Kids and Spouses

Christmas in Mexico

I’m going to write this in the context it arises in my life. I have a hunch it applies more broadly. A variation pops up at least once-a-week in casual conversation.

Ten years ago, a wise preschool teacher shared a quote with me. I liked the quote so much, it’s been on my fridge ever since.


If you are triggered about things, or money, then look around for the unmet (childhood) emotional need.

I have used the quote to guide my life for the last ten years.

  • Give time, not money.
  • Share experiences, not spending.

There’s another aspect of the quote… If you run into an adult who’s childhood emotional needs were unmet… assets, and spending, will not fill their void.

The void cannot be filled from the outside. This is an area where we need to heal ourselves.

Go further… to the heart of addictions…

Quite often, the attempt to “be a good provider” for these folks, makes their emotional problems worse. Further, they are going to feel crazy because they will be miserable while surrounding by conventional “success.”

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Let’s step back from the underlying emotional issues and discuss how parents, and spouses, can guide family spending and investing.

First, we need to sort ourselves.

My spending sets a floor above which everyone will operate. This might sound backwards but it’s my observed reality. My choices anchor “down” everyone around me.

INVERT: constraining myself is less likely to trigger resentment.

I’m the most powerful (spending) role model in my children’s life. I do them a lifelong favor by setting a consumption standard they can easily attain.

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Second, be brutally honest with yourself… Am I meeting the emotional needs of those around me?

When you are already a good emotional provider, it is very difficult for someone to trigger your need to be a good “financial” provider.

Rather than a high-stakes bargaining session… discussions about money end up closer to a 7th-grade math problem. An example… the ski-place…

  • 20-25 days spread across five resorts
  • Total cost of hotels/airfares ~$15,000
  • Shows the folly of seeking to “save” money in a single location by locking up capital

Clothes => let’s start by wearing everything in our existing wardrobes first

Cars, Furniture, Art => is there a more effective way to scratch this itch?

Recreational assets, out-of-town commitments, 2nd homes => …are you sure you want to give me an incentive to be away from you and the kids?

On and on and on… think past the purchase to overall incentives, habit creation and the impact of repeating the action for the next 5-10 years.

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Third, the “what are you going to do with the money” argument.

Related to, “but we can afford it…”

Ability to pay is probably the toughest one to control. It’s hard not to spend money in your checking account.

SIDE NOTE: this is a good argument to move cash out of places where it’s easy to spend. This was a (somewhat bizarre) benefit from a choice to STOP earning so much money when I was a young man. Financial success was making it harder to be who I wanted to be.

Here again, pause and consider,

  • What game do my actions show I am playing?
  • What is the game I want to be playing?
  • What game would move us towards “better” five years from now?

If you have kids then these questions usually point towards up-skilling independence via parental investment of TIME, and modeling behavior.

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Fourth, after you’ve done 1-2-3. Sit down and talk it over with the key people in your life.

If you are unable to convince them then have the humility to consider the possibility (albeit remote) you may be wrong!

In family systems, I’ve found it’s better to wait for a consensus to arrive than pulling rank.

Bonus: slower decisions are usually better decisions.

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Finally, related to the what will you do with the money discussion…

If you are focused on sharing time with the one’s you love then, hopefully, you will favor “experiences with them” over “making more money for them.”

Trustees, entrepreneurs, managers, exemplars, fiduciaries, parents, students, citizens…

We care for what we’ve been gifted by circumstances and pass it on.

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As a package, incorporating this process into your life results in a better allocation of time AND capital.

The expectation “we each take care of ourselves” is a good one. Even better when the parents model the behaviors required, and pass along the skills required to pull it off.


Let’s pull it together…

  • Sort myself first
  • When triggered, pause and look for the unmet emotional need
  • Smart leaders set the anchor with intention => I anchor those around me via my effort, personal standards, emotional control and personal spending.
  • Within family systems, remember my role is to meet emotional needs while teaching/modeling how to be self-sufficient financially.
  • Have the humility to see: (a) when helping-isn’t-helping; and (b) my own capacity for error.

Best Decisions

Due to aircraft mechanicals, it took us three days to get ourselves out of Mexico! United were terrific. Three COVID tests in six days for me. The possibility, of being delayed outside the US with a positive result, weighs on me when I travel.

There’s a saying in Private Equity that the best decisions we make can be the deals we don’t do.

Related, we all have thoughts that we are obligated to not act upon.

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The holidays can be a tough time for many.

Being surrounded by kids, Christmas is good for me – frequent socialization with very happy people. Their enthusiasm is contagious.

Childhood enthusiasm, sea-level sleeping, a two-month reduction in anaerobic load… combined for a pleasant finish to 2021.

The sort of finish that made me deeply grateful that I didn’t act upon a desire to dismantle my life. This desire followed me around June to October. It wasn’t much fun.


After I freaked out at the mess, my family made the (very useful) observation that I could “freak out later” and give them a chance to clean up, first.
Quit later, freak out later… pushing out the timetable for negative reactions was a winning personal policy for 2021.
When I was fed-up in the middle of the year, I pushed out my timeline for action by six months.

I have a policy to never leave myself in a position where my last interaction is a poor one. So, with a useful blog queued for Monday… I can share that 2021 was one of the toughest years of my adult life.

Externally, it was a great year. The kids absolutely crushed, the family’s net assets rose by a lot, my wife remained wonderful, my extended family took positive steps in their own lives, but…

But…

I was often very dissatisfied…

…very very very dissatisfied

🙂

…with the amount of money we were spending relative to the quality of my life.

Despite having a single residence, no mortgage, sending my kids to public school… cash out the door had crept up and up.

Not worth it (even when net worth is tracking upwards at a decent multiple of the spend).

“We can afford it” carries little weight in my internal life.

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Here’s something about dissatisfaction.

If you’re prone to getting _really_ upset, occasionally then this might help…

Looking deeply, I found it wasn’t with me all the time, or most of the time, just sometimes.

Like any emotion, it comes and goes. So an important thing to remember is not to act upon passing negative emotions.

Impulse control, learned in elite sport, has proven to be one of the most valuable assets I possess.

There’s also utility to be found in painful emotions. Persistent dissatisfaction nudged me to try some new things, and consider where my beliefs were making me miserable.

Clearly, it was my beliefs, rather than my situation that were causing the problem. My situation, by all measures, was great across the year.

Whittling down to misery-causing beliefs is not straightforward… …but these beliefs are usually obvious to those around us!

So my new things came primarily from saying “yes” to suggestions from my wife and kids.

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As I’ve written many times before, I also pay attention to when I am feeling content, serene and engaged.

  • One-on-one in nature, with friends/family.
  • Writing
  • Teaching
  • Reading
  • Learning

Things turned around, quite quickly, when I stopped sitting around and got to work on being engaged.

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If you have an extreme personality then you may be prone to fooling yourself into thinking you need to dismantle your life (to get to better). The desire to “chuck it all in and start fresh”… comes back again and again.

However, my emotional states are so fluid, a few small changes can be all it takes to nudge myself from “totally unacceptable” to “sustainable across the medium term.”

Once I arrive at a “sustainable” mindset, my task became noticing the good stuff that’s all around me.

Anyhow, I ended 2021 grateful I didn’t burn it all down… and/or… take out my temporary feelings on those who provide the joy in my life.

My Iodine Year

I hosted a belated-birthday party for my son.
I could see why they were sticklers about getting the waivers signed!

A favorite observation from Scott Molina

You don’t need to feel good to do good.

He was talking about race performances. Time has shown Scott’s observation to apply more broadly, say, to families and parenting.

Related to my last post about the phases of early education, you are unlikely to regret the difficulties required to set your family on a better path.

Go further… regardless of the outcome for the generation that follows you… providing a wonderful childhood, to any kid, will be a source of longterm satisfaction.

I’ve been at the fatherhood game for more than a decade. Often I feel worn out. The “worn out” seems to be adaptive. Our oldest is now a teen and my fatigue provides motivation to continue the process of getting her ready to leave us.

So that’s the family bit… occasionally awful, often fatiguing, always satisfying in hindsight.


A bit of real-world physics right there.

Physically, my early 50s are much different than my early 40s. The rate of decline isn’t clear to me. The downward trajectory, however, is clear!

Specific tactics I’ve been using, and considering:

Anaerobic & Tempo Load – my ability to “do work” remains at a high level. What’s missing is the capacity to recover quickly from those efforts.

I can see why people choose to supplement their recovery hormones. I’ve skipped that path. I’ve skipped it because the last thing I need in my life is an increase in aggression. I also like the challenge-of-figuring-things-out.

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Strava – I ditched it at the start of this month. I felt the public posting was nudging me towards fatigue.

=> Limiting crowd size appears to help the quality of my decisions.

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Oura Ring – I bought the Gen 3 ring and have had it on for six weeks. It’s been a help. I particularly like the ability to look at what’s happening across the night.


Tired

Ready

Other Changes: turned my morning alarm off, stopped counting days skiing, stopped counting ski vertical and ditched all notifications.

Nothing buzzes, rings or flashes in my life.

Wonderful.


Oxygen Room – When I lived in Christchurch (NZ), I had an altitude room that I used for work/sleep. It was a low-oxygen room, created by running O2 concentrators, and pumping oxygen out of the room.

The company that sold me the system is now creating oxygen-rich rooms, to let people sleep at “sea level.” A friend installed one at her ski place and she loves it. When she caught COVID (breakthrough) with Influenza (same time), she headed “up” to be at “sea level” for recovery.

With the O2 room, I’m considering:

  • What’s the goal? Perhaps better recovery. Sea level sleep, when physically tired, is bliss.
  • Assuming better recovery, how’s that actually better?
  • How would I use the better recovery? History indicates I’m likely to add load until I am just-as-tired as before!

So maybe it’s better to save the $$$s and modify my load.

Time’s going to force load reductions on me, regardless of recovery protocols. Another reason to avoid hormone supplementation => I might as well figure it out now.


Do you notice what you’re not doing to yourself?

It is difficult to wrap my head around things “not done.”

My demographic doesn’t write much about all the alcohol, edibles, prescription drugs and hormone supplementation that’s going on. I’ve decided to skip all that.

When my kids ask why…

Reality is enough for me.

Also…

You will need to decide what you want to get done in life.


Preparation & Prudence

Our family feels like it’s moving into a new phase. The changes are impossible to ignore.

  • My challenges with “preparing” physically.
  • Watching my kids track into self-directed learning, and living.
  • The shortening window, of years, that lie ahead.

On every metric, my life (and the lives of those close to me) is on track.

A new question arose this year…

What was the goal of all the preparation and prudence? Amazing wife, all-star kids, cash burn under control, balance sheet on target, body doing better than I ever expected… what now?

Back in the summer, I wrote a small “to do” list. One of the items was 20 blogs in 20 weeks. This one is #20.

🙂

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Thanks for reading and for getting in touch from time to time.

This holiday season, I hope you get outside and give yourself a chance to enjoy the view. I’ve been trying to look around more.

Picture below is moon-set from the middle of December. I never wonder “what now” when I’m enjoying the outdoors.



PS: Iodine is element 53 on the periodic table.

Early Education

My wife and I went skiing for a couple days. Our youngest missed her mom.
So… she wrapped her stuffy in my wife’s robe! Insta-mommy.

I watch where people send their kids to school. It’s a revealed preference for their values. Amongst my pals, Boulder is one of the few locations were public schools are the default choice.

One of the challenges our district faces is declining kindergarten enrollment – we don’t have a good idea “why.” Some things I’ve noticed with the families that have gone private:

  • Private school is contagious, by neighborhood, by family and by peer group. It would be great to get those families back into the district. I’m not sure we’ve asked them what it might take.
  • As elementary school enrollments shrink, the impact of a single weak teacher increases. How we support weak teachers is not clear to me.
  • Having switched one of our kids to a full-enrollment, school… there is a quality of experience issue with the schools that aren’t full. The overall experience at a “full” school is better.

Thinking about the phases of our kids’ education…

New Parents: The #1 thing we got right, eventually… Listen to professional educators. My default position is seeking to understand why staff’s view makes sense. Take time in forming opinions.

Age 2 to 6 => choose your daycare/preschool/early education based on where the child will get the best socialization skills. This is particularly important if you have a high-energy kid. Early socialization trumps preschool “academics.” All three of my kids started Grade One at the bottom of the class, all three caught up in 18 months.

Parents: model the socialization techniques the kids are learning at preschool. Learn from the teachers so the child is in a consistent environment at school, and at home.

Remember during this phase… the most important money you spend is childcare that benefits your marriage. You are under more stress than you realize – make time for each other.


Age 6 to 8 => a daily focus on learn-to-read and learn-to-learn. Learn-to-learn is building on the early socialization work that happened before they arrived in Grade One.

Parents: 20-minutes a day (read-to, read-aloud) in this phase has the highest return in your kids’ education career.

No joke!

10 minutes before school (read-together). 10 minutes before bed (read-to). HUGE.

The confidence boost from being able to read provides a positive association with learning. INVERT: smart kids (who can’t read) will wonder if they are stupid.

=>100 hours per year time investment. The highest return parenting time you will ever have.

PS => the read-together before school, should morph into read-to-self each morning. I used a summer reading prize (100 mornings = $100) to establish this habit.


Age 9 to 12 => Our theme here: don’t mess with the streak!

Siblings, routine and habit form a virtuous circle of positive reinforcement.

“Read to self” every morning, summer reading prizes, consistent bedtimes, 2-3 different after school activities, consistent weekly schedules. This phase is about locking in a routine and keeping it rolling.

Be the brand.

If you’re not then they’re going to call you on it. 🙂

My expectation on the kids is “perform at grade level.” This lets them take all the credit for above-average performances.


Other thoughts

Earned Enrichment: there’s a joke that every parent thinks their two-year old is gifted. This is funny because it’s true.

In order to keep as many families in the public channel as possible… make it clear that all kids who want to accelerate their learning will be supported. Fairness of opportunity for all kids.

Related: make it clear that teachers will be supported. I’ve watched two weak teachers cause a (very polite) gradual exodus from a wonderful neighborhood school.

Some stories:

  • My son wants to take combined Grade 7/8 math next year. We have a simple policy, if you want to accelerate then you need an “A” in current year math. You need… A’s to Accelerate.
  • Seeing her older siblings ahead… our youngest wants to get ahead in math. At the start of each academic year, she gets a chance to test out. Once that test is done, we won’t intervene on the kid’s behalf. You gotta earn it, yourself. She’s been trying for two years and has a good shot next September!
  • Overall, I’m in no rush for the kids to accelerate their learning. Just like their sport, they have 10-20 years (!!!) of formal education ahead of them. The heavy lifting will come when I’m out of the picture and must be internally motivated. Our job is to set the schedule and not screw it up!
  • Same deal with sport. If school work falls apart then we will be dialing down the training load. You need to earn the right for extra training.
  • Fair doesn’t mean equal. My kids are always comparing who-gets-what. My focus is on supporting them, fairly, to get whatever outcome they can achieve on their own merits.
  • I was very unequal when they were young. In any given year, I over-allocated toward the kid who needed an early intervention of my time. I think school districts should do the same – prioritize early interventions across all demographics.

Finally, schedule time to focus on your stars. It is very easy to get wrapped up in problems.

1// One-on-one trips/special events in your best environment.

2// Acknowledge that successful parenting means getting out of their way — building their ability to live in the world — letting them go.

3// ABC => Always build confidence, or competence… depends on the situation!

INVERT: don’t crush their confidence when they are small.

The confidence point is a big one. Bad habits don’t take your family where you want to go.

That last point is a good one => take time to ask around…

Where do we want to go?

All too easy for strivers to keep striving, across generations.

Family Financial Strategy – December 2021

Everyone completed the “summer” reading challenge!
Across the time period, our oldest became a teenager.
I’m probably done trying to “push” her at anything. Although, there has been discussion of a cash prize for getting to know the local transit system via 100 bus rides to middle school. 🙂

Like all my stuff => this is not advice to your family. Speak with local experts before making tax, legal and portfolio changes in your life.


Iñaki asked, “what to do when the world seems crazy?”

I build my life so I don’t need to be right.

Related, I want to be able to unplug for 72 hours, without worry, whenever I feel like it.

This strategy is based on knowing that I’m prone to error and don’t want to spend my life connected to the matrix.

Further, even if you have 100% confidence in yourself, your kids/spouse are going to need something robust for when you’re gone.



Across 2019, I wanted to lean into equities but there wasn’t an event that gave me an opportunity. So I rolled along, rebalancing and living my life.

In March 2020, the pandemic created an opportunity. Personally, I leaned in (fairly hard) by increasing %age exposure to equities, at a time when rebalancing alone would have triggered buying.

In a fiduciary capacity, we only leaned a little. Two members of my investment committee, with wider views of the world, advised caution. Using the principle, most conservative view rules, we were conservative with allocation.

  • Both decisions made sense at the time and worked out.
  • Time matters. “Good enough” becomes more powerful the longer your time horizon.
  • Returns across generations are driven by a famous Munger-ism => “just try not to be stupid.”
  • The family’s position, 10 years past every generational transition, is impacted more by what you burned than what you earned.

At the end of 2021, given the whacky stuff I’m seeing around me, I don’t plan in leaning in at the next correction. Rebalancing will be good enough.


Recreational Capital and Associated Spending

A dominant focus on return/allocation in your financial portfolio, misses an important source of value creation => efficient use of “recreational” capital, and associated spending.

Recreational capital is any asset that’s held for non-financial reasons. This is a material slice of many balance sheets:

  • Boats, RVs, Cars
  • Offices
  • Second homes, vacation properties
  • Sizing up personal residences
  • Renovation projects, furniture, collectibles and art
  • Charters, vacation spending, travel spending
  • Any asset with a negative yield

You’ll see I included a line for the expenses associated with those assets. Some assets, when bought, lead to more spending.

By way of example, INVERT and consider…

When you sell all your assets in a remote location then… the spending associated with the location will plummet. Now that we spend our summers “at home” vs commuting to/from Canada, we cut spending by a big number.

Even if you don’t buy… for skiing, we stopped renting a condo in Vail. Our 2021 ski season cost will be less than what my last rental cost me. Skiing is a choice with a stack of associated spending, and negative-return investment opportunities.

It would be nice to think that these decisions were driven by being smart. That would be a mistake! The Canadian exit was driving by local tax policy and COVID forced a change in approach for skiing.

We did not realize the true cost of our “recreational” choices. We had to remove them, and watch for a couple years.

The choices above:

  • Create a larger working portfolio
  • Reduce annual spending
  • Increase the flexibility to change one’s mind
  • Don’t involve admin, maintenance or exit costs

In our financial portfolio, conservative nature means we “missed out” on much of the run up. However, because we adjusted our recreational capital, and associated spending, we greatly increased wealth over the last five years.

The wealth gain, from shrinking the recreational portfolio, is locked in. These gains are hidden from conventional metrics, that your advisor might show you.


Now we move along to KC’s questions

GB: total debt will remain modest relative to assets and cash flow

KC: How do you define “assets” and “cash flow” here?  Completely paid off asset or total value of asset? All assets – or just the assets on the investment side (excluding primary home?) Cash flow from all sources after expenses? What do you define as a modest target? 

I have a spreadsheet that shows me… gross asset value, deferred taxes, tax basis (as at last tax filing year) and deferred agent’s fees (for real estate). So I can quickly look at real estate from gross to net after-tax realizable value. I compare those figures to gross rental income, and net cash flow (from my tax return).

I’m conservative with gross asset value on real estate, a discount from Zillow and my real estate agent’s estimate on value.

I assume 6.3% cost to exit, from real estate gross value, then tax the realized value at 25% of the gain over basis.

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Cash Flow

I look at… total debt service, core cost of living, total cost of living => each of those numbers gets a little bigger, and I have less control over delaying payment/spending.

Then I look at the inflows by source…

  • real estate (net and gross — consider vacancy risk)
  • employment (by role and client — consider concentration)
  • passive (royalties, dividends, distributed gains)

I want to understand my concentration in expenses (what I can cut/control) as well as income (where the risks lie). I never want to be placed in a position of being a forced seller.

My total family debt stays under 10% of net assets. Assets calculated net of all taxes and agent’s fees.

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The Role of Time

My thinking in my work, and family, is multigenerational… I look at assets, leverage, cash flow and spending at many levels…

  • What I actually own, owe, control, earn => me
  • Family level
  • Family & Corporate level => me, my family, my business
  • Multi-generational level => consolidated, over time

I think about expenses, earning power, saving power, asset utility (what benefits members) over time. I have a spreadsheet that projects the age of all living family members over time (2021, 2035, 2050). This helps me consider family asset strategy and consider when generational transitions are going to occur.

KEY for assets and cash flow => When generations stop working/saving, when kids start working/saving?

It’s not just “what you own.” It’s also when you own it, and when you sell it.

I see many people buying assets they will HAVE to sell in ten years time, mainly real estate. Now, if it’s your main home, then I get it. See below for the option value in the mortgage.

In this market, Boulder up 30% this year, it’s easy to convince yourself that you are silly not to supersize your balance sheet.

But if it’s a secondary market…

  • 10% in/out cost for the real estate
    • vs…
      • Less than 1% cost to go variable (AirBnB, Hotels.Com)
      • Total flexibility with capital (you don’t deploy into a low-occupancy, negative yielding asset)
      • No admin hassle (I really dislike organizing maintenance and cleaning)

Why are you doing it?

If you want to dazzle peers, suppliers and key relationships… …then you might be better off with a high-end club membership.

Your mind may try to convince you the joining fee is a waste of money. Note that the club joining fee is usually < 5% of a condo cost, and club dues run <10% of the condo’s cost to own.

With leasing we compare to “do nothing” => most people with ready finance will “do something.” If you’re going to do something, regardless, then something smaller can be a better option.

Your mind doesn’t see the rest of your portfolio performing better, with less hassle, by not owning an asset that’s a drag on return.

And… my mind at least, doesn’t remember how much I hate cleaning and dealing with remote maintenance issues!


KC: Tax bill as a %age of net assets-Where do you think a healthy range should be? 

Every year, I look at the tax bill relative to net assets on a consolidated basis. This lets you consider the impact of tax policy on your portfolio – smart savers free themselves from exposure to changes in tax policy. Taxes paid, as a percentage of net assets, should trend downwards over your working life.

I don’t think the taxes vs net assets number, itself, is important. What matters is trending down and asking yourself if you are worrying about the right things in your life. Lots of (wealthy) people fail to recognize how little impact the Feds have in their financial life. Others could use a nudge to save more, spend wisely.


GB: At that point, you’ll have built yourself an inflation-proof, tax-effective retirement annuity

KC: Can you help me understand the inflation-poof aspect of this strategy? Is it the income producing asset that is locked in at an low interest rate? How is RE more inflation-proof than other assets?

Real estate isn’t “more” but it can be “different”.

Local rents are influenced by local real economic growth. I like the prospects of Boulder, the Front Range and Colorado.

Local real estate values are influenced by macro (national interest rates, credit cycle) and local (replacement cost, demand) factors.

So a slice of local real estate can create an element of hedging between national, regional and local conditions. There are some other benefits…

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Hidden Options

Here in Boulder, Colorado, I believe our real estate values have a hidden option. There is a chance the best neighborhoods explode upwards towards the highest valued parts of: the Rockies (Vail/Aspen), California (Bay Area) or NYC. 

Now, I don’t have the $$$s to own trophy properties, but I don’t need to. As I wrote in The Next Doubling, it’s good enough to be nearby. For the option to pay out, we don’t need to get to the highest prices per sf => we merely need to close the gap, a bit, over time. That sort of option doesn’t exist in an index fund.

Another hidden option => we own a two-unit rental. We always have the option to move into one of the units and “live for free” by renting out the other unit.

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Option Value of Fixed Rate Debt

30-year fixed rate debt, with an option for the borrower to repay, is a valuable (oneway) option in an uncertain world. Unlike margin debt, the lender can’t call the loan on a whim.

Long rates have been declining for 40 years, so the value of this option is overlooked by many. In an inflationary environment, having a multiple of my core cost of living in low-cost fixed rate debt is a useful position.

A mortgage on a personal residence seems like a good deal to me……and if it turns out to be a bad deal then I exit via repayment or refinance.

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Saving 2% p.a. and giving Goldman an option to close you out…

Quick note on margin debt, even at <1% p.a. cost, seems like a very bad idea.

Smart people borrowing money they don’t need, to make money they are unlikely to spend in their lifetimes. Everyone figuring they will be able to unwind their financial structure before anything bad happens to them.

This strategy never ends well and only makes sense when you are playing with other people’s money.

A general principle, some things only make sense when you ignore the rebound. Fasting, margin debt, intensity-bias for endurance sport… I have found one gets a better long-term result from building smarter habits.

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Optimize over time. When I started paying attention to myself, I realized I needed a whole lot less spending, which implied less capital, which gave me much more time.

INVERT that last sentence => spending you don’t need, increases the capital you think you need, to spend more time doing what you want. I broke that cycle in 2000, got wrapped back up in it in 2005, got tossed back out during the 2008/2009 recession and, these days, cycle in/out depending on my moods!

Nearing 53, I laugh because “less” is being forced on my physical life, by time.

In my early 40s, “less” happened due to kids and a nasty recession.

In my early 30s, “less” felt liberating, and made time for a lot more self-directed time.

“Less” is a useful process!

Wanting

Needles District, Canyonlands NP.
If you get to Moab then do yourself a favor and spend a night under the stars (with the moon down).
This pic was taken hiking back from the Confluence Overlook, 10-year bucket list destination for me.
A sustainable way to enjoy longer workouts is to slow down => 10 miles in 4 hours.

I had a post queued up for Monday but it was about trust law and a bit dry!

I’ll re-work it and release it at the end of the year. A low traffic period of time.

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Last week, I finished a book called Wanting. An easy read, filled with short anecdotes, about desire.

Having spent my life in the business of money, I know about conventional desire. My time in athletics exposed me to another aspect, Victory & Vanity.

Greed comes in many shapes and forms. As I age, one form I contend with is wanting to get back to the past – a past remembered as better, stronger, more vigorous… this longing doesn’t serve me well.

For example, a longing for vigor can cause me to do too much exercise, thereby assuring exhaustion (ie a lack of vigor)!

The Wanting book was a guided personal review => considering the source of, and the likely results of, my desires.

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A Simple Case Study – the source of desires

A decade ago, shortly after visiting Aspen, I found myself wanting to buy a Range Rover. This desire appeared to “come out of nowhere”, but it didn’t really.

I’d been in Aspen for a training camp with three guys in my age group. Let’s call them the Three Amigos. I had visited their houses, been driven around in their cars (Range Rovers) and elevated my heart rate with some very competitive swim/bike/run.

The Three Amigos were people in whom I was able to see different aspects of myself. In many dimensions they were more than myself. With my heart rate up, this is a very powerful modeling situation – both consciously and unconsciously.

The Range Rover desire was the first thing I noticed. There was more.

Here’s the tip: I tend to notice my material desires before the deeper stuff.

When I notice that I’m wanting to buy the same socks as a buddy (Doc J you have a pair of very nice purple socks BTW)… pause and consider.

When I notice the mimetic transfer of a material desire (socks, car) then I pause and consider what else I might be sucking up from this person. Because I know it’s happening strongly in my unconscious.

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Thinking about an earlier draft of this post. I realized that the influence of my friends runs far deeper… watch, skis, bike, entree selection, career nudging for my children… my desires are influenced, to a point of external unconscious control, by my mentors (nears and peers).

Choose (very) wisely!

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The day after Canyonlands was a ride in the Colorado National Monument.
~30 miles, 2,500 of climbing.
Real training, not in my basement!

Risk of Ruin in Close Peers

Here’s a tip about ruin => in a group of peers, the group will tend towards the risk-seeking level of its most risk-seeking member.

We drift upwards, until something goes wrong, then we blame the situation.

Smart systems avoid catastrophe – here’s a simple one, teams of three, most conservative opinion binds the group. I use this in the mountains, and on my investment committee.

Life is a game over time.

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Anti-Desires

The power of desire works in reverse => consider people (and their specific choices) who repulse you.

The book asks the reader to consider, “Who are you not rooting for?”

It helps to be brutally honest. Owning my greed is easier than acknowledging secret envy!

It took a couple weeks (and 48 hours off my screens in Utah) to dig into my hidden desires. Part of the Wanting discussion centers around “thick” and “thin” desires.

Let’s start with a “thick” desire => do right by my kids. Where’s that going to lead us? A series of strong downstream families that endure beyond my life.

When I see someone crushing the family-side of their life, I’m happy for them => alignment with my thick values.

Compare to “thin” desires => the Range Rover, a fancy ski jacket, etc… Thin, material desires are relatively easy to spot.

Envy is less easy to spot. Disgust, however, is easy to feel => there’s the feeling again… let me consider it.

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A story.

My kids are doing great in all domains – school, sport and social. Notwithstanding this reality, I often hear a voice in my head saying…

You could be so much more…

Funny though, the voice predates my child! It’s a voice that’s been following me around for many years.

But what does this voice want?

Fame, likes, the approval of strangers!

If you repulse me then you likely have these things, all of which I secretly want… 😮

Thin, hollow desire that, most importantly, can NEVER be satisfied.

When I started publishing, I had a desire to help 1,000 people. I wrote it down as part of The Artist’s Way, bought in July 2000. Having far exceeded my goal, you’d think the desire would wane.

My desire for recognition, when fed, only grows stronger!

I see hidden desire through my anti-desires, my envy of others. What am I thinking about when I feel disgust? How might I deal with those feelings of envy?

Don’t water the seeds of envy. Simple, not easy.

Let’s get into tactics I’ve been experimenting with…

#1 – get myself to play a different game by competing in a different environment. This started in 2000. To get myself to step outside my innate monetary greed, I had to leave my daily exposure to high finance. To think clearly, I need to power down my phone and lock it in my car for a couple days.

Reduce my drive for material consumption and constant external approval… Axing Facebook/Instagram was a huge win for me. Not easy. Like stopping drinking, what am I supposed to do with all this extra time?

Not racing => the removal of a constant incentive for “more” in my physical life. Signing up for a race is a step towards fatigue. Fatigue that works against my thick desires.

On the screen you are reading this post on… who is on my screen most often? who’s like me, but more? who’s triggering my disgust?

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Write it down

Several times in my life, I’ve had a moment of clarity. A moment where I realized my thin desires were carrying me towards an outcome I didn’t want.

The moments are fleeting, so I write them down: the change and why I need to make it. Often, I try the change for 30-days and pay attention to how I feel.

The path forward is not always clear. I know people, who have a deep feeling “this isn’t it” and want to make a change. Other internal voices might be, “you gotta get out of here” or “this isn’t me.”

Write down what your hear.

Or maybe you wake up and realize your choices are destroying your health. In the early 1990s, I got kind of fat and didn’t like it. When I’m tempted to deviate from my system of healthy eating/exercise, I remind myself just how much I didn’t enjoy being chubby!

If you’re anything like me then your thin desires will persist and keep trying to lead you astray. The stronger they get, the more I need to slow down, reduce stress and consider where I want my choices to take me.

Strong downstream families enduring beyond my lifetime.

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.

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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.

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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.

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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.