2. Health (including fitness, weight, shape)
3. Relationships (partner, family, friends)
I’ve never heard anyone complaining about having too much wealth, too much health or having relationships that are too good. Sometimes in art, less is more. But when it comes to the Big 3, more is always more.
The focus of this site may be wealth. But I’ll let you into a secret. Most of the traits and attitudes that help you to build wealth, also work in the other areas.
There are great similarities in how to develop the Big 3 areas. You can’t just buy any of them…you have to do the work. All require a certain amount of knowledge and application in order to achieve great results. Luck certainly helps but you need to start by taking responsibility for your own results in all three areas. And your success in each of the Big 3 areas can be constrained by limiting beliefs.
A limiting belief is something that you believe about yourself and the world that is not true. But even though it isn’t actually true, the fact that you think it is holds you back from trying and succeeding.
For example, imagine if Muhammed Ali had been born with the same physique but instead of telling himself (and everyone else) that he was The Greatest, he had a limiting belief that he was not good enough. Would he have been able to maintain his training regime day after day? Would he have been able to recover from the fearsome blows that he took? Would he have been able to raise his game in the biggest fights? I suspect not.
Yes, Ali was physically gifted but perhaps no more so than his top class opponents. What he had was optimism, a mindset that set the bar high and a lack of limiting beliefs. If you doubt that…take a look at the clip below.
At this point, you may be thinking….hhmmm, those limiting belief things sound like bad news…..I’m sure glad I don’t have any of those!
But the thing about limiting beliefs is that we are often too close to see them. In the same way, a fish doesn’t see water: it just forms the prism through which it sees the world. Similarly we tend not to see our own limiting beliefs directly. We may therefore be unaware how they skew our view of the world…often without any rational basis.
Most limiting beliefs are inherited from parents, teachers, friends, TV presenters or newsreaders or whoever we looked up to whilst growing up. Often these people never even told us the limiting belief explicitly, we simply assumed the belief based on their example.
For example, limiting beliefs that we may unwittingly absorb include:
- FInancial independence is only for celebrities, CEOs and hedge fund managers
- I can’t expect to be really fit after my 30s
- You can’t teach an old dog new tricks
- Its harder to make new friends when you are over 30
- You need to be an inventor or genius to be an entrepreneur
It turns out that these are all bullshit. Since I quit work I’ve unpicked some of the mental blindspots that I’d picked up over the years. These limiting beliefs were reinforced by fear….in particular a fear of failure.
This is ironic as it turns out that there is no such thing as failure when it comes to financial independence. As Yoda might have said:
There is no failure. There is only learning and growing
At this point, some of the more hard-bitten and cynical readers may be feeling queasy. It always amuses me when I meet one of my former colleagues in financial services and they say something like:
Love the blog….especially the gags and the investing…but why do you have to include the woo-woo stuff about motivation, positivity and Feng Shui?
Firstly, there’s no Feng Shui on this blog.
Secondly, its funny when I hear this from former colleagues who earned more than I did in the Prison Camp…and yet are still riding the cattle trucks into work every morning whilst their precious time on this planet ebbs away. Without tackling their limiting beliefs, they may never escape the Prison Camp.
Fear of failure matters because it stops some people from even trying. There are many uncertainties on The Path to FI, but here is one certainty. If you do not start, you will not finish.
In one sense, financial independence is like the lottery. You can’t win if you don’t play. The ice-hockey star Wayne Gretzky put it this way: You miss one hundred percent of the shots that you don’t take.
Getting to FI may not be easy, but if you get your savings rate to 50% you will achieve it in less than 20 years. At 66% it takes 12 years. The prize is huge…if you are reading this blog, its probably because you are smart and you get that.
We can define success as having enough stash and enough cojones to quit. So success can be defined but what about failure?
Pursuing FI is not like jumping from one side of a chasm to the other. If you fall a bit short initially, its no big deal…you do not plunge to your death, you can just work a bit more or spend a bit less.
Imagine you spend 10 years pursuing financial independence and building your stash but you then decide that all that annoying wealth, personal growth and inner peace are not for you. Perhaps you watch an old episode of Miami Vice and are overcome with the urge to pimp up your lifestyle with a Ferrari or speedboat, some linen suits and espadrilles. And a parrot.
No problem. You see the great thing about pursuing FI is that you still have the money* and the option to piss it away! The decision to pursue financial independence is always reversible.
During the 10 years you will have learnt to live on less. You will have learnt that spending does not equal happiness and that saving is not deprivation. You now have additional skills, resilience and options (you can choose to do it again).
Whereas before you were a non financially independent person with no stash, now you are a non financially independent person with no stash but with a Ferrari, some 1980s clothes and a parrot. This is not failure as you are no worse off than you were before.
Sadly, due to a powerful and mysterious force called “reality”, the reverse does not apply. So if you spend the 10 years spending like Donald Trump, at the end of the 10 years there is unfortunately no option to change your mind and get all the money back with interest.
So the pay-offs to a decision to pursue financial independence are:
- Scenario A: Success. Financial independence achieved. Freedom, no money worries. Happy days.
- Scenario B: You decide financial independence is not for you. You have extra money (plus interest) which you are free to spend.
This is an asymmetric pay-off. The potential upside from achieving Scenario A is huge The potential downside from experiencing scenario B is minimal / non-existent. That’s why there is no such thing as failure.
Despite this, I’ve been racking my brains to think of a FI-seeking scenario that could be described as failure.
What about if along the way, we occasionally lapse into ridiculous spending? I’ve done that many times and that is not failure.
What about if someone started investing in shares and then, during a market crash panicked and sold out at the bottom. Couldn’t that be described as failure? Well maybe in the short term, yes. But this was what happened to me in 2003 (see A tale of 2 Bear Markets) and, as it turned out, it was that experience that made me a battle hardened equity investor and set me up for the 2008/09 bear market. No failure, only learning and growing.
What if you get to FI but are bored without your old job? Negotiate a 3m period of unpaid leave and see how you enjoy the time off as a FI trial. Or just quit on good terms with your boss. If you want to go back, fine. Again, no failure.
But what about that favourite FI bogeyman of the unsafe withdrawal rate? Wouldn’t it count as failure if my portfolio income fell short, I couldn’t reduce my spending enough and so ended up having to get another job?
I don’t think so and here’s why. If I had to get another job, it would be very different from the last one. These days, a good job in my book is either local or can be done (mostly) from home, it is flexible, it involves working with decent people that appreciate what you do for them. Money is nice but secondary.
True, it would not be easy for me to reproduce the earnings I used to get from the Prison Camp with a local job or small business. But I wouldn’t need those sort of earnings to supplement my existing stash.
Because interest rates are so low, having an income of say £15,000 from a part time job / mini-business would actually allow most early retirees to fill a huge gap in their retirement stash. Remember that with low interest rates, earnings are more valuable than ever. Earned income of £15,000 per year is equivalent to having £1.5m of cash sat in the bank at an interest rate of 1%.
If push came to shove, I’d back myself to get a job paying £15,000 or more. Last time I looked, Tesco were hiring.
I don’t think its going to come to that…but if that’s what it took, then so be it. I would not consider that as failure. I’d still have tasted freedom and had the chance to raise my children, get my shit together and achieve things that I previously thought might be impossible.
Like I said, there is no failure. There is only learning and growing.
*actually its better than that as you’ll still have the money plus the dividends earned on the money
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