Wall Street Playboys, LLC
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Introduction
We were hesitant on creating a book on this topic but decided to do so (popular demand). The
funny thing about this book is that we can’t think of many products like it. If you’re rich it is
actually quite easy to go broke (look at *most* professional athletes and lottery winners –
emphasis on most to avoid the nit pickers).
Maybe this is one of the reasons why no books are written on it. People simply assume that once
they have the money, they will be “set”…. and of course… this ends in tears. The only competing
products we can think of are related to frugality where people talk about maximizing every single
cent. A terrible strategy for anyone who gets rich as they lose valuable amounts of time to save a
few dollars (waiting in line for 30 minutes to save $20 should never be worth it)… Also. If you
weren’t smart enough to order online for your latest iPhone you probably shouldn’t be wasting a
day in-line to buy one. (Yes we realize there may be re-sale value… in that case you use bots and
buy a bunch to re-sell, you don’t sleep in front of a store).
We’ll happily admit that this was a painful book to write. We couldn’t think of a single way to
organize it and there are no real viable competing products out there. Our three ideas were as
follows: 1) organize by spending type – housing, food, entertainment etc. 2) organize by economic
cycles and 3) organize by after tax income. All three would work but all three have repercussions
(could miss the bigger picture).
So what did we do? We decided to do all three and attempted to tie it all together. This is the only
valid way to do it (so we think!). If your business collapses or you lose your career, you have to
adjust to a different lifestyle. If you end up getting a good chunk of money and suddenly have $35M to your name, your ability to spend goes up (essentially forever). Either way…. the point is
clear… your ability to spend is entirely driven by cash flow visibility (which could change
dramatically over a decade).
Cash flow visibility is knowing how much money you’ll receive per month. That’s not all. It also
depends on how likely the cash flow will hit your account. By rank order the safest to riskiest is as
follows *in our opinion*: 1) risk free yields, 2) career or business income, 3) real estate and 4)
equities/dividends. We’re almost certain no one will agree with the rank order we just provided.
That’s a good thing as no one reading this book is interested in “normal” opinions. So that’s how
we’ll rank the cash flow items. If you’re looking for a trend, we value “forced” value creation the
most – I.E if there are ways to use your own time and skills to generate money, it’s the safer one
in the group (only exception there is the risk free yield that starts the list).
Hypothetically, you should create your own “rating” like Moody’s or Standard & Poor’s as it relates
to your current cash flows. Rank them from AAA to C/D and adjust your “true cash flow” in
your excel sheets. No different that junk bonds, AAA bonds and everything in-between.
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Discount Rate on Earnings
Risk Free Bonds
Internet Site Real Estate Stocks
<1 Year
0.0%
20.0%
40.0%
45.0% 50.0%
>1 Year < 3 Years
0.0%
16.0%
35.0%
40.0% 45.0%
>3 Year < 5 Years
0.0%
12.0%
30.0%
35.0% 40.0%
>5 Year < 9 Years
0.0%
8.0%
25.0%
30.0% 35.0%
>9 Year < 15 Years
0.0%
4.0%
20.0%
25.0% 30.0%
> 15 Years
0.0%
0.0%
15.0%
20.0% 25.0%
While the above is pretty self-explanatory, think about it like this... Take how long you’ve had the
income stream and multiply the annual income stream by 1-the discount rate. So if you just now
got a full year of dividends worth $10,000, we would argue it’s worth $5,000 a year (potential for
50% decline). Now if you’ve had the same dividend of $10,000 and it has grown to $20,000 the
chances of it going to $5,000 is much lower so you multiply it in your head by 75% (not 50%).
This is not a science it’s an Art and a way to depict your real income.
Unless you’re able to generate a living income off of risk free yields alone, there is always a discount
applied to your earnings as things could go sour in a day, week, month or year. You never know.
What you do know is that your principal should never be touched. Bonds, equities, real estate etc.
The goal is to never sell to spend. You can sell to rebalance your book… But… You cannot sell
to spend. That’s essentially the punch line before we jump into the details.
Three Segments for the Book: This was the only reasonable way to organize the product. The
reader gets to choose how they view spending. If you view spending in terms of net income, the
third section will be better for you. If you view spending based on product category, the first
chapter will be better for you. The key here is to maximize utility.
While utility is a boring economic term it is the most useful as it encapsulates cycles as well. Utility
gained by spending on luxury items in a booming economy is *lower* than utility gained by
spending on luxury items in a recession. Utility gained on housing decreases rapidly unless you’re
building a different lifestyle (house parties, family gatherings etc.). Utility gained on dining and
produce actually changes based on your age and cash flow as well. So on and so forth. (See Appendix
1 for the post on Utility Maximization)
General Life Framework: Before jumping in, this is probably a good time to remind the readers
of our life framework. In general, we do not think you need to be worth $100M or even $20M to
live an amazing life. We think the risk reward to get there is becoming difficult to justify. That
said, we do believe that anyone can get into the $5-15M range without taking on significant “life
risk”… I.E. missing out on many years of fun and potentially getting nothing out of it. Keeping it
simple at $5-15M this means you’re generating $250-$750K a year forever *regardless* of location
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at a 5% rate of return. Even if you decide to have kids, this is not going to lead to a stressful life
as the location independence part kills the cost of living argument.
How You Get There in General Bullets (No Particular Order)
 When you’re young you focus on making money as we assume you start with $0 to your name
 To avoid developing poor social skills you go out once/twice a week in cheaper venues (if
you’re broke and young, being in shape and going to dive bars is completely fine)
 You kill off the biggest cash drain item (excluding taxes) which is housing. If you need to live
with roommates to save serious money… You live with roommates, no exceptions
 You kill off taxes by building any sort of small side income while at work, if you don’t have
two streams of income you don’t get to have much fun
 Rough math is you should focus on income generation until you’re able to save/invest half of
everything you make (everything is calculated after taxes). Until then you’re not earning
enough or you’re spending too much due to lifestyle inflation
 Take the amount you spend per year, multiply this by 25. If you’re happy with the amount
you’re spending per year… Working harder and killing yourself for more money is a fools
game
 When you get to $1M+ in net worth within 10 years… you’re going to be able to make the
decision “Do I want to be worth $20M+ or $10M”… Rich people problems. We have no
view on the choice, people have different life objectives
 Health is the only thing that is more important than money when you’re young. That said,
working 60-80 hours a week between ages 21-27… Really doesn’t do anything to your health
despite what unsuccessful people tell you. Working 80 hours a week past age 30 is something
you want to avoid
 As a framework, you want to utilize your “competitive advantage” by age band. Not having
much money is fine in your 20s, not so much in your 40s. Making a lot of mistakes in your
20s is fine (you’re young) but making wild mistakes in your 40s, not so much. Think about
what the world’s “perception” and you is and you can find areas to exploit the biases
 Avoid comparative analysis. There is no point in being jealous of people who go up the stack
faster than you. Also avoid all *unnecessary* conflict. I.E. no point in participating in
gossip/drama as it just leads to negative attention and a large time drain. You should have
better things to do. The standard “What do I gain from this?” should be asked before doing
anything. If it’s nothing positive and just an ego boost, better to skip. This is similar to quitting a
career/job, you don’t get anything by throwing a tantrum when you leave. By staying quiet
and polite you may save a few relationships you thought you would lose
 You have to live an “extreme life” by definition. If you’re going to get into the top 1% you’re
by definition an extreme outlier. It is not possible to get there by following the crowd
 To wrap it up, we avoid all family/life decision type conversations as those are personal in
nature. As long as you’re not risking everything you’ve worked for, there is no point in the
debate.
A Quick Warning: We’ll also talk about performance enhancing products. Under no
circumstances are these comments meant to be recommendations, the entire product is opinion
based. Your average person has limited will power and self-control which makes addiction higher.
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There is no such thing as a magic substance that makes you “better than average” in a single day.
Instead, performance boosters are for people who want to remain in top shape. Two extreme
examples will help: 1) if you take a wide variety of steroids, the chances of competing with proathletes is less than 0.01%... the only people who could take them and potentially get close are
people who were “on the line” before taking PEDs – typically D1 athletes who were extremely
close and 2) if you take a bunch of psychedelics, you’re unlikely going to become the next Steve
Jobs. The typical person who takes psychedelics doesn’t use them properly (notice the trend here,
there is no magic potion)
With the warning out of the way, our opinion is that you can use a lot of substances to make your
life better. Yes. We’ve used a ton of them over a long period of time. It doesn’t “change you as a
person” if you use them correctly. It simply allows you to run at full speed for longer durations
when you need to.
Final Note on Money: One last item of importance. While the phrase “you can’t take it with you
when you die” is true, that phrase is usually an excuse to spend everything… putting your health
and well-being at risk later down the line. We take a different stance.
You should earn aggressively which will cause you to save aggressively by default until you hit the
“cross over point”. If you can easily live off of ~$5,000 a month (this is just an example and would
include shelter, food and utilities), there is no real point in saving massive amounts of money
beyond this level. At that point you can ratchet up the spending as you’ll never touch the principal
in the first place.
For those that think the above is risky, there is yet another catch. After being intelligent and saving
for almost a decade, you won’t spend all of the money you make anyway. Our guess is that you
will still save around 30% of what you’re bringing in and the principal will actually grow
significantly over time. In short, once you are completely free, your stress levels will likely come
down and your spending will go up without any issues.
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Table of Contents
Segment on Spending Type……………………………………………………………… 7
Chapter 1 – Housing, the Highest Expense Item After Taxes………………………………... 7
Chapter 2 – Food and Dining, the Third Highest Expense Item…………………………
16
Chapter 3 – Clothing, Shoes, Suits, Watches and More….………………………………….. 21
Chapter 4 – Travel and Vacations, Hint No Need for the Standard Europe Trip …………… 26
Chapter 5 – Services, Focus on Improving Your Health and Performance………………….. 30
Chapter 6 – Events: Dating, Concerts and Parties…………………………………………... 34
Chapter 7 – Improving Utility Overview……………………………………………………. 38
Segment on Economic Cycles……………………………………………………………. 41
Chapter 1 – Peak of Market Cycle…………………………………………………………... 42
Chapter 2 – Bottom of Market Cycle …….………………………………………………… 47
Chapter 3 – Middle of Market Cycle……………………………………………………..
53
Segment on Ages…………………………………………………………………………. 62
Chapter 1 – Completely Broke and Starting from Zero (Early 20s)…………………………. 63
Chapter 2 – Able to Save 30-50% of Income Without Feeling Uncomfortable (Late 20s)…… 71
Chapter 3 – Millionaire Club with High Quality Cash Flow (30+)………………………….. 86
Chapter 4 – Set It and Forget It (40s)………………………………………………………. 98
Chapter 5 – Some Basic After Tax Income Brackets………………………………………. 101
Sub-Section on Social Life Spending……………………………………………………. 104
Conclusion…………………………………………………………………………………. 109
Thank You Note and the Future…………………………………………………………… 110
Appendix………………………………………………………………………………….. 112
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Segment on Spending Type
This section is for people who view their spending in categories: Housing, Food & Dining,
Clothing, Travel, Services, Events and Parties. These are the six major categories for spending and
no one will agree with our utility maximization framework. That said, you’re reading this since you
find our views interesting and likely want to think differently when it comes to spending (otherwise
you wouldn’t be here!). Each segment will give you an idea of how to maximize each dollar spent.
In the end, we put it all together and provide a quick snapshot of where we think the big utility
gains are made. This will never be perfect and many people will break the rules (for better or
worse). The main concept here is leverage and “use”. If you’re not going to get much incremental
use or leverage from the purchase then the item should be avoided.
Note: when we mention savings rates with wide ranges from 10-65%, these numbers *include* business investments
that have a high chance of paying off. If you drop $10,000 on your second internet asset but know that it’ll return
at least $30,000 that $10,000 is considered saving/investing not spending. This distinction seems to separate the
rich from the poor as poor people do not realize that starting a new venture is typically ROI positive otherwise you
wouldn’t have done it!
Chapter 1 – Housing, the Highest Expense Item After Taxes
If you grew up in the United States you know the typical strategy. Save your money and buy a
home sooner than later since you’re wasting your money on rent. The standard “expert advice” is to
lever up big. This is why you see common search terms such as “how much home can I afford”. It’s
practically a cult in our society. Luckily, you can avoid this pitfall, get rich and also become a home
owner in the future (without the stress!). The answer is quite simple and obvious… You want to
reduce housing as a percentage of your spending every single year until you can easily
afford a home/condo/apartment. Also. We really doubt you want to buy a home before you’re
35 or so since you should value your freedom. Being able to move from city to city is incredibly
important if you want to keep your career options open (we assume most will have careers despite
pushing people into having a business and secondarily a career).
With the back drop out of the way… we don’t know where you are in life. This is going to
encompass a wide range of economic situations from the absolute worst (in debt or zero net
worth) and scale all the way up to a life of luxury. As a disclaimer, we were lucky enough to have
a high paying career out of college so we started in Step 2. Step 1 is for people who are really
starting from scratch and want to live in the United States. As usual, all of our advice assumes you
live in the USA and should be treated as such.
Step 1 – Completely Broke with No Real Income: This small section is going to be an opinion
based on *no* experience. We put that disclaimer up front since we don’t like to give advice
without any relevant experience. That said, we can easily explain how we would build out of this
hole (and it’s a common request). So. Take a look at your housing options: 1) live at home and 2)
work any possible gig to live in the cheapest place possible.
Our definition is quite simple, if you’re unable to save ~15% of your after tax income, you’re in
this category. This is probably shocking to most as the average person is told to save just 10% of
their income. This is not worth it in our opinion. If you’re unable to save about 15% of what you
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make, mathematically, it just isn’t possible to get rich (you need some money to start basic low
income internet businesses).
You’re better off living in the cheapest possible place (at home for free or with multiple
roommates). While we have never been in this position, we are dead serious when we say this is
the strategy. Get any position that will help keep the lights on, live in the cheapest place possible
and simply have a high quality internet connection.
This is the shortest section since the answer is extremely clear (cheapest possible). But. We will
address some of the most important notes.
1) Fun… Not A Good Decision for Now: The reality is that this situation is terrible. Also. It
means the person unlikely made wise decisions. We’ll skip the part about “why” and simply
focus on the reality of the situation. If you’ve somehow managed to end up in this spot, there
is no point in having any fun. You’re going to grind it out all day and night instead. It isn’t
relevant if the person grew up well off, poor or middle class (or anywhere in-between). The
only thing that is relevant is the situation. Having fun just isn’t on the table since you’re
economically set up in a spot where it isn’t worth it to have fun in the first place! Tough
paragraph to write but also in-line with what we would do.
2) Dating: Sure it won’t be easy on the dating market. The question is… would you actually want
to use your valuable time to try and date people if you’re broke? Time is all you have as a lever
to catch up… so there is no real point in looking for a significant other. If you’re realistic about
the situation you’re also making a terrible choice by dating period. After you build out of the
hole and have your life moving in the right direction, the options you have will be better anyway.
3) Health: Your health won’t take a hit if you’re living at home or with a bunch of roommates.
This is because you don’t have to sacrifice basic items like water or vegetables. So you’re not
going to have any issues here. Just don’t live in a place where there is an actual health issue.
Not sure why people believe this would be impacted by living in a cheap place but we’ve seen
some insane arguments that suggest your health will take a step back (it won’t). Yes. We are
mentioning health since we’re dead serious about living in the cheapest place possible without
health issues. There is no other way to dig yourself out of this major hole (low income at a
young age).
4) Generate or Don’t Move: Unsurprisingly, we’re keeping the line firm. Unless you’re able to
save a minimum of 15% after taxes (excluding 401K) you’re basically trapped. Not allowed to
move. The only way you’re able to move is if you can save a higher dollar amount by moving.
For example if you’re able to save 10% today (say 10% of $40,000 = $4,000) and can move to
another location and save 9% after taxes (say 9% of $50,000 = $4,500)… then you can move.
But. In that situation you’re still living in the cheapest place possible.
5) Earn or Don’t Spend: While the focus was on housing we have to leave this as the punch line.
If you’re not able to save 15% of your post tax income, you’re only allowed to spend on future
earnings. This means anything you’re buying is essentially going to help you make money, will
make you more money or could potentially make you more money. Other than that your only
expenses should be living expenses. You’ll probably spend more time in the library than anyone
else in your current age group.
Step 2 – Out of the Disaster Scenario: The prior section was awful to write. It’s the entire reason
why we wrote our first book Efficiency in the first place. We needed to prove that you could get
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rich even if you only have an internet connection. The good news? Most people will probably be
around this level. If you found our website it means you were already looking for the highest
paying positions. This implies that you have above average intelligence. In Step 2 you have a good
paying Career/Job and you’re able to save around 20-30% or better. This is a healthy starting point
as you’re in square one.
Similar to the prior section we’ll offer two solutions: 1) continuing to live with one roommate and
2) living in a basic studio apartment.
From a housing point of view you’re going to choose the location that lowers your cost the most.
When we refer to cost we are including the cost of your commute time. It is unlikely that you’ll
work from home starting day one, so we assume you’ll have a minimum commute time of around
20 minutes (a reasonable amount of time). Anything beyond this will be worth $100/hour in after
tax money. So if your commute time is say 40 minutes, this is $50/day you must add to your
“rental” cost. Multiply this by the number of days you must show up to work.
Many of you will say this number is too high. We will happily disagree since your time should be
*more* valuable when you are trying to build something. Every hour is lost recurring revenue
for the rest of your life. So the value of your youth should be much higher than $100 an hour.
We suggest floating this concept to a rich person (business owner) and see what they say. We’ll
bet they say the number is *too low*. We have used a $100 number in this example since we think
it is high enough for people to pause and think about it. After all, if you’re unable to do anything
with your time… that’s essentially equivalent to being in a jail cell. (okay, okay an exaggeration but
driving the point home)
Now we can jump into the highlights. Remember. We assume you’re able to invest at least 2030% of your after tax income (excluding any retirement contributions).
1) I Want to Save Even More! So here is the yin and yang part of life. If you’re willing to live in
the cheapest place possible or live at home… we commend you for your willpower. That said…
There is a line where you start to fall back in terms of social skills. For what it is worth, people
who never go out and live a hermit type life end up developing odd social mannerisms that
actually make them *poorer* over time. If you’re unable to go to a bar and interact with normal
people it’s quite difficult to become a people manager in the first place. Surprise, surprise, there
are real repercussions to being a miser. So. That’s why we suggest you live in either a normal 2bedroom apartment with a roommate or you live in a studio apartment. This allows you to live
a basic social life. The extra savings doesn’t make a difference at this point since you’re “on the
right track” so to speak at 25-30%. Note: if for some reason you are forced to live at home or must do so
due to some other circumstance, you should go out at least 3x a week to offset the living situation and increase
social skills in an exponential manner.
2) Studio vs. Roommate: There is a slight difference between the two. In step two we assume
you’re barely able to save/invest 20-30% so we lumped the two items together. If you’re able
to choose always go with the Studio (equal commute time). This is because you’re still not
“there” financially and you’re still going to save additional time. This will sound sociopathic but
true. If you have a roommate they will likely eat up part of your time (gossip/complaining etc.).
If you’re just now in the green and on the right path, you should still have a high value tied to
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your time as you work to scale up a biz or spend extra time winning clients in your career. By
living alone you naturally have 100% control over how your time is spent.
3) Shouldn’t You Buy? The answer is clear here: no. While you may have the money to purchase
a place, you certainly want to have mobility. Without mobility you may lose out on a huge
opportunity. You might get a new career opportunity and that should not be weighed down by
the purchase of a home. There is no guarantee that any side business a person has will succeed
so you want to keep your options open (yet another reason we recommend online sales –
mobility). The one exception here is if you decide that real estate is going to be your second
form of income, then we’re talking about an entirely different strategy. Other than that we can’t
think of a good reason to lock yourself into a single location when you’re young.
4) Dating and Health: In this area you’re in great shape. You’re probably in your 20s if you’re
in this range anyway so you won’t be “hurt” by having a roommate or a basic studio apartment.
In fact, you should avoid the people who complain about your living situation. They should be
smart enough to realize you’re making a good decision with your life and on top of that…
expecting you to blow all of your money is another negative sign (avoid people who encourage
high spending at a young age).
5) Minimal Fun: At this point you’re allowed to go out. This is just below the tier we
recommended in Efficiency. Essentially you can probably go out 1x a week or so. Why? Well
the math says that if you’re only able to invest about 20-30% of your income then you’re still
trying to make one extra jump to get ahead. If you’re in a rough patch and need a break, go
ahead and go with 1x a week and try to find low cost activities you enjoy to break up the routine
(an active sport, house parties instead of going out etc.). This general region is painful as you
can see the opportunity but it’s just out of reach. This is why you’re going to live below your
means to “force motivate” yourself to get out of your situation.
Step 3 – Finally into the World of Positivity: This is where we enter the world of momentum.
Essentially once you’re able to invest/save ~35-40% of your income, you’re now allowed to live
alone. This will likely be a one-bedroom or something around that range. The interesting part
about making it into this realm is that you can stay here for a good amount of time (the younger
you are the better, as no one will expect you to have a mansion).
You can essentially “upgrade” to a place with more amenities. But. You really don’t have a *need*
to live it up. Besides, you’re probably single and hanging out so having a big place would be
counter-productive in most cases.
The options here are essentially that: a nice place to yourself. One bedroom is good enough or
anything you deem comfortable for yourself.
The other interesting thing about this range is if you’re still young… there is no reason to buy a
place. You’re saving a good amount of money and are likely juggling multiple projects to get your
cash flow up. This is a good thing as you won’t have the time or energy to pack up everything and
move into your first home. This is also the zone where you can go out twice a week without any
worries. It’s not an unbearable amount of partying and you’ll likely get to this “zone” in less than
a few years (ideally mid 20s).
Since we’re in the green now the highlights of this range are almost entirely positive.
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1) Centrally Located: Under no circumstances should you be wasting valuable time commuting
or moving long distances. If you’re at this point in life you likely value your time (otherwise you
wouldn’t be able to generate a high income!). This is probably the biggest “life changer” you
will have. By living centrally located to everything you need, you’re able to work longer hours
if you need to, rest more (8 hours easily) and live a healthier life by freeing up valuable minutes
and hours for exercise and healthier food. While we have talked about the financial snowball
effect (around $3-5 million in net-worth), the release of time is probably more important.
Without the significant reduction in time, generating income is a lot harder.
2) No More Roommates: There is just no point anymore, even if it would take your investing
rate up by 10% or more, you’re going to grow tired of it extremely quickly. Generally speaking,
as you get older you want to have less noise, more flexibility and more space. Living with
someone else is just not going to fit into any of these three changes. We doubt this part is
controversial yet… some people try to do the whole “buy a place and charge rent” living
situation. It’s not a good move for your mental health.
3) Dating: You’ll have absolutely no issues at all here. The only dating options you might lose out
on are the gold diggers. This isn’t really a market you should be interested in if you’re still in
“wealth building mode” so it won’t even cross your mind to go down this route anyway.
Essentially, you’ll be care-free living alone with a good amount of free time. Unsurprisingly…
this results in a lot of dates coming your way as long as you have normal social skills. Very few
guys have the ability to go drink and party on weekdays consistently and that’s generally when
you’ll want to go out.
4) Why Not Ramp Up the Spend? This is certainly possible if you’ve already reached a point
where you have 25x your annual spending in stocks/bonds/real estate. The problem is that we
doubt this is the case. Why? Well if you’re officially done, you want to up your spending and
upgrading the place you live in is one of the better moves you can make. There are always rare
exceptions to the rule (no inventory in the area you want, no upgrade available that wouldn’t
break the budget, etc.). But. This is generally how it works.
5) Logical Amenity Choices: Since you’re not rich (yet!) in this zone, you’ll have to do some
quick calculations on what type of apartment you want to live in. As a general rule, you end up
choosing places with minimal amenities. This is because a central location fixes almost all of
your issues. There are instances where a specific item could actually be cash flow positive. The
cleanest example is a real gym inside the building. If you live in a city that would require a car
without a gym in the building, this is actually a cash flow positive item. You can now work out
in your own personal gym and avoid a five-figure minimum car expense. You also avoid a near
guaranteed run in with the police by avoiding a car (yes this is a joke… but almost everyone
gets a speeding ticket/parking ticket or some other infraction).
Step 4 – You’re Rich Time to Spend: Generally speaking, most people will spend a good amount
of time in step 3. You’re living a good life but haven’t reached financial independence yet. As a
rule of thumb, if you were saving ~65% of your income while living below your means in step
3… It takes about 10 years to be financially set for life. After this trigger is hit, you can now spend
quite a bit of money since your downside is limited. In your worst case scenario, you go back to
living a good life in any city around the world (One-percenter problems).
This region is strange since there is no real “answer”. You can take a stab at a wide variety of
lifestyles. From what we’ve seen the most common three routes are: 1) luxury apartment, 2)
perpetual renter that enjoys living in various cities and 3) the house/private party person.
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Remember, these routes all assume that you don’t have a family. If you do decide to have a family
then you’re looking at the more common approach of simply buying a home and focusing more
on the education/future of your children.
Luxury Apartment: If you go this route, you’re looking at a high-end apartment with significant
amenities. This would include: 1) security, 2) gym, 3) sauna, 4) pool and usually another local perk
(such as a popular bar). This is probably the most common move for a single person who is well
off. The second most common is the perpetual renter. And. When push comes to shove, most
people know where they want to live by this time in their life.
As a note, if you’re looking to move into a luxury apartment, you want to wait for a downturn.
This is covered later but mentioning it now is important. The prices here move a lot more. This
is similar to homes that are “Out of Range” for the area. This is highlighted by square footage
costs suddenly going down. By way of example, if you look at the square footage and then look at
the average in the area, it should price lower. This means you’re buying something that is a bit
harder to sell. Naturally… If it is harder to sell there is less demand, more room for negotiation
and lowers the likelihood that you’ll leave.
Before moving on, do your market research in your area as each city has a specific “home type”
that is in most demand. When you see the cost suddenly falling on a sq/foot basis you know you’re
entering a market where most are priced out.
Perpetual Renter: This is the most common situation for Affiliate Marketers and other people
who work in a space similar to Affiliate Marketing. It is also common for people who make the
majority of their income online. We’re not sure why as they can certainly afford to buy and there
are hundreds of wonderful cities to live in for the majority of your life. Our best guess is that this
is due to the personality/psychology of people who earn a living online. They are generally
opposed to commitment and prefer flexibility.
Generally, once a person has a high income or high net-worth, they get annoyed by taxes and
begin looking for ways to lower their brackets. This leaves you with Wyoming, Washington, Texas,
South Dakota, Nevada, Florida and Alaska. After this you’ll find that most people choose Nevada,
Florida and Washington (rare exceptions for the other states). Combine this with the fact that
most people do not live in these states (prior to getting rich) and you’re left with a group of people
trying to “test out” each city. This then leads to a perpetual renter lifestyle where you begin to
bounce around.
With this lifestyle, the person is living in a nice apartment but not quite nice enough to justify
buying a place. Psychologically, the perpetual renter philosophy is to live in a *slightly* nicer place
than he *would* buy and pocket the difference into additional savings. There is nothing wrong
with this strategy and if you’re interested in being a home hopper, this is a good way to do it. If
you’re going to rent you have to make sure it’s lower than you would have paid on a mortgage for a similar place
(otherwise rationalization will take place and you’ll dislike the apartment).
The House Party Person: If you’re in this camp you already know it. In fact before getting to
this section you already knew that you were going to be the “house party” type person and it was
one of the items you listed on “what to do when rich”.
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This personality type usually starts with a smaller but upscale (everything upscale) home near the
most vibrant neighborhood. He’s able to go out frequently and the home typically accommodates
around 12-20 people if needed for a basic party. The person in this camp is usually quite
extroverted. If they have a laundry list of people they want to have over, it would line up with their
natural personalities/inclinations.
If you’re going to go down this path, we’ve essentially given out the initial step. The last thing you
want to do is buy “too much house” since you’ll likely lever up too much and have cash flow
issues on the initial investment. Naturally, you want to steer far away from the 3-bedroom and 2bathroom home out in the suburbs. By having a place that is closer it solves half of the battle and
from what we’ve seen, quality over quantity certainly works when it comes to throwing house
parties. You’re not in college anymore so the bigger place with lower quality items just isn’t
appealing anymore. When you upgrade to the bigger place, you can expand the number of
guests… Just don’t sacrifice quality.
The highlights here are all positive.
 No Real Answer: Unlike the other ideas we highlighted, there is no real answer. The other
situations required lowering total fixed costs, reducing travel time and improving the “time
value” of your location. At this point we’re certain there are *many* other exceptions… Such
as a person living on a farm with a huge stream of income (we’ve seen this occur in rare
occasions). That said, if you’re looking to stay in a major city with a more urban lifestyle, the
three solutions that we outlined are the most common.
 Cash Flows: Since you’re financially well off at this point, your focus is going to suddenly
change to cash flows. Why? If you have a high net worth, the specific number fluctuates on a
daily basis. What really matters to you is the consistency of cash flow to pay for fixed costs
(prevents you from touching any principal). As they say “1% problems” or “rich people
problems”. None of this is negative. It means your focus is going to shift a bit towards
consistent checks since you want more income production. You likely invested in non-income
producing assets before you were rich and a shift occurs in this time frame (more value to cash
flow).
 Reduction in Risk: The last thing you want to become is the rich person who blows his wealth.
This is an easy trap to fall into. One over leveraged bet. One over confident investment. One
business idea that requires significant up front cost. Too much generosity giving money to
family and friends. The list is actually quite long. When we refer to a reduction in risk we are
specifically referring to the assets that pay for all of your fixed costs and basic living expenses.
To avoid cash flow issues we recommend significant reduction in risk related to anything tied
to your “fixed principal”. The easiest way to do this? Take 10-20% of your savings and add this
to your untouchable fixed principal every single year.
 Try Various Lifestyles… Don’t Bet the House: Our best guess is that between the three
options, most will start with the perpetual renter model. This means you live in a new city and
hop around quite a bit. Our only item of note here… Don’t try to mix the three lifestyles. If
you’re going to buy then buy. Trying to hop (while buying) and managing the ~5% selling costs
(buy and sell) combined with volatility surrounding the price of a home is not easy to manage.
Hopefully no one is foolish enough to try and do this
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 Veer Towards Quality: This is a point of emphasis that we have to make. If you’re going to
“live it up” (insert any phrase that resonates with you), then you don’t want to have conflicting
items. You don’t want to have low quality materials of any kind. This means your
house/apartment needs to be high quality, the places you go to should be high quality and the
atmosphere in general should be high quality (this refers to the living space, furniture, lighting,
cleanliness etc.)
Bonus – You’re Ultra Rich: If you’re ultra-rich you’re free to do anything you like. You can
continue living in basic luxury apartments, you can do the classic boat/home combo, so on and
so forth. We’re only including a small sub-section here since we get a lot of questions about it.
The answer is quite simple and for those who have around $5-10 million to their name and a good
social circle… they know the answer here. Large home and private parties.
When you become rich (not ultra-rich), you end up meeting people who are ultra-rich. In a
situation where you’re ultra-rich (somewhere north of $30-50 million or so), you end up buying
large properties and host private parties. We’re only including this as a bonus section since we only
have observational information to share. You’ll end up going to parties where the majority of the
guys are in the 40-50 range (average closer to the high end).
Long story short, the majority of the women that show up are in their 20s.
In this category, you’re essentially in “sugar baby supporter” territory. You’re living a life similar
to Felix Dennis (having people live in your various apartments and buying cars like they are a pair
of socks). Hopefully you’ll make it to this level of wealth.
Back to the point. You’ll have a large home with a lot of alcohol flowing at all times for the guests
that show up. This typically involves some sort of entertainment cost (hiring a DJ for the party,
catering, etc.). From an “investment” perspective you don’t really have an interest in getting a large
return on your parties and home. You’re too far up the pyramid.
While you’re not going to go overboard and lose it all, the cost of these events (cars etc.) is a few
percentage points of your annual income anyway. If you have $50 million dollars, 5% is $2.5
million dollars which gives you a lot of wiggle room to spend freely. This is why the ultra-rich do
not worry about small things like cars.
General Snapshot: As mentioned before, money has diminishing returns. No matter what there
is always going to be someone who is richer than you. Even the richest man in the world does not
stay at the top forever (always surpassed by someone else). Even when you reach the “upper
middle”, you start to see diminishing returns on the items you can purchase. So for the housing
section the real big jumps are 1) living by yourself, 2) upgrading to a full service place with 1-2
bedrooms and finally 3) if you reach the $5M+ net worth area – dual city living. Extreme housing
is certainly better, we’re just emphasizing the increase in “utility” as you go up the stack.
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1-10 Ranking: Higher Number is Better
Housing
Living at Home
Living with Roommates
Living in a Studio
Living in a One-Bedroom
One-Bedroom with Amenities
One/Two-Bedroom with All Chores Done
Larger Place With All of the Above
Dual City Living
Extreme Housing
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2
4
5
6
7
7
9
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Chapter 2 – Food and Dining, the Third Highest Expense Item
This section is specific to your own personal consumption. We’ll go over typical going out
expenses later and are focusing on your day to day life without what we’ll call “discretionary food
spending”. Discretionary food spending is when you’re going out for fun or picking up someone
else’s tab. This chapter is your habits only. The majority of the costs don’t change much even if
you become wealthier.
At the end of the day, you’re not going to dine out every single meal and you’re not going to
methodically pick out every meal (unless you’re one of those food YouTube celebrities).
Step 1 – Completely Broke with No Real Income: If you’re unable to put away 20%+ or so,
you’re going to eat the most basic healthy foods you can find. This means you’re not allowed to
go out and eat (spending $100 or $50 for a meal). Instead you will home cook all of your food and
buy items in bulk.
Places like Costco would be ideal as you’re able to stock up on basic goods. While most people
will frown upon and laugh at frozen goods, you’re actually able to obtain a lot of nutritional value
from bulk frozen vegetables, fruits and other quick food items. Besides. If saving money is
currently tough, you need as much extra time to fix your situation… Bulk purchases allow for this.
And. As a kicker… If eating the same food consistently doesn’t make you want to get rich?
Nothing will.
Naturally, this is another short section as we were fortunate enough to not be in this spot after
graduation. As usual though we’ll provide the main highlights and action steps we’d do if forced
to start over.
1) No Entertainment Food – Bulk Only: Essentially, if you’ve got nothing, there is no reason
to go out spending money you don’t have. We’d clamp down. Spend all of our time and
resources finding ways to maximize each cent. This means you’re looking at bulk purchases of
items that last a long time: frozen foods, canned foods, rice, lentils, oats, corn and perhaps
some dried foods. You can avoid pasta as it lasts a long time but generates next to no nutritional
value.
2) Water and Coffee: If you’re serious about getting out of this situation, you’re likely consuming
some sort of energy enhancer (caffeine) and we’d just stick with coffee as it is cheap. Besides
this cost, the only thing you should really be drinking is water. This isn’t going to be feasible
from an execution standpoint but the point is the same. There is no real reason to go out
drinking beers, hard liquor, wine, sugary drinks or other products. It’s going to happen here
and there but there is no reason to spend money on it if you’re already behind.
3) Going out Expense: The only going out expense should be related to earning money. It
sounds cheesy but it is true. Unless you’re going out to spend money that will legitimately lead
to income growth… it does not make sense to spend money. Generally speaking, when you’re
looking for an entry level position to increase your income, you won’t have to spend anything.
The silver lining (there isn’t much in this income bracket) is that you’re not going to have to
spend a dime networking/looking for work.
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As you can see there isn’t really much to say here. You’re going to bulk buy items that last a long
period of time and try to focus on eating as healthy as possible. There are many creative ways to
get nutrition and we’ll name a few before moving on: 1) mild salsa in bulk that is drained through
a strainer, 2) oats, 3) frozen spinach, 4) lentils/beans for protein, 5) bananas and 6) last but not
least, plain old eggs. For what it is worth, the frozen items and 6 bullets are from real experience
(living situation when absolutely broke before entering the workforce).
Step 2 – Out of the Disaster Scenario: In similar fashion, you’re in a more stable position and
can add some wiggle room to your diet. If you have a more normal savings rate in the mid 20s
range, you’re likely able to pick up some discretionary items that will help you over the long-term.
These are not going to be big ticket items. Instead they will be low-ticket items that are more of a
“nice to have” versus a “need to have”.
You’re now able to spend a little bit of money to either 1) improve your health or 2) save additional
time for special occasions. This is where our blog’s approved products section comes in… you’ll
see the basic items there: fish oil, high quality protein and chlorella to get nutrients while on the
road or extremely busy. Beyond that, if you’re able to keep your savings rate reasonable, you can
also begin buying food “on the go” here and there when you’re looking to save time.
This would include a quick coffee, a sandwich/quick meal while on the run or a healthy juice if
you were unable to eat a lot of vegetables due to time constraints in the day. Notice, we’re not
including expensive dine out options here. The items listed above either help your health or save
you time. Going to a sit down high-end restaurant when you’re still trying to “make it” is not a
good formula for success. You’ll probably go out with friends once and a while anyway and get a
few nights out that way. Generally, you should still be too busy trying to earn since the nights
you’re “missing out on” won’t compare to the nights you’ll have in the future.
Some basic highlights in this group as things become more positive:
1) Time Flexibility: If you’ve made it to this point, you likely have a career/small business that
is somewhat demanding. This means you are going to use your additional money to buy time
(for additional work) and no longer have to plan out every single item on the “chore list”. In
the prior group, chores were organized to a point where you’re maximizing every single penny
that came in. Absolutely no cent could be wasted. In this sub-section food is the place where
you’ll get the most leverage off of the additional income. You can buy quick food when you
need to finish a project… You don’t have to buy everything on sale and your budget is more
flexible.
2) Testing Your Body’s Reaction: Another benefit of this group is you can now see what type
of foods react positively to your body. Anyone who has tried to maximize their health will
notice that they have different energy levels depending on what type of food they consume.
This could be comparing kale and spinach, broccoli and asparagus, lemons and limes… so on
and so forth. While you previously tried to maximize nutrition and nothing but nutrition, this
new wiggle room in spending allows you to figure out the best foods for you. Naturally, this
translates into your “to go” food items in emergencies as you’re able to buy the correct foods
that mix well with your reactions.
3) Quick Shots and Boosts: One of the best ways to take advantage of some extra cash is the
ability to buy quick boosts: double espressos, wheat grass shots, ginger shots, an energy drink
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etc. This is probably the most important section here as it can help offset a stressful day, a night
out drinking and a missed healthy meal for just a few bucks. Also the extra cash you have can
help you push through an all-nighter or allow you to sleep in for an extra 15-30 minutes since
you don’t have to worry about making anything in the morning (or afternoon).
Step 3 – Into Positive Territory: At this point you’re extremely flexible. You’re saving quite a
bit of money and you can now structure your life to maximize your physical fitness. If you’re
earning enough to save 35-40% or so, it means your life is significantly more flexible than in the
past. There is a wide range here as some people value eating out and other people value experiences
like partying, traveling, outdoor activities, golf, boating… The list goes on and on. Either way, if
you’re in this group you should be able to eat out at least 1-2x a week (outside of your dating
routine). This will either be a restaurant for “recovery” meaning a nice steak restaurant to get
protein after a heavy work out or it could be something more standard like a sushi place. Beyond
the handful of restaurants you like to frequent (and will know the staff shortly) you’ll also have a
flow of quick food places to save time (all items in the prior section).
Everything in this sub-segment is positive. Difficult to live a bad life when you’re able to save
time, eat better and not worry about the menu prices.
1) High-end or Mix of Restaurants: We gave away our own view in the paragraph above. We
think it’s better to have 4-5 upper middle places to go to on a semi-frequent basis. Another
strategy is to go to higher end places at a lower frequency. This is generally how most people
will dine out. One of the problems with the extremely high-end restaurant option is you’re less
likely to socialize. They are typically more closed off and meant for dates, groups or business
meetings instead of socializing and drinking in a more open environment. It’s a lot easier to
talk to the staff and people around you at a sushi bar than a closed off table with dark lighting
and some candles. Either way, the choice is yours.
2) Heavily Stacked Fridge: Another benefit of having a higher income is being able to buy a
large amount of various products for your home. Long gone are the days of having to buy
everything in bulk *and* focus all extra spending on health related items only. Going forward,
you can now stack up a variety of foods and drinks that are common for entertainment:
champagne, vodka, tequila, wine…. sparkling water, juices, some unhealthy drinks such as
sodas/energy drinks… higher quality foods to cook from seafood to oysters to tomahawk
steaks and filet mignon. There is no need to go overboard and spoil food so we’re guessing
you’ll likely spend more on the alcohol side (significantly longer shelf life). That said, you’re
going to think more and more about the type of people you’ll have over to make sure you have
all the right items for them as well.
3) Espresso Machines and Other Gadgets: Since you’re now squarely in the entertaining group,
you’ll likely spring for a few products that you prefer (or your typical guests). This could be the
standard espresso machine, juicers and blenders. Also. Since we’re in the food category…
having gum and mints for the bathrooms and living room is a nice touch as well. If we were to
summarize this, simply take the amenities of a high end hotel and try to add some of those
features as they don’t cost much to maintain.
If you’re in this category you’re living a life that most dream about on a daily basis. Be extra careful
about who you bring over. People who were always in the upper echelon (grew up upper middle
class and simply made it to the top) don’t have this issue. We’re emphasizing a bit of more caution
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since we’re writing this product for everyone. If you bring over people who are still in the lowerend you’re going to run into jealousy problems. The masses care a lot about comparisons and you
should be smarter about who enters your place. Realistically? You probably cut these people off a
while ago but for all we know you got rich suddenly and didn’t upgrade your friend base on the
way up.
Step 4 – You’re Rich Time to Spend: Congratulations! The reality is that not much is going to
change here as the extremely rich rarely change much from the above. But. We’ll go ahead and
highlight some of the things that typically come up. It gets a bit blurry here since we separated out
services in another section.
We have to include it here as that is where a lot of the leverage around time and food comes into
play. The upper echelon of rich people problems for sure.
1) Any Restaurant You Like: At this level you’re so rich that it doesn’t matter if you eat at high
end places all of time. The problem with high-end places is the amount of time it takes to sit
down and eat every single time (so we doubt anyone would do this). If it’s your thing… Then
go for it. The only real difference here is that you are probably traveling more (see section later
on that) which means you’ll actually know nice restaurants in multiple locations. While the
person in the prior step would likely know the high-end places in his primary residence and
“upper middle” slots outside of his hub.
2) Catering and a Chef: In the United States it is rare to have a chef. This is largely due to culture,
prices and other services available in the Country. That said, some people go down this route
and pay for it anyway. The more common route is consistent catering. If you recall from the
previous section on housing, even if you live in a nice penthouse apartment, catering can be
extremely valuable. In the more likely scenario (living in a home for most), catering can save
you many hours of time. Unless you reach “staff level” wealth, then you’re able to rely on the
people who work on your property (hint this is for the ultra-wealthy at the nine figure marker).
3) Ratchet Up the Quality: At this level, there is no reason to skimp on a single item. This could
be the drink quality, silverware and appliances. While you may have had the “high quality
standard items” in the prior section, at this level you even have the stuff you rarely use or are
asked for. By way of example, if you don’t like Tequila, you’ll have one bottle of high quality
Tequila in the house anyway (~10 year shelf life of high quality alcohol after being opened and
in the freezer). Someone may like it and you won’t have to go out to get it (or send someone!).
Final Note: There is no real “bonus” section here as the cost of food eventually hits a ceiling.
Sure you could go for insanely expensive items that don’t make sense (collection of wine
approaching 7 figures, rare foods that cost 10x more than high quality products) but it’s unlikely.
The real change at the ultra-high end is the move to chefs/catering and the additional 20% cost
of having high quality items across the full stack of choices. For a good “marker” you can get good
quality champagne for $500 a bottle that would cost $10,000 in the clubs… So high quality alcohol
doesn’t even move the needle for you anymore
General Snapshot: Food and Drinks is one of the easiest categories to maximize since the
chances of going out to eat at a Michelin Star restaurant everyday are slim (unless work related).
So when you become rich (higher chance since you somehow found this blog), you’ll end up going
out a few times a week and the rest of the food will probably be high quality items at your own
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place. There are people who eat out 100% of the time, but as you get older this is less likely. As
you can see the real big jumps are 1) when you can optimize your body for food/drinks, 2) when
you can go out about 2x per week – referring to high quality dinners and 3) rare case when you
can afford to have everything done for you.
It is important to note that we don’t really include lunch or breakfast in here. The reasoning is as
follows: 1) the cost of breakfast is always quite low and a lot of healthy people simply go with a
coffee which is either a few cents at home or a meaningless $2.50-5.00 at a coffee shop and 2)
lunches are also left off as the cost is not wide, you can get a decent lunch for $15-30 and making
it yourself is probably around $7-12 or so.
While we realize that $10/day is a good amount of money if you’re struggling, you wouldn’t be
scaling your spending in that scenario. When you begin to make more money (say six figures or
so), you’re definitely not going to move the needle by removing $10/day. That would be $3,650…
or just 3.65% relative to your annual income. The $200-300 dinner expense is what can move the
needle (dates etc.).
1-10 Ranking: Higher Number is Better
Food
Basics With No Wiggle Room
Higher Quality Food Made Yourself
Higher Quality Ability To Test Reactions
Going Out At Least 1x Per Week
Going Out 2x Per Week
Maxed Out Amenities In Your Place
Go Out Whenever You Like
Catering/No Work For You
Extreme Events For Parties
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2.5
5
5.5
7
7.5
8
9.5
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Chapter 3 – Clothing, Shoes, Suits, Watches and More
We’ve already covered the basics of style in prior products/posts so we’re going to focus on
brands, longevity and other things to keep in mind as you scale your spending here. Lots of
mistakes were made here in the past (quality over quantity is the most common) and hopefully
people reading this won’t make the same mistake that we did.
Step 1 – Completely Broke with No Real Income: At this level your expenses should be next
to zero. Having grown up with little, most know the feeling of not having more than a couple of
pairs of pants and a few shirts (vice versa, the point is clear). The only real item you need is one
suit and one dress shirt for interviews… That’s about it. There are a hundred ways to minimize
the cost from Thrift Shops to a slightly oversized suit followed by a tailor. Either way, this is really
the only item you “need” to spend on since you don’t want to lose a potential career position by
looking disheveled.
Humans are making the decision and looking unattractive isn’t going to help you. Before moving
on from this basic section, we’d add a decent pair of dress shoes as well. The name brand does
not matter, it just needs to be clean and *appear* to have replaceable shoes. If the interviewer is a
female, the chances she looks at your shoes are near 100% through numerous studies on this topic.
1) No Other Major Clothing Costs: At this level there is no real point in spending on your
wardrobe. If you get a good paying position, you are forced to ramp it up a bit to look
presentable on a day to day basis. But. If you’re currently stuck at the bottom you’ll be spending
on nothing but one solid interview outfit (which you will only use for interviews/job fairs).
Beyond this cost, you should simply replace what needs to be replaced and ideally focus on
clothes that simply fit. If this means you’re wearing a lot of basic white or black t-shirts, then
so be it.
2) Any Costs Focus on Professionalism: The majority of your costs here are going to be for
basic items (t-shirts, socks etc.). If for some reason a friend/family member wants to give you
clothing, make sure all of it is work-related clothing. The cost of work related clothing is an
eventual cost no matter what you do. So. If you get the chance to get any sort of additional
clothing, make sure it’s professional in nature. No need for nicer gym/work-out clothes since
there is no real utility there.
3) No “Extras”: It goes without saying that there is no reason for any accessories or special items.
If for some reason you’re given an accessory of decent value… the answer is to sell it. Sure
there are social exceptions (you’re forced to keep it since it’s a relative who will ask about it),
99% of the time you’ll immediately sell any unnecessary item. The additional items are not
justifiable and they could give you extra cash for an emergency or more serious opportunities.
Accessories are a big waste in this bracket. Note: accessory refers to a watch or pocket square, not a tie
that is required when you wear a suit to an interview.
Step 2 – Out of the Disaster Scenario: Since you have decent income in this bracket, this is
typically where the investment in clothing comes in. Why? Well there is truth to “looking the part”
when it comes to any career or small business. If you finally got your foot in the door, cleaning up
your appearance is probably one of the highest return investments you can make.
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It is an actual investment since good looking people are seen as more trustworthy and earn more
money over the course of their working career (last study we checked was around $1 million dollars
in difference over 25 years or so). The numbers are less important. What is more important is
knowing that your investment in clean clothing and a clean look will give you a much larger return
than the cost of the clothing if you do it right.
Before jumping in, the *Main Premise* here is that you’re looking for classic looks that can be used
at work. Classic looks never go out of style, are perfectly fine for the work place and you can even
use them to go out from time to time.
1) Day to Day First: We’re assuming you recently made it into this category, so you’re going to
focus on building out your day to day items first. Depending on your body type you should
choose *any* brand where the cost of a standard long-sleeve t-shirt is around $15-20 and a pair
of slacks at around $30. As long as there is no visible quality difference feel free to look for the
same brands on sale during special promotions to get them even cheaper. Around 10-15 shirts
and 7-8 pants should be more than enough. Most people in this category jump straight to
“higher quality items” like Brooks Brothers or Ralph Lauren… unfortunately the quality
actually isn’t much better and you’ll see that the common Brooks Brothers clothing line move
just leads to broken buttons and more costs. Basic items from Banana Republic, J. Crew and
Zara are likely better (you’re just getting basic items to look presentable at work and are not
well off yet)
2) Three Solid Suits: Until you make it into the next group of spending, there is no need for
more than three solid suits. We’ll leave you to choose between a mid-level brand tailored
(practically all items found at a place like Nordstrom Rack on Sale – emphasis on sales) or a
made to measure suit. We’re partial to the made to measure side but it’s really not that big of a
difference when compared to a tailored suit (assumes the sizing already fits). Either way. The
point stands. There is no reason for “going out suits” or breaking the bank on a whole rack of
them. You just need a few to rotate until you make the next step up.
3) Minimal Accessories: At this point you’ll have a few, probably a couple of shirts that require
cufflinks (only for meetings) some ties/pocket squares. That should be the end of the accessory
section. Some people attempt to get into the watch game too early and all this does is increase
the expectations of people around you and dismantle your savings rate. Running the math, even
if you’re making $160,000 pre-tax… This is only $100K or so after taxes in a place like New
York City. This means a single watch purchase is more than 5-10% of your total after tax
income. That’s an insane number that would only be reasonable in the low single digit range 13%, particularly if your savings rate is low as well.
Step 3 – Into Positive Territory: At this level you are expected to “make an impact” with your
wardrobe. This means you should be getting complements every single week if you’re going out
consistently and meeting new people. That’s the standard and it doesn’t require name brands
(although we’ll give a few that work). Many people believe they dress well, but then never receive
any complements.
That’s a terrible sign and suggests the person is not well dressed relative to the person they are
attempting to represent.
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Before moving on, this section is difficult to triangulate as we don’t know “who” you’re trying to
represent. If your style is loud vs. quiet… If you are thin or extremely wide… If you prefer going
to the beach or wine bars etc. The key message we’re attempting to convey is that your overall
wardrobe should move in that direction. There is no point in having flashy suits if you’re never
going to wear them and there is no point in buying a bunch of jeans if you’re not going out during
the day consistently.
1) Ramp Up the Whole Image: Remember. When you ramp up your image, you have to increase
all of it. When looking at the sub-sections here, the place you live comes first followed by the
clothing you have on followed by your choice in car. If you’re living with a roommate but have
a $5,000 custom suit on with an Audemar Piguet on your wrist and drive a used Honda Civic…
it just doesn’t look right. Make sure the entire image moves in the same direction.
2) Increase the Brand or Made-to-Measure/Bespoke: There is no “right” way to do it as
described earlier. Depending on your style/image, you’re going to up the brands or move to
more made-to-measure and bespoke products. Our guess is that it’ll be a brand increase or
made-to-measure since Bespoke can get pricey if you’re still in the saving 35-40% range and
are not officially rich yet. Brand increases are quite simple, once you start moving into Thomas
Pink, Canali, Giorgio Armani (not Armani Exchange) etc. the quality of your nicer items are
“leveled up”. You can save those Tom Ford/Gucci purchases for when you’re truly rich/set
for life (the prior brands can be acquired at a discount if you wait and time the purchases out)
3) Acceptable to Get into the “Watch Game”: Although we would recommend waiting until
you’re officially set, you can go ahead and enter the watch market if that’s your
personality/style. While it makes no sense to wear them if you’re not trying to convey a “classic”
look, if you’re generally in suits and prefer nice nightlife venues, it’ll help you connect with
other rich people and naturally help with women as well. People who are against watches have
typically never used them appropriately and people who obsess over them are usually overly
insecure. You don’t need to be either. A standard Rolex is good enough and you’re not going
to need to level up beyond this. If you become extremely well off, a Richard Millie/Patek will
only be recognized by truly wealthy individuals.
4) Maintenance: As a final rule of thumb, once you’re in this territory, you should only be
purchasing items that you want to take care of. That’s a good rule of thumb. Gym clothing and
other items that will receive a lot of wear and tear are in a different category. If you’re buying
shoes, suits, shirts etc. The quality should be good enough that you’re willing to maintain them.
This could mean pressing the suit (not dry cleaning to make sure it sustains better), consistent
polishing of the shoes and a watch winder if you go down that path
Step 4 – You’re Rich Time to Spend: At this level you can go in a lot of directions. As a point
of emphasis when you’re rich you don’t have to buy anything fancy. This means you don’t even
have to buy suits, wear nice shoes etc. We’re simply outlining ways to spend your money that will
actually lead to results. For example, buying a Rolex and upgrading to a slightly higher quality
Rolex doesn’t do much. Similarly, going from $500 shoes to $800 shoes rarely does anything either.
The content here is used as a guideline for “if” you want to do these things. That’s a big if since
there are wealthy people who don’t even bother wearing nice watches, nice suits or driving nice
cars.
1) High-end Brand: At this point you can buy anything you like (so we assume). If you’re doing
this, the most recognized items are generally Gucci, Louis Vuitton and even Dior (yes we were
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surprised by the last one as well but noticed it – this could change in the future and is based
on January 2020 information). If you’re in a weird situation where you suddenly got rich (say
sold a Company and cleared $10M), then we’d go ahead and say Gucci is your best bet. It’s
the most recognized now and you can figure out your own style as you move forward from
there.
2) Watches: For what it is worth, we haven’t seen much a difference from Rolex to the other
competing brands such as Audemar Piguet for example. Instead, the only way to differentiate
is by picking up something “outrageous”. We’d never do this but if it’s your thing the watch
would need to be worth over $100,000 or so. Absolutely ludicrous in our opinion (you don’t
even need a Rolex as a point of emphasis again) but it definitely attracts ultra-rich individuals
or people that are aware of ultra-rich items. Richard Millie and Patek Philippe are starting
points if you want to go down this route
3) Accessories: This one is a big deal. If you want to do everything wrong, you should buy
normal clothing and then get an outrageous Gucci belt or accessory. This is a common tactic
for people who are unable to understand style or congruency. If your clothing doesn’t fit, don’t
bother with an expensive pair of cufflinks or belt. Once you see this mistake you can’t “unsee” it. Instead the cost of the accessories should “keep up” with the remainder of the outfit.
A good rule of thumb is likely around 10% of the value of the outfit. If you’re wearing diamond
cufflinks that run $10,000 and put on a $1,500 suit that doesn’t fit… you just look
preposterous. Don’t even get us started on the Hermes tie trend with an ill-fitting suit and
submariner watch. It just looks terrible.
4) Cash on Hand: Another interesting thing you’ll notice is that you need to have physical cash
on hand. For some reason it just doesn’t look right when you pay for something and only have
$150 in your pocket. People will notice. You’re already dressed up so you’re commanding
more attention by default. Make sure you have a good amount of cash with you as waiting for
stuff while dressing up just looks strange (should have the ability to skip lines and pay/leave
quickly from venue to venue)
General Snapshot: This one is a *lot* tougher to message. Some people don’t even wear suits
and will be rich living on the beach wearing nothing but shorts and sandals. We really don’t know
what you’ll do with your money so it’s hard to figure out where you’ll spend it (as it relates to
clothing). So we would like to take a second and remind people that this information is from the
lens of someone who wants to live in a major city like New York, Los Angeles or Miami. It is not
for people who decide to say “I’m done” and move to a remote island in the Bahamas (nothing
wrong with that of course).
Clothing
Basics
Higher Quality Basics
High Quality Shoes
Tailored
Made-to-Measure
Custom Suit
Custom All High Quality
Expensive Watch
Ulta-Expensive Watch
0
1
3
4
6
7
8
9.5
10
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From the above, the real key items are 1) high quality shoes, 2) made-to-measure and 3) being
able to upgrade to an official status symbol watch – as mentioned before going beyond the
Rolex is hard on an international scale… you have to cross into extreme territories with a
Richard Millie for example.
Now we’re not sure why these are the jumps but they seem to line up with reactions and positive
comments you’ll get. A tailor just isn’t good enough relative to made to measure and high quality
shoes are the most noticeable for work and going out. If you jump to custom suits, it’s really the
gold diggers who notice, around 99% of people don’t know the difference between made-tomeasure and custom. Finally, the watch simply makes it easier for you to get people to listen. For
some reason they associate a nice watch with success even-though we have noticed that about
80% of people with an expensive watch aren’t even rich… Go figure… the real tell is always the
$100K+ watch that screams “so rich I can afford this and not care”.
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Chapter 4 - Travel and Vacations, Hint No Need for the Standard
Europe Trip
Traveling and vacations can easily break the bank if done incorrectly. There are people who
immediately spend five figures on vacations when they are not even well off yet. We’re not sure
why someone would do this but they do. We think it’s due to propaganda and group think.
There is a reason why everyone goes to the same old Western Europe vacation and the same old
Cabo/Cancun Mexico vacation. Either way, you don’t need to follow the herd as it is rarely the
right decision.
Step 1 – Completely Broke with No Real Income: You can probably guess how this one shakes
out. There is no real list… You don’t get to go on vacations. At best if your body is absolutely
shot and you need a break, you get to stay at home and have a “staycation”. Spend some time
going to see free museums or hiking/going to the beach for the day.
Thinking about this further, even with a high paying career/job out of college, vacations were
already off the table. In high-finance positions most people take at maximum a week off (not even
two weeks) as they are busy trying to be a top performer and battling it out with other competitive
individuals.
Back to the point. If you don’t have any real income, you should continue to work until you
eventually live a life you enjoy. This is not a fun period of life (no one said it would be easy) and
will likely cause mental and physical stress. As we’ve mentioned on our blog in the past, real stress
(worried about livelihood) is not good.
You want to continue grinding it out until that situation is solved.
Step 2 – Out of the Disaster Scenario: At this level you’re going to have to take what we call
“creative” vacations. If you want a rule of thumb for this scenario, you should only spend about
2x what you normally would in a regular week during your week off (we assume you’ll be taking 9
days off – two weekends and one normal work week).
This number likely sounds small and it should. The way you make your vacations possible is by
finding creative ways to reduce the overall cost for now. Easy ways to do this include: 1) credit
cards for miles, 2) using AirBnB to rent a place with your close friend(s) and 3) reducing the cost
of the trip by hitting the local super market for food – breakfast and lunch items. This doesn’t
take a lot of planning and if you were smart enough to land a good career and increase income
over time, it will only require a few hours of work.
A second rule of thumb for this category is to avoid high cost cities while you’re young. It just
doesn’t make economical sense for you to visit an expensive place like Switzerland, staying in nice
hotels and draining your bank account. You’re better off finding cheaper areas a tier down where
you can actually enjoy your time there without stepping back financially. As of this writing, South
East Asia, South America, Eastern Europe and even Canada are good options. A running joke out
in Canada is that it is now called the “Canadian Peso” since the currency devalued so much
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(2019/2020 comment). General places to avoid are easy, don’t go to Western Europe, Australia,
New Zealand and expensive US based cities (you’ll spend a lot more than you think).
Quick Bullet Recommendations
 South East Asia: While we didn’t’ do this if we did it again we would start in South East Asia,
it’s the cheapest by far in terms of cost of living and you can get more value out of your money.
 Eastern Europe: This is where we started and would recommend going to places like the
Ukraine, Romania and Poland. It is possible that it could be just as cheap as South East Asia
(due to miles/points game) but we’ve run the math and South East Asia is usually cheaper
 South America: While you have a lot of places to go to in Eastern Europe, if you’re looking
to change sceneries you can go to South America – Brazil, Argentina, Colombia for example.
Depending on the exchange rate adjust your choices
 Russia/Canada: For some reason we group these two together, they are pretty similar in cost
and not at all similar in experience. Montreal (summer) and Moscow are different experiences
that you should have at least once in your life
 Any Others: If you’re in NYC and are looking to party, Iceland is by far the easiest choice even
though it is pricy relative to the other locations
 Quick Math: South East Asia and Eastern Europe will cost you about 40% of what you
normally spend in the USA, South America is around 60%, Russia/Canada is around 70% and
anything beyond this is going to be similar to the USA in many cases. For other countries,
simply take a look at Numbeo to get a quick snapshot
If you’re on the younger side of the spectrum (early-mid 20s)... If you have a good career, chances
are you know a few people who moved to other major cities. In this case if you have a place to
crash, you can spend a lot more for a week hanging out with your friends. This way you pay it
forward (pay for some nice dinners/partying at the clubs) in exchange for a place to stay.
We’ve observed this as a common occurrence between New York and Los Angeles over the past
couple of years. Our guess is that this will continue.
Step 3 – Into Positive Territory: Ah yes, if you’ve done everything right you’ll notice an
incredible “lucky break”. If you’re well off financially, chances are you run some sort of small
internet business (readers of our blog). If you run a small business, it means you can take time off
whenever you like as long as you organize ahead of time.
Why is this important? It is important because the cost of going to any city in the world goes down
dramatically. One of the main reasons why vacations are more expensive for people is the timing.
Booking flights around the holidays always leads to insane price premiums. Even if you’re still
playing the “miles/points game”, you will get more value by being able to take vacations off
calendar.
Oh and by the way… By going off calendar you’re a lot more interesting to the locals who are
typically annoyed by the swarm of tourists showing up at a particular time of year.
At this point we assume that you’re able to spend about 3x your normal income without having a
meaningful impact on your savings/investing rate. As you make more money and your spending
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increases at a slower rate… this is usually how it works out. If you’re in this camp, you can now
open the map to any location in the world. The only caveat here (since you’re not officially rich
yet) is you want to avoid one expensive item on the trip. Typically, this means you have a few
items during the week that are free (sight-seeing etc.) instead of jam packing the week with
activities. If you’re still interested in going on vacation to the cheaper locations, you can probably
go to the high-end for every single item.
To make the examples clearer, instead of cutting some corners you can stay at 5-star hotels. Instead
of drinking “cheap stuff” you can go ahead and drink high-end alcohol and champagne any time
you go out. You can also hit the nice restaurants for every meal. It really doesn’t make a difference
since the spending won’t move the needle in general.
To wrap this section up, you can also dedicate a good section of time to buying some nice items
from the country. It’s always good to have some nice clothing from a completely different location
as the style will be different. Going to Moscow and picking up a high quality tie, suit or accessory
of some sort will almost always stand out when you’re in another country. This applies to every
country you visit, styles are simply different.
Step 4 – You’re Rich Time to Spend: This is where money flies around. And. There is no real
answer here. Generally speaking, this is a “Catch 22” as anyone who is rich doesn’t need to “take
vacation”. They can simply leave. This is why we’ve noted that the best nights to go out are
typically weekdays (Tuesday for example) since your typical worker is not going to be able to do
this while they are on the clock.
With that said, there are many common ways to spend up for events: 1) yachts/boat parties are
quite common, 2) throwing extensive house parties, 3) bringing large groups of people to any
special venue from renting out a mansion for a ski trip to buying front row seats for basketball
games, 4) staying at 5-star resorts and 5) extensive outdoor type experiences such as Safaris – some
of these are quite pricey.
If you’re good at reading between the lines (and you probably are if you’ve been reading our blog
enough), there is no real need for vacations when you live in a high quality place in a city you love.
Simply ask yourself… If you had $10 million… would you live in a place you hate? Probably not.
Some other clear ways to make your vacations better: 1) all travel is first class, 2) hotels are certainly
5-star, 3) you can hire a driver to save time and improve your mobility, 4) ensure the hotel takes
care of all your laundry/dry cleaning right before you leave so you have no chores to do when you
get back and 5) you can always rent a luxury car to drive as well.
As you can see, the list is quite egregious. There is no need for any of it. The biggest item that
helps is the first class/business class flight at all times. Any flight that is over 5 hours or so is quite
painful when you compare a lay flat seat to a standard seat. For what it’s worth, there is a significant
decline in utility/value between the lay-flat seat and a lay-flat seat that is slightly larger. The key is
being able to stay horizontal while you sleep (that’s the biggest value).
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General Snapshot: Since your travel schedule is going to vary, we focus on ranking the travel
experiences based on where you’re able to go. The big game changers are really 1) low cost
international travel, 2) being able to travel frequently and 3) the ultra-high end where you can do
major experience based trips. While we’re emphasizing that lay flat seats are going to be important
it’s hard to figure out when you’ll upgrade to these seats. If you’re only doing 1-2 hour flights
you’ll rarely need them and if your work requires coast to coast travel you’ll probably upgrade to
those before ramping up your travel expenses for pleasure. Flying is terrible for your health. As
you get wealthier you’ll realize this and quickly prioritize comfortable flying to prevent blood clots
and other negative aspects of being trapped in a compressed airplane.
1-10 Ranking: Higher Number is Better
Travel
Only Your Area
Some Domestic Travel
International - Low Cost
Frequent Travel
Domestic and International Frequently
Any Location You Like
Any Location You Like With a Group
High-End Experience Based Trips
Frequent High-End Experience Based Trips
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0
1
4.5
5
6.5
7
8
9.5
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Chapter 5 – Services, Focus on Improving Your Health and
Performance
This is where a lot of our stronger opinions shine through. We’re of the belief that you’re better
off with higher quality services than you are with larger amounts of “space”. In essence, we’d
rather live in a one bedroom high rise with tons of amenities that save time versus a larger home
with no bells and whistles. As usual feel free to make adjustments as you see fit and our list at the
end will differentiate the lifestyle approaches.
Step 1 – Completely Broke with No Real Income: Another short section since all services
should be done by yourself. Since you don’t have an ability to save, you shouldn’t be spending
money on anything that will set you back. In fact, you should provide said services and if you really
need to… find a way to get a gas efficient car (Prius for example) and just drive an Uber during
peak hours. Having services rarely makes sense unless there is significant downside to doing it
yourself. If you have a job interview, definitely don’t try to tailor your own suit or shine your own
shoes (better to just make sure you look good)
As a note, you don’t even need a gym membership at this low level of income. You can go to a
park and stick with pull-ups, sprints, push-ups and other body weight exercises. When you get
your first decent paying career or begin generating meaningful cash flow from your business
venture… then you can consider a basic gym with the standard equipment.
If you think you really need some sort of weights, then we would buy one heavy set of dumb bells
(could be 40 pounds or 80 pounds depending on your size and frame) to be used for a large range
of exercises from bench presses to lungees to shoulder press exercises. As you can imagine, if
you’re struggling to afford a pair of dumbbells, it’s probably not the right time to waste money on
fitness equipment.
Step 2 – Out of the Disaster Scenario: The two real services you’ll need are a nearby gym and a
small amount of flex spending for dry cleaning and Ubers. These two items will provide real value
as neglecting your health is out of the question (you’ll have shorter duration workouts during
heavy work days which will require gym equipment). Also. The budget for taking Ubers prevents
you from doing something foolish like buying a car and living extremely far away from where you
need to be for work.
Things that are “off” the list include: massages, a maid, laundry services (dry cleaning is for high
quality items), tax preparation services, salons/spas and club memberships
While we’ve mentioned that joining a high-end gym is of immense value and is noticeably off this
list… it is because you’re not earning enough yet. High-end gyms attract higher quality people.
And. They will only interact with you consistently if you’re on the same playing field. The one
exception is if you’re an attractive female attempting to find a rich male partner. But. The chances
are slim that this is you.
Step 3 – Into Positive Territory: This is where the magic begins to happen. If you can make it
into positive territory you’ll find that using money as a tool to buy yourself time and energy repays
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itself 100x. If you think this is an exaggeration, simply make it to this level and report back after
making services adjustments. This is a rank order of value from best to worst changes from what
we’ve seen.
1) Apartment Complex: This is by far the fastest way to improve your quality of life. If you can
find a way to place next to all of your daily items into your living space, you will save several
hours a week. If you don’t believe this just add it all up: 1) time to get to the gym goes from 30
minutes per day to one minute – assumes 15 mins back and forth from the gym, 2) dry cleaning
and laundry services are usually available at the complex – around 1 hour per week at minimum,
3) many also have spa/massage type services, no need to leave, 4) you save hours of “planning”
any quick get together as you can simply rent the room provided by the hotel/complex for
special events and 5) basic entertainment options such as pool tables and entertainment centers.
While those last two do not sound like much they add up quickly as a simple form of
entertainment can be used frequently to reduce your time spent moving around.
2) Hormone Replacement/Supplements: At this point, the truth is out there. If you hire a high
quality doctor to measure your blood every six months or so you’ll see substantial gains in your
productivity and quality of life. The days of aging “naturally” are over. While we think stress is
by far the biggest killer (hence why we put a high quality apartment first that reduces all
commute times), having a private doctor to monitor you and provide the right mix of
supplements will be life changing. Don’t think we say life changing much but it certainly applies
here and to re-emphasize, it is only something you should look at when you’re in your mid-30s
or so (others argue early 30s so we’re playing it safe)
3) Massages: This is a big one. Many of our readers are in their 20s and will laugh at this saying
“stretching and massages are a waste”. To this we say “talk to us in a decade”. There is a reason
why professional athletes slow-down in their 30s and the chances of someone reading this being
more genetically gifted than a pro-athlete is essentially 0%. When you have a chance at slowing
the hands of time, you take it. Massages and what we call “pre-habilitation”, is something you
should take seriously if you want to look and feel good at 40+
4) Dysport and Botox: Depending on your ethnicity this will help you look younger for a longer
period of time. Generally speaking, the lighter your skin is, the more it will show blemishes (this
is simply a fact, i.e. wrinkles show more clearly on white skin). Similar to the point on hormone
replacement therapy and supplements, you want to look into this in your 30s. If you have good
skin it could be your late 30s and even 40s and if you have poor skin it could be as early as 30
5) Facials and Cleansers: Similar to the above, you also want to budget in time to have your
face cleaned. You could have oily skin or you could have dry skin… We don’t know your
situation. We do know that your skin is one of the first things people see and is a major
determinant to appearing youthful vs. old
6) Basic Cleaning Services: For some reason we have this last, probably because we suggest
living in smaller places with lower total HOA/taxes/recurring expenses than a large place to
throw parties. This means the time it takes to keep the place looking nice is relatively low. Once
every two weeks, even once a month, is typically enough if you simply have a nice one bedroom
with a view.
Step 4 – You’re Rich Time to Spend: This is where it can really get out of control (in a fun way).
It can also create a lot of good experiences for you over time. Since you are rich, you can use spa
treatments as “dates”, you can consistently throw house parties since you’ll have someone to clean
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it all up and you might even have a chef! The options are pretty endless at this point as you’ll hire
event planners, DJs and spend quite a bit of money throwing entertaining events.
1) Cleaning and Cooking: We’ll lump these together as they are typically done at the same time
if you become wealthy (many of you will become rich enough to afford this in the future!). You
end up having a private cook and a person to take care of the house on a weekly basis (at
minimum). If you go down the large house path, this could mean a full time employee (or two).
For what it’s worth, when you become extremely well off, you’re not going to skip on one and
only do the cleaning or the cooking. You end up doing both to outsource all tasks. As a final
note, if you’re well off enough the employee is going to do all of the laundry and maintenance
tasks as well
2) Private Schooling/Nanny: As stated, this is not a real world experience note, just an
observation from real world events. The rich and ultra-rich typically have some sort of
Nanny/Child care cost in addition to all of the other items we listed before. It’s always fun to
hear about the complaints, spending $60-100K a year (post tax money) on taking care of their
own kid. That said when you see the pattern you cannot “un-see” it. We have no comment on
this matter as it is none of our business. That said it’s an area where a lot of people spend if
they decide to have kids. Final note, we realize many upper middle class people do this as well,
we’re referring to extreme levels of additional care (separate help for piano lessons, sports, a
dog walker and more)
3) Salons, Spas, Massages etc.: Anything in this catch all bucket is now similar to picking up
something at a convenient store for you. You can get them when you feel even slightly
tight/tense and you can use these services for dates as well (unsurprisingly you’ll rarely… more
likely never… find an attractive women who declines them).
4) Cryotherapy and Tanning: While we’re against tanning (unnaturally), some people enjoy
them and this can be added onto the list of services. Another one is really the icing on the “antiaging cake” and is called cryotherapy. We were going to include crypto therapy sessions into
the prior section but the research on the topic is minimal relative to hormone replacement
therapy. We’re personally dabbling in it now and we can say that it seems to work although the
impact is a lot harder to measure. One interesting benefit seems to be improved skin and
reduction in brain fog. We’ll likely do a post on this for free on our blog in the future.
5) Country Clubs and Other Exclusive Groups: To avoid getting criticism about all the
different groups you can join (country clubs, yacht clubs etc.) we’re just grouping this all
together. No one needs to join any particular group. And. If you do, you’re going to certainly
be around other wealthy people. High-end gyms already do this to an extent and the higher
ticker price (well over $50,000 a year in many cases) is going to be a filtering system on steroids.
You won’t find any poor people in a yacht club or an expensive country club due to severe
barriers to entry
General Snapshot: The general snapshot here is only an issue based on your current age. If you’re
under 30, the chances that you care about hormone replacement therapy and country clubs should
be next to zero (all of your levels are high and hanging out with older guys if you’re rich doesn’t
make a lot of sense from a socializing perspective but feel free to do so when you’re not out on
numerous dates). Either way we will try.
The big three jumps are really as follows: 1) no longer needing to do laundry or clean, 2) being
able to take care of all physical needs which is usually around the gym upgrade and the massage
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upgrade and finally 3) when you get older ramping up your blood metric optimization – Hormone
Replacement Therapy or if you’re younger, this would be optimizing all of your vitamins and diet
to become a well-oiled machine.
1-10 Ranking: Higher Number is Better
Services
No Services At All
Laundry Services
Laundry and Cleaning Services
High-End Gym
Ability To Afford Consistent Massages
Skin Cleaning Addition
"Optimization" Of All Metrics
Cooking Services
All Services At Any Time
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1.5
4
5
6.5
7
8.5
9
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Chapter 6: Events: Dating, Concerts and Parties
Here is where you can get a lot of leverage out of your age. Your entertainment options are
incredibly age dependent in terms of what you’re going to enjoy. While people will say “you can do
whatever you want and age is just a number”, the reality is that you’re not going to enjoy the same things
you did 10 years ago.
In fact, as we write this, we’re officially old enough to appreciate quiet areas. When you’re in your
20s, going to loud clubs, bars, concerts etc. is pretty much the ideal situation. Eventually you
transition into a different environment: house parties, relaxing vacations and fancy high quality
restaurants.
The young guys who are reading this believe that when you go into this environment the women
are suddenly old and to that… we can’t help but laugh. There are tons of attractive women who
are between 18-23 years old that have no interest in hanging out with 25-29 year old guys who
were previously popular frat guys. If you know, you know. If you don’t, then you don’t. All we
can say is that your options won’t change if you’re successful, so no need to worry about “missing
out”. It’s always there.
Step 1 – Completely Broke with No Real Income: Ah yes we actually have something to say
here. While many of your options are essentially zero, even if you have no real income and are
broke there are ways to go on dates (assuming you’re young). No one respects the broke 45 year
old since he had 25 years to fix his life.
If you’re in your 20s and don’t have much money, it’s still quite easy. All you really need is a small
amount of alcohol and a nice location. Seriously, that’s it. In fact, if you’re making money, you can
still do this as it’s not seen as “unacceptable”. It works incredibly well.
A basic real life example: Grab some food and throw it into a bag, grab a couple of cheap bottles
of wine (Moscato – a sweet wine that has grown in popularity with the young crowd)… and head
over to Central Park. Seriously, it is that simple. The exact items you take are not of importance,
you can use White Claw or some other type of alcohol.
What is the cost here? Practically nothing. While the no income people shouldn’t be doing this
much (since they’re too busy figuring out their money issues), it’s always on the table if you really
need a break after working 60-80 hours a week for several weeks in a row. Also. By doing this…
you’re forcing yourself to become more interesting as you can’t hide behind loud music to mask
weaker social skills.
Funny enough, this sub-section is clear evidence that getting your money straight when young is
the most important (besides health). If it’s possible to still go on dates with practically no money,
it means that hooking up is relatively easy as long as you have normal social skills and are not a
3/10 on the looks scale.
Step 2 – Out of the Disaster Scenario: Funny enough, even when you’re out of the disaster
scenario we would still recommend the cheaper dates. Why? Well you get a lot of benefits from
the more relaxed environment. You’re forced to talk more and you’re avoiding late nights at the
club/bar until 2-4am the next day.
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Now that said, when you’re out of the disaster scenario, the best way to get faster interactions is
by going to bars/lounges. We’d actually avoid clubs until you’re able to spend more and jump
around.
Anyone who has a lot of experience with nightlife knows that they typically hop around to 3-5
bars/clubs in a single night. If you’re not quite there from a cash flow perspective, you should
find the louder busier bar areas. While we stick with SoHo, Tribeca and Meatpacking in Manhattan
these days, if you’re still ramping, it’s better to go to a place like the Lower East side.
In places like Miami you can go to all of the rooftop bars/lounges in Brickell and simply avoid
going to places like Liv. You can avoid the entire bottle service experience for quite some time.
When you’re older you’ll get bottles and bring all of the people to the club. When you’re young,
you’re simply meeting strangers by showing up.
So rolling this all up, we’d recommend sticking with day type events when you can. For your
nightlife venues, stick with “party areas” that are not expensive until you’ve ramped up your
income. Don’t do anything foolish such as trips to Vegas. Remember that splitting bottles at the
club when you could have gone out 10-20 times (solid bars/lounges) is a horrible return on your
time.
Step 3 – Into Positive Territory: This is where your personality, culture and rolodex impact your
options. As usual we have to make a few generalizations. If you’re Caucasian or African American,
you usually end up going to tons of bars/clubs jumping around to many places in a single night.
If you’re Asian/Hispanic you’re more likely to go to clubs in groups and buy bottles. We’re not
sure why this is, but we’ve noticed it over the years.
1) Most Common: Typically, when you get your first pile of gold, you’re not going to know a
lot of people. This is just how it works. So you go out with a few close friends and hit several
bars/clubs in a single night. You also start the night by going to dinner with some girlfriends
before heading out as well. This is extremely standard. Light dinner some drinks,
clubs/bars/lounges – around 3-4 of them or so, head back to your place. Your Uber rating
will go down with the quickness (4 stars if you’re lucky)
2) A Group: Another common one that stands out is the “one spot bottles” set up. What
happens here is you start out in a similar group. A bunch of people go out to dinner 12-15
usually, you drink until you’re officially in party mode. Then you go to the most popular spot
for the day and pick up a table. After about two hours in the club, people have dispersed in
some form and everyone somehow makes it home.
3) Dates: At this point you already know the main places you like. So you go out on dates to
nicer areas and the staff will typically laugh/joke with you when you walk in. This is also
incredibly common. At this point, we assume you’re older and the whole “cheap date” idea
won’t really work. For two reasons: first you should be too busy during the day and second
your personality is going to prefer the faster action of nightlife.
Step 4 – You’re Rich Time to Spend: Ah yes. The most out of control part of the entire party
section. You’re now rich so your events are going to be insane to say the least. You’ll be throwing
house parties near the beach, taking groups of people to ski trips (Aspen is common of course),
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renting out rooms for dinner instead of getting a normal table and even renting out expensive
events such as boxes for the NBA finals or the Super Bowl. As you can tell it really gets out of a
hand as you’re combining both events with alcohol and potentially travel as well.
1) Every Guy Brings “Something”: At this point in the “stratosphere” where the air is thin, you
find that every single person at the party has some sort of value. Either they are younger and
brought a bunch of good looking girls. They are older and run large businesses. They might
even have connections to a bunch of famous people (bring in a famous DJ/singer for the
event). It really gets out of control.
2) No Stress: The people in the room are not stressed out at all and practically no one talks about
work while the party is going on. The next day you can ask about their current plans/issues and
that’s where a lot of the money is made. But. During the actual event… everyone is simply
drinking/eating and having fun. You can pretty much guarantee some sort of damage will be
done (either the restaurant will get annoyed or something will break, this should probably be
added to Newton’s laws)
3) Lots of Gold Diggers/Escorts/Strippers: Think you won’t go down this path? You’ll be
wrong. There will be escorts/strippers at the party. The wives that are there (always some)
won’t even care because they know there is nothing they can do about it. Instead of going to
the clubs and wasting a bunch of money at a Strip Club in a crazy bender, they will be brought
to the house as entertainment. Any time you’re around people who have a lot of money
someone in the room will always be on the drugs/alcohol/sex/escorts bender. It is not
avoidable and you become desensitized to it.
4) All of the Materialism Comes Back: Showing up in a helicopter, rocking a $100,000 watch,
$2,000 shoes Tom Ford shoes and tons of Gucci (since that’s the new rich brand of choice –
they never have sales unlike lower level brands like Ferragamo). You will also become
desensitized to this. If you’re in a house party scenario, we’ve found the materialism doesn’t
make a difference. Why? Well if you’re a guy and somehow got invited everyone knows you are
at least well off. Just isn’t possible to be broke. Also. If you’re in a more open space (such as a
high-end club with bottles) then the materialism *does* attract attention. More on this later
5) Some sort of Illegal Activity: Since we already mentioned drugs and escorts at these events…
you can imagine that there is always at least one “black sheep” or seven at these larger events.
A high-end drug dealer or some sort of person with a criminal background. You’d think that
the ultra-rich would be insulated but that’s simply not the case. Successful criminals blend in
just like everyone else. You don’t find out till later when they are in jail for something. If you
don’t believe this all we’ll say is “wait for it…”
General Snapshot: This one is fun as you can easily see where someone is socio-economically…
By how they think about their social lives. No one who is actually rich worries about Gold Diggers
and Escorts and none of them really care. If you bring three of them to a party you will only get
negative attention from regular people. Rich people are already used to it and don’t have any fear
of Gold Diggers. They don’t mind having some fun with a bunch of strippers in the house or
“Friends for Hire”.
In terms of the real inflections, you really get big benefits from three big moves again: 1) being
able to go out weekly without killing your savings/reinvesting rate, 2) being able to go out 2x or
more per week without looking at what you’re spending and 3) ramping up to a point where you
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don’t even mind if the girl is a gold digger since the extra cost doesn’t matter and you’re just there
to have fun anyway.
In the final category you get to have a ton of fun as a few hundred bucks (even a thousand or
more) is quite literally nothing. It’s a lot of fun for the attractive girl you’re with… who doesn’t
want to end up with a broke guy for the rest of her life. As usual, when you get here, you’ll see
it… Once you see it, you’ll understand why no one rich cares about escorts/gold diggers/strippers
and other people with low levels of morality.
Attempt to limit your hard drug consumption please!
1-10 Ranking: Higher Number is Better
Events
No Real Events at All
Basic Social Interactions
Able to Go Out 1x Per Week
Able to Go Out 2x Per Week
Going Out Minimal Spending Caps
Nicer Venues Similar As Above
No Fear of "Gold Diggers"
Extreme Events (Materialsm is Back!)
Extreme Events Frequently
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1
3
4
6
7
8.5
9
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Chapter 7 – Improving Utility Overview
Congrats! The foundation is finally built. After a pretty lengthy overview you should have a good
idea of the themes. We have to build the foundation of the house before we go through clear
examples of what to do and what not to do. You’re going to save a lot of time and headache by
reading the first ~30 pages of this book. Now that we’ve given the main step functions,
highlighting when you get a large boost in utility, below is a rough timeline of what we would
upgrade.
As a reminder, we assume that you’ll be in a good financial situation by 30. We laid out a clear
path to a million dollars within 10 years and several readers have already beat that expectation
(we’re closing in on triple digits in terms of success stories as of this writing). Also. If we could go
back in time, we wouldn’t bother with the miniature jumps in utility. Knowing what we know
now, we’d only upgrade to the highlighted items in yellow otherwise we would just wait and
accumulate more income streams. We realize at the low-end this may be harder. As you move up,
it doesn’t make much sense to get custom suits until you can afford a nice watch. It also doesn’t
make a lot of sense to upgrade your high-end apartment when you could wait and afford to live
in two cities over the course of a year.
1. Health/Food: The very first thing you should focus on is making sure your diet is straight.
Even if you’re forced to live at home before making money, you shouldn’t skip on health
related items. You can always do body weight exercises in the meantime (while playing a free
sport outside). Skipping on decent food is a non-negotiable and is the first thing you spend
money on
2. Basic Clothing: After that, assuming you’re going to start in a Career, you want to make sure
you’ve got decent clothing for work. This is going to increase your chances of getting the offer
in the first place so it is yet another non-negotiable
3. Moving Out to Central Location: After the first two are done you’re going to try and move
to a central location. You don’t need to jump to living by yourself (you’re young anyway) but
you want to kill off your commute time as much as possible. Given that starting income levels
are low, you’re simply trying to reduce the time to 15-20 minutes instead of making the big
mistake of having a 2 hour commute or more (one hour each way)
4. Laundry Services: Surprisingly, it is actually better to reduce your time spent doing laundry
vs. being able to go out once a week. Why? Well if you’re forced to choose between the two,
you’re not making enough money to enjoy going out anyway. We can still remember trying to
go out the first six months after work and it was awful. In the back of your head you realize
you’re not getting ahead and don’t really enjoy the night
5. Go Out 1x Per Week: Once you’re established in your career, either politically playing the
game right or have a clear path to a second stream of income you’re going to feel fine going
out at least 1x per week. To be seen as a good worker, it only takes about six months anyway.
It is also quite difficult to reverse unless you make major mistakes
6. International Vacation: Instead of ramping up to 2x per week, we’d stick with 1x per week
and make sure you can go to a cheap international location for your week (or two) off. This
one is close as you’re going to get a lot of value from going out 2x a week. That said, we’d
prefer the vacation as you’ll realize why you’re working hard. You go to a Third World country
and find out you’re rich (relative to them). If you’re smart you’ll realize you have a golden
opportunity in front of you. Don’t sell yourself short and take the trip to mean “quit and move
to Thailand”
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7. Upgrade to Living By Yourself: This is the next big step up in your life. When you can live
alone your productivity will go up and you’ll be able to sleep a lot better at night. We’re not
sure why this is but it could be something psychological. Only do this when you can still save
a large amount (30-50% net income) and remain within a reasonable commute time if you’re
still going back and forth from work
8. Go Out 2x a Week with Minimal Spending Caps: Since you’re living alone, it improves
your social life dramatically. No need to rely on those international trips to get your fun and
“status appreciation” in. By living alone in a major city and going out 2x a week you’re in an
arena that stands out already. As long as you have decent social skills you’ll have a great time.
And. If your social skills are currently terrible, they will be solid within a year. There is no way
to screw this up (we hope)
Taking a pause here. At this point your life is already good. People who complain about this level
of living are either: 1) spoiled and born rich or 2) generally unhappy all the time. If you’re able to
live alone, have your health in check and can go out a couple of times a week without looking at
the bills… You’re in great shape. You don’t even need to go to a bunch of restaurants as this
combination alone allows you to live a fun life. The next section below moves to a point where
people will become a bit jealous of your life. Or. They won’t even believe you since you’re having
too much success/fun.
1. Upgrade Services: At this point your next step up is actually better services, massages/better
gym/skin care/apartment cleaning. Some sort of mixture. While many believe that upgrading
to a nicer apartment has more upside, they haven’t really seen how much time is saved when
your chores go to zero or near zero. It’s an enormous increase in profitability for you as you
can work longer on your projects and those hours are *more valuable*. What we mean by this
is that hours put into work are not created equal. Working when you’re exhausted is worth
50% as much as hours worked when amped up and energized. It’s reality. By the time you
turn 30 or so, you’ll notice it in your own work
2. Upgrade Wardrobe: After this you ramp up the wardrobe… some nicer brands and madeto-measure suits with higher quality shoes. This will help your sales… which you’ll be doing
for work or when you’re convincing someone to spend time with you
3. Gold Diggers etc. At this point you’re going to attract them. Laugh if you like, but it will
happen unless you’re socially strange. Women can tell when someone is doing well and you’ll
have to learn to deal with the situation intelligently. You will be treated better and instead of
letting it fill your ego remember that it’s due to your status and nothing more. The faster you
can learn to enjoy hanging out with Gold Diggers the better your life will be. As long as you
don’t do something foolish that gets you into legal trouble there is really nothing wrong with
hanging out with attractive women hoping to find a man with means
At this point you will 100% attract some hate. There is just no way around it. If you are in great
shape, living a relaxed life and dating good looking women, this seems to break the back of 99%
of Americans. You will lose old friends – unsuccessful ones. You will see your phone contacts
change. You will look at your old life and laugh. It was all a bad dream and you will even have
nightmares about your prior life.
*Most* people get to this point and are either 1) out of shape or 2) trapped in a relationship with
an overbearing partner. We continue to be shocked by the number of financially successful men
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who have zero control over their lives. We are less shocked by the number of out of shape men
given the food that they consume on a daily basis.
The one downside (that you won’t notice until later) is that you really need to make big jumps to
see substantial improvements. What does this mean? It means your next jump to say a “high-end
experienced based trips” (Safari’s, expensive Ski trips etc.) doesn’t really give you a big jolt. While it is an
improvement, if you were already traveling the world without worries… You experienced a ton
already.
That said the next major moves to improve your lifestyle is as follows:
1. Dual City Living: The chances of jumping straight to this? Quite slim. That said, if we could
do it all over again we would skip the fancy watch and fancy apartment for now and try to
build up a dual living situation first. It is *much* more likely that you’ll upgrade your
apartment/home in your city before you go down the dual city living path. Why? We actually
have a good answer for this. When you become successful you have more emotional
attachment to the city that “made you”. You want to scale up and stay there. In the end, dual
cities can help you in several ways. They help lower your tax bills, actually decrease your travel
expenses and on top of that it typically expands your network
2. Throwing Bigger Events: By having the money to throw bigger events (inviting people to
expensive golf outings, house parties, international vacations etc.), you simultaneously expand
your group of contacts and dating pool. If you’ve gotten this far in life the chances of failing
in this environment is as close to zero as you can get. The only downside is that it is naturally
a lot more expensive. The second downside? You will deal with lots of big egos in many
situations… so get used to it
3. Custom Suit and Watch: The reality is that you’ll probably buy these two items well before
you do dual city living or the expensive events. This is just how the math works. That said, the
increase in reactions/benefits are relatively small if you have the rest of your life together
already. The only area where it is noticed more is within the dating category. Men certainly
cannot tell the difference (around 95% of them) and they don’t change their behavior. This is
more for attention and flash than anything else. If you see a well off person recommending
the custom suit and watch consistently, it means his focus is more on dating at this point in
time.
Before finalizing here, we’d like to add that the health optimization part of this game was not
included. It is probably the most important part… Unless someone is foolish enough to believe
that celebrities and billionaires are “natural”.
If you become financially successful later in life (well before age 30), health optimization should
be the *very first upgrade* (before services such as massage treatments). We left it out of this
summary for two reasons: 1) most people don’t read products so they won’t find it later in the
book – too lazy to read and 2) we assume you’ll be able to afford a custom suit and nice watch
well before you turn 30 – I.E. we really do believe anyone can get to $1M+ by age 30 or so since
we’ve seen it happen so many times.
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Segment on Economic Cycles
One of our smarter readers emailed us when we launched Triangle Investing. Asking, “Is this the
peak of crypto” to which we responded “Probably”. Why? Well you sell products at the top not at the
bottom. So. If we’re selling a book on maximizing disposable spending… what does that mean?
It means we’re probably at the top of consumer sentiment. Broadly speaking it takes around 2-3
years to build a decent cash balance to take advantage of a downturn and we’re done with one
year (2019).
Of course we could be wrong. We’ve been wrong about a lot of things before. That said, we’ve
already stated that we think we’ll be seeing declines in the 2021 time frame. A statement we have
made for a couple of years now (need to be consistent). The clear message here is that your
spending patterns should change at peak cycle, mid-cycle and in a full blown recession. If you’re
not able to take advantage of the crisis scenarios (2001 tech crash, 2009 real estate crash etc.) you
miss out on enormous wealth building opportunities.
If you believe that every year will be better from an economic perspective, you’re setting yourself
up for severe disappointment. Even billionaires have ups and downs so the chances of seeing a
straight line graph up and to the right for 20 years straight is practically zero. You have to recognize
when you’ve had a good run and get ready for a downturn.
As a rule of thumb, you can simply remember two things. Number 1: A bull market is usually
around 10 years. Yes we realize the current bull market is longer and some bull markets have been
shorter. Number 2: The stock market will unlikely go down by more than 40-50%. We’re referring
to the S&P 500 in this case.
So when you combine the two items, you can come up with a basic framework without doing
much work. If you’ve been fully invested in the stock market for a decade… spend a year or two
stacking cash and de-leveraging your balance sheet.
Also. If you see that the stock market is down around 30-35% from the highs you can begin “blind
buying” the market. It could go down another 10% but the percentage move for you would be
easy to swallow. While 100 going to 60 is painful… starting at 70 and watching it go to 60 isn’t
that hard to swallow. You’re only down 14%. If you don’t panic sell at a -14% paper loss, you’ll
be in the green after a single good year (economic recovery).
With the overview out of the way, since we believe we’re closer to the top of the cycle than the
bottom we’ll go ahead and start there. This is an important section since we highlight some key
signals of a peak (services, employment, consumer sentiment etc).
As always, you buy when there is blood in the streets and you stop buying when your unskilled
acquaintances are somehow clearing 6-figures and driving BMWs. At this point there are a lot of
$100,000 a year millionaires driving BMWs with personal loans ramping up.
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Peak of Market Cycle
At the top of the market, unemployment is at or near record lows. Consumer confidence is usually
quite high with blow outspending numbers. Stock market analysts also call for the following year
to be *up*, when they call for the market to be *down* then you’re not at the peak yet. Also.
You’ll see people who have made a lot of money (over the past 5-10 years or so) take a major risk
and suddenly do something to swing for “grand slams” and “home runs”.
All of these items seem to be present today. The consensus view is that Trump will be re-elected
and the stock market should continue to go up. That’s great and while it very well could, if you’ve
been invested in the market from 2009 to 2018… it’s not that big of a deal to start stacking cash
and crypto (we’ve only bought those two asset classes in 2019, we’ll do the same in 2020). To cap
it off, if you’re young (anything under 50), you can diversify by simply buying other assets without
selling anything you invested from 2009-2018.
As a final comment, if you think we’re at the mid-market cycle (not peak) feel free to jump to that
section. We’re certainly not going to be offended by differing opinions.
The Big Avoids: Anything related to materialism loses significant value at the top of the market.
We have used the “Rolex” test as a fantastic barometer. If people look at Rolexes and say “well
it’s not an xxx”… you know that people are flush with money. That’s currently occurring today
and is quite absurd. A Rolex is the gold standard for a high quality watch. So if the product is no
longer getting attention like it does at the bottom of the cycle or mid-cycle… it’s time to avoid
buying them.
Now we can actually scale this up. Peak market cycles debase brand value across the board. For
cars, BMWs and Mercedes are now seen as “middle of the road”, decent shoes like Allen Edmonds
are all over the place and on top of this, women are all rocking Louis Vuitton and no one believes
they are fake!
Avoid *Brand* Clothing: Thinking this through, it means that higher quality material goods will never
be sold at lower prices since everyone is competing for “brand awareness”. This is why Gucci is
practically one of the only clothing brands that commands attention (cannot find it on any
discount outlets like FarFetch). The conclusion from all of this? Everyone has nice stuff so you
can actually take your wardrobe spending to zero as it won’t make a difference.
Brand clothing loses socio-economic value unless you’re at the absolute top. So what do you do?
Well if you remember from an earlier chapter we gave a few options for clothing when you’re
making money. The clear answer is to steer to basic made to measure clothing (or custom) without
any logos/brands. Why? No one will be able to tell the difference in peak markets.
Your fitted clothing will have assumptions around it. So you don’t have to bother with the brands.
As long as the material isn’t flimsy (unlikely anyway), you’ll get a lot of comments that suggest it’s
a high end product. So you know what to do “smile, nod and agree”.
Avoid Upgraded Cars: While we prefer having no car (sticking with Uber black), we recognize that
some cities require a car. We’re not that insulated in a bubble.
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So if you’re in a car centric city, you’re not going to get a lot of value from the “upper middle
range”. The upper middle range refers to a 7-series BMW, a low end Porsche and several others.
Effectively? Anything in the $70-90K range.
We don’t know why, it just doesn’t add any real value to your social perception. There are only
three ranges: 1) stealth wealth driving a basic Honda Civic, 2) mid-range driving a bmw/entry level
Tesla and 3) ultra-high-end with a Bentley or Ferrari for example.
In peak markets, going to the higher end of the mid-range isn’t noticeable. So don’t bother. Instead
decide on your strategy. Since we’re extreme people by nature we’d go with the stealth wealth car
or the ultra-high-end. It would depend on the location and culture of the city. If you’re living in a
materialistic city like Los Angeles it is definitely better to go with the nice car. If you’re in a city
without a car culture, just get a basic stealth wealth car and spend heavier on the events since it is
a different version of displayed wealth.
Avoid the Big House: If you ignore the prior two items, for the love of God, do not buy a big
house at the peak. This absolutely kills you, not because of the leverage, but because of the book
value tax set up as well.
For those that are not buying yet, the tax payment is tied to the original purchase price. So if you
buy a million dollar home and the price goes down, you’re paying tax on that book value. Similarly,
if you buy at the bottom you’ve locked in a lower tax level for decades to come.
We’ve effectively given away why we’re stacking up cash and crypto at this point. Even if a
downturn doesn’t come for another couple years we’ll have a lot of cash on hand to buy a lot of
income producing properties at once. The argument made by perpetual renters falls apart in
downturns and is accurate in peak markets (since the real value is substantially lower at peak).
Keeping it simple… at peak market cycles, expected returns are negative. At the bottom, expected
returns are mid-high single digits which substantially offsets any maintenance costs (1.5% of home
value). Overall, keep it conservative and assume the value goes up 3-4% over the long-term
(adjusted for costs and market cycles). Starting at the top is devastating due the amount of money
at stake.
Now that we’ve (hopefully) inserted some fear into everyone, the good news is that it’s pretty easy
to buy once you see a 20% drop. Unlike stocks, there is more emotional attachment to homes,
since families refuse to leave certain areas and they always believe their home is worth more than
it is. Unlike stocks you can start shopping aggressively when you see -20-25% or so (we’re referring
to high quality areas in general).
Avoid The Services Industry: As many of our readers know, the services industry peaks at the top of
the economic cycle. This means people are flush with cash paying for massages, facials, cooks,
cleaning staffs and even dog walkers.
Long story short, this is the last item to avoid. The problem with buying services at the peak is
that you overpay by a wide margin (50% or so).
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We’re not saying to take all of these time saving items to zero, what we’re saying is that your return
is going to be next to nothing. You’ll pay market price and that’s basically it. Unless you’re worth
$10M+, being smart about economic cycles doesn’t make you cheap… it makes you intelligent.
Interestingly, you can actually spend up on items you can use at home. This means you can buy a
massage chair, high quality facial cleaners and upgrade all the laundry/cooking equipment you
have at home. The return on the investment is actually quite high as you drop your services
spending down.
To be clear, the services you really shouldn’t skip on are laundry and the once and a while skin
cleaning and teeth whitening services (despite buying more to do at home in peak economies, you
should still see a professional consistently). People will say that no “man” goes to have their face
cleaned. These people also look their age and make less money. No matter what people say, having
a sharp looking outfit and youthful face will help you. People are judgmental. The reason why rich
people appear to be younger is due to these services (and of course, lower stress)
The Big Buys: During peak economies the cities are jam packed. Traffic is through the roof and
restaurants are consistently full. You can go out on a Tuesday and have a tough time finding a
place to eat. This visible change is also seen at popular bars and clubs.
The second thing you’ll notice is a high number of job openings in the “general economy”. The
general economy refers to bartenders, restaurants and local entertainment centers (think Times
Square in New York). While people will argue that there are always jobs in these areas, the
difference is a visible increase in opening and people asking you for help (to fill their vacant slots).
In the white collar community, when you see numerous job hops (sharp change in people moving
to new opportunities), you should check to see if it above normal. While most focus on the general
economy, career hopping in expensive positions is a bigger signal. It means that large scale
transaction businesses are also booming. Great near-term of course as you save tons of money.
And. Bad long term as it’s unsustainable to see multiple record sales years in a row (particularly in
businesses with long sales cycles).
The last thing to look for is what we’re currently seeing in e-commerce. Tons of growth for sales
of what we’d consider to be junk. Low quality products with 20-40% operating margins.
Absolutely nuts! It’s great for the near-term as usual but isn’t sustainable. Unless the products are
legitimately different and valuable, the iteration on something that has already been done…
shouldn’t be generating massive margins.
Spend at Those Restaurants: If you normally went out a couple of times a week, you can ramp this up
at least one day per week (maybe even two). Why? The chances of meeting someone important is
significantly higher. If things are going well, people usually relax a bit. Even incredibly intense
CEOs/CFOs/Hedge Fund managers will go out during the week (more often).
Is this due to hubris and overconfidence? Naturally, it is due to a bit of overconfidence as it would
be a bull market. And. It means that the deals are closing! This creates free time which is difficult
to understand until 1) you enter a high-end revenue generating role or 2) start your own business.
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So you’re actually creating a positive environment for yourself. While it will feel strange at first
(assuming more deals will close), the upside is that you’re much more likely to meet other
successful people during the peak economy.
To be specific here you want to target restaurants on Tuesday and Wednesday. Everyone goes out
on Friday/Saturday so it doesn’t make a big difference and Monday is typically a day where you’re
meeting clients or communicating with employees to make sure the ship is running correctly.
Monday is generally a difficult work day even if you’re financially set and don’t need to work.
The other major reason why you’re spending more at restaurants is to “cut the line”. If you
consistently tip well and get to know the staff, you’re going to stand out amongst the crowd in a
positive way. This allows you to gain attention at a minimal cost. This attention isn’t for Instagram
photos, it is for introductions later in the night or during the dinner.
Think about it like this. If you’re in a booming economy and everyone can afford to go out, the
value of being able to cut the line goes up dramatically. This applies to both dating and to your
work. If you need to take someone out to a nice dinner, it sure doesn’t help if you’re unable to get
reservations. Battling over the phone really doesn’t help you.
The staff runs the show so you’re absolutely foolish if you treat them poorly. Sure, it still doesn’t
guarantee you a seat every day, but it does the following: 1) they will alert you if a certain week is
filling up quickly, 2) they will make sure you’re first if they are officially sold out and call you
directly to fill the spot and 3) you’re going to be prioritized for every single order. These are huge
perks in a normal market, but in a peak market they are incredibly valuable.
Spend on Your Long-term Clothing & Living Space: This needs to be crystalized. While you shouldn’t
bother with the upper mid-range brands like Ferragamo and Burberry (again nothing wrong with
them, they stand out like sore thumbs in down economies and mid-economies), you should take
a hard look at all long-term clothing, accessories and even furniture.
We kept the cover of the book simple and used a custom suit example, but it applies to anything
that’s higher quality/specialized without a brand name. Think of the following items: 1) custom
clothing; 2) high quality mattress; 3) all tables, sofas, chairs, silverware; 4) various appliances from
laundry machines to surround sound stereos and 5) televisions/pool tables.
Hopefully you’re getting the idea. Since these products generally have “price compression” you
can always find a good deal and you’ll have extra money to spend on it (since you’re dropping
your name brand spending and “luxury” spending across the board).
Why is this the case? It’s the case since specific items (listed above) can be found at smaller
shops/locations. A custom tailor has a niche business and when his is booming he’ll happily
incentivize you to buy more at a discount (or free shirts/custom shoes etc.) since this scales his
business. Similarly, all of the customized furniture is typically from boutiques as well. While
appliances are not going to be much cheaper, the implied message is that they should be replaced
every 5-7 years… So this lines up with your purchasing habits anyway!
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On the pure entertainment side, since you’ll be going out more instead of buying a new home or
car, your place will be upgraded from an activities perspective. While we really doubt this will make
a big difference in your life, it’s a nice added touch.
Before moving on we’re not contradicting ourselves. You avoid the “status” items as they don’t
garner much value in peak economies and you buy high quality custom items that can be used all
the time in the future (*no brand signaling* is the difference).
Spend a Lot More Going Out: Unsurprisingly, if we’re advising people to go out to restaurants more
frequently, we’d also ramp up the nightlife as well. Now we used simplistic alcohol examples, but
this can apply to any event based activity.
Feel free to spend up on the following: 1) your travel destinations increase in cost – added
flexibility, 2) the number of events you go to increases – if you watch live golf or MMA for example
and 3) more outdoor type activities such as skiing (jet or snow), rock climbing and anything else
you feel like trying.
The general theme in “going out” is that you’re going to have a tough time standing out from the
crowd. Everyone is dressed well and people who are over-earning relative to their actual value are
also in the mix. So it’s a lot more chaotic than normal.
Instead of getting annoyed by the increase in people and general decrease in quality (we’re referring
to the weekends within this sentence) you can take advantage of the free time you have. While you
may go out to more events and eat more than normal, you should be able to reach peak physical
fitness (for your age) without losing any sales.
For those that recently made it over the hump economically (earning a high amount for your
standards), you know how amazing that sounds. Instead of grinding out 60 hours a week, you can
easily take it down to 40 with no impact to your personal P&L.
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Bottom of Market Cycle
At the bottom of the market you should be licking your lips. This is the best opportunity you will
get to increase your net worth while doing no physical work. When the market is down
unemployment is high, drug and alcohol consumption goes up, investors flee to
food/healthcare/utility/gold for their investments and dividends are slashed (companies with
high P/E ratios collapse).
Everyone reading this is aware of economic cycles so we’ll just jump right into the main things
you should be doing: 1) levering up, 2) buying high-P/E ratio stocks and 3) reducing your cash
balance to the lowest feasible number – a few months of emergency money.
One of the statements we have made over and over on our blog is that “Crisis is another word
for opportunity”. We’re not joking when we emphasize this as an important thing to remember.
In fact, the latest crypto crash was the latest clear example, everyone declared Bitcoin as dead
($3000 range) and now it’s up significantly.
You know that it is really bad when you physically think everything has collapsed. This is a benefit
of being a long-term optimist. If you’re an upbeat person with a bright future, when you feel the
need to sell everything and give up. That is when you buy as much as you can.
It will feel awful. It will work.
The Avoids: As usual we’ll start with the avoid category. If you’ve been through a few
macroeconomic downturns it is easy to get over excited and buy the wrong stuff. As a good
example, buying bank stocks when they got slaughtered in 2008-2009 actually didn’t work very
well unless you were incredibly accurate with timing. Why? Well banks are seeing pressure across
all fronts from robot advisors to crypto currencies to regulations to direct listings to lower interest
rates. You get the point. While the “old” strategy of buying these stocks on the dip (say 2001 and
prior) would have worked… It didn’t work out this time.
Avoid Structurally Changing Business Purchases: What do we mean by this? We are referring to
industries that are under long-term secular pressure. A good example in the 2000s would have
been retail stocks. It was incredibly clear that the money was moving online so you didn’t want to
buy a ton of retail related stocks for the long-term. Does this mean that it was a horrendous
investment? No. Some retail stocks did incredibly well. We’re simply highlighting that it’s best to
avoid since you can find other sectors without these issues and invest there.
As of 2020, structurally changing industries include: retail, advertising/media, financial services
and various areas of transportation. Use that as a baseline starting point along with your own
views: for example we also think certain viewership ratings like the NFL will decline over time
(health consequences increasing, kids no longer being pushed to play football).
This is not meant to be scary. You can take a pretty balanced approach by buying things that will
be around forever: Food, Housing, Healthcare, Technological Innovation, etc. All of these things
will never go to zero, it just isn’t possible in our opinion. So. If it’s your first time simply avoid all
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secularly declining industries and focus your efforts on 1) things that will be around forever or 2)
riskier high growth sectors that could blossom into major industries.
Avoid Bankruptcy Risk: This is a tough one. Very. Tough. Even if you’re certain that a high quality
company will not go bankrupt we would recommend investing less than 5-10% of your purchasing
power into it. During downturns public companies can trade at “negative enterprise values” which
means they are worth less than the market cap minus the cash balance on the books. Anything
with leverage gets extremely dicey since cash flows can remain negative for a lot longer than you
expect.
Before moving on from this, we’re calling this sub-section a “modest avoid”. While we take a hard
stance on avoiding secularly declining stocks, you can risk a small amount of money into a
Company that has bankruptcy risk if you’d like. Do not risk a penny you can’t afford to lose and
certainly don’t lever up to buy them. The returns are incredibly high if you’re right. So. No need
to push the risk profile up.
As a fun observation, we’ve noticed that CEOs with an “aura” around them always seem to get
out of bankruptcy. The ones with immense political connections also get out of the downturn
unscathed. You want to avoid companies that are not well known and under the radar. If you’re
going to take on this type of risk you need more than hope… Connections are definitely
undervalued in the public markets. Hope is not a strategy.
Avoid New Business Partners: This one is simply strange. For some reason when you’re in a downturn,
the best way to get leverage is by hiring someone on an hourly/per task basis. Under no
circumstances do you try and hire someone as a heavy equity component in anything. Sure you
could hire people in positions that have 0.5% equity (like a Series A/Series B level company if
that’s where you are at)… Just don’t try a brand new venture with a new person. A downturn
forces you to make quick decisions while the world is burning and you don’t want to make these
fast decisions with someone new regardless of how qualified they are.
On that point, our recommendation does not mean that all business ideas you have will be failures.
There is a clear distinction between starting something entirely new (which could work) and
working with someone entirely new (which seems to fail… miserably). We have no doubt that this
mistake will still be made. We also have no doubt that there will be exceptions to the rule. And.
We’re still sticking with our guns on this one since experience matters.
On that note Equity in general is a lot cheaper than it should be. We always laugh when people
say that Trump could have just “invested in the S&P 500” as if the value of being the decision
maker is zero. It is absolutely crazy and laughable. An argument only made by people who have
never had ownership in their lives (typically white collar employees/managers). This is probably
why big equity changes with a new person doesn’t work. You’re essentially giving away a large
percentage of the project/business without thinking about the future value (2-3 years). Doesn’t
age well.
Avoid Panic Selling: If you’ve been following our blog for a long time and if you’ve read our other
products… This should be obvious. Under no circumstances do you sell wealth creating objects.
A lot of people attempt to “troll” us in the comments section of our blog by stating things like “oh
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my god you didn’t sell everything at the top!”. We can’t help but laugh at these bottom feeding peasants
as a rich person isn’t going to be moved by a 50% decline in any asset class… He is diversified to
begin with!
While this is obvious, the way we’d describe the feeling of a bottom is “helpless”. Even if you’re
rich, you’re going to feel the pressure when your net worth is cut in half. Don’t panic sell. While
this is the shortest part of the section it’s the most important. Panic selling index funds or real
estate is an enormous error as the money made on both is on the “purchase”. Getting a great deal
is where the leverage comes in (both in stocks and real estate).
The Big Buys: Now we can jump into the exciting stuff. The bull market stuff is for weaklings
since anyone can make money when things are going up and to the right. The real money is made
when everything is falling apart and you take the opportunity to build at least a generation of
wealth.
Homes: We recommend starting here. No doubt about it and difficult to debate. Why? If you go in
this direction, you are absolutely committed to buying the bottom. If you are young and you decide
to buy high-flying stocks it may hurt you as the price could go down 20% and you sell. No one
said buying the bottom is emotionally easy, it is incredibly difficult.
To explain why it is important to try and time your home purchases, do the math on the longterm appreciation of a home. Back 50 years ago the average price of a home was around $75,000
according to Economic Research from the Federal Reserve. At this point the average price of a
home is around $375,000. This implies a long-term appreciation rate of just 3%. Also. This doesn’t
include inflation which should be another 1-2% or so per year. The real growth rate is somewhere
in the low single digits.
Source: U.S. Census Bureau.
Now at an initial glance this looks like a terrible investment. Who would want to get 2-3% longterm returns? No one. The issue is that you have to include leverage along with market timing in
the numbers.
While people may laugh at a “10% decrease” in purchase price. This is actually enormous when
you look at it over a long time horizon.
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Here is the math. If we know that the growth rate of homes is going to be about 3% over time
this will result in 56% returns over 15 years. Now. Remember that the increase is not a straight
line up and to the right. It is an incredibly volatile line that jumps around (up and down). So there
are years where prices are up 6-12 percent and years where the price is down up to 10%. All you
really need to do is buy when the prices are down double digits on a year over year basis. While we gave a 20%
number earlier in this book, we’re making it simple to remember if it’s your first time trying to
time the bottom. If you’re a smart person with decent negotiating skills, we bet that you’ll get at
least 15% off the real value.
So how does the math look? If you’re able to lock in a single year when the numbers were down
double digits it means that over a 10 year period your returns are going to be close to a 15-year
period! This has quite literally moved your returns by 5-years. All of this assumes no leverage which would
juice the returns quite a bit.
It isn’t fun to talk about but during recessions you have to become as emotionless as possible.
You’re going to be dealing with people who are strapped for cash and looking to fire sale their
assets. While people will claim that you’re taking advantage of a situation, the reality is that they
won’t even be able to sell for the amount they want. People tend to overestimate the value of their
homes in the first place. So when you make all of your bids, remember that you should feel
uncomfortable when you offer up a price. This means you’ve started low enough and will lock in
a good deal.
Unsure if excitement is shining through in the prior paragraphs but it should be. We’re going to
be absolutely thrilled if the housing market goes down just 10%. The returns compound quickly
in just five years: leverage, rental income, lower locked in tax rate and inflation eats away at your
loan. Many, many, many multi-millionaires were made between 2009 and 2014 and even a minidownturn will mint a lot more multi-millionaires once again.
It gets better!
If you were not convinced by the above and the importance of leveraged high probability
returns… There is a kicker in this for you. The main kicker is that a home is “displayed wealth”.
Displayed wealth is certainly relative as a 20-something person owning a nice condo would be an
example of displayed wealth. Similarly. A 40-something person with a fancy home (pool, bar areas,
entertainment center etc.) would be a separate example of displayed wealth… Owning a one
bedroom at age 40 would not be displayed wealth.
Still not convinced? One final idea that has worked. Many people live in two cities as they get
older. New York and Los Angeles is common. New York and Miami is also common… So on
and so forth. So if you’re already thinking about living in a different location for part of the year,
this is your chance to set it up. You buy a high quality rental place in the area, build equity over
time and eventually do a like-kind transaction to pick up your second home.
At this point we’ve given more than enough reasons to buy the dip in home pricing. While we do
agree that there are less headaches from being a life-long renter, the facts remain the same. The
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majority of people who become rich own real estate and real estate investors are common
customers of private wealth management.
Service Spending Ramp: You will be able to get massive discounts on any services. This is going to
include everything from spas and personal trainers to hiring IT professionals and customer
support representatives for your businesses/projects. The latter is probably the best return on
your investment. When the economy is booming, services oriented businesses decline in quality.
Why? They don’t need to offer amazing services to make a living. As we sit here today, we see low
quality service businesses (and employees) somehow making six figures a year. This is absolutely
insane as their value does not even come close to this number.
The bottom of the economy causes a humbling effect across the entire services industry. Since
people are grateful to be employed, their work quality goes up significantly (probably a double).
So you should be jumping at the opportunity to ramp up your spending. Paying significantly less
(around 25-30%) for better quality work and a locked in higher quality employee is about the best
you can ask for.
On the pure consumption side, you can ramp up the Spa dates (no attractive woman says no to
these), increase your massage/facial frequency and hire the home services. We lump everything
related to “home treatment” in that final item as we don’t know if you prefer to have a cleaning
person, a cooking person or a gardener for example. This is your first real opportunity to lock in
the best service individuals as the high quality ones will have customers cancel for the first time in
3-4 years.
Name Brands Back in the Spotlight: Suddenly, all of the men and women with brand name clothing
disappear. The bars, clubs and restaurants are emptier and the traffic in your city will fall
significantly. This means you will now stand out if you wear clothing that is in the “upper middle”
area. If you attempt to wear ultra-high end material then we’d recommend staying away from
upper-middle class areas (it could back fire on you as most employees in the $100-200K a year
range is where a lot of the job losses occur – middle management).
So what do you buy? You buy products in the upper-middle range of course. This means a step
down from the Gucci’s of the world and you can go ahead and pick up your basic Rolex if you’re
a watch guy (no you don’t need to get the all gold $50,000 version). This will now stand out from
the general population and won’t put you into an arena where people despise you.
As a side note, while we’re not car people, a standard Mercedes or BMW is also going to put you
in the upper middle as well. This will attract positive attention without drawing immense amount
of hate. If you plan on going to ultra high-end areas and nothing else… then feel free to have your
super car and Gucci clothing. Our best guess is that most readers of our blog are in the $250K
range in income (or have the potential to get there quite rapidly) so we’re highlighting the
Mercedes/BMW example up front.
An interesting point related to made-to-measure/custom clothing is that this also works in down
economies. So if you’re extremely lazy and don’t have an interest in running your own social
experiments (comparing brands to well fitted clothing), you can ignore this entire section. For
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what it is worth, we’d recommend experimenting with some brand name clothing. You’ll be
absolutely shocked at how quickly women are able to tell the difference. Since most women enjoy
shopping quite a bit, they know a lot about men’s clothing as well.
Women from wealthier families are even taught how to flush out the “fake rich” from the “real
rich” by how they dress. So. We’d recommend going down this path for a couple years as you’ll
also get a better understanding of how women survey their environment.
Upgrade Your Gym and Lock It In: Right now, there is an actual overflow of people at higher quality
gyms. Seriously. Everyone can afford a nicer gym which actually dilutes the value of the location
in the first place.
In a down economy, pricing drops like a rock. Even nicer gyms realize that most people do not
work out consistently so higher membership numbers are key for sustainable operating margins.
If you see a downturn, you’ll notice that the gym is significantly emptier. This is your chance to
go and find the right place for you and lock in a new rate. Alternatively, you can say you’re quitting
the gym and lock in a lower rate for a long period of time.
Generally speaking, you should lock in a gym membership for an extremely long duration (call it
5-years or so at minimum). This allows you to avoid pricing hikes when the economy recovers.
Alternatively, if you’re going to leave the city shortly, we’d recommend going to the highest level
gym you can find for a couple of years. This is where all the high quality people hang out so you
want to collect contacts before you leave. This creates the right balance.
If you’re going to stay long-term, go to the best gym you can afford and lock it in for multiple
years. If you’re leaving soon negotiate a shorter duration stay but do not waste your time with
“upper-middle” gyms. Go straight to the ultra-high-end where the richest people hang out.
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Middle of Market Cycle
Ah yes, we’ve seen the boring piece of the market (the top), the exciting part of the market (the
bottom) and now we’re into the hardest part of the market (the middle). Most of your life will be
spent in the middle of the cycle so we have various items to cover. The top of the market and the
bottom of the market are quite boring (surprisingly) if you’ve been following the advice on our
blog and on our website, you’re 100x more prepared for economic cycles than 99% of the
population. You’re actually quite bored as you’re gathering up cash and asymmetric investments
(peak) or you’re living much cheaper than normal to buy everything at a discount.
While women get their kicks from shopping sprees on handbags and clothing, we get our kicks
on shopping sprees for homes and stocks. In short, the peak and bottom are a lot more boring
than they look. You know the deals are going to close (top) or you begin discounting all your
future sales due to the economic climate (bottom).
Mid-cycles begin when we’re about a year past the official bottom of the stock market. That’s a
good and simple gauge. You’ll hear a lot about the potential for a “double dip”. And. That’s when
you’re starting to move into a mid-cycle economy. Economists are mixed on the next year
consistently and difficulty around finding work decreases dramatically.
For fun... While we think we’re closer to peak and may just be getting old and less risk loving, if
you think the market holds for another 5-years this is for you.
The Avoids: Mid-cycle doesn’t really have a lot of moving parts to it, but we’ll cover it anyway.
The key is really keeping a steady emotional state. In sports, there is a common phrase “not too
high not too low” when referring to emotions during big games/events. This is because emotional
jumps are when bad decisions are made. You never want to make a decision when you recently
made a ton of money, lost a ton of money or are in a heightened emotional state in general. Why
are we highlighting this during the mid-cycle instead of peak? It’s because of the compounding
effect. In a mid-cycle you’re consistently seeing increases… over and over again. This creates the
inflated belief that the next year will also be “up and to the right” which as you know (if you were
around for the 2001 or 2008 crash) leads to brutal consequences.
Avoid Spending in Advance: While this seems obvious it is incredibly easy to do as your numbers
*generally* go up in mid-economic cycle environments. While many will assume we’re referring
to sales of a consumable product type business, we are referring to your career as well. While it
sounds amazing to go from $100K to $400K in a straight line it rarely works like that. Most people
(yes even successful ones) are forced to jump from position to position every few years or so.
What does this mean? You should never spend in advance of your income streams no matter how
secure you think it is. Good examples include: 1) annual bonus checks – can easily be
disappointing, 2) rental income as there could be an issue you need to fix or turnover, 3) anything
related to business income – sales, services… all revenue streams have volatility and 4) passive
income streams like dividends also have volatility at times.
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Simple examples of spending in advance include putting down a large amount of cash for a home
just before your bonus check hits or holiday sales begin (dangerous as there is too much volatility
in the income stream and you’ll never predict your seasonally high sales in Q4).
Assuming that you are going to close the sale of one of your assets (business or home for example)
that ends up getting delayed so you’re forced into a negative cash flow situation. Unless the money
is already cleared and in your accounts, assume that it will fall apart. Attempting to “buy inventory”
ahead of a successful launch that is well ahead of normal selling expectations. You may laugh at
that one (but everyone including us) has overbought at least once. This leads to an additional
headache to deal with and once again causes you to go cash flow negative.
Avoid Depreciating Assets (Emphasis): In general, this is never a good purchase. We don’t recommend
buying cars if you don’t have to for example. That said, mid-market cycle is just as bad as peak
market cycle for depreciating asset purchases (potentially worse, see below). If you do need a car
you want to try and time it at the bottom as highlighted in this book.
Now you’re probably thinking, well mid-market cycle is no different than the top. Unfortunately,
this is a bit flawed in our opinion. If you buy a depreciating asset in the beginning of a market
recovery this means your car or asset will become less “prestigious” as well. Remember, your
average person is much more interested in appearing successful vs. actually becoming successful.
If you buy a solid car like a Mercedes or BMW (upper middle class car), you’re going to have a
harder time selling it later. Everyone will try to “one up” the car and go for the Porsche 911 for
example. This leads to strange market behaviors that significantly tilt in favor of
status/ego/prestige purchases (more than usual).
For those in the upper end of the income spectrum, the bigger mistake is from boats. The same
thing applies in this market except you *typically* have more money on the line. If you absolutely
want to get a boat and it’s your first purchase during the middle of a market, try to come up with
a reasonable boat that you can also rent out when you’re not using it. Unless you made $10M+ it
doesn’t make sense to buy the boat in a mid-market economy with no income stream.
Avoid Numerous Subscriptions: In mid-market cycles you want to prevent yourself from purchasing
too many subscription based costs. Things like Netflix aren’t going to matter but once you start
buying tons of subscriptions/services products on a monthly basis you have a lot of unwinding to
do at the top the market. (No we’re not changing our view on Netflix, it is not something you should have until
you’re rich and at most you could use it for entertainment if you bring dates to your place)
Fortunately, this section will resonate more with people who are actually going to be rich.
Subscriptions, as you can imagine, are related to all the software tools you’ll be using to make your
life easier from a money making perspective. Over time these add up quickly, VMware/Citrix,
tracking tools, virtual assistants (would include this as part of recurring subscriptions) and of
course the annoying server cost/data center side. Don’t get us started on all those remote server
issues and computers that continuously shut off. Beyond annoying.
This is a tricky line to toe as you don’t want to underinvest in subscription based items that are
worth the sticker price. As a good balancing point we would recommend downloading some apps
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that track your usage (similar to what you see on your phone). We don’t know what you’re using
but there are many out there. Use this to help calculate if there is significant value from the
software. If you find that you’re using it less and less, cut it out immediately. Since most
subscriptions are a year-long or more, you should try and line up all the software tools to have a
renewal date on the same month (if you have to buy something get an 18-month subscription to
line it up with everything else for example). This forces you to review all your recurring items at
the same time (once a year).
The Big Buys: A good rule of life is to “front load the pain”. Why? Well most of your life is
going to be spent in positive/bull markets so… by front loading the pain (saving, investing, buying
appreciating assets), the compounding effect you have is substantial. In fact, if you take the phrase
“front load the pain” for everything in life the chances of success are high.
Lots of rejections (jobs/relationships), lots of painful nights working past midnight and lots of
mental control to avoid going out on weekends to get ahead by working instead. So on and so
forth.
Heavily Invest in Your Own Skills (Revisit Efficiency): Normally we hate reusing stuff but we have to
use this as the starting point since mid-market cycles allow you to “invest in yourself”. In a single
bull market you should be able to do the following: 1) maximize your fitness levels, 2) learn how
to be a fashionable person with knowledge of colors and patterns, 3) for the clothing haters out
there, learning fashion naturally translates into learning Ad design, Website design etc. (what
colors/shapes/sizes look the best), 4) learn a trade to improve your real estate skills to allow for
“forced appreciation” if you’re stuck between a rock and a hard place and of course 5)
continuously improving your sales skills – which is something that will never end.
As noted, our other products will allow you to short cut all of the five items above. That said, the
most important item is to improve Efficiency (each year) in as many categories as possible. A
common theme we have had is that “life gets harder as you age”. Not because of finances but
because of your energy levels (working 80 hours a week at age 21 is not the same as 41 no matter
how many drugs you take).
No Yield Over Yield: This is a general comment for mid-market economic cycles. Since a recession
is unlikely to occur immediately after a recovery, you want to focus your attention on capital
appreciation type assets. While you will need to build up a cash flow asset portfolio, at the start of
a recovery it is better to play the appreciation game.
To keep it as simple as possible this means real estate assets with low cap rates and growth stocks
with no dividends (typically small cap indexes). Since you’re in a growing market, profitability is
less important (you’ve seen this from 2010 through 2019).
From a real estate perspective, low cap rates are usually found in the “higher class areas”. Building
on the prior comments, as people look to show off their wealth it means that they will move into
higher quality neighborhoods as fast as possible. What does this mean? It means the price
appreciation game outstrips the yield of a middle class home (See Triangle Investing for our Real
Estate Strategies).
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Tons of Performance Enhancers: Ah yes out of the blue. Covered in more detail later, the biggest and
best for last. During mid-cycles smart people will purchase as many performance enhancing items
as possible. Life-long items such as HRT/TRT (insert acronym), use of micro-dosing
LSD/mushrooms, massages, cryo-therapy, hair transplants, Dysport/Botox and quite literally
anything that makes your performance improve.
Ah yes. We were careful with the wording there as we said “smart people” will do this. Why? We
don’t want to waste our time with average intelligence people who believe that the highest
performers are all natural. If you cannot tell the difference in Jeff Bezos, celebrity “transformations
for movies” and Elon Musk for example… Your problems will not end there. Being Naïve is okay
through age 21 or so… After that reality needs to set in.
As usual this is in no way legal or professional advice it is just an opinion. Without intelligent use
of performance enhancing items you’re going to undershoot all of your potential by definition.
People laugh at Dysport being a performance enhancer. And. Those same people take meetings
from attractive women all the time. You want to look young and healthy as it helps close sales.
Absolutely no one wakes up and says “I want to hang out with more unattractive people today”.
Don’t be foolish. People are judgmental.
As a simple summary, there is no reason to “age like a normal person” (when has a normal life
ever been the correct answer?). Celebrities have been using drugs for years and if we exclude the
ones that die from meth, MDMA and cocaine (meaning harmful drugs), you don’t really see any
change to the length of their lives.
Guys like Sylvester Stallone are still around (age 73 as of this writing) and don’t appear to have
significant health issues. We’ve spent a ton of time researching the topic and have yet to see a
negative correlation to Hormone Replacement Therapy, while we’re always open to hearing about
it in comments, after a long period of research it appears to be the right move (starting around
mid-30s or so).
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Concluding Remarks
By combining this cycle summary with the prior overview on Spending Segments, you should have
a solid understanding of the ebbs and flows related to consumption. As you can see, as we got
older, we loosened a lot of our bands as it relates to buying brand name goods, larger homes and
even a car (although we still don’t need them as major cities have Uber Black). Being adaptable is
important and if we were ever forced to live in a car based city, we have several friends who can
outline the “right way to do it” as you’ve seen in this product already.
The second thing we’d like to mention is that economic cycles are rarely consistent. Some bull
markets are over a decade, sometimes they only last 5 years or so. With this in mind we have no
issues with differing opinions. While we think 2020 is closer to peak than trough, if you believe
that we’re in the middle of a cycle then you can simply jump to the mid-cycle portion.
Naturally, if we get to 2021 and the economy is still roaring we won’t be thrilled as we’ll have a
crypto/cash balance that needs to be used at some point. So. As they say in gambling… when you
put your money into a bet you end up being more emotionally attached to it. At the end of the
day, we’re sticking with our call and if it doesn’t happen we’re just stuck with another “rich person
problem” of having too much cash and perhaps crypto currency exposure.
While this book is focused on spending we do get a lot of questions on how we gauge the up and
downs of the economic cycles. There is no real one size fits all answer as you have to develop a
good gut instinct. Also. You only have to be right once. What we mean by this is that you only need to
call one top or one bottom to make a lot of money. 2008-2018 was probably a once in a lifetime
opportunity in terms of the equity market and housing market to get rich. We were fortunate
enough to participate in the entire run up. Now we think we’ll go through a small contraction
buying risk averse items (cash, crypto and some gold).
Moving on we’ll explain the why for illustrative purposes.
Cycle Indicators: We look at a few indicators. First we take a look at the Shiller PE ratio which
gives a good snapshot of where earnings are relative to historical averages. As a simple metric you
don’t want to add much when it’s above 25. We use a higher number (more than the average of
16.7x and more than the median of 15.8x) since companies can generate higher margins through
automation and software. 25x seems like a big multiple even accounting for improving operating
margins. A number above 30 seems to be quite high in our opinion.
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Source: multpl.com
The next indicator we look at is the unemployment rate as mentioned earlier. Here it is below to
give you a historical view of the unemployment rate. It doesn’t seem like numbers can move much
lower than they are now. Also, we see low quality workers earning high wages (an opinion and yes
we realize that sounds rude but there is no other way to phrase it). Our rough metric is to look at
around 5-6%. If it is in the high singles we’d load up into equities. If it’s around 4% we’d be
extremely worried. We’re currently at 3.5%. We could certainly go to 2.5%... that said… it’s tough
to see from a probabilities point of view.
Source: tradingeconomics.com and US Bureau of Labor Statistics.
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The next metric is the yield curve. As we’ve explained many times in the past the same economic
cycle always occurs. Debt is issued. This debt then leads to a return. This leads to more hiring.
Over time, companies eventually can’t get a return on their debt in excess of the interest rate. They
stop hiring, profits decline and some companies even begin to default. This tightens up the credit
market, debt is less readily available and growth slows. We contract and digest. Then recovery
begins.
Since this is a normal cycle, you generally want to avoid investing when the 2-year yield and 10year yield are similar. Since we stopped adding to equity positions at the end of 2018 that tells you
our rough metric. If the 2-year and 10-year yield has a spread of only 0.25% we see limited upside.
A good proxy is probably closer to 0.75%. So if we see the spread improve to 0.75% we might
adjust again. That said, we’ve been in the 0.00-0.25% range for quite some time now (about a
year). Note: light grey in the chart below reflects recessions shortly after yield curve inversion.
Source: Federal Reserve Bank of St. Louis.
Our personal favorite is the consumer confidence index or consumer sentiment. This is the most
useful in our opinion as it’s the one thing that will never change… People will always be emotional.
If you’ve worked in sales, you’ve seen that people do not buy things for rational reasons they only
buy them for emotional reasons. The guys who truly buy for rational reasons are the worst people
to target with ads and luckily make up less than 1% of the population or so. Either way, when
everyone thinks things are going well, it’s time to bail. When everyone thinks things are bleak it’s
time to buy. The 98-100 range is where we draw the line as it is historically a poor time frame to
add to equity exposure or purchase expensive assets.
The other reason why we like it? It’s consistent. While the metrics for unemployment and multiples
have arguments around them: 1) data is flawed or 2) profitability has changed making multiples
different long-term… Nothing really impacts a simple poll that says “are things good”. It’s a great
emotional read.
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Source: tradingeconomics.com and US Bureau of Labor Statistics.
The last item we check (probably harder to read unless you have worked on Wall Street in the
past), is the fund raising market. When you see large companies going public that really don’t need
money in many cases that’s a sign to get out (or a ton of companies with negative earnings).
Another good example was when KKR filed to go public back in 2007 (Blackstone successfully
pulled off an IPO in June of 2007!). Think about that, the largest private equity firms were selling
or trying and sell shares to the public. Unsurprisingly, this marked the top of the market cycle and
we entered a bear market in 2008.
To spell it out, Private Equity firms have a goal of buying assets and either selling them or taking
them public to “exit” at what they deem as a high valuation. If the entire private equity industry is
trying to go public to sell its shares… You can read between the lines pretty easily.
At this time we’ve seen an extremely long string of issuances. It has been an incredible run but
we’re seeing a slowdown at this time. While SIFMA will likely release 2019 data shortly, we already
mentioned that bonuses and compensation across the Street will be down (official payouts in
February to March of 2020). This is in conjunction with lower fees in general. Note: for those that
want to track this information we recommend keeping it simple and looking at total issuance. For those focused on
the equity portion, Renaissance Capital has a finalized number of $46.3B (only tracks IPOs above $50M in
market cap, so likely another $2-3B higher than that number as a rough estimate).
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Before moving on here, one of the key items we’d emphasize is that you can’t look at one indicator.
This is what the average person tries to do. They learn about one trick or indicator and think that
it’ll work 100% of the time (Hint: this is why all those affiliate marketing ads with “THIS ONE WEIRD
TRICK” always seem to work!). This is due to laziness.
Instead you should always look at things from several angles and do a quick probability analysis
on the market going up or down in the future. Our quick analysis says that bull markets are
normally around 7-11 years long (we’re on the 12th year) and every single metric that suggests a
downturn within 2-years is flashing: employment rates, yield curves, issuances, multiples and
consumer sentiment. Since everything is saying the same thing, we’ll go ahead and avoid the market
for now and let the principal run.
The final thing we’ll add is that social skills are probably the most important when determining if
you’re closer to the top or bottom of economic cycles. Our information is unfortunately related
to major cities.
That said, if you’re in a smaller city you actually have an edge. If you see people buying fancy cars
and “flexing” consistently, that’s a good sign of a peak. Uber and Taxi drivers giving you stock
picks is also a good sign of a peak. So on and so forth. Use your own social skills to determine if
the people in the room are “actually well off” or if they are just spending 90% of their income to
appear richer than they actually are.
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Segment on Ages…
Before we get into the scaling game, we have to put another disclosure up front. People complain
quite a bit about our benchmarks as they seem “unrealistic” to many and “easy” to others (the
ultra-successful). As usual, these are simply numbers and benchmarks that we think are attainable
for anyone with above average intelligence and above average work ethic.
Can you catch up if you’re behind? Yes. Is there a reason to get behind in the first place? No.
The above short paragraph summarizes why we don’t argue about these things. If someone can
do better that’s amazing and great and if someone is behind, they should try to catch up. After all,
this is an opinion based book and there is no “right” way to live. There are religions and 100s of
corners of the internet to find different ways of life.
Some of the main themes here are the following: 1) you never want to decrease your standard of
living, 2) you are free to buy fancy stuff if it will never cause you to go backward in terms of
standard of living, 3) your health is more important than wealth as you can’t earn if you’re sick, 4)
no one will agree with our exact timeline or preference for “utility maximization” and 5) always
assume that your preferences will change over time. There is a reason why 60 year olds are rarely
found inside of loud clubs.
On that note, a final theme we want to highlight is our preference for convenience, comfort and
close knit groups. For people who have been long time readers of this blog it certainly shines
through. Not having a car implies that’s we’d prefer to live in a central location of a major city.
Spending more money on business class flights vs. a larger apartment, shows the importance of
comfort. Finally, the fun activities surround trips vs. massive house parties which also implies a
preference for smaller events of 10 people or so. Is there anything “right” or “wrong” about this?
No. So we try to show different ways to live within this book if our style is not in line with your
preferences.
The two hard lines we draw are: 1) don’t go back in standard of living and 2) don’t sacrifice your
health. The second one seems like an oxymoron as we recommend working 60+ hours a week in
your 20s. And. The reality is that it has practically no impact to your health. We’ve seen many
successful people work crazy hours through age 35 and still look extremely young. Even guys like
Elon Musk still work long hours sleeping on factory floors to make sure their products are done
– he still looks quite healthy.
We could use President Trump as a good example of a high energy older person as well (we’ll stop
there as the list is never ending). In short, the people who believe that working hard when you’re
young causes premature aging are simply making excuses. The stress caused by worrying about
bills and your future will age you a lot faster than a few long nights working on a project.
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Chapter 1 – Completely Broke and Starting from Zero (Early 20s)
This is by far the most important decade of your life and it isn’t even close. You’re building a
foundation for the next 60-80 years or so and if you put in the work early, it pays off for the next
50-70 years. If you find a successful person who is in his 30s the first thing he’ll tell you is how
much work and effort he put in during his 20s. Unless the guy was born into a well off family, this
is really the best way to make it.
You have everything on your side in your 20s. People believe you are lazy and dumb. This allows
you to make mistakes without being judged for it and your competition will underestimate you
(substantially). As you get older both of those benefits die. Making life changing mistakes at age
40 does not result in a quick recovery. And. Each mistake is likely greater in magnitude due to the
amount of money at stake.
Also. You don’t have any real responsibilities or dependents. Expectations are a lot lower for a 20
year old. Living with roommates and eating on the cheap is not frowned upon. Being unable to
afford a basic steak dinner at age 40? That’s a painful sight to see.
None of the above should be a surprise to readers of this blog. We’re now old enough to track
people who “screwed around” in their 20s to the ones who didn’t and there is just no debate. 99%
of the people who wasted this decade cannot and will not catch up to the snowball of success
created in an earlier generation. While we do love to see the “late bloomer” stories, the prior
sentences are still true from a broad overview perspective.
As an important note, this entire spending segment assumes that you live in a first world country
in a major city. Living in Thailand off of a couple of thousand dollars and saving 50% doesn’t
mean much. As you’ve seen with other backpackers who go down that path, the compounding
effect catches up by mid-30s and suddenly their purchasing power declines. It’s absolutely
horrifying to watch but happens year after year after year. When you’re generating a large enough
amount of money (able to save 50% in a major city) AND have a chance to live abroad… that’s a
different story. So. As a point of emphasis, our numbers relate to major city living.
Early 20s Spending (things to avoid): This is where you have the lowest spending hurdles. If
you’re entering the work force straight out of college, no one expects you to be rich. This refers
to your employer, dating life, personal life and immediate family as well. Instead of viewing this as
a bad thing, you should view it as an opportunity to minimize your expenses at no social cost.
For starters, there is no reason for the following: 1) your own place, 2) expensive dinner
restaurants, 3) higher-end alcohol, 4) a nice car/watch and 5) bottle service.
1) Housing: As long as you have your own room to sleep in, you will be entirely fine in this age
bracket. If you live with a roommate at age 22, your dating life will not be negatively impacted. At
age 40 it would be severely impacted. So you actually want to take advantage of this social situation.
You don’t need to live in an awful place and take it to an extreme (unless you feel like it). Our
point here is that there is no *deduction* to your social life for a few years since no one expects
you to be “balling out of control”. While you would benefit from living alone in a studio for
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example, our point is that this is the one period of time where living with roommates is certainly
socially acceptable. Since it is socially acceptable and won’t be a real negative, you should take
advantage of the assumptions surrounding your economic status.
In terms of an official recommendation, we’d stick with a single room as close as possible to your
place of work. Our assumption is that you will start your career directly after college and we also
assume that you won’t have a second stream of income up and running. If you follow Efficiency
and eventually get a high income earning business that is location independent… You can scratch
this strategy entirely. More realistically, it’ll take you 3-5 years to really succeed, so we assume that
living close to work is the best move. You can show up earlier, leave later and guarantee you lock
in that “top performer” rating (allowing you to pull in a higher income with less lost time).
On a quick side note, if you do decide to live at home for some reason (your family is close to
work), you should take at least half of what you would be spending (living with roommates) and
use that for going out every month. While it usually isn’t a good idea to live at home we realize
that it is a growing trend. To make sure your social skills are still solid, we would recommend
spending more going out. There is a good balance here between saving a few extra dollars and
improving your social skills at the same time. It can work in certain cases.
2) Expensive Restaurants: This is easy to explain. You shouldn’t waste your money in this area in
your early 20s unless it is for something that will generate money. For example, if you’re one of
the lucky few who is able to get a business up and running early… You may need to go to fancy
restaurants to secure clients/deals. This is entirely necessary and entirely okay since this is a
“Return on Investment” event.
On the other hand, if you are simply going out to fancy dinners for enjoyment… You’re simply
wasting your money. Again. We’re assuming that you’re not making a lot of money yet and you’re
not rich. Spending a few hundred bucks to eat out is actually a huge waste of money. You’re better
off buying high quality groceries and cooking yourself. That extra money, while small over a long
time horizon, is needed for inventory, advertising spend and investments in your future self
(books, health related items and potentially classes/courses).
From a recommendation perspective, we’d stick with upper mid-tier places for special dates. Sushi
is a common dinner idea and you can even do steak restaurants assuming it isn’t outrageous. Italian
food is also in this upper middle area and works perfectly fine as well (note that this is typically
unhealthy). Places that require reservations weeks/months in advance are off the table and you
should really avoid eating out in general to fund your business ventures on the side.
3) Higher-End Alcohol: Ah yes another benefit of being extremely young. Your body recovers at
rapid paces. We can still remember drinking heavily on certain occasions only to wake up with no
hangover or significant decrease in production. Those days are long gone and it isn’t really possible
to drink heavily without a noticeable decrease in productivity.
Well what is the point here? The point is that you really won’t see a big difference between middle
of the road drinks and high quality drinks. We’ve been there before and have no problems saying
that we’ve consumed our fair amount of middle of the road alcohol (Corona, various wines, Kettle
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One etc.). In short, your body is not really going to notice a difference between high quality and
mid-quality alcohol so there is no reason to spring for the high quality drinks.
Being completely clear here, if it were possible to see no difference between low quality and high
quality alcohol, that would be an ideal situation. You could simply drink mid-tier alcohol forever.
Unfortunately, unless you have incredibly good genetics, you’re going to upgrade your drinks over
time. There is no reason to upgrade the drinks up front as your body will legitimately not know
the difference.
As a final note on this subject, blacking out and things of that nature shouldn’t occur anymore.
Unless you enjoy embarrassing yourself in public. These days, everyone believes it is cool to black
out not remember anything and wake up with a “cool story”. Not sure how the culture in the USA
devolved into this. Instead you should drink as much as you want for the heavy party nights but
blacking out is certainly out of the equation past the age of 22. We’re sure you’ll still go through a
binge phase (when you turn rich) but you should wake up with a feeling of immense regret if you
legitimately blacked out (not proud).
4) A Nice Car/Watch: Pretty self-explanatory. Trying to flex when you’re not even a millionaire is
a complete waste of time. While your average person looks at a guy who makes $200K and says
he’s rich compared to the guy making $150K… We’d strongly disagree. Unless you’re making
$200K in your sleep and the other guy is making $150K working all week, there isn’t that much
of a difference between the two. Being rich requires cash flow while doing absolutely nothing
otherwise the person doesn’t “make” any real money. He has income, not wealth. Wealth refers to
assets that increase your net worth without your time being expended.
Despite multiple warnings about buying status goods when you’re young we’re sure this mistake
will be made by several people. So we’re trying to highlight the two biggest expense items to avoid.
The classic “rookie” mistake is buying $800 shoes at age 22 to seem cool or those awful Gucci
belt buckles strapped onto a suit that costs less than $400. Unless you were born rich and can have
the apartment + brand name clothes for everything, don’t bother with it. And. If you’re going to
make these mistakes, please don’t make them with items that cost north of $5,000 as you’ll be
screaming at yourself in 5 years when it could have funded another online business you want to
start.
5) Bottle Service: The young guys with no personalities/physically unattractive pool together to buy
a bottle of grey goose and sit at the clubs. Before the party they talk about how “cool the night is
going to be” only to go home disappointed as the tables didn’t make up for their lack of social skills.
This was quite fun to watch back in the day and it still occurs! If you work in an office environment,
you will certainly see colleagues doing this (assuming there is a decent headcount in your office).
The reality is that you should be jumping around a ton if you’re young and single. This means
you’re going to go out to at least 3-5 places in a single night as you wander around the city. For a
lot of young people in New York this is the Lower East Side and the Meat Packing District
(although a lot more clubs in that area). If you do decide to go to clubs, you should simply show
up dressed well and buy shots/drinks versus bottles. Why? Well this gives you a lot more mobility.
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If a place is terrible, you simply leave and go to the next spot. It also allows you to eventually
figure out what area is best for you in the future.
Early 20s Spending (things to buy): Instead of amassing clutter, everything you purchase should
be of use. In simple terms, it should improve your skills in some way. If it doesn’t? Consider it a
waste of money.
Lots of people will read the prior paragraph and scoff saying you’re giving up the best time of
your life. This isn’t even close to true as the peak fun is in the 30-50 age bracket assuming you
correctly built up the correct skills in your 20s. We also get a good laugh when people say it is “too
much work” to put in all this effort. Beyond funny. It is a lot more work trying to catch up from
age 30-60 with lower energy levels, zero passive income and minimal transferable skills.
Admittedly, some of the skills we learned ended up being useless. This is simply the name of the
game as you don’t know where you’ll end up in about a decade. Luckily you’re at the right place
and we can give you several skills that will be used in the future if you plan on becoming successful.
Key items: 1) learning how to sell both online and offline, 2) learning about color coordination
and design, 3) learning accounting both basic and taxes (structures), 4) learning how to make a
speech and 5) learning how to read body language.
Before moving on here, you’ll notice that every single one of these is a life-long skill. There is no
chance that you’ll be the best in the world at any of them. It just isn’t possible as there is always
an area for improvement. “The biggest room in the world is the room for improvement”
1) Learning How to Sell: If you’re ever “bored” and can’t think of anything else to do. Sit down and
learn about sales. Online sales or in person sales. It does not matter. You will learn something and
it will be used for the rest of your life. In fact, we’d say that sales (any type) is always a good
investment. If you’re 40 years old or 60 years old, you’ll still benefit by learning more about sales.
No exceptions from a learning perspective.
So you should be spending quite a bit of money here. You should be buying books (physical) and
even audio books (we hate them but some prefer them). You should look into weekend classes
on sales. You should practice copy writing every single weekend until you’re able to make money
from it. You should read advertisements on your free time and write down what sales techniques
the ad is using. You should also figure out which ad/sales techniques they are *not* using. You
should take photos of ads when you walk around in the city. You should think about how the
advertisement could be improved. You should click on ads when you’re eating lunch at your desk
to see if the writing could be improved.
Hopefully you’re seeing a trend here. While most people walk around looking for hand-outs
hoping they run into the “right guy” who helps them “suddenly get rich”, you’re walking around
looking for ways to improve every single business you see. This general attitude is going to get you
extremely far (quickly) as you’re forcing yourself to look for improvements in everything you see.
Many will complain that this isn’t “fun” and that’s why they’ll still be complaining about life 10,
20 and 30 years from today. What becomes fun for you is boring for others and that’s why they
remain in the same place year after year after year…
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2) Learning Design: If you’re going to learn sales… You have to learn design as well. This goes hand
in hand by nature as photos, colors, contrast and everything else related to “looks” will be needed
to create a successful advertising campaign. So similar to the above, you’re going to buy books,
take courses on the weekends (or at night) and spend quite a lot of money on learning what makes
something look “good”.
Most people (not you after reading this) simply walk around and see things that are eye catching.
This could be a nice car they haven’t seen before or a beautiful lady. That’s about the maximum
they can gather “wow looks amazing!” Instead you’ll be looking at it from a scientific perspective,
I.E. “Why does it look amazing”.
While this doesn’t sound like fun you don’t need to announce your beliefs in a public setting. If
you see a well-designed vehicle, a beautiful painting etc. your outward reaction can be normal. In
the back of your head, attempt to take a screen shot of the image and figure out why it stood out.
(Yes you can always take a physical photo as well).
The other item to think about is “why are men awful at taking photos?”… Well now you know,
they never practiced. So, by learning design you’re investing in your future. You will know how to
improve photographs, take better pictures for your friends and family and have a better
appreciation for art. You don’t need to change your career and become a designer but it sure helps
if you know what does or doesn’t look good.
As an important addition, since it is 2020 we would add video editing/sales as well. There is a clear
trend to videos (short videos, long form sales videos etc.) that are being utilized to sell. If you want
to learn something that differentiates yourself from the crowd we’d bet that videos would be the
right area. Just look at how much engagement short videos get TikTok is the latest fad as of 2020.
3) Accounting: Hopefully, most of you will know the basics already. This is probably the only class
in University/College that is useful. The rest of the classes are rarely used. If you haven’t taken a
basic accounting class, we recommend taking at least 3 University/College level courses and take
them seriously. You will use this knowledge in the future (when you become successful).
Accounting is about as boring as it gets. In fact, when you’re out in a city and don’t want to talk
to someone say you’re an accountant. It creates a feeling of boredom within seconds. That said,
by learning accounting you become significantly more organized. This is something you will need
when you start earning larger amounts of money with significant volatility.
Learning the difference between profits and cash flow… planning appropriately for the
unavoidable one-time events and of course constant education on Tax Law. As a point of
emphasis, you will eventually outsource all of your tax items to a true professional who has worked
within the IRS in the past (ensuring you’re in great hands), however, you must know how to run
clean books.
In terms of software, QuickBooks is perfectly fine when you’re a beginner. You’re probably using
PayPal/Shopify and QuickBooks as starting tools. Since there are hundreds of tools out there, we
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won’t go down the rabbit hole of finding the best one. The three listed above will be perfectly fine
for a beginner.
4) Learning How to Speak in Public: Luckily we don’t have stage fright. Some people do and it is
supposedly a common fear for people. We’re not sure why as no one really pays attention to
people on stage (they are too busy texting and updating their Instagram photos). If you plan on
becoming successful you must learn how to give a speech. “Speech” can be interchangeable with
“large public presentation” as we don’t expect you to become the new Martin Luther King Jr. or
a church pastor.
If you’re on a budget the cheapest way to do this is to take basic singing lessons. We’d recommend
singing classes over public speaking classes as they are more likely to be embarrassing. The key to
becoming a better speaker is to desensitize yourself to any feeling of embarrassment. Once you’ve
tried to sing a few times (we’re horrific), you’ll become numb to embarrassing yourself in front of
people. Then when it comes time to do a basic speech on a topic that you already know dead cold,
you’ll view it as a walk in the park.
As a note, some people recommend using Toastmasters, unfortunately our view is that there is
not much at stake in these classes. Unless there is real pressure for you to perform or real
embarrassment, you won’t get much out of the interaction. Now as a reminder, that is based on
our experience in life (need real pressure or real embarrassment). Some people get value out of
classes when there is nothing on the line. We’re not sure how it’s possible as taking free throws
with the game on the line (basketball analogy) is not the same as taking free throws when you’re
up by 40 points with 30 seconds left.
5) Learning How to Read Body Language: For one reason or another. More people focus on reading
implied messages based on what someone says. This is the exact wrong way to operate as 80% of
communication is actually body language and the speaking part is a lot harder to read. If someone
is clearly negative towards you, having the actual words they say doesn’t mean much as it lacks the
original context of the message.
We have already recommended books such as “What Every Body Is Saying”, “Emotions Revealed” and
“How to Analyze People”… But the reality is that this is going to take hours and hours of practice.
When you’re simply tired and can no longer work, we would recommend hanging out at a coffee
shop, busy area downtown or a bar. Instead of drinking until you pass out, simply try to make
observations.
Who is dating who, who is mad at who, which group is more likely to break out into a fight. What
you’ll find is that the vast majority of people are extremely predictable. If you’ve been to an airport
enough times you can even calculate the exact person that will run up and cry to the attendant
about the 30 minute delay and how his “day is ruined”.
Notice, we’re suggesting you attempt to predict the situation without any words. This will force
you to make reads on the environment based on body language alone. If you believe this is not
possible, you’re absolutely nuts! It doesn’t happen over-night (nothing good ever does), but you
will become fairly accurate within 3-5 years. As usual, you’ve gotten “good at it” when you predict
something will happen with a group of friends only to have them say “wow did not see that
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coming”. Until that day comes, spend your downtime learning body language. It’ll likely pay off
to the tune of a million dollars or more (no we’re not joking).
Getting Down to the Numbers and Budget: We have to start somewhere and unless you’re a
high performing individual, you’re not going to like our initial number. If you’re starting below
this it means you need to focus on the recommendations from Efficiency and simultaneously work
longer hours to prevent yourself from falling behind (gig jobs, second source of income etc.). If
you start building a deficit early it *isn’t* the end of the world. But. It is an enormous issue.
So here it is we’re going to start with $84,000 a year (Gross Income). This is actually a low number
if you are successful in the three recommended careers in Efficiency and it is a number that is still
attainable if you get a standard “white collar desk job” out of university. If you’re in this camp,
you’re probably earning $50-60K a year and need to make up an extra $24-34K per year through
a secondary source of income.
Before the complaints come in on $2,000 a month being unattainable, we recommend doing
“whatever it takes”. If we were forced to go back in time and start in a basic desk job position
we’d learn the following and charge for it: 1) copy writing, 2) resume reviews, 3) design – websites
and logos for example, 4) fixing iPhones and Samsung phones and 5) watch/battery replacements
if that’s a popular accessory in your area. If you’re absolutely stuck, you can also try to drive an
Uber during peak hours, become a tutor for kids after work or teach a specific task such as piano
lessons.
If you did all of the above there is no chance you’re earning less than $84,000 gross income and
of course we didn’t include a secondary part time job which is also an option. Although we’d
wager the items above (particularly phone repair) will get you there quite easily.
$5,000 a Month Net Income: We know the $84,000 number seems strange but it amounts to exactly
$5,000 a month. Again. If you’re a competitive person with some smarts, you’re going to get to
these numbers right out of college (due to ambition and intelligence alone). We are not going to
bother with the annual raise expectations and simply use this as a starting budget. As your numbers
improve you can look at the prior chapters and decide how you want to balance it out. As a rule
of thumb we’d say you should be saving around 20% of your income (at least) if you’re able to
generate $5,000 a month. Unsurprisingly, you won’t have a bunch of fun since you’re too busy
trying to generate more and more income.
As a rough break down of spending think of it as simple bullets:


Housing: As mentioned, try to keep this as low as possible. You want to keep it to around
$1,500 and if this requires you to commute a bit that is fine. At this amount you should be
able to pull it off, we simply pulled up rental listings now and found numbers between $1,300
and $1,500. For people in NYC, going to the Brooklyn area is also fine assuming you’re going
to live close to transportation to get you to work quickly. Art, not a science and commute time
is more valuable when compared to size of your room/apartment.
Other Bills: We lump this all together, a basic gym membership, cellphone bill, electricity and
commuting costs. Take all of this and put it into an “other expense item” and you shouldn’t
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



be higher than $500. This will also cover strange one time charges like a co-pay for a doctors
appointment or a new shirt for work
Food/Drinks etc.: This refers to consumption only. It does not refer to the occasional night out
with your friends. It should come in at around $200 a week or around $28 a day. Considering
the prior $500 number for other bills is probably high feel free to round up/down around the
edges.
Investing In Yourself: As much as you can. This will probably be close to $1,000 a month or so.
This is going to be an all-encompassing item as well, outlined by the prior paragraphs in this
sub-segment.
Fun? Not much. A few hundred bucks here and there if you’re able to reduce spending in the
prior four categories. The reality is that our “Other Bills” and constant investing in yourself
numbers are a bit high. So you’ll have a few hundred bucks to go out a couple of times per
week if you’re smart about it. When you’re not going out this allows you to buy a few items
of clothing here and there as well.
20% Savings: Unsurprisingly this lines up and adds up almost perfectly. Housing ($1,500);
Other ($500); Food/Drinks ($800), Reinvestment ($1,000) and fun ($200) = $4,000 total. By
the time you’re done, you have exactly 3 months of emergency money left. Spending $4,000
while saving $1,000 (multiply by 12) is $12,000/$4,000 = 3 months!
These numbers are not good at all (from a long-term perspective) so looking at the realistic
numbers should be a solid shot in the arm to get another form of income up and running. Once
you realize that saving $12,000 a year isn’t going to make you rich, you’re forced to swallow the
painful pill that reality has handed you.
Unlike other people, you’ll accept reality immediately and spend all additional discretionary income
on things that will either make you more money or make you more money in the future. You’ll
realize that “having fun in your 20s” isn’t really that amazing and by going out 1-2x a week is more
than enough. You’ll have more fun in a single year (rich in your 30s) than the entire decade from
age 20-29.
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Chapter 2 – Able to Save 30-50% of Income Without Feeling
Uncomfortable (Late 20s)
Assuming you’ve followed our advice from Efficiency, you should be able to earn around $12,000
a month after taxes by the time you’re in your late 20s. This does not sound achievable as it is
more than 2x what you were earning only 5 years ago. The reality? We have been blogging for
about 8 years now and we have not seen a single failure from people who really followed through
with our advice.
While we’ve seen many people give up and 95% of people don’t take the advice, the ones that do
have become successful. So we’re using this $12,000 a month benchmark as a good starting point.
Before moving on, we do want to thank “you” for all the success emails. We do read them all and
do not have a chance to response to all of them. Being successful in the first place is the main item
that matters so we really doubt it’s the end of the world if we’re not responsive to every success
story.
For fun the vast majority have made their wealth through internet businesses. This is not surprising
but does show that it is possible to do within about 5 years. The transition ends up being exactly
as expected: 1) high-end career, 2) work diligently until business is 2x the career, 3) quit and have
the best of both worlds – high income and no need to be locked into one city.
The other success stories generally surround real estate and some niche situations where a person
goes to a high quality company (gets a ton of stock) and suddenly gets rich. The last one is where
most lazy people get excited. Since lazy people don’t have skills, they think the best way to get rich
is by getting lucky on a particular stock or crypto currency for example.
That said, from a “percentage mix” stand point (success stories tied to the blog), about 80% get
rich with their own business, 15% come from real estate or something else more brick and mortar
related and around 5% or less hit the jackpot with stock in the right company at the right time.
Also. You can already figure out which person has higher life-time earnings as a one-time jackpot
does not reoccur in the future.
Late 20s Spending (things to avoid): This is unlikely going to take long as a person who makes
the first initial jump in income is usually smart enough to adjust his spending. That said, there are
still cases where extremely intelligent people make big mistakes and begin spending far more than
they should. Or worse… They take their foot off the gas only to become a “turkey”. Turkey is a
phrase for someone who thinks they are going to continue living life on the farm (free food and
sunshine) only to be taken to the slaughterhouse as their pay no longer justifies their contribution
(cliff drop in income to zero – popularized by Nassim Taleb).
List of things to avoid: 1) significant leverage, 2) change in life responsibility, 3) low quality
clothing, 4) constant business class flights and 5) the expensive watch.
1) Over Leverage: While you can live alone without a problem (basic studio or even one bedroom
depending on the city and location), we wouldn’t recommend doing the classic “house rich” trap
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by buying something where the mortgage ends up being 40% or so of your take home income.
While you can certainly do it, the loss in flexibility will hurt you when you’re trying to scale your
first successful business (whatever that is). It’s a lot easier to clamp down on expenses for a couple
of months and use that money for your business vs. taking out equity from your home/condo.
When you make your first big jump, you’re going to “feel rich”. This is a deadly trap as feeling
rich is built on flexibility (operating expense mobility). Having high fixed recurring expenses will
make you feel poor quickly (or worse you’ll become desensitized to the large risk you took with
minimal payout potential).
In short, over leverage causes you to become rigid. While there is a time and a place to invest
heavily into something, you want to avoid doing this in a way that causes large recurring payments.
If you want to make a heavy investment into a new product you’re creating (that’s perfectly fine)
doing it with debt at a rate of 5%+ is a bit foolish.
As a psychological rule of thumb any time you come into a large amount of money, you want to
pause your spending for a while. It is incredibly easy to turn the faucet on when you first come
into money. Instead, keep your life unchanged until you “feel” that you’re not rich. The key part
here is how you feel about your new net worth. Once you feel that you’re not rich again (usually
takes 6 to 12 months), your spending will go up but not to an unreasonable level.
2) Change in Life Responsibility: Here, we’re specifically referring to kids/wife/dependents. There are
always “exceptions to the rule” but it’s best to start with a huge no here. You’re at a point in your
life where you’ve finally figured out how to earn money at a high rate and have a chance at getting
rich. You don’t take your foot off of the gas in the final lap of a race, instead you sprint as hard as
you possibly can until you reach the finish line.
As an additional note on this topic, while we have no scientific proof, we’ve found that women
can sense when a man has become more successful. They call it “Women’s Intuition” for a reason
and we believe it is true. You’ll find that people are nicer to you and it is best to be a bit more
careful around new acquaintances.
As another rule of thumb, a change in life responsibility should be anything that impacts your
spending by more than $25,000 a year (that does not appreciate in value). Getting a pet dog is
perfectly fine and upgrading some of your lifestyle items will unlikely result in *recurring* expenses
of $25,000 or more. We have to emphasize the recurring part as one time spending increases
(going out more, traveling more) is something you can cut back on with ease.
3) Low Quality Clothing: You’re now in the higher income brackets/positive territory. There is no
reason to dress like a slob, act with bad manners or look physically distraught. We know it’s “cool”
to wear hoodies in Silicon Valley, but has anyone looked at their girlfriends? Be realistic. Most
coders don’t actually date good looking women since they don’t take care of themselves.
Since you’re going to be meeting more and more successful people at this level of income, you
want to think about the image you’re sending out to the world. As mentioned before, good looking
people and well-dressed people will earn money as they make better first impressions (yes there is
actual science to back this one up if you wish to google it).
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During this general time frame you want to build up a wardrobe, think of it as a “gradient”. Your
closet should slowly start with one side of “nice clothing” and every year as you acquire more
shirts, suits, slacks, jackets, ties etc… the gradient slowly moves in one direction. If you hit it big
(just jump to the older age bracket section) and do a full scale upgrade.
Since the income ranges begin to widen quite a bit when you become successful, a good way to
avoid over spending is to simply keep your gym clothes and out-door clothing cheap. You don’t
need to look impressive when you’re sweating, running and lifting weights so no need to go
overboard in this area. Basic products aren’t going to impact your performance at the gym. Please
do not become one of those weird people wearing a facemask to “reduce oxygen” at the gym.
4) Constant Business Class Flights: This may sound “Boujee” (a term frequently heard in LA to describe
rich people) but it is actually a common mistake. When you start making decent money, your
desire for comfort goes up quite a bit and you’ll end up becoming pretty addicted to business class
flights. While it is okay to use them for long trips where you’ll retain large amounts of energy
(coast to coast or international) we recommend avoiding the vast majority of business class flights.
In fact, don’t even use your airline points to upgrade the shorter flights (you’ll create bad habits).
As soon as you go down this path the following occurs: 1) you look for upgrades that cost “only
a few hundred”, 2) this escalates to $500+ and 3) you end up wasting more time in lounges just to
justify the cost of the flights. Feel free to laugh if you’d like. It’ll happen when you get into this
income bracket.
A good way to offset this bad habit is by booking earlier flights. This conserves energy and doesn’t
make you value business class as much. Remember. C-level executives fly in economy quite a bit
and unless you’re making millions… If they don’t do it… doesn’t make much sense for you to do
it either. When you start making millions per year, this all goes out the window. Just remember,
even top 0.1% earning individuals don’t fly business 100% of the time.
5) The Expensive Watch: Ah yes, similar to business class flights you’re “on the cusp” but not there
yet. You probably window shop quite a bit, look at different styles of watches and imagine wearing
one on the regular. The problem? It still doesn’t line up with your lifestyle *yet*. In order to go
down this path you should already have a high quality place to live, a wardrobe that is entirely
complete and minimal risk to “lifestyle deflation”. The last part means you should be financially
independent. While ~$12,000 a month seems like you’re rich… it doesn’t mean anything if your
net worth is $200,000. This would imply that your $10,000 watch is 5% of your entire net worth
(insanity).
Clear exceptions to this rule include: 1) gifts and 2) watch experts who purchase rare items that
appreciate in value – do not use. Both of these are perfectly acceptable as it is rude to sell a product
given to you by a family member and a watch collection that goes up in value is certainly not
something we’re referring to.
Late 20s Spending (things to buy): The prior section was less about spending and more about
“reinvesting” as a form of spending. Luckily we’re beyond that point at this level. You should
already have a solid understanding of how important it is to reinvest in yourself in terms of skills.
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Instead we now get to play the game of “lifestyle extension”. This means you’re finding ways to
optimize the best years of your life (combined physical and financial perspective) to enjoy it as
much as possible. Again. We’re not doom and gloom people. Instead we’re being realistic that
your energy and fitness levels will be better at age 27-40 than it will be at age 75 (unless there is
life changing technology, but we can’t count on that). Our goal? Figure out how to extend this
period of time… As long as humanly possible.
As a second disclaimer… we’re going into a big section here. None of this is to be deemed legal
or financial advice. All comments in this product (especially going forward) are opinions based on
life experiences.
Key items to buy: 1) grey market drugs and more...; 2) upgrade to a centralized apartment at
minimum, 3) begin purchasing and upgrading physical maintenance items, 4) upgrade your gym
and 5) upgrade your electronics.
1) Grey Market Drugs and More: If you’re intelligent… You’ll recognize that famous actors, actresses,
professional athletes and other wealthy people don’t seem to age. Their production is also sky high
and they seem to recover from injuries quickly. As an example, recovering from torn tendons is
not easy and yet many athletes come back quickly through the use of various products from
steroids to HGH etc.
At this level of wealth we started experimenting with grey market performance enhancing drugs
for intelligence/work. Nothing related to physical items (covered later as you shouldn’t touch
these until you’re in your mid-30s or so). This list is incredibly long and includes things such as
LSD, Mushrooms, Modafinil, Adderall, various types of caffeine, food choices – ginger, wheat
grass, barley grass, spinach, chlorella, garlic, beets etc.
We don’t even know where to begin so instead we would actually test *all of them*. That’s much
more realistic. Why? Well every single person gets a different reaction. If you don’t believe this
think through it logically… If some people suffer from peanut allergies and can die while other
people may feel sick when consuming gluten… Doesn’t this mean each human body processes
food/drugs differently? It sure does.
Building on this, if you were athletic (good genetics) you noticed that you were able to consume
large amounts of unhealthy food with no real impact. Candy bars, burgers, fries it didn’t matter,
you would not see an issue. This begins to change in your late 20s, so you’ll notice that if you eat
unhealthily your coordination goes down just a tad, you feel a tad slower and you’re generally more
lethargic. Why? Your metabolism comes down a bit and you’re going to feel the impact of light
amounts of inflammation (one of the worst things for your body).
What to do? Well now that you’ve got extra money you need to figure this out. This is a serious
endeavor and something we went through over the course of about 3-years. It takes a long time
to really dial in the impact that each item has on your body. So you need to take copious notes
and really try to limit external factors (keep the mini experiments as equal as possible).
LSD: This is probably the biggest performance enhancer next to caffeine. Unbelievably powerful
if you try to do the “Silicon Valley Standard” of 1/8 dosages (a regular tab has around 100
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micrograms, so 1/8 would represent 12.5 micrograms). You don’t need to do this on a daily basis,
for what it is worth we’ve noticed that it is best to take it at maximum 2-3x in a week and more
likely once every two weeks or so. The rare cases where you use in 3 times? You should be working
extremely long hours – pushing to finish a product for example. We might be micro-dosing as
we’re writing this very sentence (who knows!)… Okay we are.
The strategy we used was relatively simple. The first step is always the biggest which is to “take
the ride”. We took one full dose (a single tab) to get the entire experience. Unlike other people
who say it is life changing… we really didn’t get a life changing experience. It simply gave us a
good glimpse of what the high looks like. Items seem to be moving, colors are a *lot* brighter and
your energy levels are through the roof (tough to fall asleep even if you’re supposed to be tired).
After you get the experience you can then move to micro-dosing for a certain period of time. We
would recommend testing your reaction to it when you have a lot of mundane projects to finish
that *don’t* require tight deadlines. Why? The key here is you don’t want to screw up a project
because you’re testing a new supplement/performance enhancing drug.
In your late 20s, you already have the energy to power through if needed. By testing it on mundane
projects you can evaluate your reaction to it over the course of a week or two. This creates a
“neutral” environment and when a real project comes, you know that it won’t impact you
negatively. Imagine trying a completely new drug and dealing with anxiety and stress all at once…
Not going to end well.
Our experience with micro-dosing has primarily impacted us positively from an “alertness”
perspective. Hard to explain unless you’ve tried it. One issue with aging is that you become a bit
more forgetful and lethargic (running at lower intensity). Since LSD makes everything feel
“brighter and more alive” you’re a lot more awake as well.
This bleeds into every activity you do. Also. LSD has a lot of properties similar to serotonin so
you’re generally a bit happier than normal as well. In fact, LSD has cured depression in some cases
and we know people who claim that it fixed their introverted personalities as well (Note… nothing
wrong with being introverted, we’re referring to extreme situations where they cannot even
socialize).
As usual, everyone will have a different reaction. So here is how we would characterize the dosages:
1) if you feel like you’re “loopy” and not focused, this means the dosage was too high. Some
people can micro-dose up to 20 micrograms and this seemed like far too much, 2) if you can’t see
any impact at all the dosage is too low since you’re unable to pinpoint a single change and 3) the
general impact of a correct micro-dose is that the colors around you are “a bit brighter” than usual
and you’re able to work longer hours than normal without a reduction in energy levels. Or. You’re
able to get more done within the day but are working the same number of hours. Both work and
the sweet spot is typically the last one. Longer hours are probably unhealthy long-term (eating into
sleep time isn’t good).
In terms of consumption there are really two methods: 1) distilled water and 2) a box cutter to
precisely cut the tabs. For what it is worth we prefer the distilled water method of consumption.
The reason for this? It’s easier to measure out. When you cut the tabs, you might accidentally
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touch them and the measurements are not as precise. By using distilled water you can pretty
accurately measure each dose and simply take a shot of it when you’re ready to use it. Our
preference has been to take it at around 10:00am. This is around when you’re fully awake and
ready to work. We have tried it early in the morning and late at night as well. By taking it early,
you don’t really “use it” since you have a daily routine to wake up and by taking it at night you risk
being unable to sleep.
As a word of warning, do not try to use this every single day. Like anything else you could become
dependent on it. Even though there are no official “studies” we really doubt taking low dose LSD
for decades is healthy. Similar to how there is no official studies on other substances but we can
probably all agree that smoking weed daily for twenty years isn’t a good idea.
As a secondary word of warning… Do not try to up the dosage beyond ~1/4 of a tab. In fact you
probably don’t want to go over 1/5 of a tab. This will reduce performance and have the exact
opposite impact you were hoping for.
Caffeine: While not as exciting as the above to your average person (most talentless degenerates
think they can take LSD or mushrooms and suddenly become successful, so they jump for joy
around hard drugs), caffeine is certainly a performance enhancer. The key? Finding the right way
to consume it without feeling terrible! You’re going to drink a lot of caffeine at some point in your
life and this will come in various forms: tea, coffee, energy drinks and espressos.
In fact, most high earning people know what it is like to “feel sick” from drinking too much coffee.
Yes it is possible. Your stomach does not feel good and you actually see a drop in production. We
don’t know the scientific reason for why this occurs, but it does.
How do you fix it? You fix it by changing the way in which the caffeine is digested. While it sounds
illogical, by consuming Yerba Mate and coffee within the same day, you will reduce the negative
impacts to your stomach. You can also drink Americanos instead of straight coffee as there is
higher water content that dilutes the espresso shot.
If you’re stuck working on a long project then you can add butter or some sort of high fat item to
your coffee (we’ve heard MCT oil works better for some, sticking with butter has been good
enough for us). It absolutely works and it absolutely shouldn’t be done frequently due to the high
calorie content. Incredibly unhealthy. For fun, the reason why it works is that the fat content
forces the caffeine to disperse slowly (ie. you get a smaller jolt but for a longer period of time).
Currently, Yerba Mate appears to be the best source of consistent caffeine. For some reason it
does not seem to cause stomach issues and the cost is low as well. You can bulk buy Yerba Mate
(sugar free versions) for a couple of dollars per bottle. Avoid buying the sugary versions as the
calorie content is high for some strange reason. As usual. Better to go as natural as possible.
Mushrooms: This one is strange. Caffeine is easy to figure out through trial and error as it is not
considered to be a grey market drug (like Modafinil). Mushrooms on the other hand don’t seem
to create a lot of performance enhancing capabilities. Except in one area… Creativity. We’ve
found that taking low dosages when you’re attempting to improve the design/look of a product
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you’ll see higher performance. If you’re trying to do other activities (write, doing math etc.) you
won’t see a performance improvement.
Naturally, this is less useful for us. Could it be useful for you? Maybe. We don’t really know the
answer. Generally speaking, psilocybin mushrooms have a normal dosage of 3 grams (a trip) while
a tenth of this would be closer to a micro-dose.
The time to use this as a performance enhancer is when you’re most creative. For fun we have
noticed that creative work generally occurs in the early morning or late at night. This seems to be
the difference between “morning people” and “night people”. Again. We don’t know which one
you are and are simply highlighting this as a common trend.
With this in mind, if you’re going to micro-dose with psilocybin, we’d do it before you intend on
embarking on a creative project. This is a pretty simple rule of thumb and we’d bet you notice the
same benefits as we have. As usual, everyone digests and reacts to chemicals differently. Simply
use the above as a good starting framework.
As a note, some users of psilocybin suggest that it helps with anxiety. We don’t really suffer from
this problem so we can’t relate. If you know someone who has suffered from it (or personally
suffer from it), this may be more useful for you. It’s a powerful psychedelic and could be used to
cure problems in the future (a large amount of research dollars are being poured into psychedelics).
Another interesting result from psilocybin is that it also causes you to view yourself in “third
person” in many instances. You can hear yourself better and you’re generally happier and more
philosophical. Just like the LSD items, you’d have to “take the ride” once to see what it is like to
operate on a full dose, then cut the dosage by 1/10 to see if you can get any performance
enhancement out of it. We hope that intelligent people are mature enough to find a way to generate
value out of it instead of becoming weird hippies living in the mountains. In the end, you want all
performance enhancing drugs to… well… cause you to add more to society as a whole.
Modafinil and Adderall: We’re combining these two. Why? They are on opposite ends of the
spectrum for us. We’re not sure why but when we have experimented with Mofafinil all we got
was a weird sick feeling in our stomachs and sometimes a headache (not improved performance).
This is extremely controversial.
We have talked about this topic to several close friends who live and die by Modafinil. It is strange
since the value seems to be quite low when we’ve used it. In fact, we still try it a couple of times
per year to make sure there is no added benefit. So far… Same answer, nothing gained except a
splitting headache and awful body feeling for a few hours.
Adderall is on the other end of the spectrum. It works incredibly well but is absolutely terrible for
your body. This is one of those products where we can’t even fathom taking it for more than one
or two days per year. You can get an insane amount of work done. In fact you can take it, stare at
a book and read straight. If you’re sitting, you’ll stand up and see a nice red crease where your
stomach has a slight fold to it (even if you’re in shape). Why? You barely moved as you’re dead
focused on the task at hand.
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We’ve described the above to some people and they say the impact is not as large. So again… if
you do down this road you have to test everything yourself (as usual, not in any way to be deemed
legal advice… just our opinion).
At this point in life, we have no interest in really using Adderall anymore. We’ve gone through the
awful period already and the drug seems to be extremely unhealthy. The only time it would make
sense is if there is something incredibly big that can’t be missed. And. We doubt that would
happen. It is much more likely that major events could be spread across a few painful weeks
instead of being compacted into a single day.
While the section is short we hope the message is clear. Be careful around Adderall. It is a powerful
drug. It does work. But. You really need to be in a situation where it’s “win or go home” to justify
using it. As an example, college exams are not high enough on the priority list. If you are running
a Company and needed to work all night to make sure products are shipped to avoid 6 figures in
losses? Sure, probably an acceptable situation.
How All These Drugs Work: Seems like you’re messing with your body quite a bit doesn’t it? If
you like it or not, this is how many ultra-wealthy people operate on a daily basis. While we don’t
know what billionaires are using (exactly), it is extremely clear that many of them are on various
types of performance enhancers.
To try and help you save time, below is a good example of a difficult week. If you know that you’re
going to work long hours it would look something like the below.
Day 1: Wake up and take a shower to increase blood flow. You then do a few sit-ups and pushups along with some light stretching. After that you chug some vitamin rich products such as a
freshly made kale and apple juice mixed together. At around 10am you want to take *one dose*
of LSD. This would be right before you start the difficult work at around 11am. This will last
around 5 hours. When you feel that you’re starting to slow down, you do a light workout (20-30
minutes, such as body weight exercises or some quick sprints and hit the showers). You come
back and since your blood flow is high you can now take some caffeine.
Day 2: Similar as Day 1. The difference is that you will take a single dose of mushrooms instead.
While each person is different, we assume that this day will require more creative work. After
about 5-6 hours go by you do the same plan. Hit the gym for a short time frame and come back.
One dose of caffeine and work until you’re done.
Day 3: This is the reset day. While you’re trying to work extremely hard, you want to limit yourself
to a single dose of caffeine if possible. You’ll do a full workout at the gym and ideally lift heavy
legs and then go for a long bike ride or run. This will actually energize you. If you know how to
lift correctly, you end up having more energy the next day. Also go to sleep a bit earlier to catch
up on lost hours from Day 1 and Day 2.
Day 4 and 5: Repeat Day 1 followed by Day 2. No real change. You can add around 15 minutes
of gym time to lift instead of doing the bare minimum. You hit a single area (typically chest or
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back) since you already did legs and you won’t have the time to do arms/abs in this difficult time
period.
Day 6: This will be similar to Day 3 except you replace hard work with yoga/meditation. You
need to clear yourself up after having 5 days of significant pain and suffering. This refers to the
amount of mental gymnastics you will be doing. If you really kill yourself for 5 days straight you
need to reset your brain and take it down a couple of notches.
Day 7: Here it gets really interesting. You can repeat the past 6 days for quite some time. In fact,
we wager you could do this for about 60 days straight before becoming fatigued. If you are on a
short deadline and you can make a huge amount of money then you can look into higher dosages
of caffeine.
As usual this is an extreme scenario. To give an idea, taking something incredibly powerful like
Adderall is something we’ve done only three times in the past 10 years. It really is an “absolute
necessity” situation and we doubt we’ll ever do it again (absolutely terrible for your health).
Revisiting Some Key Notes On This Topic Based on Experience
 Don’t take multiple items on the same day except for a single dose of caffeine
 You can absolutely push through a day with only caffeine and drink multiple cups
 If you want to avoid stomach issues with high caffeine we’d use Yerba Mate if black coffee
begins to give your stomach issues
 There is no real value in “upping the dosage” on LSD/mushrooms once you figure out your
own tolerance levels. We’ve messed with slightly higher dosages and you can see the
performance declines
 Do not try to run with all of these products for a full year. It simply isn’t healthy and at most
you can go to the extreme regimen above for around 75 days in a year. That gets you over 10weeks. When you’re 30 and making good money, we sure hope you’re not trying to kill yourself
with work all the time!
 If you attempt to mix different enhancers it typically reduces productivity. For example…
drinking a lot of caffeine with a single dose of a psychedelic will reduce performance. Similarly,
mixing psychedelics typically results in performance declines as well
 Caffeine pills do work… That said, they are extremely harsh so you better have a high
tolerance for caffeine and be ready for it to wear off quickly. We think they are far too powerful
and reduce performance due to a racing heart
 If you find that you’re doing strange things (such as grabbing the glass of water and drinking
it only to find out its coffee…) you need to go to sleep. At this point your work quality has
fallen too far. The only time you should push through this extreme fatigue is if the deadline is
within a few hours
 Do not talk to people about your performance enhancers. Just experiment yourself and don’t
say anything publicly. If you talk about it publicly you’ll attract the wrong crowd. People who
are addicted to psychedelics and are falling behind in life… saying “oh man the colors are amazing”
and never use them as performance enhancers. The exception to this rule is quite obvious,
they are already rich. You’ll find that people who use psychedelics for fun are either 1) rich
already or 2) will never ever get rich. Figure out which camp they are in and do the classic
“smile, nod and agree” to the second group
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These performance enhancers are not “wonder drugs”. Being in shape is a pre-requisite to
getting benefits from them. If you’re out of shape, being in shape will be the biggest
performance enhancer for you in the first place
These performance enhancers don’t give you a massive edge. Just like anything else, if it helps
you 2-4% this is a big benefit over long periods of time. Thinking it’ll turn your average person
into above average is beyond foolish
Remember… Your body can become accustomed to any of these items. This is part of the
reason for oscillating between the enhancers. So if you overdo any of them you may end up
getting no benefits at all. You must take at least a month off and zero out all consumption for
it to maintain potency. For some people, they have to take 2-3 months off and for others
(younger) 2 weeks could be enough
Don’t mess with any of these substances until at least late 20s is our best estimate. You
probably have enough energy to stick with just caffeine through age 30-33 or so
Lots of Greens: This one is short. We’ve explained it in basic terms before. Try everything. Green
powders, drinks, barley/wheat grass shots etc. You want to be able to pinpoint inflections in your
energy levels. If you cannot tell the difference you are not consuming enough.
Simple strategies include juicing a full pound of a particular vegetable and drinking it straight. This
can be up to 12 ounces of the particular green. Is it fun? No. Does it taste great? No. Does it get
results? Yes. Repeat this process until you can figure out which greens work for you.
As an easier strategy, you can attempt to drink these greens after a night of drinking. As mentioned
before we’re certain you’ll go out and get drunk from time to time. If you know you’ll be going
out heavily, prepare a particular drink and chug it before you go to bed. You’ll be able to see the
impact when you wake up (with or without a hangover… likely without one).
While we already put up the basic greens on our approved product area (on the blog), we think
it’s important to try all of them when you’re in this income bracket. While we’ve tested a TON of
vegetables, Chlorella seems to reign supreme. The next on the list is barley/wheat grass shots.
After that is spinach/kale.
The Vitamin Game: We get a good laugh when we see the dosages for over the counter vitamins.
You can begin experimenting with them by taking higher amounts (3-4x the “normal”).
This will give you a better idea on the impact it has on your body. Below is a list of the most
important ones (opinion)
Vitamin A: The least talked about vitamin and difficult to find in pharmacies. Why? Probably
because companies don’t want you to know that Retinol is just concentrated Vitamin A! Seriously.
All you have to do is take 3x the normal dose of Vitamin A and lingering acne problems will fade
away. Will they go to zero? Probably not. Will it improve your skin? Yes.
Vitamin B12: This seems to increase energy levels slightly. You can take a basic vitamin B12
product. It isn’t amazing but it is something you should keep in your internal pharmacy as a normal
supplement.
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Vitamin D: No clear explanation for the impact here. All we know is that people who work long
hours inside typically have lower Vitamin D levels. As you get older you’ll simply go outside and
hang out in the sun more (no need for this). And. If you’re going to be inside for some reason,
have it at your disposal to make sure you don’t run a deficiency.
Calcium: If for some reason you’re going to ditch milk/dairy products it makes sense to add a bit
of calcium. No real impact that we’re aware of but it’s another item that may screen as “low” as
you get older and do more frequent blood work. Unlike the other items one tablet every other day
or so is probably enough. If you overdo this one, it can cause issues so don’t try to 2-3x the dosage
unless you have a high quality doctor who suggests you need more.
As a simple alternative, you can also add sparkling water to your daily drinking habits. Perrier and
S. Pellegrino both have ~4% calcium content in their drinks.
Fish Oil: Covered more than enough times on the blog but including it here. Take a table spoon
of the real stuff once a day. Don’t bother with the tablets as they have a smaller impact in our
experience.
Vitamin C: Overhyped vitamin. If you’re taking the above, you won’t really need Vitamin C as
you’ll get this content from berries/fruits in general. Blueberries as mentioned before have brain
healing properties so stick with that over vitamin C tablets. Another alternative? Green Tea.
Certain types have high vitamin C concentration.
Niacin: As you get older, you may want to take a small amount of niacin (many prefer wax matrix
niacin). Many men will suffer from a heart related illness and this can help lower the chances of
cardiac related issues (one of the common causes of death).
This product can help you as it has proven benefits to keep your cholesterol levels within normal
ranges. Generally speaking, advanced health experts (your private doctor… to be explained later)
push this product as a potential solution to reducing negative cardiac events. We’ve noticed that
it does seem to help energy levels so we take it.
Serums and other Supplements: Here we also suggest you test a wide variety of skin care solutions. We
do not know what your skin looks like. All we know is that you want to find the right serums that
work for you. This could be something that dries out your skin (for people who suffer from oily
skin) or it could be a moisturizer. See a professional dermatologist and get a routine going. While
someone in their late 20s will laugh at you for being “vain”… You’ll be laughing at them when
you look like you haven’t aged over the next decade.
The above is the cheat sheet to your Vitamin basics. Feel free to ignore or laugh at it but we can
say that they are all helpful. Other items will be individual specific so you can go ahead and test
out another 20-30 of them in your free time. We’ve tried hundreds of supplements over the course
of a decade. Feel free to go wild in this income bracket/time frame. A few hundred bucks of
experimentation is not going to break the bank.
Regular Food: This is pretty simple, try everything. Similar to the vitamin game, you want to test
out your reactions to a fish based diet, heavy meat based diet, vegetarian etc. What you’ll find (our
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guess) is that a higher protein diet based on fish/meat/vegetables will yield the best results. We’re
not sure who started the “carbohydrate craze” a couple of decades ago but it was certainly wrong.
You need more protein and less carbohydrates in general.
We’re not as extreme as other people, but we do notice better performance when we avoid sugar,
increase protein intake and consume a large amount of green vegetables. Limiting fruit
consumption to lower calorie based ones such as blueberries and blackberries.
Same story as prior blog posts/products: citrus is for energy levels – lemons/limes, greens are for
recovery and meat/fish are for maintaining and building muscle mass. No need to go further than
that (beating a dead horse) but including it here to be consistent and organized.
2) Centralize Your Life: If you’re in this ballpark, you want to consolidate all of your activities into
a smaller area. This means you’re no longer going to live with roommates, you’re not going to
make any concessions (travel long distances/commute) and you’re not going to skimp on quality
anymore. Instead, you’re going to attempt to reduce all of your “wasted time”.
Wasted time includes: 1) time going to the airport, 2) time going to work – if you’re still in a career,
3) time doing laundry, 4) time going to a bar/club/restaurant, 5) time it takes to get groceries done
and 6) cleaning/organizational tasks.
While there are always exceptions, you want to find ways to do a 50/50 split. If you were spending
say 10 hours a week sucking it up with longer commutes and worse logistics, you can take half of
that time to rest and spend the other half producing more income for yourself. This is a good
starting point and if you think a different split is better feel free to adjust. The point remains.
By centralizing your life you should free up several hours per week that will make your working
life extremely easy. It will also give you time to calculate your real worth and realize that it is
possible to earn more money by outsourcing tasks like cleaning.
This is also an area where frugal people tend to mess up. Just because you’re spending less by
living in a less convenient area does not mean it will result in higher savings/investments. At this
point, you’re trying to prevent burn out and increase your income.
The only way to do this is by centralizing your life and spending some money to put yourself into
a “streamlined” lifestyle. You don’t need to go crazy and party every day. And. You don’t need to
suffer and negatively impact your quality of life either. If you’re in this income bracket, you deserve
a better quality of life and your value has gone up substantially. You’ll make more and save more
by doing this.
If we were to rank order the time preference it would be: 1) centrally located living situation by
yourself – close to work if in a career, 2) cleaning and 3) distance to going out. These three items
will offer the best rewards by a wide margin. You’ll go out more, you’ll have more people at your
place and you’ll offset your increase in spending with a decrease in wasted time. It works out
perfectly as your entire life is upgraded at once instead of being forced to “pick and choose” which
looks strange and optically wrong… Like a guy wearing a Gucci belt with a cheap poorly fitted
suit.
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3) Physical Maintenance: At this point, you should take a hard look at body based maintenance items.
You don’t need to worry about hormone replacement or big changes such as hair replacement
(looking at you Elon Musk!). Instead we’re focused on upgrading your daily use items to extremely
high quality items that improve your overall recovery time frames.
The first example is a high quality bed and mattress. You spend 8-hours or so sleeping (about a
third of your life). Sleeping on low quality bedding is fine while you’re young but doesn’t help you
as you get older. The last thing you want to develop is back/neck issues since you didn’t care about
your sleeping arrangement.
Similar to the piece on grey market drugs, we don’t know how your body will react to the mattress.
That said, you should be spending north of $2,000 on a high quality mattress. We know… the
number seems high but it’s realistic since you’re going to use it for at least 5-8 years (don’t go
beyond 10 years as the quality degrades noticeably in just 5-8 years).
The second physical item you’ll invest in is massage/muscle loosening items: 1) electric pulse
massager, 2) budget for professional massages, 3) yoga classes and 4) foam rollers, exercise balls
and a muscle roller you can travel with. This is another “non-negotiable” purchase. In your early
20s you could work out and recover without any serious stretching. It didn’t matter. Those days
are now gone and you have to pay close attention to your muscles. Typically, you’ll notice it when
you get your first leg cramp on a flight.
This is simply annoying but it’s a good reminder that your muscles tend to tighten over time. So
simply sign up for a yoga class, get used to budgeting in massages and use those massagers
consistently. As a small note, working while seated on an exercise ball doesn’t do much but it is a
lot better than a normal chair. It’ll also act as a small core exercise for you.
If you’re looking for ways to force yourself to stretch more we’d recommend doing the following:
1) add it to your routine after taking a shower as it loosens up your muscles naturally, 2) leave a
muscle roller in your carry-on bag at all times which will automatically remind you when you open
it up, 3) force yourself to sign up for a weekly yoga class or weekly massage and pay up front so
you don’t skip it and 4) create a daily alert to stretch during the slowest period of the day for you.
Another way to do it is by reminding yourself to stretch every single time you sit down. You can
do really basic stretches while seated naturally – sit with feet underneath you, sit in the butterfly
position, lean back while seated with a single leg is underneath you. It’s quite simple and over time
it will make sure your muscles are being stretched (lightly) on a frequent basis. To conclude this
part, you can also use the electromagnetic massager when you’re reading or doing something in a
relaxed position. This is probably the easiest one to remember, just leave the machine near you…
You’ll naturally grab it if you see it and it takes less than 5 seconds to put on.
4) Gym Upgrade: This section can also include other activities you do (perhaps you play tennis or
golf… or soccer etc.). Essentially, you want to upgrade the environment you are in. When you do
this you increase the chances of meeting other high net worth individuals who may be valuable
contacts down the line. The chances of running into a wealthy person at Planet Fitness is simply
a lot smaller due to the minimal barriers to entry.
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This is an important upgrade and there are some exceptions to the rule. If you’re not the type of
person who goes to the gym 4-5 days a week and for some reason do another outside activity, you
may want to upgrade that item and keep the gym at a minimal cost level. It’s certainly possible to
upgrade everything and that’s the ideal situation. Our point here is that it isn’t a deal breaker like
the first three spending items.
A good rule of thumb is to upgrade to the second highest tier. Unless you’re ultra-rich already
(which would be a later category) you really don’t need to join a Country Club with high minimum
spending amounts. The best example of a high quality generic gym is probably the Equinox. If the
Gym costs less than $100/month it probably isn’t high quality (we have no doubt there are *many*
exceptions, and our baseline is based on a high cost of living US city).
The alternative to the gym upgrade is to increase the spending on your health hobby. Everyone
needs at least one hobby that keeps them healthy and you can spend more by taking lessons for a
sport you play or by entering a more expensive league/competitive event in your city. This is vague
as we don’t know what activity you’ll be doing. Generically speaking, golf is the most common
followed by skiing – if you intend on interacting with richer people.
Now it wouldn’t been fun if we didn’t give a recommendation, so if forced to choose we would
pick golf (assuming you can afford it). It is a lot more mobile relative to skiing which typically
requires a lot more planning. As you move up the socio-economic hierarchy, you’ll find that time
becomes more and more valuable. Reducing the headaches associated with going golfing relative
to going skiing is actually helpful (reduces the number of “no” responses). The last benefit is that
golf clubs typically involve more drinking when compared to skiing which typically increases the
chances of more information flowing.
5) Upgrade All Electronics/Entertainment: This is the smallest upgrade and the least important
unsurprisingly. When you get to this level of income you actually want to have high quality items
for all of your electronics. Why? Well it does save you small amounts of time. You don’t need the
latest version of everything but you can go ahead and upgrade that laptop you’ve had for 5-8 years.
You can also upgrade that cellphone now that it has been over two years. You can also upgrade
your surround sound/television etc. if you plan on having people over. (As a note, there is no real
reason to have a TV if you’re not rich yet but it’s an example depending on where you live).
Another good example of upgrades would be a pool table at your place or you could simply move
to a place with better amenities. The point here is that you can probably afford to upgrade a few
items without a real impact to your re-investment rate.
That’s all we really have to say about this segment as it is by far the least important. It could even
be ignored entirely as small upgrades don’t really change your life (social perspective). You’re
better off waiting until you’re a millionaire making significantly more per year.
As a rough break down of spending ($12,000/month) is below. It’s actually shorter as there is
more variability depending on what type of life you’re going to live.
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Housing: This one is probably going to run you at least $3,000 a month. Maybe a bit more/less
but we’ll use that as a standard.
Other Bills: We lump this all together, a basic gym membership, cellphone bill, electricity and
commuting costs. Take all of this and put it into an “other expense item” and you shouldn’t
be higher than $600. We simply add $100 for the improved gym.
Food/Drinks etc.: This refers to consumption only. It does not refer to the occasional night out
with your friends. It should come in at around $250 a week or around $35 a day. Considering
the prior $600 number for other bills is probably high feel free to round up/down around the
edges.
Investing In Yourself: As much as you can… Yet… This will probably be lower at $500 a month
or so. This is going to be an all-encompassing item as well, outlined by the prior paragraphs
in this sub-segment. You invest less as you’re busy scaling something that succeeded (shift
from learning to doing by this income range)
Fun? This increases quite a bit and where the volatility comes in. Unless you find something
brand new you’re likely ramping up your income streams without a need for more educational
investment. Somewhere around $1,400 a month.
~45% Savings: How does this add up: Housing ($3,000); Other ($600); Food/Drinks ($1,000),
Reinvestment ($500) and fun ($1,400) = $6,500 total… Saving around $5,500 a month.
Before moving on we know what some people are thinking. Wow you’re spending so little! The
reason? You’re still scaling.
The weird part about this income range is that you’re not rich yet but you see the light at the end
of the tunnel. You’re not going to take your foot off the gas unless you want to live with regret
for the rest of your life. So you can certainly spend more but your time is still heavily consumed
by work. You do go out more (evidenced by the $1,400 in spending on fun)… But you have more
fun and exciting things to do.
Regular people won’t get this. When you learn how to earn large amounts of money… that is the
most fun you will ever have. Nothing replaces the joy of winning and seeing the numbers/digits
on the screen go up.
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Chapter 3 – Millionaire Club with High Quality Cash Flow (30+)
Congratulations! You’ve officially made it. Several people who have read our blog are already here.
The millionaire club certainly allows you to spend more as you know you’ll never be living on the
street.
If you keep it simple and assume that you can always make around 5% ($50,000 per year) with a
million dollar portfolio, that’s certainly enough to live in a large number of cities around the world.
Are you popping champagne at Liv in Miami? No. Are you worried about basic living expenses
anymore? No (assuming you’re smart).
Here is the catch/fun part… If you were smart enough and successful enough to make it to a
million by 30 you’re not going to pack your bags and move to Thailand any time soon. You will
get bored within two months. In fact, we know a lot of people who have quit after accumulating
a million or two and every single one of them returns back to work. The only people who quit and
successfully stay out of the job market create their own businesses to run… Which is even harder
than returning to work!
So what do you do? Pretty simple really, you continue to invest in yourself to build up more
income streams while simultaneously reducing your hours. If you’re a millionaire, there is no
reason to work long hours unless you feel like it. Most of you (we’re guessing now) will likely do
the standard “work, rest, work, rest” model. This means you work hard for 1-2 years then take a
year or two and do minimal work… this repeats every year going forward. Serial entrepreneurs do
this all of the time and we have no problem betting that it will continue to be a common trend.
You come up with a decent idea, scale it, sell it and take a break.
Millionaire Club, 30+ (things to avoid): 1) extreme hedonism, 2) accidental pregnancy, 3)
betting your financial independence principal, 4) over-extended mortgage and 5) the super car –
for now.
1) Extreme Hedonism – Drugs, Escorts Alcohol and More: While there is practically no chance you will
avoid at least one binge, we strongly recommend keeping tabs on it. You will get hurt (eventually)
as your health will suddenly degrade. Generally speaking, you’ll feel invincible physically through
age 32-34 or so, at this point you can see the reduction in all of your numbers (lifting, running
speeds etc). While you can certainly stay in amazing shape, our point is that these binges are going
to kill you over time.
Of the three, alcohol is probably the most destructive and escorts are the most dangerous. The
difference is that destructive behavior is “socially acceptable” so you end up consuming far too
much.
On the escort side of the equation, you will be forced to interact with them even if you don’t want
to. If you’re smart (likely if you’re reading this blog) you’ll pay them to meet potential clients as
well. No. This isn’t a “fake thing” from movies. If it’s common to take clients to strip clubs, it only
takes an ounce of common sense to realize this will happen as well. If you don’t believe this all we
have to say is “wait and see”. When you see it happen 1-2 times you’ll notice it all over the place,
particularly in 5-star hotels.
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Before elaborating, we know there are always “exceptions to the rule”… once again. Some people
have intense religious beliefs that protect them from this mistake and some are simply ultrastraight edged (engineers commonly fall in here).
That said, if you found this blog, the chances that this is you… is quite low. So we’d say 99% to
99.99% chance you’ll go on a bender if you make it. You’ll spend 5-figures (easily) on some crazy
nights doing all kinds of things you’ll laugh about later (assuming you survive). We know a few
people who have spent in excess of $50,000 per night… several times… within the course of a
month or two. The benders are extreme and it might actually be better to get it out of the way in
a short period of time versus developing a bad drug habit.
From the prior area (when you were still scaling), we mentioned drugs that can help you increase
output. Now we’re switching gears and talking about drugs that will *not* help you at all.
Recreational drugs that do not improve performance for work are in this category. Instead of
going through all of them, we’re just lumping them together.
Instead of lecturing everyone on “avoiding them”… you’re going to end up doing them anyway
(at least to some extent). So we’ll look past that and emphasize that you should view the drugs as
“gifts”. This means you’re doing your best to hand it to someone who actually wants to do it. No.
You don’t have to do them to prevent other people from feeling bad.
Eventually you become influential enough (rich enough) that no one cares if you’re just drinking
instead. Yes. We are aware of the social ramifications of being the “outcast” and are here to tell
you that absolutely no one will care if you’re successful enough. Strange how that works!
Unsurprisingly, at the top you’ll meet a lot of people who are drug addicted/hard drug users. You’ll
find that many ultra-rich people do all kinds of weird stuff from wife swapping/swinger events to
heavy dosages of pain killers. All of this is simply terrible for you (opinion) and at minimum you
want to *limit” any recreational drug use. Once again, we doubt you’ll make it to $5M+ without
trying drugs at least once as you’re going to be surrounded by it for long periods of time.
Turning to alcohol… This is another double edged sword. Do too much and you end up hurting
yourself. Going with zero usually ends up being a bit too boring. So a good balance is to only
drink when you’re really going to have a big event. The other strategy, if you’re really into drinking,
is to go out frequently but with a small number of people (under 6 or so).
Both of these strategies minimize the chaos. If you’re into big events, be prepared to drink a lot
on those nights. Someone always takes it “too far” which then drags the average alcohol
consumption up a ton. If you do the small group set up, you drink less but more frequently over
longer periods of time.
Now how do we really prevent you from going into the deep end? The answer is actually physical
fitness. You’re going to pick up a private doctor, learn about hormone replacement therapy and
take it seriously. Once you go down this route, it will absolutely “put the clamps down” on your
drinking habits. Also. If you’re in great shape, you will immediately notice the impact of
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drug/alcohol usage on your body. Even pro-athletes see their metabolisms slow down and if
you’re in shape you’ll get a wake-up call within a year after “making it”.
2) Accidental Pregnancy: So you thought you had it all figured out by giving escorts a fake name and
never telling someone you’re rich? Think again!
That’s right. Once you get rich word gets around. It simply does. You don’t even have to be “ultrarich”. Once you start making around $20,000 per month after taxes, you will be marked within a
few months. How you ask? Simple: 1) your friend tells a friend… who tells a friend, 2) you go to
an expensive event and show up in a publication or you are seen by someone else who talks, 3)
you are spotted at the front of a major sporting event – usually thousands of dollars for the ticket,
4) your mannerisms will begin to give you away – speech patterns, walking speed and working
hours and 5) you get drunk and something slips in the way you describe your life. And. For fun,
you’re not going to complain about anything which will be another tell over time.
If you don’t think this could happen to you… You’re simply suffering from overconfidence. Many,
many, many people have this happen to them. All it takes is one mistake one night and you’re
done. So we recommend you take this seriously. If you’re extremely serious about this you should
live in a place with security cameras and consistently send messages and take photos to prove that
you’ve never done anything illegal as well. Some women will even fake that they are pregnant to
get you to meet them again.
People laugh but having a hidden camera is actually quite smart to avoid getting into legal issues
as well (fake crime allegations). These are extremely serious issues for rich people. While your
average person is concerned about gold diggers (when he isn’t even rich), the real issue is an
accidental pregnancy or lawsuit that is based on a “you vs. them” outcome. Don’t get yourself
involved in the last two and take extreme measures to make sure this is the case. Gold diggers
aren’t a problem at all if you’re avoiding those two… Just because a girl likes men with money?
That doesn’t actually matter at all.
This section is short but we would recommend printing out the page and saving it. If you miss
this one all of your hard work could go up in flames. Yes. It is that big of an issue.
As a closing note, there is an “exception to the rule” again. Which is? Odd individuals who don’t
attract the prettier girls when they are rich. We’ve seen a few of these usually 1) out of shape, 2)
extremely unattractive or 3) extremely strange social mannerisms. We can’t help everyone as we
can only help people within a certain band. So if someone is this off (can’t succeed on dating
market even when rich) they should seek some sort of professional help.
3) Betting the Principal: Even if you think you found the next Google start up, never bet your
principal. Your principal refers the exact dollar amount you need to live off of dividends/interest
income. Keeping it simple again, if you can live off of $5,000 a month, you are not allowed to ever
sell the investments that are generating $60,000 a year. There are no exceptions to this rule on the
investment side of the equation. The only exception is related to health if you’re forced to pay for
a life-saving procedure.
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You’d be surprised at how many people mess this up as well! This is why many rich people go
from rich to broke and sometimes make it back to being rich again. The key is to win the game
once (financial independence) and never look back. As usual, people who have never been rich
think it is easy. Unfortunately, it is not. It’s mentally taxing to stay the course when you see certain
investments doubling, quadrupling or even going up by 10x.
The good news? If you followed our path to riches from Efficiency, you should already have a
high income. Since you didn’t make your money by winning the lottery in a one-time windfall,
we’d bet you’re making around $20-30K per month after taxes and you’re in the 7-figure camp by
thirty. This means you have more than enough money to invest in higher risk ventures in the
future. You simply take one extra year (not much) and save $200K+. This allows you to invest in
high risk ventures.
Betting the principal is simply equal to adrenaline seeking. Anyone who does this is simply bored
with their current living situation. The way to get out of boredom is by either starting a new project
or by selling your current company to start a new one. Having zero “earned income” after a sale is
an immense motivator.
While we got lucky in this regard, we think an easy way to avoid betting the principal is to find an
asset with “forced appreciation”. The two easiest ones: 1) real estate and 2) internet business. If
you’re bored you simply buy one of the two. A home that you’re going to fix (force appreciate) or
an internet asset that you can fix. This is a simple and fun game that you’re already used to playing.
It also gives you more cash flow to reinvest into higher risk ventures.
4) Over Extended Mortgage: As mentioned in the first section of this book (and the second), you’re
free to make assumptions on where we are in the market cycle. Hopefully, we can agree on one
thing… You can never be 100% certain. So? If you’re going to buy a big place and that’s the type
of life you’re hoping to live (house party type environment), you should assume that the price of
the house will go down by at least 25-30% the day you buy it.
The chances that this occurs is next to zero percent since you’d have to buy the exact peak. That
said, it causes you to re-evaluate the purchase and make a smart long-term decision. As we’ve
mentioned this isn’t the style of life for us (prefer urban areas and higher quality apartments with
amenities), but it is a common decision to make for many wealthy people.
You’ll end up going to a lot of large house parties and yes all the vices will be there (drugs, alcohol,
gold diggers, strippers, escorts etc.). We still get a good laugh when people say that these parties
only have women in their late 20s to early 30s time-frame, they are showing their cards (that they
never made it) without realizing it.
Anyway. Back to the point. If you’re going to do all of this and you recently came into a large
amount of money, it would be wise to start off slower than you think. If the price of the home
drops you won’t be moved and forced to sell (eating a large loss) in a bad economy.
The best way to think about the purchase is the “stress test”. If you will feel mentally stressed by
the mortgage payment (to the point that you want and need to work harder), that’s probably too
high. If you look at the payment and say “well even if I lose my active income today I can easily make
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payments for 5-years” then you’re in good shape. The whole point of getting rich was to take your
stress levels to an extremely low level… Taking on a massive mortgage defeats the point. Stress
should be self-inflicted, which is the best kind of stress (going to the gym, working on a personal
project/company etc.).
A rule of thumb someone else gave us is that your passive income should never be smaller than
your house payment. So if your passive income is $5,000 a month, the mortgage shouldn’t be
higher than that. Not sure if that’s accurate (as we’ve never gone down this path) but the individual
is quite rich and lives in a large home as of this writing.
5) The Super Car: The only real item out of your range is the super car. A super car would be
something in the $150,000+ range with high maintenance and insurance costs as well. Even if
you’re a car guy, the depreciation and upkeep is going to be painful to eat. Not to mention the
near guaranteed speeding and parking tickets you’ll rack up due to targeting.
A good number to think about is around 5% of your net worth. That’s about the most you’re able
to spend on a car. So if you’re a millionaire and have a car valued at $45,000, you’re pretty safe
and good to go. We still get boat loads of laughs from the guys driving $40,000 cars with a net
worth of $200K or less. By buying a depreciating asset with 20% of their net worth, if the car value
goes down by about 10% they are already -2% total net worth for the year. Considering that
normal returns are around 8% they are 25% behind already! No one likes doing this math. And.
The numbers never lie.
From a recommendation perspective, it is unlikely going to be better than Uber Black. A simple
solution to transportation that is higher quality. If you live in a major city, most places are within
10-15 minutes and going with Uber Black isn’t going to impact your monthly spending patterns
at all. Unless you’re in a place like Los Angeles, a car really isn’t necessary in most major cities.
For example, Miami is considered a city where you “need a car” but it simply isn’t true. The amount
you spend traveling is certainly higher than other areas like New York but when you add up all of
the receipts over the course of the year, it doesn’t reach the total cost of car ownership on an
annual basis: depreciation, insurance, gas, etc.
Beyond Los Angeles and the “car person”, the only other group that may need one is the outdoor
person (example: Skiing, Rock Climbing, Camping gear etc.). In this scenario, grabbing a truck or
an SUV is a more likely purchase. Oddly, we’ve noticed that people in this group are *less* likely
to go through a massive hedonism streak (bender). Probably because they spend their extra money
going outdoors more often which is healthier and pushes them into a completely different
environment.
We are only partially joking when we say this “teach your kids to ski/snowboard/golf”. Why? Well based
on that information alone you’re likely decreasing the chances that they burn all their money on
drugs, alcohol and women when you’re gone.
Millionaire Club, 30+ (things to buy): After your inevitable bender(s) you should take a quick
pause and realize you can ratchet up the discretionary spending quite a bit. No need to spend every
cent as you likely want to invest/buy new companies/assets but you can certainly increase the
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variable cost line on your annual spending. As a simple rule of thumb spend whatever you want
but keep recurring costs away if you can. The only recurring cost is the most important item you’ll
buy which is a professional private doctor for Hormone Replacement Therapy (HRT).
Key items to buy at this level: 1) invest in your health (as usual!) with a private doctor, 2) complete
upgrade of all wardrobe items including that watch if you like, 3) likely a small vacation home, 4)
tons of services and 5) upgrade the flights.
1) Hormone Replacement Therapy and More: Similar to the other section, we have buried this into the
middle of the product for a few reasons. First… less than 10% of people actually read an entire
book like this and this is only going to be useful for people who take action (only the 10% of the
people who end up reading this would be in the group anyway). Second, the topic is always
controversial despite all of the evidence being readily available (no one is willing to read an
endocrinology book). And. Third, it costs money and requires a life-long commitment combined
with personal responsibility (another thing regular people lack).
Before jumping in, from our own research, getting a private doctor and entering into the world of
hormone replacement therapy should only be considered under three circumstances: 1) you are
able to afford ~$6,000/ year on your health forever, 2) you are around your mid 30s or older and
3) you have taken responsibility for your life and have frozen your sperm in a worst case scenario
that you’re unable to have kids after undergoing treatment. If you don’t pass all three tests, we
would not recommend it. We’re sure there are exceptions to the age (for some reason you suffer
from a physical illness that lowers your metrics earlier in life), but the other two are not negotiable.
Before moving on, these are our opinions and should not be considered legal/health advice in any
regard.
The problem with offering a general solution is that “general solutions” won’t work in this camp.
You have to go and find a doctor who is well versed in anti-aging and hormone replacement in
your area. As a general rule of thumb, they are readily available in Los Angeles, San Francisco,
New York, Florida, Las Vegas and Texas (yes some are states others are cities). You should spend at
least a full year researching this topic on your own time and finding people who have had success with a particular
doctor before committing. If you want our opinion, you want to find a doctor in Los Angeles given that
this city has a high concentration of people on gear (more testing for longer periods of time).
Why is the cost higher at $500/month when other people claim it can be done for a few hundred
dollars a year? Well if you’re well off you want to maximize every single metric you can. We see a
lot of individuals talking about TRT (Testosterone Replacement Therapy), but this does not
include all of the other things you’re likely trying to maximize. Thyroid, HGH, all vitamins,
potentially HCG for maintaining fertility, bi-yearly blood work/check-ups and any other items
that may show up in your bloodwork. Can it be a lot cheaper than $500/month? Yes it can. We’re
simply using a higher number so you budget intelligently if you go down this path when you reach
your mid 30s.
How Does This Work? The process is relatively simple after you figure out which doctor you’ll
be working with. You sign a bunch of paper work saying you won’t litigate (etc. etc.), and then
you go in for blood work. After your initial screen comes back, you will go through every line item
on the page (always go for the highest level of detail with your first screening as you’re trying to
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maximize your health). This is then explained to you and you can cross check this with your own
research.
At this point you go through all the major deficiencies and see which ones can be solved with
simple changes: going outside more for vitamin D or simply changing your diet for example. The
ones that cannot? You begin taking supplements to improve all of the numbers that are low. This
could mean taking testosterone injections, starting with HGH, using HCG, taking vitamin D
supplements, taking magnesium… so on and so forth.
This is where we can’t give away some “magical formula” as you have to put in the work yourself
(figuring out what needs to be fixed).
You’ll pay your monthly/quarterly/yearly fee and then simply begin your protocol. After about 36 months you’ll take yet another blood test to go over your metrics again. At this point you should
be close to “dialed in” and will likely notice a sudden change to your physical fitness levels (mental
alertness, energy levels etc.). You receive yet another set of results to see if additional tweaks need
to be made (yes this usually takes at least two cycles to get down correctly). To conclude… You
make the final adjustments take a third test to see the results and are usually “cruising” at that
point. You then reduce the number of times you need a check up to around 2x a year and simply
maintain your normal protocol going forward.
Naysayers and Debates: We don’t even bother with the people who are against HRT. There is
no point. This paragraph is just to explain why we don’t write about it on the blog or on twitter.
The reason is because it doesn’t attract the right type of people. The people who are smart enough
to figure this out, don’t talk about it publicly. Yes there are exceptions (we have friends who talk about
this all of the time that are extremely intelligent). And. We also know a lot of people who simply take
steroids/TRT/HRT and only make $150,000/year... while simultaneously talking about gym gains
all day.
The best example you can look at is Jeff Bezos… it doesn’t take more than a spec of IQ to realize
he is on gear (you’re free to believe differently but it just doesn’t add up from a logical point of
view). Also. Getting on gear isn’t going to make someone smart as we see a lot of talentless people
look for magic potions to fix their lives (HRT is a potion to get more performance out of someone
who already has talent, it isn’t magical!)
Some Concluding Remarks: To maintain credibility here, we have absolutely no clue what
*exactly* Elon Musk, Jeff Bezos and Hollywood celebrities are taking. Why? We know that every
single one of these people are on a different regiment. This can range from TRT to HGH to basic
vitamin changes. There is just no possible way to know exactly what one single person is taking
(unless you live with them and they show you everything).
If you have read a few endocrinology books, took your health seriously and know what to look
for your opinion will more likely than not line up with ours (these individuals are on gear).
This isn’t a bad thing, it says that the industry is evolving. We’ve finally reached a point where you
typically take different things based on your ethnicity (seriously it is true). Men and women take
different products and they are even fine tuning for your heritage.
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Many of you will become financially successful (or already are) and its best to learn about this as
soon as possible. If you become rich at 30 or 40? Less relevant. Knowing that this is the truth and
those famous people are on “gear” of some sort? Priceless.
The only remarks we’ll reiterate are the same: 1) make sure you can afford this for the rest of your
life, 2) make sure you’re in your 30s at minimum and 3) freeze your sperm in case you want to
have kids in the future – extra protection for you even if you don’t end up doing HRT therapy
long-term
Hair Replacement: If you end up suffering from hair loss (hopefully you don’t!), you can always go
down the Elon Musk path of hair replacement to fix your looks. Take a look at Elon Musk before
his surgery and after his surgery. He looks 100x better with hair and it isn’t really debatable. Sure,
he’s rich enough and successful enough to do whatever he likes (go bald and stay bald) but who
in the world wants to “look their age” and “age naturally” when they are rich and can afford to
look 100x better without any impact to their finances?
Another theory we have on this topic is that good looking people have more photos taken of
them. Just go to a popular restaurant/bar/club. They take pictures of the attractive people not the
ugly ones. If you make sure you’re good looking (the best looks you can have), you’re increasing
your publicity over the long-term if you’re already a public figure.
While this has less than a 5% chance of being the reason for Musk doing this, it’s a concept worth
mulling on.
Botox/Dysport: Similar to the above, if you have skin that is beginning to wrinkle quite a bit and
show your age more than you would like, go ahead and get regular Dysport/Botox injections. You
get them around 2x per year and you can start as low as a half dosage when you’re young (prevents
decay) and increase it later as you get older. Just like anything else, starting earlier results in better
long-term results. The catch is that you need the money set aside to make this a life-long
commitment.
If you’re successful you will meet many CEOs and CFOs of small/medium/large companies along
with many high net-worth individuals. Once you know how to spot people using Botox/Dysport
you can’t “un-see” it and will realize that it is quite prevalent.
Consistent Physical Work: This will be a step function up in terms of usage for you in this net worth
range. You can now afford to consistently see a massage therapist, chiropractor, dermatologist for
skin treatment etc. There is no reason to skimp on this category. As you get older blood flow is
usually a bit worse and your muscles cramp/tighten more frequently. You will notice this double
time when you fly quite a bit (your feet/legs are clearly swollen).
Instead of limiting the treatment sessions to once in a while, you should now make them frequent
to keep your body optimized from day one. Despite being seen as a luxury item, you’ll eventually
see it as part of your weekly routine. While going every day is unlikely, you’ll probably increase
your usage to around 1x per week. For what it is worth, try to make your massage days after 1)
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your hardest workout day and 2) before your roughest work day. If Monday is your hardest work
day, try to make Sunday the massage day with Saturday being the highest stress workout day.
Another solid purchase is a high quality electric massage chair. While you can still use your basic
electric pulse massager (cheaper in the $50-100 arena), purchasing a full high quality massage chair
is also a great add on for your home/apartment. You can use the chair when you’re reading,
responding to email or even taking phone calls. Since a high quality chair will have various levels
of functionality, you can target specific areas without moving around.
As a note here, we know that younger readers are laughing. What “old person” needs a massage
chair… We’ll say the same thing, which is the following: “your body will slow down over time”. There
is just no way around it. If you go on Twitter and follow rich people, all of them talk about doing
yoga, meditation and other activities that induce muscle relaxation. We’re simply giving you a
heads up now so when you get your first muscle cramp boarding that cross Atlantic Ocean flight,
you’ll remember this small section and look into muscle relaxing investments.
2) Complete Wardrobe Upgrade: At this point, you’re going to look at your closet and start throwing
away a large amount of the lower quality items (Donate them to Goodwill or another service in
your local area). While we don’t see a real point in having high-end gym clothing and sneakers, if
you want to upgrade those, go for it. The cost is only going to be in the low 4-figure range if you
get everything.
The area where you’re going to spend more is at the higher end of the spectrum: 1) highest quality
shoes, 2) higher quality suits – only custom with better material and 3) if you’re a watch person
you can go ahead and pick up one of the flashier items – as mentioned this typically means a Rolex
since that’s an international standard for high quality.
The interesting part about this is you want to do everything at once. If you find yourself cutting
corners you either aren’t rich enough yet and should go back to the prior section. Or. You’re
hurting yourself by looking strange.
This is an important item to remember. We still get emails from people saying that their upgraded
wardrobe didn’t “work”. After prodding we find out they are buying the wrong colors, half
upgraded it (only had nice shoes and a cheap suit) or they made themselves look foolish with a
Gucci belt and $200 shoes which effectively makes the Gucci belt appear to be a fake (even if it’s
real). To cap it off, some people attempt to wear clothing that doesn’t match their personalities
which is the biggest embarrassment in the group.
The key to high-end clothing? You have to have everything match up or else it really looks like a
fake. This is also how women can quickly spot fake purses. A girl carrying a LV bag with jeans
that cost $20 is typically a giveaway. Similar to a guy wearing a “Rolex” but his hair isn’t even
combed and his shoes look 10 years old with scuff marks all over them. The only guys who pull
off the expensive watch look like this are the ultra-wealthy with a regular shirt, pair of jeans and a
watch worth $100,000+ (since the watch is so expensive it offsets the look – Richard Millie or
Patek). If you’re only “rich”, not wealthy, you’re better off matching everything so you look
congruent.
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3) Small Vacation Home: This is going to be surprising to some. Unless you’re completely cookie
cutter, you’re not going to spend all of your money on rental properties. Typically, if you live in a
high cost of living area, there are a couple of cities you enjoy visiting for a month or so out of the
year. We’ve seen a huge range, it could be another country entirely (Russia, Latin America, Canada,
Spain)… It could be the “standard” which would be a basic place in Hawaii… It could be Miami,
another common place for those on the East Coast. It could be Vegas as well, if you live in
California, this is quite common (assuming you’re single, the married ones naturally veer to
Hawaii/Mexico).
Since we assume you’re still single for this section, a general strategy is to buy a place that you
could live in if you decide to move. Also. The reason for Florida and Nevada is also quite obvious,
0% state tax! So if you decide to pull the trigger and move to your small vacation property, you
can potentially lower your tax bill and have the infrastructure set up for an official move.
For those that are extremely money hungry, a final strategy is to buy a high quality place and rent
it out. You then wait until they leave and move in when you’ve got more money in the bank. This
doesn’t seem to actually play out based on what we’ve seen. Instead when the person buys their
“future home” and rents it out… the price goes up… the rents go up… they end up buying a
different place entirely later down the line. The only time we’ve seen this strategy play out is when
the home is sold out right! So in both cases, 95% of these ideas end up never playing out and the
person either sells it or buys something entirely different.
Now you’re probably wondering why you’d ever do this. Mathematically you might be able to earn
more from a rental. Say you had $250,000 and you could either generate $15,000 a year or you
could buy a place outright. Well it comes down to how many days you’re going to end up spending
in that apartment/home. No different than the math that people run when looking to buy a cabin
for skiing. Relatively rich people attempt to calculate the days and back into their implied return.
The real value generated here is actually comfort/privacy. If you spend say 50 days out of the year
in your vacation spot… that would be an implied number of $300/day. If you only did 25 days, it
would be $600 but you could be using AirBnB to subsidize your costs.
With all of this in here, we’d say it is better to either move entirely or not bother with a half-baked
vacation home. The only exception is if you find a good deal in a place you can’t pass up. Say you
find an ideal place in Hawaii but are not ready to move there. You’re better off finding a way to
use it as a short term rental (probably make out with positive cash flow) and decrease the hassles
associated with moving in (don’t have to kick anyone out).
As a fun note, it really doesn’t matter which strategy you choose. The cost of the asset is going to
be low relative to your annual cash flows and will be a rounding error even if you make a mistake
here. We’re simply highlighting a purchase you’ll likely make and would recommend steering you
to something that is going to be a short term rental at minimum. Oh… And… we’d recommend
going with a tax free place like Florida since you’re going to leave to a tax free state in the future
anyway.
4) Tons of Services: This is going to make your life significantly better. In fact, you’ll wonder how
you lived without having everything taken care of for you. It’s beyond worth it. The problem? It’s
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a recurring cost so you better be sure when you ramp up the services spending. This isn’t referring
to the massage/skin maintenance as that is considered an investment in our opinion (long-term
health and higher earnings associated with being more attractive).
Tons of services include: cleaning, cooking, chores/delivery, email and even online dating (we
don’t do the last one but some people just pay a guy to filter out all of their matches and even
organize the first meet-up). You’d be surprised at how much time this saves. Imagine waking up
and not being forced to read your email. Instead it gets filtered through an assistant who simply
deletes all the junk mail for you and you don’t even look at your phone in the morning unless
there is a clear message to do so!
On the cleaning and cooking side, this is self-explanatory. Depending on how much you’re making
you can decide if you’ll hire a full time chef or if this means you’ll be delivering everything and
only cooking for entertainment purposes from time to time. If you end up having a family, this
generally doesn’t apply as we’ve noticed well off people seem to get enjoyment out of making their
own food as a hobby unless they have a large number of people over (throwing a party for
example).
In terms of a rule of thumb, we’d say that you should be able to upgrade to full “outsourcing”
before you leave and upgrade your apartment/home. Why? It really makes life that much better.
Sometimes this is a combination of living in a nice apartment complex (valet service etc) and in
some other cases this is maxing out all of your items for a standard home (having yard service
along with all the other services mentioned).
The way we stumbled onto this strategy was by going to a lot of third world countries when we
were in the “explore the world phase”. When you go to a large number of them you find that well off
people always have a helper who takes care of the vast majority of their tasks. In the USA this isn’t
really common and we’d recommend doing it if you can afford it at this level of income. You save
hundreds of hours of time even if you decide to have someone pick up groceries and skip the paid
chef.
In fact we’d say that a full service one bedroom apartment in a central location is better than a
large 3 bedroom apartment with a built in office since you would spend even more time taking
care of the place. Once you free up your time you’re unlikely going to go back. The freedom and
time is worth way more than you think. You’re simply used to doing chores and haven’t added up
the time cost until now!
5) Go Ahead and Upgrade: Now for people who fly a lot, they know that having a straight shot flight
is better than connecting flights that may be delayed. For example it is better to fly directly to
Texas instead of doing a stop in Atlanta on the way to Texas from the North East even if it is in
business class.
Now that we’ve killed off the “exception to the rule” person, you should feel completely comfortable
upgrading all of your flights to business class. There will be exceptions as always 1) if a flight is
outrageously expensive, 2) there are no seats or 3) time constraints. That said, you should go ahead
and start using more discretionary spending for a better flying environment. It is not unreasonable
to assume that you’ll fly around 200,000 miles in a year. Even if you’re completely out of your
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career and work online, you end up bouncing around living in various countries for fun and to
prevent boredom.
This doesn’t make a dent in your finances unless you’re going out of your way to fly business/first
class at all times. Realistically, you’ll fly quite a bit in economy class/economy plus due to last
second bookings and flight timing.
As a note, if you end up flying around 100,000 miles per year, you probably want to stick with a
single airline. This will give you some extra benefits (flying with a family member or girlfriend for
example). If you move into the 200,000 miles per year area… You can pretty much use any airline
you wish. You’ll accumulate enough status/miles/points to be regarded as a high-end client at
multiple airlines so consolidating won’t make a big difference. Of course it is always best to stick
with a single airline but at that level of travel, you’re going to be up the ranks on multiple carriers.
As a small side note, there is no point in talking about credit card rewards and ranking them. They
change every 6 months or so anyway. Just try to get ones that provide cash back and after that one
start churning out airlines for mileage. If you’re already rich (this arena) you don’t even bother as
it’s a waste of time. On that thought, you should actually have your virtual assistant do the work!
General Budget: Now that you’re rich your spending is going to vary wildly based on your
personality. If you’re not rich yet, you’re still in the prior category and saving 60%+ since that’s
how the math works. Once you’re rich we’ll outline a basic budget for $12,000 in spending per
month below.
~40% Savings ($20,000 a month): How does this add up: Housing ($5,000); Other ($1,000);
Food/Drinks ($1,500), Reinvestment ($500), Services ($1,000) and fun ($3,000) = $12,000 total…
Saving around $8,000 a month despite not needing to save anymore.
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Chapter 4 – Set It and Forget It (40s)
At this point, you’re basically set for life and don’t have much to worry about. As long as you’re
not making outlandish moves such as risking your entire net worth on your next venture, you can
sit back and see a steady increase in your net worth. Sure, when the economy is down or a particular
asset class is down you may be flat to down for a year… and you’ll recover within 12-months
anyway.
Our guess is that you’ll be making decisions on if you want a family and what to do with your
assets/net worth when you die. These decisions don’t really have a playbook as we’re unsure of
your goals. If you’re going to have a family be sure to set up trust funds and a tax advantaged
situation for all of your dependents. This is a huge topic that can take up an entire book by itself
so you’re better off going back to your tax planner and having a professional set you up properly.
The last thing you want to do is accidentally give the government 1 cent more than you should.
Keep every penny between you and the people you want to inherit your empire.
Since you’re rich at this point (from a net worth and income point of view), there are a lot of
things you can buy that won’t hurt your future: 1) super cars/boats, 2) much larger homes well in
excess of what you need, 3) exclusive property or multiple vacation homes and 4) flying private
consistently.
Before providing the snapshot we realize this is unlikely going to happen to the vast majority of
readers. Even if someone is successful… getting over $25-50M requires a lot of luck and buying
a super car worth $250K when you’ve only got $2.5-4.0M in net worth is just foolish. So we’re
keeping it short but want to highlight some of the crazy stuff you can do with your money if you
get up this high.
1) Super Car or Boat: At this level of wealth (we assume you’re worth $5-10M+ and are earning at
least high six figures per year), you’re not going to be impacted by having a super car worth
$200,000+. That said, similar to what other rich people will tell you, buying a super car ends up
getting old as you realize you’re primarily buying it for the attention and to impress other people.
In some rare instances, there are people who really enjoy super cars. Los Angeles and Miami are
known as being car cities for example. That said, the chances are high that you’ll get tired of it and
won’t end up being a car person.
So if you go down this path we’d recommend leasing first. This reduces your initial upfront cost, you
get a chance to try a couple of different super cars and you have a lot less regret when you return
it (not forced to sell it well below original purchase price).
Now onto the Boat.
For this one you can probably start with a boat that duals as a rental. Spoke about this before in
an earlier section. Take a look at the boat rentals in your area and there is usually a third party who
will help you rent it out when you’re not using it. If you actually live near the water and will be
using it frequently then start with a basic used boat. That’s an extremely broad statement for a
reason as you can easily spend a million plus on a huge boat.
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Instead cap your spending at something around 25% of annual income (if you’re buying a boat
you should be generating nearly 7-figures per year). This is a good reality check as well. If you’re
generating $400K after taxes it limits you to $100,000.
Even from the quick summary above, you’ve probably correctly figured out that our wealthier
friends are car people and not boat people. We never really got pushed into the boat life for one
reason or another but the ultra-wealthy with yachts etc. are quite common down in Miami. Our
best guess is that the people who golf, ski and drive fast cars don’t overlap as much with the people
who prefer water related activities (who knows the real answer as all rich people are eccentric to
an extent).
2) A Huge House! This is what the classic version of *rich* looks like. When people think of a rich
man/woman they envision a huge house with some special ringtone for the doorbell and a butler
similar to the old TV show “The Fresh Prince of Bel-Air” (see we do know some basic pop
culture!).
At this point in the wealth spectrum, upgrading your house is actually quite safe. Why? Well…
unlike the boat or the car, the home is likely going to go up in value over a long period of time
and in a worst case scenario is more likely to at least hold its value. Yes there are exceptions such
as Detroit where prices came down and essentially never recovered (they are rare though).
The only area where this can get dangerous is if the maintenance on the house or the cost of
renovation begins to spiral out of control. If you go from living in say a $700,000 place to a
$2,100,000 place, your expenses probably go up by more than 3x even though you’re home value
has gone up 3x. Why?
Well take a look at the list of upkeep items: 1) more cleaning due to square footage, 2) likely more
yard work due to plot of land, 3) likely step up in electrical/gas bills, 4) 3x increase or more in tax
bill since based on book value unless your first home never went up in value and 5) all of those
extra rooms need furniture bells/whistles and of course eventual replacement of all items as well.
Assuming you’ve done a good job with the first place (your original $700,000 home in this
example), we’d go ahead and take the *variable* expenses and add an additional 20% for every
100% increase in home price. This creates an additional buffer room since it is unlikely that you’ll
downgrade your furniture/amenities when moving to a larger place.
3) Exclusive Property and Vacation Homes: This is another area of ultra-wealth where you purchase a
large property near the beach (exclusivity) or in an expensive area such as Aspen. Similar to the
view on the larger home, as long as it doesn’t break the bank it shouldn’t be an issue. A good
example is beach front property as the supply is factually limited to a small amount of square
footage near the beach.
The game you’re playing here is essentially the same, while the cost is high, the value of the asset
likely remains or goes up due to exclusivity.
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Depending on what stage of life you’re in (still interested in working hard), you probably won’t
use the asset much. It is there for price appreciation and use for maybe 1 month out of the year.
For what it is worth, if you’re under 45 or so it is much more common to have a “dual living
situation” where you live in say New York for half the year and in Miami or Los Angeles for the
other half. In this case you may not even do the exclusive large vacation home and stick with two
high quality centrally located homes.
4) Flying Private Consistently: At this point, you’re simply ultra-wealthy and live in a different world.
While it may be worth it to have a small allocation for a Net Jets account (travel needs dependent),
it is unlikely that you will ever fly private consistently or own your own jet. If this is you, well we
have no idea how you found this website or product since you’re already set for life and don’t
need advice from anyone in terms of spending.
Since we have no idea how the cost analysis works for purchasing a Jet (different ball game), a
good way to ramp up your travel expense without being worth $100M+ is by doing the following:
1) get a NetJets account, 2) look at new startups like BlackBird who have created an “Uber for
planes” and 3) consider pooling your accounts with friends to make sure all of the mileage is used
up on an annual basis.
The only item in here that is likely relevant is the start-up BlackBird, who knows if the company
is around within a year of this book being out, but the concept is simple.
Since the biggest issue with flying (short flights) is time constraints, BlackBird is an app that offers
short flights for cheap. These are not luxury at all. You simply fly a small plane short distances
(primarily under an hour and a half or so of flight time) and avoid long lines. We wouldn’t be
surprised to see this become more common for something like Vegas to Los Angeles or within
the state of Texas. So it’s something to look into (one negative note, as of this writing it seems to
be more focused on California given that it is headquartered in California).
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Chapter 5 –Some Basic After Tax Income Brackets
The main brackets to be aware of are really as follows on an after Tax Basis: 1) $5,000-9,000, 2)
$9,001-$15,000, 3) $15,001-$30,000 and 4) $30,001+.
Our guess is that you’ll fall into four different lifestyle categories. These are the main four and
unless you become ultra-rich (making $100,000+ per month after taxes), you’ll more likely stay in
these ball park ranges.
At $5,000+ you’re barely saving money and should be investing every cent you can into yourself.
Since you have to generate more income. Investing a few thousand dollars into stocks/crypto/real
estate etc. doesn’t move the needle. What will move the needle for you is a step function in
monthly income.
At the second level you finally have “breathing room” and more likely than not are seeing
exponential income growth. Lots of people get stuck in this range because they work a basic Career
and get lazy. They never think about the future or diversify their income streams. This is an
absolute killer and it explains why only ~3% of the population has a million dollars or so.
The third section, when you’re clearing ~$20,000 a month is when you start to feel rich. There
isn’t much you can’t do. If you’re smart you can essentially live the lifestyle of “well off people”
but not ultra-rich. You end up being extremely happy with where you are in life. What happens
next? You focus on building out large amounts of cash flow to make sure you can live like this
forever. We don’t know how long it will take you but it’s 100% possible to get to a point where
you’re making $240,000 per year after taxes with minimal to no work.
And the fourth bracket. Realistically, we should have put something like $30,001-$50,000 a month.
At this point you really need horrible habits to lose money or not be extremely rich. There isn’t
much to do. For those that are in the know and have actually gotten rich, there is something about
the ~$500K/year mark that results in forced savings. It just isn’t really possible to blow this type
of money unless you have a drug addiction or make foolish mistakes like a lot of rappers/sports
stars (again… no hate on their income, just stating facts since many go broke).
Naturally, there is a “next level” to all this which is absolutely insane levels of income ($100,000+
per month after taxes while doing nothing) as an example. Remember all of the numbers in here
are referring to straight spending (does not assume you are saving money). So if you’re somehow
able to spend more than $100,000 a month consistently you’re living on a different planet. You’re
able to look into extreme items across the board including (Yachts, private flights etc.)
Again. As you can tell, we’re not in this ulra-rich range at this time. While we have definitely spent
a large amount of money in a single month, on a day to day living basis, we haven’t really seen a
reason to spend this type of cash consistently.
We’re sure it’s possible but it doesn’t seem to be likely without some big fixed cost expenses. You
can’t include mortgage payments within the calculation (since those rental properties are paying
off the mortgage) and the chances of being worth around $50 million without owning your home
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is probably close to zero percent. Anyway. It’s fun to put into an excel sheet… Seeing what you
can afford… You just won’t pull the trigger (our best guess).
Before moving on, if you do know ultra-wealthy people (know meaning you can call them and
talk to them once and awhile… not fake stories you hear through three handshakes), you know
that security and privacy *can become* a big concern. Even in the USA, ultra-rich individuals
do have security concerns (kidnapping of their kids etc.). This is why the “Rich Kids of Instagram”
end up being taken down swiftly (resulting in more security costs as well).
If the ultra-rich person is smart about it and doesn’t run around with multiple high-end escorts &
a loud Ferrari, then no one cares. We’re putting this paragraph in here to emphasize that you can
become *very* rich without these issues, but if you open Pandora’s box with multiple escorts on
each arm driving around in 5-6 Ferraris, you’ll eventually become a target.
As usual you want to be rich not famous and the more you push on the spending pedal the more
likely you open yourself up to “risk of fame”. If you end up getting to $50M+ and simply stay
quiet as it builds to a billion dollars or more, you’re in great shape. And. The reality is that you’d
probably be living the same life anyway.
Unfortunately, no matter what we do to try and explain the above... Some guy will always barge in
and say “oh I know this and that person that disproves this”. Which is fine. We have no interest
in spending to a point where it commands attention (from regular people) as we’ve seen nothing
good come from it. Get as rich as you like and spend as much as you like without becoming
famous. This is also why rich people all hang out together. You can spend in front of each other
without jealousy and on top of that, you don’t need each other.
As a final attempt, you will end up doing stupid stuff when you make it (burn tens of thousands
partying and doing stupid things in a single month… or six)… Just remember, the more you do
this… the more regular people you will attract. Once you’re famous and public it isn’t something
you can take back. You’ll probably love your life without the fame anyway.
Some Suggestions: As usual every person is different so we’re going to outline our own general
rank order for spending. Since the prior few pages probably put absolute disgust on the faces of
anyone who is a socialist… We can start from the bottom and work up. Luckily, growing up closer
to the bottom has its perks as your baseline standard of living needs is quite low (can slowly ratchet
up by enjoying every single new upgrade more than a person who already had the same things
since age five)
Our general value proposition is as follows: 1) health, 2) convenience/privacy, 3) comfort, 4)
flexibility and 5) space.
The above assumes that quality is created equal. And. If you look at the rank order assuming the
quality of everything is the same, we’d move in that order. This helps explain why we’d prefer a
high quality one bedroom apartment over a larger home in the suburbs if it takes 1-2 hours to get
to the airport.
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Ten Step Process to Maximizing Your Spending
STEP 1
At the bottom of the totem pole you're simply looking for ways to invest into yourself. All
you really need to focus on is: 1) healthy food/health insurance, 2) a place to sleep and 3)
every cent going into something that increases your earnings potential. If it doesn't relate to
any of those items, you can probably skip it
STEP 2
At the second step we assume you've got a normal cash flow (general comment), this
means you should then look to save time. Unless you're investing in yourself, you should
be reducing all your wasted time to practically nothing. This usually means moving to
central locations and outsourcing as many chores as possible
STEP 3
Moving onto some discretionary items, you should now live in your own place. That's
probably the biggest step function you will get in terms of your social life. Living alone
allows you to think better and it also reduces "lost time" that is spent talking to people you
live with.
STEP 4
In this arena, since you live alone in a central location you want to focus on upgrading your
contacts. This means it's time to upgrade your gym, your social circle and the places you go
out to. You should be going out on a weekly basis to nice places (not just random lower
quality bars and clubs). Upgrade wardrobe here.
STEP 5
Now that you've got a decent set up in your city, we'd then look to expand to multiple
other cities. Ramping up traveling and forcing yourself to become integrated in multiple
cities. This pays off down the line. If you've only stayed in a single city the connections you
make are too concentrated into one location. Travel goes up a lot.
STEP 6
Now that you can afford even more than this we would then ramp up every single
service/health item you can. This means we think you'll be happier with zero chores and a
slightly smaller place instead of upgrading to a massive place. Ideal situation is a high-end
condo in the center of your city with weekly massages for example. Upgrade wardrobe here.
STEP 7
At this point you now look at upgrading to an even bigger place or if you're happy with
where you are we'd go for the second city location. If you followed step five closely, you
already know which city you would prefer to call your second home. So go ahead and build
a second base in that city.
STEP 8
If you've got your dual living situation set up, you now enter into the luxury market if that
fits your personality. High quality watch/car etc. "New Rich" is when you have tons of free
time and that vacation home. As you keep going up the stack, you end up seeing various
types of materialism come back at least for a decent amount of time
STEP 9
This is the private flight/insane spending category. Boats/mega houses etc. everything is
good to go in this area. This will be driven by your personality and can't really be done as a
recommendation as your hobbies will differ from everyone else. Just make sure you can't go
broke.
STEP 10
Do whatever you want, just don't get famous. We strongly recommend against being a
known rich person and if you can get to billions while being unknown you're set.
Intelligently plan what you'll do when you die and make sure all of those
trusts/wills/contracts are set up. Making money in business makes it possible to remain
anonymous while being worth a ton!
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Sub-Section On Social Life Spending
We’ve given highlights on how this scales up but it makes sense to have a sub-section on it for
organizational purposes. There is no reason to start at the absolute bottom of the totem pole (not
able to go out) since your entire life should be focused on improving your income streams and
staying healthy. So we’ll jump into basic social life and ramp up all the way to the extreme where
variance gets higher and higher.
Thursday and Saturday: These are the two days we would recommend for your typical week (as
mentioned in Efficiency). Friday is full of too many Happy Hour people and Thursday ensures
that the people you meet are likely living in the city. Saturday is generally a solid night overall as
the people who went out on Friday for Happy Hour are less likely to go out on Saturday (still a
good chunk of them).
Since this is your first level of spending, we’d go ahead and avoid clubs for now. There will be a
large number of bars/lounges that have minimal entry fees ($5-10) or even free. It’s quite easy to
keep your costs low if you avoid bottles with your group of friends and stick with either going out
solo or with one other person.
To keep it simple we’d just drink shots, some sort of mixed drink and sparkling water. If you end
up drinking too much you can just switch to sparking water as no one is going to know it doesn’t
have alcohol in it (you’re already partying anyway and likely tipsy!). While you could do what
everyone else does (tons of beer/White Claw/wine), it’s easier to do the strategy we outlined in
this paragraph. You end up drinking less calories, feel lighter and you can drink wine if you’re at a
wine bar or if you’re going to buy a bottle for a date.
Since you’re not earning a lot of money, your value is tied to your social skills and how good you
can look. That’s really all there is. People talk about “game” and things like that but we’ll just stick
with the phrase social skills. Look as good as you possibly can and get used to talking to people
frequently. You’re going to have a lot more options later so don’t worry about it. We’ll flag that
time period later on.
As a side note, there are some people who prefer to throw parties with friends if they are living
with roommates. As it’s somewhat cheaper and makes the connections a lot easier. For what it is
worth, we’ve seen that this is actually quite annoying to keep up. Most of the guys who do this
end up getting trapped into relationships far too early (in their mid-20s) and miss out on the big
upside later on. We are not against this idea. We’re just pointing out that this typically occurs based
on our observations. If you’ve got it engrained in your brain to avoid having kids until your
early/mid-30s you’re good to go.
Basic Dating Notes: Since you’re grinding away and need the money (nothing wrong with this we’ve been there
before), just stick with the following: 1) bar/drinks for dates, 2) meeting people at house parties/friends and 3)
going to the beach/park on a nice day with a bottle of wine. You’re young so no one is going to think you’re being
cheap, it’s completely acceptable.
Ramp the Restaurants and Ideal Locations: The next step up after going to normal bars and
lounges is to ramp up your spending at specific restaurants and bars. The way this works? After
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going out for a couple years you’re going to have a set of people you hang out with that are either
1) on the same life path as you or 2) unrelated – usually girls that you consistently go out with. It’s
just how it works.
On that topic, we do get a lot of questions on how to get your first set of people to go out with.
And…. The answer is just repetition. Realistically, if you’re going to be successful you already
know a handful of people who will also be successful in the future. So that keeps it simple, you go
out with one of them more often. The second group, the social group, is just from going out a lot.
You’ll go and party and hook up with someone who then has a friend and for some reason you
two end up becoming friends. Just how it works.
As you can see from the last two paragraphs, the reason why we’re ending them with the phrase:
Just how it works, is because it takes time. The only people who can verify that this is true are the
same people who are going out frequently already. They have their spots they go to, they have a
few restaurants where they are known and they don’t need to really plan anything for a particular
weekend.
Over time you probably want to have a few nice restaurants to go to. It helps you relax a bit and
on top of that you can always take a date there. We’re not referring to places with massive lines
and reservation lists. Instead you meet someone, tell them to meet you at the sushi bar and you
eat something small and drink. Extremely common. If you’re making reservations for someone
you’ve just met, something has gone terribly wrong (we’re referring to dating here).
This period will last a decent amount of time assuming you’re in accumulation phase. You’re still
trying to stack a decent amount of money while enjoying your life a bit more. We’re guessing
you’re generating around $10,000 a month in after tax income as a baseline.
As a final note, this general range also has you going to more concerts and festivals. This is quite
common for the mid-20s age band. As you can see from the next sections, it doesn’t last long if
you end up making a lot more money in the near future.
Basic Dating Notes: You probably ratchet up your spending a decent amount: 1) sushi spot with drinks or anything
small bites with drinks, 2) you can go ahead and spend on a few trips to cheaper areas – Thailand, South America,
Eastern Europe and as of this current writing Canada and 3) you can ramp up the events based spending.
Clubs and Travel: Now you’re doing well financially. You can ramp up your bigger activities
which typically means jumping around to various clubs and bars in a single night while also
traveling a lot more. Since you’ve been going out frequently for a few years, some faces have
changed and some locations have changed. That said, you can now upgrade all the venues a bit
and feel free to spend a lot more out in clubs versus just bars. You’re probably in your late 20s at
this point.
Going forward, your life turns into a smaller and smaller triangle. This means you’re going to live
a life that most will believe is either fake or not attainable. You’ll go out to new cities and go there
more frequently. This leads to meeting other well off people (who else has money to go out in
other cities frequently on weekdays? Only other well off people). You’ll meet them when you’re
Skiing, golfing, playing tennis, at a high-end gym etc.
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It gets a bit out of hand as you end up visiting all of your friends in various cities around the USA
and eventually internationally. As a note, this is a big clue that someone is well off. If his or her
*close* friends are scattered all over the place and not in a single city. It is an incredibly obvious
tell since the person has to have the financial means to go to these places frequently and on top
of that it suggests their social life is quite good… otherwise they would be stuck within a particular
bubble.
On that note we do want to emphasize the importance of traveling. While you can certainly stay
in a single city, it is a lot more fun when you have various people to reach out to on both a domestic
and international level. Why? Well your social circle is always going to evolve. You’ll have a handful
of people (around there) that actually make it and become successful with a 10+ year friendship.
Those are locked in and unlikely change unless something drastic happens. The rest of the people
you meet will unlikely ever reach a point where they are trusted as much as those five.
So… by traveling a bit more you’re able to have more soft touch relationships. This is fantastic
for your future. The number of rich people in a particular city always has an eventual cap (sure
NYC, San Francisco and Los Angeles have a ton), our point is referencing your personal tastes. If
you enjoy doing 7-8 activities the chances that you’ll find a good contact who also does the same
stuff is actually lower. Why? You’ve been going out for years in your home city so you probably
tapped out the number. If someone with similar preferences came in your acquaintance or friend
would say “you should meet XYZ you’d get along” and that would be it. Much higher return by
ramping up the travel to branch out more and increase your probabilities.
In this income range you are doing three things: 1) your original life in the prior section, going out
to dinner/bars/lounges with a small set of people, 2) traveling a ton more and 3) organizing small
vacations/trips with new groups of people.
As a note, at this level you begin to *see* real wealth. Why? You will now be invited to a lot of
exclusive parties with other people who have tons of money. You’ll see ridiculous things.
People will hire strippers/escorts to go to the parties. Lots of gold diggers all over the place as
well. In addition, you’ll also experience real “flexing” where some guy might park his $250,000 car
in the living room as a form of show casing. DJs are hired for these parties and of course the vast
majority of the women there are under the age of 25 and tons of hard drugs are being used.
If someone is over the age of 25 they are usually the wife/partner of someone else in the room
already. If you continue to travel a lot and again (are at least a millionaire) you’ll also go to Yacht
parties and other similarly outrageous events.
The above sounds fake and out of a movie but if you’re a millionaire (around this range) you’re
aware of these events and will end up at several of them (again this assumes you are decently attractive
and have solid social skills). The people who are not aware are usually out at these strange “black and
white” ball events with other people who have weaker social skills. We’re sure we just offended a
lot of well off people with the prior sentence… But… Again… It is just an observation we’ve
made.
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As a secondary fun note, we’re convinced that “Art Imitates Life”. For those that are aware of the
saying it means that life is much crazier than the stuff you see in movies and in pictures.
Basic Dating Notes: At this point you’re going to be dating some Gold Diggers. We still get great enjoyment from
people with no gold worrying about Gold Diggers (no one looks for aluminum foil). Since it will be obvious from the
way you live, you’ll group the girls you’re dating into two categories: 1) Gold Diggers and 2) Non-Gold Diggers.
After the Gold Digger attempts to become more expensive on you, you’ll just find a different girl. People like to say
they won’t do this but just like the bender you’ll go on when you get rich, you’ll mess around with Gold Diggers,
strippers, escorts and all kinds of people with a “price tag”. Eventually, you’ll come to have no problems with Gold
Diggers at all, you just won’t make dumb decisions around them.
Entering Wealthy Status: Now you’re officially wealthy. If this is the case, you’re flying
business/first and throwing events more often. Instead of everyone going to dinner/bars/clubs,
you’re going to the golf course, skiing, live sports events or… the same old dinner/bars/clubs!
This is realistic as there is a limit to how much you can do on a weekly basis. If you spent the last
10 days golfing and skiing, you’re not going to be interested in doing it again for another 10 days
straight.
Small changes are made. Instead of going to dinner you probably get one of the private rooms.
Instead of staying at a high-end hotel you upgrade to a suite or rent a larger luxury place. Instead
of inviting a date to watch the game at the sushi place you just give her one of your tickets (season
pass) and go to the game…. doing the exact same thing (except live). Instead of a weekend ski trip
you might fly over to Iceland for a weekend of partying.
The options in this category become a bit absurd. You’re likely living in two cities (two homes)
and are officially unable to relate to the regular person unless you go out of your way to remain
integrated.
In this wealth range donations become quite common as well. You can donate to organizations
you trust (going to fund raisers that cost $1,500 per plate) and more.
The last item that becomes more commonplace if you are this rich is Art. Lots of wealthy people
become more integrated into the Art scene. Extreme living, donations and Art are quite common
for one, two and three on the list for the ultra-rich.
Notes Before the Complaints and Naysayers Get a Chance
 “It Didn’t Work” – Usually this complaint comes from people who have recently just made it.
If you just made it, it only takes about a year to ramp up your social life. Quick math. If you
area actually well off, you can easily talk to three girls per day. This is over 1,000 per year. If
you talk to 1,000 people and don’t have any interest that’s simply a personality/looks issue you
have to solve. 5% is extremely low and that would be 50 dates in a single year. Honestly, talking
to three people is not even hard so you could really try and ramp that number up to ten… At
that point you’re talking about 3,650 people every year? If your dating life isn’t jam packed with
that many people (outrageous number of people to talk to), you have to find someone else to
help
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 “Spending to Make Up for Deficiency” – The second complaint is still mind boggling. There are
TONS of rich people who are absolutely owned by their wives/girlfriends since they don’t have
good social skills. We still can’t believe how many people are in this situation. For that group,
we’d say the following “SPEND LESS”. You have to learn how to meet attractive people
without spending a ton of money. By spending tons and tons with no results you’re basically
trying to offset your weak social skills with more money. A terrible idea. Fix your looks, fix
your outfits, fix your fitness and find the right place where you get the best reaction. Social
skills need to improve if you’re actually well off and still shoot blanks
 “The Circles Become Small” – the reason why most people won’t believe anything in this social
section is that they never lived it and never achieved much. That’s the reality from a math
perspective. Making $250K+ post tax money puts you around the top 1% in earnings (implies
gross income just over top 1% - or close enough). The difference? As mentioned in the first
and second bullet most guys are simply poor socially and never figure it out. So they spend and
spend thinking it’ll fix their social problems when it won’t. This leads to smaller and smaller
groups that all hang out together and know one another. When the groups eventually collide
they all get along to some extent since they realize they can have more fun by filtering out all
the strange people from the fun ones
 “It Won’t Be Linear” – All improvement that is good is non-linear. Lots of nothing then suddenly
a big jump. So you might be doing well in terms of social skills and not so good on the money
side. You know where to focus your energy. Similarly, you might even jump spending categories
if you have an exit, say making $150K a year but sell a company for $2-4 million. This means
you have to try even harder to make up for where you lack so your new social sphere matches
your skills.
 “It Becomes Automatic” – After a while it becomes so second nature you forget about all the
people you met. It becomes a bad dream (similar to when you were broke and then made it).
At this point you end up like our blog… You get tired of answering these questions that just
feel childish. We can’t explain it until it becomes second nature. We understand that everyone
has a different learning curve but if someone really can’t fix their social skills after 2-3 years?
That’s something we don’t even want to try and fix… so we avoid answering these questions
in the first place. We can only really help people within 2 standard deviations. If someone is
really on one extreme edge making it nearly impossible to improve, we really doubt we’re the
right people to ask anyway
While the five bullets above were painful to write we really doubt this will apply to 95% of the
readers here. If you’re actually trying to improve your social life when you get rich it is practically
impossible to fail. We’ve seen several people with incredibly poor social skills do well. It just takes
a few months to a year (max)… Then you’ll get bored of it like us. Bored meaning you won’t want
to explain the same concepts over and over again since they are second nature to you.
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Conclusion
In a strange change of tune, one of the messages we’d actually leave you with when it comes to
spending is this “You will make mistakes… a lot of them”. Unless you plan on living an incredibly dull
life, you’re going to make some purchases you regret later. There is nothing wrong with this, it is
simply something you should be prepared for mentally. If you’re a successful person, you probably
set high standards for yourself and beat yourself up over bad decisions. If you didn’t? You
wouldn’t be successful in the first place. So…
Expect to make some crazy purchases and bad decisions when it comes to your social life as well.
If you find that you’re going down the wrong path, hit the escape button immediately and cut your
losses. Don’t marry the stripper. Don’t buy another super car (lease instead if you want to “give it
another try”). Don’t get addicted to hard drugs. Some of you may be laughing at those three things
but we’ve seen them happen and as you can imagine it does not end well.
The second message… You’re not going to regret spending money on the following items: 1) your
health – blood work, skin care etc., 2) your physical fitness – nice gyms, massages etc., 3) reduction
in your commute/free time, 4) experiences that are once in a lifetime in nature and 5) anything
that appreciates in value. The fifth part is really a reference to housing and the importance of
buying the first downturn you can. You only need to nail that one once and you’re good to go for
the next 20-30 years.
The last message we’d like to make is related to your own personal life. This book was about
spending and how to maximize your own personal utility. After all, you didn’t get rich to live in a
hut for the rest of your life. You could always become a monk and move to the mountains if you
wanted to go down that path.
What’s the last message? Spending any amount of money to help your friends and family will never
lead to regret. Under a couple of huge assumptions. You must assume you never see it again and
you must make sure the money goes to something of real value. Buying your sister a fancier car
isn’t really a good example. Buying your sister her first car because she needs it to get to work and
can’t afford one right now is a great example. Anything that helps a person recover from
illness/pain is also extremely rewarding. In terms of the impact you’ll make it’s no different than
the outline: 1) health, 2) decrease in stress/increase in free time and 3) experience based items.
If you go down the path of buying people fancy items consistently it either leads to 1) bitterness
if the other person is not successful in life or 2) dependence on your charity which is also bad. A
good example we would recommend spending on is additional training. If you have a friend or
family member you’ve known for years and they want to go into software coding for some reason,
feel free to pay for that education. Additional training in a skill that is of value is a good balance
between being generous and them being forced to perform and appreciate your generosity.
Oddly enough, you will also hit a “spending cap”. What this means is that you’ll have a hard time
spending more than $X/month unless you make crazy decisions. This number is quite different
for everyone but it exists. When that day comes you’ll focus your attention on trust funds, charity
and ways to leave some sort of legacy.
A parting quote for those that make it “Never Work for the Same Money Twice”
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Thank You Note and the Future
What was supposed to be a fun hobby has evolved into a writing habit. We’re generally fans of
writing as it increases creativity and forces you to communicate effectively. We had no idea we’d
get to this level of scale and have to say thank you to everyone who has picked up this book. Think
of this product as sitting down and talking about spending over a drink that costs less than $10
(dirt cheap for NYC standards!)
What are we going to do from here? Well you deserve at least a hint.
First, we’ve been pretty vocal/obvious on our current beliefs surrounding crypto currencies. While
many reading this will laugh and say there is no way we can “understand it”, we can only laugh
back as 20-30 hours a week of free time and no monetary spending limit usually leads to rapid
information consumption. So we’ll dabble on this topic more in the future. Why? Our answer has
nothing to do with inflation or libertarian beliefs. Instead it is due to the people we’ve met at
conferences around the world which shows us that a lot of the smartest people in the world are
moving into the space. Do we know what the “answer” is over the next decade? No. Do we have
near 100% conviction it will be a major game changer? Yes. It is next to impossible that all of the
smartest people in technology will be wrong. Before moving on, you don’t need to care about
crypto currencies to get rich (just a reminder!)
Second, we’re going to try and find a structure to buying and flipping internet assets. While it has
been an absolute pain finding even one internet business to flip in a year, we’ve seen some
similarities spring up. It is likely possible for anyone to do the exact same mechanism and create
a “blue print” to flipping them. It is really no different than a fixer upper home. If you know the
cap rates and the rough costs to fix the asset, you have a good feel for the return. While unlikely
as cookie cutter as a home, we think it’s possible for various types of business models.
Third, big focus no longevity. As you can see we’ve tried to stress the importance of health in this
product as it relates to spending. Health always comes first and this is due to experience. After
having a few health set-backs, it’s a big reminder that our time on this planet is short. We’ll do
additional research on anti-aging, stress and organ replacements. That last one sounds extreme but
we do want to know how it works (if something terrible happens and you need blood/a
transplant). These are serious matters and it doesn’t feel good to know that we’d be searching for
answers while simultaneously in a bad spot.
Fourth, mental health research is another big one we’re focused on. It’s so big we’re separating it
out from the prior section on health. This is something to learn about as we’ve noticed that panic
attacks and lack of emotional maturity seems to be prevalent in the United States. We’re going to
look into the topic for quite a bit of time to come up with real answers/solutions.
Fifth, stress reduction techniques. At this point we’re interested in reducing stress levels across
the board. In fact, we’ve even noticed an immediate change in skin tone/quality based on stress
alone. Stress has been linked to not just grey/white hairs but to eczema/psoriasis and several other
annoying problems. Stress is also related to inflammation which is also quite bad for you. In fact,
sugar is also linked to inflammation which explains why it is quite bad for you.
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Sixth, long term physical flexibility. Yes we are serious about this. We haven’t found many good
resources for maintaining flexibility as one gets older. Sure you can do basic yoga classes and things
like that but it really isn’t structured. The entire weightlifting industry has become oversaturated
(since that is where all the money is) and flexibility isn’t something “men” take seriously. It’s all
about seeming as tough/hard as possible but your body becomes less mobile and we want to
reduce this as much as possible.
Seventh, big focus on taxes. At this point, we have to really take this a lot more seriously. As more
of your income moves online (assuming you followed Efficiency) you get to open up a lot of
different tax avenues. Also. Dividends, capital gains and rental income have different tax rules
associated with them. We’re going to spend a good amount of time doing our own research on
this topic.
Eighth, reduce our time spent on hobbies. We’re not referring to the blog in this case (we’ve got
the right amount of effort there at 1x a week or so). Over the past couple of years we had an exit
that caused us to get lazy. Lazy in terms of making money. We’re going to try and press for the
next couple of years as our free time has turned into a bit of boredom. While we realize these are
“rich people problems” imagine being on summer vacation as a kid for a couple years. You
definitely want to do something new and that’s what we’re going to do. One of our projects failed
and we think it’s partially due to this laziness “on the beach” attitude.
Ninth, meditation training. Since we know we’ll be ramping up the stress levels (purposefully)
we’re going to ramp up meditation training as well. This will result in better control over our
thoughts and improved performance (at least this is what geniuses on Twitter tell us). All jokes
aside, it does work and we want to maximize the impact of meditation.
Tenth, finding the right places to donate money. Our close friends have complained privately
about our lack of interest in donations. When multiple people (who you’ve known for 20+ years)
say the same thing, it’s usually a problem. So we’ll figure out why they are so interested in it and
find the right way to distribute excess money every year.
To close it out, we have talked about a few topics in here that we will not expand upon in our
Q&As. Luckily, we gave out the “formula” for the grey area performance enhancers and on top
of that can’t give a formula for the physical portion (need a private professional doctor).
We hope everyone reading this become rich, a real possibility given that we cater to a small subset of the population. We’ve probably grown a bit over confident on this given the high number
of success stories we’ve seen. That said, we really believe it.
If you found this blog and actually try as hard as you can on the things we mention, it’s pretty
difficult to fail. The ones who do fail, usually work “50 hours a week” between ages 22-27 and
complain that they didn’t succeed (of course this would never work!). You have to pay the price
up front and reap the rewards 10 years down the line. As always, the guy who is rich and is only
30 years old isn’t rich because of what he did yesterday. He is rich because of what he did 10 years
ago.
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Appendix 1 - Happiness is Utilitarianism – Our Stoic Framework
In economic theory we learn that every single one of us is trying to maximize our “Utility”. Utility
is defined in various ways however, the underlying concept for utility is that we as humans do
whatever it takes to maximize our utility. This could be in the form of happiness gained from
having more money, a family, good health etc. Since we’ve focused primarily on income for the
past few posts lets look at how to maximize your lifetime utility.
Our Framework for Utilitarianism
First Pillar – Health & Energy: This is the first pillar to any type of *long-term* utility
maximization framework. This is also extremely complex because health does not simply mean
you get to walk around. If you’re 25 years old and you can barely run or bench press your own
weight, your health is actually sub-par. Health means that you’re in the top 10% for your age
bracket. If you’re forty years old and you can still crank out sprints, squat a large amount of weight
and look significantly younger than your true age… You’re winning in this category without a
doubt. Without your health you cannot help your family, your friends, your bank account or
anyone else in your life that is important to you.
Second Pillar – Time: If your health is in check, the next item you’re fighting is time. Time is
not valued equally. We’re not talking about the ”future value of a dollar” but the future value of
your time. If you’re 20 years old, we have no doubt your ability to both crank out long hours of
work and party all night is sky high. Try this at 50 and it’ll be tough! No one likes to talk about
this but life is also a game of time maximization or efficiency. “If you could spend $10M between
the ages of 20 and 40 or if you could spend $100M between the ages of 60 and 80… which one
would you choose?” We’d choose option number 1 in a heartbeat! Remember… Getting rich is
easy. Getting rich young enough to enjoy it is a different story.
Third Pillar – Freedom: Once your health is in check and you’ve recognized the importance of
succeeding quickly, you’ll find that your freedom is the third most important item to check off. If
you’re making good money and are healthy, the next “dopamine rush” will come from overall
freedom. In our case, freedom is living a private life without needing to answer to anyone. For
others, it may be the freedom to simply work anywhere in the world. Typically, “freedom” is
earned by having a large net worth.
Fourth Pillar – Your Family: Many people derive a material amount of happiness or “utility”
from having a family. Two people gave up 18 years of their lives to give all of us a chance at the
game of life. Not being able to pay it back or help them when they are close to their deathbeds is
beyond repulsive in our opinion. Finally, if they are pulling you down, yes you should walk away.
Just remember they did give you the shot in the first place so holding a grudge will not help you
long-term.
Fifth Pillar – Self to Self Comparisons: There is no point in comparing yourself to anyone else.
That person likely has a host of largely different problems than you have. We all know the multimillionaires out there that crawl up into a ball when their wives come around… or the happy go
lucky vagabond that can’t afford to pay for sushi. Comparisons to other people do not contribute
anything to your utility. If you’re making the right risk adjusted decisions on a consistent basis
there is no reason to worry about comparisons because you made the right decision at that *point*
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in time. Overall, we would take a look at the table below to get a solid understanding of how we
view the Five Pillars.
Reading the Table: The chart is simplistic however it can be understood as follows: #1 Health
and Energy: no matter what we do the available energy we have declines over time, knowing this
you’ll want to use money as a tool to offset the energy reductions. The conclusion is to accumulate
assets in your 20s and by the 30-50 time frame you’re spending more without going negative, #2
Time: No one can pay to get their time back. Each day (by definition) we’re closer to the curtain
call so your time should become more valuable over the years (even Bill Gates can’t go back in
time!), #3 Freedom: with correct decision makings, your amount of freedom should increase
every single decade with a goal of being set sometime between 30 and 50 at minimum, #4 Family:
in an ideal world this will remain as a constant positive. If you have a good relationship with your
family and decide for or against having a family, the amount of utility should always be maximized
because it is within your control and #5 Self Comparisons: Similar to freedom, we should all
learn to only compare ourselves to our past selves. Look back a year and if you have the same
beliefs, that’s not a good sign! This is a skill that will be learned over time and ideally executed
upon in the 30-40 range.
Reverse Engineer Utilitarianism
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Another concept we’ve been flirting with is reverse engineering Utilitarianism. Given the number
of punches that life that will throw your way, by simply avoiding the pitfalls you’ll reverse engineer
utilitarianism.
#1 Avoid Getting Burned Twice: This can be in the form of being burned from a business,
consumer purchases or even health. Being foolish once (touching the hot stove) is acceptable,
continuously touching it is not. As an example, the vast majority of our readers are aware of
affiliate marketing (cloaking) and the sketchy underworld of online sales. Maybe you were fooled
once by a purchase that wasn’t even pre-loaded with aggressive copy, we’ll say that’s okay…. Once.
Next time, take a step back and ask “What is the person selling and can I check the claims”. If
someone is selling testosterone boosters but readily takes anabolic steroids and injects exogenous
testosterone… Why in the world do they have to use the steroids and TRT therapy if the product
is so good? Another example would be diet pills where a proclaimed doctor is 50 pounds
overweight but shells out “weight loss pills”… if they worked why is the seller overweight? So on
and so forth. To avoid getting burned twice learn the lesson of what to look for next time instead
of getting upset about it. Most will just get angry and upset which achieves nothing. Find the
systematic approach to solve the issue instead.
#2 Make Statistically Intelligent Decisions: We know. The live it up today crowd is going to
say you might get hit by a bus tomorrow so you better burn through everything you got! This is
simply crazy talk as most people are not going to be hit by a bus and you can reverse engineer
your life expectancy as well. Instead of commuting by car (extremely dangerous proposition), try
to structure your life around walking and airlines instead. By making broad intelligent decisions
you’ll likely live until the average age (somewhere around 80) and you can go ahead and take risks
(without risk life is boring) since you’ve structured your life around statistically bad decisions that
don’t add value to your life.
#3 Jump a Decade: We’ve used this trick maybe 100 times. Every 3-5 years sit down and ask
“what can I do in this decade that I won’t be able to do later”. This question will bring up both
small and large items such as attending a rap concert or deciding to have a family. If you find that
you’ve never had a specific life experience that is eroding away (tougher to do in the future) go
ahead and pencil it in for this year. You’ll reduce the amount of regrets you’ll have on your death
bed some 400 fold! In addition, you can also do this on a 5 year basis as well (shorter mental
jumps).
#4 Look Back Three Years: Every three years take a look back and decide if you missed
anything. If you do this in your 20s you’ll get a resounding no. This becomes significantly more
complex as you get older since you put a large amount of time into increasing your net worth. A
broad stroke look at the past three years prevents an “event gap”. If we only do this once eery 510 years it will be very easy to look back and say “I wish i didn’t take life so seriously” a common
complaint amongst individuals on their deathbeds.
#5 Reverse Engineer Your Happiness: The last thing we’ve added to the list is reverse
engineering happiness. We’ve explained many times that it is 100% normal to be unhappy in your
20s. Most successful people are filled with intensity at age 20 as they have a lot to prove (see the
chart – Pillar 5) which does not lead to consistent happiness. Happiness is earned (a mental choice)
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and tracking your overall happiness with life (if it’s improving or not) is critical to reverse
engineering long-term utility. If you’ve gone from being easily angered to only “sometimes”
angered, call that a win over the course of a couple of years. Make sure this is going up every single
year.
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Appendix 2 – End of the Road
When you reach your financial security levels, most people ask “what next?”
Instead of answering the question, which is impossible for each person, we’ll provide a sneak peek
at how your actions will *likely* change. As noted this is from the perspective of a business owner
and no longer from someone interested (at all) in Wall Street. In addition, we’re assuming you’re
a single male. Finally, this post can also be interpreted as “how to spot someone who has made
it”.
1) You Will No Longer Have an Interest in “Opinions”: A common criticism here is we delete
comments from people we don’t like and mark them as spam so they never return. Why? Simple.
We don’t care about the opinions of people we don’t know. When you’re set for life you think
differently. This is not a forum for “discussions” (see waste of time) and should never be viewed
as one.
Instead of doing what most regular people do, we do the opposite… The typical person will ask
10+ people their “opinion” on a topic to make sure they make the “right move”. When you’ve
already made it in life you’re not wasting your time discussing topics. You’re spending your time
getting things done. This is simply because a successful person *knows how to find the right
answer*.
Most people don’t deserve the right to an opinion in the first place. Why? They have not succeeded
in the topic they wish to speak about. Instead of polling tens, hundreds, or thousands of people
to get an answer that feels right, you’ll have a clear and concise step-by-step process to finding the
right person to answer the question. Instead of asking strangers or acquaintances, you’ll go through
your personal process and find the right person. Once that person is found, you pay the price to
obtain the answer from them and execute as they say.
2) Disconnection from People: In our prior post, explaining how money will change your life,
several unsuccessful people attempted to ignore the word *temporary* when we walked through
the *temporary* negative effects of money. This is because your average person is looking for an
excuse to avoid getting the things they want the most (fear of failure). This disconnection will
likely ebb and flow depending on your own personal state. But. For the most part, it will be
*temporary* in nature as you learn to hide your wealth from society (assuming that is the path you
take).
It is certainly not normal to wake up on a Monday or a Saturday and not know the difference. For
most, the days are clearly different as they have people to report to and deadlines to meet.
Interestingly, when financially set, you’re better off creating a reason to get on a somewhat normal
schedule on weekdays to create your own grounding mechanism (avoid downward drug and
alcohol spiral). This will help bridge the disconnection gap a bit. The gap will always be there. But.
You’ll find ways to ground yourself for a more “relatable” life style.
Hint: there is a reason many rich people turn to charity work, forced human connection.
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3) Nothing to Talk About: Unless you’re out with friends to meet other new people, you’re not
going to have much to say in one on one conversations. You’ll come off as eccentric already. Most
people have many issues they want to vent about while your entire goal is finding new challenges
or sources of entertainment (dopamine rush without the health impacts).
You’re certainly not going to blow the lid on exactly what you’re doing so you’ll find yourself
avoiding the topic everyone talks about: Work/Money. Ironically, once you have it, you don’t talk
much about it during your *personal life* (again assumes you’ll be a stealth wealth person).
Since you have less to talk about, your social priorities will shift quite a bit. The only way for you
to be enticed to go out and have fun is if there is someone you specifically wish to meet. Otherwise,
you’ll likely go out solo and have a carefree night without being interviewed for the 100th time
about “What is it that you do again… exactly?”.
4) No Stress: Assuming you’ve learned the art of stoicism, you’re not going to have any stress in
your life at all. Your only interest will be in maintaining your current health, which is worth more
than every single cent in your bank account. If we think about stress, it usually involves negative
things that could occur to you if you fail at doing something. Therefore, if you can fail at anything
and still be fine… it is almost impossible to become stressed. Your only stress will be self inflicted
through physical exhaustion (fitness) or product creation (mental stress).
The real takeaway is that no one can apply stress to you anymore because they have no control
over your life. Similar to creating forced human connections by picking up a routine that is done
during the weekdays, you’ll create self inflected stress. Most will turn to the money game, trying
to increase the numbers on a screen since it is the hardest game to play. There is no fun in life
without a challenge.
5) Irrational Buying Behavior: You won’t think about *planning* for purchases anymore, you’ll
simply look at items you want… buy them… or go through long stretches of buying nothing. If
you’re earning more than you can spend the behaviors you exhibit won’t make much sense.
Sometimes you’ll find yourself buying many items at once for prices that appear to be inflated (you
won’t care) and other times you’ll delay purchases for long periods of time because you don’t feel
like spending the time to obtain them.
The key here is that planning is no longer in your vocabulary when it comes to general
goods/products. You’ll learn that possessions don’t matter much to you and all of your planning
will surround memorable life events (trips) that take up material blocks of time.
6) Skyrocketing Time Value: The value of your time will increase at an exponential rate, you’ll
become more protective of your free time on a weekly basis. Tolerance levels also decline at the
same rate. This means you’re going to quickly change priorities and where you spend your time
will rapidly evolve on a monthly basis *at minimum* as you review each week and the time you
used wisely or burned each day.
An interesting note is your hobbies will evolve as well, for better or worse this blog will become a
more sporadic hobby in the future. We haven’t seen much need to write anymore. We feel the
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content on the blog is already enough for anyone with a high IQ and competitive drive to succeed
without silly motivation or discussion.
On a more positive note, we’ve officially started creating a basic product we wish we had several
years ago. When our internal metrics are hit we’ll go ahead and press publish with limited
“marketing” since books are not good products for money making purposes (Why? it is nonrecurring revenue).
7) Rapid Learning of Complex Topics: Since the two types of growth are essentially financial
and mental, you’ll find time to dive into complex topics. Each month (or year) you’ll find a new
“difficult” topic that interests you and become a quasi expert in the field. We use the word quasi
as you’ll know enough about the field to have interesting questions, but you won’t have the tools
necessary to solve those questions without giving up another major slug of your time.
Maybe you’ll be different but every 3-6 months you’ll find the *truth* about a new topic which
only makes you much more dangerous as people will be unable to lie to you easily. You’ll find
yourself saying the tried and true “Wow, I don’t know anything about XXX can you tell me about
it?” only to see if the person is a liar.
8) Mainstream Understanding: Instead of being part of the mainstream, you’ll understand the
psychology of the mainstream. This is vastly different from being a participant as you’re simply
selling your items based on mainstream philosophies while you avoid partaking in any of them.
To put it more simply, the things you find fun… people will loathe and the things you loathe…
you’ll sell, because its what the mainstream wants.
There is nothing wrong with selling mainstream products as that is where the market is. The joke
is that your own preferences never match up to the needs of your average customer. If your
product works and you use it yourself… the way you sell it would unlikely ever work on yourself.
9) Stable Dopamine Levels: The largest rush you’ll ever get is when you’re free. There is no
doubt about it and once you’ve gone through the temporary drug/alcohol spiral to try and chase
that next high, you’ll settle into a steady emotional state. People can yell at you, they can suck up
to you, they can even attempt to get physical with you… Your emotional state won’t change much.
Unless your life is actually at risk you’re unlikely going to get a material adrenaline rush.
This does not mean you have no emotions, it simply means you will always be stable. The highs
and lows are smaller and day to day changes are quite irrelevant. Try to envision a buddhist monk
and you’ll get an idea, the only difference is a slight smile to your face as you won’t require the
intense mental concentration.
10) Distain for Authority: So long as you’re not breaking the actual law (sent to jail) you’re not
going to have a shred of tolerance for anyone who attempts to act as an authority figure over you.
In short? You’re no longer employable.
An accelerated increase in your pushback to anyone telling you what to do will be seen in short
order. We can’t speak for the rich men with wives who boss them around as we’ll never understand
those folks, but the rest usually exhibit personality traits of a recluse. Historically, it was bad to be
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ostracized from a tribe as it was part of basic survival. In this case, the isolation will be self inflicted
as answering to someone will not be on the priority list.
11) Inability to Be Bored, Only Frustrated: Assuming you have a type B personality, you won’t
find yourself being bored. You’ll go through spurts of being social and spurts of learning new
topics as stated above. There are too many topics to learn about and too many places to see to
possibly become bored for long stretches of time. In fact, you won’t be bored for short stretches
of time
The one downside, is delays in time (airplane delays, traffic etc.) will drive you nuts. Burning of
your time is one of the rare items (next to health/your family) that will have any ability to impact
your emotions negatively. This shows up in two ways: 1) if it is a travel delay you’ll scramble to
find productive things to do… likely fail at doing something remotely and 2) if someone is wasting
your time, you’ll pay the bill and leave or simply leave the conversation abruptly if there is no
reason to wait.
12) No Impact from Rejections: This is a broad topic but can involve trying to sell a product to
dating. When you know that you’re already set, it becomes impossible for anyone to rattle you
with a “no”. If a person doesn’t want to buy your product you simply move to the next. Similarly,
if you’re chatting to a girl on a date and she is negative towards you it won’t even be an after
thought. Previously, most people will feel some emotion when hearing a “no” in either work or
play. But. Those days are long gone and you can even take an emphatic no publicly. The event will
be forgotten within 24 hours.
You’ll only remember positive things from your past as the negative items won’t seem relevant
anymore. Again. Forgotten instantly.
13) Decrease in Mental Circles: When you’re doing everything to climb up, your brain is “on”
constantly. You’re trapped in your head for the most part trying to figure out the next move. When
you’re done, it is *extremely* easy to turn this function on and off. You could have emails, phone
calls, text messages and a siren going off in the background but you’ll be able to tune out all of it
at a moments notice.
This is critical as being trapped in your mind actually reduces work performance. Being able to
shut down all thoughts as if you are at rest will allow you to learn and create at faster rates than
the past.
14) Annoyance With Travel: A small topic but a dead giveaway someone is very well off
financially. They absolutely hate flights that are not direct. They absolutely hate being in the
airport. Finally? They also absolutely loathe specific cities and will do their best to avoid them at
all cost.
“To travel to love to laugh” is something younger people want to do. “To see the world”. You’ll
be tired of moving around a lot and will have a few set places you will call home.
15) Everyone Knows Each Other: The triangle gets smaller and smaller on the way up. The
reality is that anyone who works in the same industry as us (no, not Wall Street anymore) has
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probably already crossed paths several times. In fact, we’d wager that if you’re in the top 1%
(keeping it simple) in your industry… You’ll know every single person who is at or above your
level by first name and last name basis within 6 months. Simply no chance it won’t be the case.
Funny enough, when you go to events/parties… Everyone will know the same people as well.
This is why it does not make sense to put your face out there unless you are willing to pay the toll
of being famous.
Summary Notes
Below is a quick summary of what to expect and we’ll also throw in some fun nuances and see if
anyone recognizes similar traits in people they know (that are financially set).
– No interest in opinions, therefore will come off as a “know it all” and will generally dislike people
unless prefaced with a reason to be speaking to them.
– Generally disconnected from society creating a largely eccentric personality by default
– Does not want to reveal much about his/her life with new people and therefore avoids all topics
that most people chat about (work/stressful situations)
– Appears to be largely carefree
– Irrational behavior when it comes to spending habits
– Difficult to get a hold of unless “sold” on the event
– Interested in many new topics and continues to learn a new obscure item each year
– Understands human psychology well, yet all decisions on personal basis appear to be done with
cut-throat logic
– Un-rattled emotionally, yet easily annoyed when treated like a “regular person” by a regular
person.
– Zero tolerance level for wasting of time or being told what to do (unless specifically asking an
expert and likely paying for said information)
– The word bored is killed from the vocabulary list
– Cannot seem to understand negative feelings associated with rejection, because rejections have
no impact on their lives… Clarity of thought
– Speed of travel is more important than comfort of travel (will travel “in style” if it does not
impact flight duration)
– Seems to have the same biz contacts that remain unchanged for many years
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Appendix 3 – The Five Rigged Games in Life
There are several things you cannot control in life and most of them occur before you’re even
born: 1) who your parents are, 2) your nationality, 3) your genetics and 4) the education you start
with. Naturally, all four of these things have a large starting impact on your life. Being born with
a billionaire parent vs. under the poverty line, dramatically changes your life. There are always ways
to get out of these situations but there is no denying the truth. Being born with the “right” items
out of the gate makes life significantly easier. There is good news however. Life is a rigged game
so if you play the cards correctly and “hack the system” you’ll get out quite easily.
Since information is a commodity anyone can get rich even if they have bad results from the big
“four”. You can still get access to the internet, read for free and get rich without stepping into a
classroom. In fact, we have a clear outline for $1 million dollars in 10 years and this is written in
less than 10 pages. In the past, information was not equal and it was possible to lie about the truth
(the truth about how making money is done) and that is largely left to the foolish. In 2018, anyone
who falls for get rich quick schemes is well below the bottom quartile of the intelligence spectrum.
Even if someone falls into the bottom quartile, the logic and reasoning is publicly available to be
seen and proven over and over again. Maybe the hot stove is touched once… But it is unlikely to
continue unless there really is a sucker born every second (based on our experience, this is still
true. A sucker is born every second, likely faster!). Jokes aside, the same sucker can learn from his
mistakes if he really takes the time to read.
Money is the First Rigged Game
The first rigged game is certainly money and there is one big trap here. The trap? The personality
destruction that comes with it. You’ll find that “most” rich people are boring as rocks. They are
extremely conservative and simply worked hard all day long slaving away to make money. They
are so conservative they don’t even think the 4% rule works and likely live at 35% of annual passive
income “just in case”. These are the same people that exhibit large amounts of passive aggressive
behavior, live with quiet desperation and just don’t see money as a tool (instead they view it as
their actual worth).
If you avoid this trap, you can win the “money game” by simply feeding these individuals what
they want to hear “that they are right”. If you have no talents at all, simply put yourself in a position
to tell rich people they are smart. This will make you rich. If you do have talents, you can simply
sell products that target insecurity. This is exactly why Ferrari’s and name brands exist. Since
money is the *identity* of your typical rich person (he has little beyond this) selling to that identity
will make you even richer than the most basic strategy of “telling them what they want to hear”.
For those that are uninitiated: the typical answer for getting rich is to give people something they
need. We just take it further. We already know the highest profitability lies with the rich and we
also know they are insecure. So all you need to do is find a product that makes their life easier and
make it seem prestigious. An obvious example would be Fiji Water. It is simply expensive water
but is branded as prestigious. This is why you see them in all those high end hotels. Absolute nonsense, but a great business.
The difference between a want and a need is that the “need” part cannot be ignored. Frugal people
have low “need” levels because they are laser focused on cutting costs. A rich person is the exact
reverse. He doesn’t have to cut costs. This leaves you with only one option, which is targeting his
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or her *need* for approval. Rich people are just regular people on steroids. They believe they are
better than everyone else (they believe this deeply) and simply hide the fact. There is no denying
the truth though. They have an absolute *need* to be seen as better than other people. Sometimes
it is materialism but for the most part it is attention.
Now that you know how the money game works we have given out the two most obvious ways
to get rich: 1) You feed the need for attention or 2) you sell them a product that gives them more
attention. That is really all there is to it. The second option takes a *LOT* more work and offers
a *LOT* more financial gain. The first option is for people who really have minimal skills and just
want to benefit off the hierarchy of life. Afterall, if the CEO of a multi-billion dollar company
loves you, it is unlikely you’ll be fired within his firm even if you’re simply working in Human
Resources handing out the paychecks.
Happiness is the Second Rigged Game
The second rigged game is being happy in general. From the first section you can see that there is
a clear way to get rich without having any talents. Once you have this money, it does not guarantee
you will be happy. Being happy is more inclusive: personal relationships, self-esteem etc.
Fortunately, just like money there is a basic formula to being happy which is as follows: Don’t
bother comparing yourself to anyone else and put all your effort into each day. That is really all
there is.
You’d think the formula would be more complex but it isn’t. The problem is that most people
can’t do either one. Comparing yourself to others is encouraged by practically everyone. You’ll get
passive aggressive comments suggesting someone who is your age or younger is already more
successful. You’ll get passive aggressive comments about being less important or “inferior” to
older people as well. It is interesting because people who exhibit this behavior are not happy
otherwise they wouldn’t waste their time with the comments in the first place! If someone is both
happy and rich they don’t even bother, they are more interested in having a good day.
The second one is more psychological. Once you’re set financially, you may go through the classic
drug and alcohol addiction cycle as becoming financially independent is the hardest hurdle to jump
through in the game of life. After this you’ll find a balance in the stress spectrum. At the lowest
end, if you do nothing, you’ll get bored. Flat out bored. On the other end, if you try to do too
much, you’ll be stressed out again and defeat the purpose of beating the “money game” in the first
place. We’ll leave it up to the reader on how to adjust when they get there, but we’ve found that
working until “tired” and calling it a day is just enough. No more long nights, no more stress. The
only time the far end of the stress spectrum is acceptable is when you know it is temporary in
nature. Then you balance this out with an equal amount of time of relaxation. Remember, just
because those digits go up doesn’t really mean much. Sure you may upgrade from a three bedroom
to a four bedroom… but it’s definitely not going to compare to the original dopamine rush of
being “done”.
Relationships are the Third Rigged Game
Eventually, you learn human psychology. If the general framework is learned, you’ll never have a
problem with relationships. Well… Never is a strong word, but you can reduce the probability by
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a large amount (probably 90%). Relationships are no longer a topic of this blog, it hasn’t been for
a couple of years since it should be figured out by late 20s (at minimum). Continuing to talk about
“strategies” to meet people becomes ridiculous since you’ll end up attracting the people who like
your personality if you move up the value chain enough. We haven’t met a single rich and lonely
person who didn’t have some sort of personality disorder. Learning how to strategize is essentially
a Bandaid on a gun shot wound. It will bleed out eventually so don’t bother.
How to win this rigged game? Quite simple. Never enter into a single relationship that you don’t
think will last a lifetime. That is right. As soon as you see a single character flaw you have to leave.
You’re essentially front-running the inevitable (which would be a parting of ways). It may take one
day to figure this out or it may take three years. It does not matter. Once you realize the
relationship isn’t going to work you should leave. We’re using the word relationship broadly
because you can apply it to anything: people you hire, people you date, people you are friends with
etc. This makes your real relationships extremely clear cut and dry when compared to your
“acquaintances”.
How to manage acquaintances? Yet again change the expectations here. If you have an
acquaintance for swimming, don’t expect them to be interested in your businesses or other hobbies
if they are completely unrelated to his field of work. Generally, an acquaintance is someone who
you have a single item in common with. There is no reason to expect more out of someone who
only have one overlapping interest. This also allows acquaintances to come and go throughout
your life without doing any sort of damage to your personal life. Yes it is terrible when your golf
buddy leaves and you’re forced to find someone else but it’s not the end of the world. Sure beats
hiring the same guy to your company for a role he wouldn’t succeed in and leaving on a negative
note.
The last item: believe in incentives. No matter what, people are animals. If they are incentivized
to do something and it increases over time… Don’t be surprised when it happens. This means
you should not be surprised to see your closest relationships (not acquaintances) turn sour if they
are put into a situation where they are incentivized to act poorly. People are capable of
accomplishing practically anything. That said, it would be wise to incentivize them to align with
your interests. Before asking for something, make sure everything is aligned otherwise you’ll be
sorely disappointed long-term. This is naturally more of an art than science since everyone does
favors here and there. The “tit-for-tat” is mentally noted no matter how close the person is.
Momentum is the Fourth Rigged Game
Physics applies to everything: Objects in motion stay in motion. Once you’ve established yourself,
the key is simply moving in the “right direction”. We constantly laugh when people believe they
will “officially retire”. Anyone who makes it to a few million dollars early in life, is ideally smart
enough to realize he will get bored doing nothing. The key is simply maintaining “momentum”.
This is a massively rigged game. If you have $5 million dollars, with just 4% return you’re looking
at $200,000. This means your “money momentum” only requires you to spend under $200,000.
Many people assume this means you should spend $200,000… That couldn’t be more wrong.
What this means is that your CASH FLOW is what determines what you spend in a year. We’ve
said this many times but it continues to get mis-interpreted. Cash flow is more important than net
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worth because it determines your long-term net worth. Your net worth is going to go up and down
a ton every single day. Anyone who is actually rich knows this and does not worry about the
fluctuating digits in the air. If you have $5M and the portfolio tanks 10%… There is practically no
way to offset this since that is a $500,000 decline in a single day. Instead you should look at your
quarterly cash flows and decide if it was net positive or net negative. That is all that matters. If
your cash flow coming in is always well above your cash spend you’re not going to go broke. Once
this capital machine is up and running you’ll realize why rich people don’t “know” what they are
worth. But they certainly know exactly how much cash flow came in last month or last quarter. If
the passive income drops to say $100,000 for a year… It still isn’t a big deal. You simply hold onto
those investments, spend under the total annual income for the year. No change. (Total annual
income would be $100K + cash flow from your business). It bears repeating. Once the nest egg
is made, the momentum game is yours to screw up! Practically impossible for any intelligent
individual.
Importance is the Fifth Rigged Game
The final rigged game is this desire to be seen as important. Once we realize we’re just a spec on
the earth and no one cares if we stay or leave, the ego takes a big step back. Attention is natural as
humans do want interactions. That said, keep this level as low as possible. Much better to let
people believe they are smarter than you and better than you unless there is a clear reason to show
your cards. We’ve seen nothing but negative ramifications from being an attention monkey.
Attention is certainly a way to make money… that said you don’t need the money anyway… so
why bother? Just an ego stroke. Once basic way to avoid this pitfall is by avoiding brand names
for as long as humanly possible. Since it is all but guaranteed you purchase a few fancy items in
the future, limiting these items is key. There is a line between “doing this for me” and “doing this
to impress others”. The second item in quotes always ends in tears.
Conclusion: These are the five rigged games. We’ve been blogging for about 6 years and yet we
still get mis-interpretations of all of them. This is likely because there is too much marketing out
there. While this is a publicly available article… We’re still going to invest heavily in brands
(targeting insecurity), fast food (terrible for health) and insurances (related to fear, similar to those
stock market going to zero articles). While we don’t believe in them ourselves, it doesn’t mean
that they will fail. In fact, it means they will succeed since 99% won’t get through the first step!
This is all good news for anyone reading this, they know exactly how to play the game… They
know that people won’t change and therefore… they know how to take advantage of this rigged
game.
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Appendix 4 – Random Bullets Related to Spending/Lifestyle
Below is list of things we’ve noticed in no order. We figured we missed some key items that may
have gotten lost and this should fill in any small holes.
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Homes are generally the best balance between materialism and positive reactions. Since a high
quality home is unlikely going to decline severely in value you can “flex” a bit without having
any worries about declines in value. Also. We’ve noticed it’s by far the best display of
status/wealth. The one downside is that someone has to see it naturally. You’re going to make
a fool of yourself if you try to show people photos as a crutch for social skills. Much better to
take someone there and not mention it and you’ll see how quickly they change their body
language
You are on the right track in terms of style when you get positive complements from women.
This is step one and actually scales up. The first one is just basic eye contact and the last one
is when the girl quite literally looks at you head to toe. They do the same thing that guys do to
attractive women. If you’ve never had this done in a positive way you’re still not at peak “style”
for your looks. As a note, clear exceptions are people who look absolutely crazy (dressed like
a whacko at a sports event for example) this is not the look you’re striving for
Another fun one is the suit example. Some guys cannot pull this look off, we’re not sure why.
That said a ton of you will be able to pull it off. So in rank order of reactions: 1) well-fitted
suit, 2) well-fitted suit with tie and 3) well fitted suit with pocket square. If you want to push
to the very end, well fitted suit with pocket square and high-end watch is the end of the game.
You can do the square + tie but it doesn’t change the reaction that much, essentially the same
as just a square and watch
Cufflinks do get attention. The problem? They need to either be 1) entertaining or 2) extremely
high quality that they are noticeable. We used to believe that they didn’t get noticed at all. That
assumption turned out to be totally wrong. “Entertaining” is going to depend on the event
you’re at and isn’t something we can really teach. Just think about the people who will be there
and the right type of cufflink that will resonate with them, an obvious example would be a
golden tennis racket cufflink if you’re going to an event where a ton of people play tennis
Tie pins seem to be useless. They simply fall or are not really seen as interesting. Not sure why.
Once in a great while someone will notice it. But. The cost of having a bunch of them is
probably not worth it
Despite all the items above focused on suits and fit, the colors you choose will outweigh the
brands you have as an initial impression. It just looks horrible if you try to use high-end brands
but the colors are clashing and you look like you’re “trying hard”. Don’t do this
Cars are a solid status symbol but we haven’t seen enough to justify upgrading from Uber
Black. Once you’ve moved from Uber to Uber Black, anyone you’re riding with will appreciate
the higher quality car. As noted, we don’t have a ton of experience and really note that there
is an upgrade when you use Uber Black instead of regular Uber X rides
Spas are one of the best date ideas no one does. This is probably because most guys aren’t
able to figure out the dating game (rather sad). Most underutilized date in human history
None of the fashion advice above works if you’re out of shape. Buying custom suits when off
the rack items fit you perfectly is a waste of money. Why? Well if your body fits to off the rack
clothing it means you’re not really in shape at all. Clothing is made to fit average people and
you shouldn’t be average relative to your height
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Any high quality restaurant with a bar area is probably the best place to spend your time. You
can take dates there without having any sort of awkward pauses as the environment is noisy
and it’s a lot easier to make sure you get a seat
Having the staff know who you are adds something like 100x to your ability to gain interest
from anyone new you bring. This is a clear signal since you’re taking someone to a high quality
place yet they now know it’s a normal occurrence for you
If you’re buying something that just doesn’t mesh with your personality… Don’t buy it. To
take it to an extreme, if you’re more introverted you probably don’t want to wear loud clothing
such as hot pink or neon even if those colors somehow look good on you. It kills your image
and sets alarms off
Assume you will be damaging the clothing you’re going out in. This is a good way to gut check
yourself. If you’re buying something and would be furious if alcohol spills on it or it gets ruined
within a few wears… It’s out of your price band
A great “status symbol” is free time. So if you are smart, you’ll find ways to schedule
dates/meetings when most people can’t even go out. This means you’ll be going out on
weekdays a lot more than normal
As soon as you can afford champagne for drinks you’re set. You can go down the rabbit hole
of extreme levels of high-end alcohol (wines, hard liquor etc.) but this is a never ending pit.
Just stick with high quality items that people are aware of and avoid this whole battle entirely
Skip the nuts. Seriously. When you travel a lot in business class and get free nuts at nicer
restaurants just tell them you’re not interested. These things never make you feel full and you’ll
actually gain weight by eating them every day. It takes about 6 months but you’ll step on a
scale and suddenly be heavier! Unbelievable. Nuts are terrible for maintaining your weight…
Best to avoid the fiasco entirely
Sparkling water will taste better over time. Drink them more on flights and you’ll convert
If you are not meeting people when you’re sober, it means your social skills are weak and you
shouldn’t be focused on spending (items in this book). If you’re already meeting people
randomly during the day, your social skills are likely solid and you’ll end up benefitting a ton
from the higher spending. We’ve found that this is a good test for social skills. Meeting people
while completely sober during the day
If your spending is going up but you’re not getting the results you want. You *probably* need
to spend less and figure out what is going wrong with your social interactions
Over time you will get bored (mentioned earlier) and will be able to predict a particular night
with extreme accuracy. People read this and think it’s sad but it isn’t. Boring and predictable
can also be relaxing
Don’t bother with “tit for tat”. If you spend money, assume it generates no value in the future.
This is the safest assumption. Also this forces you to really think about how much you’re
allowing yourself to spend in a month. If you don’t care… Then you’re certainly not over
spending
If you go to a third world country you are showing status without knowing it. Women will
notice mixed drinks vs. beer. They will notice the quality difference in the alcohol you buy.
They will even notice your shoes are clean and high-end. Many think the women are just
nicer… No… They just know you’re richer and you’re flashing it without knowing
Be prepared for significant changes in reactions when you get rich (assumes you have good
social skills). Many people will come out of the woodwork and suddenly people are “nicer”
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