My kids won’t fully appreciate my choices until after I’m gone.
My #1 financial goal for my kids is debt-free education in a field that enables them to get paid.
With the very best of intentions, the US Government has completely screwed up both (a) the cost of college education and (b) the financial lives of the students they were seeking to help.
Debt isn’t free.
Every market juiced with easy money gets screwed up.
Explanation below – my life mirrors the blue line – graduate early, debt free, start saving
I googled up average debt at graduation and average graduation age.
$40,000 and 23 yo.
So let’s make three simple scenarios:
Debt free early graduation (21 yo) => McGill 1990 finance grad
Debt free at 25 yo
Debt free at 30 yo
Let’s run it forward assuming:
Investment return of 5%, prior year close
$20,000 per annum savings
The late-start saver
who saves at the same annual rate
who earns the same return
ends up ~$1 million behind at 60 yo.
This is not the whole story, not even close!
In my demographic, families can burn ~$250,000 of capital to help a kid “get started” => 529 accounts and parental support. Even more if you roll private from Kindergarten.
What’s the 30-year cost of this choice?
$250,000 * (1.05)^30 = $1,080,000
Million bucks gone, you never see it.
You burned the capital
The kid figures life out by 30, and spends most of their 20s pissed at you (for tapering their support) 😉
$2 million opportunity cost, spread between two generations.
You assume it was what you were supposed to do and are grateful you finally got them off the payroll.
A possible alternative…
Our default position is in-state education and I’ll buy whatever’s left of your 529, at $2 on the dollar, once you save $100,000 of your own money.
That article introduced the concept of Lifestyle Sustainable => a low-cost base of operations where, ideally, you can live for free. The idea is to remove cost-of-housing from your financial concerns.
That’s the core financial asset for your portfolio. It cost me US$110,000 in 2000.
This is a great place to park your Core Capital.
Removing housing from your list of concerns gives you more than a financial return.
Alongside your key financial asset, I hope you have a loving, lifelong partner. This person is the most important decision, financial or otherwise, you’ll be making.
The highest return investments I made in my 30s & 40s, were not financial in nature. With a low-cost base of operations, & marketable skills, I was in a good place.
Many high-earners fail to see the value of what I just pointed out.
Low-cost base of operations
Marketable skills
Beyond that, most everything is lifestyle enhancement and ego.
Thankfully, I had a major setback in my early-30s (divorce) which gave me pause.
In 2000, I saw my future in front of me… lifestyle enhancement and ego… and I made a change.
A big one.
I became a world-class athlete. With (athletic) success came the realization that something was lacking.
So much success, still lacking!
If you’re good at making money…
If you’re good at playing the game of “career”…
If you are nearing the top of your field…
…then you’ll be tempted to keep doing what you are good at.
I’d encourage you to establish that low-cost base of operations, then try something really challenging…
The highest return investments I made were improving my suitability for marriage and learning how to parent. Most of my learning happened after I was married and my kids were born.
It is never too late to invest in the human capital of your family.
If you get these investments right then you might not notice the benefits. Honestly, a big driver in my life has been a fear of getting divorced again (not-divorced, winning)
Fear that drives positive action is useful.
I’ve been paid by less drama, and less problems (we don’t see all our wins).
I’ve also de-risked some of the challenges my future self will face (companionship, engagement, dementia). Study (the problems of) who you are likely to become.
You’ll notice my portfolio advice (still) doesn’t talk about asset allocation.
This is deliberate!
Asset selection is not the differentiating factor for a life well lived.
Marketable skills
Low-cost base of operations
Fixed-rate mortgage, if you like
Target date fund for your future self
Then focus on living your life and creating the friends/family with whom you’d like to share it.
The cherry on top was spending $75 a week to retire from driving my kids.
Driving, itself, wasn’t the issue.
I noticed my worst moments were happening in my car.
Change the environment, change the result.
I stopped hanging out in my car, I felt better.
Over 20 years, I’ve redirected my environment => one choice at a time.
Mount Crested Butte – this ski season saw a simple game. Try to hit ten resorts.
Simple project, visible feedback
I have a habit of rejecting the part of my personality that craves external feedback. I pretend I am above external approval, I’m not.
I brought back external feedback by way of my return to Twitter.
Playing a low-stakes game where you get random, positive feedback => surprisingly useful.
I am going to repeat that… if you have the blahs then you should try…
A low-stakes game
That pays out randomly
With positive emotional feedback
I shouldn’t be surprised! Before I left Private Equity in 2000, I had a message board (pre-Facebook) where we used to shoot the breeze just like Twitter. Loved it, met some great people.
My Twitter Game => seek to help a stranger daily.
Huge leverage, near-infinite niche opportunities.
Previous simple games: improve aerobic run performance, and log daily training minutes. These two games kept me engaged for over a decade!
Simple games work because they offer a focus different from my negative fixations. They are most powerful when attached to a system of daily rewards.
More information isn’t the answer for Big Guys Losing Weight => thread and article link. Think in terms of 1,000 day pacing and remember “not eating” is a losing strategy.
Jumps & Plyos are prehab for life – don’t accept the common experience as your personal baseline!
Family Money
Personal Real Estate can be a high-hassle asset but it has benefits, some hidden
I contributed to another thread on lactate testing – don’t “step” past your physiological markers
I pulled together my getting started strength tips into a Single Page for you – MAKE A COPY if you want to edit. View rights are open, edit rights are closed in the Google Doc.
Let’s cast our minds back to my 30-something self.
He’s bought a house in Christchurch, covered his taxes/utilities by giving a room to his property manager and has the ability to live free by renting out additional rooms.
Create a base of operations where you can live for free
Tick
Next up, he needs to figure out what sort of work to do and how to cover his cost of living.
A dozen triathlon coaching relationships (US$250) per month was what it took to cover basics. Those relationships were worth more than money. The relationships made his lifestyle sustainable.
Tick
Basic client filtering over time.
Which relationships to strengthen and retain? Green light client rating – immediate response, has all personal contact details. Travel to them.
Invert, which relationships are a source of distraction and drain energy? Red light client rating – still high service level, hand-off to a better fit at a natural breakpoint (end of season, end of project).
Move on to…
Next level client selection because => there is a limited number of close relationships we can sustain
These are areas I was able to study, from world-class experts, while covering my core cost of living.
Put another way, there are millions of interesting people out there. A consultant needs 5-12 relationships for a viable business. Craft those relationships with intent because your time is worth more than someone’s ability to pay.
Wise client selection is a game of getting paid to learn.
…but you gotta be lifestyle sustainable. So get that first!
Where do I want to visit?
Back in 2000, Christchurch NZ was cheap for a reason. It was far off the beaten path!
A material slice of my cost of living was international travel (airfares & hotels). I really enjoyed this aspect of my life.
I’m not alone. A key form of marketing is the ability to offer clients/investors the ability to travel to nice places. Most large companies have advisory boards, with a membership consisting of their key relationships. The advisory board has the perks of being a director, with none of the fiduciary risk.
I’ve had gigs in: Aspen, Hong Kong, Bermuda, Scotland, LA, Italy, London, Dubai, Paris, Cannes, Hawaii…
So, where do YOU want to go? Find that client, help them achieve their goals and undercharge them.
Rich folks love random acts of financial kindness. They’re always expected to pick up the tab, so paying for coffee/breakfast is a high-return investment.
A long term value added relationship with someone in a place you enjoy visiting – it’s worth more than whatever your financial deal is.
Invert (again) => don’t take work from a location you don’t want to visit. At any price.
One of my gigs came with an around-the-world ticket every six months. With a bit of planning, that covered an entire year’s worth of air travel. Another slice of my budget, covered.
What demographic am I curious about?
Tim’s blog on fame shares the Bill Murray quote, “trying being rich first.”
Actually, being rich is tough. It takes a lot of time and striving. Living rich is even worse, not for me.
Before you try to “be something” => get to know it. See what it’s like when nobody’s watching.
Coaching the rich, the fast, the famous, the savage, the beautiful… and paying attention, helped me look under-the-hood with regard to my values.
Feel The Byrn 
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