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Students of chemistry are likely aware of the four fundamental states of matter. The most advanced chemistry course I’ve taken was in high school, although I must have learned about this basic concept earlier than that. Solids have a definitive shape and volume; liquids assume the shape of its container and flow easily; gases also take the shape of the container but can be compressed in volume. The fourth state, plasma, is like gas, but produces electromagnetic fields and electric currents.

Scientists will argue that there are a number of additional states of matter, but the four fundamental states roughly equate to financial stability. To create this metaphor, there’s no need to look at superfluids or Bose-Einstein condensates.

Using the four fundamental states of matter to describe financial stability may be more relevant to someone’s life than, for example, stages of personal finance. When you break life into stages, you imply a smooth progression, or at least a linear, one-directional progression, across the stages. This has not been my observation of financial progress. Like states of matter, life can progress in any direction. And, although it’s difficult as it is with matter, one can jump from one state of personal finance to a non-adjacent state, in either direction.

State of personal finance: plasma.

Of the four fundamental states of matter, plasma has the highest levels of energy and the highest levels of chaos. Sub-atomic particles break away from each other. Two real-world examples of plasma are lightning and fire.

Lightning and fire are best avoided, and so is the plasma state of personal finance. This is when your finances are in disarray, perhaps due to a desire to ignore what might make you upset or being on the aftershock side of a financial catastrophe. Like the electrons in plasma, you have no control over your financial state of being. You are not aware of your net worth at any particular time, your expenses, or how much of a deficit you have each month.

My personal finances were in this plasma state of matter for too long as an adult. With a job working eighty hours a week or more, earning much less than minimum wage because I didn’t qualify for overtime, with a tiny non-profit salary living in a state with one of the highest costs of living, I knew my finances were heading towards danger, but I managed to find ways to survive — until the lack of financial foundation resulted in a devastating collapse.

State of personal finance: gas.

The gas state of matter is more organized than plasma, but it still has no form of its own. Just like the oxygen in the air, we need gas to live, and to survive financially, we need our personal finance situation to be in the gas state or beyond.

This fundamental state lines up with financial awareness. The molecules in a gas are not yet properly organized, but at least they are not falling apart. Financial awareness is the beginning of organization your financial life. You’ve begun understanding the importance of long-term financial health. You’re documenting your spending, tracking your net worth, reading about living below your means, evaluating strategies for getting out of debt and putting them into action, and otherwise taking steps to improve your life.

After my financial collapse, I realized I needed to make some changes to my life. I started reading the Motley Fool message boards, where amateurs would share their tips for making better financial decisions.

This was before personal finance blogs existed, before I created Consumerism Commentary. This was before popular financial blogs, like the one you are reading, Get Rich Slowly, Bargaineering, and Mr. Money Mustache were changing people’s lives.

I created a rudimentary budget, used free software to track my financial activity, and traded my job at a non-profit where I had no hope for advancement for one in which I actually had a path for development.

State of personal finance: liquid.

The molecules of a liquid are well-organized. They stick together and form a pattern, though the matter is still very fluid.

Investors talk about liquid assets, and that pertains to how easily one can turn that asset into cash for spending or investing. Your bank account is very liquid because you can withdraw money immediately; your house is not a liquid asset because it would take a lot of effort and money to sell it to realize its cash value.

To continue with the metaphor, the liquid state of personal finance is a little different than a liquid asset. When your financial situation is in the liquid state for the purposes of this article, you have control. You are in the process of getting out of debt, and you have put a priority on increasing your income. Your goals are more clear and you are determined to reach an event like being debt-free for the rest of your life or retiring with enough money that you won’t need assistance. You have excess cash flow each month, and you’re using the excess to pay off debt, save for the future, or invest.

Two changes I made between 2001 and 2002 were the most effective for moving myself out of the gas state into the liquid state of personal finance.

  • The new job helped. It wasn’t my dream job, not my passion, but at least I could make a living and build a foundation for the future.
  • I drastically reduced my living expenses by moving into a large apartment with three roommates. It wasn’t always comfortable, but I was able to save a lot of money with rent.
  • Taking my finances seriously allowed me to see my situation for what it really was — and that provided motivation and inspiration for improvement.

Eventually, I was getting to the point where I was able to invest more in myself. I could save money for the future in the form of investing in stock market index funds, a technique I gleaned from the Motley Fool online forums, and I worked hard every night after my nine-to-five job learning and writing about personal money management, investing, getting out of debt, and making better decisions with money.

State of personal finance: solid.

When matter is in its solid state, the molecules are incredible organized. There is no chaos. Solids have a definite size, shape, and volume, and these don’t change unless some kind of force influences it. The idea of solid financials is so strong that financial companies often use images based on solidity in their public messaging. Solids are stable, and stability is an apt aspect for any company that wants to be trusted with your money.

One investment and insurance company formerly used the Ashford and Simpson song from the 1980s, “Solid (As a Rock),” as their jingle, and that company still uses one of the most famous geological rock formations in its logo.

In the solid state of personal finance, one has no debt, except, perhaps, for a home mortgage, or strategic debt related to investments. (But the amount of debt in any case is controlled.) A household has and maintains a positive net worth, and cash flow is positive each month. There is enough excess cash to save for the future — there is no living paycheck-to-paycheck. Your emergency fund has your back to handle unexpected financial events.

Many people’s finances never reach this solid state. It is possible to survive in the liquid state, but it’s living on the edge, always in danger of returning to gas. It’s much more difficult for a solid to change to a gas — in chemistry, that process is sublimation — but liquids often change to gas under certain circumstances. A solid money management approach protects your money from vaporization.

I didn’t reach a truly solid state of personal finance until I was supplementing my day job income with a side business. I could have gone without the extra income, but it would have taken a much longer time to reach a point where I was no longer concerned about my ability to pay all my bills each month. Although it wasn’t overnight — in fact, one might say my business was more than ten years in the making — creating my own asset out of thin air was the quantum jump I needed to generate significant progress towards my financial goals.

Bonus state of personal finance: supersolid.

In chemistry, supersolids exist, or perhaps it’s more accurate to say that some matter exhibits supersolid properties, but to be honest, my knowledge of chemistry does not extend far enough to have a working knowledge of what that might mean. When I started my personal finance journey, I didn’t even know of the existence of this state of being, much less this state of matter.

If the solid state of personal finance requires a steady stream of income to maintain that state, and that income requires a trade-off of time and effort, then the supersolid state of personal finance is that point at which you no longer need to trade your time and effort to afford to live however you want to live your life. It’s kind of like the classical retirement — by classical, I mean the 20th century, upper-middle class concept — wherein you quit your job, relying only on income from your pension, or more recently, your own investments.

Beware people who promise that you can retire early. There is a very popular movement extolling the virtues of extreme saving and “retiring early,” but if you look closely, some of the loudest voices are still working. They’re just working at something they enjoy, relying on income from such work, and calling it “retirement.” The supersolid state of personal finance isn’t merely retiring, it’s being truly financially independent.

Followers of Consumerism Commentary know that I sold my business a few years ago. Between profit from the business as it was ongoing and proceeds of the sale, I’ve been able to save and invest more than I would have earned from my day job over the course of the remainder of my lifetime. I’m not bragging; I simply consider myself lucky and happy I had some foresight into a profitable trend, and I only state this to point out that it is possible, if rare, to reach this supersolid state, financial independence.

And still, life can change at any time. There’s no reason to believe that my finances will definitely not return to any other state in the future. Solids can melt, liquids can vaporize, just as gases can condensate, and liquids can freeze. And as I mentioned above, it’s even possible but rare to jump from one state to another. Solids are stable, and supersolids even moreso, so the goal in terms of personal finance, at least for most people living in a developed nation with reasonable opportunity, should be to reach those states.


Financial independence has become an important topic for me over the course of my adult life. It’s been a progression. First, I discovered the concept of spending less than I earn — simple mathematics but a behavioral change — and how that, in addition to making better choices, could eventually lead to financial independence through the slow path to wealth.

Yet, I have been bothered by problems with the “getting rich slowly” concept, some of which I addressed in this video about quantum leaps in finance, and which I explained better in the article linked in the previous paragraph. Just because I’m not sold on the idea that just making better decisions over the course of a lifetime will lead to wealth doesn’t mean that I think there’s a consistent method of getting rich quicker.

I am fascinated be people who report success finding financial independence early by making some extreme choices in their lives. Several years ago, during the first few weeks of the Consumerism Commentary Podcast, host Tom Dziubek and I interviewed an individual with a popular website who preaches about early retirement and the extreme choices he made to get to that point.

What is retirement, anyway?

Before I can talk about the interview, I have to point out there is some disagreement, or at least variation, regarding the meaning of retirement. I entered the interview with a traditional view. Retirement is the point at which your career has come to an end. If you work in an office or at a police station, your co-workers will throw you a going-away party with cake. You leave your job, perhaps collect a pension, move to Florida or Arizona, and live out the rest of your life in leisurely activities like sitting by the pool, playing golf, traveling, cultivating hobbies, and doting on your grandchildren.

This is, of course, a narrow view of retirement, despite it being a relatively accurate, if stereotypical, picture of a form of retirement that has certainly been popular in American culture over the last generation or two, especially with corporate workers who stay with the same company or a small number of employers within one industry throughout their lives. The disappearance of pensions in favor of 401(k) plans and a lower prioritization of human capital have encouraged employees to be less loyal to their employers and more faithful to their own needs and desires.

Average lifespans are increasing. Access to healthcare, despite the industry’s troubles, is helping people live healthier in older age. Add these to a decreased reliance on government support like Social Security and increased expectations for quality of living, retirees need more money than ever to provide the cash flow necessary to live as they are accustomed.

One result to this increased financial pressure is that many of today’s workers think they’ll never be able to retire. According to a recent Wells Fargo study — keep in mind that Wells Fargo sells “retirement planning” as a product — 37% of middle class Americans believe they will need to work until they’re too sick or until they die, at which point, retirement will lose some or all of its enjoyment.

As the world changes around us, so does the concept of retirement. The motivation for working is changing. It’s less likely that one can expect to follow the traditional path of working for thirty years and living in retirement on a pension or from returns from a risky 401(k) portfolio, so people who preach taking a more active approach to earning and saving wealth have grown in popularity. That takes me back to the interview.

Is he really retired?

In retirement, what should disappear is the need to trade time and effort, a function of labor, for capital needed to pay for living expenses. When we work, we take a certain amount of time that could be spent on activities that are more enjoyable, and use that time in manual or mental labor. Assuming a person like most people is not lucky enough to truly enjoy the work they do and to continue that enjoyment for years after turning a passion into an occupation, there’s eventually some desire to stop.

Other income sources take the place of trading labor for capital.

  • Income can come from converting retirement savings into cash flow, quickly depleting a finite resource.
  • Investments can generate income while depleting a resource at a slower rate. Financial planners suggest a safe withdrawal rate of 4% for the first year with a portfolio balanced between stocks and bonds.
  • Retirees can rely, to some extent, on government benefits for income or to pay for expenses like healthcare.

The main idea is that trading labor for income stops. Does it count as retirement when the supposed retiree is not only still working to produce income (whether he claims to need it, despite this work being different than his initial, primary career) or if he continues to rely on his wife’s income for covering expenses? It’s certainly a different level of financial independence. In this podcast guest’s particular case, a vigorous approach to saving as much income as possible, reducing material needs, and continually considering methods of downsizing all helped him reach a point at which he could quit and take more risk by starting his own business with savings and his wife’s income as a cushion.

Unfortunately, as this was one of the first podcast interviews we produced, the audio quality was not sufficient. I decided not to re-record the interview because I felt there was a bit of a lack of authenticity. I did not feel the early retirement in this case was not real enough to serve as a legitimate story. There are some interesting concepts behind the philosophy, but the holes in the logic were too large for me to feel comfortable with the story.

Is real early retirement a myth?

Let’s say you have no savings, but you also have no debt. You can “retire” any time you want. You can live off the land. Find unclaimed space and build a shelter and hunt for food. Barter for any needs you have. I suppose that can be a legitimate retirement if that type of life sounds good to you. If you change how you approach your needs for the rest of your life, you don’t need a lot of money to retire.

Or, you can plan to retire with a combination of lowering your expectations and increasing your savings for, say, five years. If you and your spouse expect to earn $400,000 over the next five years and manage to save 90% of that, your nest egg totals $360,000. If you can live off $12,000 a year — and I know people who have — you can make that nest egg last thirty years without even investing in the stock market.

It can be done. Early retirement is real for the middle class, but only those who are willing to make extreme changes to expectations and behavior today. But it’s not very realistic, and the extreme savings path is fraught with problems.

In most cases, because most will not be interested or able to make those sacrifices, early retirement is a myth, and setting that goal is a recipe for disappointment in the long run. Most people are not willing to make the kind of sacrifices necessary to make early retirement — the kind in which you actually do stop trading labor for capital and do not have a spouse’s salary to rely upon — a reality. Be sure, if you follow a guru who preaches early retirement, that you maintain realistic expectations and a good understanding of the guru’s actual retirement situation.

For the most part, the middle class is not interested in denouncing the consumerism culture perpetuated not only by the media but by our communities and society at large, but the more a guru professes early retirement, the more likely he or she is still working and generating an income in exchange for some type of labor.

Are you on a path towards early retirement? What does retirement look like to you, and what are you doing to make it happen?


This past weekend (including a few adjacent days) I attended the third Financial Blogger Conference in St. Louis, Missouri. I wrote about the experience in detail on my personal website, so check that out for a full report on the conference.

Some of the highlights relevant to Consumerism Commentary include winning the Lifetime Achievement Plutus Award for this website, participating in an “Ask Me Anything” panel about making money through blogging with J.D. Roth, Andrea Deckard, and Toni Anderson, and discussing my future plans with potential partners.

The folks at Experian were in attendance, as well. We didn’t discuss my recent credit crisis, in which a stranger was able to get a hold of my credit card number. (It seems most likely, due to the timing, that this was a result of the Adobe security breach in September, not the University of Delaware breach announced earlier this year.) Experian was interested in my thoughts about quantum jumps (or leaps) in personal finance, so I agreed to record a video discussing the topic.

Here’s what you should know. I was completely exhausted by the time we recorded this video, and I had already decided to drop my attempts to dress well. Thanks to managing the Plutus Awards and non-stop meetings and sessions, I could barely stand and talk, let alone think. But I made the effort to go through with the recording, and with Experian’s great job producing the video, I wanted to present it despite the lack of my normal, smooth communication style.

I’m not sure I got my point across.

Building wealth slowly over a long period of time is a good start, but by the time you’re old, inflation eats away at your wealth and you’re too old to enjoy it, anyway. Accelerate your wealth by taking a quantum jump; my first quantum jump was getting over my ignorance and becoming aware of my financial situation, but subsequent quantum jumps came from each job change and coming up with a project that would eventually be successful.

For some videos in which my performance is a little more lucid and comprehensible, check out those I made for PNC Bank earlier this year.


As a kid, I might have had attention deficit disorder (ADD). I was never diagnosed as far as I know, but I had many of the symptoms of the “inattentive” type of ADD, and some of those symptoms continued into adulthood. An actual diagnosis of ADD as an adult would require exhibiting at least six recognized symptoms since childhood and for those symptoms to often interfere with one’s functioning in life, work, and relationships. I don’t think I’d qualify as having ADD, but the symptoms I do have do affect my life and my finances.

There has been some criticism of the ADD diagnosis. There’s been some concern that, at least for a period of time, the condition had been overdiagnosed. The symptoms of ADD and ADHD (ADD with hyperactivity) can come from other causes than the disorder. An inability to focus, for example, could be a symptom of ADD or could just stem from a lack of experience focusing on tasks. In adults, procrastination could be a manifestation of ADD or it could be a conscious choice to avoid responsibility until the last moment possible.

Doctors believe, however, that ADD/ADHD is underdiagnosed. Three to five percent of the United States population might have adult ADD/ADHD, but only 15 percent of those who could be diagnosed are aware that they have a disorder.

Self-diagnosis of adult ADD or ADHD is not possible, at least not without a medical degree. Besides just an observation of the required number of symptoms and an analysis of the effect those symptoms have on one’s life, there are several tests that are required to rule out other causes of behavior. You should check with a doctor if you suspect you might have ADD to receive tools that can help control the symptoms.

With a diagnosis or not, the symptoms of ADD can be harmful to one’s financial life. ADD/ADHD and its symptoms can prevent financial independence or slow down the approach towards wealth or stability:

Adults with ADD/ADHD often experience career difficulties and feel a strong sense of underachievement. You may have trouble keeping a job, following corporate rules, meeting deadlines, and sticking to a 9-to-5 routine. Managing finances may also be a problem: you may struggle with unpaid bills, lost paperwork, late fees, or debt due to impulsive spending. Melinda Smith, M.A. and Robert Segal, M.A.

Rather than fighting the tendencies described above resulting from ADD or its symptoms, one approach would be to use these effects to one’s advantage. Here are a few suggestions that take ADD traits and turn them into advantages. Wouldn’t you know it, as I was writing this article, I got distracted by reading the testimonials on the Ted Mosby Is Not a Jerk website. I’m easily distracted.

Leave the corporate world behind in favor of working for yourself. This isn’t exactly a simple proposal. In fact, for someone struggling with ADD symptoms, succeeding as an entrepreneur can be that much more difficult. And in some cases, the decision to start your own business if made because of a desire to get away from corporate mentality can be a big mistake.

You never work for yourself, even if you own a business; you have to answer to customers, clients, stakeholders, employees; in fact, owning your own business greatly complicates the structure of responsibility. In some cases, though, the increased responsibility of owning a business can have the same effect as procrastination: when the stakes are higher, those who procrastinate might operate at their most efficient and effective levels.

Build systems to keep you organized.

When I was in the corporate world, companies offered educational programs designed to help employees learn the skills that assist with organization and time management. Corporations are willing to spend money on this type of education for one simple reason: organized employees work more efficiently, and efficient work saves the company money. Corporate culture is not designed to invest in the personal development beyond what is good for the company’s bottom line. Unfortunately, ADD or its symptoms make it difficult for those employees to make permanent improvements based on the skills taught in these educational programs.

Have you experienced this? After hearing some great suggestions for keeping some part of your workday organized, you put the system into action. After a week, maybe two, you get bored of the system and revert to old habits. What you need is a meta-system. A meta-system is a system, but it’s a system that helps you manage the systems you put into use. It may not be enough to organize your email inbox using incoming folders, archive folders, color-coded priority ranking, and a policy of clearing your inbox every day. This is a good system, but if you have the tendency of letting chaos creep into your email behavior, you need another system that raises the stakes to keep your system in check.

An example of a meta-system that keeps this inbox system in check might involve measuring your success once a week and rewarding yourself for your level of effectiveness.

Paying bills is one of the most important financial responsibilities one can have because the disastrous consequences of not doing so. One system often suggested for maintaining bill payments is to make them automated. You can set up recurring payments from a checking account sent automatically from your bank to the company that bills you on the same date each month. Sometimes you can set up an automated electronic transfer.

Automated bill payment is a classic example of what someone who struggles with paying attention to details can do to alleviate the potential consequences of unpaid bills. The system of automation requires oversight. If a company keeps increasing the amount charged and knows that you are automatically paying bills without review, it makes it easy to be overcharged for services. That could damage your financial condition over the long term.

Fight boredom by adding randomness into your day.

Boredom might come from ADD or ADHD. It could be a result of a lack of a challenging environment. Boredom might also be the result of settling into a behavioral pattern.

One thing that has worked for me while I was bored in my corporate environment was to take time out of the day to do some things that gave me energy. Sometimes I would go to the roof of the parking deck and jog a mile in a loop. Exercise is great if you experience the restlessness symptom of adult ADHD, because channeling that restlessness into a physical exercise satisfies the need for activity while also being beneficial to your health.

In order to fight boredom and tediousness, sometimes I would put my work away for a few minutes and work on a personal project. The boss might not have been happy about my using some time for personal endeavors, but taking a break to work on something fulfilling helped me perform my job-related assignments better.

Even visiting co-workers at different times during the day, being careful not to interrupt anyone who wouldn’t appreciate a quick social visit, help keep the boredom away.

Use focus and passion to your advantage.

ADD/ADHD can manifest as difficulty with mutli-tasking or task switching. First of all, attempting to multi-task can be damaging. According to a recent study, the more you try to multi-task “the less you’re able to learn, concentrate, or be nice to people… The less you’re able to filter out irrelevant information.” Other studies show that humans can’t multi-task at all; what we think of multi-tasking is actually task switching.

The difficulty with task switching among those with ADD can sometimes take the form of an exceptional ability to focus intently on one thing. While it’s true that some with ADD/ADHD have difficulty maintaining focus, the opposite, hyperfocus, may manifest itself in other activities — usually not the activities others want you to attend to, but personal activities that inspire some kind of passion.

You can’t always design your life and work around what you’re passionate about, but some of the creativity and restlessness that can come from ADD can help you discover life paths that incorporate those passions.

Be aware of the ADD/ADHD income deficit.

A study has determined that those with adult ADD/ADHD earn significantly less income than those without. Here are some of the pertinent economic results from the study, with figures from 2005:

  • Adults with ADHD are less likely to be employed full-time.
  • High school graduates with ADHD earn $10,791 less annually than their non-ADHD counterparts.
  • College graduates with ADHD earn $4,334 less annually than college graduates without ADHD.
  • Because of the tendency for adults with ADD/ADHD to be more likely to abuse drugs and alcohol, the cost of the disorder $180 billion a year, plus $77 billion due to lower annual income.

The economic disadvantage for adults with ADD/ADHD or its symptoms is significant, so it’s important to find ways to counter that disadvantage. Working harder or more isn’t always an option. Sometimes life prevents you from getting a second job. But you can look to overcome difficulty with negotiations to make sure you’re getting the most out of your day job income. You can consider how quantum jumps can boost your wealth. You can use some of the above tips to counter ADD tendencies, reducing the deleterious economic effects of those symptoms.

How do you deal with your adult ADD/ADHD symptoms? Have you interacted with children with ADD/ADHD or its symptoms? What behaviors have you seen among those with ADD/ADHD that helped them succeed?

Photo: Flickr/adreson