There is this busy corner downtown that I drive past on a daily basis, and every day lately when I go past this corner there is this guy out there.

He is wearing headphones and I tried to get a good picture of him for you but it did not come out real good because I was flying past in my car going 35 mph.

Anyway this guy is my new hero because he is out there every day on the corner, bopping his head and dancing on the street, he is acting goofy and pointing at cars that go by, just not giving a care in the world what anyone thinks about him.

A lot of people probably laugh at this guy and think he is a dork but I gotta say I admire him. He is doing his thing, he doesn’t care what you think, and he is just having fun and living it up. How many people sit at home in boredom or frustration while this guy is at least getting exercise and sunshine and feeling good about himself? What does he care if you think he looks goofy out there dancing on the corner?

Laugh all you want. Corner dancing guy dances on, oblivious to your harsh criticisms.

He dances to his own beat. He does his own thing.And I admire that, and I wish I had the courage to do more of that myself.There just has to be lessohere.Let’s dig in and find it, shall we?

Lifestyle design 101 and keeping up with the Joneses

Recently I had some conversations with old friends and it got me thinking quite a bit about lifestyle design, my finances, and so on.

One of my friends earns a great deal of money more than I ever have. In fact, he earns the same amount as my entire nest egg/life savings in about two years or even less.

So this makes me feel…..lacking in some way. I compare myself to his situation, and think that I am missing out on something because I could be potentially earning so much more money, like he does.

The brain cannot help but compare. Maybe he is buying a nice sports car, and has a luxurious condo, and has a cooler ringtone than me, etc. I am missing out because I do not make more money, right?

This is simply “keeping up with the Joneses syndrome” and it never really ends. My friend that is making more money probably has the same feelings when he compares his own finances to Mitt Romney or whatever. Now that is real wealth! Old Mitt is probably having a blast with his even nicer sports car, even nicer condo, and even cooler ringtones! It never ends. There is always someone out there with more wealth, more opulence, and more toys.

So there are a couple of ways that you need to think about this in order to break it down:

1) Number one, my friend who is making six figures per year, how much is he really saving? Not a whole lot, turns out. He has a nice home and a nice car but he is only socking away around ten to fifteen grand per year. I suppose this is fine over the length of a career but it brings to mind the problem of lifestyle inflation. Earn more, spend more. Pretty darn difficult to avoid that trap these days. The even bigger potential trap here is to earn more, then spend more and take on additional debt (like a mortgage) and then become locked into working to pay for it all. Inflate lifestyle, then be forced to work for decades. Nice car, nice house, nice things….keep working to pay for it all. It’s a trap!

The path I am on avoids this trap, because I refuse to inflate my lifestyle, and I am also not chasing higher pay or a better paying job.

2) Number two, you have to define what “enough” is and then figure out how to achieve that level of consumption without working like a dog for no reason, just to get “more.” What is Bill Gate’s marginal value of another million dollars? Of another billion dollars? It is very, very low. For him, getting another million or another billion is not going to increase his happiness any further, nor can it buy him additional peace or security.

The same is true of my situation, at some point, where the marginal value of earning additional money drops to almost nothing. The key is to figure out how much “lifestyle” you need in order to be happy, and then realize that you are not going to be happier just by adding more money into the equation.

Essentially I left the rat race of careerism already and I am coming at the problem from a unique standpoint. Instead of saying “I want stuff, now how much do I have to work in order to get it?” I am saying “I refuse to be dependent on a job, I have this nest egg invested, now how little do I have to work in order to supplement my investment income?”

Thus I am starting here from the point of complete freedom: no job, no career, my time is entirely my own. I currently do a bit of freelance work each week (8 hours/week to be exact) and this covers my living expenses. If the market does decent over the next few decades then I have plenty of time to let compound interest do its work for me. I can also pick and choose how much I want to work, when I want to work, if I want to work, or even pursue another business venture instead of trading hours for dollars. My time is my own and I can sort of do what I please.

I am not rich, I cannot spend money frivolously. I cannot just go buy a sports car (actually I could, but doing so would end or limit much of my “wealth”).

What I really have is wealth so long as I am frugal. I have time freedom and I have capital and I can generate a decent return on my investments, nothing like Mitt Romney (mind you) but enough to live like a pauper if I had to without having to work AT ALL. I could easily ditch my car, get a roommate, eat ramen noodles, and I would have money left over, even without doing any work at all…none, zilch, nada. Zero work. That is incredible freedom right there and obviously it has a price: I am not rich, I cannot waste my capital buying flashy stuff, and if I want to have a zero hour work week then I need to make some serious sacrifices. I am not willing to make all of those sacrifices, therefore I still do freelance work.

But the point is that a zero hour work week is at least possible for me, whereas people who locked in to the mortgage and the nice cars, they HAVE to work. They have no choice in the matter. Their choice is gone, they made their choice when they took on an inflated lifestyle and a mortgage.

Most people probably never think to choose “frugality + wealth” over the more typical “wish you were rich and spend money as if you were to get stuff.”

My investment income in 2012 is going to come very close to matching my living expenses. That is wealth. If you want to be rich, you have to get a nice house and a sports car and then obviously you either need a LOT more capital or you need to be locked into a full time career where you have no choice but to keep working.

But if you work like a dog and are locked into a career just so that you can have nice stuff, that is not wealthy by any means. That is “trying to look rich” while working really, really hard at it. Definitely not worth it for me.

My MMO website and what it should or should not become

The website you are reading now is essentially a “make money online” site (MMO).

I believe it was likely penalized by the recent Penguin update and it does not make much money to really speak of. It never did. But it makes a little bit and of course there are a million and one ways to monetize such a site.

Plus there are many different ways that you could try to market and build up the site, even without free Google traffic. You could post every day on Facebook and Pinterest and Twitter and all of that other stuff to try to drive more signups, impressions, readers, engagement, and so on.

But I suppose the bottom line is that I am just going to keep doing my own thing. I have about 20 quality guest posts pointing at this site and I even have some future ones lined up as well.

Some people think the URL is too spammy and that I should change the site name or redirect it to another URL or whatever. Then of course if I did that I would have to chase down all those 20 guest posts and get them to change their old posts that have a link to me, and so on. What a nightmare.

It is what it is, I am not putting a ton of effort or work into the site, I just post stuff like this (what you are reading now) every once in a while, so it will just grow and age with Google and maybe some day they will open up the floodgates of traffic to it. Who knows, probably not, but I am not counting on it at any rate.

I am lousy at sales and monetizing so my inclination is just to let it ride for a while, keep putting up solid posts (like this one) and keep doing the occasional guest post and see what happens. If it gains traction some day then so be it. If not, I will not be upset about it, or curse Google, or anything like that. It is what it is. There are other ways to make money!

So I am just going to keep doing my own thing with this site, no pressure to really change things up, I think Google may come around eventually. If not then it is their loss!

Pressure to upgrade my car and/or apartment?

One last idea is along the same lines of lifestyle inflation, but I really have thought hard about buying a car lately and if I should go through with it or not, or if I should pursue it or not. The bottom line is that it is just more “keeping up with the Joneses” stuff and I also have that itch that I just want to buy a new car. Ultimately it is not worth it, not even a little bit, because my current vehicle has plenty of life left in it with only 67 thousand miles on it. Crazy to trade that in and then spend ten thousand or more to get essentially the same basic transportation. Just not worth it.

Nope, I should just do my own thing and enjoy my freedom. I suppose in a way this is an answer to the last post about whether or not it is worth it to pursue more money in order to buy more stuff.

To top it all off I just got done looking at condos (not for me, I am not looking to buy right now) and their were some darn impressive properties we looked at. We saw some enormous places that had fantastic views, and it was tempting to think that someone could live there and not have to worry about the roof, the lawn, the snow shoveling, etc. The flip side to that of course is twofold:

1) You still pay “rent,” in the form of property taxes + association fees. In some cases this is equal to what I pay now in rent in my dingy little apartment, but in many cases it was more. In a few cases it was quite a lot more.

2) You have to buy the condo of course, and therefore you have an enormous opportunity cost. You cannot invest the money instead. For example, say you purchase a condo for $219,000. Not only do you have to pay “rent” now (in the form of property taxes + association fees) but you also miss out on a cash stream of about $900 to $1,000 per month (if you get around 5% return on your money, that is not outrageous to expect from what I have seen so far).

In other words, the capital that you wrap up in buying a condo (or a house for that matter) could be earning you interest + dividends to the tune of about 5 percent or so. Some may argue that it is not reasonable to expect 5 percent on your investments but from what I have experienced and seen so far I do not think this is unrealistic.

A lot of people think that if you can afford to a buy a house you would be a fool to do so in order to start “building equity” but I am not seeing this as that great of an investment compared to paper assets + renting.

A lot of those condos are darn nice but I have to do a thought experiment with them: If someone gave me one of those condos outright, would I live in it and pay “rent” of around $500/month? Or would I sell it, invest the money, and add to my monthly cash flow stream….while continuing to live in my dingy apartment for $470/month.

When you “build equity” in a home you are betting that real estate will go up and up and up. Bad bet! I am more concerned with monthly cash flow these days, and have no problem living in a dingy apartment for now while driving a ten year old car.

The luxury is so nice when you walk around in it and get a taste of it, but it wears off fast. Freedom lives on. Not having to work like a slave is priceless. Not being trapped with mortgage and debt is true freedom. Having enough capital to pay your living expenses is true freedom.

I am still feeling my way around these issues, still sorting out my level of frugality, etc. It is easy to be tempted by luxury and opulence. But I would rather have my freedom. I remember what it was like to go to work every day, knowing that I had to keep doing it, for many more years or even decades. That burden is gone now, unless I want to live like I am rich.

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