Forced Retirement: The Time to Prepare is Now

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Here’s a random thing that happened after becoming financially independent. When I caught this from the movie “Up in the Air” on TV, I felt sympathy but I remember it used to give me stress and anxiety.

Ever since starting out with a negative net worth due to $30,000 in student loans, I’ve saved money every pay period because I worried about what would happen without a job. I wanted my financial life to be a robust fortress. It was a gradual process and not black-and-white, but one day I realized that I longer had to worry about a boss (or worse, a mercenary consultant that looked like George Clooney) firing me ever again.

Barron’s recently had an article (possible paywall but it worked for me) which is really an excerpt from the book 55, Underemployed, and Faking Normal by Elizabeth White. Essentially, it is about people who had well-paying jobs for a long time, but hit hard times in their 50s and 60s:

I never thought it would happen to me. All my life—working at the World Bank, getting my M.B.A. at Harvard Business School, starting my own retail company—I thought of retirement as golfing in Florida (not that I really wanted to). Even after my business failed—taking most of my savings with it—I bounced back. I reinvented myself as a consultant and earned a six-figure salary. But in my 50s, the Great Recession hit, and the clients were slower and slower to call back. By age 60, it was crickets.

With nothing to speak of coming in, I was running through what was left of my savings. I started to notice friends in the same boat, trying to keep up appearances. A small group of us began to talk. All were 55 and older, well educated, with a history of career choice and good incomes. And then the bottom fell out. None of us expected to be here: in our 50s and 60s, scrimping and scraping or borrowing money from our adult children or 84-year-old mothers.

What is her advice for surviving forced retirement? Well, it sounds a lot like what you would read in an early retirement article.

The key question is not just how to tighten our belts. The real question is: Can we cut way back and still have good quality of life, still find ways to be connected to who and what we love? I believe that the short answer is yes.

A big first step in securing our futures is adopting a live-low-to-the-ground mind-set, which means that we have to drastically cut our expenses to fit our new income realities. But it also means figuring out what matters to you and what your priorities are and then cutting way back on everything else.

Once I get beyond the basics, it’s really about good health, family, and friends for me. I used to eat out a lot, and that’s something I still miss. But the women friends I rely on for sanity are all still here. It turns out we didn’t need fine dining and $12 glasses of Chardonnay to bond us.

You should happily spend money on your priorities, cut back on everything else, and realize that happiness is not about stuff. Sound familiar?

The key difference is that this is presented as a last-ditch solution after your hand has been forced. If you combine aggressively prioritized, lean spending with a solid six-figure career for a while, you have the basic recipe for financial independence. It may be much harder because of our various human tendencies, but it can be done.

We live in a culture that creates need where none existed before and defines quality of life as a metric of income. When you’re making money, all of that mindless consumption goes unchecked. When funds are tight you have to think about it. What do you really need to feel deeply grounded and content? You’ll discover that you actually need very little. It really does not cost much to be happy. I’m spending a tiny fraction of what I used to spend, and the world hasn’t ended.

What if you realized that at age 25 instead of 55?

Bottom line. Forced retirement may make you realize that you can live on a lot less money than you spend now. However, perhaps this book can help those who still have a solid job right now that they can also streamline their spending and thus be better prepared for whatever may happen in the future. I enjoyed the writing style in this excerpt and find it relatable.

Wild Book: What Do You Plan To Do With Your One Wild and Precious Life?

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

I’ve been catching up on some memoirs and recently finished Wild by Cheryl Strayed. (I haven’t seen the movie.) I mention it here because the author did a “Big Awesome Thing” in hiking the Pacific Crest Trail and I think achieving financial freedom is also a “Big Awesome Thing”. I thought – What makes a person able to accomplish a “Big Awesome Thing”?

First, instead of rehashing another plot summary for the book, I’ll steal the blurb from Amazon:

At twenty-two, Cheryl Strayed thought she had lost everything. In the wake of her mother’s death, her family scattered and her own marriage was soon destroyed. Four years later, with nothing more to lose, she made the most impulsive decision of her life. With no experience or training, driven only by blind will, she would hike more than a thousand miles of the Pacific Crest Trail from the Mojave Desert through California and Oregon to Washington State—and she would do it alone. Told with suspense and style, sparkling with warmth and humor, Wild powerfully captures the terrors and pleasures of one young woman forging ahead against all odds on a journey that maddened, strengthened, and ultimately healed her.

Cheryl Strayed father also left her when she was young. An excerpt from the book:

The father’s job is to teach his children how to be warriors, to give them the confidence to get on the horse and ride into battle when it’s necessary to do so. If you don’t get that from your father, you have to teach yourself.

In my opinion, the lack of a strong father figure and the early death of her mother left her without the support or belief that she had power over her own life. But by pushing herself to do this seemingly random but difficult task and overcoming many obstacles along the way, she discovered that she did have that power inside. Perhaps each person is drawn to a different “Big Awesome Thing” that can be the first stepping stone to a life lived consciously. Hers was being free in the wild:

It had only to do with how it felt to be in the wild. With what it was like to walk for miles for no reason other than to witness the accumulation of trees and meadows, mountains and deserts, streams and rocks, rivers and grasses, sunrises and sunsets. The experience was powerful and fundamental. It seemed to me that it had always felt like this to be a human in the wild, and as long as the wild existed it would always feel this way.

After that, Strayed could attain happiness and fulfillment because she had the belief that she could change her own circumstances. Her actions mattered. It was worth trying, taking that risk to make your life better. I fear that many others have lost that self-belief and thus don’t even try.

I enjoyed the following excerpt from a poem that was included in the book – by Mary Oliver.

Tell me, what is it you plan to do
with your one wild and precious life?

The Quest of the Simple Life: Escaping The Work Grind in 1907 vs. 2018

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

The Quest of the Simple Life by William J. Dawson was published over 100 years ago; it’s so old that the copyright has expired, making the book public domain (and thus available as a free Kindle download). Yet, other than the old-fashioned writing style that required regular dictionary usage, much of the contents are perfectly applicable today! Here are some excerpts to help prove my point, and at the end I compare 1907 vs. 2018. (Any bolded parts are my doing.)

On the feeling that your family time is lacking:

Let us take the life of the average business man by way of example. Such a man will rise early, sleep late, and eat the bread of carefulness, if he means to succeed. His children scarcely know him; they are asleep when he goes off in the morning, and asleep when he returns at night; he is to them the strange man who sits at the head of the table once a week and carves the Sunday joint. It is well for them if they have a mother who possesses gifts of government, sympathy, and patient comprehension, for it is clear that they have no father. He gets a living, and perhaps in time an ample living; but does he live?

On the true cost of “Keeping up appearances”:

Money may be bought at too dear a rate. The average citizen, if he did but know it, is always buying money too dear. He earns, let us say, four hundred pounds a year; but the larger proportion of this sum goes in what is called ‘keeping up appearances.’ He must live in a house at a certain rental; by the time that his rates and taxes are paid he finds one-eighth of his income at least has gone to provide a shelter for his head. A cottage, at ten pounds a year, would have served him better, and would have been equally commodious. He must needs send his children to some private ‘academy’ for education, getting only bad education and high charges for his pains; a village board-school at twopence a week would have offered undeniable advantages. He must wear the black coat and top-hat sacred to the clerking tribe; a tweed suit and cap are more comfortable, and half the price. At all points he is the slave of convention, and he pays a price for his convention out of all proportion to its value. At a moderate estimate half the daily expenditure of London is a sacrifice to the convention or imposture of respectability.

On the cost of commuting and eating out:

In all but very fine weather I must needs use some means of public conveyance every day; there was a daily lunch to be provided; and when work kept me late at the office there was tea as well. One can lunch comfortably on a shilling or eighteenpence a day; and I knew places where I could have lunched for much less, but they were in parts of the town which I could not reach in the brief time at my disposal. Moreover, one must needs be the slave of etiquette even though he be a clerk, and if all the staff of an office frequent a certain restaurant, one must perforce fall into line with them under penalty of social ostracism. Thus, whether I liked it or not, for five days in the week I had to spend eighteenpence a day for lunch, and fourpence for teas; and if we add those small gratuities which the poorest men take it as a point of honour to observe, here was an annual expenditure of 25 pounds.

Various quotes about those who feel this certain type of “discontent”:

I saw that it was the artificial needs of life that made me a slave; the real needs of life were few. […]

The debate went on for years, and it was ended only when I applied to it one fixed and reasoned principle. That principle was that my first business as a rational creature was not to get a living but to live; and that I was a fool to sacrifice the power of living in securing the means of life. […]

My chief occupation through these years was to keep my discontent alive. Satisfaction is the death of progress, and I knew well that if I once acquiesced entirely in the conditions of my life, my fate was sealed. […]

To the man who detests the nature of his employment as I detested mine, I would say at once, either conquer your detestation or change your work. Work that is not genuinely loved cannot possibly be done well. […]

On looking back having lived his new simpler life successfully for four years:

After four years’ experiment in Quest of the Simple Life I am in a position to state certain conclusions, which are sufficiently authoritative with me to suggest that they may have some weight with my readers. These conclusions I will briefly recapitulate. The chief discovery which I have made is that man may lead a perfectly honourable, sufficing, and even joyous existence upon a very small income. Money plays a part in human existence much less important than we suppose. The best boon that money can bestow upon us is independence. How much money do we need to secure independence? That must depend on the nature of our wants.

Honestly, after finishing the book I was suspicious that it was written as some sort of strange parody, as some of the themes were so similar to what folks face today. But William James Dawson appears legit and wrote several during the same period. Here’s a comparison between Dawson in 1907 vs. a hypothetical person in 2018:

1907: The author worked full-time as a clerk in London, but finds himself dissatisfied with that lifestyle. He worked long hours, didn’t enjoy his desk job, and felt his health suffering in the sooty city air. He calculated that much of his expenses went to simply keeping up everyone else: higher rent, high commuting costs (time and money), paying extra to eat out with coworkers at lunch, maintaining a proper work wardrobe, and so on. He dreamed of a simple rural life. He found a small cottage in the countryside with very low rent. He fished, hunted, and farmed much of his food and paid for the rest with his earnings as a freelance writer for a local newspaper.

2018: A young woman works full-time in a large urban metro, but finds herself dissatisfied with that lifestyle. She worked long hours, didn’t enjoy her desk job, and felt her health suffering due to sitting in front of a computer all day. She calculates that much of her expenses went to simply keeping up everyone else: higher rent, high commuting costs (time and money), paying extra to eat out with coworkers at lunch, maintaining a proper work wardrobe, and so on. She dreamed of a simpler life. A small (tiny?) house or RV on a cheap piece of land. She gained income from her investments, including a rental property (Airbnb?) and stock dividends. The rest was covered with freelance work through Upwork or Elance.

Bottom line. In some ways, life hasn’t changed much in the last 100 years. Some folks will become unsatisfied enough with the commonly chosen path and take the risk of making huge changes. A simpler life with lower costs but more time with friends and family. This doesn’t necessarily mean they have the money for full “financial independence” yet, but perhaps a job more aligned with your true values where you aren’t solely maximizing income.

Evicted: Low-Income Tenants and Landlord Economics in Milwaukee

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

evicted_coverEvicted: Poverty and Profit in the American City by Matthew Desmond follows eight different families who struggled to pay rent in poor areas of Milwaukee, Wisconsin. Around the time of the 2008 financial crisis, the author lived in the same units as the other tenants and rented from the same two landlords, whom he also profiles in vivid detail. Amongst many other major awards, this book won a 2017 Pulitzer Prize.

The eviction cycle. Imagine that you are either in a low-paying job or receive government benefits, but that income isn’t enough to pay for rent, utilities, and food. So in any given month, one of those bills doesn’t get paid. That means eventually you get behind on rent, and eventually you get evicted.

After you are evicted once, your housing options instantly shrink. (Not many landlords want to rent to someone who just got evicted.) Just as payday loans specifically target folks with no other borrowing options, there is a subset of housing units that target folks with evictions. You may be surprised that the units in the poorest neighborhoods can cost just as much as a nicer unit in a better neighborhood (that does background checks). As with payday loans, you could argue lenders need to charge higher interest rates to cover more frequent defaults. You could similarly argue that landlords in low-income areas need to charge higher rents to cover unpaid rent and higher turnover costs.

After some time in shelters or crashing with relatives, you scrape together enough to make first month’s rent and a deposit. But every month, rent again takes up 70% of your income (ex. $500 rent and $700 to $800 income), so eventually you fall behind again. The sink gets clogged. Now, the landlord doesn’t want to pay a plumber $100 an hour when you are already owe them two months of back rent. But if your landlord doesnt’t fix the sink, you’re not going to treat the apartment nicely either. You’re also not going to pay any more rent. Two wrongs don’t make a right, but they do save both sides money (in the short-term). Your next eviction is only a matter of time, and cycle repeats.

Stable housing forms the core of a good community. Forced moves can hurt your employment prospects as you miss work while searching for housing. Forced moves lead to increased student absences or having to move schools entirely. Forced moves cause people to lose valuable property like furniture, appliances, clothing, and other household items.

Landlord economics. I didn’t see that much landlord “profit” when my rough calculations showed they were basically two people working full-time in a highly-leveraged business. Yes, landlords Sherrena and her husband “owned” 36 units and brought in $120,000 in gross rent annually, but that is before paying the mortgage, taxes, maintenance, and the time spent as full-time property managers. There was a constant flow of finding new tenants, fixing up damaged units, collecting partial rent payments when possible, and evicting those who fell too far behind. Every missed rent check was $500 less out of their monthly income. An Amazon reviewer stated that he followed up on the properties and found that by 2016 Sherrena no longer owned any of them (many went into foreclosure). I happened to invest $2,000 into an investor loan backed by an 6-plex in Milwaukee and it also went into foreclosure. I’m sure there are landlords doing fine, but I wouldn’t describe it as “easy profits”.

The mobile home park was a bit different. This seems to be a weird loophole where technically you are only renting a plot of land and a utility connection. The “mobile” home (which never moves) on the concrete pad is simply given free to the tenant, who then assumes the responsibility of maintaining everything inside. The landlord doesn’t have to worry about plumbing, electrical, heat, roofing, and so on. If you get evicted, you can’t afford to move your “free” home, and it gets handed off to the next tenant.

Housing assistance statistics. In 2012, 1 in 9 occupied rental households in Cleveland and 1 in 14 in Chicago were summoned to eviction court. Having an eviction can subsequently disqualify you from future public housing assistance, which led the Pulitzer committee to call this book a “deeply researched exposé that showed how mass evictions after the 2008 economic crash were less a consequence than a cause of poverty.” Here are some statistics from the book:

  • 1% of poor renters live in rent-controlled units.
  • 15% of poor renters live in public housing.
  • 17% of poor renters receive a government subsidy (rent-reducing voucher).
  • 67% of poor renters receive no federal housing assistance.

In addition to the 2/3rd of poor renters with no federal housing assistance, another of the book’s arguments is that existing housing assistance programs simply don’t do enough to help people back on their feet. It’s like if you have a broken leg and you need eyeglasses. You need both fixed to get back to work, but you are only given enough money to solve one of the problems. Even if I give you a cast, you’re still blind. If I only give you eyeglasses, you still can’t walk. Money is being spent right now, but people are still stuck in the same place as before. Perhaps more money upfront would help people get back firmly on their feet.

The author’s proposed solution is to signficiantly expand the existing housing voucher program where every family below a certain income level would be eligible for a housing voucher. The voucher could be used to pay for rent on the open market (but not too luxurious or unsafe), similar to how food stamps work. He proposes a variety of sources for the money, for example getting rid of the mortgage interest deduction.

This book reminded me of Nickel and Dimed by Barbara Ehrenreich from over a decade ago. (Here is her of this book.) Yes, bad decisions can play a role but however you arrive, it is exceptionally hard to break out of the cycle of poverty. You are sensitive to any small setback (car repair, medical bill, theft). Many things actually end up being more expensive when you are broke. Hard work is necessary but not sufficient. You need either a big dose of help (family, friends) or a long streak of avoiding bad luck.

The storytelling in this book is what stays with you. Out of all the families profiled in the book, the only ones that eventually broke the cycle got help from family. That way, they could get everything together long enough to and either land a stable job or finish education/training. The author’s solution is essentially to have the government do that same thing, but the question is whether fellow Americans (strangers) want to help out in the same way (higher taxes). I don’t know about that.

How to Retire Happy, Wild, and Free (Book Notes)

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

retirehappy

After finishing the book How to Retire Happy, Wild, and Free by Ernie Zelinski, I am surprised at how unique it is. After all these years, this may be the first book I’ve read that directly explores the non-financial aspects of retirement. There are no historical rates of return, compound interest charts, or income strategies. Consider:

  • How will you create meaning in your life?
  • What activities will you keep your mind and body in top shape?
  • Who will you spend your time with?
  • What kind of environment do you want to surround yourself?

I’ve already written about two interesting points inside: Listing 10 activities you’d like to do in retirement, and the differences between a retirement activity and a job. Here are the rest of my book notes.

On going back to some form of paid work after official retirement:

A research study released in 2001 by Cornell University psychologists found that, particularly for men, employment after official retirement is beneficial for their psychological wellbeing. Those who retire from their primary career, but then find some sort of other work, are the happiest and suffer the least depression. Surprisingly, the researchers didn’t find much difference for women who go back to work after retiring versus those who don’t. No reasons were given for this important difference between the sexes.

On separating yourself from your job:

Many professionals miss their personal career space and some have been known to rent office space after they have retired to maintain their routine and sense of importance. They’ll tell their friends “Call me at the office,” just so they have a place to go.

For most of us, who we are, is based on what we do. If we become too dependent on this mind-set and our job ends, we lose our sense of identity. So before, or soon after retirement, we need to redefine who we are in a positive and meaningful way. Recycle yourself.

To help with this separation, try listing your five best traits that have nothing to do with work. Here are some possible examples:

ambitious
well-organized
hard-working
creative
kind
passionate
generous
joyful
loving
spontaneous
connected to others
good sense of humor
peaceful
inner happiness
spiritual

On figuring out how to spend your time instead of work. Ask yourself these questions:

  • What gift do I give naturally to others?
  • What gift do I most enjoy giving to others?
  • What gift have I most often given to others?

Some people don’t need any help in this area. They are ready to sail around the world, then bike around the world in reverse, and so on.

However, many others do need some help creating a fulfilling retirement. This book can help. Perhaps you keep on working because you can’t imagine retirement, or you have already retired but find yourself in a funk. The initial “I’m finally freeeeeeeee!!” has worn off. You might even be a little depressed from the social isolation or lack of structure in your life. This book can help.

Why Pursue Financial Freedom: Fulfilling Retirement Activity vs. Ideal Job

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

retirehappy

How to Retire Happy, Wild, and Free by Ernie Zelinski continues to offer smart observations on retirement. For example, when people are working, their idea of leisure is often passive: watching TV, listening to music, shopping, or eating at restaurants. However, in retirement, they need to replace all the intangibles besides money that working provided.

The Academy of Leisure Sciences has 8 criteria for finding a good leisure activity in retirement:

  1. You have a genuine interest in it.
  2. It is challenging.
  3. There is some sense of accomplishment associated with completing only a portion of it.
  4. It has many aspects to it so that it doesn’t become boring.
  5. It helps you develop some skill.
  6. You can get so immersed in it that you lose the sense of time.
  7. It provides you with a sense of self-development.
  8. It doesn’t cost too much.

Did you know even know the existed? Another new tidbit from this book.

My observation is that these are also same characteristics of a good job. Think of your own job and read it again:

  1. You have a genuine interest in it.
  2. It is challenging.
  3. There is some sense of accomplishment associated with completing only a portion of it.
  4. It has many aspects to it so that it doesn’t become boring.
  5. It helps you develop some skill.
  6. You can get so immersed in it that you lose the sense of time.
  7. It provides you with a sense of self-development.
  8. It pays enough to support your lifestyle.

Of course, this brings you to why saving up money to reach financial freedom is a worthy pursuit. The list of things that satisfies the top 8 leisure criteria should be pretty long. It might take a few tries to find something that fits, but you could play any sport, learn to cook, speak a new language, and so on.

However, adding the criteria that it has to pay you makes the list much shorter, perhaps non-existent. Compare picking up cycling for personal enjoyment vs. getting paid as a professional cyclist. Learning how to smoke some decent backyard BBQ vs. getting paid as a professional caterer. Start to speak a new language vs. becoming an (adequately-paid) French teacher. I’m sure some lucky people out there really do have a perfect job where they are getting paid for something that they would “do for free”. However, most of us don’t, so that’s where financial freedom comes in to remove that money requirement.

Non-Financial Retirement Planning: List 10 Retired Activities

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

retirehappyEver notice that every book on “How to Retire” is really just about how to accumulate a big pile of money? I’m currently in the middle of How to Retire Happy, Wild, and Free by Ernie Zelinski, which contains absolutely nothing about mutual funds, real estate, or safe withdrawal rates. Instead, it deals with the non-financial aspects of retirement. What does that mean? Well, many retirees spend at least some time being quite unhappy. They haven’t solved the other retirement problems:

  • How will you create meaning for yourself?
  • What activities will you keep your mind and body in top shape?
  • Who will you spend your time with?
  • Where is the best environment to live?

A recommended exercise is to write down the 10 favorite interests and activities that you would like to pursue in retirement. At the same time, write down how much time you are presently spending on these activities. If you are not spending any time pursuing these activities before retirement, the experts say that you are unlikely that you will spend much time on these activities after you quit work. Many people are surprised when their retirement is completely different from they imagined. They may become bored, aimless, lonely, and/or depressed. A surprisingly large number go back to work!

You need to develop activities as part of your retirement planning, BEFORE you retire. Here’s my list of favorite activities, along with time currently spent.

  1. Time with kids. Chasing bugs and jumping in muddy puddles. Learning new things with them. (Almost enough)
  2. Cooking at home. Becoming a better cook. Know what I’m eating. (4-6 hours a week)
  3. Time with spouse. Enjoying their company. (Not nearly enough)
  4. Play tennis. Social interaction and physical exercise. (3-6 hours a week)
  5. Keep learning about investing and finance. (Enough)
  6. Entertain friends at house. Cook for them. Socialize. (Very little)
  7. Read books. (2-3 hours a week? A little each day)
  8. Build an off-grid shed. Power from solar PV. Tinker with batteries and wind turbines for fun. Water catchment. Composting toilets? (None)
  9. Raise fish and/or chickens. I like to read about chicken tractors and backyard fish farms. (None)
  10. Travel. So much left to see out there. (Few weeks a year)

Right now, most of our non-work time is spent on toddler childcare, so many of these activities are being neglected. This list is a good reminder that I need to work harder on maintaining good relationships my wife, family, and friends. Once all the kids are in pre/school, we’ll see if I actually get around to the rest. Maybe the experts are right and I’ll never build that self-sustaining tilapia farm…

Book Sale: A Random Walk Down Wall Street + The Intelligent Investor

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

(Update 4/7: Random Walk is no longer on sale, but Intelligent Investor is still $2.99.)

randomwalk2018Amazon has the Kindle version of two investment classics on sale for $2.99 each at the moment. These are savings of over $10 from the usual price.

A Random Walk Down Wall Street was the first investment book I ever read that dealt with passive investing. My short-but-sweet December 2004 review was one of the first posts on this site – nearly 14 years ago! (I had read some previous books on DRIP plans and individual stock investing.) I should probably re-read it and see if it holds up now that I have read probably 20+ more books on passive investing.

Another coincidence is that I am currently reading the Buffett biography by Roger Lowenstein, and am at the part where Buffett studied under Benjamin Graham at Columbia University.

p.s. If you are a Texas-style brisket aficionado like me, Franklin Barbecue: A Meat-Smoking Manifesto is also on sale for $2.99.

Readwise: Turn Your Kindle Highlights Into a Personalized Email Newsletter

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

readwise0

I love physical books, but my favorite thing about Kindle books is the highlight feature. It’s really hard to remember everything that you read. This is why I try to condense my handwritten notes in my book reviews. I’ll let The Atlantic explain .

syncs with your Kindle highlights and then sends you a daily digest with five highlights taken from books that you have read. You’ll need to install a browser extension. It can include Kindle highlights done outside of eBooks, iBooks, Instapaper, and PDFs.

Here’s an example of what I was sent the other day. (I scaled it back to weekly emails.) Much of my reading is about either finance or biographies. A lot of personal finance is in the “simple but not easy” category, so it’s helpful to keep things fresh. Some of the highlights lack context, but I have found most to be useful.

The Elements of Investing by Burton G. Malkiel, Charles D. Ellis.

Rebalancing will not always increase returns. But it will always reduce the riskiness of the portfolio and it will always ensure that your actual allocation stays consistent with the right allocation for your needs and temperament.

Skating Where the Puck Was by William J Bernstein.

To complete the picture, the traditional source of portfolio diversification, international equity exposure, has likewise tarnished; with increasing market globalization, the correlations among equities around the world have crept ever higher.

The Most Important Thing by Howard Marks.

Risk means uncertainty about which outcome will occur and about the possibility of loss when the unfavorable ones do.

The Last Lecture by Randy Pausch and Jeffrey Zaslow.

“…The brick walls are there to stop the people who don’t want it badly enough. They’re there to stop the other people.” I was a thirty-seven-year-old bachelor when Jai and I met.

How does Readwise make money? From what I can tell, right now it is free during “beta”. They have a VIP level that cost $5 a month or $50 a year. I don’t think I would pay that much, to be honest. My suggestion? At the end of each email, they provide a book recommendation along with a quote. They should make that an Amazon ad, seems like a perfect fit.

Bottom line. If you have a decent library of Kindle highlights, check out Readwise and let it dig up nuggets of gold and send it to you daily or weekly. Get more mileage out of those notes and highlights.

Groupon: Free 60-Day Kindle Unlimited Membership w/ Finance Book List

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Groupon is offering a . You must not have had been a KU subscriber within the last 12 months. A Kindle Unlimited (KU) subscription usually costs $9.99 a month and includes free access to a special library of over 1 million eBooks, thousands of audiobook narrations, and current issues of various magazines. As with Netflix, when the membership ends, your ability to read the books end as well.

After making the purchase, you must “view” the voucher and redeem the unique code . Note that you must link a credit card and they will charge you $9.99 a month after the initial 60 days by default. To prevent this, you can visit and cancel the auto-renewal. It will says something like “Your benefits will continue until January 6, 2018, after which your card will not be charged and your membership will end.”

What books are included? You can . You can after clicking the “Kindle Unlimited Eligible” box on the top-left. There are is a mix of a few bestsellers, some older classics, and a lot of independently-published titles of varying quality. Here are some finance-related titles that caught my eye:

Kindle Unlimited authors get paid per page that is read. Therefore, your reading can support their efforts.

Book Review: A History of Gold in the United States

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

onenationgold

Having been born after 1971, I have never lived in a time when the dollar was backed by gold. In an effort to learn more about the gold standard, I recently finished One Nation Under Gold: How One Precious Metal Has Dominated the American Imagination for Four Centuries by James Ledbetter. In other words, this is a history of gold in America. Here are my overall takeaways:

I always thought that the pre-1971 gold standard meant that for every dollar printed, there was a certain amount of gold set aside in a vault. This turns out to be false. A long time ago, gold coins actually circulated as currency. But the more modern version of a gold standard simply means the government agrees to sell gold bullion on demand at a fixed dollar price (ex. $35 for an ounce of gold).

Under the gold standard, countries rarely had enough gold in their vaults to cover if everyone decided to redeem their currency. As a result, countries including the United States were constantly worried about running out of gold and used various political tricks to prevent too many redemptions. If the fixed ratio was $35 an ounce and people could get the equivalent of $36 an ounce somewhere else, there would be a big spike in demand and the US would have to ship out tons of gold. If the vaults went empty, that could cause a financial crisis. The system was constantly under stress.

Every major currency has ended up being forced off the gold standard, usually in times of severe stress. Wars. International trade deficits. Economic depressions. In 1933, the US government was again running low on gold and so they devalued from $20.67/oz. to $35/oz (a devaluation of over 40%). In addition, they banned domestic individuals from owning gold from 1933-1974. (Hmmm… a gold standard where you couldn’t actually get gold…) In 1971, with both the Vietnam War and ongoing trade deficits, Nixon ended international convertibility of the US dollar to gold.

I’ve read that every fiat currency in history has eventually failed. Well, it’s also true that every gold standard in history has eventually failed. Just a thought that kept running through my head while reading this book. Gold-backed currency has its own set of problems.

Harry Browne: Wise investment mind or paid salesman for gold industry? You may have heard of Harry Browne as the creator the Permanent Portfolio: 25% stocks/25% cash/25% long-term bonds/25% gold. Well, this book mostly mentions Browne as a shady doomsday salesman for the gold industry. He wrote books that promoted a specific gold company (Pacific Coast Coin Exchange) and then got paid $100,000 (~$600,000 in 2017 dollars) by that company. That’s not all… The SEC shut down PCCE for having no actual gold in vaults and instead buying things like private jets with the money. Here is a about the company.

The chance that the US goes back on a gold standard is very, very, very small. The gold standard did restrict governmental power, and some people like the sound of that. However, governments like having the ability to expand and contract the money supply to overcome stressful events like war and economic recessions. Will they wield that power wisely and effectively? Mistakes will be made, but I don’t see how they will voluntarily give up that flexibility. The question is not whether fiat currency is perfect, it is about which is better amongst imperfect options.

In the end, perhaps it is better that there is an open market for gold. Today, individuals can exchange gold for dollars and dollars for gold whenever they want. Gold ETFs let you buy gold with few clicks and lower transactional costs than physical gold. If you like market-cap weighting, consider a 1% gold portfolio.

I’m not a history buff in general, and perhaps that is why I found this book rather dry and hard to finish. There is no flowing narrative like a Michael Lewis book. However, I felt like I did learn some useful lessons and I’m glad I finished it.

Barking Up The Wrong Tree: The Benefits of Being Mostly Optimistic

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

barkingEric Barker writes at and his talent/skill is synthesizing hundreds of different sources of academic research and historical anecdotes into actionable ways to improve your life. That’s kind of a crowded field these days, but I enjoyed reading his book which combines a lot of his past work: Barking Up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong.

If I had to sum up this book in one word, it would be “nuanced”. Be nice but not too nice. Work hard but not too hard, especially on one single area of your life. Grit is good, but time is finite. Thus, quitting and working on a better thing instead can also be good. Is it better to be an extrovert or introvert? It depends. (The book details why.) With so many tips and examples, this was one those books that kept my attention when reading it, but after I finish I had trouble remembering something specific to carry with me.

After looking back on my notes, I decided to make this my takeaway: Be mostly optimistic. For the most part, being optimistic opens you up to more opportunities that more than offset any failures. If I had to use a number, be 80% trusting, 80% optimistic. However, don’t be 100% trusting as that opens you up to abuse. Here are some examples.

Your great weakness may also be your greatest advantage. Consider what makes you unique, and look at it optimistically. You might not make a lucrative career out of your quirks, but it’s still your best shot. You have to align your life and environment to maximize your differences. If you love working within structure, use that. If you need to blaze your own path and can’t stand structure, use that. If you happen to love one thing 1,000x more than anything else, well you better get on that.

Prisoner’s dilemma. This game theory experiment involves two individuals faced with the decision of whether to trust or betray the other person (from ):

Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of communicating with the other. The prosecutors lack sufficient evidence to convict the pair on the principal charge. They hope to get both sentenced to a year in prison on a lesser charge. Simultaneously, the prosecutors offer each prisoner a bargain. Each prisoner is given the opportunity either to: betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent. The offer is:

If A and B each betray the other, each of them serves 2 years in prison
If A betrays B but B remains silent, A will be set free and B will serve 3 years in prison (and vice versa)
If A and B both remain silent, both of them will only serve 1 year in prison (on the lesser charge)

As one of these prisoners, what would you do? What if you had to do it 20 times in a row? You could always trust. You could always betray. You could do something in between. It turns out that a really simple algorithm does nearly best overall: tit-for-tat. The strategy is simply to cooperate on the first iteration of the game; after that, do what your opponent did on the previous move. If they trust, then you trust. If they betray, then you betray.

You know what is a even a little bit better? Tit-for-tat occasional forgiveness. Once in a while, you should trust again even if they betrayed last time. This stops a negative back loop of repeated betrayals.

The lessons: Start out nice (be optimistic!) and hope to stay nice, but don’t be a doormat if abused in return. Be consistent. Forgive once in a while.

Optimist vs. Pessimist explanatory style. The book includes an interesting contrast as to how each would react to a setback. Pessimists tell themselves that bad events:

  • will last a long time (I’ll never get this done)
  • are universal (I can’t trust any of these people)
  • are their own fault (I’m terrible at this)

Meanwhile, optimists tell themselves that bad events:

  • are temporary (This happens occasionally, tomorrow will be better)
  • have a specific cause (It is just because the weather is bad today)
  • are not their own fault (I’m good at this, but today wasn’t my lucky day)

It is suggested that you can indeed change your natural optimism/pessimism levels by altering your explanatory style.

This is not to say that you should be only optimistic. Here’s a exploring the pros and cons of both sides. The overall conclusion:

The majority of the time, think positive. Happiness and health trump pretty much everything else. There are situations where negativity can help, like when we’re making high-stakes plans or trying to improve skills.

Be optimistic socially. Even if you aren’t a natural extrovert, you can still build your network in a positive way without being sleazy. Meet new people by finding shared interests and/or shared challenges. Help others first when you can, without expecting anything in return. Most people are good and will look to reciprocate. Join groups. Try to maintain .

Luck school = try new things. Dr. Richard Wiseman studied “lucky” people and found that the most important characteristic of lucky people is that they are much more likely to just try new stuff, which opens them up to opportunity. In other words, luck wasn’t random; it was due to choices. So he started a “Luck School”, teaching a group of people to act more like lucky people. It worked. Yes, trying more being failing more too, but people tend to regret a failure to act, while the failures didn’t really do any damage. You can often learn from failure, anyway. Finally, we tend to remember the good things and forget the bad. (This selective memory is probably why I have three kids.)

Bottom line. Being mostly optimistic appears to be the best available strategy for many things in life. Try a lot of new things. Meet new people. Optimists are more likely to create opportunities for career success and personal happiness. You will also fail more, but those failures don’t tend to cause permanent damage. Optimism is even associated with better health and longer lifespans. Don’t go overboard. Don’t be a overly-trusting doormat, and don’t be dangerously overconfident. Think 8/10 optimistic. (I’m not naturally this optimistic, so I’ll have to consciously try and change my attitude and explanatory style.)