Mo Money Mo Problem Or Mo Happiness?

How not to set $40,000 on fire.

Financial Samurai had a post titled Solving The Happiness Conundrum In Five Moves Or Less that made a couple of points that really resonated with me. Aside from this being a fun topic to explore, when people figure out all their personal/happiness/fulfillment stuff it makes the financial planning much easier because they are saving and planning for the right (for them) outcome.

Samurai first looks at the extent to which money and happiness are or are not correlated. Awhile back there was a study the showed happiness evening out at $90,000 of income and above, sorry no link. Samurai provides data that appears to show the extent to which money and happiness might be connected but only up to a certain point. I can buy that money by itself may not make you happier but I think financial independence can. We have far less control over our incomes than we do our spending. Jared Dillian just had an article at Marketwatch where he said buying new cars is like taking $40,000 and setting it on fire. It is easy to get 20 years out of a Toyota. You'll save a fortune staying off the perpetual house-upsize treadmill. One some level you know what to not spend money on, it's just a matter of figuring it out. Once you do figure it out, you're saving more, you're spending less and life gets much easier because you are financially independent. Your independence creates a sense of empowerment that is very satisfying which could make you happier but you've also removed one huge source of stress; money.

Samurai also talks about doing work that is helpful to others. Not everyone can do this. If this resonates with you (it does me) but you're not sure your work actually does help people, actively volunteering can be a great way to help others.

For what it's worth, my keys to happiness;

  • Figure out how to be happy at home
  • Do work you love (bonus: figure out how to not have a daily commute)
  • Live below your means
  • Actively volunteer
  • Get a dog
  • Exercise regularly and vigorously (lift weights and hike)
  • Do something creative as often as possible
  • Spend time in nature

There's probably others but you get the idea.

Michael Batnick had a good post called The Paradox of You. He looks at the idea of wishing that you knew 20 years ago what you know now or writing a letter of advice to the younger you. Michael is skeptical of the merits of this. I am not a fan of this either, I actually think it is a pointless exercise.

We are today the sum of all of our experiences both positive and negative, the product of all the things we got right and wrong. Had any of our experiences been different then we would not be who we are now. The counterfactual component to this notwithstanding, if you like yourself and how life has turned out then seeking to change that seems suboptimal. If you do not like yourself and how life has turned out, what can you do from here to change that dynamic?

Michael talks about our being different people than we were 20 years ago and that we'll be different people 20 years from now. The way I have made the same point in the past is to say you should give the future you as much optionality as you can because you never know what the future you will want to do.

Finally a quick note on Bitcoin which is going berserk again.

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First off, this is a repeat of the behavior from late 2017/early 2018. If it continues to go up this fast then it increases the chances of yet another 80% (or whatever) crash. I am not trying to predict when or from what level but we are clearly seeing some sort of buying panic and those rarely work out well. I've disclosed that I had a lucky purchase of Grayscale Bitcoin Trust (GBTC) in December, I bought a little for the asymmetric risk quality it has, thinking that I would hold it if it gets to one of the crazy six figure, or higher, price targets. I don't think it can maintain the current pace all the way up to a gajillion. If it keeps going up 10% a day, I would expect it to flame out long before it got to being a life changing piece of money and of course I would rather not ride an 80% decline all the way down. I have not sold my shares but am cognizant of the fact that the strategy I laid out may not come into play.

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