Facebook and Finances: How Staying Away From Social Media Saves Me Money

After graduating college, we decided to quite facebook.  Photo: http://gta.wikia.com/

After graduating college, we decided to quit facebook. Photo: http://gta.wikia.com/

This month marks a very special occasion – Mr. Old Man Mase and I are celebrating our second wedding anniversary! We owe our fabulous marriage to the love and dedication we have for one another. A time like this calls for gratitude and reflection.   Two years ago, we embarked on the journey of a lifetime. Both recent college grads, we assumed we were ready for it all.  Of course, when it comes to academics, we’ve always thrived, but you can’t always find solutions to real world problems in a textbook. It was also two years ago that we decided to abandon Facebook – for good.

We opted to permanently deactivate our accounts during our first week of real adulthood, right after graduation.  Because of this single move, I lost my connection to the rest of the world. I also lost contact with 123456789 “friends.”  I am the last one to find out about juicy gossip (if at all). I have no idea what’s going on in the news. I don’t know about your latest job promotion, or about your new car. Probably the funniest of them all – I didn’t make it to your birthday bash because I didn’t get the Facebook invite.

We have, however, tackled some pretty pivotal financial accomplishments since parting ways with Facebook. In chronological order: We paid off our student loans and credit cards entirely. Saved an emergency fund. Bought our first condo. Cash flowed our wedding reception.  Paid off 40% of said condo.

How in the world did two recent grads accomplish all this? Our income, although we are very blessed, wouldn’t leave you flabbergasted.  The answer lies in self-control, which is much easier to exercise when you’re not on Facebook. You see, Facebook provides a platform for people to showcase (and often times exaggerate) the very best of themselves. And well, let’s face it – our reality will almost always pale in comparison to everybody else’s fantasies.  In order words, Facebook enhances our need to “keep up with the Joneses.”  You’re constantly aware of how much fun other people seem to be having, and all the shiny new things they have. So you feel like you need to upgrade your life, which often leads to impulse purchases.  Don’t get me wrong, Mr. Old Man Mase and I live very colorful lives – we’ve cash flowed several vacations, go out to eat, and do plenty of giving, all while making smart choices for the future.  There are however, some things we simply go without – we live without cable, and have very basic cell service. Not having a Facebook account makes this much easier to do, because we spend our money on things we WANT, not things we feel we should have and/or do to stay in the loop.

Our finances aren’t jeopardized by the latest trends and whims on Facebook.  And because we don’t dedicate precious time to mindless Facebook surfing, we have time to cook from scratch, read, and even get some errands taken care of after we get home from our demanding corporate jobs. Quite possibly the best benefit of all, we’ve been able to meaningfully interact with our handful of lifelong friends, because we’re not blinded by the Facebook fog that makes everyone think they’re friends with everyone.

Happy Anniversary to us! And may we continue to spend our resources: time, money, and energy wisely.

Damn Right! Behind the Scenes with Berkshire Billionaire Charlie Munger by Janet Lowe

Charlie Munger's biography, written by Janet Lowe.

Charlie Munger’s biography, written by Janet Lowe.

A few weeks ago I finished the first biography I have read in quite a long time, that of the Berkshire Hathaway vice-chairman Charlie Munger.  Over the past few months I had become increasingly intrigued with his story, as I have heard snippets about his life and various philosophies that seem to be commonly known in value investing circles.  There isn’t too much information out there on Charlie Munger other than this book, although I do plan on reading his “Poor Charlie’s Almanac” at some point.  After reading author Janet Lowe’s work he really does seem like a fascinating human being.

The book starts out with Charlie’s family history and early beginnings.  To his family it seemed clear from the start that Charlie was a very smart boy with a promising future.  From an early age, he was very interested in becoming wealthy.  I empathize with his motivations, “I wanted to get rich, not drive around in Ferraris…but for the freedom it would give me.”  I have seen too many examples of people pursuing wealth for wealth’s sake, and this was a good reminder that money is simply a means to an end.  The purpose is different for different people, but Charlie’s desire for financial independence certainly rings true with my own.

Most of the chapters focus on specific business deals that Munger did in conjunction with his partner, Warren Buffet.  There are tales of buying the See’s Candies company, the Buffalo Evening News, running the Daily Journal Corporation in California, and of course, the birth and development of Berkshire Hathaway.  The guy is a mogul, no doubt, but his fortune didn’t come so easy to him.  When Charlie was is his early career years, his wife divorced him, his youngest son died, and he was broke.  He was in a dark place for awhile, but bounced back and focused on creating the life that he so desperately wanted.  He ended up marrying again, having a large family, and becoming one of America’s wealthiest investors.

Although Lowe doesn’t focus a lot on Munger’s individual investments and the rationale for various choices he’s made in business throughout the years, she gives enough to get your mind going to try to put the puzzle pieces together.  It seems that, in the early years, Munger reached the initial fringes of wealth by completing a few profitable real estate development deals.  That capital, in combination with savings from his career as a lawyer, helped propel him into the investment world where he started his own partnership.  The rates of return he was able to achieve throughout the years are given in the book, and it is quite impressive to see that there are real, live people out there who have beaten the market consistently over time.  Of course, they put an immense amount of time and research into their work, but it is nice to know that it is possible.

Let me break down some key lessons from the book that I found most useful:

Reading the story, you really do get a sense of how much of a dream team Munger and Buffet really are.  When you put two really smart, motivated people together that are both passionate about the same thing, you get amazing results.

You don’t have to be a genius to get rich.  You just have to “be a little bit smarter than the other guys over a long period of time”.

Charlie Munger really had a focused approached to investing.  Focus your intelligence, time, and capital into your best ideas and opportunities, if you are willing to live with short-term volatility.

Also, I really enjoyed Charlie’s speeches at the end of the book in the Appendices.  There is one speech where he makes a good argument that if you have a strong foundational knowledge in all of the basic disciplines (biology, psychology, mathematics, history, etc.) you will be way ahead of the majority of the population in terms of decision-making power.  With all these tools in your toolbox, you can evaluate opportunities in investing and in life with much greater clarity, while everyone else is walking around with a hammer thinking that every problem they encounter is a nail.

This book was certainly enjoyable and has a lot of worldly wisdom to convey.  Investors reading this book looking for specific strategies or a detailed history of Charlie’s investments will be disappointed.  This is definitely more of an overall picture of Charlie’s life.  I did think Lowe delved a bit too much into Charlie’s family history – I didn’t need to know about Charlie’s daughter’s cousin, etc.  But really, that’s a minor quibble.  I definitely know a lot more about Charlie Munger and his style as an investor and a businessman.  I can appreciate his philosophies because he focuses more on wisdom than simply knowledge.  If you’re looking for an insight into the mind of one of the best investors in modern times, check out this book, you’ll definitely learn something.