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Can You Ever Have Enough Money?

This article was written by in Personal Finance. 15 comments.


This is a guest article by Outlaw, who lives and works in New York’s financial district and writes on the blog Credit Card Outlaw.

When I first became fascinated with personal finance strategy, I was in serious credit card debt. I couldn’t find full-time work. I felt like an idiot.

Every month, a new credit card statement. Every month, deeper in debt. No rich parents to fall back on, no income, and yet I still had to buy food and pay my rent. Even thinking about money made me sick to my stomach.

I was too smart for this. That’s what I kept telling myself.

Fed up, I began reading everything I could get my hands on. Every blog, including Consumerism Commentary, and every book in the personal finance aisle. I landed a full-time job and started a small business. I drastically slashed my living expenses. Within about three months, something miraculous happened: I was able to pay off the last of my credit cards. I wrote about this experience and how it felt on my blog, and about how getting out of debt shifted my goals.

My goal went from $0.00 (debt free) to around $50,000. I wanted to have $50,000 because I felt that seeing an amount like that in my bank account would give me a tangible level of comfort.

It doesn’t. Sorry to burst your bubble. When you hit $50,000, you simply associate with new people. Or maybe when you hit $100,000. But it’s pretty much a universal law that as you become a bigger fish, you find yourself in a bigger pond — with much bigger fish. If anything, I was happier when I was worth nothing at all.

But building wealth isn’t about happiness. It’s about overcoming the odds. It’s about attaining a level of accomplishment that no person or thing can ever take away from you, save for the grim reaper. Beyond covering your basic needs (food, water, shelter), money has very little correlation to happiness. Not what you wanted to hear, but completely true nonetheless.

Asking about the relationship between money and happiness is like asking whether winning a chess game leads to long-term happiness. You don’t play chess to become happy. You play chess to play chess.

It is a fool’s argument to suggest otherwise. Wealth building is just a game. Once you eliminate the years of negative beliefs about money that others have forced upon you (shame, guilt, fear, envy — our culture does an impressively crap job of preparing us for wealth acquisition), you can start the game in earnest.

Lose all attachment. Look only at the returns, the profit or loss, the overhead. Nothing else matters. Forget vanity projects, forget becoming rich overnight, and forget impressing others. I love personal finance because everything is spelled out. You are either in the black or in the red, wealthy or debtor. There is no ambiguity.

And please, forget about building wealth for your distant future. Until recently, I had been contributing the maximum amount to my 401k at work. What a waste!

Now I contribute nothing.

I’m in great shape, but I have bad genetics: the odds are excellent I will die young from diabetes or heart disease. When you get good with your money, you become good at understanding statistics. And that means looking at things exactly as they are, not as you want them to be or as you wish they were.

For this reason, saving up for some magical fantasy time in my sixties when I can play golf and suck on Werther’s Originals… that doesn’t make sense to me. And what if, against all genetic odds, I survive into my sixties or seventies? I don’t want to be wealthy, with a Life Alert hanging around my neck and a spare pair of dentures in my back pocket. I want to enjoy my prosperity now, while I’m alive and healthy. I would rather be poor at seventy than poor at thirty. That’s just me.

Plus, I don’t like any of the options my employer’s 401k plan offers. I chose the most “aggressive” fund at first, because I’m relatively young and fearless, but then I did my research. I don’t like, don’t understand, or simply don’t trust many of the companies held in the most aggressive fund. Some of them are sloppy organizations, others are in debt, and the rest are just boring dinosaurs with zero growth potential. There is a difference between aggressive and stupid.

So I switched my money into my plan’s most “conservative” fund, which is based primarily on corporate bond offerings. I don’t like how insanely low the returns are, and again, I don’t trust some of the underlying companies: they are debt-ridden dinosaurs. I don’t like the high expense ratio. I don’t like the almost certain possibility that taxes will be higher in the future than they are now — Uncle Sam needs to pay off its debts in some way, eventually.

I would rather take all of my money, less applicable taxes, and put it toward self-improvement, enjoyment, and my small business. Those all yield better proven returns than some obscure aggressive growth fund or fixed-income investment managed by people in skyscrapers whom I have never met or shook hands with. Also, I should not be charged money for the “privilege” of investing in your fund. Sorry, that’s just not how it works.

Those who defend 401k plans say that if you don’t contribute now, you are robbing your future self. Maybe I am. But I would prefer that to the alternative: robbing my present self for a future self that very well may not exist.

You’re alive today. Enjoy your wealth, and invest it yourself, or in yourself. Nobody cares more about your portfolio than you do.

Stop worrying and start playing the game. Wealth won’t buy you a good relationship or better friends. It won’t buy you happiness. But it can buy you more money. And more money buys more money.

Whoever first coined the term “the first million is always the hardest” was a genius. Invest your money now, while it is still worth something, before inflation eats it up or your health deteriorates. Don’t give it to a 401k plan to do with as they please.

And don’t share your plans with other people, unless they are on the same path. Some of my friends resent me when I talk about my wealth building goals, or my small successes so far. So I don’t talk to them about it any more. Let people live in ignorance. There are enough smart people online and in personal finance forums; you don’t need to be getting any financial advice from your friends or family members.

If you diversify, invest in what you know, spend less than you earn, enjoy the present and lose all emotional attachment to money you will succeed. There is no other option.

The rest is just small talk.

Updated February 10, 2011 and originally published December 24, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Outlaw lives and works in New York's financial district. He is interested in sitting on the beach, making money, and sleeping in. Every major decision he has made in the past year has been influenced at least in part by one of those desires. If Outlaw could tell his unborn son only one thing, it would be this: instant gratification is overrated. He blogs at Credit Card Outlaw. View all articles by .

{ 15 comments… read them below or add one }

avatar Anonymous

Don’t “throw out the baby with the bath water”…
Although I agree that “saving for retirement” has become almost meaningless what I have really discovered is that the important thing is building wealth to create PERSONAL FREEDOM.
It is also often confused that wealth equals money or being rich. Wealth is not necessarily a number in your portfolio, it is a state, a point you reach in your financial well-being.

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avatar Monevator

Interesting point of view that you don’t hear everyday — although it amazes me how many financial professionals hold mainly bonds in their retirement portfolios.

I think your post is self-contradictory though, a little. If money is a game, why do you need to spend now — particularly if you were happy when you had nothing? Why not save the difference for your retirement, if you can do without now.

Happy with nothing when you’re 30 and healthy is very different from having nothing when you’re 75, many of your friends have gone, you want to see your family but they’re all a flight away, and you can’t walk to the corner store without stopping three times.

I won’t second guess your odds on your life expectancy, but for most people you’re being far too pessimistic. Most people who can read and write a post like that are in a socio-economic background where unless they’ve already got serious health problems, they’ll make it to 65 no worries. And at 65 your chances of not seeing 66 is only about 1%.

Anyway, that’s just my two cents — thanks for thought provoking!

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avatar Erica Douglass

This post is completely bats*** insane.

If you don’t like your 401(k), and you have your own business, consider investing in a SEP-IRA. Or (depending on how much you make) a Roth IRA. IRAs can be used for many things other than retirement, as well!

“Look only at the returns, the profit or loss, the overhead. Nothing else matters.”

Really? Because there are certain stocks I won’t invest in even though they have high returns (Altria, anyone?)

And there are reasons I spend and/or save money that have nothing to do with returns.

“Invest your money now, while it is still worth something, before inflation eats it up or your health deteriorates.”

In *what*? You’ve already ruled out retirement plans!

-Erica

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avatar Luke Landes ♦127,386 (Platinum)

If you’re pretty sure you’re not going to live past 50 and you have no one to support after your death, the by all means, live it up and forget about saving for the future. I don’t think most people fit that description. I do agree that you should enjoy your life as much as possible, so for many people, a balanced approach between saving for the future (or retirement) is key. But for many, the choice is a luxury. You need to be generating well over average income to have a secure future and a financially worry-free present.

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avatar Troy

This is a kick ass post. And a rare one. As they say, act average…get average. The average PF advice is typically junk. Your advice is in the minority. IT is this minority that will truly accomplish something.

You are taking on the holy grail when you suggest that the establishment complicates money for their own benefit. But you are right.

Money is simple. Addition and subtraction. Nothing more. The strategies erected, the tax shelters, the retirement plans, are typically more complicating that beneficial.

I as well contribute absolutely zero to any retirement plan. I think retirement plans are complete junk. Yes…including the revered “match.” Becasue there is no free money, even with a match. it is simply well disguised.

I contribute zero to any stock or mutual fund I don’t know about.

But I do invest in my business. In my home. In myself. In the things I understand and control.

and I am very comfortable. And successful.

I find it interesting that so many want to chase the returns of the market, especially through retirement plans, when a simple fact exists. A VAST mazority of wealthy individuals became that way not through investing, or retirement plans, or credit card rewards, but through investment in their own businesses. Warren buffet isn’t rich becasue he is a master of the stock market. He is wealthy because he OWNS BUSINESSES. Lots of them.

That is the way.

And I also fully agree with the little recognized point that “saving” for retirement has an enormous opportunity cost. That opportunity cost is your present. The guaranteed present.

People say “what about all the “compounding” you are missing out on.

Zip it. Everything compounds. Assets and debts. Interest on debts or liabilities coumpounds exactly as it does on assets. So pay off your debt. Invest in your present, and your present compounds. Maybe enough to where you wont need to rely on a compounding retirement plan in the unknown future.

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avatar Steve

I’m happy for you, and ima let you finish. But Vanguard has some of the best 401(k) plans of all time. OF ALL TIME.

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avatar atexasgirl

Great post. I’ve never been comfortable putting my money somewhere I can’t touch it, and having to play by rules set up by someone else–rules that can and likely will change in the future. I contribute just enough to a Roth IRA to zero out my tax bill. The rest I save in CDs or interest-bearing savings accounts. When I want my money, I’ll get it without waiting until I’m a certain age or considering the impact of fees and penalties. Traditional retirement accounts limit our freedom, choices, and futures far more than most people realize.

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avatar Dave

“Warren buffet isn’t rich becasue he is a master of the stock market. He is wealthy because he OWNS BUSINESSES. Lots of them.”

This doesn’t make any sense, owning stock IS owning businesses, and Warren Buffet owns a ton of stock. He doesn’t own Berkshire Hathaway outright, just stock in it. And Berkshire owns stock in other companies, that’s its entire business.

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avatar Tyler Karasewski

“Stop worrying and start playing the game. Wealth won’t buy you a good relationship or better friends. It won’t buy you happiness. But it can buy you more money. And more money buys more money.”

great, more money that can’t buy you any of the things you actually want. Sounds like a really well-thought-out goal. But hey, “live fast, die young” — it sounds really edgy and aggressive, maybe that will let you make friends with the cool kids.

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avatar Financial Samurai

It really is about the journey. Once you get to the end, well… it’s THE END!

There’s a reason why we sometimes need to go poop before opening presents. It’s the anticipation that counts, rather than the gift!

Happy Holidays!

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avatar John DeFlumeri Jr

I think I agree, you can’t ever have enough money to feel satisfied, unless you hit the lottery or something like that.

John DeFlumeri Jr

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avatar Anca

Finally, someone has the guts to question the old retirement model.

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avatar SteveDH

Whoa there… My Mother has diabetes, has had two heart valve replacements, had cancer, and has lost her eyesight but she still enjoyed Christmas with us, her grandchildren, and her great-grandchildren. Contrary to the present hype the health care system can work wonders. She’s 89.
Don’t throw out that retirement model either. I’m retired (2 year now) and it has worked for me. Balance is the key. While working we still bought the big screen TV and took at least two vacations a year – all while trying our best to throw as much as we could into that “Nest Egg” thingy. Now we are comfortable living on pensions and using the Nest Egg for Extra-Ordinary life events (like a cruise to Australia) or one of those emergencies that crop up for time to time.

Peace of mind isn’t cheap but it’s worth the cost.

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avatar ajc

I’m living a genetic coin flip: all those on my father’s side died within a decade or so of my current age … all those on my mother’s side, into their 80′s/90′s/???? (grandma’s 97 and still kickin’).

But, no matter how long the allotment, there must be something IMPORTANT that you want to do with your life? If you’re not already doing it, how much time/money do you need to make that happen?

These are question that I asked myself when I was living day to day (WITH responsibilities) and $40k in debt …these are the questions that spurred me into massive action … or, is 7 years to $7million STILL to long for you?!

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avatar ddaryl

I agree. Retirement savings is just the big wealty boys using our money to make them richer, and if by chance they made you some moeny too then that’s great, but they don’t lose any sleep over that.

I support corproate pension plnas. You work for a ocmpany for 30 – 40 years you should be able ot walk away and live just fine with no worries. Because our society doesn’t work that way I fully expect it to degrade to the point where moeny itself will be of no use to anyone…

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