An Easy $1,500

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What is it about our cable bill that arouses such anger?

In my case, it’s paying money for someone to pump fear, anger and violence into my wife and children.

I’ve been working since 2008 to cut the cord. However, my wife made an excellent point that the kids programs are useful.

Seven years later, I came up with a strategy that will save me $1,500 over the next year.

Here’s what I did:

  • Buy a Roku box
  • Unplug my cable box, plug in my roku
  • Set up amazon direct and netflix
  • Netflix – we went for the two streaming plan so we can use an iPad as well as the Roku
  • Run the above in parallel with cable for a month to prove concept to my wife
  • Head down to Best Buy and get a basic cable modem
  • Call up my cable company to activate my owned-modem
  • Return all my hardware and change my account to broadband only

Time investment 90 minutes.

One year net savings $1,500.

If you are married to an athlete then make the shift in a non-Olympic year during the off-season of her favorite sport.

I play a long game!

🙂

Lessons From My Divorce

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2015-03-31 10.04.40The speed that people bring hate to a divorcing couple is surprising. It comes quickly and unexpectedly.

Having been through a divorce, I want you to know that the hate isn’t useful.

Getting divorced sucks, for everyone.

It’s worth remembering that nobody is enjoying the process, not even your soon-to-be-ex-spouse.

Your wise friends, knowing that nobody is having fun, will help you remove hate from the situation.

They will do this by listening, without knowing the answer.

They will encourage you to settle your differences with compassion for each other, and the rest of the community.

As for the hate…

When I find myself hating, it is a sign that my own actions are inconsistent my values. Hate is a sign that I need to make a change within my own life.

As for the divorcee…

It’s going to take years for the dust to settle.

After 1,000 days or so, you’ll be able to start the process of understanding the small ways that you might have contributed just-a-little-bit to the divorce.

Once you can see an area for improvement, start there.

Gradual self-improvement will lead you to a wonderful life.

Mommy Fatigue

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As a triathlon coach, I warned my athletes about the risks of dumb-ass fatigue. I would encourage them to get tired the right way and eliminate habits of pointless fatigue.

Recently, I was at my son’s school for community night. Given that it would be rude to say “dumb-ass” in a room filled with preschool parents, I needed to tailor my language for the audience.

The fatigue in mothers appears deeper than what I experience as a father.

Mommy fatigue reminds me of man flu, which is something that must be experienced to be believed.

I believe you and I wanted to help the community.

So I asked a question…

Do I perform better when I am exhausted?

I shared my experience…

The most fatiguing period of my adult life was spending 1,000 days constantly carrying around the problems of fatherhood. I thought about my problems 24/7 and it was exhausting.

I offered an antidote…

It was impossible for me to transcend my thought habits.

It has proven to be far easier to replace my habits with something useful.

When you find yourself fixated on your problems, pull out your Facebook feed and meditate on pictures that make you feel happy.

Close your eyes and breathe in that happiness.

When your problems reappear, close your eyes for a moment and breathe some happiness into them.

I shared my fatherhood goals…

I realized that aiming for perfection was making me miserable.

My kids don’t need perfection from me.

How should I define achievable success?

Don’t retaliate.

Stick with it.

Aim low, keep improving and we will end up better than we ever expected.

An Illusion of Individual Experience

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riverMy buddy, AC, wrote a good article about his athletic journey.

Alan’s article was a reminder of my own capacity for self-harm and a need to remain vigilant against fooling myself. You see, my story is the same with different details.

I make a cameo in the last decade of Alan’s life and my friends have been talking to me about their own experience.

I wanted to share part of a conversation…

A – I could never do that.
G – Never do what?

A – I could never share my story.
G – You might want to be careful with that.

A – Careful with what?
G – Be careful about making affirmations to conceal your truth

When you start to share your truth, you’re likely to discover that it’s really our truth.

Be brave.

Understanding Your Family’s Risk of Ruin

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nightwalkIn my previous piece on effective wealth, I made the case for linking wealth to spending.

  • Individual wealth => 5 to 10 years cost of living
  • Generational wealth => 10 to 25 years cost of living
  • Multi-generational wealth => 25 to 40 years cost of living
  • Surplus (excess?) wealth => beyond 40 years cost of living

Spanning 25 years and a range of industries, my careers have had one thing in common… clients can sustain significant losses.

Early in my working life, permanent financial loss didn’t concern me.

  • I had limited assets
  • I was an employee
  • I was insured by my company
  • I was indemnified by my clients

Over time my exposure changed and, eventually, I realized that I had a significant risk of ruin.

My definition of “ruin” has changed over time. It’s worth writing out your own and discussing within your family.

For example, “losing everything I own:”

  • didn’t concern me at 25 – I had a small balance sheet relative to my future earning potential
  • would have been a huge problem at 35 – I had limited earnings, moderate personal leverage and a balance sheet containing more than 15 years cost of living
  • isn’t a problem today – low leverage, small personal balance sheet, greatly reduced cash flow deficit relative to my young family’s assets

Today, ruin consists of adverse events with my family’s human capital.

While I run our family structure, it’s a very small piece of what I do.

Because… the purpose of getting family structure correct is to enable a focus on what matters – human capital and shared experience.

  • marriage
  • kids
  • family
  • health

Get the structure right so that you can focus on things other than the structure!

  • Simple
  • Straightforward to manage
  • Cost-effective (time, expense, future flexibility)

Consider:

  1. Are you worth suing?
  2. In what capacity could you be sued?
  3. What’s the nature of the losses that could be sustained by any party?
  4. What can go wrong outside of lawsuits? Personal disability, for example.
  5. Can financial, or legal, structuring reduce these risks?
  6. What’s the cost to insure these risks?

Brainstorm the answers and schedule consultations with:

  • an experienced litigation attorney – quantify and understand how you will be ruined 🙂
  • an experienced trust and estate lawyer
  • a fiduciary with experience advising families similar to your own
  • a family that has managed two successful generational wealth transfers – what does success look like when you’re gone?

Write out your notes from these meetings, discuss with your family counsel and reach a rough consensus on your family values.

Here are reading resources to help you understand family wealth.

  • Consult widely
  • Seek out smart people that disagree with you – you’ll both benefit
  • When family members disagree, pause
  • Change slowly

More on the specifics of my own journey in a future installment.

Educating A Beautiful Girl

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Lexi in MoabAn enduring benefit from working across cultures, races, sexual orientation, body mass indices and beauty is an increased capacity to see myself in other people.

If you look closely then you’ll see that power-seekers have a tendency to focus on the wickedness of “them.” It’s an effective argument employed by the media, politicians and our leaders.

Pointing out “their wickedness” is so common that I search for teachers that are careful to avoid an appeal to wickedness.

A story…

My daughter and I were heading into the supermarket in Moab. People in the desert look different than people in Boulder.

Dad, dad… that homeless guy is stealing all the food.

Sweetie, look carefully, he’s taking his groceries to his car.

With her filters off, my daughter reminded me that I have some work to do.

Another example…

The wealth effect of excessive living is obvious. However, if you look deeply then you’ll discover another, far more subtle, effect. You’ll be able to feel a separation between yourself and other people.

As you separate yourself, you will be prone to seeing “their wickedness.”

The physical separation is in plain sight – education policy, gated communities, exclusive clubs, athletic ability…

In Boulder, we don’t need gates, the price of real estate makes an effective barrier to entry, especially when combined with private school fees (so our children are protected from their children).

If you sit quietly then you will feel a deeper separation. It makes us miserable and allows us to be manipulated.

An antidote…

  • Humility in my own needs
  • Spending time outside my “tribe”
  • Looking inwards at my tendency to hold myself separate

Later in the trip I asked my daughter…

Who gets hurt when you’re scared or angry?

PJs

Dealing with an Irrational Spouse

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girlsA decade ago, I was working in Bermuda and went shopping with my girlfriend. She picked out a small container of strawberries for us and I nearly pooped my pants…

Eight bucks for strawberries?!?

My girlfriend is now my wife but I’ve held onto my tendency to sweat the small stuff.

In the middle of winter I was looking at all the exotic fruit in the fridge and asking myself how much all this cost. I came across a quart of chopped watermelon and nearly pooped my pants…

Ten bucks for watermelon?!?

While I haven’t learned, my wife has…

I’m grateful to be married to a man that can afford to buy ten-dollar watermelon and I assure you that your children and I are going to savor every single piece of it.

I share the script because the people in our lives that feel pain from spending probably feel pleasure from providing.

Her reply was brilliant.

While I have been doing more fruit shopping at CostCo, the pain from opening the fridge door has been replaced with pride from being able to provide the family with healthy choices.

This example has given me the courage to search for other “fruity” situations in my life.

A Lesson From Richard Feynman

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snow_bunnyThe mistake I made was not reconsidering my involvement once the original reason for agreeing to help had been removed.

The quote is Richard Feynman’s. It refers to his role in building the nuclear weapons that killed more than 100,000 people. You’ll find the story of his involvement in The Pleasure of Finding Things Out.

One of the most dangerous biases that we’re prone to is consistency and commitment tendency.

Once we start down a path, it takes uncommon effort to get us to deviate, or change our mind. In fact, the harder outsiders try to change our minds, the more we dig in. Think politics, patriotism, corporate policy and religious dogma.

However, it is not all bad news. We can acknowledge this tendency and harness it to make positive changes in our lives.

Write down key decisions and own our errors. I force myself to do this annually.

Force ourselves to look inwards and discover the irrationality and intellectual arrogance that we see in others. My wife is an expert at gently pointing out inconsistencies!

Make a habit of micro-change. Fake it until you make it and give yourself permission to change your mind “just a little bit.”

Making significant changes in our lives is such a hassle that we nearly always wait until a crisis forces our hand.

  • Divorce
  • Health emergency
  • Large scale financial fraud
  • Ethical lapses
  • Criminal behavior
  • Addiction and abuse

These are opportunities to reassess but, in a crisis, I’m too overwhelmed to think clearly!

My solution is to schedule time to consider time.

  • Family
  • Career
  • Relationships
  • Athletics
  • Volunteering

Remembering why I started.

Did my choices today make sense?

Allowance 3 2 1

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amigosMy six-year old has been hounding me to buy her stuff:

  • Pink iPhone
  • Pink Mermaid Tail
  • Pink Guitar

Rather than entering into a philosophical debate on consumerism with my kindergartener…

I decided to put her on the payroll.

We’re starting at $6 per week and I told her that she’d get a raise of $1 per week on her birthday.

$6 also makes the math easy for what I want to teach her.

I gave her three envelopes. I wrote on each…

  1. Save
  2. Spend
  3. Donate

My weekly recommendation was to save three dollars, spend two dollars and give one dollar away.

She asked if she had to do it my way.

Knowing that the purpose is to create ownership, embed good habits and learn from errors… I said it was up to her.

So far she’s saving 100%.

She asked if she had to do any extra work.

Hoping that a reasonable allowance might reduce lying and petty theft, I said that it didn’t rely on anything.

My wife felt that $6 per week was a lot. Looking at a CPI calculator, it’s the equivalent of $2.50 when my wife was six and $1.25 (!) when I was six.

Seems reasonable and the round numbers made it easy to introduce the concept of allocating income (Save, Spend, Give).

Saving half of everything I earned before 30 was the best financial decision of my life.

It will be interesting to see the unintended consequences.

Effective Wealth and Diversification

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2015-03-18 07.31.56I was asked to update thoughts on family legal structuring. Before jumping into that topic, I want to define effective wealth.

If you remember one thing from this post…

Your effective wealth is most closely linked to your spending, not your balance sheet.

Consider US$1,000,000. Depending on where you live, this money could support:

  • a CEO for a year
  • a family for a decade
  • a village forever

The first thing to understand is your core cost of living. It’s going to contain:

  • Housing / Property Taxes / Insurance / Maintenance
  • Groceries
  • Income Tax
  • Health Care & Dental
  • Utilities / Mobile / IT
  • Transport

My family’s total approaches $100,000, which is a big number. However, on a per person basis we’re under $20,000, which is less than I’ve been able to live on my own.

Next comes discretionary spending (mine in descending order):

  • School Fees & Childcare
  • Gifting
  • Club Fees, Subscriptions & Kids Activities
  • Date Nights
  • Cleaning

Before parenthood, I missed the step change in expenditure, and associated wealth effect, of kids. Note that kids increase human capital, are sources of love and have tremendous option value!

Finally comes luxury spending – travel and vacations. With five in my household, luxury spending has been on a rapid downward trend since my second child was born.

Pulling all of that together, you’ll be able to consider your financial wealth relative to your spending.

  • Individual wealth => 5 to 10 years cost of living
  • Generational wealth => 10 to 25 years cost of living
  • Multi-generational wealth => 25 to 40 years cost of living
  • Surplus (excess?) wealth => beyond 40 years cost of living

The appropriate legal structure changes as your family wealth changes.

To understand effective diversification, express your asset allocation relative to your spending. Consider these categories in years spending:

  • Family home
  • Business investments
  • Real estate investments
  • Retirement accounts
  • Education accounts
  • Taxable investment accounts
  • Cash equivalents
  • Non-yielding luxury assets (art, jewelry, vacation homes)
  • Depreciable assets (boats, RVs, vehicles)

Also write out your sources of income and make your cash flow concentration visible.

Looking at asset, income and cash flow concentration should make your key financial risks more obvious.

Be aware of the human tendency to look away from things that make us uncomfortable.

Micromanaging the “little” will make you miserable – remember to focus on the big things.

Change slowly.