If you're new here, this blog will give you the tools to become financially independent in 5 years. The wiki page gives a good summary of the principles of the strategy. The key to success is to run your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. Not just any business but a business that's flexible, agile, and adaptable. Conversely most consumers run their personal finances like an inflexible money-losing anti-business always in danger on losing their jobs to the next wave of downsizing. Here's more than a hundred online journals from people, who are following the ERE strategy tailored to their particular situation (age, children, location, education, goals, ...). Increasing their savings from the usual 5-15% of their income to tens of thousands of dollars each year or typically 40-80% of their income, many accumulate six-figure net-worths within a few years. Since everybody's situation is different (age, education, location, children, goals, ...) I suggest only spending a brief moment on this blog, which can be thought of as my personal journal, before delving into the forum journals and looking for the crowd's wisdom for your particular situation.
I’m currently reading How to get rich by Felix Dennis. The front cover claims it’s supposed to reveal some secrets to getting rich. I’m currently on page 70 and I haven’t come across as anything revolutionary yet (hopes are high though), but one thing that struck me was a paragraph in the preface, written by a someone, who is worth about half a billion dollars:
[I wrote this book to]…demonstrate that that becoming rich has given me the most precious thing in life. And just what is the most precious thing in life that riches can supply? Easy: For me, it’s Time. Time. Time to read and write poetry if I want to. Or to write a book if it takes my fancy. Time to travel on the slightest whim, to walk in the woods, to think, to commission art, to read, to drink, to hang out with friends and loved ones … to do just about anything really, as long as it does not involve day after grinding day making money in an office or a factory for someone else. That’s what money can do.
Wow! This is from a guy who “outriches” me by more than a factor 1000 and what he seeks and has is essentially the same as what I seek and have. Actually, if me outsourcing my bookcover can be considered commissioning art, and if blogging is poetry (ahem!) we enjoy exactly the same things. This is somewhat unexpected given the factor 1000 difference. Usually I expect differences in kind when differences exceed a factor 10.
So good news everybody! You really don’t need $500,000,000+ to have that time and live well.
He does mention some of the cars he can buy, which I can’t, but on the other hand he can’t drive them, so I guess that makes us even
I have on the rare occasion considered working more to pick up more money so I can buy stuff, but frankly, giving up Time to buy stuff is a lot to ask, so I’ll satisfy myself with cheaper indulgences.
Thus I conclude that I am already beyond what extra money can do for me. More accurately, the marginal utility of more money is low. It’s been like that for a while. Even while I was working, money quickly developed into simply a way of keeping score. It’s a natural consequence of spending far less than the pay.
Lately, I have realized that I am getting old. I’m in my mid thirties. Double that and I’ll be in my seventies. To me 70 is somewhat old. So I have as much time going back to 0 as I do going up to 70 and I don’t feel like I have lived a particularly long time. The marginal utility of more time is high!
Spending very precious time to make more money than needed is thus uneconomical. Sure, making money incidentally is nice, but actively spending time to pursue more when I already seem to have reached the limit of what is possible with money (aside from the ownership of large luxury items which I think I can live without) is simply nuts when it appear that there is no additional satisfaction to be had.
Sure, everybody probably thinks, as mentioned in the book, that they’re the one exception that money does indeed buy happiness, but I’m not willing to bet 15 years of my life on that.
Originally posted 2010-05-31 23:22:55.