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How to get rich writing a personal finance blog

Do you want to know the secret of how personal finance blogs really make their money? It has nothing to do with writing about personal finance!
Roll up, roll up! Step right up for some magic elixir! Cures any disease, smooths wrinkles, and removes stubborn stains
Roll up, roll up! Step right up for some magic elixir! Cures any disease, smooths wrinkles, and removes stubborn stains
Snake oil salesman

Want to be rich? Successful? Irresistible? Learn to live with disappointment.

Have you ever heard the siren song of those strangely compelling late night television infomercials?

Get a rock hard six pack in less than 5 minutes a day, while sitting on your couch eating Doritos!

Stunning models with chiselled torsos and perfect teeth alluringly promise if you just “phone now, but don’t send any money” your dreams will come true, your career successful, and the opposite sex will find you irresistible. A better life for just $29.99!

Saturation coverage and repetition condition us into accepting the initially dubious message.

After three repetitions, we find ourselves nodding along.

After six repetitions, we catch ourselves thinking: “Hey I’ve got a couch, I like Doritos, I just need one of these devices”.

After nine repetitions, some of us actually reach for the phone.

Politicians deploy this same technique during election campaigns. By parroting the same unlikely sound bite over and over, voters begin to unquestioningly accept nonsensical ideas. “Better services and lower taxes? Guaranteed if you vote for me”!

The golden rules of the personal finance / debt reduction / financial independence / early retirement niches are well known: “don’t buy crap you don’t need, spend less than you earn, and invest for the long term”.

“don’t buy crap you don’t need, spend less than you earn, and invest for the long term".
Following these simple rules may make for a financially secure future, but they provide very limited opportunities for bloggers to sell things to their audience without too much hypocrisy.

There are simple rules for a financially secure future, but they provide very limited opportunities for bloggers to sell things.

Few bloggers would altruistically donate the 15-20 hours a week of their time required to establish a blog, write compelling content, and build up a following if they weren’t getting something out of it.

How do bloggers make money?

How do bloggers make money while evangelising the “don’t buy crap you don’t need” message?

Some use their blogs as a platform to establish themselves as “experts” or talking heads. Build a large enough following and requests to provide media quotes, give keynote addresses, and host lucrative residential retreats may follow.

Others create info-products such as courses and e-books they sell to their subscriber email lists. In practice these seldom contain more substance that the free content the author already has published on their blog. However, as the continued existence of the active fund management and financial planning industries demonstrates, people value advice more highly when they pay for it.

The final monetisation approach is running sponsored content, advertorials, and generating affiliate income via the ubiquitous “if you click my link you’ll receive a special price on [insert some crap you don’t need here]” sales pitch.

Get rich by... writing a “How to get rich” book?

Ironically the most lucrative affiliate income generation approach in the personal finance space is the very meta personal finance/entrepreneurship blog post about “how to start a personal finance/entrepreneurship blog”!

Think about that for a second.

We’ve all seen those Pat Flynn style posts: “my success can be yours by establishing a blog using my affiliate links to purchase domain names, web hosting, premium themes, etc”. Go Daddy? Tick. Bluehost? Tick. Leadpages? Tick. Thesis themes? Tick. Sumo.Me? Tick. Aweber? Tick.

Apparently some bloggers earn $30,000+ a month from these posts, which is great because they sure don't make any money from providing sensible financial advice to the internet!

some bloggers earn $30,000+ a month from these posts

So what?

A wise man once said the easiest way to get rich was to write a “How to get rich” book. The personal finance equivalent of those dubious home exercise machines and unlikely political promises is touting website hosting to naive wannabe financial bloggers!

Oh wait, I’m one of them… I better go work on my six pack, where are my Doritos?!?

Wednesday Wordsmiths: 2017-01-18

To help you mentally escape your commuter hell, here is the week’s collection of great reads from around the web.
Escape to your happy place with Wednesday Wordsmiths
A soul-destroying commute can suck the joy out of life.

Sardined on an overcrowded commuter train, gridlocked on the road to nowhere, or riding the bus while attempting to ignore that crazy old lady talking to her groceries… you are as far as can be from your “happy place”.

To help you mentally escape your commuter hell, here is this week’s collection of great reads from around the web.

Dreaming the Dream

An honest and thought provoking post from the Sex Health Money Death blog about the potential issues newly minted retirees face adjusting to life out of the work force. After a year of struggling to fill in his daylight hours, the author returned to the ranks of the gainfully employed.

I’m now ready to FIRE

Retirement Investing Today discusses the difference between being financially able to retire and mentally ready to do so. It is amazing how another lap through the annual performance target setting process sharpens the readiness!

The Inevitable Often Takes Way Longer To Happen Than You Might Think

Venture capitalist Fred Wilson discusses how inevitable does not necessarily mean the immediate.

This is timely advice given driverless cars will "inevitably" end the need for taxi and truck drivers, free online education will "inevitably" end the need for teachers and lecturers, and robo-advisors will "inevitably" kill off generalist financial planners. Long term these predictions probably will come true, but there remains plenty of time for people currently working those jobs to make a plan B.

The Ultimate Guide to Safe Withdrawal Rates

EarlyRetirementNow has written a fascinating series of articles that calls bullshit on the so-called 4% "Safe" Withdrawal Rate. They don't make for light reading, but you're efforts will be rewarded by a deep understanding of some of the limitations and shortcomings of this widely held FIRE community belief.

Financial Independence versus Financial Freedom

A great post from PoF highlighting the important difference between having "enough" to be Financially Independent and being comfortable. Steak dinners and holidaying in the south of France would require "enough plus a bit more", than say enjoying fish and chips in a caravan park in Essex. Everyone likes fish and chips, but having the means to splurge every now and again makes life all that more enjoyable.

Overcoming Bandwidth Woes...

Daniel Saffioti isn't a man who takes no for an answer. When his local broadband provider refused to connect his house to the network, he built his own network! Taking this kind of initiative in the face of rejection can be applied to all areas of our lives, including our finances.

When Is It OK To Forsake Stealth Wealth And Spend Up?

Sam Dogan presents an entertaining post about learning to recognise when you have "enough", and ensuring you start to enjoy yourself once you do.

How to get a pension of £20,000 by the time you retire

The BBC ran a story looking at the monthly savings requirements required to achieve a given level of pension income. The interesting point was just how quickly the amount a person needed to save each month increased depending on the age they got started. Granted most people aren't going to rush out and buy an annuity like the article assumes, but it does provide a powerful example of compounding interest at work.
Contributions needed to get a £30,000 income by retirement.
Image credit: BBC News

So what?

If you've finished all those and you still haven't reached the end of your commute then you really need to rethink your priorities! In case you missed it, here is one final recommendation for this week: Live a life of luxurious frugality

Trap for young players

Index tracker fund management fees may not stop at the Ongoing Charge Figure. Read the fine print, and beware of entry charges and dilution levies.

OCFs may not be the only fund fees charged

If you spend more than 30 seconds reading anything in the Personal Finance blogosphere you’ll stumble upon somebody evangelising about Vanguard’s low cost range of index tracker funds. To give credit where credit is due, my own research has found they are one of the more competitive and better performing fund providers. Your mileage may vary, so as always do your own research.

My research also recently turned up a trap for young players.

Beware the gap between fund OCF fees and the total fees charged
Beware the gap between fund OCF fees and the total fees charged
All the Vanguard managed funds charge an Ongoing Charge Figure, which can otherwise be thought of as the management fee the provider charges investors to do the actual index tracking, keep score on who is entitled to what dividends, and so on.

In the United Kingdom the OCF fee Vanguard charges ranges from as low as 0.08% up to 0.38%.

What surprised me a little when I was reading through the small print is investors in some of the funds get stung for one of more additional fees and charges over the OCF. These extra charges don’t get factored into the comparison tables at Morningstar or TrustNet, so they are easily overlooked by unwary investors who don’t read the small print.

Managed Fund fees don't stop withe OCF

easily overlooked by unwary investors who don’t read the small print
For example the Vanguard FTSE U.K. All Share Index Unit Trust has a super low OCF of 0.08%.

However investors are then also charged an additional 0.20% Stamp Duty Reserve Tax when they buy into the fund. That additional fee is going to give the investor’s first year investment returns a bit of a kick in the bollocks.

Investors in the Vanguard FTSE U.K. Equity Income Index Fund, get stung for double that amount at 0.40%.

Each of the following Fixed Income Vanguard funds listed below impose a dilution levy on any new investment funds being invested, ranging from 0.20% to 0.50%.

  • Vanguard U.K. Investment Grade Bond Index
  • Vanguard Global Bond Index
  • Vanguard U.K. Short-Term Investment Grade Bond Index Fund
  • Euro Investment Grade Bond Index Fund
  • US Investment Grade Credit Index Fund
  • Global Short Term Bond Index Fund
It is worth noting that even with the additional charges detailed here the Vanguard fund I have picked on remains more cost effective than the Blackrock (0.06% OCF + 5.00% initial charge = 5.06%) and Fidelity (0.06% OCF + 0.35% fees = 0.41%) equivalents.

View Vanguard’s full list of charges here.

So what?

The purpose of this post isn’t to give Vanguard a bashing, they do a fine job and offer many attractive investment vehicles to investors. The responsibility falls on the prospective investor to always do their due diligence and ensure they understand what it is they are signing up for when they pursue a given investment opportunity.

Live a life of luxurious frugality

What if I told you there is a way to live frugally, while still enjoying select creature comforts. Guilt free. For life. I believe there is.
Much of the Financial Independence and Early Retirement ethos is rooted in frugality.

Spend less than you earn

Delay gratification

Live within your means

It is difficult to disagree with the logic of these arguments, but when taken to their Jacob Lund Fisker style extreme they can certainly make for a miserable existence!

Frugality is no fun

I love the concept of Financial Independence. I love having Jim Collins style FU money. I love being able to pick and choose my clients, my working patterns, and most importantly how I will spend my time.

However I also love my Amazon Prime.

I love watching Formula 1 and Cricket, and despite resenting the hell out of the fact they are locked away behind a pay wall (I’m looking at you Bernie Ecclestone and Rupert Murdoch!) I must confess I pay to watch them anyway.

If frugality means I can’t have those, then I say bollocks to that!

Formula 1: One of life's little luxuries

People my age have baby boomer parents, which means we had depression era grandparents.

Those tough old folks could pinch a penny harder than Ebenezer Scrooge. They were the “waste not, want not” generation who would do crazy things like wash aluminium foil and use it again, and would buy heirloom quality furniture because they “weren’t rich enough to buy cheap things that wouldn’t last”.

Basically they were the anti-millennials, were the purportedly aimless hopeless useless youth of today to actually resemble the “spend it while you’ve got it, live for today” stereotype they have been assigned by popular culture.

What if I were to tell you that there is a way to live frugally like our grandparents, while still enjoying select creature comforts that will bring you much Millennial style happiness? Guilt free. For life.

I believe there is.

Have your cake and eat it too... everybody loves cake!

For each of life’s little luxuries you wish to enjoy, establish a self-renewing passive income stream to pay for it.

Take a Netflix subscription for example.

Currently that costs £5.99 per month, or £72 per year.

At the time of writing the HSBC MSCI World UCITS ETF global index tracker pays out a dividend yield of 1.88%. By all means pick a fund of your own, I chose this one for the example because it mimics the global stock market.

Therefore were you to the invest £3,830 (£72 annual fee / 1.88% dividend yield), your investment would throw off an income stream capable of providing you with a lifetime of guilt free Netflix goodness.

Amazon Prime? Invest £4202.

Sky Sports? This one requires a bit of soul searching, you would need to invest £21,696… which is nearing the average UK annual wage of £24,700.

I found adopting this approach provided a feeling of progress on my own journey towards Financial Independence. By investing £75,000 I should never need worry about paying my gas and electricity bills again. Another £12,765 meant my mobile phone bills should be covered forever. And so on.

Live a life of luxurious frugality
Relaxing like a boss!
What this shows is that it is certainly possible to enjoy the finer things in life, without unduly compromising your savings rate.

Inevitably nothing in life is truly free, so you will need to make some prioritisation decisions. Below is a table illustrating some of the common everyday expenditures, and how much you would need to invest in order to have those bills perpetually paid for by your passive investment cash flow.

So what?

Hopefully this post has shown that it is possible to still achieve Financial Independence without living like a Trappist Monk. Don't be a miserable bastard delaying all gratification until you arrive at the destination, enjoy the journey along the way!

Wednesday Wordsmiths: 2017-01-11

To help you mentally escape your commuter hell, here is the week’s collection of great reads from around the web.
Escape to your happy place with Wednesday Wordsmiths
A soul-destroying commute can suck the joy out of life.

Sardined on an overcrowded commuter train, gridlocked on the road to nowhere, or riding the bus while attempting to ignore that crazy old lady talking to her groceries… you are as far as can be from your “happy place”.

To help you mentally escape your commuter hell, here is this week’s collection of great reads from around the web.

Compare the UK’s cheapest online brokers

The team at Monevator have updated their fantastic UK broker comparison table, doing much of the hard work so you don’t have to.

Why “Earn More” vs. “Save More” is the Wrong Debate.

Paula Pant argues that focussing on growing the gap between earnings and spending will achieve financial independence much more effectively than focussing solely on what you earn or what you spend.

Financial Independence: The Journey AND The Destination.

Miss Mazuma presents a beautifully written piece about ensuring those on the journey towards Financial Independence enjoying the ride. If they don’t they are missing half the fun.

A third of apartment cranes in banks’ ‘blacklisted’ areas.

In intriguing method of evaluating where in the property cycle a city is. The article plots the locations of construction cranes on a map displaying where lenders see evidence of mortgage distress. Where there are loads of cranes in the black spots it suggests a looming oversupply problem.

How to get more enjoyment from the time available.

Ross Gittins writes about a study suggesting ways to make ourselves feel less rushed, which in tun makes us feel happier.

What my calendar looks like.

Jason Fried posted a thought provoking piece about being busy versus getting things done.

The 36 things I look at when evaluating a property purchase

Rob Dix details the key things he looks for when evaluating a potential investment property.

So what?

If you've finished all those and you still haven't reached the end of your commute then you really need to rethink your priorities! In case you missed it, here is one final recommendation for this week: A FIRE blanket spouse

A FIRE blanket spouse?

Relationships are wonderful things. However a spendy spouse is not a good bedfellow for your precious FIRE nest egg. Things are about to get bumpy!
Relationships can be wonderful things. The opportunity to share somebody else’s life. To help them achieve their desires and dreams. The reassurance of having a cheerleader. A wingman who always has your back. The pleasure of companionship. The joy of having someone to share life’s triumphs and challenges with. The gift of brutal honesty. Maybe even sex!

Relationships are complicated

Few relationships resemble the plot to a Disney movie. Disney left out the part about the morning after. The awakening to morning breath, the argument about leaving the toilet seat up, and the grumpy caveman you are before caffeine kicks in.

Anybody who has been in a relationship for more than about 10 minutes will agree that relationships are complicated.

In a relationship two different sets of hopes, dreams, values, beliefs, and preferences collide. This can, and often does, lead to there being some simmering tensions just below the surface.

In a relationship two different sets of hopes, dreams, values, beliefs, and preferences collide.
Add some scarcity of time and financial pressure to the mix, and often things become combustible!

Nothing extinguishes dreams of FIRE faster than a spouse pissing all over them.
Nothing extinguishes dreams of FIRE faster than a spouse pissing all over them.
The pursuit of financial independence is a lifestyle choice. It’s devotees often embrace it with an almost religious fervour, muttering strange cult-like rituals about frugality and safe withdrawal rates.

There is the vague promise of something better: escaping the rat race; gaining control of your time; potentially retiring early and never needing to work for a living again.

Sounds great! Where do I sign up?

Hold on, not so fast. Like most things in life, things are not as simple as they first appear.

Things are about to get bumpy

For many deciding to pursue financial independence will represent a massive change in their values and priorities.

Consumer debt replaces your mother-in-law as the embodiment of evil.

Keeping up with the Joneses becomes unimportant. Fuck the Joneses!

Every single spending decision starts being viewed through an opportunity cost filter: how much compounded investment return will I forgo by spending this money today?

In short you may appear to become a cheap penny pinching bastard. Santa Claus becomes Ebenezer Scrooge.

If you’re in a relationship this change in approach is no small thing.

What if your significant other enjoys living in an oversized McMansion, driving around in a shiny new financed German luxury car, drinking £30 bottles of Perrier Jouet champagne, and shopping till they drop?

Anti-FIRE: the champagne lifestyle
Champagne lifestyle
What if they loved those business class flights to 5* hotels located in expensively exotic locales?

What if they believe the more you spend on your children’s expensive private school education, the better prepared for life they will be?

If this is the case then things are about to become complicated in your relationship.

Let's get ready to rumble

A spendy spouse can pour cold water on your FIRE dreams.

A spendy spouse can pour cold water on your FIRE dreams.
A spouse who enjoys their job now, and doesn’t want to retire early, may suck the joy out of your newfound dreams. That extended trip through Southeast Asia, or taking a year out to explore the countryside in a campervan? Forget it, or go on your own.

This isn’t their failing, you are the one who has moved the goal posts. Own that.

In many cases this clash of outlooks will not be an insurmountable problem. However it does require honest communication to discuss your newly held priorities and values.

It won’t be a comfortable conversation. I’m not going to lie to you, not all relationships can survive the transition.

Therefore it is important you possess a good understanding about what it is that you want, and why you want it. What is important to you, and what can you compromise on?

Don’t just mindlessly parrot some inane generalities you picked up from a FIRE podcast or a self-appointed “expert” on reddit.

Take the time to actually think through what is important to you, what it will cost to fund, and what changes you will realistically need to make to get the numbers to work.

Be careful what you wish for

To some people the idea of retired serenity alone while their spouse remains working would be idyllic. To others the idea of a lonely existence rattling around an empty house with only unemployment television for company would be frankly terrifying.

Be sure think through what makes you happy, and how you will occupy those hours previously consumed by your job and commute.

Think about who you are, once you will no longer be “Clive the Plumber” or “Joti the Lawyer”. Many people derive their identity in large part around their chosen profession. If you no longer have one, then who are you?

Determine whether you are running towards something you genuinely desire. Or are you just running away from something you don’t like? They are very different things.

FIRE is a realistic and desirable thing for many, but not everyone. Determine if it is a realistic option for yourself before you damage your relationship over a pipe dream. Be careful what you wish for!

So what?

One thing is for sure, a spendy spouse and the precious FIRE nest egg needed to fund your lengthy retirement are not going to be compatible bedfellows. They will go through your savings faster than my mother's home cooked chilli con carne used to go through us as kids.

Get in front of this potential problem early, as the longer you leave it the harder it will be.

Everyone is a genius in a rising market

In 2016 my 4 year old son, using the simplest low cost portfolio imaginable, outperformed 92.5% of the UK’s active fund managers. How did you do?

My 4 year old son achieved 32% annual return

The other day I received a notification from the brokerage that hosts my children’s ISA accounts. They had received their end of year dividend payments.

I’ve been attempting to teach my boys about money and personal finance from an early age. By getting them involved in regular saving and investment I am hoping to bake in good financial habits, so that they become part of what they view as normal rather than becoming the hard won lessons most of us learn later in life.

Everyone is a genius in a rising market
Everyone is a genius in a rising market
I had explained that owning a renewable income stream was better than owning a exhaustibly finite bucket of wealth.

I had explained how buying shares in a company meant becoming an owner of that company, with each shareholder owning a small piece of every company asset.

I had explained about that good investments earn an investor more than they cost to hold.

I had explained about opportunity costs, that buying a lot of one thing meant you could not buy a lot of something else, whereas buying a little of each meant it was possible to have some of both.

I had explained the concept of consumption versus investing, and how it was impossible to have your cake and eat it too.

I had explained about diversification, that it was less risky to hold a little piece of many companies rather than larger pieces of just a few.

The I asked them what companies they knew about, and which ones they thought did a good job.

My four year old loves these horrible noisy battery guzzling toys made by a Hong Kong based company V-Tech. He is also partial to Hot Wheels cars and anything from the Disney Cars movie, both of which Mattel manufactures.

My ten year old is rapidly becoming a teenager, very into Microsoft’s Xbox One and Apple iPads. However he is becoming more aware of the companies that he has experienced enjoyable interactions with, so was interested in Singapore Airlines and Walt Disney and Pizza Hut (owned by Yum Brands).

Together we discussed various ways it would be possible for them to buy a piece of the companies they like. Eventually we settled upon the Vanguard FTSE All-World UCITS ETF (VWRL), which is a low cost global index tracker fund.

Anyway I dutifully logged in to the brokerage website to check out what the notification was about, and when I saw their portfolio values I nearly fell off my chair!

My 4 year old son's share portfolio achieved a 27% gain over 2016
My 4 year old son's share portfolio achieved a 27% gain over 2016
The value of their holdings were up 27% for the year (the blue line on the chart) and when factoring in the dividends received their annual return was actually around 32%.

In his first year of investing my 4 year old son, operating the simplest low cost portfolios imaginable, managed to kick the collective backsides of 92.5% of the UK’s active fund managers.

When was the last time anybody’s share portfolio returned a greater than 30% return? I doubt I’ve ever managed to achieve that.

Granted about 20% of that increase was the result of the collapse in value of the British Pound (the green line on the chart), but we might as well take the win now before we start complaining about all that imported inflation pushing up our grocery prices in 2017.

So what?

Everyone looks like a genius in a rising market. How did your portfolio do?

How to achieve Financial Independence

Want to know the secret to achieving financial independence? If I could achieve this then anyone can. Here is a summary of what worked for me.

Want to achieve financial independence?

Time and money are the two factors I use to measure wealth. The truly wealthy have an abundance of both. Until you gain control over both you are not financially independent.

I achieved financial independence before the age of 40. You can too. Here is what I know:

How to achieve financial independence

Spend less than you earn.

If you don’t, you are doomed. End of discussion.

Start now.

There is never a right time. The best time to invest was always yesterday, but unless you have a time machine handy... get over it!

Quit procrastinating and just get on with it.

Own your decisions.

You are the boss of you. Not your employer or your spouse or your advisor or your government.
Only you are responsible for the decisions you make, so own them.

Only you are responsible for the decisions you make, so own them.
They made me do it” or “it is their fault”… bollocks to that! Only dickheads shirk accountability or attempt to blame shift. "They" aren't going to help you reach financial independence, for that you will need to rely on your own self.

If you can’t afford to pay cash for something, then you can’t afford it.

Pay day loans are for dickheads. Car loans are for dickheads. Personal loans are for dickheads. Carrying a credit card balance is for dickheads. Equity release loans used to fund consumer spending are for dickheads.

Any debt that does not generate you more income than it costs you is dragging you away from financial independence. Don't be a dickhead by getting into consumer debt, it is the biggest financial own goal you can score.

If you have already fallen into the consumer debt created hole, then stop digging!

Saving is not the same as deferred spending.

Setting aside money to pay for a holiday, or Christmas presents, or a new car, or meeting your tax obligations is great from a budgeting perspective. However it is not saving, it is deferred spending.

You are lying to yourself if you include deferred spending in your saving rate calculations. Spending is spending.

Cash is a medium of exchange, not a store of value.

Inflation pushes up prices and erodes purchasing power over time.

Keep score by looking at what your net worth can buy you, not how large a number it is. Remember that people with a million dollars used to be considered rich, but no longer given there are now more than 33 million “millionaires” in the world.

Finish every day with a larger hoard than you started it.

Achieve this more often than not, and you will be heading in the right direction.

Leverage is a powerful investment tool... but only if the investment is self funding.

The careful application of leverage to accelerate investment portfolio growth can shave years off your journey towards financial independence.

Any “investment” that fails to cover its ownership costs should not be considered an asset, as holding it will cost you money and adversely impact on your lifestyle on an ongoing basis. If you are having to subsidise your investments then you are making your journey towards financial independence a more arduous journey than it needs to be.

Your home is (probably) not an investment.

We all need to live somewhere, but most people don’t derive any income from their homes. The cost of occupying your home is either your rent, or your mortgage interest + ownership costs.

Many home owners lie to themselves that as the value of their house increases they are getting wealthier. However if all the surrounding houses in your neighbourhood have also increased in value, then unless you are prepared to move somewhere smaller or cheaper you are actually no better off.

Your home can become an investment if you generate an income from it, or if you apply your accumulated equity towards securing the purchase of income producing investments.

Manage tax like you would any other expense.

Plan using before-tax numbers, to ensure you minimise taxation like you would any other expenses such as mortgage interest or brokerage fees.

Plan using before-tax numbers
Beware of investments that only make sense after taking into account financial trickery like depreciation or tax credits or rebates or subsidies. The tax man can change the rules at any time which may leave you holding an investment that no longer makes sense.

Stick with it.

Regular investing eliminates the temptation to try and time the market.

When prices are high your regular investment will purchase a lesser quantity, conversely when prices are low you will scoop up many bargains.

"Slow and steady wins the race" is a cliché for a reason.

Spread your risk.

Markets rise and fall. Companies boom and go broke. Natural disasters happen.

Spread your money over a variety of asset classes, providers, markets, and geographies.

This way your investment portfolio always contains some winners, some losers, and the remainder plodding along.

Financial Independence is about gaining control your time, not about money.

We all have the exact same number of hours in a week. Financial Independence is about you, not your employer or your lender or your family, determining how you will choose to spend those hours.

Financial Independence is the power to determine how you spend your time.

Defend your time.

Is the thing currently shouting for your attention going to take you closer to financial independence?

Is it something you would choose to do after financial independence?

If the answer to both questions is no, then why would you want to do it now?

Assign a value to your time, then prioritise everything you do using that figure.

Triage whether a task actually needs to be done at all. If not, then don’t waste your time.

Assign a monetary value to every hour of your time, your employer certainly does!

If a given task is worth less to you than the value of your time, then pay somebody to do it for you. This is a great way to quickly identify the actual value to you of any given task.

Spending a weekend installing a new tap handle yourself may be rewarding, but if a professional could successfully complete the job in an hour then you are effectively saying your time is only worth 1/16th of their time. Does that sound right to you?

Now you can concentrate on those high value tasks that will get you closer to achieving your goals, or those you would derive satisfaction from once you were financially independent.

Only you can achieve your financial independence, use your time wisely
Remember that only you can achieve your financial independence. Don't make excuses, or put busy work ahead of the things that will really make a difference.

Every time you go to make a purchase think about its true cost.

The cost of purchasing something does not finish at the checkout.

Everything you buy must to be stored, and that incurs an ongoing cost. How much of your monthly rent or mortgage interest expense is going toward storage? Having lots of stuff is expensive!

How much is the purchase really worth to you?

Each purchase made today takes away money that could be invested for your future. Over a lifetime of compounding returns even a trivial expenditure can grow into a vast sum.

Unless a purchase is being made to meet an immediate basic need, multiply the price by 11 to assess how much your purchase will be stealing from your future self.

If the purchase still makes sense at this higher price then by all means proceed. If not then evaluate whether you really need it. Your financially independent future self will thank you.

Keep a lid on your lifestyle costs.

Many people were the happiest they’ll ever be while they were students or in their early 20s. Free of responsibility, flat broke, and with nothing to lose.

Those same people are often much less happy when they find themselves selling off their lives a day at a time in a job they don't much like, just so they can service the crushing weight of mortgage debt, car loans, school fees, and credit cards.

Keep things simple and stick with what genuinely makes you happy.

FIRE is as much about the journey as the destination.

You only get one life to live, it would be a great shame to waste it working yourself to death. Unfortunately not all of us will be so fortunate as to live to a ripe old age.

Determine why you so desperately wish to be financially independent or retire early, then start doing those things today.

Define boundaries around how much you are willing to work, then work smart within those boundaries. Your productivity won’t reduce by much, but you will be much happier and more relaxed for the more balanced lifestyle.

The most effective staff I have ever had were mothers returning to the workforce after having children. They knew they had a hard stop on their working day when they needed to collect their offspring from nursery or school. This turned them into productivity super heroes, often delivering more during their part time work day than than their colleagues achieved over a full working day.

Block out time for the truly important things like spending time with loved ones, playing with your kids and pets, travel, and experiencing new things.

Money is an enabler, not a goal.

Money can’t make you happy, but it can certainly can help remove some of the barriers to happiness.


In 2005 the Sydney Swans football team assembled an unremarkable squad of unproven kids, journeymen, and unheralded veterans using a now famous “no dickheads” recruitment policy.

The team didn’t contain any superstars or prima donnas, deliberately choosing to the avoid the headline grabbing and negative behaviours for which professional sportspeople are infamous.

The collective effort of each individually unglorified team member produced exemplary results, creating a dynasty of success lasting more than ten years.

Much like the assembly of a successful sporting team, the journey towards Financial Independence involves the combination of a great number of individually unremarkable behaviours in order to achieve a truly amazing outcome.

This endeavour is easily sabotaged by scoring own goals or adopting dickhead-like behaviour, such as lifestyle inflation, living beyond your means, or falling prey to consumer debt.
 Sydney Swans "no dickheads" recruitment policy
Sydney Swans "no dickheads" recruitment policy
If I could achieve Financial Independence, while raising two young children and living in one of the world’s most expensive cities, then anyone can.

So what?

Now that you know what it takes, I wish you every success on your own Financial Independence journey, and beyond.

Worst financial advice ever

What is the single WORST piece of financial advice you have received? A host of leading personal finance authors share their tips on what NOT to do.
I recently surveyed the best and brightest minds in the Personal Finance world to ask each for the single WORST piece of financial advice they had ever personally received. It turned out Mr Money Moustache, J.D. Roth, the Mad Fientist, Jim Collins, and Paula Pant were all lost somewhere in the wilds of Ecuador, but the day was saved by the gang from Rockstar Finance Forums.

Jim Collins, Mad Fientist, Mr Money Moustache, Paula Pant, and JD Roth in search of Chautauqua in Ecuador
Jim Collins, Mad Fientist, Mr Money Moustache, Paula Pant, and JD Roth in search of Chautauqua in Ecuador
With the season for planning financial goals having arrived once more, this timely list of personal finance traps and pitfalls best avoided should help everybody achieve a better financial outcome in 2017.

Jim from RouteToRetire, BigDaddyG and GeckoVision flagged this path to financial self-destruction:

“you only live once… spend it when you got it!”.
EdgarPickle quoted the classic:

 “easy come, easy go”.
Lindsay shared an expensive cautionary tale of not reading the small print, and trusting due diligence to a buddy rather than a suitably qualified professional.

BrandNewPapa suggested the urban myth:

 “buying a house is a great investment”.
Steve from ThinkSaveRetire upped the ante:

 “buy as big a house as you can afford”.
Until Savvy Family Finance trumped them both with:

 “buy the most expensive house you can now, because your income will always go up while the payment will stay the same”.
ChooseBetterLife contributed some old wives' tales:

 “student loans and mortgages are good debt”.
KeepThrifty questioned the wisdom of people not paying off their mortgages early because:

 “you're going to wish you had that mortgage interest deduction when it's gone”.
Mister_RIP from RetireInProgress opined the worst advice was the old family favourite:

 “renting is a waste of money”.
PaulM pointed out the common trap that people being laid off fall into, which is cashing out their retirement accounts.

FullTimeFinance, MrsBITA from and Shnugi all cautioned against the perennial defensive investor standby of

 “invest in gold”.
Shin from MoneyIsNotTaboo flagged the financial advisor gravy train, specifically that classic commission earner that is the right answer for almost nobody:

"Whole of Life insurance"
As many a liberal arts graduate has discovered to their cost, Amy questioned the conventional wisdom that anybody taking on debt to study will inevitably:

“enable you to earn more income always”. 
Seth Drebitko disapproved of a minimalist approach to diversification

“hold all your money in [Mutual Funds/Index Funds/Bitcoin?] and you’ll never need to worry about your investments for the rest of your life”. 
ApathyEnds was told the order a person loads up on consumer debt is important, meaning obtaining a car loan may max out your debt to income ratio to such an extent you couldn’t qualify for a mortgage.

 “make sure you take out a huge debt, before taking on a small (but still substantial) debt” 
HernandezPrime rounds out the worst financial advice ever received with the gem:

"Never invest in the stock market, you'll just lose all your money"
The prevailing theme that emerged from this survey was to be careful of whom you seek advice from, and always “trust, but verify” what you are told before making important financial decisions.

Unfortunately many of the bum steers and red herrings listed here underpin much of society's conventional financial wisdom. There is certainly a reason why so many folks today are feeling frustrated that they aren't getting ahead, while they are slowly being crushed under the weight of servicing all their mortgage and consumer debts.

I’d like to thank all these generous folks for their contributions. Not only do they know enough to recognise these anti-tips for the terrible advice they are, many of them freely share their hard won knowledge and experience of what actually does work when it comes to personal finance.

So what?

I’ve learned plenty from them, take a read of what they have to say and you probably will too.

I wish all the Cantankerous.Life readers a financially secure and prosperous 2017!

Some thoughts on stress

Stress is self-inflicted. It is us who make ourselves worked up, and our own perspectives that determine what is worth worrying about.

Feeling stressed?

This morning my ten year old son exclaimed “Oh my goodness, I’m so stressed!”.

I caught myself shaking my head at the ridiculousness of his statement. What in his supremely comfortable middle class existence could he possibly believe was stressing him out? Come to think of it, did he even know what stress was?

It turned out that he was having trouble completing an intricate maneuverer during the assembly of a complicated looking Lego set. The instructions made it look easy, but the coordination and logistics required proved challenging for him.

That got me thinking. Today we live in a world where everyone is always complaining about feeling time pressured and stressed out. However many of us live in a level of comfort that our parent's and grandparent's generations could only have dreamed of.

Once, but no longer

Many years ago I used to get worked up about things, but a series of interactions changed my perspective.

This can be summarised by a great quote from the cricketer Keith Miller, who had been a fighter pilot during World War II. “Pressure is a Messerschmitt up your arse, cricket is not.

Pressure is a Messerschmitt up your arse, cricket is not.
Keith Miller: Pressure is a Messerschmitt up your arse, cricket is not.
My best mate at school became a surgeon. Shortly after graduating from university we caught up for a beer, during which I vented about how stressful my day had been. A deadline had been missed at the office, resulting in my pointy headed boss directing a toddler tantrum at all us accountants. My friend reflected on this for a second, then proclaimed that wasn’t stressful at all. A bad day at the office for him resulted in patients dying. I must confess that was pretty hard to argue with.

I used to work with a Swedish guy who was incredibly good at writing the embedded computer programs that make microwave ovens and car satnavs and calculators work. He accepted a role writing the program that was to control a new generation of heart pace makers. On his third day in the job it occurred to him that he was no longer programming some random consumer device. This time if his work was anything less than perfect it would actually kill people. He quit on the spot, knowing he would endlessly worry about spectre of an undiscovered bug in his code.

My cousin performed bomb disposal in the armed forces for many years. I once joked that we should get him a t-shirt saying “if you see me running, try to keep up”. He responded that their team motto was actually “if at first you don’t succeed, bomb disposal wasn’t for you”. You don't meet too many unlucky people in his line of work.

I asked him how he coped with the idea that every job could potentially be his last. He just shrugged and said there wasn’t any point worrying about things that he couldn’t control.

You don't meet too many unlucky people working in bomb disposal.
You don't meet too many unlucky people working in bomb disposal.
The common thread these interactions had is they taught me stress is self-inflicted. It is us who make ourselves worked up, and our own perspectives that determine what is worth worrying about and what can be shrugged off.

Since I came to understand this I very rarely become stressed.

I am regularly challenged by stressed out consultants and client executives, demanding to know how I can be so calm after some “crisis meeting” or other has left them with a sense of bowel clenching fear and foreboding.

Usually I smile and tell them that I don’t worry about things I can’t control, that somebody else’s panic does not have to become my own, and that things will remain broken until we fix it no matter how much we stress about them. Then I suggest we solve the problem rather than wasting time worrying about it.

What is the worst that could happen?

The next time you find yourself getting worked up about something, STOP.

Ask yourself: “Is anybody going to die because of this?

Most of the time the answer will be no.

Next ask yourself: “Is somebody trying to injure me or my loved ones in some way?

Most of the time the answer will also be no.

Then ask yourself, as that famous Dr Pepper advertisement once did: “What is the worst that can happen?

Things seldom turn out as bad as we fear they may, which means most of the time they work out far better.

Finally ask yourself: “Will stressing about it actually help?

I’m yet to experience a situation where the answer to this question was actually yes.

So what?

Stress doesn't make us happy nor make us feel better nor help us get things done. As it is self inflicted, why not devote your energies to solving the problem rather than worrying about it? Get the job done and move on.
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