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March 12, 2014


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I find that people who set goals for their net worth and track their finances become much more focused on building their "wealth" than people who are "stuff focused" and strive to earn more money, but only with the goal of buying a new BMW, bigger house or more clothes.

I know which I'd rather be...

Having a large networth can actually become another thing you have acquired. I don't have a lot of "stuff" and live well below my means. I guess I'm happier having a large networth than having a lot toys but I'm not sure. I would like to do an experiment where I save no money for a year and spend it all on stuff to see if I become more or less happy.

Hoarding is not good either. Why make and save money if you aren't going to spend it on things/experiences you enhjoy?


Accumulating is not the same as hoarding. If you accumulate to reach a goal, then use that accumulated wealth to produce the life that was intended by your goal that is not hoarding.

If you accumulate for the sake of making the pile bigger and then don't ever use that pile towards any goals then that is hoarding. There are people who do that but it's an entirely different scenario / mindset. I do not believe it is fair to compare what is being talked about here with hoarding.

Using the hoarding reasoning can be an excuse to not accumulate wealth and a justification for making repeated spending decisions that can drastically if not completely derail any chance of reaching a long term financially stable position.

It's very important to separate the possession of things from happiness. Most people never make this separation and therefore tell themselves that they'll be happy with a bigger house, a newer car or stainless steel whatevers.

Happiness comes from being satisfied with what you have. My 10 year old car gets me from one place to another quite well. My 4 year old iphone works just fine. I'm happy now, but I want to grow my net worth enough so I can retire by 45. Not so I can buy a lot of stuff or a huge house, but so I will be financially free. To me this means never having to work if I don't want to. I'll also be in a position to help more people without the demands of a 9-5 job.

For us, having a large net worth and investment portfolio is more about providing peace of mind and security than anything else. It's a great feeling when you are completely debt free, can pay every bill on time, and if there is something that you really need then you can go and buy it. It's also about having excellent health coverage, living in a very nice (but not opulent) home in a well kept up, safe, location where you are very happy, and be able to buy the necessities of life as they are needed. Being on the same page with your spouse where money is concerned is also of the utmost importance.

I have also found that it's very nice when you can find your ideal location fairly early on in life, in my case 1977 when I was 43. Then buy a home that is adequate for your family, make improvements both inside and outside and then spend the rest of your days in it. Now that the three children have moved on there's just the two of us in a 4br, 3ba, 2,500 sf home on a 1/3 acre lot in the heart of Silicon Valley but we have spread out to take full advantage of it as well as being able to keep our property taxes very low by not feeling we had to move.

@ Ari

You are correct-- hoarding is not good either.

But, what I have found is that you can have it all as long as you are both committed and patient.

If you spend everything you earn, you obviously never will get ahead. If you save everything, you will have built a big net worth yet never enjoyed it.

However, if you save diligently at the early stages of your career, and you let the power (magic?) of compounding interest work for you-- there is no reason that you cannot garner a win/win. In time, your net worth continues growing without the ongoing need for your assistance and contributions. When your investment gains exceed your contributions--- things really start to get good.

It is at that point that you can start to really enjoy life with fun experiences, luxuries and gifts to help others. Whatever floats your boat.

It is at that point when you can do all of the above while still growing your net worth, without fear of endangering your peace of mind and security ( as Old Limey stated).

Personal finance, to me, is very much like a business. In the startup phase you need to make an investment in time and money, nurture it, and probably not take a salary right off the bat. When the business starts to turn a profit you can start to take a small salary, hire employees to help you out ( a financial planner?) and work on expansion and efficiency. In the later phases, when the business is mature, the business becomes a machine of sorts (if you are lucky), and can provide fantastic monetary benefits to its owner.

@ Old Limey, I agree with you most of the time and I agree with you again. Its all about peace of mind and security. In return for being prudent when I was in the early stages of my career (and avoiding the temptation to keep up with the Joneses)I am now financially secure, sleep easy knowing that I will not be easily derailed because my car breaks down and happy knowing that it really was not that hard to accomplish.

There's another benefit of being prudent, simultaneously with saving enough money so that you eventually reach the state where your "Invisible Slave", i.e. your money, is doing all your work for you.

That benefit is that you will find that the stress that you once had disappears. When you reach that point where you are in a happy relationship, and stress free, you will find that you become healthier in both mind and body.

Out of habit I follow the market quite closely even though I have our money and most of our children's money safely invested in individual bonds (taxable in IRAs, and tax exempt in taxable accounts).

Since 2008 when I moved into the slow lane my main investment task these days is just reinvesting the interest that rolls in predictably twice/month.

It wasn't always like that, especially during the bubble when I was trading hi-tech mutual funds and subjecting myself to a lot of stress inducing volatility.

My guess is the dividing line is what we believe our money to represent. If we take money as a proxy for self-worth, there's very little chance we can ever be happy because we can never win the game, there's always someone with more. But if we see money as just a tool by which to obtain something meaningful, then it's at least realistic to find contentment. Gary feels inadequate only because others around him are earning more, and to him this means that society values him less than those around him. Pete saw the game as did the gladiator of yore who stayed in the ring only long enough to accumulate enough prize money to buy his freedom. He wasn't goaded by the growing adulation of his fans into testing his winning streak. Pete knows very well the meaning of "enough" while Gary never will.

I work in silicon valley and can see firsthand how the legends of the big score make many of those around me who earn close to seven figures completely miserable. It's not always obvious but I think it affects their decision making-- think C-suiters who feel compelled to bet the farm. I bet the desperation is worse on Wall Street.

On the other hand perhaps it's all for the greater good a la creative destruction? Societies that embrace what we might regard as corrupted values may be able to grow faster than those that create happy campers.

@Old Limey - You mentioned in another post on this site how your investments have fared since retirement. You also mentioned a subscription to a database. Do you mind sharing what subscription/database you used?

I would greatly appreciate it and wish you continued success.



Wow! $25,000 a week versus $25,000 a year and feeling rich! I wanna be that person! I'm breaking my jaws right now! Can't imagine how life can be if you follow this path.

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