First Principles

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Why This Site Exists

Personal Finance God, unlike so many others, is not about trying to retire early at 35, 40, or whatever age you define as early.

In fact, research shows that cognitive ability begins to decline when you retire. Why would anyone want to start that early!?

Many people, even after reaching financial independence, continue to enjoy scaling the heights of their chosen profession. Entrepreneurs try becoming investors. Athletes become coaches. Managers attempt to lead successively larger organizations. Or maybe they trying mastering a new profession or craft.

There won’t be any recommendations here to skip your morning latte in the hopes of being able to sit on your couch all day by age 40. We don’t think you landed here and are reading this to find out how you can live a life where you have to deprive yourself of a fucking latte. What’s more, do you want to be depriving yourself during what will be some of your best years? If you’re not even buying lattes, are you going on exciting adventures you will never forget? Yeah, probably not. You won’t be able to do those adventures later, physically, yes, but you also might have other obligations, like a spouse and children.

Another problem with most personal finance writers and the FIRE crowd, is that many/most of them are actually making most of their “post-retirement” “passive” income …. by writing about FIRE! That obviously won’t work as a strategy for everyone!

So if the FIRE crowd are about learning to live with being minimalists, you can think of us as exploring a maximalist style instead.


Minimalist vs. Maximalist

Most other personal finance content boils down to some version of this: go to crazy lengths to minimize your lifestyle so that your annual spending is incredibly low. Put the rest into a low-cost ETF index fund and wait 20-30 years. That way you will be able to “retire” early with less money or wealth than you thought you needed.

That’s not living an incredible life. That’s not freedom when it matters. That’s not a comfortable retirement if you still have to watch every penny.

Who would want to sign up for this? It boggles the mind that millions of people follow this advice. What’s worse is that much of this advice would have its followers living like misers during some of the best years of your life. Why would you save every last penny in your 20s, 30s, and 40s, just to live a mediocre lifestyle later in life, when you won’t be able to do many of the things you could have done when you were younger.

Instead, this brand will explore a maximalist type of personal finance. You get one life and I want you to maximize it. I don’t want you thinking about whether or not a nice dinner fits into your budget by the time you retire.

Instead, your goal should be to maximize your life, where you have enough income and wealth that decisions like that are totally inconsequential. Don’t “learn to live with less,” instead, learn to enjoy the adventure of life and get as much out of it as you can.

Build a Financial Fortress

The main theme of this brand.

Your goal, unlike what other personal finance advice will tell you, is not to live a minimalist, loser’s lifestyle.

Your goal, instead, is to maximize your lifestyle.

Maximize will be different for different people, not everyone will be able to earn the same amount of money.

But everyone should be building themselves a fortress from which they can confidently go out into the world and experience life, take risks, and get after it. But be safe and secure in the knowledge that they can retreat into the fortress when they need to.

Center of the Fort / What You’re Trying to Protect

Your Invested Capital is the core of what you want to protect. This is the money you have invested and you need years to compound and grow into something meaningful. Ideally, it grows to a point where you can perpetually make withdrawals from this amount at a safe rate to fund your lifestyle, but still, allow your net worth to grow.

SBLOC/HELOC

This is your last line of defense. Regular people might use credit cards when they have expenses/liabilities they can’t meet with their income. That is flat-out crazy. Even with a good credit score, you might be paying an annual rate on your credit cards that is in the high teens. If you don’t have a good credit score you might be paying closer to the legal limit of ~30%.

Using an SBLOC or HELOC, however, allows you to essentially create a loan for yourself and typically pay 7% or less annually. See the specific posts for more details, but essentially if you are willing to post some type of collateral (your brokerage account for a SBLOC, your house for a HELOC) financial institutions will of course give you a lower rate.

This can be a great way to create financing for yourself for business projects as well if you are highly qualified to take that risk and have a high probability of success! Please don’t take this as advice to take out a loan against your brokerage account to start an ill-conceived business you are not qualified for. That will end badly as you will still owe the money if your business project doesn’t generate the profit to pay back the loan and you will have your assets seized and sold to pay off the loan.

Passive Income

Passive income should be used to meet expenses/liabilities after active income because in most cases you are going to want to be reinvesting that passive income back into what generated it in the first place. For example, if you’re receiving dividends from a stock portfolio, in most cases, you will probably just want to send up a Dividend Reinvestment Plan (DRIP) and buy more of that stock/ETF with the dividend received to start creating a compounding/snowball effect. Or maybe you have a side hustle generating profits, more than likely, you will be wanting to use a large proportion of those profits to grow that side hustle.

Active Income

This is your primary career and what you will use to pay most expenses/liabilities.

Insurance

While you won’t be using this too often (hopefully), you should always have this in the back of your mind to check if some expense or liability you’ve incurred or need to spend can be met with insurance. These days nearly everyone is covered by multiple insurance policies, so always be thinking of one of your insurance policies will cover it. For example, a few years ago, I had my laptop stolen. Even though this didn’t happen in my apartment, my renter’s insurance policy covered it and I had the money for a new laptop wired into my account in just a couple of days.

There is a balance, which I will explore in an upcoming series of posts, between being fully covered for everything reasonable and paying out the nose and having insurance for everything, most of which you will never use in any reasonable scenario, and becoming “insurance poor.” Generally, you need insurance for large, unexpected and unforeseeable, events that could be devastating to your net worth if not covered by insurance.

What This Gives You

Having this system in place, with multiple layers of defense and your invested capital protected and appreciating in value, will give you great confidence. Far from living paycheck to paycheck, like the vast majority of people, you can then comfortably allocate your income coming into investments and lifestyle spending (recommended percentages and amounts will be discussed in great detail in an upcoming post!).