Since we have been having so much fun, we have been talking about things that are not really linked to achieving financial freedom. Since becoming wealthy is simply the first small step toward leading a long and productive life, these lessons can come in handy. After all, if you take on the Mustachian attitude at a young age, you will live most of your life in a perpetual state of financial excess, meaning that opportunities for personal development and challenges will arise in domains other than finance.
Still, we do not want to mislead any newcomers, therefore sometimes our huge ideas can make us overlook some important subtleties. In light of this, this post will act as a recap of some fundamental ideas that, to many, should go without saying but are nonetheless worth mentioning. Go over them and check if you can already see them.
1. You Don't Try to Gamble Your Way to Wealth:
The other day, I came upon an intriguing article concerning the state lottery system. It gave an account of rural and small-town life in the United States. People in the area buy a lot of lottery tickets every week, many of them struggle to make ends meet, and medical bankruptcies are common.
"You gotta be in it to win it"
"When my numbers finally come up in the powerball, I'm gonna get my life turned around"
...and other such tragically misinformed nonsense.
Every cruise ship on the planet and Las Vegas experience a same occurrence. By feeding their hard-earned little green employees into the cashiers and slots of these rigged games, people enrich the cunning owners with mathematical certainty while simultaneously becoming impoverished.
Let us just conclude this by saying that if your aim is to become wealthy, you should never, ever gamble. That is all there is to it.
The majority of lottery winners and gamblers I have spoken to hold superstitious beliefs in "luck" and "magic numbers." They are not real. Everyone on the earth has the same risk of being unlucky and losing money in rigged games of chance. To win, one must choose to not participate. Understanding the probabilities in every situation and stacking your cards on the side where the odds are in your favor is the only way to become "lucky" in life.
In actuality, playing the lottery and gambling are a double-edged sword of loss: not only are you putting your money at risk, but you are also giving psychological authority over your fortune to forces beyond your control. "I will become rich if the system determines I will, and otherwise I will remain poor" is a victimization tactic you are using. It is an incorrect way of thinking.
To get wealthy, follow these steps: maximize your income, minimize your waste, and invest the remaining funds. And no, investment does not entail purchasing a penny stock or hot tech because you believe it will triple; it is only gambling with marginally improved odds.
2. Windfalls are for buying Freedom, not Jet-skis
A fortunate break or two comes along for almost every diligent worker during their lives. At work, you might receive a bonus or a raise. a substantial insurance payout for minor hail damage to your vehicle. an inheritance or gift from friends or relatives.
Most people promptly go out and spend these windfalls.
"Thanks for your generous gift! I took my lady out to the restaurant we thought we would never visit!"
"The annual bonus was hefty this year, and I'll remember it every time I see that new Infiniti G37x sitting in my driveway"
"Shoes, shoes, shoooooes!"
and other such blunders.
No. Not a single one. When you receive a windfall, you immediately utilize it to pay off your mortgage, your highest-interest debt, your next batch of index funds, or your next rental property. You have not even purchased your independence yet, so why would you exaggerate your lifestyle? Windfalls ought to be perceived as enormous Groupon savings on Freedom.
For a windfall over $5000, you may get yourself one gourmet coffee or a Chipotle Burrito, but that's about it.
3. You Don't Buy Shit you Can't Afford
"I can afford it, and I deserve it", is a common refrain from people with high incomes and virtually no savings. So just a couple of reminders on how to tell if you can afford something:
You most likely can not currently afford "it" if you are experiencing any kind of debt emergency.
If you still have to work for a living, and would prefer to have a choice in the matter, the diagnosis is the same.
Every now and then, if something is truly essential to us, we will all break this rule. But as a general rule, it is a useful one. It saves you from making costly purchases like a $3000 credit card purchase for a pair of cobalt-blue LG laundry machines or a new car.
4. You don't buy things you don't need
Rule #3 can be softened by considering what it really means to "require" something. For instance, a very manly drinking flask with a fierce South American face inscribed on it that was made of leather and animal horns stole my heart during a recent trip to Ecuador.
"Gasp!" was my initial reaction. "This item is ideal! This is something I have to have. I could put some wine in it and throw it over my shoulder when we go to Longmont every week for Bike Night. With this product, I would be seen as amusing and gain more popularity."
I gave in to the illusion, felt the pull of temptation, and decided not to purchase the flask.Why? since I was not looking for a flask when I traveled to Ecuador. Looking back, I discovered that I have never felt that the lack of a drinking flask with carvings of leather and horns has diminished my existence in any way, and I can clearly recall being content in the not-too-distant past without having one of these items.I also thought of the storage area in my basement, full with other interesting items that I never use but still can not seem to get rid of.
Every material object must be looked upon as a lifelong burden. Will its benefits outweigh the lifelong burden? Consider carefully.
To put this principle into profitable practice, just remember this rule: You never, ever go "shopping". You go to the grocery store and get stuff for salads and the healthiest meals you can dream up. And that's it.
You begin a list for everything else. components to replace the damaged faucet. Your old hiking boots are only good for a few hundred miles of hiking, so buy new ones next year. Eventually, when the things on the list start to become important, you set out on a quick, focused quest to purchase only that one item. After that, you go back and take a hot shower to rid yourself of the shopping juice.
Other things you never need to buy: bottled water, packaged desserts and convenience foods, soda, juice, status watches, jewelry, and anything ever found in a "gift shop".
5. You don't Pay to Have Shit Stored
The fact that so many Americans had to pay for the upkeep of a permanent storage space astounded me. No, not for the month following the sale of one house and before to the purchase of another. They continue doing that for years. at least $100 a month.
The Stuff Gods are telling you that you own too much stuff. Craigslist is a new way to keep items that does not cost you money, but instead generates you money. Put items you do not need in there. If you ever need it again, which is doubtful, buy it again.
6. You Don't think of Restaurants as a Source of Food
I share your love of dining out. Maybe even more, since I enjoy the actual great luxury of it each time I indulge. Every time I do it, I think to myself, "Look at me, I am renting this enormous location and paying an army of people to make food for me!"
However, the world is not your own smorgasbord. There are bear traps all across the forest, waiting to entangle and despoil you. As a result, you never go out on the town without making plans for your next supper.
While spending the day in Montreal this summer, my wife and I ignored this advise. We ended up being really hungry after several hours of traveling and were still unable to locate a suitable spot to eat. On Sundays, everything was closed or served pizza or fried food. We eventually located a cafe and sat down with gratitude. After two tacky salads and thirty dollars with tip, I told myself to stick to my own guidelines. Your backpack provides you with sustenance. Restaurants are for well thought-out get-togethers with close pals.
7. You put the Good Shit on Automatic
Recently, I was captivated by the omnipresent stacks of opened utility and phone bills that I saw when visiting family. They clarified that checks were still mailed to pay bills. This is absurd: just as your 401(k) contributions and other investment plans should be automated, so too should your credit cards and utility bills. Why risk missing payments and squander time? There is no use in executing these tasks by hand; instead, devote your time and energy to the goal of truly becoming wealthy.
Update: A few individuals have posted alarming accounts of being overcharged for items like AT&T phone bills in the comments section. I always use a credit card for the automated payments to guard against this (ideally a high-reward credit card to earn some cash back). This provides you with a grace period of one month to analyze charges and the ability to simply stop paying any vendor whose charges you find objectionable. When you do this, the credit card companies are pleasantly cruel on your behalf because the retailer has the burden of proving you owe them the money instead of the other way around.
8. You Stock Up When Things are On Sale
Cheese is very pricey in Canada. 200-300% more than what Americans spend. Still, everyone consumes it. The biggest supermarket chain in the nation offered cheese at costs comparable to those in the US during a summertime sale. There has never been anything like this.
"Wow, look at that", my brother marveled, as he threw one pack into his shopping cart. "Good deal!"
What is missing in this picture?
If kept unopened in the refrigerator, cheese keeps for at least three months. Every week, his family utilizes roughly one pound. Therefore, twelve pounds of cheese, not one pound, should be added to the cart.
This is a mentality that you have to live by if you find a way to save money on something you already own. It cuts down on shopping expenses and time.
These are the obvious suggestions that during the course of the last year's travels, have found their way into my notepad. While any of them may stand alone as an article, I hope that taken as a whole they will impart some of the fundamental principles of efficient living, which are necessary to piece together a happy and productive existence.
The legendary 50-75% savings rate that scares so many people away from my site becomes automatic rather than excruciating after you get that pleasant and efficient life bargain going. The real fun starts at that point.
What aspects of yourself ought to be apparent? Do most people ignore powerful, self-evident lifestyle advice that are common sense?