Challenging the Status Quo

Three nights in Mexico last week. Very enjoyable.

The cost of the status quo is hidden.

It simply isn’t possible to see both (a) what the future could be; and (b) the drag of accepting the way things are.

Over Thanksgiving my kids reminded me of this fact. They were amazing.


After a decade of fatherhood, they chilled the entire flight, enjoying each other.

Bickering

Earlier in the year, I told them that I was done spending time with all three. No “full family” trips.

I stuck to my guns. When it came to kids, I was 1s and 2s across the year. Much less refereeing between them.

But they missed hanging out with each other so they started a get-along campaign.

See Dad, we get along now.

Reminded me of another favorite lesson => to be sick of sickness is the only cure.

The part of me that likes to say “no” was a little sad at their improvement. Strange thing human nature!

I share the story as a holiday reminder that parents have a choice with regard to the status quo. It does take a lot of patience, skill and persistence to help everyone get along with each other.

While I can’t control the actions of others, as a parent, I can influence the incentive structure.

Even getting the incentives correct, change was slow and took many months, to become obvious.


Personal Recovery

Another thing that’s been frustrating is my lack of recovery. In my 50s, I simply do not bounce back from anything very well.

I’ve noticed that the days with “more” cardio are a whole lot easier for my mental health. So, with an eye towards “better”, I got myself an Oura ring to gain insight into resting HR, HRV and sleep quality.

This process was another reminder… Two things are necessary for progress: (a) make mistakes visible; and (b) have the courage to see, then address, uncomfortable truths.

You see, I bought the ring so it could tell me what I wanted to hear!

Unfortunately, the data has had other ideas. It’s early days, so I’ll skip the specifics until I’ve gone a full season.

Suffice to say, the message appears to be that my appetite is greater than my tolerance. The only way I’m going to fit in “more” is to go a whole lot easier (most of the time). This reminds me of an observation I shared with KP (when he was my age).

I used to do a lot more easy training than I remember.

He liked that quote so much, he hung it above his desk. As I near 53, I’m glad the memory came back to me.

Anybody over 50 who says “age is just a number” isn’t paying attention, or may be trying to sell you something. 🙂

A recurring theme across my fatherhood journey… remembering it is OK to be sensible.


Anaerobic Tolerance

Another observation, this one physiological, each time I give myself a novel anaerobic stimuli, it kicks my butt for at least a month.

The first month of something new kicks my butt. Being wrecked is obvious to me. Thereafter, the fatigue gets more subtle.

Mark Allen quote… just because you feel better, doesn’t mean you are better. At the time we were talking about over-reaching but it applies more broadly.

In other words, adaptations are continuing even when I can’t “feel” them.


A well worn race shirt

The shirt pictured above is from the last time I was “fast” in a conventional sense, August 2012. We had a 3 year old, a baby and my wife was 8-months pregnant with our youngest.

Shortly thereafter, I decided to pause the racing. That one choice started a positive cascade of consequences that continue to benefit my family.

The “pausing” racing choice was a big one to make. I had a lot of my identity tied up in my relative performance.

I also had a mistaken belief that the process of race preparation was essential to look good. As I age, I’m bumping into the same fear.

Just like with my household, changing the incentives can lead to better.

Boom Time Real Estate

Some quality kid-art, right there!

We are living through boom times in our local real estate market. Houses are selling quickly, at the equivalent of 50-100x annual rent.

Everything, other than debt pricing, looks expensive to me. So… I’m looking to move, borrow and increase the assets in my portfolio that generate cash flow.

A simple way to view this… (a) split the equity in your existing house in two parts; (b) borrow 30-year fixed and buy a new place with one part of the equity; and (c) place the other part into a rental property.

The explanation follows, with a 25-year overview at the end.


In 2010, I purchased two rental properties as a hedge. Specifically, I wanted to hedge against the risk of my family being priced out of our home market. I thought I was protecting my kids. Turns out I was protecting myself.

The idea was to get paid (via rental income) to hold: 3 units, 10 bedrooms and 20,000 sf of Boulder land. The locations were excellent, the properties dated.


The 2010 purchases worked out well, not just because they performed. The purchases put significant cash pressure on me. The pressure improved my spending choices and motivated me to sort a business which was hemorrhaging cash. In a sense, having tight cash was a form of forced savings.

In 2013, we downsized, borrowed and moved across town. By staying in the same type of neighborhood, and borrowing modestly, our equity appreciation in the smaller house ended up the same as what we would have earned in the larger, unleveraged house.

My ego likes headline numbers and struggles to accept this reality. Something about real estate => the gross, headline numbers are more emotionally salient than the net cash flow reality.


Once again, I’d like to free up time, and reduce admin, by moving. The price I’m going to pay is time/hassle from the move, bringing some deferred taxes forward and agent’s fees.

With the run up in asset values (2015-2021), my family has a much larger allocation to “dead assets.” Dead assets are assets that cost money to hold => for many readers, this is the house they live in. Given recent capital appreciation, the cash cost to hold has been ignored by many.

Downsizing, and locking in 30-year fixed debt for a portion of the new purchase, enables me to keep the amount of “dead assets” modest within the family portfolio.

My ego is tempted to size up, and add a ski place. The better financial move is to improve the quality of our rental portfolio, while reducing my housework and driving.

30-year fixed debt on the family home is one of the best deals going. Given the borrower’s option to repay, it’s a one-way option that could be worth big $$$ in the future.


A word to the leveraged.

Now, like 2005-2007, is a great time to be heavily indebted. You will take comfort in your ability to unwind any financial difficulties.

You are correct.

However, if you truly “need” to unwind financial positions then we are likely in a market like 2009, unpleasant.

So be cautious with opting-in to risks that don’t add to your long-term strategy. Most particularly, any arrangement where an outside party has the power to force a sale. While I am seeking to borrow, total debt will remain modest relative to assets and cash flow.


Breaking it down, building wealth across decades.

  • Resist the urge to up-size your life, particularly by adding negative yielding assets.
  • Rather, seek to build up 2-4 rental units. Pay attention to location, lot size and bedrooms.
  • Unless you want to get into the hotel management business, rent unfurnished to long term tenants. Inverting I have learned… furnished, short-term rentals bleed expenses, emotion and time.
  • For your long-term rentals, use a local property manager – their cost as a %age of capital value will be tiny compared to the value they add, and the hassle you avoid. This frees time to make money in a field where you have an edge => whatever you were doing when you built up the $$$ to purchase rental properties. Side Note on taxes: tax bill as a %age of net assets is a number you should track.
  • Use your personal home for shelter, as an entry in the best public schools in your state, as a cheap source of fixed rate debt and a tax-favored investment. If this asset appreciates to the point where you have “too much” invested in non-yielding real estate then downsize, get a new mortgage and repeat the cycle.
  • Aside from the roof and HVAC… spend no material capital on any of your properties. Instead, spend time with the people you love (and buy more assets that generate cash flow).

If you start the above when you get married then you’ll have 1-3 moves by the time you are empty nesters. At that point, you’ll have built yourself an inflation-proof, tax-effective retirement annuity. You can constrain your spending and pass it to your grown kids OR run down the assets as you see fit.

That’s the financial overlay. You also have the ability to use trust structures within this strategy. I’ll get to those in a future post. Put simply, when I say “you” it’s possible to put a trust in “your” place. That can protect your assets from the unexpected which, over a 25 year time horizon, is nearly certain to happen.

Ideally, you graduated debt-free from college and made a habit of maximizing your retirement contributions in the first 10 years of your career. Don’t be in a rush to get into real estate, I’d been working/saving for a decade before I had the capital, and geographic stability, for a purchase to make sense. While a favorite form of security for lenders, real estate is chunky, a pain to manage and expensive to sell.

What Would That Look Like

The 50m pool at Coronado – not a hardship posting!
First person who took me here was Coach KP, 20-ish years ago.
The Big Dog is always with me. Love you, buddy.

I flew out to San Diego to have a chat with a friend.

I had a hunch he’d come up with something and he delivered via a well-timed question.

What would that look like?

At the time, I was stuck talking about everything other than what I was going to do about my life.

Put another way, I was talking about what life was doing to me… rather than what I was going to do with my life.

So here goes.


Last time, I outlined what better would look like in my marriage.

Scheduling time for our three “weeklies.” Six hours a week plus a 20-minute planning meeting => huge return on time invested.

This has been great and I have noticed a useful change in my thinking. After a month of rolling our weeklies, my thinking shifted towards my actions to improve my life.

++

With better thinking I noticed…

Time => this year I added 800 annual hours of driving to my life, without noticing!

Two schools across town, birthday parties, swim meets, swim workouts, jiujitsu, climbing… throw in dishwashing, laundry and picking up clutter… 2021 is up over 1,000 annual hours of s*** work.

Why would anyone learn to take care of themselves when they are offered catering, limo rides and daily maid service at their beck and call?

Have you ever quantified the dead miles from your commute? We are making 450 trips per school year. At 7.2 miles per round trip it is 3,240 miles. Tack on after school activities and we’re over 5,000 miles.

But wait, there’s more… cut cleaning AND driving => downsize into a place that is walking distance from where my kids will be going to school for the next TEN years.

Having lived through the challenges of running a 6,000 sf house, then a 5,000 sf house… I’d like to pull 2,500 sf out of our footprint, while reclaiming 5,000 hours over the next decade.


1//. I wasn’t able to see until I settled my mind to the point where I noticed how my time was being spent.

2//. When I am too busy, I get caught blaming the situation, rather than guiding the situation to a better outcome.

To notice, consider then act appropriately… I need empty space in my life.

Side note for my real estate pals — I’m all set, no need to drop me a line. 😉


Opening Day, Vail 2021

Something else I realized about time…

I have no more than 1,500 days left to directly impact my kids.

Somewhere beyond 2025, they are going to stop listening to me as they transition to adulthood.

So I’m going to make time for 1-on-1 trips, my best forum.


Also last week. Time well spent

Another story, this time about spending.

Just before the pandemic, my identity was stolen. It was stolen to the point where someone was able to call up my bank and get the bank to believe they were talking to me.

Huge pain in the rear. Not because I lost any money. More because I had to change every single thing I could to lock the buggers out — that took time.

Things have settled down but my security protocol means that my watch buzzes every time a nickel leaves my life. This has gradually made me miserable!

Recently, my watch died and the buzzes stopped.

It was wonderful.

I’m going to shift all notifications off my body.

++

Back to those 1,500 days with the kids. Why are we doing this?

I want my kids to be equipped with the skills to self-direct their lives.

Why?

Because if you lack these skills then you run a much greater lifetime risk of being abused – literally, figuratively and financially.

A key value of knowing the why, is being able to discard the noise that surrounds us… politics, markets, crypto, workplace drama, status anxiety…

Also, consider the noise that surrounds parenthood… popularity, college admissions, athletic performance, academic performance, status anxiety, unresolved childhood trauma (being addressed via proxy)…

If the goal is to enable a child to self-direct their life then much of the above can be jettisoned. This enables the family to focus on things that could prove useful…

  • Getting along with difficult people
  • Knowing when not to engage
  • Letting others be wrong
  • Building marketable skills
  • Modeling the capacity to live within one’s means
  • Daily movement in nature
  • Understanding, then avoiding, ruin
  • Absence of addiction, abuse, disease, ill-health

So the filter I am using with regard to my kids is… is this a reasonable constraint on my time to up-skill them?

My driving and housework are beyond reasonable, which means I’m not doing my best work with the useful.


In life, and the bouldering gym, I struggle with balance moves.

To fully answer my friend’s question, “how would that look?” I need to get specific with regard to myself. I need to own the actions required to improve.

Say “yes” more often => people who are good at building capital (and fitness) receive an uncommon pleasure from deferring joy. Improving my yes-no balance requires a mental adjustment.

To create the space for better thinking, I’m going to spend 3-5 days exploring, in nature, tech-lite, each month in 2022. I failed to pull this off in 2021.

Something I learned 30 years ago, “there’s always a good reason to postpone the vacation.” In 2020 & 2021, there were many good reasons to say no to myself. Keeping myself far away from the urge to dismantle my family life is a good reason to say yes to creating some space.

Keep iterating towards better.


My plan for last Friday afternoon didn’t have “spend the afternoon doing autobelays with your kid” in it.
I said “yes” to him and had a great time.
One Positive Step.

More and Less

My kids love it when I dress up

I view my negative emotions as feedback and, when they persist, I change my approach.

My summer had some unpleasant moments. Moments which spurred the resolve to reach for better.


The first thing I noticed…

If I am going to do something mean then it’s going to happen at home, after spending the day alone.

I can’t remember a single unforced error happening after a day outside. The errors I do remember start with a slow boil starting at my desk!

So…

I have stickers facing me while I type away on my screens…



Whatever I truly need… it’s not to be found in a chair, looking at screens.



Another lesson I’ve learned, this time about marriage.

Schedule time to enjoy each other.

I don’t know if we’d gotten “too busy”, or complacent.

Either way, when I’m getting jealous of swim meets then it’s a sign we need to increase our us-time.

  • Tuesday – train together (outside), then lunch
  • Thursday – starting after Christmas break, ski together
  • Saturday – date night (and our oldest can handle the sitting)

Three opportunities for “together” each week.

Have fun together and avoid forming a habit of preparing a list of grievances for each encounter, yes I have done this.

The Thursday means we need to help. When I first raised the idea, it was…

I want you to get childcare so I can take an entire day off. Every. Single. Week.

My wife had no idea what, or why, this was important.

Nothing happened, for months.

When I explained the downstream idea (ski together each week), help was found within 12 hours.

Good ideas do better with effective communication.

These ideas were put together with an understanding of enduring drivers of satisfaction in my life…

  • Exploring, together
  • Being outside, together

The three “weeklies” put me in my best environment, so my wife isn’t interacting with me in my worst environment (the house after a day alone).

We had a bit of an issue with restaurant selection so we rotate choice, by week, with a no-veto policy.


Kid #2 completed their reading challenge!

John Hellemans notes there are three plans in any athlete-coach relationship. I goes something like this…

  • The plan the coach believes the athlete is given
  • The plan the athlete actually does
  • The plan the coach believes the athlete did

It’s a reminder to be cautious with assumptions, and pay attention to clues that point to reality being different than expected.

A version of this extends to all things in life…

  • What you think you need
  • What you actually do
  • What you think you did

Consider money…

  • What I think I need to spend to make myself happy [A]
  • What the family is actually spending [B]
  • What I think my family wants me to spend [C]

The punchline here is TIME.

When you are enjoying each other, your family will enjoy inexpensive hobbies.

INVERT => no amount of spending can overcome a lack of meaningful connection

What’s been bothering me, quite a bit as it turns out, was the ratio of B to A. The $5 of family spending that follows each $1 I find useful in my own life.

I dug deeper.

What I’ve arrived at is equity. Equity of contributions and benefits. We’re working on it. A simple change, that is difficult to implement…

I will not burden myself with the task of removing the consequences of another’s choices.

Basically, if someone calls an audible, repeats a bad habit, makes a poor choice… then I’ll limit myself to polite emotional support, while calmly showing the connection between their choice and the consequence.

Then I’ll move on.

++

Getting What I Want

With the money I think my family wants me to spend… I just smile at myself.

First, because my wants are driven by my peers, my values and the advertising industry => my family is the solution, not the issue.

A bit of effort with my media filter dials down my greed, and dials up useful traits. A simple change… unsubscribe reduces useless spending.

Second, my “wants” are transitory. They come and go, just like moods. I don’t need to take them seriously, they change all the time.

A better question:

What’s it going to take to raise my kids, the way I want, and set myself up for the next stage of my life?

The price is a cost of doing business.

The actions are where to focus.

Angel Birthdays

The many lives we will lead are hidden from us in the present moment.
Pic is Little Andy.

My wife has one angel birthday in her life, October 30th, the date of Andy’s accident. We had a memorial last week and it went well.

It’s difficult to front up to a funeral, VERY difficult to speak at one… thank you to those of you who came, and those who spoke.

++

Some thoughts on conversations from the memorial.

The concept of closure: for me, this doesn’t exist. Everything I have experienced, is carried forward and changes over time. Andy, in me, continues to evolve.

A key part of growing up is learning how to deal with loss.

I’ll share my list of Angel Birthdays to illustrate the point: Stuart, Kristy, Kevin, Dan, Andy, Henry and Gary. As we get older, many people are going to pass. The advice to “grieve the small stuff” is well made.

The picture below, is Andy with “Little Ax.” My son lives on, he’s 10, but Little Ax ain’t coming back. I miss him.

Life gives us many opportunities to acknowledge loss, both small and large.

Better to grieve the small things (than seek to close them off).


Best Toddler Ever

Michael shared an idea to re-frame our triggers.

Andy died falling from the Second Flatiron. In Boulder, we can see the Flatirons from EVERYWHERE in town.

It goes further that that, if you know where to look you can see them from Eldora, from the tops of the local canyons, flying into Denver…

One endless trigger.

Becoming aware of our memory triggers, we can take the opportunity to reframe them.

So when I look at the Flatirons, I want to remember to say “yes” more often.

Andy and I were on opposite ends of the yes/no spectrum.

There are many days where I wake up keen to say “no” – to myself, to my family, to anyone… no, no, no!

My “no” is rooted in a fear of “yes” getting out of control.

A little more “yes” will improve my life. It’s a good way to remember AC and, perhaps, I’ll give him credit when I’m less of a hardass.

Reframe the trigger to serve the life I wish to lead, the person I wish to be.

++

Andy would have wanted…

If you’d asked him, when he woke up on his final morning, if he was OK with dying in a few hours. then I am certain he would have said “not yet.” We had a look through his planner and he had lots of fun things planned for later in the week.

However, when I met him in 2004 (and many times subsequently), Andy told me he was OK with death. He went further saying he believed in a collective “duty to die”. Not to kill ourselves, by the way. Rather, Andy believed we had a duty to live life fully.

So if you’d told him he’d die in middle age, quickly, pain-free, exercising outdoors… he would have been OK with that.

Andy and I had different values when it came to risk and ruin. Two key reasons: (a) the future is invisible to our present selves; and (b) we are not autonomous beings.

He always gave me a fair hearing.

++

By way of Bob, Chris shared a letter from Hawaii. Extending my favorite part to the general…

Vibe with nature, don’t seek to challenge her.

Rock, snow, ocean, mountain, exercise, work, training load, run mileage… vibe it, don’t challenge.

The vibe is what we seek.

Another way of saying, “look deeply into the need you are seeking to fill.”

++

A final shout out to Monica’s Buddy Andrea (MBA).

MBA flew out, stayed with us and helped with continuous acts of kindness.

A lot of little things, from all of you, turned into a big assist for our family.

Thank you.

The Next Doubling

I was 12 years old at the peak.

A good question to consider with major assets in a portfolio…

Would I buy at current prices?

Like most real estate in Colorado, Boulder capital values have been on a 7-year upswing. According to Zillow, the capital value of where we live is $2.5 million, up 36% since the start of 2020. The only way to describe how this value feels is “too high”.

One way to consider capital values is to express them in terms of cash flow and time => with real estate, the proxy is cost to rent.

With our current address, comparing rental costs with gross capital value…

  • $3,000 per month rental => 69 years equivalent
  • $4,500 per month rental => 46 years equivalent
  • $6,000 per month rental => 35 years equivalent

With the run-up in prices, homeowners have been rewarded for properties that are larger than their needs. Like-for-like rental, doesn’t look too crazy right now. However, we could easily fit ourselves into a location that’s 40% smaller than where we live at present (implying a gross yield of less than 2%).

On to the next example…

++

In 2021, some friends exited the Boulder real estate market. Their net sales proceeds (after taxes and agent’s fees) equate to ~100x their first year rent in their new location.

Worth repeating: they are taking a century of rental-equivalent off the table.

Put another way: by selling into this market they can do the following (in current dollars):

  • Cover their future cost of living on a joint-life expected basis;
  • Put their kids through college;
  • Buy an apartment as a hedge against future rental rates; and
  • Treat future earned income as fully discretionary.

Compelling, especially if your house is the primary asset in your balance sheet.

They aren’t “set” by any means: inflation, illness, increased spending or investment losses might derail their plan. However, the asset sale greatly reduces their financial stress and buys them a tremendous amount of time.

Stress, time and the risk of ruin.

++

Another example, vacation properties.

The house we rented in Vail (2019/2020) is valued at more than 100x the rental we paid. The condo we rented in 2018/2019 sold for 50x annual rental.

There’s never been a better time to rent assets you don’t need. 😉

If you own assets in secondary locations, or are considering buying, then the above calculation is a useful one to consider. The numbers above are using gross rental figures. From the landlord’s point of view, the net rental income would be tiny (relative to capital).

Also consider the benefits of being variable…

Rather than lock in a single location for the winter, I’ve decided to try an AirBnB season. I booked in 22 days of skiing, the dates tie to school holidays => Vail, Telluride and Jackson.

Adding a bit of airfare, gas and mileage… total cost will be $15,000 to use properties with an average value of ~$1 million. VTSAX dividend yield is 1.25%.

By not owning, it was cost-free to change strategy.

++

Other questions I like to ask:

  • Assume things go well and this asset doubles in price (again), who’s going to buy?
  • What’s going to drive the next doubling in value?
  • Where’s my family exposure: (a) benefiting from the next doubling; or (b) harm from the risk of a halving?

Who’s going to buy? A smaller place in a great neighborhood is much easier to sell than the best place in that neighborhood. The top places in Boulder are now selling for around $5 million. Who’s going to buy when the market goes to $10 million? Might “ability to purchase” create headwinds for appreciation in the market?

Prime Colorado real estate benefits from buyers coming from “even more expensive” markets. Boulder remains a great place to land from one of our coastal Metros. City-based housing markets benefit from local economic growth.

Vacation-markets, at 50-100x gross rental income, are reliant on continued balance sheet appreciation for the Top 1% of society.

A comparison I follow in Colorado… Boulder rental property (house with land, no HOA) vs Vail vacation property (condo w/o land rights, HOA). In the last recession, I tracked this comparison in Arizona – unfortunately, I bought condos down there instead of houses.

What’s going to drive the next doubling? See the chart at the top of this post => there’s been a multigenerational tailwind due to declining interest rates. Every store I enter, and every manager I talk to, gives multiple examples of tight labor & inflationary pressures.

Negative real interest rates might keep the party going for a bit. With Social Security COLA adjustments over 5%, it seems nuts to buy into property that’s trading on 50-100x rental income.

Family exposure. For me this is kind of like the “who’s buying” question.

If you’re a double-income family with a diversified portfolio then sticking 10-15% of assets into a vacation market is a different choice than a single-income family with 90%+ of assets tied up in a mortgaged home. The context of the choice is worth considering.

One final point, despite living at 5,500 feet (and training year round up to 14,000), I don’t sleep well above 9,000 feet. For many, ability to sleep at altitude changes as we age.

Climate, altitude, neighbors, convenience, community, quality of local schools/governance… good reasons to rent locally before you buy.

Hope this helps.

Kid Rich

Summer reading prize – read aloud challenge.
I had to offer his older sister a “bonus”…
If your boss offered to pay you, AND send you on a vacation, then would you do a 100-day training program that required a mere 12-minutes per day?
When she said “hell, ya”, I pointed out that she needed to get the reading challenge done before I would be paying for any out-of-state swim meets.

Dressed up and out of the box!
Pre-, and post-, flight COVID tests enabled us to enjoy a normal wedding in Cali.
So great.

What is the underlying goal of childhood financial education?

=> Self-generated, lifelong financial stability

I’ll run through to tools we use to equip the kids to pay their own way in life.


Allowance => simple formula: weekly deposit into an account with the Bank of Dad, deposit is $1 for each year of age, and the deposit balance earns 10% per annum.

Many families view the purpose of an allowance to teach a kid how to spend.

We don’t.

The purpose of an allowance is to create a positive emotional association with the power of compounding.

Our oldest has been rolling her allowance since Kindergarten. She now earns $7 per week from compounding and $13 from being 13 years old.

Compounding is an ever growing sum. When they enter high school, I’ll run through the math behind it. I have a spreadsheet by week.

In time, I will let them know I grew my net worth by 15% per annum for many years, mainly by saving half of what I earned. This habit bought a lot of time.

++

To put off the discussion of “why am I saving?”, I have them pointed at “saving up for a car.” When we get closer, we will sit down and look at the impact of swapping their earnings (from doing nothing) with a set of bills for owning a car (insurance, maintenance, taxes).

Uber is going to look VERY attractive against 10+ years of compound interest. That lesson plan might be: keep depreciating assets variable and stay invested.


Earned money is their money – this has resulted in a house full of Lego

Earned Money Is Their Money

To effectively learn about spending, one needs to earn the money being spent.

This is because spending other people’s money feels different.

Sometimes really different…

Spending other people’s money, with a credit card where you don’t see the bill, feels better than free!

Don’t hook your kids on this form of pleasure. We tell ourselves all sorts of BS to self-justify this situation.

++

Our greatest financial achievement in 2021 happened by accident. We got our oldest off the payroll. She started babysitting and stopped asking us for money, for anything!

This opened her up to the real world of: lending money to friends, spending paycheck-to-paycheck, buying poor quality goods on impulse…

…and because it was HER money, she learned very quickly from her errors, and her friends were not (indirectly) placed on our payroll.

Self-Earned Money + Scarcity + Freedom to Err = Learning

Also… “if you want to buy friends then you’ll have to do that with your own money. Your choice. I think you are a star.”

++

Our other kids aren’t old enough to babysit, yet. They get assistant sitter gigs, and do yard work in the neighborhood. The work pays well in kid-terms. I supplement with odd jobs.

This is enough to make the whole family “kid rich” => rich enough to buy whatever they want, from their own money.

Quite often, what they wanted was LEGO and it was tempting for me to use my own money to “make them happy” thereby facilitating consumption.

One of our family values is we each pay our own way. Elders are to avoid facilitating consumption. With this in mind, I made a choice to reward my kids with time and I remember…

When you are spending other people’s money you can easily get trapped into dreaming of more, more, more.

This is because we are chasing something stuff can never buy. The journey of adulthood is about discovering our personal “what.”


Quietly, I watched nothing happen with the birthday present…

With the shift towards their own money, supplemented by Christmas, birthday and summer reading prizes… they noticed…

New stuff is fun, but only for about a week, then it sits on a shelf.

I let it sit on the shelf, for years, then one day…

I never play with my Legos, they are kind of a waste of money…

Jackpot!

So the current lesson: we buy luxury goods at retail and sell them at wholesale (if we are lucky!).

Thanks to a very kind cousin, we are in the process of converting Lego sets to cash. Lesson to come will be comparing “cost to buy” against “net realized value from sale”.


Breaking down the sets and preparing for sale

“If you want an iPhone then earn the money to buy it”

In 2020, our oldest sold 200 masks, at $5 a mask, to earn the cash to buy herself an iPhone. No social media on that phone and we financed the sewing machine and materials. She handled marketing and mask production. She shut down the “business” the day after she had enough for the phone!


To recap

  • Allowance creates a positive association with compounding
  • Earned money is their money
  • Listen to their errors, give time and positive attention to their lessons
  • Celebrate “getting off the payroll” => they also make their own lunches, another big win.

Let scarcity teach and create incentives to reward work.

++

Basic Cleaning

A valuable lesson for them, weekly humility training for me…

We split the house into Five Zones:

  • Kitchen
  • Carpets
  • Cat Room (dirtiest room in house, done by our youngest)
  • Sinks, counters, baths and showers
  • Toilets and floors

Same zone each week, no excuses.

The Car Off the Lot



Just finished another great read by Poundstone, Priceless.

For the families I work with, the information inside is probably worth an additional ten years of self-allocated time. Ten years, the parents could allocate to their kids, rather than building assets. Or even allocate to yourself.

If we slide into the investment world, the information is worth tens of millions. Just sit and listen to any executive who controls a budget over $250 million, or listen to the debates within your city council. Boulder city budget creeping up to $500 million for ~100K pop. Down the road, City of Denver has a ~$1.3 billion budget.

Unforced errors are easy to spot when watching others. More valuable is to teach yourself to notice how you are being pulled into spending more. Personally, my top unforced error is $275,000 and I’ve come across mistakes in excess of $1 million.

Our emotions can lead us astray. Be particularly wary of having sadness triggered… “I wish I could have that…”

Whenever I notice that feeling, I stop!

My first line of (emotional) defense is slowing down the process.


What’s the car off the lot? It’s the deal that gets you onto the lot.

I’ll compress three trips to the dealership and a month of research into a story…

When you arrive, the first thing you see is the anchor.

Or, in the case of fashion, it’s the purses/dresses in the display cases with discreet (but astronomical) prices displayed.

It’s the jacked up Denali Super Max Monster Truck, blacked out, with 48-inch tires, that’s driven onto a rock and visible from the street…

Locally, our Toyota dealership puts out a PRO and prices it $10,000 over MSRP. Thereby setting a $60,000 anchor in your mind. Each year, this car comes out with a unique color scheme, and a special type of roof rack, so connoisseurs can instantly ID the driver’s status.

While they’d be very happy to sell you the PRO, it’s not the lead vehicle. What they really want to sell you is one of the four (!) OFF ROAD parked right beside it. They have $10,000 worth of options and are priced at $49,999 (-ish). They are lifted, with gleaming knobby tires and they have swapped the decal so it is badged “PRO.”

With that $60,000 anchor in my mind, the sexed up OFF ROAD certainly felt like a deal. I could “save” $10,000 by buying it, it was right there…

But where was that basic OFF ROAD that I saw on the internet?

We went into the salesman’s office and pulled up the dealership inventory.

G: Sort the OFF ROAD trims by price for me, thanks.

Salesman: The system won’t let me do that.

G: OK, I’ll just have a look.

Salesman: Sure

G: What about that one?

S: It’s not the color you wanted.

G: That’s OK, let’s have a look at it.

S: It’s at a remote lot.

G: That’s OK, I’ll wait.

30 minutes later, it rolls up. Homeboy was not in a rush for me to see this vehicle!

Eventually, I’m out of there with an extra $20,000 in my pocket.

By the way, the dealership still did well. I was emotionally tired and didn’t haggle the last $$$s out of the car and my trade-in.

Three trips to the lot and a month of thinking it over. Slowing myself down is the best defense against emotional purchase errors. These techniques, and much more, included in Priceless.

In my financial life, I have a system to slow myself down => a disinterested person sits on my investment committee and oversees every proposed change in strategy.

The remote, disinterested mentor => valuable!


Three things to notice in all purchase domains…

  • What’s the high anchor?
  • What do they really want to sell?
  • Where is the “car off the lot” => their best deal?

These three things exist in every purchase offering: Anchor, Target Sale, Hidden Best Deal.

  • Multi-unit apartment complexes
  • Home appliances
  • Luxury retail
  • Jewelry
  • Hotel rooms
  • Ski passes
  • Groceries
  • Show homes…

See it for yourself, and always take the initiative to set the anchor.

…then teach your kids.

Yes, you can afford the high anchor. However, your family system will do far better if you invest the money you save, buy yourself time and improve your human capital.

Also remember, every beneficiary, and dependent, sets a low anchor on the value of unearned money.

Unfortunately, we can’t change the reality of being influenced by knowing about it! The only thing that works is building systems around our human nature.

Winter Season Planning

The trip to the Canyon marked the end of my summer season. On the bus ride back to our car, my wife asked “what’s next?” I’ll share the answers to that question and add some ideas that might be helpful.


One of my challenges with parenthood is being haunted by the thought… “I’m going to be old by the time I escape this grind.” In my 20s, that thought (and a divorce) helped me jettison myself from desk work.

Our youngest isn’t going to graduate high school until 2032, so there’s some truth in these feelings. However:

(1) my age isn’t necessary a problem, or a barrier, for a life with meaning;

(2) I had similar thoughts ~20 years ago and things turned out fine; and

(3) fear is a distraction from doing what solves the problem.

Anyhow, I wanted to acknowledge those thoughts as I’m certain many of us feel similarly, at times.


We’ll see how long he can continue to flash his age. He’s currently 5.11 at our local.

The Mental Benefit of Getting Better At Something

One of my coaching mentors, John Hellemans, has a wonderful presentation about triathlon. One of his lessons is “try something new, each year.” He backs this advice with a series of slides showing all the whacky equipment he tried out over the years. He must get a kick out of novelty.

Coming out of COVID (it seems we’ve been leaving the pandemic for all of 2021!), I was gym-strong. As a result, I’ve been able to get back, rather quickly, to a level of indoor climbing I’d last achieved in 1996.

Gains & novelty are fun.

What will you try this winter?

My areas for improvement: metabolic fitness via endurance cycling, skills & novelty via indoor climbing, eccentric leg strength via dryland ski training and agility via downhill skiing.


She’s always been a great runner, just didn’t like it! 🙂 Swimming helped her get used to how racing feels. PS: something I tell her, “by turning up at a race, regardless of outcome, you make everyone better.” She’s been shaking up the hierarchy at various squads around town. Be grateful for your competition, and remember that winning is fleeting.

Knowing What I Don’t Want

Do you know the conditions likely to to bring out your worst?

I sure do: tired, in traffic, the whole family in close proximity, after a day spent answering questions and listening to low-grade bickering between my kids.

Not going to spend time, and money, to put myself in that situation!

My personal planner, through to the end of March 2022, doesn’t have a single peak-period family drive (and the kids had to demonstrate a material improvement in behavior to get me to agree to fly with them).

The current situation tends to continue as long as we tolerate it.

Write out your “not to do” list.


New sheriff in town. Howdy partner!

The Value of Being Able to Change Course

The last year was another reminder how life surprises me.

In August 2020, our daughter started year round swim team. Team implies ~12 meets a year, 6 of those requiring travel. That’s a lot of time out of my “with my wife” allocation. It was a major adjustment for me, which we are still figuring out.

That wasn’t the surprising part, fatherhood can feel like a gradual drift down the priority list until the kids move out. Just the way it is, and why I make a priority of having fun with my wife.

I was surprised by the cost. Swimming is expensive for a “cheap” sport. Our cost is greatly increased by my desire for childcare => so I don’t lose my mind, being left home alone with the other kids.

++

Over the years we have considered properties in various vacation markets. I feel fortunate that I didn’t pull the trigger on anything. Because we didn’t lock ourselves into a secondary market, it was painless to cut the winter activity budget in half and cover the cost of swimming.

So no winter ski place rental, which eliminates Sunday drives home (in snow storms, tired, with all three kids).

Of Interest Here: I am being compensated by less of what I don’t like. Very tough to price the benefit of via negativa.

What would I pay to cut my worst days in half? No idea, but I do pause to notice the benefits of less.

The lesson isn’t my specific situation. The lesson is life changes every five years or so. Choices, and investments, that make sense today can be costly to unwind tomorrow => even when you get out at a profit.

We’ve owned a BoCo rental property since 2010 and I’m often tempted to swap it for a vacation place. By not buying in a secondary market:

  • I continued to hold a rental property in my home market.
  • I didn’t pay capital gains taxes.
  • The rental income more than covered my vacation rentals.
  • I benefited from 75% capital appreciation.
  • My net cost on the site is zero, a few years back I subdivided and sold part of the land.

In 2016, I didn’t know how I would be surprised, but I could see the ability to cover vacation expenses with rental income. Also, it was also easy to calculate the taxes and agents fees deferred by not selling => make the cost of change visible.

I have a persistent feeling that owning is better. In secondary markets, the facts tell me otherwise.

Looking forward to 2032, I know we will be empty nesters. What that means for our life is unknowable today.

Stay variable.


Take Advantage of Childhood Opportunities

There is a limited window of time where my kids will think I am brilliant. I care about the value of my family’s human capital so I remember…

It is much easier to indoctrinate a child in “risk management by example” than to achieve anything by heckling a teen.

As a coach, my job was to teach my team what I would advise, without needing to say it.

Being the brand was excellent preparation for parenthood. Kids have a keen nose for inconsistency!

Prepared is better than protected.


Repeating good habits from a young age will do more for my family than any amount of lecturing. (1) Do it right, every single time. (2) Be open to learning from everyone, even your siblings!

Grand Canyon 2021

If you are a tentative nighttime-descender then consider getting a set of Knuckle Lights. Worth 5-10 minutes per mile for my wife. They didn’t do much for my night vision, but she was happy!

Two days and ~50 miles in the Grand Canyon. Going to share pictures and ideas in case you’re thinking about something big in your future.


At the start, dropping down Bright Angel trail – it’s an extra 2.5 miles to Phantom Ranch but the drop is more gradual and the stairs are not as high as on South Kaibab. The view dropping in on South Kaibab is spectacular, however. We were in the dark so I opted to save our legs with a smoother entry to the canyon. TIP: If you want to maintain your night vision then green works better than red. Water available (in-season) on Bright Angel, none of South Kaibab until you hit the river.

~82F at 5am at Indian Gardens. With no real heat training, I was quite concerned about melting down. We dropped in ~3am on both days.

From Indian Gardens through to Manzanita Rest Area, you’re never far from water. Bring a filter and keep your clothes wet. Ultimate Direction’s ultralight tee was awesome – in the heat and low humidity it felt freezing each time I put it back on after dipping.

Good look at my lightweight setup – three piece carbon poles, running hydration vest with pockets up-front. Accented (!) with a small belt pack. This pic is at the bottom of Bright Angel.

Soft sand segments and beach weather!

10+ years ago I came through here with Jonas Colting on our way up Bright Angel. So many good memories with him.

TIP: on your way into the canyon, aim for as many flat foot plants as possible. In the sand, on the stairs, everywhere. This will reduce the stress on your feet and lower legs.

10 miles to the end of the bridge from Bright Angel Lodge at the top of the South Rim.

Ultimate Fastpack 20L, can hold 4x500ml soft bottles up front. Gear keeps getting better and better.

Knee sleeves are HUGE for keeping my 52 yo legs happy when descending. Big lifeguard hat works better in Colorado cool than Arizona heat. Still loved having it.

Back in the day… I ran into the Canyon with nothing but a belly full of sports nutrition. Loaded up on the Ranch’s lemonade and hit the water stations on my way up Bright Angel.

Water, food and souvenirs available at Phantom Ranch – check their website for details and opening hours.

Someone didn’t pick up their breakfast, so they gave it to me, gratis! I didn’t eat the sausage.

Day One was ~2,500 kcal by 7am and 3,000+ by 10am. I skew my calories, fat and protein => early and late.

~25 miles to the North Rim if you drop Bright Angel. But… my GPS works “funny” in cliffy sections, we had a couple miles (both days) that seemed too quick for the effort. I think it was the GPS bouncing around/up/down in steep terrain.

Box Canyon is a neat place. I wouldn’t want to be there on a hot afternoon. We were through by 9a.

More Box Canyon and a profile shot of my pack. Knee sleeves are transitioned to calf compression.

Ran into our buddy, Doug, below Cottonwood Campground. He did the out-and-back in a day. 30 miles in his legs at this point and he was looking strong. Bold!

A very dry place with lots of water around.

I’ve been using Katadyn BeFree collapsible water filter (1L bottle) all season. Weighs nothing and doubles as a spare bottle. Carrying some form of water purification system is essential – the park water can fail and/or get contaminated.

~4,500 vertical to go. Long days are about finding sustainable pace and sticking with it. Both days the uphill segments took longer than we expected. With a 3am roll, there was a lot of darkness/shade in our 10 hour north-bound crossing.

The view from the dining room of the North Rim Lodge, which is ~2 miles from the North Kaibab Trailhead.

They release their rooms/cabins in batches. I signed up in April for our September trip. I also booked dinner at the same time. They were sold out, and fully booked, on a Tuesday after Labor Day.

Day Two breakfast was carrot cake from the restaurant and Nitro Coffee I’d hauled across. Not having to worry about a third day, I ate lighter, but not light! 😉

On day two, five hours of hiking, and six hours total time, found us back at the river.

Phantom Ranch sells cold brew coffee, which was appreciated. Drank three refills before the ice was gone (one coffee and two water).

Just south of the bridge, we were rolled up by a mule train.

We were chatting with the cowboy and found out they take 4 hours, with 19 stops, to get from Phantom Ranch to the top of South Kaibab. We pushed on, curious to see if we’d be able to hold them off…

Mule train moving right in the foreground of this shot, bottom of the frame.

These views are why South Kaibab is so amazing.

I was hopeful that the top of this feature would see us within shouting distance of the top.

Not to be!

Tucked into the butte with 3 miles and 2,300 vertical to go. Feeling my lack of heat training and hiding under a ledge to dial down low-grade nausea while I drank. From this point on => heat, not fitness, dictated sustainable pace. I’d planned on dumping surplus water on myself to cool off but found we didn’t have any to spare.

Pants are the best $30 I’ve spent this year – team them up with a fabric belt, which can double as a field tourniquet. Rest of my first aid kit was an epipen, albuterol, scissors, moleskin and an assortment of fabric bandages. Lunch, both days, was ~500 kcal of Hammer Gel Vanilla served at 10am with a stack of water. No further calories until the rim, just sipping water. Eat so you can continue, without eating, when the going gets tough.

Never surge HR and remember by the time you need to drink, it’s too late.

I started my hydration early. I knew Day Two would have a demanding finish and I’d been peeing every 45 minutes since before dawn. Drank ~2L, while eating, at Phantom Ranch. We filled up every container we had for the hike up Kaibab.

The only thing you will find on South Kaibab is vault toilets, and the kindness of strangers.

I have a similar pic from April 2008.

Three kids and many adventures later… I was back.

Make time to share experiences with those you want to grow close to.

Love you babe!


Feeling fresh on the bus back to the village AND we put an hour into those mules!

A little bit of shared suffering is an effective way to strengthen the bonds of marriage.

Deeply thankful the trip was her idea.