things to do than put out and/or consume endless online content for the sake of influence or attention. Inspiration and insight are good and I hope this update provides some and finds you making progress. However, we would all do well to kill the masters on the path. Be well and let me close by again thanking all of you who reached out over the last year when I needed it most. I continue to believe that we could use more kindness these days 🙂

I’d love to hear your learnings or insights over the last year if you feel like sharing in the comments below.

If you’re interested in financial independence, happiness, successful habits, and adventure, consider subscribing below to get an occasional email directly from me with a few thoughts and latest articles.

The post Lessons Learned From 4 Years Outside The Maze first appeared on Life Outside The Maze.

Getting Pulled In

I overheard a discussion from the gathering group next to us where a woman named Stephanie and her husband were talking about how they used to stay in cheap hotels but now can afford more luxury brands.  She revealed that they were financially independent with a buffer and talked excitedly of how they now can afford to buy more expensive things.  I remembered back to my own financial independence journey and how I did a few victory laps when I found out that I was FI.  There was a definite excitement to the idea that I would never need to work anymore to make ends meet.  However, I also thought back on the necessary redefinition of work that I had to go through to feel purposeful.  I thought of the risk of hedonic adaptation one faces as standard of living is increased, and the risk of always feeling like you then need 20% more in order to have enough.

Stephanie and her husband shared that they had amassed enough money to live off of investments under the 4% rule.  However, since the 4% rule is something of a worst case safety net, I offered that in time they may have triple what their current net worth is.  What will you do then, I asked?

They offered something about how they will fly business class all of the time and kind of laughed.  

Yes but if you are part of this community you must understand that these increased expenditures rapidly fall into diminished returns on your happiness.  What is the meaning going to be in your life and how can your finances empower that?

The irony of this conversation is that I was specifically at this event to support my friend Jordan Grumet aka Doc G and celebrate the launch of his book, “Taking Stock.”  

Taking Stock

Only 20 minutes prior to my discussion with this young couple, Jordan had shared lessons that he had learned from taking care of the dying for more than a decade as a hospice doctor.  What are you going to regret on your deathbed and what is really most important for happiness and meaning in life?  Jordan has spent years helping others at end of life as they reflected on and weighed in on these very questions.  He is also host of the award winning Earn & Invest Podcast where he has interviewed hundreds of financial independence folks including myself twice(1,2). 

Jordan may be one of the most thoughtful and compassionate people that I know in the FI community.  In fact hospice work is something that he has chosen to do post financial independence.  For those who have written books, you know that this is a labor of passion as opposed to one of financial gain.  Most books sell less than a thousand copies. Jordan worked with a writing coach, spent thousands of hours, and did 3-4 re-writes of this book to do his subject matter justice.   

During the event discussion Jordan read the following passage from his book:

“Daddy, what does it feel like to die?”

I drew her in close and held her tightly. “My sweet child, I’m still trying to figure out what it feels like to live.”

What is a good life?

Taking Stock covers the basics in taking stock of ones finances in order to empower living the life you want.  This includes different paths to FI and financial planning.  However, Taking Stock spends more time on taking stock of ones life:

• How to leverage your resources to develop purpose, identity, and connections 
• Cutting through what some “FI experts” get wrong
• Why Maslow’s Pyramid needs to be flattened
• How to understand time and best work with it in one’s life
• The power of doing now the things most wait to act on until on their deathbed
• Some of the most powerful investing is not done with money

What is Wealth Really?

The truth is that when many of us talk about wealth it is really a good life culminating in a good death that we are seeking.  As Jordan himself mentioned in his talk, when people in the FI community get together they rarely talk about money but mostly about other things.    

I can vouch for this point first hand.  Earlier that same day, I spent a few hours having lunch with Jordan and a friend and then I took them both on a hike up to this awesome view:

We talked about life and mission.  We shared stories.  The subject of money or optimizing finances didn’t come up once.  In the early afternoon, we met up at a brewery with some other FI folk.  My friend Leif, The Physician on Fire, was in town for a visit and showed up with his family.  When I started writing online, Leif was one of the first to give me some help and graciously gave me an opportunity to guest post.  At the brewery, he showed up with armloads of pizzas for everyone and we even got to celebrate his wife Rayce’s birthday with a cake.

I think of that night at the launch event for Taking Stock.  My friend (and the man that brought me into this community years back) Carl aka Mr 1500 Days emceed the event and helped organize.  Many brought food and drink and/or helped out.  

I remember back to talking to Stephanie and her husband later that night in the kitchen. I am not against spending money but rather interested in spending it well, I explained.  It is not just money that compounds. Habits, skills, and relationships do too.  If you find yourself in that situation where your finances have grown far beyond what you can spend, you could use that money to fuel the other things that have compounded in your life and have a better life and a broader impact.

Or I could just donate the money and let someone else do the work, she offered.

Yes, but you would be giving up something meaningful, I said.

I thought of Pete (Mr Money Mustache) who had stepped away from this kitchen conversation quite awhile ago.  I don’t know Pete very well but I see him occasionally and we have many friends in common. As a sort of unintentional celebrity of the FI community, I know lots of people are vying for Pete’s time and he must turn down a lot of offers.  He doesn’t write that much online these days.  However, he helped fund and build this gathering place and community where we were all talking.  I see Pete helping people out all of the time here and doing informal sort of coaching and mentoring.  I know he sometimes writes for the local paper and has a sincere and deep commitment to community even if or perhaps because he is not writing about it online every day.  

As I wrapped up my discussion with Stephanie and the others, she mentioned that she does some life coaching.  She also offered that she could help me spend my money if I would like and she gave me her email address.

I don’t know if she and I have different thoughts on financial independence and what a good life means or if rather we are just at different stages of our FI journey. However, this could not have been a more fitting audience for Taking Stock.

I think back on that whole day and all of the goodwill and work that others from the community have offered myself and others.  I try to offer some as well.  Based on his book, I think Jordan would call this “connection.”  Maybe we each receive only what we are ready for.  

Should You Order Taking Stock?

For those saving for financial independence, Taking Stock offers some paths to get there and approaches financial planning in an engaging and easy to understand way.

For those who are already financially independent, Taking Stock warns, “I see the same issues arise for the newly financially independent as the ones that surface for my hospice patients when they’re conducting a life review. The only difference is that for the financially independent, these issues are occurring much earlier, when the individuals are young and healthy. And that’s when I realized that money and wealth are stunting our growth.”

As the night wound down for this book launch I remember talking about how I am coming out of this year of going through cancer and thinking of what is next in my life. On one hand I am considering starting some type of larger endeavor that could look like a business. On the other hand, it was less than 6 months ago that I was laying in a bed, had no hair, and nothing worked. All I wanted was more time to enjoy with my wife and family, to be able to enjoy food again, to have time. Throwing myself into an endeavor could put this happiness in jeopardy or create a temporary untenable situation which I am hesitant to do because I don’t know how much time I truly have. Jordan offered that I am looking at it too binary. “You mean you can be only mostly dead?”, I quipped mimicking The Princess Bride. After finishing Taking Stock, I understand in a deeper way what Jordan meant with his more than decade of experience in both the FI community and dealing with people’s lives and the way we make meaning.

Maslow’s hierarchy of needs is not a pyramid where I must achieve the bottom layers before climbing to the next. I can pursue all layers simultaneously. My way of thinking might be an artifact from my experience mostly racing to financial independence like the eldest brother example in Jordan’s book. My time in startups perhaps has only contributed to this false dichotomy that in order to do something worthwhile, I need to go all in and suffer greatly in some ways for huge outcomes in other ways. I can instead use time to build all aspects of work and life incrementally while iteratively minimizing the things that don’t build purpose, identity, or connection. I can also use money as a lever without focusing on the opportunity cost fallacy or getting stuck in the money mind meld. If this sounds good to you or you have no idea what I am talking about, grab yourself a copy of Taking Stock and read it well.

Have your thoughts on money and the meaning of financial independence changed over time? I’d love to hear about it in the comments section below 🙂

I’m passionate about financial independence, happiness, successful habits, and adventure. Consider subscribing below to get an occasional email directly from me with a few thoughts and latest articles. It’s totally free and totally worth it, I promise.

The post Financial Independence: Taking Stock first appeared on Life Outside The Maze.

My silver lining is that I will most likely live.  However, there is that minority percentage.  Sometimes when I am laying awake at night, that percentage is the one that screams.  I think about my kids, my wife, my family.  They need me and I have too much love and life to give.

I usually write on this site about successful habits, building wealth, practicing happiness, and seeking an adventurous life through applying one’s self.  I like to think that I have some useful knowledge to share in these areas.  However, when it comes to this cancer, I’ll admit that I have no idea what I am doing.  All of my cleverly placed dominos so neatly arranged and then a big slobbering dog comes running through the door.  I am trying to learn as I go and I have never felt more vulnerable.  

Asking For Help

I am not great at asking for help but I am working on that…  If you have been through testicular cancer and have any advice, stories, books, blogs, etc, that you would recommend I’d love to hear from you.  I start 2-3 months of chemo tomorrow 1/24/22. As you read this there is a good chance that I am on an IV getting mildly poisoned while simultaneously getting built up by steroids. If this site has meant something to you and you want to offer a few words to give me a boost please shoot me a private message ([email protected]).  I’ll take anything that I can get 🙂  

I don’t know how much I will feel like writing over the coming months.  I’ll have lots of time and may love the distraction.  However, I may also not have as much energy or focus and may just fall off for a while.  So I want to make sure that I at least share some things that have been on my mind before the storm starts back up. 

The Paradox of Life

I don’t want to die.  I don’t mean from this cancer, I mean ever.  The more you build in life, the more you leave behind.  Why would I ever want to leave?  However, it is inevitable.  Paradoxically, this may be what makes life beautiful.  Death is actually the very reason that we get out of bed in the morning.  Seize the day.  Why?  Because you only have so many.  The great paradox of life is that it is precious because it is finite.  However, the fear from this awareness is sometimes the very thing that holds us back from being most alive.  Hence, we fall into a habit of operating as though we have all of the time in the world until we are jolted back into the present by a reminder.  The most beautiful may be so because it is the most improbable and fleeting.

A Premonition?

You want to hear something creepy?  This is part of a post that I wrote this summer from a beach in Costa Rica:

When I left my job 2.5 years ago, I recognized something. If I got cancer tomorrow, I would not regret if my career ended up being only 15 years instead of 20 or even 35.  However, I would regret time lost with family while my kids were young.  I would regret weakening some of my relationships that I assumed I had infinite time to repair someday.  I would regret not having done some of those childhood dreams, travels, and, adventures.  I don’t know how much time I have left in the bank but I get to make choices that build what the future looks like. I am grateful for that opportunity.  As my own needs change over time, I hope to pursue them without grand revelations or regret.

I have a similar prophetic quote at 1:20:40-1:22:47 in this podcast that I did with some friends this summer on Mile High FI.

Did I already have the cancer and somehow subconsciously know it?  Nah.  I have just known for a long time that the statistical odds are about 40% that you will get cancer at some point in your life so it seemed like a good example.  

Financial Independence and Achieving Dreams

I love that bit I wrote above about pursuing my needs without grand revelations or regret.  Take a moment and think about the measure of comfort and peace that position brings when your life gets knocked over by one of those big slobbering dogs like my cancer.  At the risk of coming off as self congratulatory, understand that the guy saying that already achieved financial independence several years back and has been spending the last 3 years outside of traditional work.  He has been focusing on being a better human.  He has been trying to responsibly build happiness.  He has made some awesome memories with his kids, and he has been in the fortunate position to pursue some really joyous and weird childhood dreams such as joining a dinosaur dig, or diving for sunken treasure.

Financial Independence When You Get Knocked Down

The promise of doing fun adventures and sitting on beaches is kind of the sugar that helps the medicine go down for most as they diligently save and invest on the road to financial independence.  However, we think much less about that big slobbering dog that could come running through at any moment.  The big bad surprises that kind of change everything.  While financial independence empowered me to responsibly fund some adventures, in many ways dealing with slobbering dogs may be when financial independence helps the most.

I am about to lose my hair and look like a zombie for a few months.  How would I hold down a job while going to chemo for 6-8 hours a day some weeks?  My wife too will likely need to scale back to support me and she will have to do all of the day to day stuff that we used to split between two.  

Three of my scans and the very ultrasound that found my cancer were all initially deemed “not medically necessary,” by my insurance company.  I was literally in the waiting room for one scan on the day of my surgery when I got a call saying that the scan was denied and I may have to pay $13,000 out of pocket if I do it and the authorization fails to come through. What do I do?!  This is where financial independence really helps.  We can focus on the things that matter most in these times without fearing whether we will go bankrupt or what will happen to our careers.  

This is not the glamorous lifestyle that motivated me when we were saving and investing the majority of our paychecks in our 20’s.  When I started rehabbing properties in the evenings after work in my early 30’s, I didn’t know that I would get get cancer at 42.  Still, here I am and never has it been more important to me to be financially solid.

A Call To Action and The Real Power of Financial Independence

Empowered by financial independence, I set out 3 years ago to start working for myself for happiness rather than working for others for money. I have had the opportunity to re-design my life and spend this time doing exactly what I wanted to do. What a gift! I have traveled, made music, met some new friends, explored the outdoors, gotten in shape, written a screen play, learned Muay Thai, taught some college courses, and shared experiences with my kids. I have also learned a lot about myself, what motivates me, and what I thought I wanted but really don’t. The pursuit and realization of financial independence empowered me to do this. I am grateful for these experiences. None of us knows how much time that we have left and many things fall by the wayside when life or health of loved ones is suddenly in jeopardy.

Cancer has a way of immediately distilling one’s priorities to the critical few. For example, ever since I was little I have been casually collecting a loose set of features that I want in my dream house. I plan to build it some day. However, I remember sitting on the couch watching a show about amazing homes with my kids right after getting my diagnosis and thinking, who cares where you live? Health, time, the wellbeing of my kids, lazy mornings talking with my wife, that’s a home. The rest is just window dressing.

Money certainly isn’t saving me from this life shock and its ongoing challenges. However, it can cushion the blow. Financial independence means that I know my kids will be provided for. I know that we can go through this time without worrying about paying the bills or damaging a career necessary to support our lifestyle. While this is not the rich life that was on my mind in my 20’s or 30’s while working toward financial independence, it may be the biggest benefit. Life is precious and beautiful. I plan to be around for as long as possible. While I am the example in this article, it’s really not about me. I am merely offering it up for you. My hope is that this piece inspires you to action…Now excuse me while I go beat the crap out of this cancer.

Feel free to leave a public comment below or send me a private message through the “contact me” form at the very bottom of the page.

The post Um…I Have Cancer first appeared on Life Outside The Maze.