I’ve been thinking about strategy lately, and I am coming to the conclusion that not everyone knows the difference between a plan and a strategy. The reason I think this is that most people get upset when their plans are disrupted. A good strategy begins with the assumption that the disruptions will arrive in a continual stream.
When I was young and poor, I never felt like I could make much in the way of plans, much less strategy. I didn’t know it, but my overall strategy was, Get the rent paid this month, somehow or other. That was it, that was the whole thing. I had few policies or systems in place. Little about my life was intentional. I thought that was because stuff kept happening to me. I didn’t realize that chaos is the natural result of lack of a plan. This is one of the interesting things I have noticed about chronic disorganization. My disorganized households are similar in many ways and unique in others. For instance, one household has laundry covering most of the floor, yet the kitchen is sparkling clean every day. Another has dirty dishes everywhere 99% of the time, yet the laundry gets washed, folded, and put away like clockwork. Another house looks immaculate, yet there are two storage units stuffed to the rafters and they’re going broke, and of course the fourth house is the total package of hoarding and squalor. These different outcomes arise naturally from whatever it is that each individual does in default mode. Default mode is its own type of strategy. It’s the thing we’ve found that works if we keep doing it, at least in the short term. I used to have a roommate. He had a friend he would bring over, an obnoxious guy who would insult my housekeeping yet keep coming back. This guy had a plan where he would go to various drive-thru restaurants and claim his order had been messed up. He had never actually ordered or paid for anything; it was a scam. He figured if he threw a big enough fit, they would give him what he wanted just to get rid of him. In this manner he would ask his associates what they wanted, and day after day he would scam them bags of hot fast food. (Never me, because I was already a vegetarian and also because I wanted nothing to do with that guy). Eventually he had become recognizable at every place in our area and that plan quit working. It should not have surprised me that the roommate who kept bringing over the scam artist would wind up living off me rent-free for months, until my boyfriend made me kick him out. I got into situations like these when I was young and poor because I did not understand much about other people’s motivations. I wasn’t very good at recognizing patterns of behavior. I assumed that other people were honest and well-meaning. The truth is that they usually are; they do not set out to trick or defraud other people, unlike the scumbag fast food scammer. They don’t consciously intend to cause problems. Problems like not “being able to pay” the rent are the unintentional results. Results of what? A plan that does not include enough fallback options. In other words, a plan that is not a strategy. After my divorce, I spent quite a lot of time reading self-help books and writing hundreds of pages in my journal. I wanted to figure out how I had gotten myself into that situation. Why had I trusted someone who was untrustworthy? How had I missed what other people later told me were obvious red flags? One of the conclusions I came to was that I needed to be more selective in who I trusted and how I would vet the people I allowed into my social orbit. I would never tolerate having someone like the fast food scammer in my home again. It was extremely difficult for me to come to terms with this, and it took a few years, but finally I concluded that I couldn’t blame anyone but myself for the financial ruin that followed my divorce. I had wanted to tell myself that it was someone else’s behavior that “got me into this mess,” but the truth was, it *was* my behavior. I was “the kind of person” who would trust an untrustworthy person. I was the kind of person who signed a lease and set up accounts with an untrustworthy person, and that therefore made me untrustworthy as well. If I rent a motel room, and I then invite someone into the room who starts spraying ketchup everywhere, then I am clearly liable for the mess even though I myself did not make the mess. This burned me up, but once I made the connection I couldn’t disagree with myself. If I have one set of values, and the people around me have a different and incompatible set of values, then I am in effect living their values instead of my own. How would anyone know any different about me, other than my associations and my behavior? I started to make the connection between my results and my state of being in constant reaction mode. One crisis after another. I had always felt that it was unfair that something always seemed to be going wrong in my life. Gradually I started to realize that I needed to have some kind of plan in place in order to avoid these crises. The first part of my new life strategy: Stay away from scam artists, jerks, criminals, or other lowlifes. I also realized that a huge part of avoiding untrustworthy people was to build more financial security into my life. I needed to be in a position to turn away bad roommates, avoid being on road trips with sketchy people, and generally make sure I only had to share housing and transportation with people who were reliable and honest. This was what led me to start obsessively reading personal finance books at the public library. I wanted to learn everything I could so I could avoid the worst parts about being poor, which starts with having criminals for neighbors and roommates. I also wanted to avoid going hungry, not being able to go to the doctor, and not being able to pay my rent or my bills. Reading all those free books gradually helped to teach me how to put a basic plan into place. More importantly, these books helped to teach me what questions to ask and how to start thinking strategically. My life as an educated investor is wildly, radically different than my life was as a poor twenty-something. I have been in worse and scarier situations, but I have been able to resolve them because I am better at problem solving and critical thinking. It’s not so much that having money solves a lot of problems, although IT DOES; it’s that the ability to think strategically can solve many types of problems, including lack of money. My husband and I just found the ten-year financial plan we made together shortly before we decided to get married. I wrote about how that plan worked out (spoiler: we were 0.4% ahead of projection), and I wrote about how making a ten-year plan helped us make the decision to get married.
What I haven’t really shared is how we did it. How do we have that kind of talk (which we do regularly) and how do we do it without fighting? This is where even a five-minute conversation can go well or badly, based on the entire structure of your relationship. This includes: Whether you respect each other Whether you’re willing to humor each other and listen to an unusual pitch Whether you actually know what a “pitch” is What emotional pitfalls either of you are likely to fall into Note that this is the same whether you’re having a financial conversation with a roommate, travel buddy, business partner, sibling, parent, child, best friend, random stranger, or talking squirrel. The only real reason that it would be different when talking about money with your romantic partner is that you’re more likely to be sharing accounts. Think that through. As far as the *duration* of your relationships, you may have a roommate, colleague, or bestie in your life far longer than you’ll have a husband or wife. (Or talking squirrel, for that matter. Regular squirrels only have a lifespan of about… sixteen years?? What the…???) The very most important part of a strategic discussion is to choose your moment. It’s the context and the situation and the timing. Where most people go wrong when they start learning how to pitch or negotiate is here, in the timing and choosing the optimal context. When we act out of panic, desperation, or pessimism, when we’re anxious, we tend to blurt things out at the worst possible time. This is because We are thinking about OURSELVES and our feelings and our guesses and our projections Rather than The OTHER PERSON and their perspective and their needs and their likely reaction. It’s the same with public speaking. When I am anxious, it’s because I’m thinking about myself. What will people think of me?? (who cares) I can relax when I refocus on my audience. I can crush it when I focus on… my message. Not how I look, or who’s watching, but what I am saying and how important that is. When I believe that my message is valuable, then I increase my motivation to share it. LOOK OUT! .. is a very important message, as is FIRE! Obviously people need to know if they’re in the path of chaos or if something is on fire. We should never hesitate to call out if we have that information and other people don’t. Honestly, talking about money with people who are close to us can often be much more important to their long-term survival than open flames or a runaway shopping cart. It matters. We avoid these conversations when we are afraid of conflict, and we are afraid of conflict in a lot of avoidable situations. We’re afraid when we don’t know how the other person will react… yet the only way to get to know this person’s reactions is to get to know them better. That happens through open communication. We’re also afraid when we’re insecure in our position or when we have something to hide. Yet open and honest communication destroys the reason to hide anything. We can only find that security in our position by thinking strategically about it, figuring out many approaches to solve our problems and create our desired results. What we are trying to accomplish when we talk about money is a mutually satisfactory result. In the case of bad roommates, the result might be “how do we both move out without owing extra money?” In the case of siblings, the result might be “how do we take care of our parents without them having to move in with any of us?” In the case of romantic partners, it should start with “how do we have rational discussions about this so we don’t have to give all our money to a divorce lawyer?” I’m not even kidding about that. I’m a divorced woman married to a divorced man. Our entire friendship started over lunchtime conversations about our divorces and the cannonball-sized holes they blew through our finances. The first thing a strategic thinker asks is, How do I mitigate my risk? That means, what are the obvious pitfalls? Where am I going to get myself into trouble? What do I need to avoid in order for this to work out? When we’re first reaching out and entering negotiations with someone, about anything but most especially about money, we want to avoid alienating our discussion partner. If we’re going to trust each other in any kind of contractual situation (marriage, lease, mortgage, creation of entire new human), then we have to have a basis for ongoing communication. That’s also true after a painful, explosive divorce, by the way. Just because you hate each other and never want to see each other again does not excuse either of you from having to fill out financial forms together. If you have kids, then you’re involved in each other’s tax planning for years. It’s a lot easier to talk about money with someone we like and want to spend time with! Remember that and try to keep it that way. Give what you wish to receive. Listen attentively and with courtesy and consideration. That is literally the only way that you can earn reciprocal respect. One little trick that I use is to avoid the word “you” as much as possible when speaking to someone. I try to only use the word “you” when followed by a complimentary observation, such as “you got Exceeds Expectations on your performance review.” There is something inherently accusatory about saying “you” to someone that tends to make people tense up. What you want to do is to choose your moment carefully. You want to make it low-stakes. Make it easy to agree with you. Start with an easy win. Be willing to go first. Start with an offer. If you don’t know the person very well, engage with curiosity about something that they would like. What’s important to them? What are their values? Hopefully you already know at least a few things about the values of your spouse, if you’ve already married this person. As an example, I had some roommates in a big, drafty house. Someone gave them a smart thermostat after upgrading theirs, and none of us really knew how to install it, so it sat on a table for a few months. I knew it would save us money to hook it up. As the child of an airplane mechanic, I believed I could either figure it out, or make a phone call and get some guidance. My pitch was basically, Do you want to try to install that thermostat together? Low stakes, non-accusatory, mutually beneficial outcome. As it turned out, it took five minutes, worked right away, we all cried out in joy and threw our arms in the air, and it saved us hundreds of dollars over the next few months. Every time you pitch something that is a mutual win, you build trust and rapport. This can quickly build to outright enthusiasm, such that when you say, I have an idea, everyone’s head swivels in your direction. Yes please! More ideas please! Another important aspect of negotiation is to think through your position before you start talking. You have to know what you want. If your position is, I wish to abdicate and convince someone else to shoulder my responsibilities, then I sincerely hope you’ve spent some time choosing your target. My starting position was, I am on track and I am a total accountability person. I will share my financial statements and the fundamentals of my strategy. We can make plans together as long as you are willing to be as open as I am. This is part of how we opened our first major financial planning meeting together. We had started talking *before* we started sharing accounts, before we moved in together, before our money started to mingle. We didn’t blame each other for anything, we didn’t try to throw down ultimatums about each other’s spending, and we didn’t ask each other for anything we weren’t willing to do ourselves. We succeeded at talking out a ten-year plan, and succeeded at staying on track over those ten years, because we saw each other as equal partners. We also did it without fighting because we had no reason to be angry, hurt, or upset. We reached out to each other in friendship, in an invitation to combine forces, us against the world. Hey honey, let’s pay off our debts together and save enough to retire, and go on vacation too! * copy and paste that and send it to your money buddy * Interesting things always happen when you clear clutter, and this was no exception. My husband was going through a bag of papers, the last thing left from our move six months ago. Yes, a bag, a reusable shopping bag. Aha, he said, here it is! We’d been looking for this. The first financial plan we ever put in writing together.
In 2009, we made a ten-year financial plan. It turned up just as we were getting ready to do our taxes for the tenth year. How’d we do? Before I answer that, I should explain what is so significant about this ten-year plan and why anyone other than us would care about it. What I didn’t know that winter was that my boyfriend at the time had already decided he wanted to marry me. We had been dating for nearly three years, living in separate cities the whole time, and I was perfectly fine with this arrangement. We had both been divorced, mine five years before his, and I didn’t see any reason to disrupt what we had. I also felt like it was his decision if he ever wanted to get married again, because his divorce was much fresher and he had a kid. There was nothing to be gained from exerting any pressure on my end, especially because I value my independence and I need a lot of alone time. I had steadily been doing better for myself and I was proud of my progress. Keep in mind that when we met, I was sleeping on an air mattress in a rented room, working as a temp, with no benefits. After I paid my student loan every month, I had about $30 of wiggle room in my budget. This boyfriend of mine, the one who was secretly contemplating marriage, had watched me as I consolidated my position: The first raise. The permanent job offer, with benefits and another raise. The first promotion. Moving to an apartment of my own, with no roommates. Paying off two credit cards. Paying off a student loan six years early. Applying for, and getting, two promotional opportunities. Going on a proper beach vacation (without him) and paying for it in cash. Moving to a small rental house of my own. I didn’t necessarily see myself on a clear trajectory at the time. I felt I was constantly pushing away from a very rough period in my life and recovering from the disaster that was my divorce. I still thought of myself as… temporarily non-broke. I knew I wouldn’t feel any kind of peace of mind until some later point, not one that I could imagine, but probably something like a hundred thousand dollars of savings, that or annual income. Why would I ever stop what I was doing when I felt the dark alternative in my bones? When my boyfriend of nearly three years called and suggested that we have a financial planning meeting together, I was intrigued and excited. Sure, sounds great! He came over to my mini-house. I loved that place! It was the first time in my life that I felt really proud of where I lived, the tiniest house in a safe, quiet, and upscale neighborhood. (It was really more like a servant’s quarters, to be honest, a granny unit on the same lot as a house that was 4x larger). I had built all my IKEA furniture myself, bought and paid for it all in cash, and although I was renting, my place was nicer than my boyfriend’s. The financial planning meeting wasn’t too different from the New Year’s planning I had invited him to do with me for the last three years. I think that process opened the door for this. We had already had some practice being open and honest with each other, we’d already seen some of our plans work out, and we had been talking about money since before we started dating. He worked the calculator and I wrote everything down on ordinary lined notebook paper. Most of our discussion was setting the parameters for what would go into the plan. We started with the assumption that neither of us would ever get a raise, a promotion, a bonus, or a windfall of any kind. That way, any successes of this nature would come as pleasant surprises, not baseline requirements. We each have our own page. Our names are right at the top. We’re set up slightly differently, because at the time our retirement savings were structured differently and we had different expenses. I supposedly had a pension and a deferred savings account, while he had a traditional 401(k). He was still paying child support, alimony, and a note on his truck. (I had already gone car-free by then). It took me a while to reinterpret the math, because almost everything I had written out for both of us was arithmetic, not notes or dictation. We were estimating our retirement contributions and savings. In his case, we were forecasting how much more he could save after he paid off his truck and no longer owed alimony or child support. What we failed to anticipate was a couple of layoffs, major moves, and surprise expenses. *gulp* We also didn’t include consumer debt or my last student loan. Oh, and, um, we didn’t include me quitting my day job a year later. *nervous laughter* Or the wedding, since the entire topic of marriage had not come up yet... Ten years is a pretty long time for anyone. It’s quite a long time indeed in the life of a love relationship. My first marriage was over and done in a three-year span. It was a little nuts for us to be forecasting this far, and we knew it at the time. WHO KNEW what the future would bring??? Trust, love, and optimism, that’s what it brought, along with the usual share of disruption, dread, and calamity. When both of our ten-year financial forecasts were finished, a full page for each of us, we sat back and looked at each other. Wow! That was actually fun! Just a couple of months later, he proposed, his decision already made. He chose the one who likes to crunch numbers and talk about money, the one who is a careful saver, who reads personal finance manuals and manages her own investments. The one who beat the market in 2008. He chose me. I chose him right back. I could choose freely because I didn’t need him, I wanted him. I was doing fine on my own. It just so happened that we liked it better when we were together. How did it turn out? After ten years: roughly two thousand dollars ahead of forecast. That’s a 0.4% win, pretty much as close as one could get. How about that? Not only do we still like each other and find each other attractive, we just found vindication of our decisions from a decade ago buried in a stack of papers. Our methods apparently worked. Now it’s probably time to put together a new ten-year plan, since the old one just expired. We can add in the perspective we’ve gained over the past decade, with the assumption that the next ten years will probably include a long recession and the firm knowledge that we can’t expect a single thing in our lives to stay the same. Well, except for our ability to have rational discussions together about our plans. That part we get to keep. This is a window into possibility. There are infinite ways to think about money and to talk about it. This is ours. Maybe our way will make you feel cheerfully smug about how much better your way is working. Maybe it will boggle your mind. Either way, please accept this invitation to have your own strategy session.
We started talking about money together at the very beginning of our friendship, long before dating each other had ever crossed our minds. It was how we bonded. We were both stressed out and feeling broke and victimized, both recovering from divorce. I was sleeping on an air mattress at the time and he had two metal folding chairs at his dining table. Part of what we both had in common was that we didn’t trust our exes about money. Both had been secret spenders and both resented us for wanting to save money or make financial plans for the future. We both resonated with the feeling that total transparency is good. It feels easy and light and clean to us. We like talking about money and strategizing together. It makes us feel like a team and it makes us feel smart. Not everyone is going to feel this way, and that’s good to know. If you’d like to avoid these kinds of discussions because your partner is not as focused on financial security as you are, then you can. You can just plan your own finances and set a good example. Maybe try to find a way to make the discussion lower-stakes and less tense. Or, like we eventually did, you can come to the hard realization that the two of you simply are not compatible. Sometimes someone just can’t give you what you need. No matter what you say or what you do, no matter how hard you try, another person may never fit with you. They have zero ability or intention to change because they are who they are. Their values are not your values, and they never will be. The tough thing to realize here is that in this kind of situation, I may be the villain! My desire to change another person may make ME the bad guy. This other person never claimed to be any different, never agreed to change, never endorsed my values, and never signed onto my plan. Maybe this other person will have a difficult life because of this, but that is their right. Autonomy is their right. Why waste my time and life energy on this person, out of seven billion possible partners, when they don’t want what I want anyway? On the other hand, maybe I’m the sloppy one, maybe I’m the one with no plan. In that case, it’s my job to figure out what to do, because it’s my responsibility no matter who I’m with, whether I’m single and alone or in any kind of shared situation. Trusting someone else to figure everything out for me means trusting in the illusion that that person is immortal, omnipotent, and immune to change. The bedrock of financial strategy is asking, “Can I handle it?” In response to a list of scenarios, what would I do if that happened? If there is a way for money to fix that type of problem, do I have that money? If not, could I get it? This is why we keep some small, crumpled bills in our go bags. We start with the assumption that in a major crisis, the internet may be out for at least three days and we may not be able to access any of our accounts. We need food and water and we need a way to pay for transportation. A gold brick would be useless in that kind of scenario, and so would a ten million dollar house or a fat stock portfolio. After the emergency cash comes the default strategy. What if everything is basically fine and crisis-free for the rest of our lives? We make sure our expenses are lower than our income, that we’re on track. If we kept doing what we’re doing, and we ignored our finances for several months, what would happen? Would it be okay or would it be a disaster? Next is the part that takes actual concentration, and that is tax season. We sit down and do a little research. As time passes, our ages change and regulations do, too. Can we put more away for retirement? Have the contribution limits changed for our IRAs or our 401(k)? There was definitely a time in my life when I felt like this type of question did not apply to me, and never would. I felt so broke that I could not imagine a different future. As a result, I missed a lot of opportunities to apply for better jobs, build credentials, or even make a new and improved financial plan. Assuming I would always be broke almost guaranteed that I *would* always be broke. There are two things that my husband and I do that most couples do not do. One is that we have a weekly Status Meeting when we talk about our finances. The other is that we took a financial workshop together a few years ago, and as a result we are living on about half our income. We’re able to talk about our shared accounts cheerfully and with enthusiasm, because we have a working plan. Since our expenses are so much lower than our income, we have a lot of leeway. We can handle surprises (which, financially, are almost always the bad kind of surprise) and we can also “afford” vacations and treats. We live radically, in a tiny home, with no vehicle, and because of that we have almost no financial worries or stress. Talking financial strategy raises a few extremely salient questions. Can I have that kind of discussion with my partner? Am I at least as focused and prepared as I expect anyone else to be? Am I ready to make changes to my core lifestyle? Do I have reason to feel optimistic about my situation and the future, or is this more of a time for brutal truths? Financial strategy means caring for Future You, both yourself as an individual and “you” as future partners. It can be a loving gift that leads to long-term contentment. Eventually. And maybe with someone else? There are probably a bunch of couples around the world who happen to be named “Harry and Meghan” - particularly because I doubt anyone refers to them as “Heghan” or “Megry.” There is, though, only one celebrity couple so I’ll assume everyone knows who I mean.
I asked my husband what he would do if he were Harry in this situation. Basically “paparazzi killed my mom, this is the most boring job on Earth, I never liked it anyway and now everyone is completely terrible to my wife, BYEEEEE.” What would he do if he were about to celebrate his first day as a free man? Probably watch some sports and drink a (warm) beer on the couch. Then what? We agreed that most guys would just do whatever their “thing” is, but that Harry probably never had a chance to even figure that out. What kind of guy is he? What would he do if he were born ordinary? This is a man who may never have played a video game, stood in line at the movie theater, or made his own sandwich. What would it be like to have no idea how much mustard you like? Or what kind? Or if you even like mustard at all? It’s fairly easy for me to imagine what I would do if I were Meghan. That’s because I live in Southern California. A lot of extremely famous actors, musicians, models etc have homes within ten miles of my apartment, and apparently there are several in the two-mile range. This is the crux of the problem for royalists. Clearly the “wealthy California celebrity” lifestyle is preferable to the “British aristocrat” lifestyle. It must burn their collective bacon. There’s something about the fantasy of aristocracy that really appeals to a lot of people. Note how many princess movies we have, both for kids and for adults, both animated and live-action. Gee, imagine, you get to have servants! And whatever gowns and jewels you want! And you get to have perfect hair and makeup all day every day! And live in a palace! Plus you’re in love with a handsome prince! *sigh* *swoon* *barf* I mean, I got to live the princess fantasy in some ways. I threw a shoe at my current husband, making him fall in love with me, and he elevated me to the middle class. (I was on my way to doing it for myself, but it would have taken me several years longer to make it alone). We danced at our wedding and all that. Then we won the game. We’ve had the incredible good fortune to be both married and able to live in perfect obscurity. We can go anywhere we want, do anything we want, wear whatever we want, and behave in whatsoever manner we choose. The press never reports on us. I don’t think people give enough consideration to this. We have something that money cannot buy, something that every celebrity wants, something truly enviable. We have liberty. If I were Meghan, I know what I’d do. On my first day of freedom, I’d wear my hair pulled back in a low ponytail. No makeup. I’d wear yoga pants and walk around barefoot. I’d read a book. Later, I’d go to the store and load up my cart and then I’d come home and put a tray of tater tots in the oven. Heck yeah! The great thing about this particular dream of freedom is that I can literally live it every single day, and nobody is stopping me. Nobody speculates about whether I’m pregnant, or takes pictures of my cellulite, or follows me around town, or suggests that I should wear high heels with jeans. I don’t have to read rumors about my marriage in the tabloids. Gossip about me and my life would be pretty low-caliber, and that’s okay. Amazing in fact. What I dislike about the aristocratic lifestyle is... everything. All these highly posed group photos and extreme fashion guidelines. If part of the job of duchess is to wear pantyhose and pumps on a regular basis, I’m out. Everything royals do is in the public eye, and those public things they do are not things that interest me. At all. Nary a one. I’m not into that style of architecture, landscaping, or interior design either. I have everything I’ve ever wanted. Aside from privacy and freedom from constant scrutiny, what I’ve wanted has always been BOOKS, comfortable shoes, and access to a wide variety of multicultural foods. Secret love affair with the interesting, mostly ordinary man whom I call husband. Messy pets. Ability to hang out with my wacky family, filters completely off, no dress code, and laugh until I snort. My life is mine, not the community’s. I’m not public property. I have no concerns about Duty or Legacy or Heritage or whatever the heck those people talk about. Nobody follows me around with a gilded clipboard or a little bound ledger, reciting rules and regulations at me, and I don’t have a style guide. The only protocol in my life is dictated by my parrot, who has her own elaborate ways. There seems to be a broad consensus, outside of SoCal anyway, that celebrities deserve whatever they get, that once you’re in the public eye then total loss of privacy is the price. Here, we understand that even famous people want to walk down the street, go to the airport, or have dinner with their families in peace and quiet. We know what famous life looks like, and that gives us sympathy. History always comes around, and around, and around. Eighty-ish years ago Edward VIII abdicated so he could be with the woman of his choice, a decision that gets less and less romantic the more one looks into the details, but it was his basic right as a human being. A baby does not choose to become a family brand ambassador. All Edward and Harry wanted was to be in love and have jobs, to make their own money in the ordinary way. All they wanted, in other words, was to have what we have. An ordinary life, an ordinary love, an ordinary job, an ordinary home. Just for a moment, let’s all pretend that we are abdicating royalty and that we’ve chosen this homely mess for ourselves. Talking about money makes a lot of people stressed out and upset. This is sad, because ignoring financial problems only makes them worse. Money is the best solution for money problems!
It doesn’t take much to completely change your financial situation. It can be done in a surprisingly short time. The tricky part is that the rules that work at one level don’t even make sense at another level. It’s not so much learning these rules or putting them into practice, it’s believing that they are true. “What got you here won’t get you there.” One of the biggest of these is the mindset behind paying off debt. It can be such a major goal for so long. When it happens, though, you never have to worry about paying off debt again. You’ve done it and you’ve learned how to live on less than you earn. Debt will only come back into your life if you fall back on old habits or something unexpected happens. So then what? If PAY OFF DEBT is no longer your big long-term financial goal, then what is? When you’re broke, it makes sense to go on an austerity plan and save as much money as possible. I can tell you a lot about that if you haven't already tried it. Renting a room, not owning furniture, riding the bus, skipping meals, clipping coupons and going to the thrift store on half-off day. Delaying everything from medical and dental care to haircuts. When you rise in your career, though, it actually hurts rather than helps to “save money” in these ways. More and more of your employability revolves around your external appearance. Cut your own hair and wear stuff from the thrift store bins, and you’ll quickly find that less qualified people are moving forward before you. Spend your time bargain shopping and cutting coupons, and maybe you won’t even realize that those hours could have been spent far more strategically. Most of us don’t learn these things from our families. The financial lessons we learn come from earlier eras, when the economy was different and the rules of the business world were different, too. We can get jobs now in entire fields that did not exist in our parents’ or grandparents’ day. Get a solid job with a solid employer, work there until retirement, and buy a house as your major investment. Gee, nice work if you can get it! The major advancements in my household’s financial life have come, more or less, from the EXACT OPPOSITE advice. Be prepared for your entire industry to change almost overnight as technology advances. Brace yourself for mass layoffs at least once a year and maybe even once a quarter. Constantly learn new things so you don’t get left behind. Stay flexible because your best opportunity may be in a new city, new state, or new country entirely. We’ve won specifically because we knew we couldn’t bet on any one employer and because we know a home purchase is only worth it if you’re confident you can stay there at least five years. With each move, we’ve done better. Another thing that holds people back is fixating on one job, giving everything to that employer, and holding a grievance about why they promote the wrong people, make bad decisions, or still haven’t given back the recognition and appreciation that the right people deserve. It’s emotionally the same as staying in a disappointing love relationship out of misplaced loyalty. The answer for a lot of people is that they’ve outgrown their job long ago. They should have put their emotional attachments toward their friends and family, and their mental focus toward looking elsewhere for professional advancement. Most people only get a raise or promotion when they change jobs. Most people are in positions where there *are no* opportunities for advancement and *never will be.* The hardest workers keep picturing how all the problems with their job could be fixed, if only someone would listen. All that energy and drive and ambition and talent is going straight down the drain. Alphas are often in trouble at work, because we don’t “know our place” and we keep sharing our ideas when that is not seen as appropriate to our role. It comes across as a distraction at best and insubordination at worst. Why can’t you just keep your head down and mop that floor? Yes, I have been assigned to mop the floor at work. I’m not proud. I’ll probably mop a floor later today. The point is that while I do it, I can still run my mouth and share ideas about how to streamline workflow or improve the bottom line. That is, I can do it for a willing listener. Or I can pause and realize that if I’m going to mop floors at work, I should do it at my own company. Why work for someone else who doesn’t get it and never will? The biggest advantage of a lame, boring, dead-end job is that you can do it competently while bootstrapping your own side venture. If nobody there recognizes you as what you are, if nobody cares that you have more to offer, then they probably won’t even notice that your attention is divided. I’m convinced that at least 95% of the people I supported as an admin wouldn’t even remember my name; I’ve passed former coworkers on the street who clearly didn’t recognize me. We owe them nothing but our 8 hours and basic courtesy. Following the status quo is not “a move.” Do what’s expected and you get what everyone else is getting, namely debt, chronic financial anxiety, long commutes, and a big question mark where “retirement” is supposed to be. It’s the willingness to acknowledge risk that allows for big money moves. The truth is that the status quo is inherently extremely, catastrophically risky! Ask around. It isn’t working for most people and they will readily admit it. Is it risky to relocate for a job, to start a side hustle, to live a radical lifestyle that makes your parents nervous? Of course it is. No riskier than everyday reality, though. Allow yourself to at least consider making major changes, since you can test them emotionally before making those big money moves into reality. Once upon a time, we lived in the worst place of our marriage. It had so many problems, the worst of which was that our upstairs neighbors made noise any time between 4:00 AM and 2:00 AM. We could never get any sleep and our property manager refused to do anything about it.
We wanted out of our lease. We thought we had grounds. Instead the property manager blamed us for being the bad tenant and causing problems. We were told that if we left, we would be charged 2.5x rent. Aha, we thought, at this point it would be cheaper just to move out and keep paying the rent. So that’s what we did. Before forming an opinion on this course of action, imagine just how thoroughly miserable you would have to be, you personally, before you would pay double rent. Imagine what emotions you would have to have before that would sound like a good idea. Yeah. That’s pretty much how we felt. This place was built at some point in the Sixties or Seventies, and it shows. They have to disclose the presence of both lead and asbestos. There is constantly an outage of either the power, or the hot water, or all the water, or the internet. Or the laundry room is closed, or the pool is closed, or one of the parking garages is closed, or an entire building has to be evacuated for a couple of days. We left our first building and moved to a different unit after watching as no fewer than four apartments on our floor suffered flooding from a burst pipe. Inexorably, every couple of weeks there would be a giant fan set up in a doorway down the hall, then one closer, then one closer, then yet another unit closer. “We’re next,” we thought, and imagined how much of our stuff would be ruined by a burst pipe. Sure, we have renter’s insurance, but the mess! This place sucked. The only thing it had going for it was the location, amplified by its luxe landscaping. What hooked us was that you can’t tell by looking at it how many problems this place had with its infrastructure. We’d been counting the months until our lease was up. Then I realized that I had miscounted, or misremembered, which becomes a chronic issue when you don’t get enough sleep for a year. We actually had about six weeks longer than I had remembered. No way, we thought. Can’t do it. We couldn’t bear it. Then we saw that a listing we had fantasized over weeks before was still open. We launched. Somehow we knew when we first saw the photos that we would live there, that it would be ours, and recklessly we signed the papers. We didn’t say anything when we moved out. I just hired movers and reserved a van, and we were out in, what, four hours? I had our new place mostly set up before my husband even got home from work. He left the Bad Apartment in the morning and came home to the New Place ten hours later. It really was that simple. Okay, EXPENSIVE, but simple. The reason we were able to make this move is that we have been living off only half our income for the past couple of years. We have savings and we have investments because we prioritize living well within our means. They call it EFF YOU MONEY and that’s exactly what we did with it. We talked to our [***evil***] landlord and then we internally formed the potent thought EFF YOU, BUDDY and then we effed the eff right out of there. What we paid in double rent was annoying. It in fact made me really angry for two months. “That could have been a really nice vacation,” I pointed out to my husband, who is much better than I am at shrugging things off and emotionally moving forward. “It HAS been a really nice vacation,” he said, shocking me to my core. I hadn’t thought of it that way. What other vacation would we have had that would have lasted for two months? We’d been able to sleep, to take two naps a day sometimes. We could go out on the rooftop patio and watch the sunset and look at the sea, and we did. We had a gym and a pool and a hot tub and a sauna, dated and small, but still available. What we might have spent on a nice vacation, we instead wound up spending on a semi-permanent lifestyle upgrade. We’ve met our new landlord, an impossibly cool person who has his own Wikipedia page, and we like him. It is cheering to write our checks to him personally instead of to a property management company that we believe is corrupt. See, when you stay in a hotel, the hotel management puts guest satisfaction first and foremost. At the slightest issue, they’ll move your things for you to a different room, often a nicer room. We’ve gotten free upgrades, from a room to a suite, from a suite to a penthouse suite, and we’ve been comped meals and drinks basically just for smiling. A hotel trades happiness for cash. For some reason, a lot of landlords and property managers take the opposite view. They see tenants as parasites infesting and ruining their property. No nail holes, they say, no paint, don’t you dare pretend you actually live here and wreck the place. It’s combative from the first day. Why, though? Why can’t both hoteliers and property managers see a guest/tenant as an unending fountain of passive income? Why not see a hotel room and an apartment in the same light, as a trade of shelter for cash, and the nicer the more valuable? The place where we used to live has about fifty units sitting empty. This is why they shafted us for $300 after we moved out, the first time since 1990 that I have ever not had my entire deposit returned, because I always spend days micro-cleaning with a toothbrush and cotton swabs. They’re terrified that they’ll continue to make less and less money, and that scarcity mindset poisons the commercial relationship they have with their tenants. This is why they are untruthful and refuse to disclose so many issues with the property, because they see their tenants as adversaries. We would have stayed for years if we could only have had a quiet home. They could have made tens of thousands of dollars off us. We would have convinced our various colleagues and casual friends to move in and make the complex into a social hub. Instead we’ll feel obligated to warn people away, to tell the absolute truth about what it was like to live there. Now our cool and nice new landlord can cash our rent checks instead. It’s all the same to us. That property manager may feel smug that they “won” the negotiation. They got a couple more rent checks. Yay. Good for you, you must be so proud. How good you are at business. They’re thinking in the short term, though, and they have no idea how much this attitude is truly costing them. We didn’t “break our lease” because our reputation is more valuable to us than money. That didn’t mean we had to actually live in an unlivable situation, though. Just because we continued to pay market rent on the place did not mean we had to stay there ourselves! Nobody can force us to stay in a situation after we’ve decided that we are unwilling. We couldn’t live there anymore, and so we just moved out. We used to worry about money a lot, but we don’t anymore, because we have a simple strategy. It comes in three pieces, and it works. Anyone can learn it. It goes like this:
When I was younger my eyes used to glaze over when I read lists like that. I didn’t want to have to think about anything with an acronym. I didn’t want to learn new technology. I figured I would think about it when I was older. Now I AM older and I’m feeling pretty smug that Young Me read so many personal finance books and made the effort to learn these concepts. It takes about 15 minutes to fill out the paperwork to max out your payroll deductions and put them in a 401(k) or equivalent. You literally only have to do it once per job. That’s the first step, and after those 15 minutes then you never have to think about it again. The third step, living on less money than you earn, can be tricky. It can be hard to believe it can be done. It sometimes means making radical lifestyle changes, and those can be emotional and hard to explain to other people. Following the plan itself, though, becomes automatic. It’s the second step, setting up an IRA and putting money in it every year, that trips people up. I knew what it was and how to do it, and I never bothered to get around to it until a few years into my second marriage. When I think back to all the tens of thousands of dollars I would have if I hadn’t procrastinated on this, it makes me want to slap myself. UGGGH! The reason it’s so easy to procrastinate is that there isn’t an HR person to walk you through it. Nobody sends you an email reminder. You have to find a bank and set up a brand-new account. You have to decide which of two types of account work for you. Then you have to get the money together and remember to deposit it before the deadline every year. In practice you can do it in an hour, set up a reminder on your phone in one minute, and then spend ten minutes a year moving the money. It’s not the time, it’s the mental bandwidth. Now that I know how to do this stuff, and I’ve seen it work, it seems simple and easy. In fact most people I know put more thought, focus, and attention into following the plot of complicated prestige television than I do into investing. It’s just that hump of studying up and learning how something works, especially if nobody you know does it or talks about it. Setting up an investment account is free. You don’t have to keep putting money in it; you can skip a year if you have to. You can also catch up and do the previous year. You don’t have to have the maximum amount, either. Even if you only have a dollar to put in one year, that’s better than nothing. This is a conversation I had with my husband when we first met, when we were just work buddies. He was complaining about his expensive divorce, child support, and alimony, and he said he couldn’t even afford to invest in his retirement plan. “What??” I bawled him out. “You make three times as much as me and I’m maxed out. You’re trying to tell me you can’t even save one percent? I don’t believe you.” (This is actually why we are married today, because he respects my frugality and I always tell it like it is). He told me later that he went in to HR and filed the papers. He immediately maxed out his retirement contribution and, of course, it was fine. He could afford it after all. Emotionally, he had just been feeling the divorce drama. Mine had come and gone five years earlier, so I recognized it. The thing is, there’s no such thing as CAN’T AFFORD. You’ll never be as young again as you are today. One day, Older You is going to have some kind of problem that only Younger You can solve, because Older You won’t be able to work or earn more money. The emergency you have in the future is going to be harder to solve than any problem you have today. Almost definitely. You can never allow yourself to believe that it’s impossible. You can never give in to the idea that you can’t even find a penny on the street once a year. (A guy at the next table in my cafe literally dropped a penny on the floor AS I WROTE THAT and he still hasn’t picked it up. It’s the second penny I’ve seen on a floor today). The main advantage of being poor (or thinking you are) is that you know how to live with a low overhead. That means you understand austerity, that you can emotionally handle spending as little as possible on things like rent, transportation, healthcare, heat, and food. The disadvantage of being poor is that scarcity mindset prevents us from having better ideas about how to earn more money. I did my husband the favor of snapping him out of his divorce blues and convincing him to start investing toward his retirement again. That paid off for me because now his financial future is also mine... He returned the favor to me, many times over, by painstakingly teaching me how to replace my scarcity mindset with abundance mentality. None of the rules that worked for my life when I was poor, a broke student, an entry-level career person, none of those rules make any sense in my life as a comfortably established married person. Another way to express that there are three parts to a financial plan is like this:
Feel that your anxiety and dejection about money is an emotional state, not reality. Understand that the only difference between you and a rich person is that they know things you don’t. Figure out what it takes to kick yourself, to make yourself do things. How do you get yourself to make phone calls or log in to websites or drive to a bank? How do you set up reminders for yourself to do things by a certain date? How do you inspire yourself to learn things you don’t already know? What do you do when you realize you need help; do you ask someone? Everyone has a financial plan. For most people that is, “Don’t think about it right now.” Please reward yourself by using your imagination, your creativity, and your intelligence to come up with a more interesting plan. Maybe part of that could be setting up an account for your IRA, even if you don’t have any money to put in it quite yet. We continue our tradition of buying nothing and going nowhere the day after Thanksgiving. It’s going well. Three of us are bundled up in blankets on the couch, and Noelie is sunning herself by the window. Time has no meaning for us today. We’re simply relaxing and doing whatever we want.
Apparently the alternative is to get up early, drive around town, and fight other people for bargains? We went shopping together on this supposed Black Friday once when we were dating. As we idled in traffic at an intersection, we saw something remarkable: One man kneeling on another man’s chest, hands on his throat, while a few bystanders stood there. Our attention was drawn because two pickup trucks were pulled up to the curb, one at a slant, doors hanging open. A road rage incident. Ahh, the holiday spirit in action! We did not feel that adding another truck and more people would bring any clarity to this situation. Instead we drove on, making up new lyrics to It’s the Most Wonderful Time of the Year. “...and punching your neighbor and drinking some beeeeeerrrr...” Since then, we’ve let go of not just shopping on Black Friday, but owning a vehicle and driving as well. Hanging out at home for Buy Nothing Day has spoiled us. Bargains are not bargains. Usually a sale or a coupon is the retail price of something, artificially inflated and then “dropped” to make it look cheaper. Sometimes it’s a functionally obsolete item, shunted to the side to make room for the new version that’s about to fill the shelves. It’s never a bargain if it leads to months or years of credit card debt. We know this, right? Whatever we buy, we add sales tax, and then we multiply by the interest rate that we are paying on credit. Then we subtract that from our post-tax paycheck. The quick version of this is to estimate that we have to earn two dollars for every dollar we spend. That is no bargain. The pressure is off in my family. We agreed that instead of exchanging gifts, we would put that budget toward visiting each other. We also sponsor a family, bringing them gifts and groceries, keeping them in sheets and towels and that sort of thing. Our family holiday spirit revolves around games rather than piles of packages. I just challenged my mom to online Scrabble. Do you think she’ll play me? Shopping is hard for a minimalist. Not that we’re no good at buying things, just that it’s hard for others to shop for us. This is especially true if they’ve seen our apartment. Nice, thank you for the lovely gift, now where in tarnation are we going to put it?? This is why, when we get a package, it usually consists of a parrot toy and a bag of dog treats. These are things that are guaranteed to get used, and they also have some fun value. Part of why we’re staying home today is that our dog’s days are numbered. He supposedly had only a few weeks to live as of Thanksgiving 2018, yet somehow, magically, he is still here and having a pretty good day. We are in the existentially fraught situation where we literally have to compare a “bargain” to a snuggle day at home with him. That’s technically true for everyone, but we forget. And it’s not just true for our pets, either. I think of all the times I’ve been out shopping with someone, and we come home tense and tired after fighting traffic, bad weather, long lines, and slow walkers. We’re seduced by an endless stream of marketing material into thinking that buying things will be jolly and spiritually fulfilling. Then we go out and try to do it and discover that the process is hollow and exhausting. While we were in line, were we getting what we came for? Love and togetherness? Does the shopping and the debt really translate into caring and affection? Is this what happiness feels like? Joy and delight? Honestly I don’t think all of us know the difference. We’re going for dopamine instead of oxytocin. Shopping expeditions are sometimes the only way that families and friends know how to relate to each other, the only way to have a good time. This is part of where compulsive acquisition comes from. My hoarders may be out shopping with family multiple times a week. Part of the habit is justified by stocking up on gifts, gifts that may pile up for years without actually being given to the intended recipient. There’s always a special pile of gifts received and still in the original wrapping. Sometimes they have the year written on the tag so you can see how far back they go. That’s where our bargains go, sometimes. They go into a hoarded pile on someone’s dining table or into their closet. All that shopping and wrapping, for what? This is why it’s so hard for me to find an exchange of gifts very interesting. I can’t help but see all this stuff in the context of thrift stores, yard sales, and hoarding. What was the exciting gift of one holiday season will inevitably be shabby a few years later. The constant churning of consumer preference creates, as part of its nature, tackiness and unwearable colors and dated fashions that cause us to burst into laughter. They were all desirable one year and a complete joke not long after. That could actually make a fun party idea! Everyone show up wearing a thrift store outfit from an earlier era and wrap up a white elephant gift from a different decade. Throw a potluck using all the dusty kitchen appliances from the back of the cabinet. Make a game out of identifying weird unitaskers, the single-use gadgets that fill so many drawers and closets. Then see if anyone will be willing to take it off your hands. That sounds like work to me right now, though. I’m going to continue lounging around in my pajamas until noon and then see how much cranberry sauce I can fit in my lunch. This is Slack Friday, after all, and I’m not convinced I’m slacking hard enough. Financial Freedom is a book about financial independence for those who are ready to look at the numbers. This is a practical handbook. It’s particularly ideal for someone who wants to convince a skeptical partner to give FI a closer look.
As a non-math person, I like that Financial Freedom includes lookup tables of numbers. It doesn’t require a calculator, which is good because I’m the kind of person who can get four different answers for the same math problem. Fortunately, financial independence is possible for anyone, regardless of numeracy. Sabatier starts the book with a copy of his bank statement, containing $2.26, while he is back living with his parents after a layoff. At one point he counts up how much he had earned at his last job, after taxes, and compares it to the credit card balance he had run up. He doesn’t say it in so many words, but effectively he’s come out ahead by only $2.50 an hour. Whatever was going on with his full-time work/standard consumer lifestyle, it wasn’t working and it sure didn’t look much like financial freedom. Sound familiar? Five years later he was a millionaire. I’m guessing that part does NOT sound so familiar. Not everyone wants or needs to be a millionaire, and most people won’t feel that it’s possible for them when they start. Sabatier outlines seven levels of financial freedom, starting with simple clarity, and none of these levels has a specific dollar amount attached. It depends on your personal situation. The author started with no knowledge and a bunch of debt, and one year later he had seven income streams and $100,000 in savings. It can happen fast if you figure out how to do it. Most people probably spend more time, in minutes, figuring out what movie to watch than they do looking over their accounts or planning a financial strategy. We have the free time, we have the intelligence, we certainly have the desire to be free of stress and struggle. All we’re missing are the role models and the plan, and Grant Sabatier is here to help with both. Favorite quotes: No matter how much money you owe, there’s a path out and a path to wealth. I’m just going to come out and say it—most people who are side hustling, especially when they are first starting out, charge way too little for their services or products. The next time you think about buying something, ask yourself, Is this worth trading my freedom for? |
AuthorI've been working with chronic disorganization, squalor, and hoarding for over 20 years. I'm also a marathon runner who was diagnosed with fibromyalgia and thyroid disease 17 years ago. This website uses marketing and tracking technologies. Opting out of this will opt you out of all cookies, except for those needed to run the website. Note that some products may not work as well without tracking cookies. Opt Out of CookiesArchives
January 2022
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