My wife and I love to fish. Freshwater, salt water, trout streams, farm ponds, every kind of fishing we’ve tried has turned out to be a lot of fun. I also fish with some of my buddies both in my boat and in theirs. One of my fishing friends has had all kinds of boat problems lately that culminated in him needing to have his outboard motor rebuilt. Boats, to put it lightly, are high maintenance items.
That probably sounds like a minor expense to you if you aren’t familiar with fishing boat economics. While you could buy a $1,000 aluminum john boat and rig it out for another $500 and have a perfectly functional fishing boat, that’s not what most bass fishermen do. They buy a boat already rigged out for bass fishing. The “essential” equipment for that is a fairly large 16 to 21 foot boat with a large outboard engine, a couple of depth finders with color view screens, an electric foot controlled trolling motor for using while you move around silently casting for fish, a live well to keep the fish you catch(essentially an aquarium built into the boat), storage compartments under the floor and seats and a trailer to transport the boat to the lake. And as crazy as it sounds these boats range in cost from about $20,000 on the low end to almost $100,000 for a top end rigged out bass boat. That’s right, you can spend more for an open top fishing boat that only holds two people than you’d spend on a Porsche Cayenne turbo SUV!
I’m financially independent and retired and my boat is on the cheap end of the spectrum. I own a 16 foot aluminum bass boat with a 70 horsepower outboard motor and it cost me $20,000 when I bought it five years ago. I could afford a much more expensive boat and a Porsche SUV to haul it too, but no way I’m spending that much on a boat or a car when I can spend a lot less and still have nearly the same experience. My friend has fancier tastes and his boat is on the upper end of the scale, around $60,000 I’d estimate.
That is a lot of background information in a story that isn’t really about fishing, but I’m known to ramble so forgive me, please. Plus, if you aren’t a boat owner then you probably did not realize that most of those fishing boats you pass on the highway on their little trailers cost twice or maybe three times as much as the car you are driving. The point is, my buddy’s outboard motor needs $7,000 worth of repairs which isn’t out of line for a major rebuild of an expensive fishing boat motor.
Now in a country where 40% of the population can’t handle a $400 expense, my friend fits right in, he’s distraught that the boat repair shop won’t touch his motor until he prepays the $7,000. And from the way he said it I believe it is because he doesn’t have that much “float” in his finances. He is waiting on an insurance check before he can get the repairs done, meanwhile the awesome spring fishing is going by without him.
That brings to mind a lot of thoughts. First, why would you buy such an expensive toy if you can’t afford to maintain it? Second, I wonder how much that fish I have in the freezer costs me per pound, yikes! And third, how different is my life from his because I don’t own anything that I can’t afford to repair or replace with cash on hand.
I was discussing this with my wife at the kitchen table yesterday. I pointed out how it seemed odd that my buddy couldn’t get his motor fixed due to the cost. She pointed out that $7,000 was a lot of money and few people kept that much extra in savings. And that got us to thinking about how lucky we were. This month alone we will have spent $6,000 on a replacement HVAC unit for our home, $12,000 for shingles and skylights replacement on the roof and $39,000 in cash for her first new car in 15 years. And none of that caused us to sell any investments. And rather than seeing our financial position get worse from all that spending, our net worth actually went up due to the growth of our portfolio in the last few weeks.
When her new Baby Bronco showed up she put her 2006 Nissan Exterra out on the driveway with a for sale sign and listed it on Facebook. The first caller really wanted it for the $5,100 price but after a few hours called back and dejectedly said she just could not come up with that much cash. The second caller got the car. Again, needing a car and not having the money, I’ve never been in that situation in my life. Yet I know it is normal for a majority of people in this country. And it might not just be a luxury item like a boat that they can’t afford to fix, it might be something critical like needed surgery or a car about to get repossessed.
After further reflection, it occurred to me that in 42 years of marriage I can’t remember a time when money was so tight we couldn’t have replaced anything we owned with cash on hand. And we started out with zero assets, but we were lucky that my wife’s school loans were only a few thousand bucks and I did not have any school debt. Even when we bought our first and only house, we had enough in savings to pay it off after maybe five years. I can’t imagine what it would be like to not have enough money to handle life’s inconveniences because I’ve never been in that situation. We’ve never had a money fight or deferred any purchase because we didn’t have the money. On the other hand we have deferred almost every sizable purchase we have ever made, because we do not buy things on impulse. My wife spent three years trying to decide to buy a replacement car for her 2006 vehicle. I never had a nice new fishing boat until I was a multimillionaire and still pull it with a used Toyota SUV that has 175,000 miles on it.
Living a life where financial worries do not exist is not normal, I know that. Part of it was I’ve always been a high earner, not mega but still way better than median for where I’ve lived. But we were also a single income family with three kids so it wasn’t like we were rolling in money. Another part of it was we controlled the costs of the big three, housing, transportation and food. And the biggest part of it was we maxed out every retirement account we qualified for every single year and invested 100% in mutual funds and index funds. Plus we saved and invested on top of that in taxable accounts. We lived in a smaller house, drove poorer cars and limited our toys to low priced used items that stayed broke a lot of the time. That, along with a good income, made us financially independent over time.
Could we have done it on a more modest income? I think so, but we wouldn’t have as much or have gotten it as quickly. But I look at our parents, mine who handed down a significant inheritance to my brother and me. And my wife’s who died debt free leaving a farm of hundreds of acres to their kids. Neither of them made large incomes but both sets of parents were frugal people who passed that lifestyle down to their kids, none of whom have any problems covering unexpected financial emergencies in life.
I used to manage a place with lots of employees. Part of being the big boss was being an unlicensed therapist to my coworkers when life turns on them. As a result I’ve seen lots of people making far above median wages who were dead broke, getting their checks garnished over consumer debt. And it is sad, but often those people lived in bigger and nicer houses and had better cars and trucks in the parking lot than I did. When I would run into them fishing they would be in their top of the line boat and I’d be in my used POS fishing rig. Other employees were better at money than I was, they had side businesses and were millionaires in their 30’s and 40’s. They made the exact same union wages as the broke people but they lived differently and made different choices. And that’s what it comes down to. Assuming you are making more than a subsistence level living wage you can choose to live below your means and save and invest the difference. That will lead you to a life where you will still have problems, but money problems won’t be among them.
So, what do you think? Am I just rich guy who is clueless about how real life works, or is financial independence a matter of choice for the majority of us?
Do you stand out among your circle of friends for having a less expensive lifestyle? Does that ever cause you to not fit in?
As always, if you don’t see a comment box just click on the title of the post up above.
Congrats to your wife on the new Bronco! Those new designs are so cool!
I don’t think you’re a clueless rich guy at all… You recognize and admit your privileges, you’re an extremely hard worker, and you spend time giving back and teaching others. Financial independence is definitely a matter of choice. You could have chosen the opposite if you wanted.
My wife and I stand out for being frugal sometimes. But what we lack in fancy possessions, we make up with an abundance of true wealth and happiness 🙂
Have fun fishing!
Thanks Joel! It is a cool little car, and she’ll drive it until the wheels fall off based on her past practice. An abundance of true wealth and happiness is truly having it all!
I thought the best time for a boat owner is when he picks up the keys and hands i the keys?!
I’m getting a feeling you are in the unknown right now post work.. it will work its way out!
I think that is more true for people who only use their boats on rare occasions. We fish a lot and always have, its a great spousal hobby. Plus we like fish for meals. They are high maintenance items though, boats that is, not spouses, or not all spouses. Glad my wife doesn’t know which blog is mine! I kind of have that feeling that something is out there I need to be doing, but I’m not anxious about finding out what it is. I think it will work its way out like you say Sam. Thanks for the encouragement!
even when my wife and i hadn’t met yet we didn’t make much money but didn’t dig the financial hole very deep with a big lifestyle. our house and cars were not bottom level but relatively inexpensive by today’s standards.
we hang out with the rich folks and the poorer folks almost equally. mrs. me has a circle of friends who go out to eat/drink at nice places 4-5 times a week. sometimes she does that without me. because we don’t splurge very often a high ticket lunch or dinner on vacation happens a few times a year. we’re not cheap, just selective.
I agree, you can live well by being selective. Fishing was always expensive, so we cut costs by getting the lowest cost boat and tackle that would still provide a quality experience. I could get a very used boat for a couple of thousand bucks, a $25 reel instead of a $300 one. $20 Walmart rod instead of a $100 name brand. I’ve only upgraded after having secured our retirement funding. And still won’t go near the real premium equipment.
You’re not an out-of-touch rich guy, but that won’t stop people who aren’t willing to do the same thing from saying you are! My grandma was a secretary but frugal and disciplined with her investments, and she died with $3 million. Math.
Don’t get me started on the fitting-in socially thing. The only reason it isn’t more of an issue is because we’ve ended up pulling back from friendships with people who always wanted to do expensive activities and go to pricy restaurants. We don’t mind those things on occasion, or if it is something we really want to do, but I very much resent any EXPECTATION that I’m okay dropping big bucks without anybody bothering to ask. Aside from that, I couldn’t care less if our friends have fancy houses or Teslas, and I don’t feel any insecurity or pressure to compare or compete. I just remind myself of our investment balances and tell myself that maybe someday I’ll splurge on some big fancy things, if I want to, but only when doing so is a drop in the bucket. Because, like you said, not having financial worries feels so darned good. There’s no way in hell I would ruin that by depleting our savings for some fun new toy.
Mrs. FCB you are so wise, I think my writing would improve if I just started plagiarizing your comments. Hey, now that’s an idea! One of our secretaries at where I used to work donated over $800,000 to local charities after she died. She didn’t make big bucks but she had big bucks, math. See I’m even copying you in my comments. One thing about rural Arkansas, you can’t just go out for an expensive dinner and drinks because there is no place to go. That’s some kind of forced frugality.
You are not out of touch and must be a carpenter because you hit the nail right on the head. Life is about choices. You can choose what makes you happy or you can “keep up with the Jones” – your choice. I have had many of the same experiences as you – subordinates, colleagues and even bosses ask about their financial issues or problems. Some come crying. It is all about choices, and the delayed gratification. In order to become FI and not depend on your labor to live, one needs to save (delayed gratification) AND invest AND let compounding work its magic. I know many who lease their BMW or MB and complain about how low the SS COLA is this year. Very sad.
Thanks, actually my wife is the carpenter. I almost included my other fishing buddy I fished with this week. He is 66 and can’t afford to retire, yet he has made good chemical engineering wages his whole career. But a very expensive divorce and a lifestyle where casino’s and making big bets are a favorite hobby, plus the fact that he and his wife are both driving Mercedes cars just doesn’t leave him much of a gap to invest. There were three of us in college that hung out together, all engineers. Me and the other guy have similar net worths. I’d say both of my friends made similar money, less than me, but still solid wages. One has millions and one worries about how to retire. The other financially independent one took a different route, he has a bunch of rental properties that he and his wife work as a team on. He retired early too. So in their two cases it was purely the choices that made the difference.
“This month alone we will have spent $6,000 on a replacement HVAC unit for our home, $12,000 for shingles and skylights replacement on the roof and $39,000 in cash for her first new car in 15 years. And none of that caused us to sell any investments.”
Long time reader, first time commenter. Would you mind sharing how you did this? I have a few decades until retirement, but would love to emulate your mindset and thoughtful planning one day! The ability to not only spend >50k in one month, but more importantly, without having to sell investments is something I want to aim for.
LTR, I did phrase that rather poorly. What I meant to say was that the size of our portfolio actually went up during the period of paying for those things. I did pull some money out of the portfolio a couple of months ahead of time but by the time we spent it the portfolio had grown larger than it was before I transferred the money out. The end state of the portfolio was as if I had not sold any investments (of course if we had not spent the money the portfolio would be even larger). It did look like smoke and mirrors the way I wrote that. Glad you asked that, thanks.
My dad used to say that another name for a boat was a hole in the water that you throw money into. Thanks for the post, I really enjoy your blog.
Chris, you had a wise dad. I used to jog with an oil billionaire who owned a large part of a Fortune 500 corporation originally founded by his family. He said oil refineries were like black holes in the universe that you shoveled money into. Soon after saying that they sold their refineries and got out of the business of making gasoline.
“And that got us to thinking about how lucky we were. ”
No, it wasn’t because of luck. You made the right choices, plain and simple. Luck may have played a small part, but it wasn’t just chance.
And as far as standing out, I have a post about that in the queue, happy fishing.
Thanks Dave, I like to think my wealthy friends think I’m merely eccentric and not deranged. Of course many of them have much more money than I do thanks to having been CEO’s, surgeons, oil barons, etc. My normal not wealthy friends, they don’t often talk about money, I’m not sure what they think about me.
If you are clueless than I am too! Certainly luck of what family you were born into played a role and it did for me too, but you also made the right choices for you by knowing when you have enough.
I wish more of us were financially competent, but then I also wonder if our economy would be as strong as it is without our gluten for consumer spending?
I wonder that too AR, its like the credit card industry. They don’t make much money off of those of us who pay our balance in full each month. Its the people paying 18% interest that fund the convenience of cards and the rewards points or cash back deals for the financially competent card holders. Without mindless consumerism our economy would have to contract significantly. I don’t think it will ever happen though.
In my life, I’ve never been the financial basket-case type that is the typical American. But I have experienced a few rough patches, which I was able to weather without ever digging a hole. But having gone through that, I can say from first-hand experience than now that I have the financial means to weather most storms, that knowledge and the security it brings with it are absolutely priceless. Being in tough financial straits . . . well, pardon the pun, but it straight up sucks. A soul-sucking, gut-punching type of sucks.
FFTP, I think you’ve got more credibility than me because you know the pain I have never felt. Congratulations on being a winner financially! It would have been very hard for me to have ever screwed up my financial life due to who raised me and who I married. I was just immersed in a common sense cloud by some wonderful loved ones. And I had a great job where I found even more mentors who were wise with money. I have friends who weren’t so lucky in life, and the strain is visible on their faces. I am glad you did the hard work to take money off the worry list. I agree it is priceless.
I grew up with boats and had my own for 20 years. I didn’t buy one myself until I knew I could handle the $1000 or $5000 unplanned repairs with cash. It’s not the cost of buying, it’s the cost of owning. That’s why I don’t have the 458 and/or the 1969 resto mod muscle car in the garage.
People are broke at different levels. What sets them apart from the “savers/investors” comes down to a couple things like priorities, planning and the need for immediate gratification. Like you, I have a few friends like your boat friend. I’m baffled by it at my level and it seems so obvious.
However, the uber-wealthy probably look at my meager existence and life style and wonder why I don’t apply myself to break past my conservative investing/spending life style.
That’s a good point FB, I haven’t gotten that feeling from my richer friends. I think they know that if you are in the top 5% financially you’ve still done well, even compared to a 1/2 percenter, but they’d be too polite to show it even if they thought we were barely getting by.
Do wealthy and uber wealthy really do a rack and stack comparison of the top 5% or top 1%?.
Teddy Roosevelt stoically stated that Comparison is the death of Joy.
You are correct, my 1/2% friends don’t really mind the differences in things that we we separately value. We’ve all been friends a long time.
That’s certainly been my experience as well Francis. Most of the people who have won the financial game are not all that concerned about one upping each other. I’m thrilled my billionaire friends have what they have and they are happy I’m financially well off even if I have what amounts to a rounding error in comparison. Where you see ugly emotions are in people who are terribly disappointed in their own finances, that can lead to acting out in jealousy directed at the more successful people. I knew people that hated the very nice billionaire couple, simply because they had so much. I never understood why they blamed a rich couple for their own problems, there was no real connection at all.
Timely post, Steve. My wife was speaking with her Mom yesterday, and her Mom said my wife’s sister called her yesterday crying/balling about not having the money to fix her car (which her step-son just wrecked).
Understand, my wife’s sister SHOULD have some money. She is currently unemployed, but she made 100k-200k for the last 8 years, and she inherited about 85K five years ago. And she just married a man who’s been working for a large, well known snack company for a long time.
How she is out of money is beyond me.
I just dropped about 10K over the past few weeks, too, doing some mass LED light replacement inside and outside the house and some landscaping. It was nice to be able to write a few checks without thinking much about it.
And I always love hearing the story about you and your work mates who made around the same amount of money, and he’s still working, unable to retire. As I always say, it’s all about CHOICES people make for the large majority that determine where people end up.
Thanks Mr. Hobo. It is sad when people who have the advantages of a good income still end up financially strapped. I think we all know someone like that, maybe even in our own families. As one of the 401K committee members I was in a position to see whenever one of my coworkers got a 401K loan to do something like take a vacation to Hawaii or to buy a F150 pickup truck and it just made me sad. But a lot of it is how we were raised, in my case very astute middle class parents who talked to me about avoiding debt, investing and selecting a good career. I know most people didn’t have that advantage.
The most impressive feat you’ve mentioned is not the millions in net worth, but the 42 years of marriage. That’s awesome (and the millions is still impressive by the way!)
Enjoy your full retirement! I’m looking forward to learning how that goes.
You are so right MrC, my wife is priceless, as are my grown kids. Again, no credit to me, I just married a great person who has been the glue that holds our family together for over four decades. I think above any other single factor, being well partnered is the secret to success in all areas of life.
Whoa, did the car end up selling for $5,100 even after 15 years of usage? If so that is very interesting. I’ve been depreciating my car by 10% every year so that after 10 years, my car will be worthless. Maybe I’m too aggressive in my depreciation calculation.
I definitely agree on the delayed gratification point. Even though I could buy a $60,000 boat right now with cash, I flat out refuse to do so because of the huge opportunity cost of just letting that money sit in the markets.
Shouldn’t buy what you can’t afford!
Hey David, thanks for commenting. My wife’s 2006 Nissan Exterra with 165,000 miles on it did sell for $5,100. I think it brought that much because it is a true body on frame four wheel drive off roader as opposed to a CVT all wheel drive crossover like a Subaru. All wheel drive is basically a road car with some limited off road capability but for going on really rough terrain, mud and rocks four wheel drive destroys all wheel drive. So there is kind of a cult following down here in the swamps about having to have a four wheel drive truck or SUV. That lets them maintain their value past what a regular vehicle will. Also the Exterra never changed its looks throughout its life, so it doesn’t look as dated as most cars that old. Plus my wife maintains her vehicles meticulously, except for some faded black plastic on the outside trim it had no dents, rust or scratches and never missed an oil change. As far as buying what you can afford, that seems so obvious that it is puzzling why people like you and me are outnumbered by people who just buy what they want and try to figure out how to pay for it later.
I like the new Bronco. The question is though is how do you define enough. For everyone it is different…I guess.
DP, It is a very individualistic thing. For my wife it’s a new car every 15 years that costs a fraction of her net worth. For me it is a great deal on a used sportscar every time I hit 200,000 miles on the odometer.
I enjoyed reading this.
Like you, I had good financial habits taught to me by my parents.
Unlike you, I didn’t choose wisely when it came to a spouse, so I had a few decades where life was a real struggle.
But I always had the long view in mind – financial security for myself and the boys.
Now? A month after I retired, a tiler who was revamping my ensuite found water damage in the main bathroom. I was able to ok a 10K fix without losing sleep over it.
It’s nice to have stress removed from decisions like this.
Hey FJ, I never credit marrying well or poorly to being a matter of great wisdom of lack thereof. The fact is you can’t really know that person until its too late, until you’ve been married for years, in my opinion. The only thing I got right was knowing we had a similar world view and valued the same things. I credit marrying the right person to be mostly luck, and I got lucky. I have some brilliant and wonderful friends who had one or more bad marriages, and I’d judge these people to be better than me in most categories. I think they just weren’t lucky in love.