This morning I woke up, did some email and had breakfast with my family. The kids went out and played in 4 fresh inches of snow, and I went downstairs to read some product specs for work. The specs, as usual, were boring and filled with anomalies, so I switched over to Quicken to check my monthly budget. 30 seconds later I checked my total asset balance and I learned that I’m now a millionaire.
It’s fascinating how anti-climactic and altogether meaningless this milestone turned out to be, especially considering that this was a goal I set 11.5 years ago, and worked relentlessly to achieve.
When I graduated college and took my $50K/year engineering job I immediately started saving aggressively. I had a strict budget and a determination to hit $1M by the time I was 40, after which I would retire. I figured I would get a 10% return from the market, so I could then spend $100K/yr in retirement. I was a fool in many ways.
So as I achieve this milesone, I’d like to share some of my recent revelations:
It’s easier to decrease spending than it is to increase earnings.
I was very fortunate in my career, as I chose a path that was both exciting to me and one in which I was talented. Because of that, in less than a decade I grew from making $50K/yr to $160K/yr. This seems like a lot at first, but as lifestyle inflation kicks in it merely pays the bills. In fact, up until recently my monthly savings were not much more than when I first graduated. I had $850K in savings, yet was 20+ years from retirement due to my high budget.
I was a Money Magazine reading dimwit who thought I needed $3M or more to retire.
Then I realized that my life was too important to waste away in a cubicle. I now had kids, and I wanted to see them grow up. Reducing hours in the office is not a good long-term prospect in my profession – so I needed another way out. For awhile I floundered around, bordering on depression, because I didn’t know how I could “get out of the rat race” as the kids like to say. But then a series of events hit me – and I realized the answer was right under my nose. I could spend less.
But it wouldn’t be easy. I needed to make serious changes in my life. I wasn’t going to achieve my objective by clipping coupons, buying a fuel efficient car, and turning down the thermostat. My wife and I needed to downsize our house, stop eating out so much, and get rid of a car (among other things). We figured this wouldn’t be easy, and it wasn’t… for about 2 months. After that, we found ourselves in a new city, a small house close enough to bike to work, and with a single car. Besides the 2 months of hard work making it all happen, the changes were actually quite easy. Now we find that we’re making no sacrifices in our new situation, and in fact our lives are happier and more peaceful. It turns out cutting major expenses is quite easy if you’re mentally ready to let go of the consumerist culture.
Money, as they say, does not buy happiness
I get no satisfaction reaching my million dollar goal. None. A surprising emptiness exists in achieving it. I’m not regretful at all the hours I put into my career & building my salary, nor am I sad that I let some part of my life slip by in a flourescent cubicle dealing with politics and extreme careerism. I feel… nothing.
But that doesn’t mean I’m not happy. I am quite joyful with my life. I have a wonderful wife who supports me (even when I’m a complete jackass). I have two kids who I love and who love me back. I am grateful for everything I have in life, and I know I’m very lucky to have it.
But when I think about what makes me smile, it’s not spending money. It’s watching my wife run around in the backyard with 2 laughing kids. It’s running through trails in the mountains, kissing my kids as they sleep in their beds, sitting in complete quietness and solitude, and a cold beer after a marathon.
I know you all love cliches, so I’ll drop another one on you. It turns out the best things in life really are free.
Financial freedom is a great thing
Despite my lack of excitement about becoming a millionaire, that’s not to say I don’t see some benefits. Financial freedom is a wonderful thing. For as long as I choose to work, I can act with logic and integrity over politics. I don’t have to stress about raises or layoffs. I work in a small office where if we dry up on business, layoffs are inevitable. My co-workers regularly and outwardly worry about this, but I don’t. Not only is this good for the soul, it also leads to better work because I’m focused purely on the output.
And when I’m ready to quit working for a living, I can simply walk away. Those who are not financially independent don’t have that choice. I remember not having that choice, and it sucks.
With wealth comes responsibility
I’ll admit, this is a philosophy I’m still developing. Over the past 3-4 years, I’ve been coming to terms with how lucky I’ve been in life, and how many others have not been given the same chance that I did. I didn’t come from money, but I didn’t grow up in poverty either. I thought I was pretty poor, but I didn’t know what poverty was. 4 years ago I spent a month in Bangalore, India and I got to see what true poverty was. 3 years ago I spent time in Nicaragua and was again reminded.
And so I see it as fitting that I reach this milestone at the same time that the Occupy Wall Street revolt is continuing to gain steam. I can’t help but read the stories at We Are The 99% and feel that while some of the poor got themselves into their own mess, too many have been dealt a hardship that I likely wouldn’t have handled any better.
And so I’m left trying to figure out how I should invest my time and money ethically. When investing in US treasury bonds, am I supporting an infrastructure that will help out the people in need, or am I funding wars for cheap oil that destroys the land? When I buy individual stocks, am I supporting jobs for the middle class, or am I raising the salaries of their CEO’s? When financing a house renovation, am I taking advantage of the lower class person who I sell the house to, or am I taking an unlivable house and making it livable again for someone who otherwise would be in a worse place. Is there a way I can use my money and my increased free time to help others, and will that be satisfying to me?
I don’t know the answer to these questions yet, but I know that I feel responsible for figuring this out.
Finally, your time is a finite asset
Money comes and goes, as do most things in your life. But time just goes. In the words of Chuck Pahlaniuk, “This is your life, and it’s ending one minute at a time.”
I’ve learned not to waste time earning more money than I need. I’ve learned that spending time with family and friends is not only more fun, it’s also more rewarding. And most importantly, I’ve come to realize that the work and hours I put in to collect this large amount of money I now have would be in vain if I didn’t use it wisely – which is to say that soon I’ll retire and spend my time in the most valuable ways as possible: Enjoying my time with family and friends, teaching my kids values and supporting whatever path they take in life, meditating and philosophizing, learning life’s skills and becoming more self-sufficient, and having a lower impact on the environment so many generations after me can also enjoy this earth.
If I achieve all this, then I can look back at this milestone and finally smile.