Or when does obsession with accumulating more wealth become an issue?
I’ve had a lot of fun recently engaging with different “FIRE” (Financially Independent Retired Early) and hobby-investors through different channels (mostly Twitter). The resulting motivation to from being mindful of how big impact small additional income streams become over time when allowed to compound has been much of my drive for posting daily in January, also when sitting down to write felt like a real hustle. I also think that the take-aways can be very helpful in so many aspects of our lives. Whether it is to understand that we don’t need a tonne of “things” to be happy, and get off that never-ending desire-train of craving expensive stuff, or the financial benefits of the outcome of rigorous saving and investing. But at what point does it go too far?
Time spent hustling to earn time for what?
I'm certain that most people can benefit greatly from adding some portion of minimalism and disciplined saving and investing to their daily lives. But on the spectrum from the person who lives pay-check to pay-check on one end, and the guy who lives on pasta and oatmeal despite earning six figures on the other, where does a better balance exist?
Looking at the common mantras shared in the FIRE community present some suggestions of where "too far lies":
“Never increase your spending, only increase your investment as your revenue grows!”.
“The most important currency is time, thus spending money only postpones one’s freedom”.
You get the idea. The encouragement is always to limit spending whilst hustling to increase the amount of money that one can invest and let compounding do its thing. But at what point is this merely an act of sacrificing one’s youthful years in the hopes of something greater later on? How much time is it worth spending hustling to reach financial goals? At what point would someone more interested in maximizing their total well-being throughout life, rather than just the dollar figure in their portfolio tracker, think that time is better spent elsewhere? Or that money would be better allocated towards something else than another rental property?
In short, I have two questions that I’m now asking myself more often:
- Am I letting go of too many opportunities to just have fun, travel, go out, simply to hustle for something that won’t make me happy?
- Now that I am in a quite good place financially, is the goal simply to grow more wealth? Or is it to have the means to bring something to the world that I want to see happen?
Thinking beyond wealth as purchasing power
When we talk about being financially free, people will have different things in mind. Listing reasonable goals from low to high could be to have enough wealth to the point where:
- Money is no longer a source of stress and worry (out of bad debt)
- The need for more money does not make you work a less desirable job
- You don’t need an income to sustain your current way of life
- When you can do anything that you can think of without considering the prices of goods and services.
The typical “FIRE” goal is to reach number 3. Namely to have a portfolio of assets that provide sufficient dividends to sustain a decent lifestyle. To others, 2 may be enough, although it is still often hard to let go of a better-paid job in order to have more time and less responsibility. Yet, I can’t help but see a certain flaw in each point.
All of the above are based on the assumption that money is there to be spent on yourself. Now, I’ve always pitied those who have such a narrow view of what money is and what it can do. You’ll often hear people with this view of money say something along the lines of: “Nobody should have a billion dollars”. When trying to back this up, people then tend to translate how much money one would have to spend each day, month, or year in order to spend a billion dollars. Naturally, the conclusion is that nobody can reasonably spend a billion dollars. But this fails to realize that money, and net worth especially, isn’t just purchasing power, it is also the ability to allocate productive assets. If I have a dream to see a growing space sector in Norway, I may want to have a billion dollars in order to invest and help grow companies to realize that dream.
So at what point would you consider yourself so wealthy, that you care more about what you are creating than how much you are obtaining? If you already have achieved nr 3. on the list, will you be happier pursuing number 4. in order to also have a yacht and this vacation house then you would be investing in a few startup companies that did something you found truly exciting and meaningful?
I pose these questions out loud because they've had me thinking for a while. We are all so lucky to be a life in an incredible time where we can travel the world and see and experience what only a lucky few could do for almost all of our history. How much of that time is worth spending staring at crypto-charts?