How to Live with Annoying People

You must always have a way of getting out when things go wrong.

When most people try to save money, they look at small expenses such as coffee. According to David Bach’s “latte factor” concept, by skipping your daily coffee, you save about $4 per day, and this adds up to about $1000 per year.

While I do not disagree that skipping your daily coffee can help you save, I’d rather put my effort into actions that have a bigger impact. The biggest expense that most people face is accommodation, i.e. putting a roof over your head.

My recommendation for those who want to save money on accommodation is to live with other people. Either buy a house and rent out spare bedrooms to others (e.g. via Airbnb) or rent with others. Another simple way to live with others is to live with your parents. By living with others, costs are spread out.

However, living with others is not easy. That being said, if someone wants to pay more money to live by himself, I have nothing against this because I know how bad it can be to live with other people. For example, today is a Sunday, and I live with my parents. Today I was at home in my bedroom on my computer. My mother was in the living room. She is screaming something to my grandmother, arguing about food. I could not concentrate at all.

My recommendation to those who live with others to save money is not necessarily to move out. Rather, the answer can be as simple as getting out of the house.

Annoyed that my family were making too much noise, I had a shower, got dressed, grabbed my laptop, hopped into the car, and drove to the local library. I am typing this blog post right now in the local library.

Like I said, living by yourself is fine. It makes sense to have your independence and privacy. However, living with others can save you a considerable amount of money. It can be annoying, but the annoyance can be mitigated to some extent simply by removing yourself from the house most of the time.

Driving out of the home when the family goes crazy, in my opinion, highlights a fundamental law that all freedom extremists must be aware of: always have an exit plan. No matter where you are, no matter what relationship you have with anyone, be it a professional relationship or an intimate relationship, you must always have a way of getting out when things go wrong.

Be free.


Don’t Bite the Hand That Feeds You

Don’t bite the hand that feeds you. Instead, lick it, and suck on it lovingly, even if it’s stained with shit. If you don’t suck it, you won’t be fed.

This expression really illustrates how soul crushing the 9-to-5 is. You can’t object to whatever is paying your bills or your mortgage. You got to kiss ass. You got to kneel down and submit just like the slave you are.

But what if, instead, the hands that feed you are rivers of cash from passive income? What if you lived off dividends from shares, rent from real estate, interest from bonds, revenue from ebooks?

If hands offer you food, then eat, and if those hands abuse you, you are free to refuse their feed.

You can also bite back.

Don’t Aspire to Buy and Live in Your Own Home

There is much talk of a housing affordability crisis in Australia. Average house prices in Melbourne and Sydney are reaching $600,000 or even more.

However, for young people looking to buy a house, my recommendation is that you do not buy.

Instead, go to your parents and negotiate with them an arrangement whereby you pay, say, $300 per month to live with them. Depending on how nice your parents are, they may even allow you to live with them for free.

If this is not an option, try to arrange to share a house with other people.

If you do buy a house, consider ways you can offset the burden of a big mortgage, such as renting out spare rooms.

I know a friend who, after purchasing a house, decided to renovate the garage so it was liveable. He lived in his garage and rented out the rest of the house. The rent was pretty much able to cover the mortgage repayments, which meant he was able to pay off the mortgage in about six years.

I have lived with my parents for the past five years and have been able to save up about $60k per year. After five years that adds up to about $300k, but rather than invest in property, I prefer to invest in shares, index funds, and managed funds. Nevertheless, shares have gone up in value in the last five or six years, and my net worth has increased at a rate of about $100k per year, which gives a net worth of about $500k now.

It doesn’t matter whether you invest in shares or property. Both are good investments. However, I believe shares are better because they usually make more money and because you generally pay less tax (although this depends on which country you live in).

To sum up, try to live with your parents. If you rent, try to rent with others. If you buy, rent out the rooms. Any of these three strategies frees up money to allow you to invest. You’re not really investing much if so much of what you earn goes towards paying interest, which is the situation most people have when they take out a massive mortgage to buy their dream home. It is true that rent money is dead money, but interest is also dead money.

The main benefit of real estate as an investment is the ability to borrow money to invest. If you are able to borrow more money, you have more assets exposed to the market, which means returns are higher. However, this can be achieved via index funds or shares simply by getting a margin loan (i.e. borrowing to invest) and/or investing in internally leveraged ETFs (i.e. investing in a fund that borrows to invest).

Note that just because you can use debt to make more money, it doesn’t mean you should. Borrowing to invest can be profitable, but there are many assumptions you are making about interest rates and returns. With leveraged ETFs, fund managers usually use dividends to pay off their own debt, which means the investment produces very little income. Furthermore, when you borrow to invest, you usually need to make regular monthly repayments. These regular monthly repayments diminish the value you get from any passive income you may receive from dividends or rent. Debt is anti-passive income and therefore anti-freedom. Borrowing money from the bank makes you are slave to the bank.

There is a myth pervasive in Australia and many other countries that renters are second class citizens who must aspire to own a home because owning a home makes money. This is a lie. What matters is how fast your net worth increases. Most people who buy a home have such massive mortgages with huge interest repayments that their net worth increases very slowly because any progress made when the price of the house goes up is quickly lost when they have to pay interest. Their net worth would have grown faster if they had rented a cheap place and socked the saved money into index funds.

It is not just interest. Buying a house is also associated with massive fees to accountants, real estate agents, and lawyers, as well as huge taxes (such as stamp duty in Australia). All these bring down the growth of your net worth, often by more than people expect.

When most people at my work “invest” in property, I never hear them talk about the rate of growth of net worth, rental yields, or variability of prices. They seem more keen to talk about how nice the patio is, whether the kitchen has a granite bench, and whether it has period styling. All this is bling that distracts them from the massive expenses associated with property.

Don’t bother buying a house. They are clunky massive assets that are taxed heavily and usually produce little returns. They tie you to one place and stifle your movements.

Passive Income vs Laptop Income vs 9 to 5 Income

You do what you want, when you want, with whom you want, wherever you want, how you want.

I am a strong believer in passive income, which is defined as income you earn from doing nothing. Passive income includes dividends from shares, interest from savings accounts, or even revenue from Amazon eBook sales or Adsense revenue from YouTube videos.

However, passive income tends to be low. Interest from a bank account will give you about 3 per cent. Depending on which shares you buy, dividend yield tends to be around 6 percent or so, although it varies across companies and across countries. An investment that I invest in that currently pays a yield of about 12 per cent is the Betashares Australian Dividend Harvester Fund.

While passive income is excellent because you don’t have to work for it, I do not hate working. I hate my nine-to-five job, but it’s not the actual work I hate. I just hate having a manager tell me what to do, and I am not the only one. Studies show that about 70 percent of Americans hate their job and their bosses and are disengaged.

This is why it is important to earn money online. I call this “laptop income.” It is not as good as passive income but definitely better than the salary from a 9 to 5 job.

Earning money online is not necessarily passive. You may need to post videos on YouTube, run an eCommerce store, send emails, write blog posts, trade shares online, and so forth, but it is work that can be done on your laptop while you are in a cafe. It is work that you can do anywhere where there is internet connection, and you don’t have a boss watching over you.

You do what you want, when you want, with whom you want, wherever you want, how you want.

If you are new to working online, here are three ideas.

  1. Work online: This is not that great because freelance work is a lot like a 9 to 5 job in that you have a client you work for, a client you need to keep happy, but working online means you get to choose who your clients are. Filling in surveys (e.g. at Pureprofile) and completing projects at Upwork or Freelancer can earn you money, but the amounts are not huge. Freelance work can make you serious money if you are talented in a specific area.
  2. Create or build something: This includes blogs, ebooks, YouTube videos, websites, eCommerce stores, etc. This is the best way to make money. You must be a creator rather than a consumer. Rather than watch YouTube videos, make them instead. Rather than read articles, write them. This is where it is important to get rid of distractions because too often distractions from Facebook and other social media can make you too much of a consumer rather than a creator or a builder. I manage distractions by simply putting it off. For example, suppose I am browsing my email and I see a link to an article I need to read. I use the app Pocket to save it and read it later. This is a very useful app. If there is a YouTube video that I feel I need to watch right away, I save it to a playlist where I can watch it later. Put off distractions for later and focus on building and creating things of value.
  3. Monetize what you create or build: This can be achieved using advertisements with, say, Adsense (I prefer to use Anonymous Ads, which pays you in bitcoin and allows you to remain anonymous). That being said, advertising does not make much money. Other options include affiliate links (e.g. via iHerb and Amazon) or even creating your own product or eCommerce store and advertising your own products on your products. Creating and advertising your own products allows you to make the most.