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Living below your means is hard

Anything related to matters of the mind

rymf

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Living below your means is hard

I have always thought that I am smart enough to not spend money on stupid things.

Because I know it’s wrong.

And I think that most of you also think like this.

But now that I have the money I find it hard to not spend it.

And that’s how I ended up with the iPhone 13 Pro and a BMW 1.

I try to rationalise it in the most pointless ways.
“the phone will help me work more efficiently”
“The car just holds its value so it’s diversification” and things like that which is of course not true.

I could do the same things with a budget phone and a 20 year old car.

Of course I don’t get my bank account to 0, but still this money could be invested and not wasted.

I think it’s mostly because I’m still just a teen and deeply I just want to be admired and be important.

It’s constant battle in mind between rational decisions and primitive needs.

But I think that the first one is finally winning it.


Just my thoughts that I feel I need to share
 
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UK_Mike

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Of course it's difficult, that's why so many people have cars on contract hire, credit card bills they'll never be able to pay off, and are so highly leveraged that the slightest change in interest rates will cause them a problem. Compared to them, if you've bought your two nice shiny things with actual cash money that you haven't borrowed, and you still have some left, you're still doing OK.

And it's important not to go too far the other way. I've spent so long building up savings "just in case" that I now find it difficult to just buy stuff, but I'm OK with that. My car just turned 22 years old - but it does the job I need it to. I just switched out my old Nokia N75 Symbian phone (yes, a Smartphone from before Apple took over the name) for an iPhone 6s. It was £20, but it'll do for now. Whenever I've bought stuff and experienced "buyer's remorse", I just use them as a reminder that buying them didn't fulfil a need for me, and didn't make me feel better.
 

heavy_industry

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There's nothing wrong with buying items that improve your life.

But the percentage spent is more important than the price itself. For example, buying a new car that you love may be the best decision if it requires less than 5% of the total capital available, or a catastrophic decision if it exceeds 50%.

Same car, same price, different circumstances.
 

Andy Black

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Choate

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Now that you have them, the choice has been made. The important question is where do you go from here?

A phone and car is almost as essential to living as food and home. If you take care of both and they last you for years, it's not a bad decision.

I bought an iPhone SE for $400 a year ago and before that, I had an iPhone 8 for years. Considering I keep my phone for years, it's ultimately not that big of a cost. I pay for my phone outright with cash, but if you look at the monthly breakdown, the difference between a $400 phone and a $1000 phone is around $15/month over 3 years. Would I have gotten an extra $15 of utility, longevity, efficiency, or ease by going with the $1000 latest iPhone? Maybe, and it ultimately wouldn't have been that much different.

The car is ultimately a bigger decision that can negatively impact your lifestyle. If you paid for it with cash, it's easier to justify. Sure, you might spend a little more on insurance and maintenance, but you know you'll be able to get to where you need to go and have less random issues pop up. The peace of mind can be worth it. If you are financing it at $500/month, well now you have a potential issue that is tying up your monthly income and preventing you from being flexible.
 

Johnny boy

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I spend like 30-40k a month in various things including business expenses.

I hope to bump that up to 80k a month next year, and much more after that.

I pray that soon I'll be spending 10 million a month.

Money is called currency because it flows like a current. It moves. It flows. It is measured in volume and speed like water.

It flows in and out of your control and can be diverted any which way you choose. You are a magician who can press buttons and divert the current in different places. The amount of currency you can control and divert is how much power and control you have. If you have a good system that can create a large surplus then you can divert a larger flow in any possible direction you wish.

I do not want to be a little nerd with a trickle of a stream going into a stagnant little pool that doesn't flow outwards at all.

I want to be Poseidon, diverting oceans and raging rivers any which direction I please. Moving millions of gallons in AND out every second, so much that it's deafening.

It's not your money anyways. You will die and even the money you save will be someone else's. Even if it goes to your kids your little pool will grow stagnant and eventually will go to someone else anyways.

I hope billions pass through me and I can divert and allocate where it goes. I hope there's enough of a surplus that I can divert enough towards enjoying a super high quality life, and still have so much of it left I can divert the majority of it to affecting the world the way I see fit.

Your bmw is meaningless. Buy it or don't, sell it or don't, you still spent a million dollars this year in opportunity cost.

You COULD'VE done something to make a million dollars but you blew it. You don't SEE the expense but it was still there. Your biggest expense every single day is ALWAYS missed opportunities. I kick myself daily for it and am always focusing my energy on thinking that way instead of only focusing on what you can see. What you can't see is so, so much more expensive.
 
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Johnny boy

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That car isn't that expensive.

A insignificant hit to cash flow (less than a grand a month)

Your costs are

The depreciation of the car for the time you own and drive it
+ the interest payments of the car

divided by the years you enjoy and drive it

so it's probably something like 20k/6 = a little over 3k a year

(+insurance)

Do you make more money when you have financial pressure? If you have a business you probably do.

Okay so now go hustle a bit more.

It will force you to reach a new level in your business, which will usually force you to develop the business in some way. You'll have to fix a sales process, get better at advertising, hire more people, develop more systems. Those skills pay dividends since you'll know how to do it forever. It's a new level and pushes you out of your comfort zone.

I genuinely think it's better for you to spend a lot, work harder, make more, etc. It creates pressure for you.

You can change your spending immediately. One day in a surge of discipline you could sell some stuff, change your spending, etc. and still have the income and skills.

I focus on only a couple things.

1. Is my model good? Are the variables that affect the basic model of my business sound and solid? Do I make a good margin with one unit, location, crew, etc.? (is the supply and demand good or is it changing and I need to adjust?)

2. If the model is good, make it huge. (How do I do this nationally?)

All temporary expenses and random bullshit is water under the bridge. It can sting and can mess with your life, but if it's not indicative of the core of the model of your business, it doesn't really matter.
 

doster.zach

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Living below your means is hard

I have always thought that I am smart enough to not spend money on stupid things.

Because I know it’s wrong.

And I think that most of you also think like this.

But now that I have the money I find it hard to not spend it.

And that’s how I ended up with the iPhone 13 Pro and a BMW 1.

I try to rationalise it in the most pointless ways.
“the phone will help me work more efficiently”
“The car just holds its value so it’s diversification” and things like that which is of course not true.

I could do the same things with a budget phone and a 20 year old car.

Of course I don’t get my bank account to 0, but still this money could be invested and not wasted.

I think it’s mostly because I’m still just a teen and deeply I just want to be admired and be important.

It’s constant battle in mind between rational decisions and primitive needs.

But I think that the first one is finally winning it.


Just my thoughts that I feel I need to share

Sounds like you should get a sales job.

If you don't know what business to start at least you can work in a job where
"Doing what it takes" makes money, not "giving it your best effort" makes money.

Making money is more offense than defense and the only investments you should be making right now is in yourself and/or a business.
 

biophase

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Living below your means is hard

I have always thought that I am smart enough to not spend money on stupid things.

Because I know it’s wrong.

And I think that most of you also think like this.

But now that I have the money I find it hard to not spend it.

And that’s how I ended up with the iPhone 13 Pro and a BMW 1.

I try to rationalise it in the most pointless ways.
“the phone will help me work more efficiently”
“The car just holds its value so it’s diversification” and things like that which is of course not true.

I could do the same things with a budget phone and a 20 year old car.

Of course I don’t get my bank account to 0, but still this money could be invested and not wasted.

I think it’s mostly because I’m still just a teen and deeply I just want to be admired and be important.

It’s constant battle in mind between rational decisions and primitive needs.

But I think that the first one is finally winning it.


Just my thoughts that I feel I need to share

I bet if you made more money you would have bought a 3 series. So ask yourself why? Why wouldn't you buy a 1 if you were making 3x your current salary?

I see this mentality all the time. I don't understand it. I had a friend visit me in Vegas recently from out of town who is not currently working. We went to a bunch of tourist places and she bought a bunch of souvenirs. I just don't understand how someone can spend $35 on a t-shirt, $10 on a mug and $15 on a random knickknack when they aren't working. The excuse is "But I'm on vacation.". "I want something to remember this trip by."
 
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Hong_Kong

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Living below your means is hard

I have always thought that I am smart enough to not spend money on stupid things.

Because I know it’s wrong.

And I think that most of you also think like this.

But now that I have the money I find it hard to not spend it.

And that’s how I ended up with the iPhone 13 Pro and a BMW 1.

I try to rationalise it in the most pointless ways.
“the phone will help me work more efficiently”
“The car just holds its value so it’s diversification” and things like that which is of course not true.

I could do the same things with a budget phone and a 20 year old car.

Of course I don’t get my bank account to 0, but still this money could be invested and not wasted.

I think it’s mostly because I’m still just a teen and deeply I just want to be admired and be important.

It’s constant battle in mind between rational decisions and primitive needs.

But I think that the first one is finally winning it.


Just my thoughts that I feel I need to share
I've been reinvesting upwards of 70-80% of my income, soon hope to increase this to 90% and eventually to 99%.

Tips:
  • Set aside cash first, then budget from whats left.
  • Some days don't spend anything at all (zero spend days).
  • Buy high quality things you can get a lot of usage for. Try to find things that will last a long time.
  • Find creative ways to increase your lifestyle without increasing your budget.
  • Find out how to spend on things that don't add a large recurring costs.
  • Avoid spending money on things that don't make you more money, or have any immediate benefit. Ie the brand new iPhone is cool I guess, but it doesn't help you make even a dollar more than a basic smart phone.
  • Find ways to save. For example if you play golf buy used clubs, they are pretty much just as good but a lot cheaper.
  • Excess funds that are left over or outside of normal budget, go straight into wealth building. Example, I invest a huge chunk, if I get money more money than expected or have money leftover, that goes straight into investments - why spend it when I didn't need it.
For me the number one goal of money is to make more money. Any thing else is really secondary. I focus on using my money to produce more money, rather than to consume.
 

S.Y.

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Nothing wrong with spending money. I am not penny pinching and I am not extravagant. If I want something, I pay it.

I won't go as far as get my account to zero, or consistently spend more than I earn in the long run - unless for things that will increase my cashflow.

What is the point of having money if you can use it. Sure, don't go overboard, but enjoy the result of your hard work. Nothing wrong with that.
 

NeoDialectic

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I bet if you made more money you would have bought a 3 series. So ask yourself why? Why wouldn't you buy a 1 if you were making 3x your current salary?

I see this mentality all the time. I don't understand it. I had a friend visit me in Vegas recently from out of town who is not currently working. We went to a bunch of tourist places and she bought a bunch of souvenirs. I just don't understand how someone can spend $35 on a t-shirt, $10 on a mug and $15 on a random knickknack when they aren't working. The excuse is "But I'm on vacation.". "I want something to remember this trip by."

This you?

MJ, you know I was kind of happy with my new Vegas home until I saw yours. Now, all I think about is how to get a house with an indoor basketball court. I've been looking at homes on larger lots for that sole purpose. I even contacted my HOA to see what the building height limit is on my current home! LOL
Haha......But seriously....People like nice things. a 3 series has many benefits over a 1 series but it's more expensive. He didn't get a 1 series because its the best car to get. Just maybe the best he could afford at the time.

Don't get me wrong. I spent most of my life being baffled by how much most people are willing to spend considering how much they make. But any time I have really dug into their point of view, it's always just stops at a major values difference.
 
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NeoDialectic

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I spend like 30-40k a month in various things including business expenses.

I hope to bump that up to 80k a month next year, and much more after that.

I pray that soon I'll be spending 10 million a month.

Money is called currency because it flows like a current. It moves. It flows. It is measured in volume and speed like water.

It flows in and out of your control and can be diverted any which way you choose. You are a magician who can press buttons and divert the current in different places. The amount of currency you can control and divert is how much power and control you have. If you have a good system that can create a large surplus then you can divert a larger flow in any possible direction you wish.

I do not want to be a little nerd with a trickle of a stream going into a stagnant little pool that doesn't flow outwards at all.

I want to be Poseidon, diverting oceans and raging rivers any which direction I please. Moving millions of gallons in AND out every second, so much that it's deafening.

It's not your money anyways. You will die and even the money you save will be someone else's. Even if it goes to your kids your little pool will grow stagnant and eventually will go to someone else anyways.

I hope billions pass through me and I can divert and allocate where it goes. I hope there's enough of a surplus that I can divert enough towards enjoying a super high quality life, and still have so much of it left I can divert the majority of it to affecting the world the way I see fit.

Your bmw is meaningless. Buy it or don't, sell it or don't, you still spent a million dollars this year in opportunity cost.

You COULD'VE done something to make a million dollars but you blew it. You don't SEE the expense but it was still there. Your biggest expense every single day is ALWAYS missed opportunities. I kick myself daily for it and am always focusing my energy on thinking that way instead of only focusing on what you can see. What you can't see is so, so much more expensive.
I agree with alot of your sentiment but that likely says more about some of our similarities than the analysis itself. It seems to be based on some very specific assumptions about personal preferences/values.

What would you say to someone that doesn't enjoy working? (let's define work as something that society views as valuable and is willing to pay you for it).
 

Hong_Kong

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I agree with alot of your sentiment but that likely says more about some of our similarities than the analysis itself. It seems to be based on some very specific assumptions about personal preferences/values.

What would you say to someone that doesn't enjoy working? (let's define work as something that society views as valuable and is willing to pay you for it).
I agree. This is an interesting case study with some numbers.
early-retirement-savings-chart.jpg
 

Johnny boy

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I agree with alot of your sentiment but that likely says more about some of our similarities than the analysis itself. It seems to be based on some very specific assumptions about personal preferences/values.

What would you say to someone that doesn't enjoy working? (let's define work as something that society views as valuable and is willing to pay you for it).
Well, accomplish your goals and do what you want is what I would say.
I agree. This is an interesting case study with some numbers.
early-retirement-savings-chart.jpg

Did you read the book? What do you think "slowlane" means? lmao
 
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Hong_Kong

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Well, accomplish your goals and do what you want is what I would say.


Did you read the book? What do you think "slowlane" means? lmao
My goal is to start ventures and reinvest all the proceeds into financial assets. Businesses are a great way to build wealth, but my goal has to more with keeping wealth in my family for successive generations. ETFs are a very diverse time tested way of maintaining (not building) that wealth.
Lets say if you have a really bad health incident tomorrow, what happens with your business? My goal is to have enough capital saved up that running a business is irrelevant to my financial success.
If I have a fastlane business, but then I'm still living on a small percent and reinvesting almost all income that's even better.
The ultimate goal is to exit the business, and reinvest all of it into financial assets.
I'm not saying work a slowlane job and save as much as you can. I'm saying run a fastlane business, but save up as much as you can and reinvest it, that way you don't even need the business.
 

MJ DeMarco

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I agree. This is an interesting case study with some numbers.
early-retirement-savings-chart.jpg

God I hate this type of shit.

How about sell your company for $25M? How about making $1.5M a year?

There, problem solved, and throw away these stupid charts.

Nothing wrong with trying to have a detailed plan, but ultimately people who live by charts and Excel spreadsheets are enslaved by money and have no plan to escape the defensive side of the rat-race.

Minimizing expenses doesn't create wealth, maximizing income and assets does.
 

MTF

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God I hate this type of shit.

How about sell your company for $25M? How about making $1.5M a year?

There, problem solved, and throw away these stupid charts.

Nothing wrong with trying to have a detailed plan, but ultimately people who live by charts and Excel spreadsheets are enslaved by money and have no plan to escape the defensive side of the rat-race.

Minimizing expenses doesn't create wealth, maximizing income and assets does.

The worst thing about this is the implicit lack of respect for human life, treating it like a commodity.
 
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Hong_Kong

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God I hate this type of shit.

How about sell your company for $25M? How about making $1.5M a year?

There, problem solved, and throw away these stupid charts.

Nothing wrong with trying to have a detailed plan, but ultimately people who live by charts and Excel spreadsheets are enslaved by money and have no plan to escape the defensive side of the rat-race.

Minimizing expenses doesn't create wealth, maximizing income and assets does.
Whats the downside of getting to that financial position sooner by limiting expenses? In that example you would have the savings from the 25M company plus the exit, increasing your overall net worth. I get that there is no floor to expenses so its better to increase income, but that doesn't mean spending more is increasing your financial strength in anyway.
 

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I agree. This is an interesting case study with some numbers.
early-retirement-savings-chart.jpg
Yikes!

There’s zero context.

I like what @MTF said. There’s literally zero humanity in charting personal financial progress like this.

What about someone who loves the rush of the deal and will likely remain semiretired forever despite saving a large portion of income?

I intend to always be useful.
 
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Hong_Kong

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Yikes!

There’s zero context.

I like what @MTF said. There’s literally zero humanity in charting personal financial progress like this.

What about someone who loves the rush of the deal and will likely remain semiretired forever despite saving a large portion of income?
I guess someone who keeps working, while saving a huge percent of their income would be the ideal to me. That results in the largest possible net worth.
 
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MJ DeMarco

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Whats the downside of getting to that financial position sooner by limiting expenses?

Nothing wrong with prudent financial management.
Nothing wrong with spending less than you earn.
Nothing wrong with investing excess savings in better opportunities than a 1% savings account.

The problem is, what you just said often translates into this: What's the downside of making my life suck more in order to increase a number on my computer monitor?

Once you start making $1M+ a year (or even $500K) you're not going to give a shit about saving money on coffee, car washes, nice hotels, and nice dinners out.

There is more utility in spending the money and living a life of experiential
richness, than in the mental pyrrhic victories of investing $1125.75 into an index-fund because you deprived yourself of Starbucks and nice meals out for a year of your life, a youthful year you will NEVER get back.

I guess someone who keeps working, while saving a huge percent of their income would be the ideal to me. That results in the largest possible net worth.

Read Die with Zero by Perkins. At some point, saving excess $$ becomes a stupid exercise.
 

Kak

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Everyone that I’ve ever met that held some idealistic view of traditional easy chair and golf retirement is miserable now that they have it.

Becoming useless isn’t good for a person.
 

Kak

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Nothing wrong with prudent financial management.
Nothing wrong with spending less than you earn.
Nothing wrong with investing excess savings in better opportunities than a 1% savings account.

The problem is, what you just said often translates into this: What's the downside of making my life suck more in order to increase a number on my computer monitor?

Once you start making $1M+ a year (or even $500K) you're not going to give a shit about saving money on coffee, car washes, nice hotels, and nice dinners out.

There is more utility in spending the money and living a life of experiential
richness, than in the mental pyrrhic victories of investing $1125.75 into an index-fund because you deprived yourself of Starbucks and nice meals out for a year of your life, a youthful year you will NEVER get back.



Read Die with Zero by Perkins. At some point, saving excess $$ becomes a stupid exercise.
I loved all of this except the die with zero thing. Not a fan of that book, but understand its appeal to some.

I’m totally fine with my richest day being the day I die. To me it’s not wasting. It’s providing, along with my proper raising of them, my kids opportunities to struggle on bigger things than I ever struggled on.
 
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I guess someone who keeps working, while saving a huge percent of their income would be the ideal to me. That results in the largest possible net worth.

I think you misread @Kak post.

Growing net worth just for the sake of growing net worth is stupid.

Money is a tool, use it. It helps amplify who you are. A useful human will become even more useful with more money. A useless human winning a lotto will piss it all away and go back to being useless.

I enjoy doing deals, creating business opportunities, solving problems, creating jobs for people, walking past buildings we built, seeing tenants that rent our apartments and even hearing them complain! I feel like what we do isn't just profitable, but useful too. People chose to buy an industrial space from us and now have a small business there, a few employees, some nice cars parked outside. I had something to do with that. I don't want that feeling to stop by "retiring" even if I have enough money not to work.

There is a sense of satisfaction from having a purpose. Grow your net worth to have options and opportunities but don't get sucked into the idea that "the higher the better" for the sake of seeing another zero on a bank account on your screen. It's only better if you make it better, if you use it the right way.

Retirement goal is dangerous that way, it presupposes that doing little is the way to go. But when are we happiest? There is no happiness in lethargy. Happiness comes from being stretched, doing more than you thought possible.
 

Hong_Kong

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Nothing wrong with prudent financial management.
Nothing wrong with spending less than you earn.
Nothing wrong with investing excess savings in better opportunities than a 1% savings account.
I agree with this.
The problem is, what you just said often translates into this: What's the downside of making my life suck more in order to increase a number on my computer monitor?
That makes sense. The way I think about is a like a game, how can I improve my life as much as possible while spending the least. For example I ski / golf, but I do it the most cost effective ways (buy seasons pass early, used clubs for now but still great clubs). I live a nice lifestyle, but I still live far far below what I could be living.

There is more utility in spending the money and living a life of experiential richness, than in the mental pyrrhic victories of investing $1125.75 into an index-fund because you deprived yourself of Starbucks and nice meals out for a year of your life, a youthful year you will NEVER get back.
This makes sense, its finding the right balance.
Read Die with Zero by Perkins. At some point, saving excess $$ becomes a stupid exercise.
My goal is to really push the needle on my NW as much as I can, then lock it all up in several trust funds (dynasty trust style). For me its about family, and family pride.
 

Hong_Kong

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Growing net worth just for the sake of growing net worth is stupid.
I guess I don't see the same. Net worth is a point of family pride for me. I've always took inspiration from families that have build and maintained great wealth over generations and generations. I get than not everyone sees it the same way, but for me this is really what inspires me.
 
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NeoDialectic

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I think you misread @Kak post.

Growing net worth just for the sake of growing net worth is stupid.

Money is a tool, use it. It helps amplify who you are. A useful human will become even more useful with more money. A useless human winning a lotto will piss it all away and go back to being useless.

I enjoy doing deals, creating business opportunities, solving problems, creating jobs for people, walking past buildings we built, seeing tenants that rent our apartments and even hearing them complain! I feel like what we do isn't just profitable, but useful too. People chose to buy an industrial space from us and now have a small business there, a few employees, some nice cars parked outside. I had something to do with that. I don't want that feeling to stop by "retiring" even if I have enough money not to work.

There is a sense of satisfaction from having a purpose. Grow your net worth to have options and opportunities but don't get sucked into the idea that "the higher the better" for the sake of seeing another zero on a bank account on your screen. It's only better if you make it better, if you use it the right way.

Retirement goal is dangerous that way, it presupposes that doing little is the way to go. But when are we happiest? There is no happiness in lethargy. Happiness comes from being stretched, doing more than you thought possible.
Everyone that I’ve ever met that held some idealistic view of traditional easy chair and golf retirement is miserable now that they have it.

Becoming useless isn’t good for a person.
If you meet someone that is living a "useless life" based on your descriptions and they claim they are happy/fulfilled relaxing with their family all day on the beach (or surfing or video gaming or whatever else).

How would you fit that contradiction into your ideology? Would you just conclude they are lying about what they do or about their happiness?
 

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If you meet someone that is living a "useless life" based on your descriptions and they claim they are happy/fulfilled relaxing with their family all day on the beach (or surfing or video gaming or whatever else).

How would you fit that contradiction into your ideology? Would you just conclude they are lying about what they do or about their happiness?
Never met one yet. Will let you know when I do ;)
 

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