Housing Theory

Part 1: Background

A friend came to me the other day and said, “Why do you think people who buy houses are idiots?”

The question kind of shocked me, and it took me a long time to figure what in the world he was talking about. I don’t remember having this opinion!

Of course, I did assume it may have something to do with a recent Facebook post:

I’m excited for my sister and brother-in-law buying a house, but only because they are smart with their money and I can trust that it won’t be a death trap for them. It’s also well-situated for them, and they’ll be needing the extra space soon.

But I have noticed over the past year how a massive slew of “congratulations” have made it to anybody who has bought a house. Really, there’s no difference between buying a house or not buying a house, they are just decisions on where to live. But I think this exposes how buying a house is seen as a sign of “making it”. My personal idea of “making it” is waking up five years from now in a place with very tall mountains and having an investment portfolio large enough to support me there.

There are options with how you go about your time on this rock, but most people don’t realize this. Just know what you want in life

Somehow, this came across to a large number of people as if I were saying that those who buy houses are idiots. WTF? This says more about those people than it does about what I said!

You can talk about politics and annoy people. You can post pictures of food and silly things and people laugh. You can grumble about your situation and people sympathize. But if you come close to insulting homeownership? You’re a monster, and everybody is pissed off at you!

Let’s first clarify something: I don’t believe homeownership is for idiots.

If my sister and brother-in-law were terrible with their finances and were out wasting their money on expensive consumer goods or gambling it away, I probably would not support them in their desire to buy a house. I don’t believe financially irresponsible people have any business committing to a 15- or 30-year loan. However, my sister’s family is pretty great, so I am happy for them. Many other people are smart with their money and buy houses and it works. What bothers me is how anybody can post excited pictures of their new property on Facebook and everybody else will pour support upon them no matter what. NO MATTER WHAT. This is like the good old days where relationships on Facebook were widely congratulated even if the relationship was horribly unhealthy or how everybody cooed “what happened?” when a break-up occurred even if the break-up was extremely healthy.

This sort of thing happens with all major “stages” of the American religion. Yes, some of these stages are somewhat universal to humans, but the focus seems almost always to be on the stage and not on the actual condition of the person. I don’t support people just because they reach a stage, I support them if they are in the right condition for that stage. Maybe you don’t agree with this, but I don’t really care. I would rather piss my friends off than watch them walk into a bad situation or ruin.

Nobody really celebrates when you move to a different apartment. Yeah, I know, some people may give a word. But that Sold sign? Man, people go nuts over that. That’s why, having a social science background, I’m fascinated with the behavior surrounding this, and I think our whole society is geared toward seeing homeownership as more of a step up in life than renting. It’s what you’re “supposed” to do, it’s a sign of settling in, it’s a sign of stability.

Let’s get something else clear. I have had homeownership preached down my throat for as long as I can remember. This was mostly done through schools. I remember being told in one of my classes (was it microeconomics?) that children raised in a house have higher self-esteem than those raised in an apartment. Mind you, I did grow up in a house, but I believed it was huge when I was a kid, whereas now I know it was a fairly small, modest house. I don’t think kids really know the difference until they learn to compare themselves to others. I’ve also heard that kids have a higher self-esteem when their fathers have over 100 head of cattle, but course that was in a different culture than ours. The take-away from this is that people have higher self-esteem when they attain their culture’s version of success, even if there is nothing strictly objective about the definition of success. This is further proof that our culture sees homeownership as a sign of success. So much so that David Platt can’t present many realistic alternatives to the American Dream despite making a good living hating on it, and I can’t think of too many, either. I also suspect these super-positive attributes of homeownership are peddled by a rather powerful real estate lobby. Industries with massive power and influence tend to do this. Think oil, pharmaceuticals, finance. Many people see these actors as terrible, but they forget that real estate is just as enormous. Oh, and what happened in 2007?

Even I once saw homeownership as the ideal. I lived with my parents for many years to pay off my student loans, and when those loans were paid off I started thinking about buying a house. However, a good friend of mine had dropped some serious cash on major repairs to his house. He had the sort of career set-up to ride through that, but I knew that I did not. So I decided that I would not buy a house until I had a sufficient OS fund in place to handle major repairs. I wholeheartedly believe this was a very smart thing to do, because I later went through three months of unemployment that wiped out my savings. It was very stressful, but would have been 10x more stressful if I had signed my life away on the dotted line of a mortgage. I at least had the recourse of moving back in with my parents, though I’m blessed it never came to this. After I started my new job, I rebuilt my savings with a more accurate emergency fund, saved up for a nice used car in much better condition than the one I had, and even started contributing to my company’s 401k plan. Then I discovered the Financial Independence community and I grew to love it, soaked it all up. There were options! I had options! And that was so amazing and exciting, and I really came to despise the message of that “one and only” path that had been forced on me.

Also, my parents had some very terrible experiences due to their house back in the recession. My generation just seems so arrogant about houses I don’t think they realize just what can happen when real estate turns sour. I won’t tell my parents’ story on this blog, but I see such sheer arrogance about homeownership that it makes me sick. “Just buy a house! You should always buy a house! It worked for me!” If you are not smart with your money, and sometimes even if you are, that home can become a “death trap”. If you don’t understand that this does not happen often but can certainly happen to you, then no, I do not believe you are an intelligent person. I think intelligent people go into buying a house cautiously.

So now you know where I’m coming from.

 

Part 2: Where I Stand

I have heard too many people say, “Renting is throwing money away!” and they suddenly believe they are financial geniuses for this insight. I may get a bit nasty here. These people generally don’t have any understanding of economics and think that opportunity cost is only related to what happens when you don’t have the guts to ask a girl out. It apparently takes an inordinate amount of reason to understand that owning a house involves throwing money away, too, mostly in the form of interest on the mortgage and the grand dice roll of geography and home repairs and renovations.

There are many good reasons for owning a house. I don’t deny this. I don’t begrudge people who have good reasons. Sometimes I think people are on autopilot with what the culture preaches to them, but this is not always the case, and I still won’t deny that there are some very good reasons.

But some homeowners can be such dicks that I can’t help but have negative feelings toward homeownership entirely.

Again, it’s been preached at me my whole life. I watched it not work out so well for my parents, and I get a lot of friends who act like nothing bad could ever happen. I want to tell them, “You do realize that a few tough years can wipe out your investment entirely, don’t you? You do realize that yes, you do typically pay less for a house than an apartment but if you aren’t saving that difference for home repairs then you may get some rude surprises along the way? You do realize that it is one of the riskiest investments you can ever make (if you choose to treat it like an investment)?”

Now, to be fair, I’m not looking to put down roots. I’m not looking to settle-in, to pursue the American Dream, to be a part of the middle class. This is not the case for everyone. I want to do missions work and volunteer over seas, and I’ve never seen anybody, I mean ANYBODY in the Christian missions community investing like crazy to support themselves overseas. They are usually too busy telling everyone that wealth is evil and/or trying to raise money to support their work =P. I think I could serve the Kingdom much better not having to worry about money and being able to contribute in many different and varied ways. That’s one of my primary reasons for pursing FI, and it’s why buying a house really has no place in my life right now. Sometimes I envy the lower costs of owning a house, but I also remember the unexpected variables and how a mortgage does not work well with a mobile lifestyle. A co-worker friend often tells me that he was always able to save so much more before he got his feet wet in real estate. Despite very much being a nature lover, he almost always finds his weekends occupied with work around the house.

“I made a ton of money selling my house!”

Several friends bought houses before the huge real estate climb here in Colorado. One couple sold their place for much more than they paid, and used their earnings to halve one spouse’s medical degree debt. This is incredibly smart and I have a lot of respect for them doing that. Another friend sold his house for almost double what he paid and then moved to another state where prices are much cheaper. For the win! Even another friend had help from his dad buying a foreclosed property in the wake of the recession and could probably sell his house now for many times what he paid.

But I’m not going to do this myself. And here’s why.

Let’s say you have no financial training but you invested in Company X back in 2007. And let’s say that over ten years your investment tripled. You go to me and say, “Hey, you should buy stock from Company X, I had my money triple, and yours will triple, too!” This wouldn’t make any sense, because earnings like that are extremely rare and cannot accurately be predicted. I could just as easily lose money, and my friend would either have cashed out or seen only a relatively small dip compared to the value of his/her overall investment.

Colorado prices have skyrocketed, and I wouldn’t believe a single friend who said they predicted this. I mean, great for those who bought-in before the prices went up – they won a small lottery – but that doesn’t mean I should do what they did and expect the same results. That would just be market timing, and nobody can realistically do that. Just ask the people who bought bitcoin at $20k thinking it could only go higher! (I mean, it may someday, but most people buying-in were looking for quick gains, and it’s my opinion that this is not wise).

And again, if I had bought a house before that period of unemployment? I don’t want to think about that. High returns or not, that would have been foolish on my part.

So again, great for those people, I am happy for them, but that doesn’t mean I should buy a house.

“House prices always go up!”

Using this as an argument to buy a house is just sheer ignorance. Housing keeps pace with inflation. The cost of labor goes up, too, property taxes rise, and other products go up in general. Tell me something I don’t know. Some areas get lucky, and some areas get really unlucky. We haven’t seen ‘unlucky’ in Colorado for awhile because of the population boom and the increased demand for housing, but it happens to many, many people, and is quietly ignored by those who believe that owning a house is the only way to go. Again, buying a house because values “always” go up is like timing the market, except you are completely contained to one geographic area, and short of investing in a REIT to diversify or actually buying houses across the country to rent out (which is known to have good returns sometimes), you may find that if that one region fails, your house probably fails with it. You also pay a great number of fees in the process, which is why it is recommended you have your residence for five years or more. Think about this for a second: the average homeowner is encouraged not to move for five years before the appreciation even makes the total cost of the house worth it! Normal investments generally have to be kept for only one year to avoid a steeper capital gains tax!

 

Final Thoughts

This could be talked and written about forever, but I’m going to stop here.

So again, there ARE good reasons to buy a house! There are also some bad reasons to buy a house, and a very widespread lack of understanding about how houses can sometimes be poor investments. This DOES depend on your circumstances and what you want out of life. I personally have fairly negative opinions of homeownership simply because I almost let our culture dictate a lifestyle for me that I don’t want to live. For the longest time I didn’t know any better. This WILL leak into my conversations about housing, but that doesn’t mean I’m talking about you! There are intelligent home owners and intelligent renters, just as there are stupid homeowners and stupid renters. Just don’t follow one path because you were told to, or because it’s popular. Educate yourself and learn how to make good decisions with your money. And don’t be that dick person who is always telling me housing is the only way to go and renting is for chumps because this really does make you look like an idiot.

The Unpopularity of Financial Independence

I don’t have any friends who are interested in financial independence. A few friends have encountered Mr. Money Mustache’s blog through the course of their financial searches, but I don’t know anybody else personally who is pursuing FI.

Largely, I don’t think anybody knows it is an option. I certainly didn’t. I once had the off thought that it might be possible to earn my income through investments, but the sheer size of the required money intimidated me, and I basically gave it up as unrealistic. Now I know it is very realistic.

Just yesterday some friends at church (good people, I might add), were laughing at how a friend had gotten a high-paying engineering job in the midwest, rented a 2-bedroom 2-bath apartment for $500-600/month, and was putting 35% of their earnings into retirement, with an employer match of 10%. In speaking about this person, one friend laughed and said, “Does he want to get married anytime soon?” All I could think of was how his friend could do even better if he downsized to a 1-bedroom 1-bath apartment and invested even more!

My first paycheck came in today with the changes I made for health insurance, which saves me a decent amount of money. This inspired me to put 2% in my roth 401k on top of the 30% I’m putting in the traditional 401k. You know, tax diversification.

It’s very popular if you are in your 20s to travel, and it kind of kills me thinking how fast I could save up for travel if I weren’t contributing all this, but the power of compounding is real, and I know I will thank myself later. I have left just enough money in my take-home pay to afford my standard budget and still have some left over for the car, for travel / personal development, and cash for giving or investing outside of the retirement accounts. But if I really want to hit my goals, pushing myself to 35% would be ideal. I am planning on getting creative with rent so I could boost this higher, since it is fairly low compared to most others in the FI community. Living alone is a luxury that probably costs me around $600/month. I should write it like that in the budget. Rent is what I would expect to pay if I split a place. That extra $600 should just be a budget item called “personal luxury”. Ouch! That’s a dose of reality I need!

A co-worker once asked me what my plans were for marriage, kind of as a joke in response to my story of pursuing FI. Average women want a large house with all the accoutrements, new cars, etc. They want to see your status. See, though, I want to BE my status, free to pursue what really matters to me in life. Now, when you hang around churches a lot you find more women who want to do missions work and aren’t as concerned about having things. To be fair, I had a really long conversation about all of this with a (rather attractive) girl who received it well a few months ago, but I think most people in the church are still gunning for that middle class life of consumption, as long as the family can dutifully give 10% to the church, of course. It is what is. I’d honestly rather be single than spend my life chasing the American dream. The best you can hope to do with excess possessions is share them, and that’s probably the only smart way to approach that dream: to not over-consume, but to do things like open your house up to others, to make food for them, etc. But that really is a huge can of worms I can’t cover in one post. In all reality though, almost everybody I know will choose “lots of stuff, just shared” as an out for giving up things in general. Honestly, I’m just going to have to let go of this. It seems rather dumb on my part to worry about other people’s decisions.

It’s not popular but it’s definitely my cup of tea. My copy of Jacob Fisker’s “Early Retirement Extreme” arrived today and it’s chock full of great philosophy. I want to volunteer full time overseas, to make those small differences in the world, to experience new cultures, and to be able to do it all without a timeframe stamped on it. That’s what FI means to me. It may not be popular, but I think when my friends see that in action they may think, “Hey, you know maybe that’s wasn’t such a bad option, afterall.” Unfortunately, it may be rather late in their game, so I keep discussing the subject. Let’s make this more popular!

The Pernicious Lie

“It will always be tough.”

Several years ago, I experienced a significant pay raise at my job and found that my money was melting away and I wasn’t sure where to. I was living with my parents to avoid paying rent and was using a large part of my paycheck to pay off my student loans, but I began to question why I wasn’t making faster progress despite the pay increases.

“You know, it will always be tough,” my mom told me.

Now, to be clear, I’m not saying my mom is trying to spread pernicious lies. But I am trying to say that my mom’s reaction that day is characteristic of a broader social problem, this belief that life is so difficult and there is never enough money. I have read articles about families making $200,000 per year and complaining that “it’s just so hard to make it.” A cursory look at their expenses basically revealed that people are not naturally intelligent creatures.

Scarcity is an old and neglected economic term. One major and influential economic theory states that human desires are infinite while resources are finite, thus producing scarcity. In a scarce environment, supply and demand rule, and thus is born the market economy. The whole Occupy movement was created to protest the lack of capital among the “99%”, blaming this on misconduct by the “1%” who have hoarded capital (I’m not going to take a position on this here). We see this in political movements, but we all see this in personal finance contexts, where people lament just “how hard it is to get by” and how “you just can’t support a family on $X per year”.

A common theme, something I discovered within myself that day, was no matter how much one earns, the money never seems to be enough. But how was it that at lower pay, I had everything I needed, and at higher pay, I still had everything I needed but didn’t know what had actually happened to the difference?

We all know I was spending that extra money. It’s not rocket science. We humans have this amazing proclivity to increase our expenditures when we increase our income. We have more money, so we spend more money. After all, human desires are infinite. I can sit down at any time and make a list of things I would like to own if I either had the money or money weren’t a factor.

Now, I have read that wages have not increased with the cost of living. Especially here in Denver, I’d say most of people’s expenses are being dumped into overpriced houses and overpriced apartments, and many jobs do not earn enough money to cover these expenses and most other necessities. And that sucks. But I also want to explore this more.

The market is not your friend. Technology tells you how much it can improve your life and increase your creative juices, and help you to make money from your own innovation. Car companies tell you to treat yourself to the new car smell and gain prestige for the good hard work that you do. Cereal companies tell you that you are a good mother for feeding your kids a nutritious breakfast. Insurance companies tell you how secure you will feel knowing your money or health is protected. The problem is that we believe this. Because of scarcity, because of supply and demand, everyone wants your money. And you’ve been raised to spend that money on the products those people are selling. You go to work and depend on your company to sell things so that you continue to have a job so that you can continue spending. We all know this cycle. It’s not good, and it’s not evil. You could potentially extrapolate this message from the “labor” Adam is forced to perform in Genesis. Nonetheless, we spend because we believe it will make us happier, that it will satisfy x or y desire or “need.” This becomes ingrained in our understand of what “base subsistence” even means. Dave Ramsey has a great story about how, when he was going bankrupt, he absolutely refused to give up his Jaguar until the choice stopped being his. “But I need this!” we all say. “How can I live without this?”

I also want to approach one major objection to Financial Independence. People love to criticize it when they have kids. “Haha, yeah, I’d like to see you live like that once you have kids!” Clearly, kids cost millions of dollars, despite the fact that humans have successfully raised them for hundreds of thousands of years before the market economy existed.

When I was a child, I really wanted these flip-head Power Ranger action figures. You pressed the belt and the head flipped from mask to no-mask. I thought it was super cool. But my parents refused to buy me any for the longest time. Do you know what I did? I had these large Power Ranger marbles that stood-in for the action figures, took on personalities and went on adventures all the same. I wouldn’t have even cared if I hadn’t known the action figures existed (demonstration-effect theory, anyone?). Those marbles probably cost a few bucks compared to much more for even just one action figure. Spoiler: I did eventually receive one for my birthday, if I remember correctly.

I’ve always been fascinating when reading ethnographies to learn that many indigenous children grow up making mud or baked cow-manure figures to play out social roles they see around them. Cost $0 USD??? It sounded like they were happy. I guess you’d probably get a call from social services if you baked some cow patties and your neighbors saw your kids out playing with them, but while I’m joking I’m also not, and that’s just a reflection that society is not a perfect representation of reality, and cultural norms can be flawed. What you can derive from this is that your kids don’t need expensive masses of toys to be happy. We’ve shuffled them into an immaculate toy world where everything is about toys. It’s just sad.

Also for the record, toys are only one category of overspending on children, but I’m beginning to suspect I could fill a whole post with more. “You don’t have kids, you can’t talk!” No, but I’ve seen what parents and family members buy for kids and it’s proof that people can be idiots in their rush to give those kids a perfect consumerist childhood.

Going back to the pernicious lie, you also see people buying new $30,000 vehicles in order avoid a major $1500 vehicle repair and a day or two getting rides to and from work. Many believe car payments are essential to life. People nearing bankruptcy refuse to cancel their satellite TV service to save money. Having an iPhone is considered essential living “because of my fine taste.” I’m starting to feel negative so I’ll cut this off here, but this is a small sample of what happens.

We just are not very smart. We are so not smart that I’m planning to write about the sorts of not-smart things I have done with money.

Several months ago I was putting 12% of each paycheck into my 401k, and the stretch to 15% made me question if I could hit my other savings goals. Then I moved it to 20% and found out that I was fine and had plenty left over. So in January I will be taking the plunge and giving 30% a shot. It’s amazing how stupid I was being before, how much floating money I was leaving outside of any budget bucket, “just in case”. My goals is 50%. Currently I could reach 40%, but this would wipe out the money I plan to put monthly into my car maintenance savings and the money I would like to save for things like travel and visiting friends across the country. Most of it will be saved, but won’t be invested, per se. The easiest way to reach 50% is to get creative with living situations or find an apartment that costs less than my current (this is somewhat difficult in Denver).

Lest we feel too negative over the “it will always be difficult” maxim, there is another maxim that is also popular: “live below your means.” Many people do not like this because it forces you to assume responsibility for your actions. Yes, there is injustice. Yes, there are difficulties. Yes, some people have extreme circumstances. I hate feeling like I have to qualify everything all the time, but people hate you if you don’t. If you’re helpless, then ignore me. If you are in any control of your life, challenge yourself to live below your means. Build a budget. Understand where your money goes and why. Do you shop to feel better? Do you believe that car payments are a good thing? Are you paying people to do things you can do yourself? Do you use the things you have purchased in the past? Have you ever had buyer’s remorse? If so, how can you avoid that in the future?

If it feels I’m leaving this post incomplete, I am. I think I can really dig into more specifics by detailing my experiences and what I’ve seen other do. This applies to both good and bad.

The pernicious lie does not have to apply to you.

 

 

Assessing the True Cost of Things

Ignoring costs can lead to poor purchasing decisions.

One of my pet economic theories is that all items you can purchase can be analyzed from three cost perspectives: the initial cost, the inherent cost, and the extended cost. I’m certain I’ve picked this up subconsciously from real economists or economics classes, but it has proven quite useful in my purchasing decisions.

 

Initial Cost

The initial cost is typically the most obvious, and is the price or amount of money you pay for an item. If I’m buying a chair from the department store for $60 or a lawnmower from a neighbor for $100, the initial cost is $60 and $100 respectively. Initial costs are the only thing I record in my ledger when keeping track of my budget balances, and the great danger to initial costs is that they make it easy to ignore the other costs.

Inherent Cost

Inherent costs are those costs that are accrued in the course of utilizing or operating an item. The inherent cost of a car is typically the cost of gasoline, the inherent cost of an apartment is the cost of utilities, the inherent cost of Netflix is the price of internet service. You get the idea. Whatever relies upon the purchasing of an additional item or service is bound to an inherent cost. We are usually aware of inherent costs, but we tend not to calculate their magnitude over large periods of time. Because my commute is so long, I tend to budget around $150 per month for gasoline, but don’t want to think about how this will cost me $1,800 per year.

Extended Cost

Most pernicious and evasive is the extended cost of a thing.¬†Extended costs are additional expenses that complement the item being purchased, and are often established by cultural norms, expectations, and habits. Most televisions or monitors either do not have speakers or come with “crappy” speakers built in. You could argue that manufacturers do this to encourage you to buy a sound bar or sound system to increase the audio quality of your television experience. Most of the people I know have a sound bar for their televisions, and this would be considered an extended cost to the purchase of a television. You may be very excited about your new 60″ television, but unless you have a sound bar, the idea may start to grow in your mind that your new television would really be better off with a nice new sound system to go with it. This is often how extended costs work.

For example, I have considered buying an XBox One S so that I could play games with two of my close friends who recently moved to different parts of the United States. Yes, Black Friday sales approach, but generally these consoles have cost $300, and I have been extremely leery of making this purchase for several reasons. First, although the console may “only” cost $300, the service to play online costs $60 per year. Moreover, in order to make the console more useful, I would want to buy additional controllers so that I could have friends over to play as well, and each controller typically costs an additional $60. Because I don’t like going through large numbers of batteries, I would probably want to purchase the rechargeable controller batteries, which cost around $25 each. So really, for a system with two controllers – and that certainly isn’t enough for having more friends over – I would be paying around $530 to get started*. Oh, and I forgot about the games. Ultimately, though, my long-distance friends don’t have the time or the access to play online, and all of these things have convinced me to set the desire aside completely. I also don’t play video games enough to justify the purchase in the first place. Many friends have decided it is worth it to them, and that is perfectly fine as long as you know what you are getting into.

Although I will be writing about houses and apartments another day, I would like to mention here that having too much space can generate extended costs. Who wants an empty room? Most people will add a guest bed, perhaps a few items of furniture, or perhaps paint the walls. Just having empty space tends to fight very strongly against our cultural expectations of interiors, and will often lead us into spending more money than we planned in order to satisfy those expectations in our minds.

I should perhaps also mention that time and opportunity cost play into these as well. The true cost of a book includes the time you spend reading it, and the true cost of pretty much anything non-essential could be the well-being of your car if you know it has issues and are trying to ignore them by purchasing something “fun”. Nothing is fun about paying for car repairs, but not doing so will cost you in added stress and strain later.

The moral of the story is, don’t just look at sticker price (the initial cost). Consider the ramifications your purchases will have in other areas of your life and across your wallet. When you understand these costs, you are positioning yourself to make better decisions with your money.

 

* I forgot that most consoles already come with one controller, so this total may be $470 instead, or maybe you decided to buy an additional controller without the rechargeable battery ūüôā

Fear and Keeping the Things We Hate

Does your room look like this?

Most of us have a possession or two of which we think, “Ugh, I hate this thing.” It can be anything: clothing, books, kitchen utensils, tools, appliances, decorations, gifts.

This past year I’ve reduced my collection of shirts from around 60 to 36. It required a significant amount of mental effort, but I frequently came across shirts that some deep part of me really hated. Why had I kept them all those years? This was also the case for other items, such as camping gear I never used but which was always cluttering my storage spaces. Sometimes it was technical books that had the potential to boost my career but which I despised owning.

I began to realize that fear was my primary motivation for keeping things that I hated. I kept work shirts because I feared I may need them if I lost my job. Sometimes I would keep shirts for the simple fear that I may want to wear them in the future. I’ve kept Christmas and birthday cards out of the fear that one of my relatives may pass and I would regret not having kept their kind words, symbols of their love. I have feared that if I got rid of some of my programming or cyber security books that there would come a time when I desperately needed them and would have to shell out top dollar to get them back.

To describe to a fuller extend how much fear has dominated my physical realm, for a long time, my primary reason for keeping a decently large movie collection was the fear that I would have a girlfriend and she would be bored because there would be nothing to do. Forget that I have, historically, never been interested in girls who wish to spend all their time watching TV and movies, I let my fear force me into the “library” mentality of hoarding entertainment. Over the past few months I have finally identified the true nature of this fear, so I gave away around 50% of my DVD collection, with plans to get rid of more. My friends thought I was crazy, but I feel much more like the person I have always wanted to be. I also found that less entertainment gets me out the door more often and has significantly increased my happiness.

Here are some more case studies:

  • I had a large stack of photos from the days before cheap cameras and smartphones. I had ordered duplicates for many of those pictures, at the advice of my parents and sister at that time, and years and years later I still had the duplicates to protect them from loss! I shredded all the duplicates, and also shredded the pictures I didn’t care to keep, which was most of them.
  • I had a programming book that was a Christmas gift from my dad several years ago. I had specifically wanted this book and he had spent a decent amount for it, but the concepts were more related to IT than software development, so the material ended up not being as interesting as I had thought, and I never made much progress past the first few chapters. I kept it because it was a gift from my dad and I had wanted it so badly, but I ultimately had to accept that keeping it around wasn’t doing me any good and was only making me feel guilty for not reading it. I gave it away and haven’t regretted it.
  • Like most people, I finally liquidated my CD collection. I had chipped away at it over the years, but I kept the most sentimental albums. I now only have one because I need to stop being lazy and copy it onto my computer. This CD collection had also included obscure driver software, programs I would never use, and even a DVD of my high school band performances. This did not occupy a ton a space, but the box I kept them in has been a “hold-out” box which just refuses to die because of the slight value of its contents. I’m actively in battle with this box, and need to find a way to get rid of more inside of it.

Here are the things I plan to get rid of:

  • High school yearbooks. I may keep my senior year book, but I suspect my reasoning there is also flawed. I’ve never really looked back through them, and I know how to contact the friends from that time who still matter to me.
  • More DVDs. My local library allows you to check out a huge selection of movies. I’m moving into an experimental time in life where I want to see what I can go without.
  • The headboard to my bed and the bed frame. They aren’t necessary at all, and I’m kind of drawn to extreme simplicity.
  • More books. Still hard for me to do, but I love playing the mental game of “if I could only keep ten books, which would I keep?” I guarantee you they’d be only the best in my collection.
  • My small coin/currency collection. I guess seeing what people pay with in the Bahamas is kind of cool, but really it just sits there.
  • The final 3 stick-piece¬†hockey cards from my old collection. I honestly do kind of hate these, I may have to drive to a card store and donate them. Supposedly they’re “valuable”, which means you may be able to finagle $10-20 for each on ebay, but my job pays much, much better.
  • Miscellaneous stuff. It’s all been simplified to one large and one small plastic container, but I want it all gone, all of it!

There are many other stories to tell, but these are positive illustrations.

What I love about minimalism is the intellectual challenge that it posses to the individual. Because we live in a society that values quantity and convenience, it takes considerable effort to challenge those assumptions and escape from them. Although I’ve been reducing my possessions slowly for the past decade, I’m realizing just how far I still have to go. Fear is not the only reason we keep things (pride and self-image come to mind as somewhat obvious alternative motives), but I think we would all find that reducing the fear in our lives necessarily comes with the reduction of our possessions.

The Importance of Tipping Well

It’s a warm, breezy Saturday afternoon, so I took a trip to one of the nearby pizza joints for lunch. It had been several years since I had gone there, so I had forgotten that it was more of a sit-down restaurant than a grab-a-slice-and-go restaurant.

I’ve set myself a monthly food budget of $200. I have a separate budget for food with friends, but since I have a pretty terrible track record with my grocery and person food money, I decided I could shoot for $50 per week. I’m sure more frugal people can do much better than that, but you have to crawl before you can walk, and I just need to get that food budget under control.

My first thought was to get the old special, a slice with some breadsticks and a drink. But when they sat me down and gave me a menu, I was tempted by all sorts of delicious meals, almost all of which cost more. I don’t like dropping money on solo meals like this, unless I’m exploring new restaurants and don’t want the hassle of getting other people on board, so my waistline thanked me when I ordered the $5 special.

Then it hit me: this is going to cost more than $5 because I have to leave a tip! That was a real bummer because I was excited to get a small but delicious meal for cheap. “Well, at least the tip won’t be as much this way than with a larger meal,” I thought. Sure, but who wants to be the tool who leaves a $1 tip?

My waitress was actually very friendly, and made sure to refill my green tea. I thought about my job, and the inroads God gave me for software development, and how so much of this I could never have done on my own. I had several days at work this past week where I was between projects and was basically being paid to study. And what I make in one day is a lot. So I thought of this waitress probably making minimum wage and hoping for decent tips, in this expensive city, while I spend a decent amount of time plotting my route to Financial Independence.

So I paid $10 and left the extra as a tip. There is a price to spending money on food, but what is the price of being cheap toward your fellow humans? I still have money left in my budget for the rest of this week.

This will probably be an ongoing theme on this blog, too. How can we, as Christians, pursue financial independence while still being rich toward God? Scaling back on my personal expenditures seems the best option, but scaling back on my giving is probably the wrong direction to take. One of these days I’d love to leave a $100 tip to a good waiter/waitress and make somebody’s day.

Who are the Joneses?

I had never actually heard of the Joneses until I began reading Dave Ramsey nearly a decade ago, and I have mostly only heard the expression “keep up with the Joneses” in financial settings. My family has never, to my knowledge, purchased anything to keep up with their neighbors or friends. I could be wrong, but if they did it certainly wasn’t anything like a boat or ATVs – you know, anything large and expensive.

When I first read about the Joneses, I felt pretty smug about myself. I certainly didn’t have any problem like that. In fact, to this day, I’m not certain any of my friends have been Joneses, and, to my shame, I can’t actually say I know my neighbors in this apartment building.

But then I had to ask myself: who actually are the Joneses?

I’ve decided the Joneses are anybody who have something that I don’t have. What I mean by this is that anybody who has something I don’t have can, intentionally or unintentionally, influence my decision to purchase said item.

And here’s what often isn’t mentioned about the Joneses: sometimes they actually can afford the swag they buy. The great danger is assuming they can’t and writing yourself off as a smart cookie while you criticize their lack of financial discipline, but this simply may not be true. The Joneses are who we perceive them to be. They could be your friend who bought an iPhone X, or a neighbor who bought a ten-year-old Maxima¬† which looks so much nicer than your rusting twenty-year-old Accord. They could be your friends who always invite you to join them at expensive restaurants. They can even be your parents who decided a sleep number bed would help them get better sleep. Or they could be an acquaintance who has a massive gun collection. Whatever.

There’s no point calling out the Joneses – the Joneses are in your head. They are the status and the utility that you crave. They are either the things you covet or the things you feel pressured to buy.

Despite the highly inflated housing market here in Denver, many friends have bought-in, and I often feel the current¬† whispering to me, “You should buy in, too!” My financial disagreements with homeownership, and my desire to leave within the next 3 to 5 years don’t make this a tempting prospect, but I can say that I definitely feel the pressure. I also wonder what sort of message I send to my friends when I try to persuade them to join me at various restaurants, a great weakness of mine.

If you want to make smarter decisions than keeping up with the Joneses, you have to understand your desires for what they are. Are you trying to be accepted? To fit in? Are you trying to present yourself in a certain light (“I’m an extreme off-roader!”, “I’m a Mac guy!”, “I’m a nature lover!”, “I do humanitarian work!”)? You have to understand whether that’s something you truly want or if you aren’t just kidding yourself and trying to fill-in your insecurities. When you are happy with yourself, you won’t strive so hard to keep up with who you think you want to be.

Why I Pursue Financial Independence

My quest for financial independence and minimalism go hand-in-hand. My quest began in high school.

I did not grow up in a wealthy household. We were not poor, but we were not rich. Having also grown up in the Church, I believed that contentment was a virtue, but I still had a room packed to the brim with Lego sets, sports cards, and video games. I had, like most children, gone through life completely clueless about money, and I didn’t receive much advice about it from my parents.¬† This all changed in high school¬† when I had a crush on a girl whose father was an engineer. They lived in a large house and enjoyed expensive hobbies. In the back of my male brain there was that self-esteem switch, shouting, “You won’t measure up! You’re too boring! You don’t have enough money! She’ll never be okay with you!” Fortunately I didn’t find out her dad was an engineer until after I had asked her out (twice!), but it was my first introduction to how self-esteem and money melded together in the human spirit. When things turned south between us, I established my mountain of war, bunkered down on my commitment to becoming a great writer, and praised the simple life. I became a pious asshole. But I suspected part of my equation was wrong.

I had seen the race for money. I saw friends maxing their schedules and stressing themselves to death with extracurricular activities, all to get into a good school to get a good job. Most just landed at State U. What had they been so terrified about? I thought everyone was nuts. Again, I was getting half of the equation wrong. So of course, I ran off to a private Christian school and before I had even had my first job, watched my net worth go red to the tune of $18,000 over three semesters. This began to freak me out when my paychecks came in with maybe $150 each time. How was I ever going to pay that money back? I woke up, I even got a little crazy. I found that community college cost around $300 for an entire semester after grants, so I played some transfer games, I even paid off several small loans while I was in school, but this didn’t stop me from finishing my social science degree with $28,000 in debt.

I made the final payment on my student loans in December of 2015, only a few short years after graduating. Staying out of debt and reducing my possessions had become a real passion over time, but I was still languid, longing to figure out exactly what I wanted to do in life, especially concerned because I feared I would have to pick one thing and be stuck with it for the rest of my life. I thought of applying my software development skills to Christian missions or international development, but I had heard how this often ruined people or placed them in rather difficult positions. As a Christian I wrestled with this, believing that when God calls you to go, you go, and learn to trust. But deep down I kept thinking that there had to be a way I could game the system to support myself while I was overseas. Not that my faith was weak, I had just seen too much mismanagement of funds in the church, and rarely saw people winning with money when they had so many resources right in front of them. We were taught that possessions were not evil, but all I saw around me were people buying and hoarding, more and more. This didn’t seem to be the heart of Christ. I didn’t like the hassle of having too many things, anyway.

Enter Mr. Money Mustache, whose blog showed me that simple living and money could be combined to produce some truly amazing things. I had played with the idea of living off of investments before, but when my calculations started reaching a need for $300,000 , I gave up. MMM taught me that the math was shockingly simple, and I caught FIRE. If I could use the resources that God had given me wisely, if I could scale back my ridiculous need for stuff that had nothing to do with my goals and dreams in life, then I, too, could become financial independent and dedicate my life to those causes that so stirred me. You don’t need a master’s degree in something you hate or later get bored with in order to do what you love. And there’s a whole community dedicated to this pursuit. I’ve been yapping economics with my friends for ages, so I decided it was time to join the fray by starting this blog.

There are so many stories to tell between these paragraphs, but I’m excited to start contributing to the conversation. I love reading all the stories of the people who have made it, especially those courageous souls who pulled it off in their mid or early 30s, and I believe this conversation has been tragically missing from Christian circles. I write this blog fully knowing I will probably receive serious hate messages (once I open the comments up!), because, unfortunately, people tend to use their religion as a battering ram against others to make themselves feel better. Most people do not want to hear how you are winning with your money if they are not winning with theirs, but I write to inspire and encourage all readers, but especially Christians, so they can truly reap the rewards that come from this awareness to what truly matters.