There is no failure

YodaThere are 3 big areas that we would like to improve in. The big three (not in order of importance) are:

1. Wealth

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.

miami-viceImagine 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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17 comments

  1. Great post, TEA.

    I had not really thought about this fact. That by pursuing FI you–actually–cannot really lose. Quite a remarkable thought really. Not many things in life that you can say that about!

    When (or should that be if!) I reach FI I would quite happily retain a part-time job. Not out of necessity but for variety. It is the opportunity that FI buys which fascinates me. Being able to choose to be completely free or not.

    Thanks for the thought-provoking post.

  2. TEA:

    I’ve always enjoyed your work…it’s top notch. But I must say since you busted out of Prison Camp ( as you alluded to in this piece), you’ve taken things to an even higher level of quality. You da’man! 🙂

    1. Thanks Jon…that made me laugh.

      I’d just like other readers to know that Jon is not my Mum chipping in to boost my self-esteem.

  3. Great post!

    Some people might think that you lose in the following scenario:
    After 10 years seeking FI, you realise a life of deprivation and lack of material benefits is not for you. You have saved the money, but you cannot get those 10 years back. YOLO, if you know what I mean… Not that I think like that, but what would you say to them?

    1. Oriol

      Thanks! To those people, I’d say that there is a very weak relationship between spending and happiness. There are studies that show that. I proved it to myself beyond reasonable doubt when in the Prison Camp and we spent loads with little / no benefit in terms of happiness. So I don’t accept that spending less is deprivation. For me, happiness comes from overcoming challenges or achieving something difficult that you have worked for. The obstacle is the way.

      Practically speaking, this is a non-issue because almost no one deprives themselves for 10 years. We just aren’t built that way. We will only stick with pursuing FI if, rather than deprivation, we either see it as a worthwhile pursuit or, even better, enjoy the game itself and the creativity required to live on less.

      To use a diet analogy….if you see a diet in terms of deprivation you will quit. If you see it as eating only the best natural food and excluding the processed crap, you are much more likely to succeed.

      All the best and thanks for the comment

      TEA

  4. whilst you can never have too much wealth, health and relationships, the development of these three qualities can be quite mutually exclusive (not always, but often), in as much as they all take time and effort and time and effort is a finite reserve. So conflict is there right from the word go, conflict that requires as much wisdom as you can muster to overcome. So sitting above those three virtues if you like, is wisdom – wisdom is pretty fundamental, without that you’re fucked. You can never have enough wisdom. If anyone offers you any then bite their hand off

    The argument that pursuing FI is fine, even if it turns out you don’t like it, isn’t really sound. It is true that you have the option to change at the end – but you’ve still wasted a bunch of time being unhappy (or less happy to put it less dramatically) and the integral of happiness over lifetime is the metric of the Socratean good-life. No different to saying give a career a go for 10 years and if at the end its not for you then quit – or go to prison for 10 years but don’t worry cause they’ll let you out at the end of your sentence. Time is of the essence as they say..

  5. Ben, your argument that spending less makes you unhappy is true but only to an extent. I have seen smiling homeless and many white collar workers wearing a frown even though they were playing with their latest iJunk.

    Exotic travels are the one item, that I consider worth the money. Memories made in distant places at the bottom of mountain peaks, or in turquoise lagoons are hard to replicate without spending the $.

    Having most of your money in the stock market, is also a risk. 1929, 2008, wwI and wwII are not os far in the rear view mirror. Monetary devaluation aka Argentina, Zimbabwe etc, are uncommon but not impossible. Keep everything in perspective, save but enjoy maybe instead of 20 it will take 25, but a little fun on the way is OK.

    1. that isn’t my argument – my argument is that time spent doing something you subsequently deem to be a waste or in some way sub-optimal cannot be regained – this is the bitch about time..

      a good psychological tool for preventing this occuring is to always pull the positives out of a life-period regardless of how bad it was – its a bit of a trick on one s self but it can mean you never have to suffer with ‘time-wasters-remorse’ or in other words you never let yourself believe that you wasted time or endured a sub-optimal experience over a period of time. like sex, an even when its bad its good approach can be applied to the passing of time if one wills it to be so..

  6. This is just what I needed to hear right now, thank you.

    I only started my FI journey in November and at 35 years old my current saving rate suggests I might barely achieve FI by 55. The thought of another 20 years in work is not cheery! However in only 10 months I’ve managed to save more money than I’ve ever had in my life and 20 years is a long time for an unexpected increase in the stash to possibly occur. Retiring 12 years before I’m meant to would still be an awesome feat.

    Limiting beliefs are still very present in lots of areas for me, but to have this pointed out is helpful. To look at what I have already achieved as a motivator rather than get hung up on current figures gives me renewed enthusiasm.

    Again, thank you.

    1. I love feedback like this. Here is the important thing to remember: if you only started in November, you are still a FI baby😉. Over the next few years your progress will accelerate significantly.

      It took me years to figure this stuff out. I bet you will get it quicker than I did. Remember The Aggregation of Marginal Gains and you could be out much quicker than seems possible now…all the best!

  7. There's Value · · Reply

    Love this article, also really interesting to read all the comments. Something that resilient man said above really reminded me of Li Ka Shing’s advice on how to spend your money: 30% living expenses; 20% relationship building (taking friends, family, and colleagues to lunch and calling people regularly); 15% education (up to 5% on books, rest on courses); 10% on foreign holidays; 25% investing (at the beginning he recommends saving up to start your own small businesses, a simple retail) sales business.

    But the focus he put on saving 10% towards foreign holidays was really important, he said of course living off such a small proportion would be difficult, but the foreign trips would be a reward. I can’t agree enough with this. I’ve tried to see if we could do his plan, but there’s no way we could live off 30% of our income. The lowest I could get to was 45%, and that was still a huge stretch. However, with a bit of jigging a plan similar to this could be achieved, we’re saving around 8-10% for our foreign holidays.

    Cheers

    1. Thanks! That advice is interesting. I would try to achieve the relationship building for less…by inviting people to your house for meals / drinks, or to the park rather than going to restaurants etc. And with the internet/libraries/Amazon, I reckon you can get the education % down as well. So the relationship spend becomes, say, 5%, with education another 5% leaving a 50% savings rate…so FI within 20 years.

  8. Yes the tweaks can definitely shave money off education and relationships. We have people over quite a lot, but I feel like it isn’t quite the same as if you take someone out for lunch – especially a colleague. The principle Li advised was to take out people who work harder than you, are richer than you, or are more knowledgeable than you – in which case you will learn from these people (hopefully) as they are at a stage that you want to progress to. With libraries, you can get all the books you want for free, so that eradicated the 5% – the education you could shave too if you’ve already got a degree or higher degree especially. Overall, he gives a lot of advice that is centred around improving yourself as a person both educationally and socially, and providing for your family and child(ren).

    We are going to try this method (albeit altered) from the new year, and see how it goes. Our final percentages are:

    50% living costs
    6% relationships
    6.5% charity donations (instead of books)
    7.5% educational courses
    10% holidays
    20% investing

    We could be FI right now if we moved to a cheap foreign country, but we want to stay here in Blighty for the immediate future, so we are not rushing for FI as much as we could. In theory, we could gradually achieve it here too in slightly over 16 years, which is what we are aiming for.

  9. Great article and a timely reminder to me.

    Attaining FI is worthy and requires a lot of discipline. However, from my experience, even after attaining FI it is still very difficult to walk away from a pay cheque. The number one reason of course is fear of the unknown. At such a time one needs to remind oneself that there is more to life than accumulating wealth. As you mentioned, improving health and relationships are worthy goals. Achieving FI will allow more time to improve these things. And then there is the great feeling of being in control of ones time and life that comes with FI.

  10. Great post again TEA,

    After working in a few pretty bad jobs in the prison camp, I decided that enough was enough.The bad environment (back-biting/office-politics/scapegoating) was my motivation to achieve FI and release myself from the shackles. Fears were pushed at me from everyone – bosses, work colleagues, friends and family. You are blind to them at first but once you learn to see them, its just a matter of taking them one-by-one and crushing them.

    I have been tasting freedom for 3 months now and it has enabled me to recharge my batteries and feel more alive than I was when under the drudgery and oppressive nature of the workplace. My health has improved considerably. I am still working on the relationship parts of the equation but life’s a journey.

    I am currently sampling free education via FutureLearn and CodeAcademy where I can signup for free courses of interest and exercise those brain cells and appreciate the learning. It may prove useful for a local job working with decent like-minded people in the future! 🙂

    No-one has a crystal ball that can predict the future, all you can do is assess the risks and debunk the fears and work on the Big 3.

    1. I’d be interested in how you get on with those 2 course providers Sparklebee….thanks for the tip….loving that crowd-sourcing

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