Legthorn's journal

[Legthorn Brownboat]

I've been a lurker on here and similar sites, and I think it will be very good for me to record publicly (but anonymously) my personal journey going forwards. My numbers may seem large and intimidating to some, and pitiful to others, but they're my numbers. I am markedly less extreme than most here in my lifestyle, but still frugal compared to my peers. I hope that awareness and exposing my details will help me find balance.

I'm also using this as a therapeutic outlet, as I have to balance personal struggles. I alternate between wanting to give up all responsibility and work, and taking so much interest in the sense of progress, especially when it concretely applies to my career and finances. The things which drive me the most are also the things which burden me the most. Maybe I can see looking back here a degree of progress, and looking forward a hope of balance.

I will post details below.

[Legthorn Brownboat]

I have a base salary, but receive lump sum bonus and stock grants, so it fluctuates wildly at times. I have recurring expenses, but pay some ahead of time or in lumps (in exchange for a discount).

I think I’ll post numbers as ’take-home pay’. This means post tax withholding (and I pay a lot of tax), post-401K contributions (I max out annually), post-HSA/insurance premiums, post stock purchase plan, etc. This take-home pay is typically ~ 40-60% of gross pay, depending on circumstances. This will simplify my posts, as well as more accurately portray my perspective.

Age is in the late 20s.

[Legthorn Brownboat]

First update will be looking back at September 2014. This month saw unusual sources of extra income. I suspect the next month will also be out of whack a bit.
In:
14,500
Out:
4,100

Net worth across accounts is approximately:
238K

The spending shocks me to look at it, that will amount to ~50k annually if I don’t address it. Semi-annual insurance payments, vacation accommodations, furniture, bills, eating out, medical, public transportation, and rent reared their ugly heads. Rent I expect to be zero for October and then be higher than this month for November. I realize my monthly cost of living is roughly 10 months for Jacob, but I’m trying to figure out my own path.

Net worth is spread across retirement accounts and liquid investments. The net worth surprises me as well, I thought I was sub-200.

edit: I think it would be useful to also display other figures.
Savings rate: 72% (due to a larger-than-normal income)
Months saved: 58 (averaging out my expenses)

[Legthorn Brownboat]

I decided to make a little calculator to show progress assuming averages and some basic assumptions. Here's the current status:

Code: Select all

Starting: $227,600
Assumed avg. annual rate of return (compounded quarterly): 3.0%
 Month 0:
  Income: $14,500
  Expenses: $4,100
  Savings Rate: 71.72%
Average income: $14,500
Average expenses: $4,100
Average savings/mo: $10,400
Savings rate: 71.72%
Current value: $238,000
Months saved: 58
Months remaining (at current averages): 111
Needed total assets: $1,645,213

This is a little scary right now, because the first income entry is definitely much higher than normal. I like to think the expenses are also not typical, but we'll see. It's funny how awareness can spark frugality.

[Noedig]

My first thought is - wow, you sure make a lot of dough for a young guy (particularly considering after tax). Wow!

You have found the financial independence movement, instead of choosing to blow it all. So you are triply blessed with wealth, youth, and the wisdom not to waste at least the wealth part. Figuring out the other bit...that could be tricky.

Well, good on you!.

If you are here it will likely be to refine your approach and resolve. So some questions:

Are you utterly maxed out on levels of tax efficient savings, the kind where you contribute pre-tax or get to claim some back?

What do you invest in? With your level of savings this is a pressing issue. I am guessing you are time poor so something simple may be in order - many hereabouts would recommend a Vanguard trackers. OTOH you may well be settling down in a few years to buy a property.

How do you see your future? Tough question for a young guy, that one. But also pressing because wherever that is, looks like you will be in a position to get there ... Fast.

[Legthorn Brownboat]

My first thought is - wow, you sure make a lot of dough for a young guy (particularly considering after tax). Wow!

Thank you for visiting! Also note that those numbers are a little a-typical. Business is booming right now (and will probably continue into October), but should slow down to more sane levels in Nov.

You have found the financial independence movement, instead of choosing to blow it all. So you are triply blessed with wealth, youth, and the wisdom not to waste at least the wealth part. Figuring out the other bit...that could be tricky.

I wouldn't say "wisdom" so much as a strong (crippling?) sense of responsibility. That also tends to boost my wealth as I successfully carry many responsibilities, but also leads me to being burdened with more.

Well, good on you!.

If you are here it will likely be to refine your approach and resolve. So some questions:

Are you utterly maxed out on levels of tax efficient savings, the kind where you contribute pre-tax or get to claim some back?

I am maxing my (traditional) 401K, which I count towards my net worth, but my listed income is after contributions. I do not qualify for any other tax advantaged accounts.

What do you invest in? With your level of savings this is a pressing issue. I am guessing you are time poor so something simple may be in order - many hereabouts would recommend a Vanguard trackers. OTOH you may well be settling down in a few years to buy a property.

I do diversified index investing. I might also look into private loans. Property is something that would also interest me, as another means of diversification.

How do you see your future? Tough question for a young guy, that one. But also pressing because wherever that is, looks like you will be in a position to get there ... Fast.

Right now my work is pretty all-consuming; it doesn't have to be but for some reason I obsess over it. Of course, that has served me well so far, but it does wear me down. I fantasize about switching to a regular 9-5 job that I can easily coast through, but I don't know if I can ever stop myself from being so obsessive. In my future, I'm kind of afraid that without something to drive me (crazy?) I would lose meaning. I may change to something I can do part time, travel, teach, etc.

As far as getting there fast, I drastically need to cut down my expenses. I think last month was atypically high, or at least I hope it was. My calculation showed about 111 months left until FI, though I may of had a bug as my new calculator shows 165 months. That's a long time to be keeping my current pace.

[Legthorn Brownboat]

Quick mid-month update. I've started paying much closer attention to spending, eating out less often, etc. I was wanting to really take up low-cost cooking when I hit FI, but then the super-obvious dawned on me --- why don't I start now, little-by-little, and that will also speed up up towards FI! Obvious, I know.

I've been practicing many different techniques to make deviled eggs. I think eggs+milk are incredibly good nutrition-for-value deals, and have lots of flexibility in how to prepare them. I wonder what else I might discover.

My finite mental energy is probably better spent maintaining/advancing my current career (for now at least), but I think small efforts to curb spending will dramatically help as well. I've started tracking budgets with YNAB. YNAB isn't a perfect fit, as it's mostly geared towards those who barely make ends meet, but it does force me to be mindful and perform the occasional post-mortem. That has a tendency to shake out some waste.

I'm looking forward to the end of the month when I can post an update.

[Legthorn Brownboat]

In hindsight, I picked the two most atypical months in the year to start this journal on. Also, my calculator is based on averaging, so the estimates will be out of whack for a bit. The below "averages" will be pretty optimistic

My side business has been the busiest ever. I guess it's kind of like how CPAs have all of their business in March/April, except that I have to work all year around on it and get paid in Sept/Oct. Other work is doing well as well, and a continual steady source of decent income.

Everything is a massive wear on me, but at least it's profitable. The expenses are lower this month than typical, I expect them to flatten out to around ~3500/mo, unless I can continue to chip away at it.

Most of my mental energy is going into work and income, but I'm trying to cut down on the easier things to cut. I'll be exploring much more opportunities to reduce my eating out.

Code: Select all

Assumed avg. annual rate of return (compounded monthly in simulations): 3.0%
 Month 0:
  Net Worth: $238,000
  Income: $14,500
  Expenses: $4,100
  Savings Rate: 71.72%
 Month 1:
  Net Worth: $272,046
  Income: $31,410
  Expenses: $1,847
  Savings Rate: 94.11%
Average income: $22,955
Average expenses: $2,973
Average savings/mo: $19,982
Savings rate: 87.04%
Monthly income: 680
Months saved (no return): 92
Months saved (3.0%): 119
Percentage: 22.87%
Months until FI (at current averages): 43
Alternatively, needed rate of withdrawal: 13.11%

[Legthorn Brownboat]

This morning I had an epiphany and the best toast of my life. Let me talk about the toast first.

While I had planned on sleeping this weekend in after one of the longest grueling weeks I’ve had in years, my scumbag brain woke me up in time to get ready for my job even though it’s my day off. I made coffee (more on that subject to come) and did some work (I had some inspiration). Enter the toast.

Something Jacob had said as a throwaway line in either a blog post or interview is that people don’t need all the modern gadgets like toasters etc. I happen to believe that the toaster-oven is the most important contribution of Western civilization to the world. Jacob’s comment always bugged me a little bit for some reason; I didn’t like his attack on toasters. However, I’m temporarily without a toaster-oven. My method of frugality is basically procrastination, and while procrastinating purchasing a toaster-oven I decided to toss some butter in a frying pan and then put in a piece of bread. The bread is this seed bread that has all kinds of random stuff thrown in, which is my style of eating/cooking anyways. After frying this bread in butter, it emerged as my new favorite breakfast item.

Then, as I’m eating this toast I have my epiphany. When I was growing up, my parents were a little too cheap to get a new computer whenever I deemed it necessary (my motives were driven by gaming). They gave me some old clunker desktops or laptops they got either for free or on the cheap. Thus began my love of old, abandonware games. Also, this served as a basis of my exploration into how to make computers function despite their age. I launched into alternate operating systems, living without any windowing system, fixing problems, security, and eventually coding. The negative situation of not having a nice computer propelled me into acquiring skills in the use and development of the most important tool of my generation. It has served me well so far and also driven me crazy.

I realize that this is a message Jacob and the great Mustached One have been conveying all along. Situational adversity drives personal development. Me not having a toaster-oven drove me to eating the best toast of my life. Also, it wasn’t that hard, I just had been “outsourcing” to a gadget. Now, I’ll probably eventually get another toaster-oven, just as I eventually got nice computers, but I’ll always be a better person (in a tiny, tiny way) because of it.

What else in my life do I outsource?

[Legthorn Brownboat]

I just made the toast for my wife. I’ve been gradually easing her into thinking about FI, though we have some pretty different viewpoints at times. As I read more of others in this community, that actually seems pretty common. Of course, I’m right and she’s wrong and I need to guide her towards my viewpoint. Of course… In reality it’s a way for me to grow myself and realize my own short comings. More on this later.

Anyways, the toast is a big hit. It’s strengthening my argument and giving me ways to subtly influence her views about FI. If you’re reading this, seriously, you need to make it:

• Get some seed bread (the more seeds the better)
• Throw butter in a frying pan, wait until the butter is sizzling hot
• Add bread, move it around. Put some more butter on the top of the bread to kind of melt in while the bottom cooks
• Flip and cook the other side. Keep flipping and cooking until it’s your optimal level of crispiness and tastiness (for me, that’s reasonably blackened)

[Legthorn Brownboat]

Just made Jacob’s infamous lentils dish*. It wasn’t that bad, and very good nutrition for the time and money spent. It definitely was a little bit bland on its own, so my wife and I have been taking turns spicing it up. I have Southern Asian in my blood and my wife has some East Asian, though generations later for each of us. We end up with something South-East-Asian-American.

Exhibit A) Add lots of freshly ground peppercorn. Peppercorn is ridiculously cheap in bulk, and when you grind it on the spot, it’s orders of magnitude more potent. After a few hours, the flavor and aroma fade, so I would recommend doing it on the spot. Significant flavor improvement.

Exhibit B) Add in some Sriracha sauce. The sauce has very dominating flavors and spiciness. This is a good way to change the dish completely, so long as you don’t get yourself sick of having Sriracha sauce.

Exhibit C) Add in powdered soup base. You can get lots for cheap from Chinese supermarkets, often times flavored with chicken or seafood.

Exhibit D) Turmeric, cardamom, cumin, cloves, ginger, and fennel seeds. I don’t think this one actually tasted good in hindsight, but your senses will be very distracted.

I want to try adding in heavy cream. I haven’t tried this one yet, but I’m very hopeful. Heavy spices and cream reminds me of good masala chai. I might also explore mixing in ground beef or chicken.

* For those too lazy to read his blog post: Bring 1/2cup lentils to a boil until desired consistency, drain and add in 1 can or chopped tomatoes, 1/2 chopped onion, and a few chopped cloves of garlic. Bring to a boil, then serve.

[Legthorn Brownboat]

I tried a few more runs of the lentil soup, and I'll record my findings here. If I later have more insights into this particular dish or variations, I'll just update this post.

The basic recipe is nutritious and serviceable, but lacks a lot of satisfying flavor and texture. I would rate it tasty, but in the hunger-is-the-best-spice tasty. There may be merits in waiting to eat anything until you're sufficiently hungry, but I'll leave that thought for later.

As a base, I would add heavy cream. This dramatically enhances the texture, flavor, and serves as a starting point for many experimental flavors you can add. This takes the meal from utilitarian to a culinary experience. Here's some different (but not mutually exclusive) options I tried.

Add heavy cream, then try:

• Balsamic vinegar - Not cheap (at least the good stuff isn't), but really zests up the flavor if you're into that.
• Butter (also can be used as a substitute to the heavy cream) - adds in satisfying amount of fat and flavor, synergizes well with other flavors.
• Sriracha sause - always a way to add a kick to the flavor profile. Complements the cream
• Cumin - it's chili time! Once in a while makes it interesting
• Shredded Parmesan cheese - enhances flavor, adds texture
• Powdered soup base - Adds a wide variety of flavors and constitutions to the dish
• Mayo - only recommended if you like the flavor of mayo, as it kinda dominated other flavors for me
• Freshly ground peppercorn - Always a good thing to add. Try adding it until your nose runs just by looking at the dish

My favorite is probably heavy cream, Sriracha, parmesan, and enough ground peppercorn to cure the flu. I might try playing around with some minor meat as garnish, but for now I'm enjoying lacto-vegitarian cooking.

I realize these things start to run a little counter to the original purpose, eventually, but I'm surprised in the amount of variety and satisfaction I can derive from this meal. Well worth the time and (tiny bit of) money investment.

[Legthorn Brownboat]

I made Jacob's Pilaf*, it was interesting. Chopping onions starts to burn around the third one. I lightly cartelized the onions, and steamed the rice before adding it to the onions/lentils. The dish ended up being hearty but rather dry and flavorless. Even with heavy seasoning, and some Sriracha sauce it felt lacking. So, I stored it all in the fridge, and decided to re-cook it in the frying pan before eating, adding in an egg or oil or anything. The eggs help, but I found the most improvement came from adding a heaping amount of olive oil. The oil improved the texture and flavor quite a bit, and helped establish a base for further seasoning. I'll probably make it again, but with much more experimentation.

One thing I noticed was that after the meals, I usually felt heavy and tired. I wonder if I was over-eating, since it's pretty nutrient and carb dense, and with the olive oil very fat dense as well. This is in contrast to the lentil soup and most meals where I do not have this effect.

I consider this another worthy investment of time and money.

* http://earlyretirementextreme.com/pilaf ... udget.html

[ashe]

I love your entrepreneurial bent. When you do retire, 1) you could spend half what you're spending now 2) you'll probably keep or even grow the side-business (I've done that). The two factors combined just obliterates the crossover time. Looking at your numbers it's definitely in less than 3 years from today.

[Legthorn Brownboat]

Thanks for dropping by! If anything, I see myself dropping the side-businesses first . This month should have more typical figures and numbers. I think I'll follow what many are doing here and break out 3 different spending levels: current, current location + FI, and displace-my-family-to-reach-FI. Also, while I've been tracking every expense outside the scope of this journal, I've mostly looked at net income and spending levels after withholding, 401k contributions, insurance premiums, etc. After listening to RPF*, I figured I would sit down and write down gross, and break out every deduction and withholding. This might cause my savings rate to change since I'm accounting for 401k contributions or for medical costs/premiums. Either way, I feel it will be more instructive for myself. I'm still trying to figure out how to account for some things, such as expenses that may be reimbursed later. If I count the reimbursement as income and the earlier expense as an expense, then it under-reports my savings rate.

I also have a list of half-completed entries about various subjects that I've been trying to get off my mind, which I hope to wrap up and move on with. Expect a variety of posts in the near future. I started with viewtopic.php?f=7&t=5755

* http://radicalpersonalfinance.com/26/

[Legthorn Brownboat]

Life protip: Convert yourself before you convert others.

It’s embarrassing how wrong I’ve been at various points in my life, and how I’ve even argued from those positions. Before I engage or investigate any controversy, I’ve started trying to first convert myself to each side. My main approach, or at least where I find much value, is in establishing a simple but initial intuition, which I can expand as needed. The smallest seed of intuition can eventually help change overall feelings and attitudes about subjects, as one’s instincts are often the sum of heuristics governed by intuition.

In what little I’ve done looking into various “controversies”, there’s always a tiny seed of intuition which can help me to grow an understanding/appreciation of the differing sides. I put “controversy” in quotes, because as far as I can tell, both sides are under the impression that it isn’t really a controversy, that the facts are known, and that the other side has worked to make it into a “controversy" for profit, either monetarily or politically. This other side swindles the commoner, who if only he were further educated in the true facts would obviously emerge on the correct side, their side. People on either side are surprisingly similar in their views of themselves and their views of the opposing side — they’re almost clones of each other, except their sports jerseys are blue whereas the other sides are red. They each have their experts who they cite, and consider the other side’s experts as charlatans. This plays out similarly for any “controversy” I’ve gone through so far: theism vs atheism, climate change, banking and regulation, single-payer health care, creationism vs. evolution, free-market economics, .

Facts, figures, and statistics can be argued by either side and it feels like without great devotion of myself, it’s hard to discern them. Countering an argument of one side could amount to years of scientific/economic maturity and study. A seed of intuition blossoms over my life as I challenge old heuristics and beliefs.

Here’s an example of a seed in the Climate change “controversy”. On this forum, someone (and I think it might of been Jacob) mentioned that humans have opened up the carbon cycle by digging up that which was once buried, burning it, and introducing it into the current ecosystem. An understanding of open systems vs closed systems is the soil for that particular seed, and just that consideration can open up a world view to gradual widening. The further details are very complex and intricate, but the simple intuitive argument of the possibility invites further investigation.

A single idea starts a paradigm shift...

[Legthorn Brownboat]

Book review: Your Money or Your Life

Pretty much everyone has read YMYL. If you haven’t, then read it as it’s the fore-runner to FI/ERE. I think I will give an almost pointless brief review here, pointless because everyone has reviewed it or already read it. But, I want to mention my take-aways from it as well.

It’s pretty drawn out. There’s a lot of flavor text, and that makes reading it a bit of a chore for me. Perhaps it’s because I’ve had exposure to the underlying philosophy before, but it seemed like it could of been 1/2 the length, while still being every bit as easy to read and follow. I would prefer a 1/4 condensed version, personally. Thankfully the book closed with an Epilogue that is the highlights of the approach, and after reading through the book once all I need to do is refer to those few pages.

Even with my prior exposure to FI/ERE, there’s still some good stuff in here. The book shows you how to construct your true hourly rate, which is income minus work-caused expenses divided by all the time you spend related to your job. Work-caused expenses are not just those necessary to do the work itself, but those that you pay to keep your sanity (shopping therapy) and factors in opportunity costs. Time spent is not just on-the-clock, but commuting time, preparation time, and time spent unwinding from the stress. I can’t tell if they want you to subtract taxes from the pay, but I think they want “gross” for some reason. I’ve done this before in the past and helped friends do it; whenever I help a friend do it it’s usually enlightening.

I like the thinking of money as life-energy, and considering the cost of a good in terms of how much of your life-energy to expend for it. Would I spend 120 hours of life-energy for a laptop? Probably. Would I do it for a latte-a-day for the year? Nope. I do feel like the life-energy is slightly off, in that it doesn’t account for the “energy” aspect, but is more so measured in time units, but it’s really hard to quantify energy, much less have a two-dimensional unit.

It’s a 9-step program to become FI, and every step is a good and useful step. I would recommend everyone go through the steps, no matter who you are, and go through all of them to the greatest precision you can. Get the book, speed-read the prose, and follow the epilogue.

[PulpUser]

I haven't had a chance to read "Your Money or Your Life" yet, but it's in the top of my reading list.

[Legthorn Brownboat]

Finally, a “normal” month! Income levels are more typical. For expenses, this is the first month some of my obligatory costs have settled down (they were highly variable previously). I didn’t give an overall breakdown of costs prior as things were in such flux. The fixed costs account for most of the swings, and I’ve been making significant improvements to the discretionary bits.

I basically split my costs into obligatory (under current situation) and discretionary. Obligatory would cover the costs it takes to provide my adequate contribution to supporting my family’s welfare in my current geographical and sociological environment. That basically covers housing, health care, and a small grocery budget. Of course, these can be fixed by displacing my family (more on that below), but the number provides a useful foundation to think about other things. Discretionary is everything else.

My discretionary spending decreased to be a quarter of what it was last month! I’ve been following various budgeting approaches, include YNAB, YMYL, and random logging attempts on my own. None of them is quite what I’m looking for, and doing all the different accounting adds overhead to the process, but I’m figuring out what I like from each.

Being continually conscious, taking efforts to trim the fat (see cooking stories above), and always asking myself “will I really find enjoyment from this, or is this just a needless distraction for which I can find alternatives”, have allowed be to advance along the S-curve quite a bit this month. Going forwards, I don’t know how long before it tapers off so hard it’s not worth my effort, but I think I still have room.

I’ve also decided to list out 3 expense level: current, core, and dispruted. Current is the month’s expenses that I just finished. Core is the spending level I could find myself if I needed to focus my efforts on spending less (e.g. due to unemployment) without displacing my family. Disrupted would be my estimate of expenses if I were to displace and disrupt my family, community, and position in society. Of course, all these numbers are arbitrary and debatable ad nauseum, but they’re rough guesses. “Disruption” is a degree, after all.

I decided to bump up my inflation-adjusted return from 3% to 4%, for reasons I’ll talk about later. The short story of it is that I doubt I’ll ever want to find myself in a zero-work environment, so I don’t mind forsaking the “conservative” 3% for the “typical” 4%. Of course, conservative and typical are highly debatable and have degrees, but I’ve settled on these numbers for now.

The “years saved” field is assuming that I get that 4% return annually on the remaining balance (each year that balance is lower, of course), and represents how long until I deplete my savings. “Indefinite withdrawal return” is the return needed such that the income funds the given expenses without drawing down the principle.

Code: Select all

Month 0:
 (predictions at 4.0% annual rate of return)
 Net Worth: $238,000
 Income: $14,500
 Expenses: $4,100
 Savings Rate: 71.72%
 Monthly return: 793
 Number of years saved (current, core, disrupted): 5.41667, 10.0833, 39.5
 Percentage covered (current, core, disrupted: 19.34%, 33.04%, 79.3%
 Indefinite withdrawal return (current, core, disrupted): 20.67%, 12.1%, 5.04%
Month 1:
 (predictions at 4.0% annual rate of return)
 Net Worth: $272,046
 Income: $31,410
 Expenses: $1,847
 Savings Rate: 94.11%
 Monthly return: 906
 Number of years saved (current, core, disrupted): 16.9167, 11.9167, 59.3333
 Percentage covered (current, core, disrupted: 49.05%, 37.75%, 90.6%
 Indefinite withdrawal return (current, core, disrupted): 8.14%, 10.58%, 4.41%
Month 2:
 (predictions at 4.0% annual rate of return)
 Net Worth: $275,000
 Income: $5,300
 Expenses: $2,715
 Savings Rate: 48.77%
 Monthly return: 916
 Number of years saved (current, core, disrupted): 10.3333, 12.0833, 62.1667
 Percentage covered (current, core, disrupted: 33.73%, 38.16%, 91.6%
 Indefinite withdrawal return (current, core, disrupted): 11.84%, 10.47%, 4.36%

[Legthorn Brownboat]

Review: Rich Dad Poor Dad.

While reading this book, I was continually amazed at all of the great content and great lessons the book was providing me. I kept thinking how I was going to refer all my friends to this book. It seemed like there was a lot of interesting lessons and advice coming out of it. After I fished reading the book, I began to reflect on what I read.

That’s when I realized that the author would make a very good politician. In hindsight, the author had spoken to great lengths without hardly saying anything. That is, there were a couple of maxims surrounded by nebulous prose. It’s like listening to a speech, getting riled up and exercising your neck muscles through vigorous nodding in agreement, thinking “I will follow this man, for he understands my plight and appreciates my values”, only to realize that nothing actionable was actually said and that the words were vague enough to appeal to anybody. I tried to look back for the lessons I had learned and the key phrases that inspired me, but I couldn’t find them again. Maybe the text just contained cues to trigger my own imagination?

In works such as these, there’s always some beginnings of ideas that may be new to the reader. This is where the book can have value. It discusses several minor points that one could or even should already know, but maybe haven’t been prodded enough into thinking about:

• assets generating income, enough to fund expenditures (greatly exaggerated, and statements regarding taxes are false)
• breaking down one’s net worth into assets and liabilities
• your house is not a great investment
• tax avoidance possibilities of your own company (albeit fraudulently as described by the book)
• losing is an opportunity to learn; fear of losing prevents success
• over specialization leads to entrapment and inflexibility

There’s also some really sketchy bits where it seems like the author is trying to be clever, but is engaging in behavior that is either illegal or ruinous to his professional reputation. I also don’t think the author actually knows the tax code, despite much of the book stating that understanding it is the key to retaining earned wealth. His examples are clearly tax fraud, but seem to instead cater to the public’s imagination of what is possible (or what they wish to believe is possible). It’s as if everything in this book is crafted to be either what the reader expects from their pre-conceived notions, or to satisfy what the reader wishes to believe.

The book kicks off with a story of him growing up and meeting his “rich dad” who teaches him everything he would need to know to succeed. There’s lots of good maxims espoused by his rich dad:

“The rich don’t work for money.” "People’s lives are forever controlled by two emotions: fear and greed. Offer them more money and they continue the cycle by increasing their spending. This is what I call the Rat Race.” "Most people fail to realize that in life, it’s not how much money you make. It’s how much money you keep.” “Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets, “ "Wealth is a person’s ability to survive so many number of days forward — or, if I stopped working today, how long could I survive?” "My rich dad just played the game smart, and he did it through corporations— the biggest secret of the rich.” "Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.” "the more specialized you become, the more you are trapped and dependent on that specialty."

I do recommend reading the first quarter of this book for entertainment value. It’s a nice story. You can also come away enriched from the maxims and general statements. The value you derive may be originated from within you, and merely triggered to recollection or further ponderance by a statement from the book. But, that shouldn’t discount the value of having a charismatic author provide those triggers. The middle part of the book is moderately helpful. The last quarter is almost entirely meaningless in retrospect and feels like it was priming my appetite to seek further knowledge from future books of his. I have not read the next book in the series yet.

After reading the book and formulating much of this review, I stumbled upon this website*. The accusation here is that the book (and most of what the author says elsewhere) is 90% fiction. They claim that the author never actually made money in real-estate, and instead made his fortune through multi-level marketing and peddling this book and seminars. The interesting thing about real estate investing, as well as major ownership in companies, is that all such things are available in public records. They claim there are no public records to back any of the author’s claims. The website’s author is probably biased himself for many reasons, but his criticisms do seem to be valid (albeit ad hominem in most cases).

I realize that a message is not invalidated solely by the invalidation of the messenger. Unfortunately, much of the book is written with the author’s (supposedly) fictitious life as proof of its validity. The author for decades said that rich dad was a real person, but then later admitted he was a fabrication. Does it matter, though?

In the end, the book might provide some benefit despite itself and its author. You may find value here. Definitely avoid losing yourself into what may just be a marketing scheme. In hindsight, this review does appear to be overly negative, but I really can’t make up my mind on the book. If you read it, that’s great; always exercise caution.

(*) http://www.johntreed.com/Kiyosaki.html