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These past couple weeks represent the biggest shift in my understanding of personal finance in many years, maybe even decades. Things that never made much sense to me (and which I dismissed as foolish) now make a lot of sense, and my own plan for how I manage my finances has changed drastically. I also have a much greater understanding of what is happening in the economy (for example, why the stock market is so high when things are going so poorly).
It all started with Mark Zuckerberg. I read online somewhere that he bought a 6 million dollar house and got a mortgage for it. Why would you get a mortgage for a house when you're a billionaire?
This led me down a rabbit hole and made me realize that extremely rich people treat personal finance in a fundamentally different way than you and I do, and that their approach can be scaled down and used by normal people like you and me (if you're a billionaire and I have offended you by calling you a normal person: sorry).
I've been asked a lot recently about how I manage different priorities and how I translate those priorities into day-to-day actions. It's always a good question, but with many of us finding ourselves less distracted with travel and entertainment, the question is more relevant than ever.
Let's go through a quick exercise to help solve this problem in real-time.
First, write down the areas of your life that demand your attention or those in which you would like to make progress. A simple version might be
1. Work2. Fitness3. Relationship4. Social Life5. Learning
I've been studying Japanese tea ceremony for a little over a year now. The way you learn is by watching people who are better than you, trying to imitate them, and then receiving corrections from your teacher.
There are dozens of types of tea ceremony, but the simple ones you do as a beginner last for about 15-25 minutes, depending on how many guests you have and how quick you are. In that time you perform dozens of steps, and most of those steps have a lot of nuance to them, so you may have gotten a certain amount of water from one container to another, but you may have done it all wrong.
In that way, it reminds me a lot of ballet. There is a precisely correct way of doing everything, and even if you do it for years there is still room for improvement on even the most rudimentary movements.
At first I thought that I was great at it, because I received very few corrections. Then as I got better I realized that teachers usually only correct a couple of the biggest mistakes so that you have something to focus on. Like so many other subjects, you constantly realize just how incompetent you were just a few weeks ago.
As I mentioned in my last post, one of the things I did recently was move Sett to a new server. This is a task that I had every reason to do five years ago, but had been dreading and putting off. It was never that urgent, wasn't moving me closer to any major goal, but most importantly it just sounded like a miserable project.
The most daunting part of it all was that all of the software that Sett relied on was horribly out of date. I was two major versions of PHP behind, and each of its 5-10 dependencies was certainly either obsolete or out of date. Of course, as time went on this disparity became even greater, making me even less likely to want to do it.
At first this cost me about $170 a month, then I finally downgraded our server (but used the same image) to save about $40 a month. Overall, it probably cost me about $10,000 to not move servers! Even greater than this cost is the constant burden of knowing in the back of my head that I should move it and having to make the decision of whether or not to do the work.
Finally, in quarantine, I decided to take a stab at it. I resolved to spend half a day working on it and reassessing from there. If it was going to require too much of a rewrite I would try something else. It was hard to know exactly how long it would take, but it felt like a 5-7 day project to me.
I've been quarantining in Las Vegas for four months now, so I thought that it would be fun to write about how I've used that time so far, especially because I've done a few projects that wouldn't have gotten done if I weren't here for so long. Presented in roughly chronological order:
1. Rewrote lots of CruiseSheet
I'm not sure how other people do it, but when I create a new project I tend to just jump in and start making it. That means that some of what I start out with wasn't exactly suited for what the end result was, so I get a little bit of accumulated kludge. I had noticed that it seemed like the number of available cruises would slowly decrease over time, which didn't seem to reflect reality, so I took a deep dive on the data import section and found the error. While I was under the hood I also fixed a bunch of other minor things that had been bothering me for a while.
2. Got back on a perfect gym / eating schedule
I see a lot of people struggle with motivation, especially those who are already doing well. That represents a big loss of potential, as those who have already achieved some level of success are demonstrably able to channel motivation into output. I have some ideas on why this happens and also how to combat it.
While I think that it's important to be able to work with as little motivation as possible, there's no point in making things harder than they have to be. Working is easier and more enjoyable when we are properly motivated, so learning to motivate ourselves is a valuable skill.
It is possible, and maybe even preferable, to be motivated by work itself. I wrote a whole post called Love Work about this many years ago. If you are not able to love your work and be motivated by it, you are definitely in the wrong field. However, all of us go through periods of time when our immediate tasks are not overly motivating. I spent the last two weeks totally rewriting code I had already written, which is really hard to get very excited about.
Think of external motivation as the starter to your productivity engine. Work is usually most motivating when you're in the zone and in the middle of an interesting problem, but sometimes we need a push to get there.
A reader emailed me recently and asked how I'm able to have such a great group of friends who are so adventurous and into crazy ideas like buying an island and other properties around the world. I certainly don't take my friends for granted, but because I'm surrounded by them constantly I do sometimes forget just how unusual those types of people are.
I've said it a million times, but I do feel as though my greatest assets in life are my friends and family. This is, or at least should be, true for almost everyone because no other part of your life has the potential to bring as much joy as other people.
And yet... people don't really think much about friendships or put all that much effort into them. Think about how much proactive time and effort people spend on their careers compared to the people around them. Career is important, but not as important as people, and yet most people are far more eager to work on their career.
If you want to have an excellent group of friends, you must commit to that goal and be willing to work towards it, not just hope it happens (spoiler: it probably won't).
Beginning around high school, one of my major core values was paying the least possible amount for everything. I was always trying to figure out how to get things for massive discounts or to orchestrate some complex trade so that I got whatever I wanted for free in the end. I got so good at it that my first real income-producing business was in high school when I was buying and selling Palm Pilots and Apple Newtons. I started that business with the purchase of a $70 Newton and never invested more outside money into it.
Being frugal can be good. At it's best, being frugal is the practice of deciding whether you actually need something or not, whether it will be worth it to you, and carefully stewarding your money. Most people should probably be more frugal.
Over time, however, I realized that my frugality had turned into something different. I felt as though I didn't win unless someone else lost. When I went to a buffet, it was important to me that I ate so much that the casino lost money on me. Either I was the sucker or they were the sucker, and I didn't want it to be me. One of the best things at the Bellagio buffet was the pesto mashed potatoes, but I would only allow myself tiny amounts of them because I didn't want to fill up on cheap potatoes.
My business immediately after the Newton trading business was professional gambling, which was very much a win-lose situation. The casinos were trying to force me to lose and I was trying to do the opposite to them. The experience of being a professional gambler was very valuable to me, both financially and mentally, but I wonder if it helped ingrain into me that idea of not wanting to enrich companies.
I don't keep very close track, but last year I went through emails and discovered that I had purchased about 100 plane tickets for that year. Many were short hops to reposition and sometimes one trip would be three different tickets, but still-- that's a lot of travel. And now, I've flown twice in the past three months. Once to help my mom move across the country and once to visit some quarantining friends in Florida.
If you'd asked me a year ago what the chances were that I would fly only two domestic trips in three months, I would have said about zero. And yet... here we are.
It's rare to get such a big change in behavior, so I thought I'd write about a little bit, as much for future me as for you.
The biggest surprise is that I really like it. The first week or two was novel. The next two weeks had me searching the map to see if there was anywhere I could justify going, knowing that the answer was no. And since then I've been loving it. Paradoxically I can't wait to travel again and know that I will as soon as I can, but I also sort of hope the lock down keeps going for a while.
Before getting into this post, I should come clean: there was actually one friday about 450 days ago where I thought that I had already done the day's puzzle but I hadn't. So far that reason I haven't actually done the puzzle 800 days in a row, but rather 800 days with one day missing. Ok, it feels good to get that off my chest.
Three years ago my family came to visit me in Budapest. My younger cousin, with whom I tend to be both cooperative and competitive with on just about everything, had printed out a few crosswords to do on the plane. I immediately felt that if she was getting into crosswords I should also get into them, so we started doing puzzles together. The New York Times puzzle ranges from Mondays (easy) to Saturdays (hard). We were doing Tuesdays and Wednesdays with some difficulty, but it was a fun challenge.
Fast forward a few years and we both do the puzzle every single day (except that one Friday) and we share our times with each other. The rules are simple: no cheating, no using the built-in check or reveal feature, and the puzzle must be done before midnight EST. At first my extra ~15 years of experience on this earth played to my advantage and I would beat her almost every day. Now her intelligence and quickness has overcome that advantage and I win 1-2 times per week average. Some weeks I don't win at all.
Even if I'm not able to beat my cousin, I'm pretty good at crosswords these days. The last time I wasn't able to solve the daily puzzle was over two years ago, and my median times range from around 3 minutes for a Monday to 10-15 for a Saturday (lots more variance there, so I'm not sure). Besides being a lot of fun to do the puzzle (just like my daily Chipotle, I look forward to it all day), I've learned a lot through doing the puzzle.