When I was in high school and college, I was “good” with money. I spent very little on myself, never bought things like DVDs or other entertainment media, and rarely bought expensive things. But strangely, this was never enough. Despite saving most of my birthday and Christmas money, my first semester of college wiped out all of my savings when I had to spend over $300 on books. Moreover, later in college once I started having jobs, the repairs on my car routinely wiped out almost all of my savings. I didn’t understand: I wasn’t a wasteful person, and I watched my money carefully. Why was I failing?
A lot of this could be explained as a simple income problem. Not having a job in high school makes affording college pretty difficult. And in college, I came up against the eternal law of nature that owning a complex, multi-thousand pound machine composed of hundreds if not thousands of components costs money (the nerve!).
These were tough economics lessons. In fact, one of the hardest and most important lessons you can learn is that being a “good” person and making “good” financial decisions doesn’t guarantee ANYTHING. My parents are good people. They are even better parents. And they still lost their house in the recession due to some mistakes, well-intentioned but poor decisions, and systemic issues. And I think a lot of people fall into this trap of thinking that meaning well will cause everything to fall into place. It’s why I’m disgusted by arrogance in investing and people inviting greater and greater risks into their lives just so they can brag about their exorbitant lifestyle. “It’s easy bro, crypto is the future!” “Just borrow half a million dollars for an investment property, you can’t go wrong!” Go fuck yourself.
And I experienced it, too. Like I mentioned, I hardly spent money on anything in college. I was living at home rent-free and was basically saving 50% of my income (even before I learned about FIRE), and still my car kept having these issues that would routinely wipe my savings out. It was kind of a helpless feeling.
After experiencing a lot of despair, I finally went into assault mode and started learning how to work on my car. This was really valuable, as it helped lower the threshold of expense and also lowered my anxiety significantly whenever an issue cropped up. Eventually I was able to crawl out of that hole and get some decent savings.
I worked for awhile and things went pretty well and I was able to pay off my student loans.
But then the next thing hit, where my “Christian” based company decided they wanted me to have technical passion for a job they had worked very hard to remove all technical work from. They also wanted me to micromanage myself, which was hilarious because almost every ticket I worked on was boring as fuck. What honestly was there to micromanage? So I left.
Although I had paid off my student loans, which was great, I was also faced with unexpected unemployment with only about $5,000 in the bank. At the end of 3 months this had been nearly exhausted, when God provided a job out of left field. I love pointing out that the new job paid about 30% more than my previous job. Because, you know, God wants you to work hard for your employer, but God doesn’t really care if your employer pays you fairly or not. [Sorry, I still have some bitterness. Fuck that place Jesus loves them]
So once again…my savings had accomplished something for me, but I felt like I had barely survived without going deeply into debt. I guarded my spending very tightly over the next six months as I built up a new emergency fund and saved money for a better car. In the past, it had just felt that every time I had set aside a decent amount of money, it got wiped out.
I think it’s best to think of money as a structural issue. As the structural complexity of your life increases, the financial demands increase exponentially. Car ownership is fairly ubiquitous in the United States, but it’s an enormous cost. Even a paid off car requires maintenance, and you additionally have to pay for insurance, registration, and gas (or electricity). Although it’s practically necessary for most things, not all life situations can easily afford it. The cost of going from not owning a car to owning a car is enormous, and so it’s no wonder that some people are drowning under the cost of their car alone, as I was in college. Sometimes the cost of owning a car is actually greater than the earnings from the job you have to drive to!
But then once you get past that, you also have things like emergency expenses and the potential of unemployment. If you think paying for repairs on your car is expensive, imagine several months needing to pay $1,100 in rent without a job. Needing to pay $800 to replace the rear main seal in your car just doesn’t hold a candle to the cost of housing when it’s being pulled from your savings.
After building my savings back up while experiencing crushing imposter syndrome, something strange started happening. Although fear is not a good thing, fear actually led me to build a $10,000 emergency fund. I was earning good money, and although I was treating myself to a few things here and there, the fresh memory of unemployment lingered, and I knew I did not want to experience that again, so I was building a much greater hedge to deal with the possibility of that happening in the future.
Then I discovered FIRE. Over the course of several years, the fear dropped, but I pushed my expectations more and more. What I once thought would be uncomfortable turned out to be very easy, and so the savings snowballed. I became mindful of systemic complexity and how it can drag you down, so although I bought some really nice things, I made sure to avoid things that had hidden or sneaky costs. Rather than buy a house I really didn’t need and had no desire for, I continued renting, and then moved into a friend’s house to reduce my costs even further. I continued to learn how to work on cars, rather than simply going out and buying a new car because I had money.
And to be clear, there’s NOTHING wrong with buying a new car. But if you buy one as soon as you have the money for it, you open yourself up to systemic complexity in that you now have to pay more in insurance, you might be paying interest, and you are probably paying to care for it more, but you don’t technically have any additional money placed aside for other things in life, including setbacks. And there’s still nothing wrong with doing so if you really need to (I know of several cases that strike me as quite valid), but you have to acknowledge it for what it is.
See, with lifestyle inflation, as soon as people have money, they spend it. I’m always seeing people who immediately buy a house as soon as they have the down payment, completely oblivious to the possibility that they could lose their job and not be able to make payments on the house. Or they get a raise and immediately spent it for the next 5 years on a new car.
So many people are running in place. They have shelter, but it’s a much bigger shelter (and it costs a lot more to maintain). They have transportation, but it has more features. Their child is being educated, but the education is far more expensive. These are just a few examples. And again, nothing is wrong with any one of these, but when immmediately spending more becomes the hallmark of increases in income, it’s no surprise to step back and see that people are getting absolutely nowhere. They have all of the same general things, but nothing really to show for the money they spent. No greater freedom, no greater time, no greater peace, no greater anything.
And more often than not, these people are still just one job loss away from losing it all. It becomes a house of cards. And it’s a terrible thing to see.
As I earned more money and watched my savings reach “escape velocity”, I did reach a point where I started feeling comfortable treating myself. Painted furniture. That incredible pair of $260 boots that are the best ever. Tools for the car. Art. Camping gear. But very few if any of these things increased the systemic complexity of my life. And that, I think, has been one of the keys. If I had increased systemic complexity, it would have increased the bar for reaching escape velocity. And I so wish more people around me knew what escape velocity felt like. After 4 or 5 years, the savings were just insane. And a certain amount of “luck” or “blessing” is kind of involved. I haven’t had to do anything major to my car in awhile (that I wasn’t able to do myself, for example). I’ve been fortunate to have relatively good heath, etc. You’re never “immune” to everything. Money is not and cannot ever be your “savior”. It doesn’t work like that. But you can work with the things in your control, and I see a lot of people fail to ever consider this to be important.
Part of me taking a year off from work was actually a check on my heart. When you get to see your savings grow so rapidly, it can become addictive. And my greatest grievance against taking the year off was watching my money decrease, which was slightly painful to think of. But I really feel like it’s what God wanted for me. Because although the growth of my savings has been such a positive thing in my life, I always have to remember that it is not my savior, it simply allows a great number of money issues to not be issues. This year was a lot of me letting go of watching the money grow even more and accepting this.
I don’t pretend to know exactly what things should look like in other peoples’ lives. Everyone is so different. But I do believe that systemic complexity explains so much of the financial issues people face, and I think if people paid more attention to it and tried to reduce it, they would see some great improvements in their finances.