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avatar You are viewing an archive of articles by Outlaw. 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.


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.

I don’t believe in conspiracies.

A few weeks ago someone I vaguely knew from college forwarded me an email about how the World Trade Center was likely destroyed by government “beam weapons.” I don’t even know what a beam weapon is, but it sounds absurd. Then, more recently, I was watching a special about Roswell on the History Channel.

Interesting stuff… But I just don’t buy any of these conspiracy theories, and here’s why: people love to talk. We can’t resist talking, in fact.

No employee or government official can be trusted for long before he or she gives in to the urge: a high-traffic whistleblower blog, an interview on CNN, a tell-all book. No matter how far up the food chain you go, people love telling others about their “hot” information. This is why insider trading is a problem. This is also why viral videos go viral.

free adviceIt is this same human compulsion to share exclusive info that sometimes convinces me I have to spread the personal finance gospel. Now that I am totally immersed in personal finance — I blog about it, I read about it, I try to live it — I want others to get in on the action, too. I want others to see their money working for them, rather than only working for money.

When a friend tells me he is liquidating everything to load up on gold bullion, or that he plans to take his fiancee on some extravagant vacation financed entirely by high-interest credit cards (when he still has massive student loans to pay down), I start to get hives. And chest pain.

Fact of the matter is, I hate watching someone walk into the path of an oncoming bus. Especially if that person is a long-time friend or family member.

Despite this, being the armchair financial advisor no one asked for can lose you friendships. It can upset family. And it can even backfire… If you’ve ever given someone a well-researched stock tip, you know what I mean. If the stock goes down, your buddy blames you for his loss. As if you literally stole the money from his wallet and ran off with it. And if it goes up, you get no credit — he will praise himself for his amazing “find” and sound judgment.

I’ve developed a rule of thumb that seems to work really well for spreading the good word. Here it is:

1. Help close family members (parents and siblings only; grandparents are a lost cause) when you see them doing the wrong thing consistently, or when you know they could be allocating their money better, or saving much more. They’re your own blood, after all, and you have an obligation to help them get on the path.

2. Let friends and co-workers spend their money however they want. You can’t convince someone to lead a financially sound life if he or she has already committed to a delusional “rock star” existence fueled by credit cards. If your friend’s spending habits are truly unbearable, you need new friends. Just as it is hard to stop drinking if all of your friends are stone cold alcoholics, it is hard to remain financially savvy if those around you abuse wealth and do not understand the time value power of money.

When you do stage an “intervention” with a family member, keep it low key. I have personally found that “show, don’t tell” is an excellent strategy here: rather than lecturing to them about interest rates or emerging market ETFs, loan them one of your favorite books on personal finance or investing. “I’d love to get your views on this one when you finish reading through it,” is what I say. It’s low-pressure and laid back. (The Richest Man in Babylon is good for those who seem to have no respect at all for money. For more hopeful cases, try an inspiring Warren Buffett biography.)

If they are ready to see the light, they will. And if not, hey, at least you tried. Now get back to making money.

Photo credit: Solo, with others


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.