Pocketbook Over Pride

Mrs. Mase switched jobs recently. There were some good things about the old place she was at, mostly a few co-workers who ended up becoming friends. However, the overall work situation was starting to become untenable for certain reasons. It was reaching such a point of unsustainability in fact, that she quit the job just before Christmas.

We had it all planned out in advance budget-wise – because we’ve been saving such a large portion of our take home pay in order to knock out our mortgage, re-tooling the budget didn’t hurt much. In fact, because we had purposefully built in a decent amount of financial margin in our lives, it wasn’t a difficult decision to make.

My wife was able to search for a new position, take a breather, and take her time finding the next opportunity without a lot of stress. This whole process has left me feeling incredibly grateful and thankful to God. I can’t imagine how much more stress we would each have had in our lives if we were living paycheck to paycheck under the same circumstances. Yeah, my wife would have probably still left her position, but we would have had to cut back much more than we did.

So what’s happening now? Well, the Mrs. found an awesome new job that she started this week. The role is not quite as prestigious as her old one, but she is happier than ever about it.

The pay is better, the hours are shorter, and the culture seems to be pretty friendly and complementary with people who want work/life balance. Also, the job is even closer to home than her previous one, which cuts her commute (she walks to work) by over 50%! Talk about a huge blessing.

The thing is, my wife could have been a brat and complained about the whole thing because her job title isn’t as cool sounding as her old one. She could have complained about a number of other things too. But the thing is, she didn’t, and that’s why I love her so much. She kept searching until she found the right opportunity that not only gave her a better position that more fully integrates into our lives; she did it without sacrificing our financial goals too.

Sometimes I think a lot of people care way more about their job title than what they’re actually doing at work or what their pay or hours look like. Thinking about it more, it makes sense, because different people need different types of validation in their career. Some people care exclusively about money – raises are a direct indication to them of how well they are doing and they believe that it determines their status in the organization. Others care mainly about schedule – free time is way more important than overtime. Still, others just care about making an impact in the lives of others through their work. They don’t care about the money or titles as much, and they’re willing to stay late and come in early because they feel they’re making a real difference.

Ultimately, I think most people care about a mixture of all those things. However, I believe each person leans in one direction a little more than all the others. Have you ever had a co-worker or friend choose their pride over their pocketbook?

Some people much prefer to have a position with high status, such as some doctors – they pay hundreds of thousands in medical school bills and study for years on end before bringing in the big bucks.   Even though residents typically make far less than they will later in their careers, just saying to others that they’re in medical school carries social weight (I don’t mean to pick on doctors – a lot of them pursue medicine because they truly just care about saving lives and want to do it in a way such that they can comfortably provide for themselves and their family).

Ultimately, I think a mix of priorities is important. You can’t only focus on having social impact in your work – you’re going to constantly be destitute if you can’t pay your bills. You can’t only focus on having a high status career – who really cares anyway? You can’t focus only on schedule either – if you work five hours a week but make $100 per week you’re going to have a tough time living off of that amount. You can’t only focus on bringing in money – money buys freedom and choices, but not love and happiness.

All priorities need to be embraced to some degree. However, if one has to fall by the wayside, it definitely should be status or job position. Take care of your family’s finances as best you can, do work that’s meaningful to you, and get the work schedule that works best for you and your family. Don’t get caught up in the ego of a job title. I’m super proud of my wife for making a great decision that makes her happier. It’s not about how people refer to you in the corporate world, it’s about having the highest quality of life possible, and increasing that quality day by day, year by year.

The Role of Financial Gurus in American Society

Financial gurus play an interesting role in US culture today. They speak to the masses about how to manage their personal finances. These are people like Dave Ramsey, David Bach, Suze Orman, and Clark Howard, to name a few. Some people loathe these gurus, while others love them.

In fact, it was one of these gurus that lured me into the world of personal finance in the first place. In one of my first posts ever, I talked about my experience of walking into a half-price book store and picking up a copy of David Bach’s The Automatic Millionaire. In many ways, that book changed my life. Up until that point, I had figured I would make a good income and live a comfortable lifestyle, but I didn’t have a clue about financial planning or even that I could become a millionaire without that much effort if I was patient and saved diligently.

The Automatic Millionaire’s message is very basic, but it had an impact on me. As a complete beginner, it was just what I needed to read at the time to get me started on the journey to transforming my life’s personal finances.

Over time, I devoured more and more content from Bach as well as other sources. My wife and I discovered Dave Ramsey and decided to make it a family priority to get out of debt completely. We didn’t want anyone laying a claim to our future earnings. Of the two gurus that had the biggest impact on our lives in the early stages, Dave Ramsey and David Bach were at the top of the list. Bach’s basic message that we could actually be millionaires one day and Ramsey’s message about debt and how to insert wisdom into personal finance really resonated with us.

As I started to consume more content, I naturally gravitated toward authors who spoke about more advanced topics, and that’s how I entered the world of investment literature. I started reading Benjamin Graham, Charlie Munger, Warren Buffet’s biography, etc. I also started looking toward contemporary experts like Joshua Kennon and Joshua Sheats, men who are both extremely well-versed in their fields of expertise and have a lot of knowledge to share.

At this point in life, I am especially grateful for authors/speakers like these who are able to cater to a crowd who wants to learn something more than the “get out of credit card debt, learn how to save money for retirement” message. At one point in time, I really needed to hear that message, but now I want to learn more advanced and technical subjects.

I think there are natural groups of financial gurus that are out there trying to get their message out. You have the big mainstream voices that a lot of Americans know about (Dave Ramsey and Suze Orman are probably the biggest) that are really out there with the mission of helping people get their basic financial lives together. When you get into more advanced subjects, the groups are smaller and more specialized. For example, in the early retirement world, Jacob Lund Fisker and Mr. Money Mustache are probably the biggest voices. Kraig Mathias from Create My Independence talks a lot about entrepreneurship. Joshua Kennon is an expert on investing (and a lot of other things). Jason Fieber from Dividend Mantra has probably the biggest blog about dividend growth investing, and Joshua Sheats has the best podcast out there (by far) on financial planning.

Once (and if) people want to go beyond the personal finance basics, there are so many resources out there to learn more. The beautiful thing about this day and age is that a few quick searches can help you find an expert who is willing to freely share information about whatever it is that you are interested in. Although some may hate on the gurus out there, I think they each provide something unique to their audiences.

The big gurus sometimes get blasted a lot because of their mainstream, sometimes-controversial messages. I don’t think that’s fair. They provide an important message to people who need to hear it, just like all of the niche gurus provide their messages to different groups of people. The beautiful thing is there’s always somebody at any given time to learn from, so it’s our job as those who want to learn more about a subject to keep our mind open to different perspectives.

Breaking Down Variables in the Wealth Equation

It is an oft-quoted tenant in personal finance to “spend less than you make” and to “invest that money wisely”. These are well known maxims that are basically all that is really needed to understand how to build wealth. Like any equation however, breaking down the variables into specific components can teach us more about how the overall system works. We can tweak each variable as we please and make a huge difference with the speed and effectiveness with which we reach our financial goals.

Simply put, wealth creation is the result of:


Income – Expenses = Savings for Investments –> Growth over time at a certain rate of return –> reinvestment of profits = Wealth.

So, from the equation it is clear that wealth can be built in a variety of ways. You can have a high income and moderate expenses, invest for the length of your career, and you’ll likely have built some real wealth. This is the scenario of the typical young professional. They have solid salaries, but don’t want to “live in poverty” like they did during their college years. However, they know saving at least something for retirement is important in the long run, so they begin that habit early.

Let’s say they start at 25, work until 65, and make $75,000 per year and are willing to forgo $7500 of that in pre-tax savings. We’ll assume this compounds at 10%. In this case our young professional would have over $3.6 million. This won’t make them super rich (this amount is equivalent to about $1.6 million today when accounting for inflation), but it will still provide a nice quality of life in America, one of the most wealthy and expensive places to live in the world.


How about someone who hustles really hard in their early twenties, builds a business, and is able to save $200,000 over the course of ten years and then stops investing completely? Let’s assume our young entrepreneur starts building a business in their early twenties and by the age of 25, is able to save $20,000. They invest an additional $20,000 for the next nine years as well and stop at age 35, then letting the money compound until age 65. Again here, we’ll assume a 10% rate of return.

What are the results? It’s over $6.1 million dollars. Whoa. All that from at total of $200,000 worth of savings – not bad at all. When you think about it, this scenario really isn’t that unrealistic. People start businesses all the time. Sure, a lot of them fail, but imagine if you could just make a $20,000 after-tax profit per year when all was said and done – that amount alone, invested early enough, could set you up for retirement is you invested it well and just let the money sit there, reinvesting all the income.


You’ve probably heard the time value of money speech many times in your life already. This is especially true if you work in accounting, finance, or have a deep interest in personal finance (like me). I don’t know about you, but for me, the story never gets old. Simply setting aside a decent chunk of money early in life can enhance the wealth creation story unlike many other things.

Early in life, savings rate is the most important variable in creating wealth – the income minus the expenses that you put to productive use. The rate of return matters, but not really that much in the early years. After all, what good is it if you have the investing skills of Seth Klarman but only have the capital to invest $100 per month? Sure, you’ll growth your wealth – but it will take decades compounds to something meaningful.

On the flipside, what if you have a lot of capital to invest later in life, but you’re not able to secure that great of a rate of return, say 5% compounded annually? Your pile of cash will slowly grow and probably keep up with inflation, but not do much more than that.

If you look at people who’ve built the most wealth throughout recent history, you’ll notice that they tweaked all variables of the equation to their optimal settings early, and then once they reached a certain level of net worth and income they improved their lifestyle a bit.

Typically, they spend the early part of their careers building up assets and income as quickly as possible – whether that’s through learning to run a new business or working their way up to be a senior executive a company. During this time, they typically pay off all debt (or at least consumer debt) and keep their lifestyle relatively modest. They know that getting that first bit of capital built up and increasing their incomes is the most important variable at this stage.

Then, once they build up sufficient productive assets, they raise their expenses a little to start enjoying the fruits of their labor. At the same time, they focus on having a high rate of return on their investments. Look at Warren Buffet or Charlie Munger. When they were getting started they did everything they could to build up their income and assets first (Buffet had many different ventures as a young man; Munger became a top-ranked lawyer and developed real estate).

At the same time, they kept their expenses reasonably low. Buffet never spent on luxuries and Munger even drove a beat up Cadillac that was apparently quite the eyesore.

Then, they found bigger and better deals with their cumulative knowledge and experience with how to achieve great rates of return while minimizing risk. Just look at either man’s records when they were still unknown in the public eye and before they had huge amounts of capital that now limits their maximum returns on investment.

Lastly, people who build substantial wealth have the time to grow it! If you’re the next Buffet and you die at age 35 well…that’s it for you. Both Buffet and Munger are in their late 80s/early 90s at this point. That’s a heck of a long time for your money to be working for you.

The wealth creation process depends on all of these variables. No single one can be left out of consideration. Increase income and assets quickly early in life while keeping expenses low to moderate. Eliminate debt. Invest your savings into good investments that produce high rates of return over long periods of time. Reinvest the profits. One day, you’ll be wealthy. It’s like baking a cake. If you follow each step of the recipe you’re bound to come out with the result you want.