Hierarchy of Importance

I want to share an idea I’m seeing over and over again.

This morning it just came up again regarding a pancake recipe.

For so many things, there’s a hierarchy to the orders of magnitude of importance, and it’s something like this:

1. What’s absent.
2. What’s present.
3. Timing/Sequence
4. Quantity/Intensity

Examples:

Diet
1. What foods you never eat
2. What foods you do eat
3. When you eat each food
4. How much of each food you eat

And you’ll see many people thinking #4 is important (counting calories), when #1 is many times more important than #4.

Athletic team

1. Who’s not on it
2. Who is on it
3. Substitution schedules
4. How many minutes each player is on the floor/ice/field

#1 is wayyyyy more important than #2. A pro basketball team can’t win with 1 or more unskilled players (#1 is that all non-pros aren’t allowed on pro teams), and a far smaller difference is which pro players happen to be on each particular team (#2) and on down the list. In pickup basketball or volleyball, you see #1’s importance in the way a team always attacks the opposing teams’ weakest link(s).

Cooking

By adding “wrong” ingredients (violating #1) you could ruin any dish. Get the ingredients you do use mostly right (#2), and you can often miss 1 or 2 of them and still be OK. (#3) What order you combine things in matters quite a lot, but not as much as which things you combine. (#4) Whether 1 vs 2 teaspoons of salt, 4 vs 5 eggs, 1.25 vs 2.5 cups of sugar makes relatively little difference.

How to Play Wii Smash Bros, SNES Mario Kart, N64, on Mac for $30.

I use 2 different emulators, 1 for wii/gamecube, and 1 for everything else

OpenEmu

and

Dolphin

Then I just bought 4 controllers on ebay for $7 each. These ones are nicer, and $8.5 each. Couldn’t find the $7 ones today. Also available on Amazon: PS3 USB Controller for a few dollars more.

Most classic game ROMs can be found on emuparadise, but I think I had to torrent the bigger 8gb Wii ISOs for Smash bros, Mario Kart, FIFA, etc.

We often have 4-player Smash Bros Brawl and Mario Kart game nights with this setup with an HDMI cable from the MacBook Pro to the TV.

After 5 Years of No Cell Phone, I Bought a Phone

So I’ve been on the free google voice over wifi cell phone plan because wi-fi is cheap/free and ubiquitous. But tonight, I found a plan that made me purchase a used phablet with LTE capabilities.

Why?

Because there’s finally a FREE phone/text/data plan in the world!

It’s only 500MB data for free, and 200 minutes of talk, BUT, 500MB is about 730 minutes of Google Voice calls… or 1500 minutes of talking on more economical VoIP apps!

Check it out:
100% Free Mobile Phone + 500MB 4G data

They offer BYOD for any Sprint-compatible devices (so you can buy a used Sprint-compatible phone or tablet like I did, for 1/3 the price)

There are also plans with more talk/text/data for more money per month, similar to Republic Wireless.

Shoes Are Not Made for Feet

Here’s my foot.
IMG_20150613_150454
It is a size 10.5 in length. It is average width.
It’s resting inside the insole of a size 11.5 4E (extra wide) shoe.
IMG_20150613_150439
Why is a shoe 1 whole size bigger than my foot, and extra wide unable to accommodate my toes?

Here’s me scrunching my toes the way I do in shoes:
IMG_20150613_150531

Here’s the same insole as a template:
insoletemplate

I used this template to produce alpha-channel views of various feet I pulled off Google Images, if they were scaled in length to the length of the insole. It seems my problem isn’t unique:

foot-1 foot-alpha-1
foot-2 foot-alpha-2
foot-3 alpha-foot-3

Is there anywhere to buy shoes that fit feet?

Are there any good reasons every shoe is made ridiculously narrow at the parts where human toes would naturally splay out?

Why the Government is Forgiving $59,000 of My Student Loans

I started with $72k @ 7.8%

I paid $16k for the first few years, while keeping the loans in deferment.

For most US borrowers, I think the most important thing to do is get on Pay as You Earn (PAYE) as soon as you can. As an early retiree, my income qualifies me for $0 payments, and 100% forgiveness after 20 years.

Borrowers who received their first disbursement before 2011 are supposedly not eligible for PAYE, though I know of many exceptions.

Old timers, while benefitting from the lower interest rates (3-4% vs 6-8%), are only eligible for income-based repayment (IBR). Similar to PAYE, but the forgiveness only comes after 25 years.

By orders of magnitude, here’s what I think will benefit most US student loan borrowers:

1. Forgiveness via teaching, public service, PAYE/REPAYE, IBR

2. Paying early, staunching the blood flow by paying loans off in <4 years, before interest compounds. (Contingent on large post-grad salary, which very few grads are landing) 3. Not paying at all. Your credit rating goes down, but you don't go to jail, and as an early retiree/freelancing/self-employing/tax-optimizing person, your wages are extremely difficult to garnish, and your income, if low enough, is not even legally garnish-able. I know many people freak out at suggestions to simply not pay, as the debt is non-dischargable in bankruptcy, but if any significant % of the more than $1Trillion+ US student debt defaults, there will be reconciliation. A negotiation will begin between the federal government and the millions of delinquent debtors. If we all choose to simply not pay, together, now, we are too powerful to ignore, and the lendor gets $0 by punishing us, so they will eventually compromise to get some fraction of the principle back. Also, credit rating is just a tool for you to use to take advantage of dinosaur corporations, stop believing that he who dies with an 850 FICO, wins. The way I see it, there is only one reason to build a high score: borrow cheap money. Our generation is generally not affording houses, so it may be a rational choice to refi house-sized student loans on good credit, pay a couple years, and default. There are many serious inconveniences to trashed credit, but $X00,000 makes those downsides worthwhile to many people, and they should take advantage of the systems that saddled them with high debt, pay them insignificant wages, and overrate their creditworthiness. 4. Refinancing to reduce interest rate Keep in mind refinancing thru private lenders will prevent you from using PAYE or IBR, but, perhaps, you could discharge the debt of a private lender in bankruptcy, while you cannot discharge federal loans. But, you can get a 7.8% loan refinanced to the 3-5% range at most credit unions, refi specialists, and other private lenders.

Buyers’ Guide to Frugal Living

Every few months, I restart life in a new city. I usually fulfill credit card bonus offers while jumpstarting my new life. Assuming you’ve handled housing, this guide contains all you need to live a happy, healthy, frugal life. These are all the items I don’t like carrying in a suitcase that are necessary to sleep, eat, and transport myself around any new city.

The cost of owning these items is usually low, and sometimes negative. As long as you’re selling back your used items on craigslist/amazon/ebay each time you move, you’ll recoup nearly all of your initial investment. On Apple computers, for example, I always make a small profit, so the total cost of ownership is negative. Yes, the market has actually paid me to own and use the last 4 Macbook Pros and Macbook Airs I’ve owned.

For all per year costs, I’m assuming a five-year useful life for each item. You could make most of these things last much longer, making the per-year cost of ownership even less.

Sleep
I love a queen or king latex-foam mattress (this is the high-end luxury compared to covered spring coils most people use) and high thread-count sheets. You can buy a used IKEA bed frame as well, and cost of ownership is very low.

ITEM PRICE /YR
mattress SleepMaster Memory Foam Mattress $144 $30
sheets Italian 1500 Thread Count Sheets $25 $10
TOTAL
$169 $40

Transportation
I like the Denali because it’s the first large-frame bike I found under $250, and it’s brand new! It’s wonderful on gravel and dirt trails through the woods like a mountain bike. I have owned it twice, and never had a flat tire or any mechanical problems. A lady once opened a car door right in front of me, and despite the collision shaking me up, the bike and I finished the ride to work just fine. The first one I resold for about $20 less than I bought it for. The second one I sold at the same price, and over one year at work, I earned an untaxed bicycle benefit of $20 per month, which paid for the bicycle and then some. Considering I sold the bicycle at no loss, owning the bike paid me $240 per year in cash. You can also order it from Walmart, select Ship-to-Store, and they assemble it free. Walk or ride a bus to Walmart, ride your bike home.

ITEM PRICE /YR
denali GMC Denali Road Bike $169 $0
TOTAL
$169 $0, Bike Pays You!

Food, Frugal
Packs up neatly inside the pressure cooker. I would add a spatula from Goodwill or Salvation Army.

ITEM PRICE /YR
pressure_cooker Presto 6-Quart Pressure Cooker $49 $5
knife Kendo Colors 8 Inch Chef Knife $4 $0
cutlery Stainless Steel Cutlery + Can Opener $6 $0
TOTAL
$59 $7

Food, Luxury
Getting crazy with an electric pressure cooker, tons of extra pots and pans, and 4 more knives than you’ll ever need. I would add plates, cups, and silverware from Goodwill or Salvation Army.

ITEM PRICE /YR
electric_pressure_cooker 6 Quart Electronic Pressure Cooker $135 $27
knives Tomodachi Titanium 5-Piece Knife Set $30 $6
cookset 15 Piece Cookware Set $50 $10
TOTAL
$215 $43

Tech
I’ve always used a laptop to work (at companies and for myself). I either buy new from Amazon with cash-back discounts, or used from Amazon/Craigslist/eBay. The last 4 macbooks I’ve owned sold for more than I paid to buy them. I upgrade every 9-15 months, and profit $70 to $240 each time.

ITEM PRICE /YR
macbook-pro-15-yosemite 13″ Apple Retina MacBook Pro $1208 $-100
$1208 $-100

…and that’s all the items that I don’t like to cram into suitcases when moving on flights. I pack clothes, toiletries, and even ridiculous miscellany like tupperware containers, a sewing kit, watch repair tools, an extra backpack, and a ski jacket into two suitcases for a portable life.

How I Retired at Age 27

I’ve always disliked waking up to an alarm, and, double-disliked working for someone else. One day I was feeling depressed, weighed down by my $72,000 of student loans. I promised myself I would run my personal finances like a business or a hedge fund, so I could get out of debt and stop feeling crushed by student debt. In a stroke of luck, I stumbled into Early Retirement Extreme and learned about an alternative to working forever. If you reached financial independence, you could “retire”, and spend your time how you wanted.

I spent that night reading the blog. The next day, I couldn’t wait for work to end. I raced home, and read again until past midnight, until I devoured the entire blog.

The premise was simple, live richly on around $7,000 per year. Most Americans’ biggest expenses are housing, transportation, and food, in that order. If you can choose a housing arrangement close to work and with family, friends, or roommates, and ride a bike or walk to work, and cook some food, you’ll be healthier, happier, and change hours of every day enjoying extra fresh air and exercise. As a side effect, you also save a shitload of money. If you invest this productively, eventually, the income from investments will exceed spending, and work becomes optional.

When I read the blog, I was renting a $750 single bedroom apartment, and owned two cars. Remembering my promise to myself, I decided to move at the end of my lease. I also bought a bicycle.

In the beginning, I biked only 1-2 times per week. I didn’t like biking in the rain, and enjoyed taking naps in my backseat during lunch. I began to bike more and more, getting groceries by bicycle plus backpack.

I put an ad on craigslist to sell one of the cars.

A few weeks later, I moved to a $500 rather large apartment, still close to work, and with full kitchen, living room, washer and dryer. I rode my bike to work consistently, sometimes riding my Electric Skateboard as well.

I was extremely happy during this time. Being out on a bicycle makes you feel alive.

I read some Buddhist philosophy. I remember reading that we live but once, and like a fire, a good life burns completely, leaving nothing but ashes. I set myself on fire, and was saving $1250 on $2500 take-home pay.

I’ve since taken BJ Fogg’s Tiny Habits and Maneesh Sethi’s Hack the Habit courses, which taught me how habits can be added, subtracted, or replaced. I’ve also read a lot of sources that lead me to conclude

“Biking is the keystone habit for financial independence.”

The only way people change is by changing their behaviors. One of the most powerful ways to change a person is to change their identity. Much of military boot camp is about tearing down someone’s identity, and then replacing it with a complete set of new habits: what to wear, how to wear it, how to clean your body, how to speak, how to make your bed, even how to tie your shoes.

But, critically, you don’t have to tear down someone’s identity to activate massive change! There are two other very effective ways to kick off identity-level change.

One way plays upon peoples’ desire to appear consistent. When experimenters solicited a neighborhood for donations to a cause, they would get little money. When they first gave lawn signs to homeowners declaring support for a good cause, and then later solicited donations, people gave a lot more. The reason is they were manipulated into believing “I’m the kind of person who supports this cause” because they had a sign up in their yard, and saw it every day, and didn’t want to seem inconsistent with their prior actions. In another experiment, people had an obnoxious sign for a good cause, which almost nobody would allow in their yard. But, if they gave them free lapel pins for the same cause the week prior, almost everyone agreed to put up the hideous sign. Same principle.

Another way is through keystone behaviors. For example, if you make somebody start flossing their teeth, it ripples out into improved longevity, better credit scores, and all measures of health. The flossing probably doesn’t lower your arterial plaque, but it does make you conscientious, considerate about the future, and changes the way you see yourself. You see yourself as someone who is responsible for their own health, and cares about the future. Then that identity shift ripples out.

I read that when Coach K gets a Duke basketball team together for their first practice, he starts by describing how to put on your socks and tie your shoes to avoid blisters. This might be a keystone habit for championship basketball teams.

Similarly, when I read about people who have become financially independent, almost all of the success stories include a chapter where the person walked and/or rode their bicycle to school/work. It makes you healthy, makes you wealthy, and, because you don’t want to appear incongruent, reinforces your identity: you are exactly the kind of person who makes decisions propelling you toward greater health and wealth every day.

So, after getting into the groove and beginning to see consistent progress, I reached a point where my job wasn’t good anymore. I had originally created my own job as a marketing coordinator, but when the Governor retired, I was replaced by her main marketing person and shunted into QA. I wasn’t really applying myself, so the founder and I wrote a separation agreement with some severance pay and I was laid off.

Then, my grandpa died. My aunt asked me to come help organize his estate, and with no job, I readily agreed. I learned a lot concentrating cash, stocks and insurance, and canceling credit cards and closing down all the little quasi-scams old people agree to accidentally.

I interviewed and got hired at a new job, this time earning $63,000 per year.

I moved to a new city, and this time, I felt like a pro. I found a room in a house for $430 per month, internet and utilities included. It was just 8 minutes’ bike ride from work. I purchased the same bike again, brand new, for $150. I cooked 5 lunches each Sunday night. I was motivated and on the right path, pushing closer to freedom each month.

Highlights
I lent $20k to a property manager friend who buys and rents houses in the hood. $200/mo interest.
I sold 6 appliances for $500 profit at lunch one day.
I sold bitcoin to anyone who wanted it at a 10% premium.
I built micro-businesses (websites) earning $5k/ year.
My savings rate reached 87%. I was consistently saving over $3000 on take-home pay of $3700.

It was the best job I’ve had, and while I loved it, I loved the idea of freedom more. I kept a spreadsheet on my work computer called “Path to Financial Freedom” and I would look at it whenever I needed motivation. Each month, my passive income grew, approaching my projected expenses. Sometime around November, I realized I was floating. Every dollar I earned at work was no longer necessary. I told my manager I wanted to retire, and he was shocked. I proposed retiring at the end of December, figuring it would simplify taxes and everything, but my manager asked me to stay two more months to transition my work to new people. I agreed.

On Jan 31, 2014 I retired, at age 27.

Maybe retirement isn’t your goal. But I think everyone can benefit from practicing these principles.

1. Before I did this, I didn’t believe it was possible. Now, I believe anyone with a job in a “rich” country can retire in under 5 years. If you have crushing debt, a minimum wage job, or kids, it will take longer than if you don’t. But it’s still possible! Many times, the obstacle is the way. Debt often gives people enough motivation to change.

2. It’s important to see how little it really costs to live happily.[1]

3. A gut-level appreciation for quantitative vs qualitative differences. This can be earned through other avenues, but the journey to financial independence illustrates it clearly.

Quantitatively, most people earned 5 and 20 times as many dollars as I did in 2014.

Yet qualitatively, we can buy the same clothes, phones, laptops, stuff on Amazon, and travel to the same places. We eat safe food and have similar internet access speeds. We have access to similar healthcare. We have as much electricity and clean water as we want.

Qualitatively, I might be able to enjoy my food more, spend my time doing what I want, and feel healthier.

Retirement so far
I didn’t feel like I could publish this post, but it’s been one year, and I’m financially stable and thriving. I haven’t woken up to an alarm except to travel or help other people. If friends are getting married, or someone dies, I just go.

I was able to travel to two other countries (three trips), and car camp in all the western US National Parks with my girlfriend because she had a gap year. I’ve read books, spent time with friends and family, and played sports. I work to improve daily on writing, trading, thinking, chess, finances, marketing, physical strength, and health.

Retirement is the best job I’ve ever had.

Reality Changers

Financial Independence
Early Retirement Extreme
Mr. Money Mustache

Business
My thinking was forever changed by this 5-part blog post.
The Millionaire Fastlane
The Personal MBA– Useful mental frameworks for business.

How to Retire in Less Than Two Years

I didn’t like waking up to an alarm clock, sitting in an office in a single geographic location, doing work someone else told me to do, and not going home until someone told me I could. Unlike many people, I decided to do something about it. Between age 25 and age 27, I changed myself. In January 2014, I retired. Now, after a full year since retirement, it’s time to publish this post.

For most people, this idea doesn’t fit with their experiences, so it seems impossible. I approached early retirement as an experiment, curious if it was possible, and sensing that the reward, never having to work again, outweighed the risks, failing, and going back to a job).

Like most people, I’d never examined the assumptions that go into the generally accepted notions of retirement. These assumptions left me believing I would need at least 2 million dollars to retire, and I would need to work jobs for ~50 years until retirement.

Whenever I say I’m retired, people don’t believe me, because I’m young, and my retirement doesn’t fit with their reality, so they try to disprove me, like either I’m not “really” retired, or “that’s nice for you, but it would never work for me.”

“Damn, did you hit the Mega Millions?”
No. I’m not even rich.

“What if I have student loans, mortgage, car payments or credit card debt?”
I began with $72,000 in student loans.

“What if I don’t have a high-paying job?”
I earned $40,000 per year for 13 months, then $63,000 per year for 10 months.

“I need at least 2 Million Dollars to retire!”
I started with a NEGATIVE $70k net worth. I retired with a NEGATIVE $16k net worth.

“But, someday you’re gonna have kids, and that’ll break Early Retirement/Financial Independence!”
Look at Mr Money Mustache for an example of an early retiree with a kid. Children will not ‘break’ early retirement for a financially responsible person. And, the chance to spend time with kids and actually see them grow up is one of the greatest reasons to retire BEFORE having kids. I can’t imagine working a job and parenting at the same time. That sounds much more exhausting and painful than the ‘sacrifices’ I made to free myself from 9-5 work and purchase freedom forever.

“Do your parents support you?”
They did while I was growing up, and in undergrad, (thank you Mom and Dad!), but I’ve been living independently from them for years.

Usually, I try to avoid these conversations, because they’re not productive. I even bought a membership to AARP just so I can whip out the card to prove my retirement to people.

How I Retired at Age 27
I stumbled into some ideas from www.earlyretirementextreme.com and www.mrmoneymustache.com that made me question my definition of retirement, and many of my assumptions about time and money.

What is needed to never have to work again?
Monthly inflow of cash must be equal to or larger than monthly outflow of cash.

If you simplify the problems of retirement with respect to this equation, it becomes easier to take action toward financial freedom.

I realized that permanently reducing monthly expenses has a two-fold impact on retirement. It increases savings per month while earning, and drastically reduces the overall cost of retirement.

What this means is that how long it takes to retire is based entirely on the savings rate.

Money Saved Each Month
Take-Home Money (after tax income)

For a savings rate of 100%, obviously, you don’t need to work anymore, because you are spending 0% of your take-home pay. If you don’t need to spend any money ever again, you don’t need to work to get money.

If you save 50%, you get to take 1 year off for each 1 year of work. If you plan to live for 50 years, you could work for 25 of them, save 50%, and spend the savings for the next 25 years, dying conveniently with exactly $0 in the bank.

If you’d like to see how many years it will take to retire for your savings rate, check out Mr Money Mustache’s The Shockingly Simple Math Behind Early Retirement or Jacob of Early Retirement Extreme’s article on years to retirement vs savings rate.

Of course, people object that there are things like healthcare getting more expensive as you age, and the cost of kids’ college educations, and mortgages.

I would counter that there are also things that tip the equation in your favor:
investments: pay tax-advantaged dividends whether you work or not,
businesses: accrue value with leverage, freeing you from trading time for money,
social security: pays plenty of money once you reach advanced age
medicare/medicaid: free health insurance if you ever need it
technology: makes you 1000x more productive than your parents/grandparents
technology: reduces cost of housing, food, clothing and tools every year
intrinsically rewarding part-time work: usually pays some money

There is generally a consensus that you should build savings to either 20 or 25 times your annual spending before retiring. 20 and 25 are the inverse of 4% and 5%, which are the generally accepted “safe withdrawal rates” on investments, which have netted 7% per year, on average, for several hundred years.

If I agreed with these assumptions, I would have saved until I had $158,000 in stocks and bonds.

But, as you can see from this graph of my net worth, from mint.com, I had -$16,000 net worth when I retired at the end of January, 2014. Yes, that’s NEGATIVE net worth.

Net Worth
Net Worth

I don’t believe in safe withdrawal rates. I didn’t want to waste 3-5 more years working in a job I didn’t enjoy. I wanted to take my life back as soon as possible, and earn the freedom to choose what I do, when I do it, and where.

How I Retired at Age 27

How We’re Killing Racism and Sexism

How much time do you spend on Youtube, Facebook, and Vine?

I’m willing to bet that people will continue posting more and more first-person video from wearables like Glass or GoPro. We’ll spend as much time experiencing first-person videos as we spend watching smartphone videos today.

As long as people of different races, sexes, and ages keep doing cool shit, most people will watch their videos.

When you spend a significant amount of your life embodied in bodies of different colors, shapes, and sizes, it will be harder to discriminate against people based on the bodies they’re in.

Don’t think so?

Here’s a Duke professor who reduces racial bias by virtually embodying people.

Have you ever played this game?

Every year we spend more time outside our bodies, and I wager this will radically reduce discrimination.