Scott Galloway’s Algebra of Wealth (or: How To Become Rich)

Posted on February 25, 2021 // 1 Comment

Scott Galloway shares in The Algebra of Wealth his thoughts on how to achieve financial security (be rich). You should read the entire thing, but the ingredients in his formula are Focus, Stoicism, Time, and Diversification. I’m only including a few notes and personal interpretations here.

Focus. If you want to get rich, you have consciously take action to make it happen. It rarely happens by accident. Look for a good wave to ride when you are young. Look carefully for the right life partner.

Successful people often unwittingly head fake young people with the humblebrags of “follow your passion” and “don’t think about money.” This is (mostly) bullshit. Achieving economic security requires hard work, talent, and a tremendous amount of focus on . . . money. Yes, some people’s genius will be a tsunami that overwhelms a lack of focus and discipline. Assume you are not that person.

Stoicism. Develop some self-discipline and character. Be generous and helpful to others. This will help you spend less money.

Determine what you can and can’t control. You can control your reactions to temptation — a lack of discipline is the antichrist to economic security. Our society of superabundance makes this difficult. Billions of dollars are spent every year on schemes to manipulate our natural impulses into spending more money, consuming more fat, and believing everyone around us is more successful than we are. The upgrade from economy to premium to business to first class to private jet can seem like an investment in yourself — it’s not. The most powerful forward-looking indicator of your financial freedom is not how much you earn, but how much you save.

Time. Steady improvements over time can supercharge your results. Don’t focus only on the short-term. As the saying goes, “Time in the market is more important than timing the market.”

Compounding is not just a financial thing. The most important returns in life come from the compounded effects of our investments over time, whether in our finances, careers, hobbies, or relationships.

Diversification. Never expose yourself to a fully catastrophic loss. Make sure you can walk away to fight another day. If you do it right, you only need to get rich once.

Diversification is the kevlar that protects you — with it, bad decisions will still hurt, but they won’t prove fatal. Diversification, in other words, is your bulletproof vest. […] That doesn’t mean I don’t look for opportunities that offer asymmetric upside — I do. I just don’t ever take off my kevlar. You don’t need to be a hero to get to economic security.

There is no simple step-by-step plan to become financially independent, otherwise everyone would be rich. Luck matters too, but working on all of these factors helps maintain maximum exposure to good luck.

Filed Under: Career, Entrepreneurial, Family, Inspirational, Investing, Retirement //

Eat and Run: On Moving Forward and Taking True Risks

Posted on February 8, 2021 // Leave a Comment

Scott Jurek is a well-known ultramarathoner that I first learned about in the book Born to Run (my highlights) by Christopher McDougall. Jurek later wrote his own memoir, titled Eat and Run: My Unlikely Journey to Ultramarathon Greatness. I’ll probably never have the physical and mental endurance to run 100 miles in a day. But perhaps I could learn how to push myself farther outside of my comfort zone?

As the title suggests, Jurek attributes much of his racing success to his plant-based diet. Some folks still claim that it’s too hard to get excellent nutrition just from plants, but Jurek’s performance is the perfect counterpoint. However, he isn’t overly preachy on the subject, and I appreciated that he sprinkled his favorite vegan recipes throughout the book. The few that I tried tasted pretty good.

He shares about his challenges as a child and teenager, and how that really shaped him. His mother was diagnosed with multiple sclerosis when he was very young, and he had to juggle the responsibilities of being head of his household by the time he was a teenager. In addition to schoolwork and sports, he had parenting and housework duties as well. Yet, he still managed to graduate as the valedictorian of his high school.

In my valedictory speech I said, “I would like to leave you with four messages to help you and others benefit from life.” (I still have the speech.) “First of all, I ask you to be different. “Second, find a way to help others rather than thinking solely of yourself. “Third, everyone is capable of achieving. Never let anyone discourage you when trying to pursue a goal or a dream. “And finally, do things while you’re young. Be sure to pursue your dreams and goals even if they seem impossible.”

He also learned that being physically able should not be taken for granted. He provides some simple, practical advice about taking up running as a beginner:

Running efficiently demands good technique, and running efficiently for 100 miles demands great technique. But the wonderful paradox of running is that getting started requires no technique. None at all. If you want to become a runner, get onto a trail, into the woods, or on a sidewalk or street and run. Go 50 yards if that’s all you can handle. Tomorrow, you can go farther. The activity itself will reconnect you with the joy and instinctual pleasure of moving. It will feel like child’s play, which it should be. Don’t worry about speed at first or even distance. In fact, go slow. That means 50 to 70 percent of your maximum effort. The best way to find that zone is to run with a friend and talk while you’re doing so. If you can’t talk, you’re running too fast and too hard.

On the importance of the journey:

We focus on something external to motivate us, but we need to remember that it’s the process of reaching for that prize—not the prize itself—that can bring us peace and joy. Life, as countless posters and bumper stickers rightly attest, is a journey, not a destination.

On finding your path over time:

It’s easy to get wrapped up in deadlines and debt, victory and loss. Friends squabble. Loved ones leave. People suffer. A 100-mile race—or a 5K, or a run around the block—won’t cure pain. A plate filled with guacamole and dinosaur kale will not deliver anyone from sorrow. But you can be transformed. Not overnight, but over time. Life is not a race. Neither is an ultramarathon, not really, even though it looks like one. There is no finish line. We strive toward a goal, and whether we achieve it or not is important, but it’s not what’s most important. What matters is how we move toward that goal. What’s crucial is the step we’re taking now, the step you’re taking now. Everyone follows a different path. Eating well and running free helped me find mine. It can help you find yours. You never know where that path might take you.

My favorite highlight – On paying respect to the true risk-takers. Jurek is known for staying at the finish line after winning an ultramarathon and cheering on every other single runner until the last one has crossed. Every single one! For an ultramarathon, this could be another several hours or longer. Here is part of his reasoning:

Every single one of us possesses the strength to attempt something he isn’t sure he can accomplish. It can be running a mile, or a 10K race, or 100 miles. It can be changing a career, losing 5 pounds, or telling someone you love her (or him). I can guarantee that no one at the Western States knew they were going to finish, much less win (including me). A lot of people never do something great with their lives. A lot of people never attempt it. Everyone here had done both. Staying at the finish line and greeting those runners, I could pay tribute to the pain and doubt, fatigue and hopelessness, that I imagined they had pushed through.

Filed Under: Book Reviews, Entrepreneurial, Inspirational //

What If You Invested $10,000 Every Year For the Last 10 Years? 2021 Edition

Posted on January 5, 2021 // 10 Comments

Instead of focusing only on what happened in 2020, how about stepping back and taking the longer view? How would a slow-and-steady investor have done over the last decade? Most successful savers invest money each year over a long period of time, these days often into a target-date fund (TDF). You may not find yourself buying Bugattis with Bitcoin, but we should not take for granted the ability for everyday folks to own a basket of successful businesses for tiny fees. Don’t pass up the opportunity right in front of you.

Target date funds. The Vanguard Target Retirement 2045 Fund is an all-in-one fund that is low-cost, highly diversified, and available both inside many employer retirement plans and to anyone that funds an IRA. During the early accumulation phase, this fund holds 90% stocks (both US and international) and 10% bonds (investment-grade domestic and international). It is a solid default choice in a world of mediocre, overpriced options. These “simple” funds have made substantial wealth for millions of investors.

The power of consistent, tax-advantaged investing. For the last decade, the maximum allowable annual contribution to a Traditional or Roth IRA has been roughly $5,000 per person. The maximum allowable annual contribution for a 401k, 403b, or TSP plan has been over $10,000 per person. If you have a household income of $67,000, then $10,000 is right at the 15% savings rate mark. Therefore, I’m going to use $10,000 as a benchmark amount. This round number also makes it easy to multiply the results as needed to match your own situation. Save $5,000 a year? Halve the result. Save $20,000 a year? Double the numbers, and so on.

The real-world payoff from a decade of saving $833 a month. What would have happened if you put $10,000 a year into the Vanguard Target Retirement 2045 Fund, every year, for the past 10 years? You’d have put in $100,000 over time, but in more manageable increments. With the interactive tools at Morningstar and a Google spreadsheet, we get this:

Investing $10,000 every year for the last decade would have resulted in a total balance of $184,000. That breaks down to $100k in contributions + $84k investment growth.

Extended edition: 15 years of real-world savings. What would have happened if you put $10,000 a year into the Vanguard Target Retirement 2045 Fund, every year, for the past 15 years instead? (Now $150,000 total.) Here are the extended return numbers:

Investing $10,000 every year for the last decade and a half would have resulted in a total balance of $324,000. That breaks down to $150k in contributions + $175k investment growth. Your gains are now officially more than what you initially invested.

Real-world path to becoming a 401(k) millionaire. Not theoretical numbers from a calculator! Are you a dual-income household that can put away more? If you were a couple that both maxed out their 401k and IRAs at roughly $20k each or $40k total per year for 10 years, you would have a total balance of over $735,000. You would be 3/4 of the way to millionaire status after a decade. That breaks down to $400k in contributions + $335k investment growth.

If you did this for the last 15 years, you would be a 401(k) millionaire household. If you started when you were 30 years old, your account statement would show a balance just shy of $1,300,000 by the age of 45. (This doesn’t include the 401k company match, which is how many people reach millionaire status even faster.)

Timing still matters, but not as much as you might think due to the dollar-cost averaging and longer time horizon. Yes, the last decade has been a great run for US stock markets. But Vanguard Target funds also own a lot of international stocks, which haven’t been nearly as hot and have maintained lower valuations. More importantly, you can’t control that part. You have much more control over how much you save. Here are my previous “saving for a decade” posts:

Work on improving your career skills (or start your own business), save a big chunk of your income, and then invest it in productive assets. Keep calm and repeat. The only “secret” here is consistency. We have maxed out both IRA and the 401k salary deferral limits nearly every year since 2004. No inheritances, no special access to a hedge fund, no stock-picking skill. You can build serious wealth with something as accessible and boring as the Vanguard Target Retirement fund.

Filed Under: Inspirational, Investing, Retirement //

Flippa: Buy and Sell Digital Real Estate Like eCommerce Stores, Amazon Products

Posted on October 8, 2020 // 4 Comments

Flipping, rehabbing, or rental residential real estate is a popular entrepreneurial activity, but I’ve always been more partial to digital real estate (websites). There are similarities in that anyone can enter the business as long as they are willing to learn quickly and put in the hours. Nobody gets a degree in “landlording”, just as nobody gets a degree in “digital marketing”. Everything is about results, not letters after names. Some own $500 websites, while others own $5,000,000 websites.

You can now also buy and sell digital properties via online marketplaces. I often spend idle moments browsing the email newsletter of the biggest one, Flippa.com, and realized that a beginner could learn a lot about the industry by just reading through the listings. The best way to learn is still to jump in and get your hands dirty, but seeing the inner details of all these properties will accelerate your education. How does their website valuation tool work? What are the ranges in terms of multiples of revenue? How do you verify traffic stats? By signing up for a free account, you can see the non-public listings as well. I’ve learned a lot more about the Amazon ecosystem myself.

Some people love to start websites from nothing and quickly sell them for $1,000 to $10,000. Others like to find a starter drop-shipping site or Amazon product with potential and improve it into a six-figure property. Others are just looking to build a portfolio of properties that creates a steady cashflow with minimal maintenance. The market is a lot more mature than when I was buying domains on small internet forums. Private equity funds and publicly-listed corporations are also increasingly in the game.

You should also know that digital properties are much more volatile in price. A condo in Manhattan, NY or a 4-plex in Portland, OR might double in price in the next 10 years, but it won’t go up 2,000% or drop by 95% either. They also vary widely in the ongoing work involved. Some require hardly any maintenance, while others require ongoing marketing campaigns and a team of independent contractors.

One of the pathways to wealth is to find an asset type that you have a passion for, instead of a consumer product. Some people get $1,000 and spend it on video games, a car modification, or some nice clothes. Others get a kick out of buying another share of BRK, JNJ, or VTI stock. Same for a downpayment toward a rental property, reinvesting into their own private business, or to improve or acquire a digital asset. You also end up increasing your knowledge in that industry, which is highly valuable on its own.

Disclosure: I did sign up to be an affiliate of Flippa, and will receive a commission if someone clicks and lists a site for sale, but not if you just sign up for an account to browse listings.

Filed Under: Entrepreneurial, Inspirational //

Charlie Munger: Huge Compilation of Annual Shareholder Letters, Interviews, Op-Eds, Speech Transcripts

Posted on September 1, 2020 // 5 Comments

Charles Munger is probably best known as the Vice Chairman of Berkshire Hathaway and longstanding investing partner of Warren Buffett. However, he has also been the CEO and/or Chairman of the Board of multiple other companies. This means there many additional sources of knowledge and wisdom beyond just BRK shareholder letters. I recently discovered this huge 1,000 page compilation (PDF) of everything Munger, including annual letters from Blue Chip Stamps, Wesco, and Daily Journal as well as his op-ed contributions and transcripts of speeches. Found at ValueWalk, the PDF includes links to most of the individual sources inside as well. Thanks to all the folks that worked hard to preserve this material.

There was no table of contents, so I started making a list of all the goodies inside:

Annual Shareholder Letters and Meeting Transcripts

  • Blue Chip Stamps, Annual Shareholder Letters, 1978-1982. Blue Chip Stamps was merged into Berkshire Hathaway in 1983.
  • Wesco Financial Corporation, Annual Shareholder Letters and/or Meeting Notes, 1983-2010. Wesco Financial was officially merged into Berkshire Hathaway in 2011.
  • Q&A sesssion with Charlie Munger July 1st, 2011. An event paid for by Charlie Munger after the Wesco merger.
  • Daily Journal Corporation Annual Meeting Notes and/or Transcript, 2013-2018.

Speech Transcripts, Op-Eds, Interviews, Etc.

  • Opinion Pieces, 1984.
  • Speech by Charlie Munger to the Harvard School, 1986.
  • Resignation of Mutual Savings from US League of Savings Institutions, May 30, 1989.
  • A Lesson On Elementary, Worldly Wisdom As It Relates To Investment Management & Business, 1995.
  • Practical Thought about Practical Thought?, 1996.
  • Investment Practices of Leading Charitable Foundations, 1998.
  • Foundation Financial Officers Group Master’s Class, 1999.
  • A Perverse Use of Antitrust Law, 2000.
  • Philanthropy Round Table, 2000
  • Optimism Has No Place in Accounting, 2002
  • The Great Financial Scandal of 2003
  • Herb Kay Undergraduate Lecture at the University of California, Santa Barbara Economics Department, 2003.
  • Munger speech at University of California, Santa Barbara, 2004.
  • The Pyschology of Human Misjudgment,
  • Charlie Munger – USC Commencement Speech 2007
  • Sacrificing To Restore Market Confidence, 2009.
  • Basically, It’s Over. A parable about how one nation came to financial ruin, 2009.
  • Wantmore, Tweakmore, Totalscum, and the Tragedy of Boneheadia: A Parody about the Great Recession, 2011.
  • A Conversation with Charlie Munger and Michigan Ross Dean Scott DeRue, 2017.
  • Charlie Munger, Unplugged, 2019.
  • Foreword to the Chinese Edition of Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger (by Louis Li).

This should keep me busy for a while!

Filed Under: Frugal Living, Inspirational, Investing //

The Warren Buffett Pilot Story: The Importance of Making a NOT To Do List

Posted on August 24, 2020 // 1 Comment

Even before COVID, I hated that feeling at the end of the day that comes after running around but not being able to list anything accomplished. Here’s a helpful idea of what I call the story of Warren Buffett and his pilot. I’ve read a few different versions from various sources, and I honestly don’t even know any of them are true. This one is taken from the book Grit: The Power of Passion and Perseverance by Angela Duckworth:

Warren Buffett—the self-made multibillionaire whose personal wealth, acquired entirely within his own lifetime, is roughly twice the size of Harvard University’s endowment – reportedly gave his pilot a simple three-step process for prioritizing.

The story goes like this: Buffett turns to his faithful pilot and says that he must have dreams greater than flying Buffett around to where he needs to go. The pilot confesses that, yes, he does. And then Buffett takes him through three steps.

First, you write down a list of twenty-five career goals.

Second, you do some soul-searching and circle the five highest-priority goals. Just five.

Third, you take a good hard look at the twenty goals you didn’t circle. These you avoid at all costs. They’re what distract you; they eat away time and energy, taking your eye from the goals that matter more.

(Note that this is from a book about not giving up!)

Creating this list provides a clear yardstick at the end of each day. Did you make any progress towards your top 5 goals? Even a little progress makes the day seem well spent. A common problem is that not even knowing what those top 5 goals are.

However, equally if not more important is the second list. Instead of the ever-expanding To Do List, we need a NOT To Do List. In order to be truly productive, we need to be willing to focus on the most important things and not just ignore the unimportant things, but also ignore the simply not-quite-as important things. You only have a limited amount of time and energy (focus). As someone with completionist and perfectionist tendencies, this is hard!

Doing this properly means giving up on a good and respectable goal (at least temporarily). For example, I chose to give up pursuing rental properties and residential real estate. I also spend minimal time on Facebook/Twitter/Instagram, even though it can be useful for research, networking, and marketing. These might be near the top of someone else’s list, but just not high enough on my personal list. I still don’t feel like I have enough time, but it is nice to let go of feeling guilty about not doing something that other successful people do.

This concept can apply to many different areas of life. Money is finite as well, so we have budgeting. You should have two lists: What can you cut? Yes. But also, what do you love so much that you want to spend more on? Ideally, you now have a positive reason that motivates you to make that change.

Marie Kondo has created an entire brand in applying this to getting rid of your stuff. I don’t claim to grasp her ethos completely, but my take is that you can spend more money (and space and time) on the list of things that “brings you joy” if you get rid of the other list of things that “you don’t really need but still can’t seem to give away”. (Still working on this one too.)

Filed Under: Budgeting, Entrepreneurial, Inspirational //

Kneading Dough Podcast: Athletes Talk Openly About Money

Posted on August 3, 2020 // Leave a Comment

Another podcast that I discovered late is Kneading Dough, where famous athletes sit down and talk openly about their finances. Created by UNINTERRUPTED (founded by Lebron James and Maverick Carter) and sponsored by Chase, guests over the three seasons range from Lebron James to Serena Williams to Simone Biles. The description sounded similar to Celebrity Money Diaries.

Despite the old saying about death and taxes, studies show that personal finance is actually the most difficult topic for most Americans to discuss. But while most Americans aren’t comfortable revealing their finances, athletes’ money mistakes are splashed across newspapers and the internet.

Chase’s Kneading Dough series connects the money challenges of average people to the hard-earned lessons of pro athletes. In exclusive, one-on-one interviews, famous athletes discuss how they learned to budget responsibly, balance the needs of career and family, and prepare for retirement.

You can view all of the shorter video interviews on this YouTube playlist, but the podcast version includes the full unedited interviews.

In the end, these are often people who were not born into wealth, so I did find them relatable and enjoyed the casual conversational style. You hear straight from Lebron how he handled the fame and responsibility of becoming the family breadwinner at age 18 (and how other athletes handled huge windfalls and learned to manage their budgets), but also how one navigates the more modest WNBA max salary of $110,000 a year (now higher but the average player earns $130k). There are amusing moments like how Serena Williams tried to deposit her first million-dollar tournament check at the local bank drive-thru window, which the teller didn’t know how to handle.

Filed Under: Entrepreneurial, Inspirational //

The Money Hamster Wheel, Part 2: Multiple Solutions, Not Just More Money

Posted on July 3, 2020 // 3 Comments

In Part 1: Identifying the Problem, I shared Lawrence Yeo’s unique take on money and the hamster wheel metaphor, where we just keep spinning and can’t get off. Since then, I have thought more about how best to slow things down by instead attacking each step of the cycle. To be honest, I don’t know if I can properly explain Yeo’s concepts, so I came up with my own version of the hamster wheel. Here it is, rather hastily-drawn:

A common criticism of seeking financial freedom is that it’s all about money. Make more money. Spend less money. However, if you take a step back, money is just part of the flow between how you spend the time in your life. How are you making that money? Why do you want more money? Why are you spending the money?

Accordingly, here various ways that someone could lessen the impact of each part of the cycle.

  • Find better-paying work that is equally fulfilling and stimulating. Try to save the excess. Don’t make yourself more unsatisfied for more money.
  • Find more fulfilling and stimulating work, even if it pays less. Be happier, and thus need to spend less to replace that happiness.
  • Engage in non-work activities that provide meaning and stimulation. If you need a better job, work on a new skill. If you need more stimulation, start a side business and keep your current job. Or just find a new hobby/sport/language. Taking action is the key, as the right activities will energize you.
  • Reduce your intake of low-quality media. Stop consuming things that make you feel worse about yourself. The wrong activities will drain you, which encourages more spending.
  • Exercise more (try outdoors or with other people) and eat better food. This gives you more energy all day long.
  • Spend less money on the things that don’t matter, so you need less money. Cut out the mindless and unhelpful spending.
  • Spend more money on the things that truly matter to you. Now that you cut the mindless, you can spend more on improving interpersonal relationships, or energizing activities (see above).
  • The more you learn to control this cycle, the more you can use the concept of “Enough” to widen the gap between money in and money out. Decouple earning and spending. Invest in enough productive assets so that your required income is less and less.

Addressing the problem from one angle, helps free you up to attack it from another angle later. For example, if you eat and exercise better, you might have enough energy to take corrective action, and not just fantasize about that side business when you really just turn on the TV after a long day at work.

Filed Under: Inspirational, Retirement //

The Money Hamster Wheel, Part 1: Identifying The Problem

Posted on July 1, 2020 // 3 Comments

I started looking into financial independence because I simply couldn’t imagine doing what I was doing every weekday at that time for another 30 or 40 years. Some people know exactly what they want to spend their life doing, and it also pays the bills and then some. I was always envious of those folks. Strangely, I never really felt that making more money was the final answer. I saved diligently in order to quit my job and go back to school and explore alternate paths.

This week, I’ve been pondering a longread by Lawrence Yeo about his philosophy of money at How Money Forever Changed Us. It’s a very high-level exploration of how money both solves and causes various conflicts in our lives. This culminates into what he calls the Money Hamster Wheel:

The questions posed are slightly different than you may have seen elsewhere. Does working a job that doesn’t fulfill our need for purpose and meaning really take something away from our identity? Is that identity loss what we are really trying to replace by spending money? Why is it so rare to find people that are truly happy and aligned with their work and the rest of their lives?

You’ll have to read the entire article to understand all the spokes of his wheel (although I’m still not sure I do completely), and while Yeo admits that it is not possible to fully “get off the wheel”, you can do something:

When I look at each spoke on the wheel, I view them as potential opportunities to slow the whole thing down. If we are aware of each mechanism, we can notice when we’re operating under them, and lessen their impact in turn.

The hamster wheel is a great metaphor. Over time, I’ve accepted that financial independence will always be rare. I used to think that higher income = more wealth = more stability. But then I noticed that certain things don’t change when people make $75k vs. $150k vs. $300k a year. The neighborhood changes. The car changes. Yes, even average net worth changes (but rarely enough to 33x expenses before age 65). Unless they hit a huge windfall in the multi-millions, most of them will work until they are 65 or older. Most will say they like their job okay, but they would never do it for a 25% pay cut. Most will never be able to handle an extended period of unemployment. Earn more, spend more. Still spinning on the wheel. Maybe that’s just how it’s meant to be? Yeo presents a solution:

But if we take the time to look closer, we’ll see that a middle-ground exists. A place where our fears could be calmed, and our desires could be curtailed. A place where the quest for money falls only to what is essential.

In a world where neither scarcity nor abundance will do, perhaps the closest solution to the great paradox comes down to one principle:

The ability to recognize when we have enough.

Sounds easy, but shockingly hard. “Enough” is not encouraged in our culture. I still struggle with it as well, or at least I’m afraid I won’t be able to keep up the fight forever.

Filed Under: Inspirational, Retirement //

Forrager Podcast: Start Your Own Home-Based Food Business

Posted on June 22, 2020 // Leave a Comment

If you enjoy listening to podcasts about entrepreneurial stories on a smaller scale (i.e. not tech unicorns), I recommend the Forrager Podcast about cottage food businesses, where people sell food made in their home kitchens (as opposed to a commercial kitchen). Depending on the cottage food laws in their state, you can learn from successful small (often solo) business owners selling their homemade bread, granola, nut mixes, cookies, pies, and other food products in both retail or wholesale environments.

The cottage food industry allows you to start small with minimal upfront investment. You keep your big potential upside, but you’ve minimized your downside. Being able to take asymmetrical risks like that is very powerful. You only need to hit it big once!

Here’s a quote from an episode with baker David Kaminer, who makes a living selling about 300 loaves of sourdough bread each week:

What’s so nice about the cottage food law is you have the opportunity to start small. Prior to cottage food laws existing, if I wanted to open up a bakery I’d be a quarter of a million dollars in before I could even produce my first loaf of bread. You can start making six loaves a week and trying to sell them on the weekends while you’re working your normal job and then see how it goes.

I feel like as long as you love making bread and you’re comfortable charging people for it and you understand the value of your time you could make a go at it pretty easily. For me it was starting like that just seeing if I could potentially ramp this up. So I feel like as long as you’re you’re ambitious and you love making bread you can pull off a cottage food business almost at any scale. It just all depends on defining how much you need and if it’s worth your time.

However, many people choose to keep it small on purpose. There is a common theme with the financial independence community of being able to work more on your own terms. Owning a cottage food business definitely won’t be for everyone, but it is more of a lifestyle choice that will be very attractive to a select few. Sound familiar? Here is a quote from an episode description with Lisa Kivirist who runs her own farm, bed & breakfast, and home bakery amongst many other things. It could very well be the bio for a personal finance author.

Lisa talks about living off the land, moving away from the corporate life-style, creatively packaging products, diversifying income streams, advocating for your laws, and everything in between.

Filed Under: Entrepreneurial, Inspirational //

Father’s Day Advice from Jack Bogle

Posted on June 19, 2020 // 4 Comments

Art Carey of the Phildelphia Inquirer shares some great quotes from a past interview with the late Jack Bogle, in which Bogle shared the advice he would give his own son: Vanguard’s John Bogle gives tips for life on Father’s Day. The advice is inspiring and has very little to do with investing in particular. The entire interview is worth reading if you can, but here are some partial excerpts:

[…] First, don’t forget your family, because in the end, that’s all you really have. Next, be a decent human being, and don’t think you’re better than anybody else, no matter what your condition of wealth or importance.

Never let things — the material possessions you may come to accumulate — become the measure of your life. It is an easy trap to fall into during these days of such material abundance in America, or at least in the privileged part of America that we see — with grander homes, bigger stores, more powerful cars, smarter phones, more exotic rock concerts, more sophisticated toys for children, and more elaborate toys for grown-ups, a cornucopia of things almost beyond measure.

And never forget the important role of luck in your life. Never, never, never, never say, ‘I did it all myself.’ Nobody does it all themselves. And when somebody has the temerity to tell me they did, I say to them: ‘That’s wonderful. I’m not sure I’ve ever met anybody who did it all themselves, but could I ask you one question: How did you arrange to be born in the United States of America?’

Above all, never give up your idealism. No matter how dark things get, keep your eye on the brighter side of things. Never let your determination falter. Even when the world turns against you and ridicules your ideas, ‘Press on, regardless.’ […] You don’t say, ‘I’ve arrived, I’m here.’ You say, ‘I’ll try to do a little better tomorrow, and all the tomorrows after that.’

Filed Under: Inspirational //

Live Cheaply and Invest In Yourself

Posted on June 8, 2020 // 10 Comments

The The Money Diaries series at Wealthsimple continues to offer periodic interviews with an interesting mix of people sharing about their financial lives. I’d never heard of Carson Mell, but I appreciated how he cared most about doing what he wanted with his time as a young adult, and how he lived cheaply in order to invest in himself. (His most well-known project is probably Silicon Valley on HBO.)

The power on knowing the cost of your minimum viable lifestyle. My advice to a young ambitious person would be to figure out exactly how little you can live on. Mell’s monthly expenses were on the order of $1,150 a month:

[…] after a few months, I’d saved up some money and I made a decision: I’d quit my job and live as simple and frugal a lifestyle as I could, so that I could invest my time and energy in my own work. I had my own small apartment and paid $700 a month for it. I found that beyond rent, I could get by on 15 bucks a day. A nearby taco place had a $2.75 special for huevos rancheros — I ate there every single day. While I prided myself on throwing myself into my art instead of filling my days working mundane jobs, I learned quickly that meant becoming a cheap bastard.

Once you establish at level at which “I know I can survive on $XXX”, that can create a certain type of self-confidence. For example, I once knew that having $20,000 meant that I could cover my expenses for a year, and thus once I amassed that amount, I could take all the risks with my TIME that I wanted for a year. I could start a new business, learn a new trade, change the direction of my life.

Maybe cheap eats is key too? Beside my apartment, there was a restaurant that sold two eggs any way, hash browns, and toast for $1.99. I lived in the same rundown apartment and ate those over-easy eggs when I made under $20,000 a year, and when I made over $60,000 a year.

I decided that the thing to do was to keep investing in myself — living simply, being a cheap bastard, and putting my time and effort into my work.

Finding the motivation. Some people equate spending thoughtfully with being caring a lot about money (bad). However, it can really extend from caring a lot about how you spend your limited time on Earth (good).

As for myself, I no longer have the headache of hewing to a budget of 15 bucks a day. These days, I don’t mind paying to park in a parking structure, or leaving my car at the valet if it looks like finding a free space will be a pain in the butt. Anything that saves you time is worth spending money on, because your time is an invaluable resource. But I’m extremely mindful of where I spend my money. Here’s the thing: In TV, you don’t know when the next job will come. And I never want to have to take a job just to cover the cost of an upgraded lifestyle. I want to continue to have the chance to invest in myself — my own ideas, my own projects.

I spend money very thoughtfully, and because I save money, I can be selective about what jobs I take or don’t take, and where I put my time and energy.

I forget the exact quote, but to paraphrase – Once you find your “why”, the “how” becomes so much easier.

Filed Under: Debt, Frugal Living, Inspirational //
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