How To Get Filthy Rich in Rising Asia and Random Musings

Warning – spoilers ahead.

After taking over a month to finish the Rise of Endymion by Dan Simmons I was pleasantly surprised by the diminutive size of How to Get Filthy Rich in Rising Asia. Not only was it short, but compelling and easy to read. I decided to pick this one up based on a recommendation from the Tim Ferriss show, and I’m glad I did.

I love a good rags to riches story, which fuels a good deal of my fascination with biographies of famous business people, and How To Get Filthy Rich does not disappoint. Well, in a way I suppose it does. It’s not an instruction manual, but rather a first person narrative that begins on the dirt floor of a hut and chronicles the rise of an entrepreneur. It’s a fascinating perspective, especially for someone living in the cloistered world of suburban America like myself.

We love to bitch and moan about how “busy” we are, and how times can be tough. Well, it could always be worse. A lot worse as this story will show us. How to Get Filthy Rich shows to get ahead in rising Asia you have to be willing to overcome immense odds, staggering cruelty, be willing to engage in questionable business practices, and deal with a corrupt government, competition that will resort to physical threats and intimidation, and the odd twists that life throws at us all. It reveals an almost animalistic approach to business. The young man threads carefully through the shallows, avoiding apex predators. He scraps and scrabbles and slowly builds a small foothold. He catches a break and claws his way up the food chain. The hunted becomes the hunter, and now he is the predator, although bigger threats still circle ominously overhead. He builds his fortune, but never seems to find true fulfillment. In a ruthless world where we prey upon the sick and weak, the hunter eventually regresses back the hunted.

This is a powerful and startling account of life and death. There are some stylistic nuances that take a little getting used to. While I think it’s generally a beautifully written book with lots of powerful quotes, the author’s choice of language can be juvenile and puzzling at times. He also deviates from the story at the start of each chapter, and tells the reader that this is a self help book. He talks about him writing and you reading a lot. It didn’t bother me as we quickly settle back into the story, but I can see how it might irk some people.

Ultimately, I think the theme here for me is gratitude. To paraphrase Warren Buffet, if you are reading this from the United States then you have truly won the genetic lottery. It’s easy to dismiss that as most of us have not spent time in developing or third world countries, and we lead immensely sheltered lives, but the truth is most of us have cultivated little gratitude or empathy. I know that is true for me. A book like this gives you a window into another world, and it’s primal, shocking, and more than a little sad. The pursuit of financial independence is a privilege, especially if you don’t have to get ahead by paying bribes, engaging in morally dubious business practices, and hire armed guards in order to go about your day.

I don’t want to say much more, as it’s a short and simple book. Worth a read and especially so as I close the door on another weekend. And as I close that door I can’t help but feel a little anxiety for the work week to come. By the time Friday rolled around I was exhausted and could hardly think as the clock hit 4PM. My mind was numb and cottony yet still things were racing. I got home and laid in bed for a while and read. I tried a little meditation and I actually felt better. I should try to do that more often.

Saturday was mostly spent with family and looking at real estate. Fun but not particularly relaxing. Today I was able to hit the gym, run some errands and spend some time reading and lounging in the neighbor’s pool. I cooked some fat steaks for my girlfriend’s birthday and by the time everything was cleaned up it was 7. I finished off How to Get Filthy Rich and it left me in a reflective mood. One thing I didn’t do this weekend was write – until now. I didn’t get a cigar in either, which would have been nice. On the flip side, I also didn’t go into the office this Sunday for the first time in weeks, so I suppose you just have to take what you can get.

I’ve been going full steam for a while and feel myself wanting to take a more substantial break. It’s very hard to believe we are 3/4 of the way through 2016 already. Time is blurring by. Things are generally marching forward. It has been at least a couple months since paying off my student loans. Frankly it feels great not to have that looming over my head any more. It is one less thing to worry about. A goal completed.

I still have my small car loan (less than $4K) that continues to nibble at the edge of my mind, but I’m not in a huge hurry to take my cash and pay that off immediately. At this point in the loan most of the payments go to principal, so I’d rather just have the cash on hand. I want to keep some powder dry. Speaking of which, I have decided to divert some of my newfound excess cashflow to Vanguard funds in a brokerage account. An extra $300/week for the time being. I put it into Vanguards Target 2050 fund. I’ll write a post on my take on Vanguard Target funds one day. I like it for the time being, but also own their stand alone funds as well. I am looking at real estate, but everything on the MLS seems too high. It is disappointing but am OK with that. I’ll just bide my time and enjoy being mostly debt free for a while. I’ll be curious to see how quickly the cash piles up.

I also liquidated my small position ($2,000) in Vanguard’s total bond fund and put that money into a couple of high dividend stocks. More risky business, but I think holding bonds at this point is a little silly for me. I still have some bond exposure in my target fund so I’m alright with it. I’ll write more on that later. In the meantime I am going to start reading The Deep Blue Good-Bye by John MacDonald. Tomorrow is a new day, and a new opportunity. The Sunday blues quickly fade into a manic Monday, and there will be much to do this week.

Mid Year Resolution – Limit Drinking

Writing down my goals and resolutions for 2016 has actually been an interesting exercise. People say it’s important to do this, so I figured I would give it a shot. So far I don’t regret the decision.

One of my goals was actually to only drink “3 beers a week”. Well, I don’t know what the hell I was thinking setting that goal because, (A) I don’t remember even setting it, and (B) I quickly got into the habit of drinking 2 beers a night 5 days a week. Throw in some hard liquor at least one night a week and the occasional bottle of wine, and I was pretty well rounded on the drinking front.

But that doesn’t surprise me because I’ve always been very well rounded on the drinking front. In high school I engaged in my fair share of binge drinking. Clandestine parties fueled by vacant houses, fake id’s, and high school theatrics. Since the legal drinking age is 21, it was fun and exciting to drink at 16. In college I drank massive quantities of liquor and beer. I was on my own in New Orleans, a city known for its good times, and I definitely had some great times. Although I became “of age” somewhere in the middle of college, the novelty of going out and drinking did not wear off. If anything, it intensified in my last semester. I was living with a group of German foreign exchange students. I became their unofficial ambassador and we took the city by storm. It was an epic time and one of my most memorable experiences in college. We had a blast, although I freely admit that was a time of unbridled debauchery.

In law school I got into the habit of pounding a fifth of cheap bourbon every 2 or 3 days as part of my “exam prep”. I would study from 7pm-midnight, and then drink bourbon on the rocks until 2AM. I’d wake up at 10am in time for my 11AM class. If I wasn’t rolling into class with a hangover something was wrong. In retrospect that was pretty sad, but law school was pretty sad. I was trying to jump through the hoops on the strength of my understanding that a law degree could create a better life for my future self. I was deeply confused about what I wanted to do or where I was going.

I didn’t feel like a man. School felt like an exercise in emasculation. I was reliant on the government as my education was funded by student loans, and I relied on my family. Also I didn’t care for most of the people I met at law school. When I got my internship at a big law firm, I realized I didn’t particularly care of the practice of law at a big law firm. Frankly that was a horrible realization. I hitched my wagon to the law school train because it seemed like the best opportunity at the time given my credentials and mindset. I had little confidence, I was depressed, and I self medicated.

As I settled into adult life and launched my career I found I was drinking less. Maybe one or 2 beers 3 nights a week during the week, and then I might get into it a little further on the weekends. I wasn’t going out to bars, since I met my significant other at this point, and I wasn’t binge drinking as often, but I still drank too much. And as this year wore on I found myself drinking more and more. This has been an exhausting year as I tried to get my staffing issues sorted out and my head on straight. I would get home at 7 or 8 and reflexively open the fridge and down a couple beers before I started to feel comfortably numb. Swimming in the mornings would provide some clarity, but that practice slowly slipped off the map. I also got fatter and fatter.

I went on a trip to visit a good friend in July. We both have a “thirst” and our trip included a fair amount of drinking (although honestly it could have been a lost worse). My buddy was telling me about how he had taken some time off from drinking and that he experienced some health benefits from it. His weight dropped, and his mind expanded. He felt better. That all makes sense. It doesn’t take a M.D. to realize that drinking can have ill effects, including weight gain, wear and tear on your liver, dehydration, poor sleep, and messing with your testosterone. Plus you are pretty useless once you are impaired. Even after a couple beers I have a hard time reading or writing anything. At that point we switch from producers to consumers.

Alcohol is also expensive, and it made up a significant portion of my grocery budget. A 12 pack of decent beers a week sets you back the better part of $20. If you go down the craft beer rabbit hole, a rabbit hole I have been known to explore quite thoroughly, you can easily blow tons of cash. Plus I have a penchant for quality bourbon, gin, vodka, rum, and tequila. I wasn’t blowing $50 a night at the bar, but I probably still spent $75-$100 a month on alcohol. That is about $1,000 a year. Even if you are making $100k a year, that’s still a full percentage point of your gross income going directly to alcohol. A decidedly un-frugal move for someone espousing the benefits of frugality, trying to reach Financial Independence, and saving at least 50% of his income. There are ways to mitigate this, cheap liquor and beer, but that’s just treating the symptoms and ignoring the root cause of a problem. The real solution is to cut back.

The trip made a big impression on me. Not only was it a tremendous trip, I remember what my buddy said about the drinking. I could feel the ill effects of all the extra drinking and restaurant food after the trip, so I decided to dial back the alcohol significantly. I have been averaging 1 beer a week for the past 6 weeks, and it has been good for me (surprise surprise). My face looks less puffy and I think I have lost some fat. I feel “OK” – probably better than if I was drinking, although I obviously enjoy drinking a great deal. I think I am sleeping better. Certainly I am spending a lot less money on alcohol. I actually haven’t spent any money on alcohol since I got back from my trip in July. I still have some beer left over in the fridge, plenty of liquor in the pantry, and at this pace it looks like I won’t need to buy anything for a while.

This isn’t the first time I have taken time away from the sauce. After college I took 9 months off to work before starting law school. In that period of time I moved back into my parent’s house, switched to a ketogenic diet, and hit the weights religiously. I got into the best shape of my life. I would still enjoy some drinks at happy hour on Fridays after work, but beyond that I kept a strict diet and cut out alcohol. I fell back into drinking once I returned school.

By some standards I would be considered an alcoholic. I have never felt that way because I always considered alcoholism to be an addiction to alcohol. I have met alcoholics, and they literally cannot stop drinking. Thankfully I have never had an addictive personality, and have managed to quit things cold turkey in the past. This sounds an awful lot like denial.

Anyhow, I am glad that I have cut back on the drinking. Now that I type all of this out I realize that it serves no real purpose and hurts your budget and health. I still appreciate the craft of creating and enjoying high quality beer and liquor, but I need to take a step back and dry out. I need to run this experiment longer.

My goal here is to limit myself to 1 drink a week. Maybe that is a beer with dinner on Friday or Saturday night, or a drink if I’m at a social event. If I get invited to a party, or have 3 beers one night or something I don’t want to feel like I fucked myself, but the general goal is one drink a week. Oddly enough that has worked out well. I don’t feel deprived of anything. It hasn’t been bad not drinking.

What I really want to avoid drinking in response to stress, and to avoid habitually drinking – especially during the week in response to stress. I most feel like having a drink after getting through a brutal Tuesday, or something along those lines. Being self employed generates a fair amount of stress, especially when you are self employed and handling divorces and litigation matters for a living. It’s like piling stress on top of stress. You have the swings of entrepreneurship, and the swings of trial law. Add my fragile personality into the mix and this has been a true exercise in self development. No wonder I want to reach financial independence so badly.

Stress is part of life and the grass is always greener. Those that work for themselves occasionally want the safety of a paycheck and freedom from managing overhead. Those that work for others occasionally want the freedom and autonomy of their own business. And our attitudes swing depending on what day it is. That’s life. I’d like to avoid drinking in response to stress and exhaustion, and so far have done a decent job. Oddly enough I haven’t felt a strong compulsion to drink on the weekends. I didn’t have a drop of alcohol this Friday or Saturday night, despite telling myself it is perfectly OK to have a beer if I wanted one. I haven’t wanted one.

At the end of the day the goal is to swap small bad habits with small good habits. Cutting out the 2 beers on a Tuesday night seems trivial on some respects, but these bad habits have a way of compounding like interest in a brokerage account. The goal is to become more productive, self-reliant, and happier. I need to take a hard look at myself and my habits if I really want to get there.

Self Employment vs. Starting a Real Business – The Cashflow Quadrant

I finished listening to Robert Kiyosaki’s Rich Dad Poor Dad: Cashflow Quadrant for the second time last month. Rich Dad Poor Dad is arguably one of most influential books on personal finance ever created, and for good reason. It’s a tremendous book that will inspire and awaken you. Cashflow Quadrant is a great read as well, and dives even deeper into some of the concepts Kiyosaki outlines in his original book.

I think the theory behind Rich Dad, Poor Dad is brilliant. Acquire assets, avoid liabilities. An “asset” is defined as something that makes you money. A “liability” is something that costs you money. Perhaps one of the more controversial aspects of the book is that Kiyosaki argues that your primary residence, if you choose to own one, is a liability, not an asset. This is because it costs you money (unless you are renting rooms or something). This concept flies in the face of the typical American dream, and the creed that “your house should be your biggest asset”. Housing is an expense, and your house should not be considered asset. Anyhow, I digress…

The original Rich Dad, Poor Dad also introduced us to the “Cashflow Quadrant”. His supplemental text dives much deeper. The Cashflow Quadrant identifies 4 types of people: Employees, Self Employed People, Business Owners, and Investors. Employees and the Self Employed work for money. True Business Owners and Investors have their money work for them. Ultimately to become financially independent you need to eventually either start a Business or become an Investor (preferably, do both!).

What was most interesting to me was the distinction between a Self Employed person and a Business Owner. I could argue that as a lawyer who owns his own law practice I am a “Small Business Owner”. The reality is I have simply created a job for myself. If I were to walk out the door of my law firm tomorrow and not come back for 6 months my “Business” would be dead. I’d face a pile of lawsuits for defaulting on my buisness’ financial obligations and for legal malpractice. A true Business is a system. That system, if it’s properly established, should be able to run itself or you should be able to hire someone to run it for you and still turn a profit. Even if you walk away from the business for a year. If you can’t walk away from your business for months, then you don’t have a Business. You have a job. I have a job.

This can be somewhat disheartening after being inculcated with the teachings of the educational-industrial complex for decades. The prevailing notion is to go to school and to get a good safe job. If you are decent at taking tests, then the prevailing notion is to go to graduate school and join a profession. Sit down, shut up, be a good boy, get good grades, pass all the tests, and then become a doctor, lawyer, pharmacist, or accountant. That way you can buy a nice house, finance a nice car, attract a spouse with a similar socioeconomic background and an equal or greater level of physical attractiveness as you, have 2.5 children, a dog, buy various shiny objects, pay plenty of taxes, enjoy 2.5 weeks of vacation a year, finance most of it, and post the highlights on social media. Disregard that nagging desire to be disruptive and independent, and sharpen your pencil because the teacher has something important to tell you. These are the keys to the upper middle class they say. Do these things and you too will achieve the American Dream they say.

That may be true, but the most successful and wealthy people in this world generally aren’t doctors or lawyers or accountants, they are business owners. People who have created systems that have scaled dramatically to help entire populations of people. They say if you want to become a billionaire, then you must figure out how to help a billion of people. It requires a totally different mindset from what the traditional path trains you for. Rather than to sit patiently in class and fall in line at school, so you can one day sit patiently in your cubicle and fall in line at work, to become a successful Business owner you must learn to think creatively and strategically to disrupt or make markets and serve the masses. You have to be more than good at showing up and taking tests. Those that can do that are the true .0001%. They are true masters of the economic universe. Even if you only learn how to help thousands or mere millions of people as a true Business owner, you are at the tip of the iceberg.

At this point, I am not going to abandon the practice of law. I’m about 4 years in, recently paid off my student loans, and am starting to get a feel for what it really means to be a lawyer. It’s a fascinating career, and the choice to practice litigation and to run my own little law firm has developed me as a person in ways that I would have never previously imagined. I have learned so much about myself, the practice of law, and about business. The job can also be exhausting and stressful, but the entire process has been a tremendous eye-opener for me, and it has been rewarding in many ways. Still, I do not suffer the illusions of grandeur that I have created a true Business. I haven’t. I have created a job for myself. It’s a relatively high paying and intellectually stimulating job, but it’s still a J-O-B. So in order to reach financial independence I must become an Investor or start a Business. Better yet, I need to do both.

If you are also Self Employed or an Employee and want to become Financially Independent, then you should become an Investor or start a Business too. If that’s of interest then I recommend both Rich Dad, Poor Dad as well as Cashflow Quadrant.