Ah traffic! Just like the old days when I worked a 9 to 5 job, I recently found myself stuck in horrible commute traffic again. Miles and miles of jammed-up traffic, barely inching forward.
Before you start thinking I’ve joined the ranks of the working again, you should know that this was during our recent family vacation to Texas.
We simply timed our travels badly and got stuck in Houston commute traffic. Yay?
So there I was — stuck on the highway in our rental Nissan Versa amongst the endless ranks of giant SUVs and super-sized commuter trucks. It would have been the perfect time to lay on the car horn and scream out the window about the injustice of wage-slavery and consumerism…
I totally should have done that.
Rather than road-rage like a crazy person, I reminisced about the decisions that got me to where I am today…
What decisions did I make that led to my different outcome in life? What different path did I take to reach a life of financial independence at age 38?
Are most people really all that different?
While it’s true that everyone comes from different backgrounds (some rich and some poor), our society still enjoys a fair amount of social mobility. It is still very possible for a hard working young man or woman to rise from the depths of poverty to the height of wealth. It’s unusual, but it can happen.
Attaining financial independence is very much the same; achieving a different outcome in life is really about making different decisions.
Make the right decisions and you could find yourself with a financially independent life — one without the need for a job, plenty of time to travel, and the ability to pursue whatever makes you happiest in life!
Make the wrong decisions, and you could find yourself in a mountain of debt, working at a job you hate, and living paycheck-to-paycheck (with nary an end in sight).
In my case, it was just a few investing decisions that made a HUGE difference — and I’m not just talking about investing in stocks or real estate.
I’m also talking about how I invested my time…
Difference 1: Education
Education is really where the differences started. I view education that happens after high school as an investment with a potential return.
In my case, I spent the time (and borrowed enough money) to invest in a Bachelor’s degree. By the time I got that fancy piece of paper, I’d rung-up over $50k in debt.
Lucky for me, the investment paid off. I was able to attain a good job that paid a decent salary. (Mind you — not a great paying job, just a good one.)
Getting a good education makes all the difference when you’re starting out in life. Suddenly you’re no longer trying to survive on minimum-wage jobs, but you actually earn enough to have a little extra money at the end of the month.
It’s that extra money and what you do with it that makes all the difference. If you play your cards right, it can eventually lead to financial independence.
Difference 2: Excess Cash
Some people view extra cash at the end of the month as “fun money” — money to be spent on restaurants, travel, entertainment, alcohol, or maybe some nice new clothes. Anything not spent this month is then saved for spending at a later date.
This is really just deferred spending.
My view on excess money has always been a little different — instead of seeing excess cash as money to be spent, I saw this as cash that needed investing.
In the beginning, I wasn’t investing in stocks — I was simply using the excess cash to widening the gap between me and financial failure. This first “investment” was a cash cushion to protect against potential job loss or other small financial disasters.
Eventually I started making “real” investments in stocks, bonds, REITs, or preferred shares. It started small, just a couple of hundred dollars per month. Those hundreds eventually became thousands — dollars that would never be spent on pleasurable pursuits like nice cars, travel, or fancy clothes. It would be invested permanently.
Mrs. Tako and I saved our money carefully for years — and you can see exactly how much we saved in this post.
I never believed that excess cash was there to make my life pleasurable. I viewed it as a lucky break that my skills were actually worth more than the cost of keeping me alive and sheltered.
One day everyone’s luck runs-out. I was simply preparing for the day when it happened to me.
Difference 3: Investing Is A Skill
As the money began to build-up, I started to get serious about investing — I sent myself back to school for a masters degree, investing in even more education. This eventually helped me get a higher paying job, which expanded the excess cash I had available every month.
Meanwhile, I spent every spare minute I had reading investing books.
You see — I’m a firm believer that the most important education happens outside the classroom. A degree from a fancy college IS NOT going to teach you how to get rich — YOU have to teach yourself how to do that.
Some people attain wealth by simply becoming incredibly good at their jobs. They climb the corporate ladder. This usually leads to a high paying job, but also a very stressful work-life.
Other people achieve wealth by starting their own successful businesses. This is a HUGE amount of work (usually far more than 40 hours a week), and many small businesses fail in the first 5 years.
For me, it seemed the most likely path to building wealth had to come from compounding. I simply needed to compound my money for a lifetime and I would be wealthy. (This is actually trickier than it sounds.) In order to do that, I needed to be a good investor.
So, I read every investing book under the sun. A few of them were actually really good books.
Small Differences Matter
These days, I have two kids and a lot less time on my hands… but I still work to continuously expand upon these three main differences:
- I continuously try to educate myself and learn new skills — For example: If something breaks, I simply teach myself to fix it. (Mrs. Tako now believes I can fix anything!)
- I carefully invest any excess cash. I track our expenses closely (which you can see in my monthly reports) and we still spend very little on “entertainment” and other “junk” expenses.
- I read every investing book I can get my hands on. I believe investing is a skill that must be honed, and not a random lucky event. I’ve become a much better investor because of it.
These differences don’t sound very big, do they? They’re really not!
At first, they were nothing — tiny differences between me and the next person. But, over time they’ve compounded into something much larger.
So the next time you’re stuck in commute traffic, think about this post — What’s the difference between you and the person in the car ahead of you? Are you different enough to achieve a different outcome in life? Will those differences compound to bring you a wealthier, healthier, and happier life?