The Downside Of Financial Independence

The downside of financial independence

There is a downside of financial independence that’s worth discussing. The media likes to make it seem that financial independence is the best thing since slice bread. But I’d like to provide more balance.

One of the things I was counting on when I published, Being A Landlord Questions My Faith In Humanity, was readers coming out of the woodwork questioning why I would be so lenient when my tenants were so thoughtless. Most were empathetic to my situation, but some blamed me for my tenant’s actions. That’s cool. I like to blame TV for my consumption habits.

At the end of the day, I got $216,000 worth of rent over 24 months, a completely redone backyard mostly paid for by them, a professionally cleaned house, and $1,000 of their $17,000 deposit. Things could have been much worse if you read some of the tenant horror stories in the comments section.

My tenants were generally nice guys. They were just clueless. When I sent them the picture of the trash explosion the next day, they immediately called a junk truck to collect everything a couple hours later. They could have just disappeared into the wind since they had their deposits back. But they didn’t.

Hopefully my post will encourage people to be more thoughtful. At the very least, it provides some insights for current and future landlords. I always try to highlight the good with the bad on my road towards financial utopia (doesn’t exist, sorry).

In this post, I’d like to highlight the downside of being financially independent. I don’t know any other landlord who would not have charged a single late fee after eight times of tardiness. But you know I’ve got a masochistic side, looking for ridiculous situations to share with all of you!

The Downside Of Financial Independence

1) Not optimizing for maximum financial returns.

When you are financially independent, you don’t need more money because you already have money. If the counter party isn’t financially independent as well, you start feeling a little slimy for trying to optimize your returns.

As a result, you aren’t negotiating the best deals. You aren’t shopping around to find the best bargains. You’re definitely not driving around the block to find a free parking spot. And you’re always booking flights late because you value optionality.

Instead of optimizing for financial returns, you start maximizing for peace and harmony. With each late payment, I had a choice of letting it go or laying down the hammer, which might have led to more property damage and further disregard of the lease. I knew they would eventually pay, so I showed kindness.

By forgiving their tardiness, I wanted to build credits for future instances when I couldn’t come over in a timely manner to fix something or address an issue. And it worked on two occasions: 1) The kitchen faucet lost cold water pressure for some reason. My master tenant volunteered to meet the plumber, make the payment, and oversee the project. 2) Then my microwave stopped working one day. It was a custom size that was built into the cabinetry. He took it upon himself to go to Best Buy, then to a private party when Best Buy didn’t carry such a model to pick one up, pay for it, and install it. His actions saved me at least three hours of time.

My main mantra is to always give as much as possible first. This way, people are more inclined to do right by you in the future.

Related: To Get Rich, Be Willing To Do The Dirty Work

2) People will take advantage of your kindness.

It doesn’t matter how rich you are, nobody ever wants to be taken advantage of. Yes, my tenants were taking advantage that I wasn’t penalizing them $250 for each time they were late. But the way I saw it was I had $2,000 worth of credit I could withhold from their $17,000 security deposit if they didn’t comply with what I asked for before moving out.

They knew this, which is why one of the tenants said the day before move out, “We won’t let you down Sam!”

I have a wealthy friend who escaped to Paris for a year with his wife and four kids because he couldn’t stand getting hit up for money all the time. He told me, “Every time I open my inbox, I get some random person whom I don’t even know asking if I could donate $100,000 to some organization I don’t care for. It’s maddening I tell you. How about at least getting to know me first?”

Dine And Ditch

One time I met a friend for drinks. He was talking to this startup female founder who was once an ex-beauty pageant queen. She was attractive and she knew it by the way she talked about her relationships with “high powered VCs.”

Both my friend and the founder had to leave, so instead of paying for her own drink, she looked at me and said, “I’ve got to run. It was nice meeting you,” implying that I was to pick up her tab. Since she Usain bolted, of course I had to pay even though we just met. I’ll give her startup a 0.1% chance of surviving with that type of entitlement.

Finally, I get bombarded every day with questions from people who don’t bother to make a connection first. I’ve been asked to give a diagnostic of their entire financial lives. Some have asked whether I can help them with their marriages. Others have asked me to help them with their online business plan. The most common question I get is, “Can I pick your brain?” I’m not sure how anybody thinks that’s enjoyable.

To avoid being taken advantage is one of the key reasons for practicing Stealth Wealth. If people know you are financially independent, they’ll do everything they can to extract as much time and money from you as possible.

3) You start empathizing too much.

I saw in my tenants a rowdier version of me when I was their age. I remember what it was like to struggle at work, survive layoffs, begrudgingly pay a portion of my paycheck to rent, all while trying to enjoy everything that life has to offer. As a result, I started developing a lot of empathy for them because some of them had issues at work.

Another had back tax problems because he somehow forgot to pay them. While another just couldn’t get it together given his parents babied him too much as an adult. I thought I could be sort of a big brother who could provide some guidance.

But empathy doesn’t get you anywhere if the other side doesn’t care. There’s a reason why it’s never a good idea to do business with friends or loved ones. For at least the rest of the year, I’m going to work on being a stone cold business assassin. It’s not in my nature because I’m always joking around and having a good time.

To be frank, I fear the lion within. I’ve never backed down from a fist fight or a shouting match when provoked. A part of me longs to snap an oppressor’s bones as I once did as a raging young man who always defended his honor. Thanks to the feedback from the community, I’ve been reminded how overly soft I’ve become. Time to get fierce and care for no one!

Related: Are You Smart Enough To Act Dumb Enough To Get Ahead

4) You start taking money for granted. 

Do you remember how excited you were as a kid to get a crisp new bill in an envelope for your birthday or Christmas? Those were the best! Unfortunately, I no longer get excited about seeing a $20 bill or even a $100 bill in my wallet. Now, I withdraw thousands of dollars at a time to pay vendors without feeling a thing.

The reason why I’ve begun to tip more aggressively since reaching financial independence is because I enjoy seeing the joy in others that I once had. I remember getting a $5 tip for just a $5 ride when I gave an Uber ride to this woman. My eyes teared up with gratitude! For the rest of the afternoon I had an extra hop in my step. Then I noticed the best tippers are those who work in the service industry because they know how hard it is to make a buck.

I wish I would be excited by money again. But I’m not. Nowadays, all I get excited about is living life on my terms.

* I just realized while writing this post that I forgot to collect $420 for the two pro-rated and discounted nights after April 30 check out. I accommodated two of the guys because their escrow closing was delayed. I wanted them out on April 30 because it would take five days for the floor guy to refinish everything with four coats of polyurethane. If I cared more about money, I would have remembered to have collected the $420 on the May 2 walk through. 

5) You slowly lose motivation to try harder.

There was a time when I responded to almost every comment. I felt I had to at least say “thank you” to those who took the time to share their thoughts. But now, I respond to only about a third because I’ve lost the energy to keep up. I feel I’ve provided enough value over the years to give myself a break. Besides, the time formerly spent responding to comments is being used to write meaty new posts.

I used to have this goal of writing five posts a week from the current three posts a week cadence. More posts, higher growth, and more revenue. Now, I’m thinking about just posting a couple times a week because I don’t have this insatiable drive to grow my business anymore. Unless there’s a huge tax cut, I don’t want to build a ONIG Financial Blog app or create a larger publication with 10 different staff writers. I just want to have my own little lifestyle business that never feels like work.

The people who hit it out of the ballpark have this ridiculous drive. Pity the trust fund kids who went to private school, got jobs through connections, and don’t really have to create something of their own. When you have everything taken care of, it’s much harder to be your own person. I blame my loss of motivation partly due to my older age, but mostly due to my passive income and steadily declining debt levels.

Related: Debt Optimization Framework For Financial Independence

The Three Generation Cycle

“From rice paddy field to rice paddy field in three generations.” – Japanese/Chinese variation

“Shirtsleeves to shirtsleeves in three generations.” – American variation

“The father buys, the son builds, the grandchild sells, and his son begs.” – Scottish variation

The First Generation comes from a life of hardship. This generation takes the most risks, works the hardest, and makes the most sacrifices to break the cycle of poverty.

The Second Generation grows up a witness to their parents’ struggle and understands the importance of hard work. Because of this awareness, they make good financial decisions and build upon the foundation their parents worked so hard to create.

The Third Generation, however, has no recollection of hardship. They only know a life of abundance. Without an awareness of the work needed to build build wealth, the third generation squanders their good fortune their parents and grandparents worked so hard to build.

My great grandparents left China by boat in order to make better lives in Hawaii and Taiwan. They took all kinds of risk, whereas by comparison, I’ve done nothing close. I fear that a life free of financial worries will dishonor their generations of hard work, frugality, and sacrifice. With consternation, I wonder when my child grows up, will he take his good fortune for granted?

Beware OF The Downside Of Financial Independence

Being financially independent is fine, but unless you have a deep hunger to do something great, it is unlikely you will ever maximize your potential. The downside of financial independence is real. Therefore, a key reminder is to always be mindful of others.

Financial independence can blind you to the world’s suffering. Or financial independence can bless you with the time to help other people. Which will you choose?


The Dark Side Of Early Retirement

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