Just released. My interview with Clark and Jace on Millionaires Unveiled podcast. Episode #90.

Enjoy.

In this politically correct world we live in today, equality seems to be a big topic of interest. The thing is, equality doesn’t exist, and it’ simply impossible for it to exist. Sure we are ALL equally valuable as human beings. We don’t live in the world of Logan’s Run. No… no one is worthless, discard-able, or needs to be done-away with. But we are not all equal, at least not in skills and strengths. The idea of trying to make everyone equal is crazy. Equality should not be the goal. Equal opportunity is a worthy goal (but it’s probably not realistically possible either).

None of us are equal. We all have different positives and negatives. We all have something we’re good at, and other things we are not. We all have physical attributes that make some things possible and some things impossible. In order to be successful in life, you must figure out what your strengths and weaknesses are. You find self-worth in finding what you’re good at. And contrary to the popular belief of working hard on your weaknesses, you should really double-down on your strengths. Sure, put some effort into bettering some weaknesses, but don’t waste time trying to overcome something that doesn’t matter in the long run… or worse, futilely trying to overcome a weakness that is impossible to overcome.

I must say, I’ve “had it up to here” with people born in the United States complaining about money, jobs, “the rich”, “can’t get ahead”, telling successful people they’re lucky… all of it.

You know who doesn’t complain? Immigrants. Immigrants who’ve been given a chance to make something of their lives here.

I haven’t posted as much as I’d have liked to in the past month or so. The truth is I’ve been super busy. I was in Arkansas for three weeks helping my son rehab a new rental. I’m invested with him in some Airbnb rentals there. As anyone who’s ever rehabbed a house knows, it’s a lot of work. And the last couple of weeks, I’ve been doing some minor, but time-consuming, updates to software that I designed. When I work on a project, I generally go “all in” and commit full resources to it. Not just to get it done quicker, but I believe good (great) work requires complete focus. If you’re working on something business-related, I don’t believe you can do it half-hearted (at least not in the early years). So I generally work 10-12 hours per day until something is done. That means I’ve been working 70+ hour weeks the last 6-8 weeks. I don’t have a moderate switch.

The truth is, though, when I’m not going all out on a house rehab, or making a minor update to my software, I don’t have to work that much per week anymore to maintain my software company. A “small” software company that has recurring/subscription revenue of ~$700,000/year.

My pursuit of financial freedom started in my 20’s (30 years ago). I did not know anything back then about FI or FIRE, or one of the original books on all of this… “Your Money or Your Life”. I simply didn’t want to have to work and be controlled like my father was at his jobs. My father served in Vietnam in the 101st Airborne in his early 20’s. After that, with his jobs, he pretty much got up to an alarm at 5am for almost 50 years until he died. While I deeply respected my father’s hard work and sacrifices (I’ve never known anyone who worked harder), I wanted more, and I wanted to not be a slave to an alarm clock for the rest of my life.

Fast-forward to 2012, I was finally making some good money after 20+ years of hustle (200+K of profit). I was technically a millionaire on paper by then due to my software subscription business model (X multiplier of net profit with recurring revenue), but I certainly didn’t feel like it. Just a few years prior I was paying off IRS debt (that’s another long story), and I had zero savings. Yes, you read that correct, zero.

I blog a lot about this subject (choices in life), because it really is at the core of all that I believe. The sum of your choices in life will determine where you end up (and with how much money). Of course there are people who get the “short end of the stick”… that’s not you. If you’re here reading this, you’re alive, have internet, you’re doing better than the folks who got the short end.

FIRE: Financial Independence Retire Early

The math of FIRE is simply to save 25-30 times your yearly expenses and live off that savings by withdrawing 3%-4% “forever”. If you spend $30,000/year, you need to save $750,000 to $900,000. If you spend $100,000/year, you need to save $2,500,000 to $3,000,000.

A lot of people seem to think it’s impossible to save 25-30 times your yearly expenses. It’s not. It’s all math and choices.

You’re probably wondering how in the world could Mr. Hobo Millionaire possibly have an opinion about actors and auditions. What you don’t know is I’ve  produced and cast a few independent movies in my lifetime. Seven (7) total movies/feature films in all. None of them have been super successful, but they have been good enough to air on Showtime, Starz, Lifetime, Amazon, and Netflix. In my movies I’ve worked with actors Lou Diamond Phillips, Mimi Rogers, Fisher Stevens, and Sean Patrick Flanery… just to name a few.

Warren Buffett recently released his annual Berkshire Hathaway letter. You can read the whole thing here. I want to focus on a few juicy bits from page 13 of the letter titled “The American Tailwind”. Mr. Buffett spoke of his first investment of $114.75 at the age of 11 (he started hustling at a very young age, but that’s a topic for another time). The year was 1942. 77 years ago. What stood out to me was his analysis of how much that $114 could have grown to in an S&P 500 index fund over that time (if one existed).

If my $114.75 had been invested in a no-fee S&P 500 index fund, and all dividends had been reinvested, my stake would have grown to be worth (pre-taxes) $606,811 on January 31, 2019 (the latest data available before the printing of this letter). That is a gain of 5,288 for 1. Meanwhile, a $1 million investment by a tax-free institution of that time – say, a pension fund or college endowment – would have grown to about $5.3 billion.

Let me add one additional calculation that I believe will shock you: If that hypothetical institution had paid only 1% of assets annually to various “helpers,” such as investment managers and consultants (in other words “unnecessary investment fees”), its gain would have been cut in half, to $2.65 billion. That’s what happens over 77 years when the 11.8% annual return actually achieved by the S&P 500 is recalculated at a 10.8% rate.

His $114 would have compounded into $600,000. Think about that! We’re not talking about starting with $114 and adding a $100/month or $1000/month. No, we’re talking about compounding only the $114. That takes my breath away. That’s astounding, even if over 77 years (which is just about a lifetime).

And $1,000,000 would have grown to $5.3 billion… yes, billion with a “b”.

A couple of weeks ago, I ran across a story of a semi-famous radio host who had passed away. I didn’t know him, and I had never heard of him, even though many seem to know him. I’m not going to mention his name, because I won’t be pointing out very kind observations about him and his life.

The reason he jumped out at me was because of how many people have talked about the impact he had on their lives. He evidently spoke a lot about small business and entrepreneurship.

What others said about him…

I highly respected [person], listened to him every morning when he was on [radio station]. I spoke to him both on the radio and in person more than once. 

[Person] taught me a ton! Will be greatly missed…

Your heart toward small business and entrepreneurs was incredible. Someone should start a [The Person] Foundation, whose sole purpose is to help, encourage, and support small business and entrepreneurs.

What does this have to do with GoFundMe and Financial Planning?

He apparently had no net worth and no life insurance in place.

Yes, you read that correctly.

I’ve made a number of dumb, bad, financial decisions over my 50+ years of life. But the single, dumbest, financial mistake EVER… was buying a set of encyclopedias. I know what you’re thinking. Oh, that’s not that bad. At least encyclopedias are educational and you can get a lot of use of them! Yes. Yes, but…

But… Except…

Except for the fact that I was in my early 20’s, newly married, we had NO other furniture except for a bed, and the rest of the apartment was 100% empty. Why did I buy them? Because it came with a “free” TV, and I didn’t have one. And I bought these from a door-to-door salesman at an apartment complex. I spent around $1000-$1500 for them.

Mark Gastineu was a great NFL defensive end for the New York Jets. Some time in the 80’s, he started the NFL craze of over celebrating a tackle. In some ways it’s kind of entertaining, but ultimately I believe it sets a bad example (more on that in a moment). At this point in time (20 years into the 2000’s), it’s gotten out of hand in the NFL. We now see players over celebrating a tackle even when their team is losing! I also understand that the Madden football video games had a big affect on current players, too. They grew up watching the video game characters over celebrate, and now they are modeling that behavior.

What’s wrong with over celebrating?

I believe it sets a bad example, because it models incorrect behavior in terms of competition, struggling, and perseverance. Long term success takes years, not one day or one moment. Yes, professional football players have put years into being where they are, but on that day, the “success” goal is to win a football game, and to win multiple games over a season, and win in the playoffs, and eventually win a championship. The goal is not to make one good play.

Let me say from the beginning, before the PC police show up, by “beat most people”, I’m not wishing any ill-will towards others. But if you don’t think life is a competition… you’re losing.

Life Is Hard

Life is very hard, unless you figure out a way early on to be very strategic with your goals. You won’t be able to map out a perfect strategy in your 20’s… or really at any age “perfect” is probably not attainable, but you should try. Don’t wander through life waiting for things to happen to you; work towards making them happen for you.

I wish everyone could be successful in some way. Most are not willing to put in the work necessary to be successful, though. And if your definition of success is a 9-5 job until you’re 70, 5-10 years of retirement, and then you die… then I wish you well. I’m not here to change your definition of success.

You know how some teens are great at sports (gifted naturally to be the quarterback, running back, linebackers), popular because of their good looks, or super smart? That was not me. I was only a slightly above-average teen. I say “slightly above average” only because I was I was a pretty good kid, respectful to others and my parents. I was also a member of a church-based boys group much like the Boy Scouts, and I achieved the highest possible rank/awards in that program (achievements were mostly related to camping and nature). That said, I was not super popular, not picked first for sports teams, not the teenager everyone thinks of first (or even second or third). I wasn’t necessarily odd or picked on… just kind of normal and unseen. That all changed for me the summer of 1984.