What’s the last article you read that really resonated with you? One of those pieces that made you go back every so often to relive those feelings it inspired?
The other day I found myself rereading Len Penzo’s 19 Things Your Suburban Millionaire Neighbor Won’t Tell You. It’s an excellent piece if you’re genuinely interested in financial independence. Actually, the blog is worth subscribing to if you’re interested in financial independence.
So, what is that next-door millionaire not sharing with you? Here are the points that stood out for me:
1. He always spends less than he earns.
In fact his mantra is, over the long run, you’re better off if you strive to be anonymously rich rather than deceptively poor.
Over the years it’s gotten easier to spend less than I earn by putting my money toward retirement and savings. In college it was too easy to look around and wonder where all my limited funds had gone. It’s gotten easier to track my money as I’ve gotten older, and it helps that a substantial portion of my discretionary income goes to savings. It goes hand in hand with the primary tenant of financial independence of paying yourself first.
3. When you go to his modest three-bed two-bath house, you’re going to be drinking Folgers instead of Starbucks.
And if you need a lift, well, you’re going to get a ride in his ten-year-old economy sedan. And if you think that makes him cheap, ask him if he cares. (He doesn’t.)
My daily technology pieces last me six years or more–laptop, book reader, and up until recently, my phone. I don’t mind spending good money to purchase good products that will last but generally don’t feel compelled to have the latest upgrade, especially when new iPhone models are more of an incremental upgrade.
But, still, oh so tempting!
Up until the start of the pandemic, my job required suits, but rather than rack up large bills on dry cleaning, I used a solution I could tackle myself at home. The suits themselves were never going to make fashion statements.
By now you’re probably thinking: Well, aren’t you special?
Perhaps, but notice I did not make reference to the first home I bought. My first home purchase was not a mansion by any stretch, but it was larger than necessary. I was okay with that, because space and privacy have always been important to me. I’m willing to cut expenses on other fronts to enjoy those things that are important.
Figure out your biggest financial weakness. Then find ways to accommodate it rather than feel as though you need to stifle it.
10. Although it’s possible to get rich if you spend your life making a living doing something you don’t enjoy, he wonders why you do.
Life is too short.
Ouch. That one cuts a little too close to home, so for the moment let’s just say I agree with Penzo and leave it to the future to see if I eventually heed the advice. Suffice to say I do feel the cold metal of the golden handcuffs, and it’s an awful feeling.
14. He realizes that stuff happens, that’s why you’re a fool if you don’t insure yourself against risk.
Remember that the potential for bankruptcy is always just around the corner and can be triggered from multiple sources: the death of the family’s key bread winner, divorce, or disability that leads to a loss of work.
Insurance often reminds me of product warranties. It sometimes feels like a gimmick, right? Yet, there are times when insurance absolutely makes sense. It’s one of a few scenarios where it makes sense to have it and never need it than to need it and find yourself without.
15. He understands that time is an ally of the young.
He was fortunate enough to begin saving in his twenties so he could take maximum advantage of the power of compounding growth on his nest egg.
I’ve said it before. I’m sure after today I’ll say it again. If I knew in college what I knew today, I would have spent money on Google stock than beer and pizza. My savings would have thanked me for it.
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And, any additional advice you would add to his list?
It’s been far too long since we’ve gotten together. I look forward to another season of thought provokers. Thank you for continuing to be a loyal subscriber.