Make them work for you

With the urbanization, gentrification and economic polarization of modern society, that the developed world is experiencing currently, it is getting increasingly normal to talk about “an elite” that supposedly controls everything and isolates itself from the rest of the common folk.

I don’t know if this phenomenon of an elite is anything particularly new in human history. However, it is clear that the wealth is now getting more concentrated in fewer rich people, and that the western middle-class is getting smaller.

You hear in the media that a lot of people is feeling disenfranchised due to this dynamic, and much of the successful election campaign of Donald Trump was build on this platform.

With this post, I am not going to make any political statement about the matter, but rather highlight how most people can feel like the come out on the winning side of this power struggle with a very simple strategy.

For more than a year now, I have promulgated the minimalist lifestyle as well as the concept of early retirement on this blog, and a funny side effect of this has been a change in my attitude towards the issue mentioned above.

I feel like a winner in the most widespread social battle of our time, and I am not even breaking a sweat in the meantime.

 

My solution

I lead a very simplistic lifestyle, spend my money only on the stuff that matters (which isn’t many things), work in a very low-stress position for a maximum of 30 hours a week, save most of my paycheck and invest it in stocks.

The last part is important.

People tend to forget, what actually happens when we buy stocks in a company: we become the owner – the ultimate CEO!

It is very easy to buy a stock, it requires almost nothing of you and anybody with half-a-decent salary is able to do it.

A guy working in Walmart can become the partial owner of Apple (not a stock recommendation) after a handful of paychecks, and suddenly Tim Cook is working for him!

I often think about how all of the phd’s and master degrees among my fellow citizens are stressing themselves out to give me a return on my investment. I’m not doing anything, I am just giving them 100 bucks, and let them figure out how to give me 105 or 110 back a year later.

They are sweating, I am not, and they are supposed to be the smartest people in the country ?

With a little frugality and minimalism, you too can become the true master of the corporate world in whatever country you live in, and take pleasure from the thought of how the most ambitious people are now working for you. If they are the elite, while working for you, I don’t know what that makes you!

Telling ourselves that we are irrational

You know about the old quote by Henry Ford:

Whether you think you can or whether you think you can’tyoure right.” ?

The essence of this is that our own attitude and perception of our capabilities plays a vital role in our odds of succeeding in anything. And I think it’s true.

Recently I have noticed many examples of people doubting their own capabilities/behavior in relation to their personal finances. They think they are irrational by nature and can’t be trusted with their own money.

Here are 3 examples of this:

  • In Denmark, we have a mandatory vacation fund, where employers are forced to take out a small portion of all employees paychecks, and pay it into this fund, so that employees can apply to have this money refunded to them, next time they can prove that they are going on vacation. Our government is basically saying: “you people aren’t responsible enough to be trusted with the long-term administration of your own money”. So they have decided to take them from us, however temporarily, pays us no interest in the meantime, and the worst part is that people are HAPPY about this arrangement. Even happy about the fact, that this isn’t a voluntary concept because they would not trust themselves to sign up for it, because they think of themselves as being economically irrational, and it is better to let Bigbrother handle their vacation money.
  • I was recently discussing the general concept of insurance with an otherwise really smart friend of mine. He told me how happy he had been about paying for the premium package with his insurance company because his policy had been triggered years earlier, which had meant a nice payday for him back then. After some quick calculations, though, we figured out that he had paid much more to his insurance company over the years, compared to the premium they had paid him on that particular day. He then said: “I know that I could have just saved all the money that I spent on insurance over the years, and been better off in the grand scheme of things, but nobody is able to act like that, so I am still happy with my decision”. (For the record, I am not against all insurance – topic for another day).
  • I also know a lot of people who feels like buying a home is more economically rational than renting because their housing loan serves as a mandatory savings account. I see how this can work, but buying a house in itself is not by default an effective way of saving up a lot of money – watch this video, to learn how renting can be just as smart IF you can manage to save and behave rationally!

I know that we are only humans, even myself :). And I don’t think that anyone has the capabilities to behave perfectly rational in all aspects of life.

However, I am a firm believer, that most people can behave mostly rational by cultivating the right automatic habits over time.

This is the type of journey I have been on for the past 2 years, whereas I didn’t used to save anything for the future when I was younger.

The point is that we can all strive to become more rational and be smarter with our attitudes towards money. But it all has to begin with a belief in our own ability to become exactly that, and that we can make anything happen if we just change one small thing at a time – without forcing it or overloading ourselves with commitments. It has to come slowly.

My first year of working on early retirement: how is it going?

It has now been almost exactly a year since I discovered the early retirement community on the internet when I was immediately hooked.

I found that early retirement was the next logical step to pursue, for a minimalist who seldomly has found a job that he truly enjoyed.

Early retirement is not something I aim for because I dream about laying on the couch all day. It is something I fantasize about because there are many things I want to do in life, that won’t necessarily earn me any money, and so I just need a lot of time.

If there is anything you want to accomplish in life, you must track your own progress, in order to stay on course and fully optimize for success.

So as you might have read about in an earlier post , I keep track of my overall progress in a spreadsheet, on how far I have come in my journey to financial independence.

The basic idea is that I calculate how much of monthly expenses can be covered by the passive income I generate, and so I can either cut back on expenses or generate more passive income to make progress on this goal.

Currently, I only have 2 passive sources of income:

  1. I put aside money every month, and invest them in either stocks, mutual funds or index funds. The basic assumption in almost all early retirement plans is that you should be able to withdraw 4% of your total investment every year and still leave room for continual growth of your nest egg.
  2. Income from this and other blogs, which is comprised of Google Adsense ads and Amazon affiliate links.

At the moment, the majority of my passive income stems from the investments, but as I see and up-trending tendency in my blog income, I hope this might not be the case within the next few years.

 

Getting to the point

So as you can see in the graph below, I have been able to generate enough passive income recently, that it corresponds to about 7% of my total expenses.

skaermbillede-2017-01-10-kl-07-25-55

(The only setback that is visible in the graph, is explained by me cashing out some of my investments, in preparation for quitting my job in the fall of 2016)

This might not seem like a lot, but then again, this actually means that I am retired 2 days out of every month, which is a little uplifting to think about ?

Where do we go from here

It is important to understand, that I don’t actually take these 2 days off every month, and I don’t withdraw the 4% from the investments every year (yet), which means all of my passive income gets reinvested.

This way, I should see even faster and faster progress every month from here on out, which should result in a more exponentially shaped continuation of the graph above – especially if stock prices keeps going up.

One of my goals for 2017 is to make that graph reach 20% by December, and I will, of course, keep you updated on whether I reach this goal or not.

This first year of working on this goal has made me optimistic about the possibility of reaching retirement within 10 years (max) from when I began, which means I should be able to leave the rat race once I get to the age of 37. Let’s see 🙂

Free from authority

I must admit, I have always had problems with authorities to some degree throughout my life. Some might accuse me of having a big ego or being a spoiled child.

I know one thing, though: my parents had a very laissez-faire style of parenting me and my brother, and this has to be part of the explanation.

Because of this, I have always had problematic relationships with teachers in school, bosses at work and politicians that I don’t particularly agree with.

It is only natural for us humans, to mirror everyone around us in ourselves, and so I personally have a tendency to assume that everyone else must also hate their bosses, their workplace and restrictions on their lives in all forms – the same way I do.

So I sometimes wonder why people aren’t more weary of making grant commitments in their lives – to housing loans, car loans, pets they need to take care of for 15 years or even having kids. Don’t they see that all of this raises their dependency on others (as in their bosses)?.

Then again, I have to realize that not everyone is like me. Some people must actually like their boss and their bank.

Nevertheless, I still have to make the argument that many humans long for more freedom in modern society. And this, I think, make sense from an evolutionary perspective, because our psyche has not evolved yet, to being this dependent on external authoritative entities.

My Thesis

Every time we think about evolution, we can (simplistically speaking) forget about this most recent period, where we have had agriculturally based civilizations, and instead think primarily of the longer hunter-gatherer era we had before that.

Back then, we probably didn’t form groups much bigger than 150 people (according to Dunbar’s Number), and it is easy to imagine just how little authority one would encounter on a daily basis in those days.

Obviously, these societies would have some kind of chieftain among them, but rebellions could have quickly materialized once such an authority would get too unreasonable.

For the record, I am no anthropologist by any means, so what do I know? 🙂

My main point here, is that the level of authority that we have to deal with in modern society, is probably a little weird seen from our own biology, and maybe there is a good reason why so many dream about being their own bosses, financially free and influential enough to have a say in how the law system affects their lives.

Maybe, thinking this much about simplicity and freedom isn’t only for spoiled brats (like myself), but something that could enhance the lives of the majority?

 

 

On setting the bar lower

It should be perfectly obvious, that a person who needs very little, has a higher than average chance of having “enough”.
Someone who lives his life in a manner, that indicates he can’t get enough, probably won’t.
This is simple, but the implications of this truth goes further in my view.

A person who dreams of doing creative painting as a profession, can only achieve this, by becoming sufficiently succesful as a painter, that it can provide him with enough (or more). The more he needs, the more succesful he has to get in order to stay in the game.

The simplistic lifestyle can therefore be considered an enabler of dreams.
Whatever you dream of doing with your life, can potentially be materialized by lowering the basic requirements of your lifestyle. It is my guess, that people who follows this advice has a higher rate of success in pursuing their true goals.

For me, cutting expenses, throwing out stuff and reprogramming my expectations of the future, was what helped me quit the job that I absolutely hated, and try something new. It made it a lot less scary.
I was fortunate enough, that I hadn’t let my needs rise in synchronicity with my income, and that allowed me to not get trapped, as I saw many of my former colleagues do.
Now, I am trying something else, and I love it – even though I don’t spend much money on luxury stuff; I don’t feel like it makes much of a difference on my long-term happiness.

If you are starting out from 0 (or in debt even), see how attainable you can make your ultimate goal, by lowering the bar for survival, before you begin putting in more work than necessary.

This is not about being unambitious. It is about ambitiously optimizing your chances of success – and learning about, what is truly valuable in life.

A minimalist drinks coffee

According to what I have observed, the average, modern minimalist/hipster type is a serious coffee snob.

You may, as an example, have seen The Minimalists promote the coffee house they co-own in Florida, or noticed how all minimalist community meetings are held in coffee houses that serves a top-of-the-line Americano.

But I actually think that this whole coffee fascination fits badly into the simple living ideology.
I get the feeling that many simplicity advocates, take all the money they save from living frugally and reallocates them into a new espresso machine, that can apply the perfect amount of pressure to the coffee-making process.

Thereafter comes the reoccurring extra expenses from supplying oneself with single-estate organic coffee from Kenya, that is so sour that only the supreme connoisseur can enjoy it.

This is not to say, that I am against coffee as a hobby. I just see it used as a tool for signaling that you are part of the group way too often.

And as with everything else, the danger of becoming a connoisseur is that you loose the ability to enjoy an average tasting/feeling/looking product. You loose the ability to see how privileged you are, when you drink an average cup of coffee, compared to what options people had available 100 years ago.

The author, Ryan Holiday, explains it so nicely when he says that he refuses to fly first class because he knows how that soon will be the new norm for him.

The bottom line is, I personally try not to get too heavily into the coffee universe, even though I love coffee. I have tried it, but I have also noticed how much self-deception and placebo effect is involved – just like with wine.

 

How I do

I have even experimented a lot with my own brewing techniques, and found that the way they do it on Bali is the best and simplest one.

The Balinese people simply grinds the beans into an extremely fine texture, put about 1.5 teaspoons of the grounds in a cup, dump boiling water on it and stir.

After a few minutes, the grounds falls to the bottom of the cup, and you are ready to drink – just make sure you stop drinking a little earlier than you normally would, to avoid eating the grounds.

There are 3 reasons why I love making coffee this way:

  1. The coffee is unfiltered, which means you keep the precious coffee oils, that both taste good and have some cool effects on your health.
  2. The method is very efficient, in terms how many beans it requires.
  3. The coffee can be made without any equipment, which means you can make your coffee on the road, and you won’t have to buy any kind of machine for it.

This is, by my standards, the best way to drink coffee as a minimalist.

Noise Cancelling Headphones – Like Having a Superpower

On this very blog of mine, I identify as being a minimalist/frugal person. Because of this fact, I always feel like I need to justify it, every time I advise the readers to break open their wallets.

In my opinion, the purpose of being a minimalist is not to spend no money whatsoever. The main idea is to realize, that most of what consumer culture has to offer, is total garbage, and that we should always be very skeptical, whenever someone is trying to sell us something.

However, in some cases, we simply run into products or offers, that are truly worth it, because they add value in a meaningful way to our lives. In those cases, I believe that it is exactly the job of the minimalist to shine some light on these objects, to make the market easier to navigate for everybody else.

Recently, I acquired a product that falls into this category. After considering it for a very long time, I finally took the leap and bought the in-ear, noise cancelling headphones from BOSE.

As I said, it took me a long time to actually do it, since they were fairly expensive, but I always had the suspicion that they might be worth it. They are by no means, an essential product that everyone should own, but they are a really nice luxury to have if one can afford them.

Their main feature, obviously, is the noise-cancelling function. With them, you get a button, that you can press at any time, in case you want to shut out all low-level noise around you. This is truly powerful whenever you find yourself in a train, airplane or even open office, and want to be able to concentrate. I also find that you get a lot less fatigued from sitting on an airplane, when you are able to shut out the constant humming that goes on in the background during the entire trip. If you want to take a walk down the street and be alone with your thoughts in a noisy city, they are great for that too.

They do not make you completely deaf. They just filter out all low-level background noise, and still allow you to hear, what the person next to you is saying. This also makes them reasonably safe to wear in public/traffic.

I say that they are like having a new superpower, although a minor one, because they allow you to concentrate and have some peace, a little bit better than everyone around you – whenever you click the button.

They are great headphones in the classic sense too, and I use them for podcasts and music every day. However, the sound quality aspect is not something I obsess so much about. All I can say is that they are very good in my uninformed opinion.

To be honest, it is a minus that you have to charge the headphones separately every other day with a micro USB cable. But since you can do this, every time you sit in front of a laptop, it is a minor detail in my view.

To sum up: the headphones have my very strong recommendation.

Thanks for reading!

On Actually Needed Something

When you ask the simple question of when the right time is to buy a new item – say shoes – the answer should be clear. It only seems logical to go out and spend money on new shoes, as soon as the old ones stop being functional. At the point where you cannot use them for their true purpose of walking/running, or at the point where people might take you for a hobo by the sight of them.

However, when do we ever get to this point in reality, before we replace them?

I know, in my case, I usually start paying attention to the decline of my shoes’ condition, around the time they are at the midpoint in their lifecycle. I begin noticing that something is slightly coming apart, or a color is getting a little altered from its original state.

At this point, I start “sticking out my antenna”. I check websites and catalogs for offers on shoes I might consider buying, and I begin to consider what brand of shoe I might want the next time.

A “need” for a new of pair shoes has been fully established inside me, even though I am still far from being “in need” of a new pair of shoes.

Then a few days later, when I walk into to a shopping mall or check out a website, I find the exact kind of shoe, or the exact kind of offer I was looking for, and it seems illogical not to take advantage of it on the spot, now that I have found what I was hoping for.

What my monkey brain doesn’t realize is the insignificance of this lucky coincidence, since a shopping mall usually is filled with hundreds of thousands of shoes, and they are almost all on sale during any given three month period.

When I decide to take advantage of this “phenomenal” offer, I feel like I have made a rational business decision, and it therefore only seems reasonable to throw out the old pair – especially now that I have gotten the new ones at such a good price. I have replaced my old shoes, close to twice as fast as I needed to, and I am still way too happy about it.

What I should have done instead, was ask myself beforehand: when am I really going to need a new pair of shoes? When will the old pair no longer be able to serve its purpose?

And then act accordingly, not eagerly.

Or, at least, I should have kept the old ones, until they were truly useless, and only taken the new ones into use then.

I think most of us end up spending much more than we need, due to this dynamic, and it certainly doesn’t only apply to shoes. Because of it, we never get to experience the feeling of actually needing anything. For some reason, I feel like it would be good for us, to experience that feeling from time to time.

It’s worth saying, that this mindset might not apply exactly to groceries and other consumables.

So when was the last time you actually needed something?

//Max

A Case For Not Checking

I remember a few years ago, when the general concept of “social media” was synonymous with “Facebook”. At that point, Twitter hadn’t blown up yet, and there was no Instagram, Snapchat, Whatsapp or what have you.

Those were simpler times…. 🙂

Nowadays, we constantly need to keep up with an ocean of apps, where friends can reach us, news can be delivered to us and stock portfolios can be checked.

In reality, this means you can always feel certain, that somewhere on your smartphone, there is a bit of information that was just updated and that it still hasn’t reached your eyeballs yet.

This further means, that there is always a new little reward/dopamine/adrenaline rush to be had, every time you want it. You just need to check for it.

Now, is there anything wrong with this? Little rewards here and there throughout the day sounds lovely, doesn’t it? WRONG!

I have spent a lot of time thinking about this stuff recently, and come to the conclusion, that it both kills our productivity and happiness in the long run. And let me explain why.

 

Checking kills your productivity

Remember in school, when you had a report due the next day, how suddenly you felt the urge to clean your room? Obviously, this was just basic procrastination, but what it specifically did, was give you an easy feeling of accomplishment, instead of going through the drudgery of actually completing the report.

Later on, you found yourself writing the report at 3 AM, when the time pressure had become so immense, that you no longer had a choice but to write.

The final result would be stress, lower quality of work and a longer time to finish.

Today, instead of cleaning your room, you can just choose to manically check stuff on your computer or smartphone, whenever you want to procrastinate and feel rewarded.

This gives you a falls sense of accomplishment by completing something, that was totally unimportant.  As a result, the big and meaningful rewards will only be delayed due to the many premature rewards.

 

Kills your happiness

The second part of my argument is just an extension of the first.

I believe, that true happiness in life is partially comprised of some sense of meaningful accomplishment.

That means, if all you aim for, is the small and meaningless rewards, like checking your Facebook account, you won’t improve your long-term quality of life, compared to finishing bigger and tougher projects.

 

How to?

I have now made the case, that we should try and stop checking our smartphones several times a day, because it distracts us from the truly important. This will also enable us to stay more present throughout the day.

But how? Below, I suggest a few tips on how to start making this change. It is a tough habit to cultivate in the beginning, just like anything else, and it won’t come overnight. But the following tips have worked for me so far:

 

Be mindful. Try and see, if you can notice the urge to check, before you actually do it. Most times, it is totally automatic, so it would be best to stop yourself and ask, why you need to check whatever you want to check.

Are you sure, that it cannot wait? I’m sure that it can.

Delete non-essential apps from your phone. This point is self-explanatory, but decide what is non-essential, and what is necessary for your day to day life. Also, think about what can be checked on the computer instead, with lesser frequency.

Decrease the number of platforms for communication. As I said earlier, people can reach each other in too many ways nowadays. Which ones do you use (email, SMS, Facebook, Slack, Snapchat, iMessage)? Are there any of them, you can opt out of, in order to simplify your life, and maintain focus?

Set fixed times for checking. Of course, some things do need to be checked sometimes. Therefore, it can be useful to create artificial boundaries, to keep the checking under control. For instance, tell yourself, that you can check X every morning, and then that’s it for the day.

 

That’s it guys, I hope you liked the post, and that it will help you staying more focused in your day to day life.

 

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For further readings on the idea of staying more focused, check out:

–        The One Thing

–        The Power of Less

–        Essentialism

Quality As a Way of Life

Recently I have gotten immensely fascinated with a guy named Josh Waitzkin. He is the author of The Art of Learning, world champion in chess and tai chi and a high level Brazilian jiu-jitsu practitioner.

He has been on two episodes of the Tim Ferriss podcast now, so check those out, if you want to learn more about him.

One of the things he talks a lot about is a concept called “quality as a way of life”. What I personally translate this into is: the pursuit of perfection in everything that you do.

Obviously, it is impossible to do everything in life perfectly, but it is never too late to try and reach for this impossible goal.

This is not about making perfection the criteria for contentment, or even the criteria for anything actually. It is just about having an internal compass, and a healthy set of habits, that will guide you onto the right path at all times.

I love this idea, and I will start incorporating into my life today.

 

If you also want to try this, it will imply two things for you:

You must be mindful. You cannot rush perfection. You cannot fake quality. You must be fully present at all times, and completely aware of what you are doing right now. This makes the concept very closely related to mindfulness.

You must be an essentialist. You cannot take on too many projects or obligations. You must stay focused on only a few things, otherwise, you risk spreading yourself too thin, and you cannot do anything perfectly this way. (Read the book Essentialism for more)  

So to live the life of quality, you must combine mindfulness and essentialism/minimalism – it is no wonder I feel intrigued!

 

The exercise is, to constantly stop in whatever you do, and remind yourself about doing it with quality, until it becomes a habit.

Take your time, take your breaks, think about what it is you are doing right now – how can you do it better? Do you even have to do the thing you are doing?

If something is worth doing, do it with quality.

Be selective and be critical.

 

Breathe with quality.

Talk to your partner with quality.

Work with quality.

Walk with quality.

Read your book with quality.

 

I have always been a quantity over quality kind of guy.

My mantra has been “if it is good enough, I am done”.

Now, I am striving towards a new mantra, that will flip this on its head: “I am not done until its perfect”.

But I am also not going to focus on anything unimportant from now on – I won’t have time for that.

 

What do you guys think?

Would you join me in living this life of quality?

 

Further reading recommendations about the subject:

–        The Power of Less

–        The One Thing