Category Archives: Uncategorized

Teaching Kids To Smoke

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Growing up, I spent ten idyllic summers at a YMCA camp on Howe Sound.

When I worked my way up to Senior Staff, I learned part of the camp’s Oral History => prior to the 1964 Surgeon General’s report on smoking, the camp used to sell cigarettes in its Tuck Shop.

My boss at the time, told me it went further.

We used to teach kids to smoke.

Keep in mind the camp was run by the Young Men’s Christian Association – these were good people, trying to help a wide range of kids.

The story reminds me to keep my eyes open for obvious harms, accepted by everybody.

Current practice can be completely clueless.

Vaping “it will shift people from smoking” is an obvious example. A handful of entrepreneurs hooked a generation of young people before anyone noticed.

Less obvious is the introduction of electronics, and social media, into the lives of our children. My kids have been staring at screens since preschool. COVID institutionalized screens into the daily lives of our children.

Here’s what I’ve told our oldest, now in Middle School.

  • You don’t want to spend your life doing sexy dances for strange boys and men (TicToc) => who’s on the other side of the screen?
  • There’s no such thing as digital privacy – it does not exist
  • You will need to make a choice => do I want to get stuff done, or stare at screens (IG, Snap, Among Us)
  • Your mother and I saw what it was doing to us and stopped
  • Exercise makes you happy – I point this out after every good workout

Similar to conversations I expect to be having on sex, drugs and alcohol… I had to get my own life in order before I attempted to teach my kids.

Who am I really trying to impress? Following a path of external approval creates a never ending cycle of “more” (likes, followers, stuff, money, food, victories). Where is “more” going to take me?

Fastest way to boost health and self-confidence?

  • Positive Action => a habit of daily exercise
  • Via Negativa => ax the Social Media

Right now, your mother and I are making smart choices for you. Soon, it will be up to you.

Choose Wisely.

Little update on my 2021 tech initiative.

  • January saw me cut my screen time in half. Pretty impressive from a single workflow change and deleting two phone apps.
  • My eyesight improved.
  • Less eMail/Twitter is far easier than less “news”.

Live Free Recipe

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This post is about creating the freedom to choose how you spend your weekdays.

Owning a place to live, and being paid to live there, will change your life beyond the financial benefit it brings.

What’s it going to take?

Capital

I outlined the educational aspects here.

The easiest time to build capital is in your 20s. You can live very cheaply because you’re either at work, or carousing. Your health insurance is peanuts and you don’t need to take on any dependents (free birth control saves lives).

Age is not a barrier. Use the recipe below and you can be living free by 2030.

Big Cities remain the best places to build experience, knowledge, contacts and skills.

When I made partner, a wise man took me out to breakfast and reminded me…

Get what you want, then get out

He didn’t tell me why I needed to get out. I learned that for myself…

  • You’ll be tempted to go private with educating your kids => $1 million you need not spend, or earn
  • You’ll be jammed into a little place and/or you’ll have your financial life tied up in a single asset – you won’t care about this after graduation, you will care about this when you have preschoolers!
  • It requires extreme luck to get yourself on the housing ladder before you’re 40 => get your timing wrong and you’ll feel trapped
  • You will be surrounded by social pressure to spend, spend, spend!

Megacities are filled with opportunity and excellent people to whom you sell your skills.

Megacities are a great place to start.

Just remember to leave.

Target Location

Having played this game three times, I think a small city is your best bet.

  • ~250,000 (pop.) in a county with ~500,000 (pop.)
  • Natural Beauty – clean water, clean air, the ability to exercise safely without driving
  • Climate – I gamed this by having a rental in the Northern Hemisphere and a low-cost Home Base in the Southern Hemisphere. Later in life, I moved to a place I didn’t need to leave (Colorado, Front Range)
  • Airport Proximity – needing to take a flight-to-your-flight will get old

Before my first kid was born, I worked in: Canada, England, Hong Kong, New Zealand, Bermuda and Scotland.

The skills to be happy somewhere are the same as the skills to be happy anywhere.

Target Property

My worst deals (financially) have been the most impressive (visually).

Buy space and let the next owner spend a fortune in renovations. The money I’ve spent beyond paint, carpets and replacing worn out appliances/HVAC has been largely wasted.

You’ve probably spent the last decade renting – your younger self is your target market. Choose a location that will be easy to rent (if you leave, if you need income).

Lock off basements, detached units, split floors… earn rental income, maintain personal privacy.

Margin of Safety – your land premium is “total price” less “value of the buildings” – the closer you get the land premium to zero, the safer your deal.

Coming out of the Great Recession of 2008, land premium was briefly negative – this was due to banks foreclosing and forcing the market down. Five bedroom houses, 15 minutes from Boulder, were selling at $75 per sq foot. Condos, apartments and houses in Arizona got even cheaper, under $50 per sq. foot.

Cheap will happen again.

Connection

It can be tempting to go remote. I feel ya.

Escapism is a recurring dream of mine, especially in times of stress. However, you need to be practical – friends, sexual partners, basic services, transport… the practicalities of life.

The purpose of setting up your low-cost base is to provide security within a life with meaning. Go to where there are people with whom you’d want to spend the rest of your life.

Shared values, within an active lifestyle.

Wait For The Fat Pitch

To get this done you’re going to need a trigger that makes the local property market seem cheap to YOU. It won’t seem cheap to the locals, who will be expecting further declines.

  • Recession combined with High Interest Rates (UK 1990)
  • Asian Crisis (1997)
  • Currency Crisis (NZD in 2000)
  • Global Financial Meltdown (2008)

I witnessed all of the above. There is ALWAYS a “next crisis”.

2020 was a boom year in real estate. When you’re living through a boom, your FOMO will be pushing you to take action.

One of the best things your first good deal brings you is a reduction in the pressure to do a deal.

To do great deals, you need to be comfortable doing no deals.

You Have A Choice

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The picture above explains my athletic journey better than all my writings combined.

When I was in the middle, personal excellence was beyond my comprehension.

If you can sustain transformation in ANY area of your life, you have the skills to take yourself most anywhere you’d like to go.

My favorite lesson about marriage comes from a close friend.

What does it take to have a great marriage?

A willingness to do whatever it takes to have a great marriage.

This lesson applies across every domain in my life.

Whatcha doing?

I thought I might cook, clean and do laundry while the kids stare at screens…

…every day for the next decade.

Back in 2019, I decided to change the way our house was run.

First step was to burn our ships. I cut loose all our staff. COVID arrived five months later and there was no going back!

Second step was to figure out how to do it myself. It took me 20 hours to clean the house the first time I tried. Days!

Roll forward 15 months, and we have the place looking great by 8am each Sunday.

How’d we do it? I used a little psychology.

It’s not going to make sense for me to spend 20 hours a week (1,000 annual hours) cleaning. I think a lot of folks probably tap out at this point. I certainly wanted to quit.

I told myself that I only had to do it for 6 months. I gave myself the freedom to quit later, just not this week.

Note: I was tempted to quit before I’d learned the basics.

Coach Molina once told me to “give it three years” before I made any decisions about whether I was making progress!

While I was “not quitting” I reduced my cleaning time to 7 hours a week. Skills.

I noticed I made a lot less mess. Incentives.

I also noticed the rest of the family made less mess. Social Pressure.

Skills, incentives & social pressure.

Part of the reason my first few times took so long is our cleaners didn’t have the same incentives as we do. I was paying money to live in a house that wasn’t very clean.

Nobody has the same incentive to sort your life, your health, your finances… than you.

The struggle is real… I’d just asked her to put some dishes away.

Next, I asked each kid to “take one job” => specific, personal responsibility.

15 months later => I’m at 4 weekly-hours => a HUGE reduction from my baseline, my kids are learning how to take care of themselves and we save ~$10K per annum.

A superior outcome for a “problem” I was going to solve by hiring a House Manager.

  • $50,000 annual swing
  • A decade until our youngest graduates high school
  • Avoided by 4 hours a week
  • Compounding at 5% is $625,000

My goal is not to get my life to the point where I stare at a screen all day and have others take care of me => enabling my kids to live that life would be a disservice to them and, strangely, no better for me.

The goal is to live as I’d wish for my kids, and you.

Next time, we talk money => specifically, how I went from the lowest paid person in the building (1990/1991) to owning a house, that paid for itself (2001).

If last week’s financial discussion seemed impossible => I’ll break it down for you.

Family Financial Review: Portfolio Allocation

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Thursday, I shared my thoughts on the real risks I face. That’s where the action happens in my life.

Still, this is a financial review, so it’s the right time to consider asset allocation.

Having spent 30+ years locking in my Core Cost of Living, the main choice I face is how much cash/bonds/no-return assets to hold.

Here’s how I approach that topic.

There is a cost to holding cash, especially today. Zero, or negative, yield.

Cash is exposed to the “ravages of inflation” – on one side.

Cash earns nothing, while you watch bitcoin, prime real estate and other asset classes skyrocket – on the other side.

Against those costs there are benefits. The three biggest (for me) are:

  • a call option to benefit from a future crisis
  • serenity
  • cash/bonds dampen the volatility of my portfolio.

Now, here’s the questions I ask..

1/. How many “years” do I need to feel serene? This will depend on your psychological make-up, earning capacity, earnings diversity and age.

Getting my net-cashflow-burn down is the only way I’ve been able to feel serene. I just don’t have the psychological make-up to soothe myself via luxury spending, more assets or more income.

2/. How many dollars might I need to capitalize on the coming apocalypse? Being able to buy real assets in a down market will make you happy for a long, long time. I’m still happy about a couple purchases I made in 2010.

My financial assets provide me with an opportunity to get out there and live my life. Financial assets provide very little inherent satisfaction – this is a good thing as I can remain (mostly) detached in downturns.

Our actions in the real world provide satisfaction => share experiences (ideally in nature) with people you respect and love.

BTW, here’s a 2019 article I wrote about wealthy people talking about cash. Back in 2019, many wanted to be in cash. Roll forward to 2021, some of the same folks want to be out of cash! Personally, I’m about the same. I spent the intervening period paying off my mortgage and clearing my car loan.

Family Financial Review: Risk, Worry, Ruin

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I ended Wednesday by asking, Am I worried about the right things?

It’s easy to get distracted by the noise surrounding our lives.

Do you know your key risks?

It varies between people and over time => focus on habits that might lead to ruin (leverage, lack of impulse control, smoking, substance abuse…).

See also my review from 2019.

Set your financial life up so it runs on autopilot.

Did you read the PDF from yesterday? Good reminders at any age, as well as an embedded reading list.

Things I focus on more than my portfolio…

  • Near-term: keeping up with my teenagers – what is it going to take to share the outdoors with my family when I’m 60?
  • Medium-term: personal engagement when my kids are gone – what will I do with more time, and less energy?
  • Health: poor choices increasing my risk for cancer and other health issues
  • End of Life: my body outlives my brain

My actions today reflect awareness of the real risks in my life.

My portfolio? Good enough is good enough. Avoid unforced errors and keep on keeping on.

Don’t assume these answers.

Do the calculations from Wednesday, reflect on your life, write it down, review annually…

Then get out there and enjoy 2021.

Family Financial Review: Time

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Tuesday’s post ended with the observation that I pay myself in time.

So, how much time have you got?

Let’s find out.

Scale It => Relate Your Exposure To Your Balance Sheet

I recommend you look at things a few different ways. Print this out and write your numbers on the page.

Make it real, especially if you’re financially fearful.

  • Gross assets / Core Cost of Living = years
  • Net assets / Core Cost of Living = years
  • Net assets / Net annual cash movement = years
  • Net assets / Net annual cash movement (excluding active income) = years
  • Cash / Core Cost of Living = years
  • Cash / Net annual cash movement = years
  • Cash / Net annual cash movement (excluding active income) = years
  • Cash / Gross assets = percentage
  • Cash / Net assets = percentage

I include bond holdings in cash. I focus on the BOLD, while considering each line.

Armed with the above, you can get a feel for how much time is available to you, based on how you are living today.

It’s easy to get fixated on income/spending and lose track of time. The best investments I made in my 30s involved trading money for time.

We tend to over-value money vs time => you can do great deals for yourself once you prove your worth to your firm.

Related => it doesn’t take much time to greatly increase the quality of your personal life. As a triathlon coach, I’d get my athletes to carve out one weekday morning per week where they’d start work late. This would enable us to make Sunday life-focused and spread their training load.

Discretionary/Luxury Spending – will fall outside your Core Cost of Living. My advice here is “pay yourself first” – slice your investment program off the top of each paycheck before you get a chance to spend it.

Don’t borrow any money (personally) until the first credit crisis after your 30th birthday. Then, borrow modestly to purchase real assets that are being priced down due to a banking crisis.

Across the 40-50 years of your working life, you will not miss luxuries not purchased.

As for overall strategy, there is a great PDF here. As the PDF will explain, don’t get distracted, by those who want to profit from complexity!

Focus on what matters: (1) spending vs new capital saved; (2) learning to think in time, not money; and (3) good enough is good enough (low cost, persistent investment, across long time horizons).

Maybe I should add #4… the best stuff in my life happens between people – shared experiences with those I love.

People, not portfolios.

To get ready for tomorrow…

Ask a confidant… When I talk about money, what do you hear?

With your financial concerns… Am I worrying about the right thing?

Family Financial Review: Winning

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Monday’s post here – tomorrow we will start using the data you’ve prepared.

Before we get into the analysis, let’s discuss the game.

My game is NOT won by building income, assets and spending.

Something I hope to teach my kids about money:

Any choice made to appear rich has an underlying effect of reducing family wealth.

My game => increase discretionary time while getting the net burn to zero.

I’m willing to wager you will not feel free, or serene, until you get close to that point.

“That point” being where you can sit back and not care about the ups and downs of the world. Being able to sit with equanimity will improve your thinking, and your relationships.

It’s going to take a while to get there. Here’s something I wrote in 2016 about the process.

I hope you read the link – I chipped away for 31 years and am a better man, on a smaller balance sheet.

The main thing to remember is each time you get an attractive opportunity to lock in a piece of your core cost of living, take it.

Pay yourself in time.

Philosophy of Status

Don’t think I have transcended my human drive to compete for status.

What I’ve done is (try to) channel it away from external approval, virtue signaling and consumption.

Needing a place to allocate this drive, it goes into my writing, marriage, quality of thought and daily actions. For a long time, my drive went into my sport.

Redirection is a whole lot easier than transcendance.

Family Financial Review: Set Up

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The picture is what it cost to send a first class letter when I married my lovely wife. The 55c cost today (+34%) is a reminder that inflation ticks away one penny at a time.

When it comes to inflation/deflation, I like to maintain a neutral position. More broadly, I seek to avoid the need to pick winners.

I also avoid making predictions about an unknowable future. Most importantly, because it’s impossible (!) but also because I have no idea what my life is going to be like ten years from now.

What follows is present-focused.

Quantify Your Exposure

Start with your core cost of living – that’s what’s going to inflate and outliving your money is a key risk.

What’s in my Core Cost of Living?

  • Healthcare ($19,300 of premiums and $7,200 to a family HSA for a plan with a $14K family deductible) – this sector is ripe for disruption, I get little for my spending
  • Taxes, Utilities, Car Costs and Insurance
  • Food, Clothing and Kid Activities
  • Childcare – a massive line item 2009 to 2019, now a source of income for the family, our middle-schooler is a sitter
  • Mortgage, rent, car loans – my main project from 2010 to 2020 was getting this down to zero – once that was achieved, I went a step further and turned it into a source of income

Next, consider your sources of passive and active income. Rents, royalties, dividends, interest (at least in the good old days), consulting and any other forms of income. Write it all out.

Compare your Cost of Living with the Sources of Income and calculate your net burn rate, or your net annual surplus.

Net annual surplus gets routed to discretionary spending, luxury items and/or new investment capital.

The best investment decision I ever made had nothing to do with asset allocation. From 1990 to 2008, I routed 50% of my gross income to new investment capital.

In my early 20s – healthcare costs were peanuts, no childcare costs, living in a shared apartment… I saved a ton. Good thing, too. I had no idea how much my cost of living would pop when I had kids.

My 40s (2009 to 2018) saw unexpected unemployment combine with a big jump in childcare, healthcare and housing costs. This resulted in a burn rate that forced us to make a series of changes, and choices, which proved quite useful in hindsight.

Also write out your balance sheet – assets and liabilities.

Include a liability called “deferred tax and agent’s fees“. Estimate this liability as 6% of the gross value of all the real estate you own plus 25% of all the capital gains in your portfolio (exclude the exempt portion of the gain on your primary residence). Making this number real will help you avoid incurring unnecessary expenses by tinkering with your assets.

The best time to sell great assets is never.

Let it roll.

Writings for an expecting father: Where the rubber meets the road

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The second birthday of your first child is a key milestone.

Life’s about to get real.

I think a lot of guys would be more involved if they knew, in advance, what long-term female bitterness does to a marriage.

How much risk do you want to run?

What sort of role do you want to create for yourself?

  • Take a dominant kid away so your wife meets the other kids (this comes later).
  • Taking a toddler away on an overnight trip so your wife can put her adrenal system back together.
  • Lock in a Daddy Day once a week.
  • Lock in a time slot 5 days a week so your wife can exercise.

Smart, tactical choices will help create the woman you’d like to spend the rest of your life alongside.

What do you do best?

For me, it is 1-on-1 time in nature. Whatever your skill happens to be, do not expect it to be a whole lot of fun at the beginning.

The “win” happens when your wife uses the space you create for her own needs.

To create space for meeting our own needs, I was rarely supportive of “getting exhausted together”.

Also invert the situation and consider…

What does your partner like least? …but maybe that’s outside your skill level. In that case…

What can you subcontract? Teaching your kid(s) to be put to bed at an early age from someone other than their mother is one of the best things you can do for your marriage.

I experienced some resistance to outside help with our first kid. The resistance was _completely_ gone by the time our 3rd arrived.

Subcontracting is not a clear cut issue. I can easily subcontract cleaning but it’s one of the highest return things I do in my house. Unassailable authority when I assign chores or ask for help.

Do no expect your kids to thank you => remember you’re doing this for your marriage and to hedge your bets for tomorrow.

You can not do it all => What are you willing to give up to create space for this new initiative?

In the short term, as you adjust to your new reality, it will feel like you’ve given up everything => Because you have!

It’s a brand new life you’re creating.

Writings for an expecting father: The Start

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Three things:

  • Learn to swaddle
  • Focus on your wife’s sleep
  • Babies cry

Nothing else matters until you’ve mastered these points.

Why?

Done well, these points bring relief and create space for the rest of your life.

Downstream effects

Where you’ll be sleeping => I spent a lot of time, alone, in the basement.

Sleep schedules => Baby, Mom, You => in order of priority.

Use of outside help => support the marriage by supporting your wife’s sleep and up-skilling everyone’s ability to swaddle and deal with the reality of the baby (they cry).

Pay attention to what works, and doesn’t.

Keep what works and build a schedule.