Saturday, January 14, 2006
A Lean Mean Moneymaking Machine
"We are a lean mean moneymaking machine."
So said Moopy to Mopey about six months ago. I've been trying to convince my wife for years of the benefits of getting rich as fast as possible. In the early years past it was to no avail. We used to have lots of disagreements about how we were going to "live" and what types of lifestyle choices we were going to make.
Ironically one of the key issues that spouses differ on--whether or not to have kids--was NOT one of our issues. More on that subject in later posts.
Our disagreements centered more on issues like when and under what circumstances we were going to get a house, whether we would "settle down" and also whether we would eventually purchase a medical practice together. [My wife practices in the medical field.]
Me, being:
My wife years ago (yes she has changed immeasurably for the better :) thought that doing these things, like buying a house and starting a medical practice (or investing in the practice she was currently working in, is "WHAT YOU DO." By this I think she meant you don't question it, everybody else does it too, you frigging buy a house so you can join society like everybody else.
I tend to question things. All the time. It has been profoundly annoying to my wife many times. I suspect it's even more annoying to her because on one or two of these subjects where I questioned the conventional wisdom I turned out to be right. :) Even she would admit it though, to her credit. [You rule, Moopy!]
But one of the things I have questioned in the past, in addition to questioning the wisdom of buying a house and questioning the wisdom of runing/buying into a medical practice, has to do with how to get rich.
The conventional wisdom of course is to put your money into growth mutual funds (hey you're young, you should be taking extra risk!) and having them double several times or something and magically you're a millionaire (or multimillionaire depending on how many doubles you clip) when you retire in 30 years. Well, shit, that DID NOT WORK as of the year 2000 now did it?
I strongly suggest reading this.
Another piece of conventional wisdom was to invest money into your house. Make "improvements"! Add that white stone fireplace! Put on that vinyl siding. Put that Italianate fountain in your front yard. Heck you'll for sure get 87c on the dollar when you sell the house.
Maybe we're squares but we both ended up on the same page...we own conservative investments, either stocks that pay dividends or tax free muni bonds (although we do subscribe to the James Cramer school of thought where we speculate with SOME of our money), and we try and live a really simple life such that we execute well on our jobs and are therefore able to save most of the money we earn.
And the final piece of the puzzle was for both of us to realize that we were DEFERRING lifestyle choices like buying a house or driving fancier cars (or eating out in fancy restaurants or taking really expensive vacations--pick your favorite picuniary indulgence). It wasn't that we'd NEVER get to do these things. Just wait until we have a material third income from our investments and we can use THAT to subsidize and eventually pay for our expenses and indulgences.
I mean don't get me wrong: if you have a de minimus savings rate, you'll have to wait 30 years to have nice stuff. And if for that entire 30-year period you have to live in a cardboard box and wear rags and drive a Yugo back and forth to work (with your brown bag lunch!), then hell, live for today. I guess. That's a time value of money question that you have to answer for yourself. In our case we just made the active choice to live a simpler life which is meaningfully below our means and save the bulk of our income.
So that fine day when my wife uttered those words I didn't feel so much like a harsh killjoy any more. I felt like a good person. A good fiduciary!
Mopey
So said Moopy to Mopey about six months ago. I've been trying to convince my wife for years of the benefits of getting rich as fast as possible. In the early years past it was to no avail. We used to have lots of disagreements about how we were going to "live" and what types of lifestyle choices we were going to make.
Ironically one of the key issues that spouses differ on--whether or not to have kids--was NOT one of our issues. More on that subject in later posts.
Our disagreements centered more on issues like when and under what circumstances we were going to get a house, whether we would "settle down" and also whether we would eventually purchase a medical practice together. [My wife practices in the medical field.]
Me, being:
- the harsh killjoy that I am (yes my wife called me a killjoy once...it's become a complex metaphor now in our conversations), and
- being a methodical financial planner with the long term goal of financial independence for the two of us (or as we call it, getting out from under the boot of the Man), a goal that quite frankly is all but incomprehensible to all of our family members with perhaps one or two exceptions (more on THIS later as well),
My wife years ago (yes she has changed immeasurably for the better :) thought that doing these things, like buying a house and starting a medical practice (or investing in the practice she was currently working in, is "WHAT YOU DO." By this I think she meant you don't question it, everybody else does it too, you frigging buy a house so you can join society like everybody else.
I tend to question things. All the time. It has been profoundly annoying to my wife many times. I suspect it's even more annoying to her because on one or two of these subjects where I questioned the conventional wisdom I turned out to be right. :) Even she would admit it though, to her credit. [You rule, Moopy!]
But one of the things I have questioned in the past, in addition to questioning the wisdom of buying a house and questioning the wisdom of runing/buying into a medical practice, has to do with how to get rich.
The conventional wisdom of course is to put your money into growth mutual funds (hey you're young, you should be taking extra risk!) and having them double several times or something and magically you're a millionaire (or multimillionaire depending on how many doubles you clip) when you retire in 30 years. Well, shit, that DID NOT WORK as of the year 2000 now did it?
I strongly suggest reading this.
Another piece of conventional wisdom was to invest money into your house. Make "improvements"! Add that white stone fireplace! Put on that vinyl siding. Put that Italianate fountain in your front yard. Heck you'll for sure get 87c on the dollar when you sell the house.
Maybe we're squares but we both ended up on the same page...we own conservative investments, either stocks that pay dividends or tax free muni bonds (although we do subscribe to the James Cramer school of thought where we speculate with SOME of our money), and we try and live a really simple life such that we execute well on our jobs and are therefore able to save most of the money we earn.
And the final piece of the puzzle was for both of us to realize that we were DEFERRING lifestyle choices like buying a house or driving fancier cars (or eating out in fancy restaurants or taking really expensive vacations--pick your favorite picuniary indulgence). It wasn't that we'd NEVER get to do these things. Just wait until we have a material third income from our investments and we can use THAT to subsidize and eventually pay for our expenses and indulgences.
I mean don't get me wrong: if you have a de minimus savings rate, you'll have to wait 30 years to have nice stuff. And if for that entire 30-year period you have to live in a cardboard box and wear rags and drive a Yugo back and forth to work (with your brown bag lunch!), then hell, live for today. I guess. That's a time value of money question that you have to answer for yourself. In our case we just made the active choice to live a simpler life which is meaningfully below our means and save the bulk of our income.
So that fine day when my wife uttered those words I didn't feel so much like a harsh killjoy any more. I felt like a good person. A good fiduciary!
Mopey
# posted by Moopy and Mopey @ 7:29 PM 
