Jogging in the park yesterday evening, just outside my home, and whilst carefully social distancing of course by dodging other joggers, dogwalkers and whole families on an evening walk, it became crystal clear to me that a new normal has settled in. Life in lockdown clearly has its phases. The infamous “Storm the toilet paper shelves Panic” is long gone. (Phew!) And “The PM is dying, Long live the queen! Panic” is in the past now too. BoJo is back. Looks like he even managed to keep his weekly appointment with his usual blind circus clown barber. And Amazon prime delivered my River Cottage Handbook No.12 on Booze just in time within a day. So you can let the flood go on for a little while longer, I’m not done yet with my brew here which I promised for the after flood party. And anyway, I’ve decided to start with white Rum based tropical infusions so I’m really not in a hurry. My lab is ready!
And so frankly to me, this whole mess still very much boils down to whether I can maintain my waistline in lockdown not moving as often as I used to than whether I need to urgently go foraging for mushrooms on my next 5K through the woods. Although of course if you were to tell me there’s some seriously worthwhile (read magical) mushrooms out there to be picked and what they look like(please PM me), I just might change my mind. Try me!
But where was I. Oh yeah, the new normal. It is a different mood altogether out there now, isn’t it? And it’s something slightly less entertaining perhaps this time. Maybe slightly more gloomy. Like a grey filter on our late to arrive sunny springy sunshine. And you could hear it in the conversations which have become quite loud now that people maintain a distance to each other so they shout across the park pathways when they more or less randomly meet up with their friends.
Don’t know if this comes as any surprise to anyone but it was all about the money for people in the park yesterday. All about the bottom line. The system error screens can no longer be ignored. The realisation there is largely no real help desk either, you were always unsurprisingly kind of on your own here. And as the social experiment of keeping whole nations at home to protect the health care organisations from over-crowding is still very much on, to fellow citizens, it has become all about the impact on their wallets.
It’s a moment of truth perhaps for many. On one side of the pathway there was this carefree simply dressed almost hippy’ish looking dad figure, who didn’t seem too bothered as he “didn’t have a mortgage anymore and took some vacation” I heard him shouting to his friend, and seemingly relaxed he was enjoying some quality time with his kid. On the other side of the pathway there was his heart palpations suffering character locked in the Upside Down of Stranger Things. A pale more expensively dressed up chap, who could hardly breath from the stress he caused himself via massively inflated lifestyle and debt, or maybe just out of shape, dragging his 3 yo behind, shouting some random complaints back at hippy dad. As if Covid-19 could be issued a formal complaint.
They were both about my age, in their early 40’s, and schooled by the very same University of Boom and Bust the rest of us attended. The Dotcom Bubble of the 2000’s, then the Financial Crisis of 2007/08, and now the Coronavirus Recession of god knows until when and to what end. And they both drew their own conclusions from the very same lectures and these were as diametrically opposed as The Fonz from Happy Days and the Demagorgon from Stranger Things. Or at least some versions of the famous Poor dad Rich Dad from Robert Kiyosaki’s book.
It made me actually think of the Leo Dicaprio starred film, The Great Gatsby, and all those 1920’s party scenes. And then the many stories I once read about the Great Depression massive hangover that followed throughout the 30’s. You had those big shot high flying suited and booted characters who hit the jackpot in The Roaring 20’s from their highly leveraged investments, all made of towers in the air to always sell on to the next sucker. Worked well for a while. Until it didn’t. And the staggering numbers of these financially and mentally fragile Wall Street speculator types, accustomed to the never-ending flow of expensive champagne, Cuban cigars and fancy cars, who lost their very reason to live overnight when the bartender shouted closing time. They just couldn’t handle the idea that their Great Gatsby bacchanal is over and they must wake up the Cinderellas they really were, penniless, alcoholic and begging for change by the side of the road. And so they finished up the last of their glass, every drop of it financed by funds they borrowed from their loan sharks, and stepped off their high towers in the air to their deaths.
A bit too grim eh. Sorry, Got carried away with the description there. But you get where I’m heading here right. I mean I guess no one wants to wake up after a Great Gatsby session like the Roaring 20s. But as always, where some saw nothing but the very bitter end of Jazz in October 1929, others saw just another natural occurrence and a great potential for a new bright beginning!
Those emerging first from the hangover of the Roaring 20’s had their lives built around far more robust values and down to earth financial planning then the Gatsby types. This new hangover era got owned by the grounded robust bad ass types. They passed the stress test with flying colours where their Gatsby colleagues just gave up entirely. Instead of carrying debt and forever slaving to fund their toxic unaffordable lifestyles, these guys carried the cash they patiently stashed throughout the 20’s to get hold of heavily discounted assets or if they didn’t they hurried up to plant victory gardens in their backyards. Yup, the resourceful patient bad ass types always win in the end. (the bums will always loose you hear me Lebowski?).
Most folk just survived of course. Then some thrived. Some others even made a fortune. Take the eternal Warren Buffet for example. Started trading penny stock at 11 yo and now he is the old wise Oracle from Omaha. Or take the crackpot Aviator Howard Hughes. Another larger than life character immortalised by Leo Dicaprio in The Aviator. He had a thing with washing his hands too often even back then waaaayyy before the Covid-19 Recession! Or baseball star Babe Ruth. And the Kennedy family. And the list goes on and on.
It wasn’t all poverty and hardship although for many it sure was. But as Newton’s third law of motion proved eternal once again, then just as now, there is no downside without an upside and every movement has a counter movement. And so the question then becomes, where to position yourself such, that no matter how hard the inevitable crash, financial ruin can’t ever be in your cards, nor your will to live forever gone due to economic downturn. And whilst at the same time such, that you can always at least break even or suffer minimal losses during economic hardship for a while, whilst keeping an upside to be pulled up by the market just as high as the crash pulls others less responsible players down.
Sounds like voodoo but certainly ain’t. In fact it’s quite as stupidly simple as it should be. The answer is obviously, aim to live the most purposeful and happy life you could possibly lead and to having a simple but robust financial plan you follow and that will always keep your head above water no matter how bad the flood. Or in other words, be the hippy dad. Not the Upside Down fella. Capish?
Oh yeah, the 30’s were also the time of bad ass mothe**** Al Capone. Prohibition Era… now that and the Depression must have been the real killer combo.
So a meaningful life. What does that even mean right. For each of us the details would obviously be different. And so I won’t go there. But the basics should be the same I think. To me the penny dropped most recently again whilst trekking for 6 months straight in the South American Andes and rain forests with close to nothing in my backpack and a big happy smile on my face. When I wasn’t balancing on a glacier at 5,500 meters that is. I wasn’t smiling much then. I trust glaciers as much as I trust roulette tables. How very little I needed to be happy though…
That part really came as a complete surprise. Did I totally forget what’s truly important in life whilst in the rat race I’ve lived in the last, wait what, 18 years… And suddenly I needed none of my possessions. Some trekking gear for sure, and also some clothes, the Andes can be freezing. But even most of this gear felt too heavy, too much, as I’ve learned how to put up a makeshift tent and just lay down on the ground for a night under the starry sky.
And so to my surprise, here it was that I thought of what this most simple winning formula I would need moving forward, to be more financially robust and the happiest that I could possibly become. This didn’t occur to me the previous year, whilst traveling often to conferences in expensive flashy cities, staying in five-star hotels and dining in Michelin starred restaurants. The only thing that occurred to me there was how empty all that heavily packed space felt and all that loneliness it radiated.
No, it came to me instead on a cold rock that I sat on, upon a majestic snow-white mountain by the side of a glacier watching the sunrise. There it was I felt I’m on the throne at last. This for me was richess beyond my dreams. A simple campfire and a can of beans beats any Michelin star joint. A cheap hostel with a shared kitchen to cook my meals felt like I was a guest at a Maharaja’s palace. And the endless freedom of the countless valleys and hills a spiritual sanctuary. A cup of the strongest black tea and some cheap animalitos biscuits in the morning, by a deserted shore of a green river in a cloud forest, just before I’d get back up on the raft and onwards sail towards another virgin far away shore, a perfect recipe for happiness. Steaming hot-springs to rest my bones in after hiking for days on end in the freezing temperatures of the Andes, the best 5-star spa no amount of money could buy. Ideally with a bottle of ice-cold local beer of course. And a truck to hop on that will take me back to the nearest town. A red burning sunset on a beach by the ocean with a special someone that I deeply care for… Now that is the stuff to live for!
See, luckily for me it never was about possessions or lack of. The incredible moment when the sun would rise from behind the mountain. That to me was everything I ever needed to be shining bright. That, and the spark in the eyes of that special someone is happiness. How could any economic downturn ever take any of that away from me?
The treasure map that leads to the richest, most purposeful, happiest life you could possibly live is made of the simplest ingredients as far as I’m concerned. Many of these will cost you next to nothing to find, research and implement. This all might be just stating the obvious but I’ll risk it anyway. There should be no black magic involved in getting the very basic steps in Maslow’s Hieararchy of needs right. Not in modern Western society. You do not need a life coach, a guru or a financial advisor unless you insist you must have one. But if you do and they ask to charge you huge sums of money, run to the hills. It’s a fraud! Because really, what is possibly easier than focusing on what truly makes you happy, your health and relationships, whilst completely steering clear of mortgaging your future away?
Step 1. Hippy dad treated debt (read slavery) as you would treat Covid-19. Especially consumer debt. I guarantee you he had none of it. To hippy dad debt is a disease as far as he is concerned. And if you already got infected, put a plan in place to rid yourself from it as a matter of emergency and then focus on the cure, hiking the path to financial independence. So toughen up a little, get creative, be a bad ass and rid yourself of your shackles.
And no you don’t have to plant a Victory Garden although it’s incredibly cool imho, but perhaps as step 2, consider stashing some cash aside for a rainy day (an emergency fund should ideally enough to sustain you for at least 3-6 months), and then instead of mortgaging away your future away, in return for stuff you don’t need and which is often meant to impress people you don’t like and which ends up owning you. Yes, Tyler Durden was right! Maybe consider saving yourself and the environment from all the consumerism, and instead invest every last penny in your future instead.
And so that brings us to step 3. Get your F-you money together. My personal investment regime is made of predominantly tax free schemes such ass SIPPs and ISAs with focus on cheap Vanguard index funds, but you invest of course in whatever portfolio that you believe in and which fits your risk profile.
Work on your version of steps 1-3 regularly and with discipline, and you too will be as robust and care free as hippy dad. And at some point, perhaps you’ll even be entirely financially independent. Maybe even retire from the rat race forever.
Live like the Gatsby highly leveraged party monkey types instead and… Well, you can see my point right?
There’s more to it for sure. Here’s a couple of useful links to help you get started on your path to financial independence. The rest is entirely up to you.
http://earlyretirementextreme.com – Jacob Lund Fisker is a Danish PHD in astrophysics, ERE is a set of principles that are based on a systems theoretic approach to “lifestyle design” allowing each individual to create their own robust strategy to a flexible lifestyle that is resilient to economic downturns and which meets all needs and reasonable wants while minimizing ongoing costs and effort.
https://www.mrmoneymustache.com – Pete Adeney is a Canadian blogger who lives in Colorado and who retired from his computer software engineering job at age 30.
https://jlcollinsnh.com – JL Collins is an American blogger, entrepreneur, investor, who authored The Simple Path to Wealth.
Walden; or, Life in the Woods, is a vivid account of the time that the great American philosopher Henry D. Thoreau lived alone in a secluded cabin at Walden Pond. Changed my life!