Unexpected mid-week power day. It’s hard to put a value on the ability to “drop everything”.
What does the title of this piece bring to mind?
Jet?
Multiple properties?
Luxury yacht charters?
Seven-figure burn rate?
Handing out favors to friends and strangers?
Being hailed and feted?
One of the best parts of my coaching journey was getting to know “the well adjusted rich.”
I’m going to spend a few Thursdays running through the lessons I learned from watching people who have a different set of limits.
The Best Teachers You Can Find
My journey started ten years before I got the job.
First, I was a student…
Meeting Joe Friel: Joe is the founder of triathlon coaching in the United States. I had the chance to spend a weekend with him in the Spring of 2000.
By the way, this is how you might get a mentor interested in you…
I went to him
I showed him how he’d helped me
I listened to his advice
I went away and did it
Something he said stuck with me, “I’d never met someone who understood my teaching as well as you.” I didn’t just study his philosophy, I tried to embody it.
Joe started me as a coach, helped me win races and wrote a book with me.
Great deal for both of us.
The strategy worked once, so I repeated…
John Hellemans, Scott Molina, Dave Scott, Mark Allen => I was able to learn from the best.
I shared what I learned, for free, widely.
Eventually, I was a teacher…
A decade later, I turn up in Oceanside, on a road bike, in March, and crush most everyone over 40 in a 70.3 race.
Two guys, I’d never heard of, reach out for a call and I accept. I didn’t know they were friends and checking me out, separately.
I get hired and have the chance to look under the hood of the well-adjusted rich.
Turns out my client was a successful finance-guy, who stayed in the game.
His life was, and remains, the best-case scenario of a life I decided not to lead.
Teach your kids their financial lives will be about no more than a dozen choices.
Here are mine:
Study finance (class of 1990)
Save 50% of my take home (1990-2007)
Partners investment scheme (late 90s, all in then, equivalent of 1 yr spending now)
Work to build a startup (2000)
Sell into the frenzy (2005-2007)
Move into a low-cost Vanguard portfolio (2008 onwards)
Boulder real estate (2010 & 2012))
Downsize (2012-2013)
Borrow long at 3.25% (2013)
Debt free (2007 & 2020)
Have kids with a kind woman from a humble background (on going)
Every other choice turned out to be noise. What to do?
Focus on actions, not outcome.
What does that really mean?
Do what moves you forward and have faith. Sport, marriage, money, all things… daily action is the fundamental force moving you towards “better.”
Education matters => I was given a chance in Private Equity because I had high marks in a useful field. Between my high school graduation (1986) and my youngest’s (2031) the nature of “useful” will have changed. However, the need for skilled people to “do” will endure.
The most useful part of my degree wasn’t finance! It was financial accounting, programming and mathematics => I learned fundamental knowledge in college. I learned my profession on-the-job. You learn the valuable part by doing work, for the best people you can find.
This keeps popping up over and over again (professors, partners, coaches, mentors, twitter follows). At 53, I’m learning from people less than half my age! Do work to learn.
Avoid Ruin => studying, then working in, financial accounting helps you learn when a situation doesn’t feel right. Embezzlement is an old game and it’s useful to learn the patterns. Financial fraud happens, and will continue to happen. Take steps to reduce your family’s exposure to ruin.
With the accounting, I learned the most with 9 credits spread across three courses. Financial Accounting 1, 2 and 3. Small investment, huge return. Do it when you’re young. Being forced to rely on others to do your financial math is a disadvantage that will cost you.
Let’s pull it together for you…
Starting your working life (in a useful field, with your financial accounting courses done)…
Waiting for the fat pitch – once in a lifetime investment opportunities happen once a decade
Turning yourself into the sort of person you’d like to marry, the friend you’d like to have, the parent you aspire to be => meaningful connection is true wealth
Your mind will try to trick you into thinking it’s the investment choices that matter.
It is not.
It is the four habits I outlined above, and avoiding substance abuse.
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.
Feel The Byrn 
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