This one goes out to all the overachieving Millennials I know who are disappointed in themselves for not yet having cured cancer, cashed out a startup worth more than a small country, or established world peace as we creep toward 30 (or 35 or whatever). I was supposed to be well on my way to being Amal Alamuddin-Clooney and saving the world by now, but law bubble. Oops. Turns out most good causes need money anyway, not lawyers. This week, I found out a very nice girl (well, woman now) I went to middle school with established a friggin French couture brand, which was my other pipe dream, and I was jealous for a (long) minute because I wasn’t born into a family of means like she was and designing always seemed like such a risk. (Don’t get me wrong, she’s very talented and deserves recognition for it, but I doubt she’s ever had to choose between buying dinner and deodorant, which does make going out a limb a bit less like walking the plank.) But then I pep-talked my way out of my self-pity and decided to embrace the fact that I’ve spent my 20s thus far planning to do or create cool things, which will just make it easier to hit the ground running when the time comes. So, new life goal: Acquire capital, do cool stuff, and buy the change I want to see in the world.
For those of you who don’t already know, Boyfriend and I are going to build an empire. I’m not saying we “hope to” build an empire or we “want to [but may fail to]” build an empire because the only question in my mind is how vast our empire will be. If you don’t know me, you may now be thinking, “Wow, I didn’t realize this anonymish bloggeress was delusional/one of those people/a cocky asshole.” (If you do know me, I can only assume you realized when I–a Latin American Studies major–accidentally founded a tech nonprofit after trying to quit the nonprofit sector entirely that I’m a tad off my rocker.) But this time I’m not crazy.
I recently became friends with a suburban Midwestern woman–let’s call her Jane–who literally finds it laughable that Boyfriend and I intend to buy our freedom from having to work for others within the next, max, 10 years. I’d guess that Jane and her husband make about $100,000 – $120,000 when both are working full-time, and yet one of the reasons that she’s been unable to separate from her husband is that they have too much debt and she has less than $10,000 in savings to use as a down payment. They both drive new cars, they own an ATV, and they have a hot tub–none of these for any good reason that I can come up with–and she doesn’t see how their consumerism is working against her freedom. Decades of women’s lib activism has secured daycare and equal access to employment, property, and lines of credit; yet, Jane is caught up in the middle class version of a poverty trap, unable to leave a situation that makes her miserable. In fact, she spends more these days, in an effort to feel happier. The weirdest part, to me, is that she’s clearly never considered not participating in mindless middle-class consumption. Jointly, anyway, they could have easily been on their way to millionaire status by 40 (not that anyone has to want that, but Jane does care about “having nice things”). Assuming a $20,000 initial deposit, adding about $28,000 per year from age 25 to age 40 makes you a millionaire by age 40. Instead of an ATV in the suburbs, they could have gone off-roading across Australia! But, no, she “needs” a whole bunch of random shit from mediocre meals on the town to… whatever else it is that she could possibly be spending all that money on. And Jane isn’t alone. Professors Chua and Rubenstein of Yale Law School identify impulse control (or the ability to delay gratification) as one of the three main factors in the success of some groups over others.
[T]he strikingly successful groups in America today share three traits that, together, propel success. The first is a superiority complex — a deep-seated belief in their exceptionality. The second appears to be the opposite — insecurity, a feeling that you or what you’ve done is not good enough. The third is impulse control.
Boyfriend and I, meanwhile, have been surviving on his grad student + internship income alone during this awful lung cancer chapter in our lives, paying the rent equivalent of the mortgage on a $340,000-ish house (including taxes and insurance). Our current apartment takes up more of our monthly budget than we’d like, but it’s one of the few pet-friendly places with space for a home office and an included parking space (lockable garage, actually) in the neighborhood we pretty much need to live in until he’s done with school. (Soon!!)
When Boyfriend graduates, his skills will fetch a pretty penny. We realize that we are very lucky that his interests happen to be conducive to good pay, but I also have to say, he’s kicked his own ass to acquire those skills. He didn’t just hit Code Monkey status and decide to coast, though that would still have made for a comfortable enough life. His desire and ability to rapidly consume and implement knowledge are unparalleled and I believe that our joint curiosity about the world will be our greatest financial asset. Anyway, the point of all that bragging about Boyfriend was to acknowledge that there is absolutely some privilege at work in our situation, but when we become the movers and the shakers, it won’t be because we inherited a glass floor, either. We are white and were born into gene pools and circumstances that facilitated our intelligence, but we come from middle class families who didn’t have our paths to careers in high finance/corporate law/national politics mapped out before we could walk (thank goodness). We are not ashamed to be striving, though I sometimes get the feeling in discussions with Jane that she thinks we should be because it’s embarrassing to in some way to believe anyone can advance their station beyond their birthright. I could have sworn I read a great article on the accomplishments of striving individuals who (in the probably-real article) went to public high schools, then Ivy League colleges (e.g. Zuckerberg). The point of the piece, if it exists, was that striving folks are well-positioned to shake things up, in part because of the tension between exceptionality and insecurity that Chua and Rubenstein discuss.
There’s three things in life. You were born with the genes that you have through sheer luck. It had nothing to do with you; you can’t take any credit for that. Your environment is also dumb luck. You happened to be born to parents who believe in education. You have this great environment. You don’t get any credit for that. But you do get credit for working incredibly hard. – Robin Chase
To buy our freedom and security so we can safely pursue higher risk/higher reward ventures, we will live life fully but modestly, in the spirit of Mr. Money Mustache but more on par with Joshua Kennon. After Boyfriend graduates, we’re eagerly looking forward to our financial stress giving way to more breathing room, to relocating, and to spending some of that money on crazy luxuries like office chairs that aren’t disintegrating and new clothing to replace things we’ve been wearing since way before college. New basics will come mostly from Costco because their shirts and tank tops fit my long torso so well and their Calvin Klein pants changed my life, but I’m also a fan of secondhand brand names for fancier acquisitions (hello, Armani Collezioni blazers from eBay) and Nordstrom for undergarments because I’m over being lied to by Victoria’s Secret and the like about my not-in-stock-at-those-places bra size. We’ll continue to prepare most of our meals at home. One of our favorite pastimes is looking on Zillow at houses we can afford next year and the houses we aspire to later on. The price certainly depends on what part of the new locale we end up in, but there are a lot of options with all the space we need and real yards that would cost considerably less than we pay in rent now, but not be much further from a city-center. After Boyfriend graduates, we’ll have more time to work on lots of little projects to minimize our expenses (e.g. homebrewing) and to create a steady flow of low-maintenance revenue. We’ll put all of our excess money to work for us, so it actually doesn’t seem unreasonable that neither of us should have to work within five years of the start of this new chapter, assuming we will use our freedom to continue to make money. And then…
Boyfriend is brilliant with computers and math and physics, and I’m interested in… lots of seemingly unrelated stuff. But by our powers combined…! You know whose ideas aren’t heard at all the brogrammer startups? Women’s. You know what industries investors aren’t interested in disrupting? Ones catering to women. You know what the best preparation for startup success is? Knowing lots of random, cool stuff and lots of random, cool people. Active listening is another important skill and it’s one I am working to improve. Standard advice for people working through problems is to talk to the duck; I want to master that role except, as Boyfriend has joked, it will be a little more like “Talk to the Five Year-Old” if I’m your sounding board because I ask a million questions. (In fact, I do that without prompting, often when I’m supposed to be going to sleep.)
Right now, I’m in the process of reading The Emperor of Scent, about Luca Turin who has contributed hugely to the vibrational theory of smell. He’s a perfect example of how curiosity + an unwillingness to obey the rules and keep confined to your narrowly delineated box of domain knowledge = disruption/innovation/breakthrough/awesomeness. Boyfriend, also a biophysicist, refuses to stay in his box and I don’t know that I’ve stayed still long enough to be confined to one. Being curious about each other’s worlds and having these rubber ducky conversations, we’ve already bootstrapped a nonprofit and we have half a notebook full of other ideas.
So that’s our plan, along with a handful of reasons I think it’ll work. I wanted to share it not only because thinking about things this way has made me feel very optimistic about the future, but because a lot of people I know are approaching turning points in their lives like officially joining finances, having a first child, or graduating with an advanced degree. For a lot of us, it’s the stage at which we get to choose whether we’ll settle for an ATV in the suburbs now or go on an epic safari later. Financial planning isn’t often a topic of conversation among 20-somethings because, I guess, of the potential to sound like a douche when talking to friends who are barely making ends meet. That said, it’s a really good time to be thinking and talking about it, lest we all turn into sheeple like Jane and suffer whatever consequences might come to bear.
If you want to read more on this whole ~*~delaying gratification so you can buy your freedom (or just buy cooler stuff later)~*~ thing, in addition to Mr. Money Mustache’s blog and Joshua Kennon’s (linked above), Jacob Lund Fisker of Early Retirement Extreme is pretty famous for his claim that his blog can “give you the tools to be financially independent in 5 years,” though his approach is… well, extreme. A quick Google search also revealed this link and this one. One million dollars invested in an index fund isn’t a magical number, but one can very plausibly live on $40,000 per year without touching the principal. (Four percent is the approximate withdrawal rate many grantmakers use because it tends to be more than sustainable). Particularly with a paid off car and residence, $40K can leave plenty of room for enjoyable non-necessities, so we’re not talking about becoming an ascetic here!
So what about you, Jumpers? Do you want to buy your freedom? Do you have a financial plan for becoming a millionaire? Let me know in the comments!