Getting Started Early on FI/RE

image of the cover of Daredevil #181

I started adopting the mindset that set me on the path for FI/RE (Financial Independence/Retire Early) when I was very young. I collected baseball cards when I was a kid and added comic collections when I was a bit older kid.

Early on I was paying attention to the investment potential. I enjoyed not just the collecting but also the idea of making money by buying something and then selling it later for more money (which is the fundamental idea of investing). It came naturally to me.

I never much liked spending money on something that lost its value. For some things, like ice cream, I could happily spend my money even though I would soon have nothing to show for it. But more often I would rather buy something I could enjoy and also believe I would be able to sell later at a higher price.

image of Watchmen comic cover

When I started actually trying to sell baseball cards for money I learned about he difference between reported “value” and the ability to get cash for what you owned. Not only can’t you sell items to a store at the “value” reported in pricing guides you often couldn’t sell them at all (they didn’t want the items at all).

In high school I started renting space to sell at shows. There you were selling to the public (or other dealers). I learned vivid examples of the challenges of turning assets into cash. And I also learned about the weaknesses in the economic ideals such as the market being efficient. I saw how often the very same product (the same baseball card) for sale in the same hall would have very different prices (over 100% more was not uncommon) and the sales were often not close to the best buys. The friction in this situation was much smaller than the typical purchase (all the items were in the same room, just a little bit of walking created the friction).

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Golden Rules for Making Money

P. T. Barnum wrote the Golden Rules for Making Money in 1880. He provides a few paragraphs on each of the 20 golden rules:

1. Don’t mistake your vocation
2. Select the right location
3. Avoid debt

Money is in some respects like fire; it is a very excellent servant but a terrible master. When you have it mastering you; when interest is constantly piling up against you, it will keep you down in the worst kind of slavery. But let money work for you, and you have the most devoted servant in the world. It is no “eye-servant.” There is nothing animate or inanimate that will work so faithfully as money when placed at interest, well secured. It works night and day, and in wet or dry weather.

4. Persevere
5. Whatever you do, do it with all your might
6. Depend upon your own personal exertions
7. Use the best tools
8. Don’t get above your business
9. Learn something useful
10. Let hope predominate but be not too visionary
11. Do not scatter your powers
12. Be systematic
13. Read the newspapers
14. Beware of “outside operations”
15. Don’t indorse without security
16. Advertise your business
17. Be polite and kind to your customers
18. Be charitable
19. Don’t blab
20. Preserve your integrity

From the introduction,

Those who really desire to attain an independence, have only to set their minds upon it, and adopt the proper means, as they do in regard to any other object which they wish to accomplish, and the thing is easily done. But however easy it may be found to make money, I have no doubt many of my hearers will agree it is the most difficult thing in the world to keep it. The road to wealth is, as Dr. Franklin truly says, “as plain as the road to the mill.” It consists simply in expending less than we earn; that seems to be a very simple problem.

The thoughts are worth reading today. You can update things a bit, from read the newspapers, to read the websites, but mainly it is sensible advice today.

"A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so." - Mahatma Gandhi

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Multi-generational Housing Communities

The digital nomad lifestyle is made possible by the modern world. In some ways it harkens back to nomads but not really very much. Another idea that is gaining favor (not as popular as the digital nomad trend) is multi-generational housing.

Our ancestors all lived in close knit multi-generational communities. Normally with 3 or 4 generations of the same family under the same roof (or within shouting distance in a hut nearby).

I can understand many reasons why many of us moved to our more independent way of living (especially in the USA) as we got rich enough to afford to do so.

There are really interesting (small) efforts to do this in non-related multi-generation households. I think there are very good reasons for it. And for people like me that would rather not live in the same house with these others it can even work in a small group of homes. Often with shared kitchen… Sometimes older people can share some financial burden (young family gets cheaper housing). And younger people can help with yard work, repairs… Cooking can be shared. Childcare from elderly can help free up the kids parents and can give some personal contact to elderly (that can otherwise be socially isolated). Kids can get more contact with people in the small community and may has less time just sitting in front of Netflix (especially small kids).

I learned about the resurgent movement for co-housing while I was living as a nomad. To me it really seems like another form of trying new ways of living that are not the common living arrangement for most people today. It seems to me it has the potential to be as life changing and enriching as many find the nomad lifestyle to be.

Of course there are all the issues you have with people being together. But there are some pretty good things about it too.

Related: Union Corners Cohousing in Madison, WisconsinShould I Sell or Keep My House When I Become a Nomad?Design coalition multifamily housingHousing Savings by Living as a Nomad

Motivation and Delivering Solutions When You Work for Yourself

When you work for a company you have clear expectations for performance. If you become your own boss, for example as a digital nomad, you operate in an system that doesn’t have the same structures to enforce you focus and deliver. In many ways this is exactly what people seeking the digital nomad life want, but it also can bring challenges.

If you find yourself having difficulty getting yourself to work without a boss what can you do?

Doing what you are passionate about is important. As an entrepreneur working for yourself, if you feel work is a chore that you want to avoid, you can easily to avoid it.

But it is likely it isn’t that you want to avoid work, you just don’t have the urgency to “deliver” working solutions quickly without some extrinsic pressure (boss or…).

To do lists work for some people. You focus yourself with specific targets. If that doesn’t work, a virtual assistant to track progress and serve as a personal re-enforcement mechanism can work, for some people. Publicly making a commitment can work for others (on your blog, or on fb or to your customer or to your spouse or parent…).

The virtual assistant is partially a combination of a to do list and a public commitment along with someone to enforce evaluating progress on the to do list.

Habits are a powerful influence on behavior. For some people all that is needed is creating the habit of working in the morning for 4 hours and then enjoying the rest of the day. They can then focus every day for a specific period of time and don’t waste time procrastinating or being distracted with other matters.

For some people setting up rewards for themselves can work. Once I achieve x then I can (get a new game, take a weekend trip to the beach…).

What is important is finding a solution that works for your psychology. Some digital nomads don’t need any of these tactics, but for some these tactics can be useful.

It is possible that the reason you have trouble focusing on work is that you just don’t care about what you are working on now, so you should look at the bigger picture and find something your are passionate about. But I think, in most cases, this type of issue with motivation or difficulty with procrastination is more likely to be a smaller matter of just creating a bit of urgency to deliver.

So the question is how do you do create an urgency to deliver in a way that works for you and leaves you with a situation you enjoy. Certain tactics would drive some people crazy. But what matters if not some perfect solution for everyone, but finding one that works for you.

Related: Finding an International Business Bank as a Digital NomadSupporting Virtual WorkersStatistics on EntrepreneurshipDelivering working software (Deming’s ideas on management)

Reverse Budgeting: Money that Must be Spent

I realize that being reluctant to spend money isn’t the normal problem people have. This is especially true where I grew up: the USA. But I do have trouble spending money, my default desire it to save money.

The main reason I have the ability to have a digital nomad, long travel lifestyle now is not some incredible business bringing in lots of cash. It isn’t have made a huge fortune that I can now live on. It is mainly because I don’t need to spend a huge amount now. And I have saved up money by not spending a huge amount before. Investing that money well also helped.

But I do also have trouble due to my desire to not spend money even when I might like the result (when the cost just seems too high for what is offered). I have taken to a “reverse budget” where I have set money that I expect to spend. And I add to that balance each month and if it grows I have an increasing pile of money I am suppose to spend.

So when I think about getting a guide for a trip in China and I am put off by how much it costs, I can look at my balance and say if I have to spend that money there really isn’t anything I want to spend it on more than hiring a guide. So then I can spend money in the way that benefits me and I can escape the trap of saving more than really makes the most sense when you look at the overall picture.

sunset from boat

Sunset from boat tour in Kuching, Borneo, Malaysia. I may well not have taken this evening boat tour if I didn’t have money I “had” to spend.

Some people will put some amount into a checking account each month to limit their spending to say $2,000. I do something similar but for the opposite purpose to segregate money to spend. I move the decision from whether I am better off saving or spending that money to this is the money that has already been allocated for spending, so now go spend it on whatever is the best use for it.

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Helping Others

Nearly everyone reading this blog is very lucky financially. Even if they see many near them that are even luckier they are still financially fortunate.

I believe those of us who are lucky have an obligation to share with those that are not as fortunate. Many people are happy to help out more than they are already, but they need encouragement.

Two of the big challenges are to appeal to them in a captivating way (person connection are good – photos and videos help a great deal) and trustworthy opportunities. Sadly a significant issue is people seeing how willing people are to part with their money to help others and they figure they can get that money by just saying it will help others and then doing nothing, or very little for others (and keeping the cash for themselves).

So trustworthy appeals that engage happy to help both benefit those receiving funds and those giving funds.

I have long used TrickleUp, Kiva and Global Giving to help (and they each do a good job of engaging donors (tugging on their heartstrings and making them happy to give).

I try to give back to the places I visit. So I integrate this into my digital nomad life. As with many digital nomads I have an affinity for entrepreneurs and my charity often focuses on helping them (Global Giving does other things too – such as providing clean water, electricity, education and training…).

Trickle Up provides grants to entrepreneurs and provides significant training, support and a network of like minded people. Kiva is more well known and provides loans to entrepreneurs.

Related: Giving More Than Money to CharityFunding Entrepreneurs in Nicaragua, Ghana, Viet Nam, Togo and TanzaniaFinancial Thanksgiving