I think about money a lot. Not just the simple dream of having more, but how we make it, what it allows in terms of freedom, how inequitably it is distributed, and how I can communicate with others about travel knowing that money makes travel possible – or not. I read about money, I research how people make it, I listen to podcasts and I ask people how they make their living. It’s on my mind most days. I’m not the only one, I’m sure, particularly in these unstable times, where the rich are getting astronomically richer without doing much (anything?), and those poor or middle class are working harder for less, falling downwards without any security net.
I read an Atlantic article recently that said in order to escape poverty, poor people have to go without a crisis for 20 years. (https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/). That’s 20 years… What are the chances of that, I wonder? Just read my Medical Misadventure posts and recall that the fees are in Mexico, and only a small fraction of what this otherwise perfectly healthy woman would have paid in the US.
Another article looked at the real ways in which millennials could build wealth. The answer: with family help. Not only by – and this is so very crucial – avoiding college debt, but by receiving help with a home down payment, real estate being the primary wealth builder in American society.
I recently shared with a friend that while I have always loved working and writing, running a news department at a radio station, and being a journalist generally, it never occurred to me that the profession would – or even could– be my only livelihood, or lead me to any real wealth. I know others have made their living in the field, but I was fed (maybe even misled) by something else. It was a comment my mother’s friend shared with me many years ago in passing: He was playing the stock market and advised me to learn about it. “If you’re working for a living, you’re not making money” he told me. “It might keep you afloat, but in this country it will never get you ahead.” I never forgot that comment. While I have never been rich in any monetary sense, I have always separated my actual work from the direct practice of trying to build wealth. Work helped me, sure, but only to keep me afloat.
From the first moment I could, I’ve invested in stocks and real estate. My choices aren’t always smart: I bought early Apple stock but sold it after college to buy a car. I made a seven-fold profit by selling back in the day, but as friends like to remind me, if I’d held onto it, I could’ve paid for my house in cash. Yeah, yeah, always perfect in hindsight. I also bought EuroDisney when it was close to $72 dollars a share. I think it’s now about ¢.17… One lesson I learned early on was only to invest what I was willing to lose.
Real estate, with its accompanying headaches (and my, there are many), has nonetheless allowed me amazing freedom. How did I get here? The easiest answer is that like many millennials today, I had no school debt. The greatest gift my family gave me was an undergraduate education. And perhaps a lesson in debt aversion.
I’ve always hated the idea of debt, maybe to my own detriment. I say this because there is value in some debt, as investment in oneself can create amazing returns and not always monetary. For example, when I went to graduate school I chose a blessed full ride scholarship to an obscure University in northern England instead of going to Johns Hopkins in Washington DC, which didn’t offer me a scholarship. As a new single mother, I couldn’t imagine how I could possibly pay off tens if not hundreds of thousands of dollars in school debt and childcare costs. So off I went to England. Years later, I still wonder if I made the right choice. It took me years to understand that graduate school is less about education per se, and far more about connections and access, what J.D. Vance’s great book Hillbilly Elegyexplained in length as Social Capital. So I comfort myself instead with the knowledge that I never had any school debt.
Being debt-free isn’t minor, as it paves the way for other financial possibilities. I had the additional blessing of help from both family and friends, with down payments on two different houses, one of which I’m still in the process of paying back. There was no way I could save enough for a down payment on my own meager earnings, but without other debt I’ve always been able to make mortgage payments. So by “house hacking” I’ve turned this form of debt into an income. House hacking is renting out part of your home, renting the house in its entirety while you’re somewhere less expensive, or finding some other creative variation, which ultimately can create income and flexibility. You can also hack if you’re only a renter, perhaps taking a bigger place (preferably only if the rent is still manageable to you) and either sharing or using Airb&B in an extra room to offset costs. By renting my homes, I’ve been able to travel the world and still write. As I’ve repeatedly said, full-time travel has consistently proven to be more affordable than living full-time in the United States. The way things are now, I can’t afford Notto travel full time.
I’ve had to work through some embarrassment and shame around the help I’ve received, and it was difficult even writing this post. But I’ve decided that I can’t advise anyone to take a leap of faith into a life of travel or Worldschooling without acknowledging my own entitlement. The truth is I’ve had lots of blessings in life that I know others haven’t received.
That said, I also won’t let anyone brush off their own potential because they didn’t receive the same help with school or down payments. It’s easy to dismiss my lifestyle with the assumption that I could only do it with family help. And in my case, it was true. But I often hear these critiques from married couples or high-earning individuals, each with salaries several times anything I’ve ever earned. In digging a bit further, I learn these people have no regular saving or investment mechanisms and have simply increased their cost of living to match their hefty incomes. Because I’m a single parent who has always earned little, I’ve learned to be resourceful; I’ve seen that many with far greater incomes and opportunities have no such training.
This means I’ve had to make choices. I may not be able to send my son to that great private school he got into. Instead he goes to a fine school and travels the world with his mom and a group of adventurous and creative Worldschoolers.
People have told me they prefer the comfort of staying put and earning a stable income over the unknown. I understand the desire for that, but I’ve never been one of those people. Which means I may never be wildly rich, or even rich at all. My life gamble is that through real estate and house hacking, I’ll have everything I need to be happy.
Which isn’t to say I’m not always fine-tuning. I think I spend too much for the income I do make – not on stuff, but on air travel. Yes, I invest in experiences over stuff at almost every turn, but I still could spend less and save more. I do desire to put more into retirement or an expanded safety net of sorts. In fact, according to Mr. Money Mustache, one of my favorite financial gurus, I should have about $2.5 million to retire, a number based on my annual spending times anywhere from 20 to 50 years. Let’s just say I’m nowhere near the ballpark.
But I’m enjoying the ride.
Plus, I will never be one of these people who puts off life to save for retirement. I’ve seen enough beautiful souls die young to know that putting off life for later is not always a wise choice. I believe (and espouse) that a healthy combination of saving and spending allows for a safety net while also living spontaneously and with joy and adventure. Of course as I get older, my choices have become more conservative, and I’m recently looking at how to relieve myself from any remaining debt. This entails some very difficult decisions… But I’d like to think that my own financial decisions – both good and bad – will not only help me, but can help inform others down the road, whether they want to travel or not.
Regardless of what you have or earn, it’s your responsibility to be a good steward and to make wise choices moving forward. As part of my own savings plan, I’d like to also give my son the same financial step up that I received and I’d like to think he’s on his way. Life is full of curveballs but for now at least, his first year of college is paid for.
Here are some of my favorite financial resources:
Tim Ferris – Author of the book The 4-Hour Workweek. He also puts out a weekly newletter and podcasts.
Mr. Money Mustache – He emphasizes cutting spending and increasing savings as a means to achieve financial independence. http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/
Here’s one post about the potential of rentals: http://www.mrmoneymustache.com/2011/05/23/get-rich-with-owning-rental-houses/
Making Sense of Cents www.makingsenseofcents.com– Is one of my favorite financial blogs. Michelle shares detailed information about the (outrageous amount of) money she makes from her blogs, including affiliate marketing, advertising, and selling online courses.
ChooseFI www.choosefi.com– is a Financial Independence Movement, which has resources for every level of income and financial state. The goal being a form of financial independence, most often from real estate. I like their Facebook group best.
(There are two affiliate links here so please order any books I ever mention!)