Have you read Die With Zero: Getting all you can from your money and your life by Bill Perkins?
“When I say the words ‘die with zero,’ most people’s immediate reaction is fear.”
Ha! When I told my sister I was reading this book, her initial reaction was fear, indeed, but I’m intrigued.
The author talks about his friend who took some time off work in his twenties to travel while the author penny-pinched and managed to save $1,000. Who was better off in forty years?
The friend has this lifetime of core memories, backpacking around Europe and staying in hostels and meeting new people and experiencing new things. The saver has a relatively paltry sum of money.
My initial reaction, of course, is the guy who penny-pinched. After reading this book, I still think my answer is the guy who penny-pinched in his twenties to get to financial independence early to enjoy travel a little later in life.
When you’re young, you have a lot of time and energy, but not a lot of money. As an adult, you have a lot of energy and money, but not a lot of time. And when you’re old, you have a lot of time and money, but not a lot of energy.
It’s a sad fact of life that doesn’t have to be true. Hence, the FIRE movement, in my opinion. Use compounding interest to supercharge your savings into an early retirement so you’re still healthy enough to enjoy your money and your time.
Indeed, the author invokes the early retirement idea and talks about Your Money or Your Life, but still seems to think his friend was better off. I think you can travel and not take money from a freaking loan shark to do it.
The author comes away with the idea that one should borrow money in your twenties to experience all life has to offer and then save later in life. I…I don’t know. He invokes a famous economist, Steven Levitt of Freakonomics, who believes the same. Your income potential is only going to grow.
I suppose.
I’m still skeptical.
He recommends using a life expectancy calculator, like this one or this one. The calculators told me that I’d live to be 86-97. After you figure out how long you’re going to live, then you “time bucket” your life. Think about the experiences you want to have and then decide when in life you want to have them.
I think it’s kind of like my Life Bucket List. A general roadmap for your life. He disagrees and thinks a bucket list is something only old people make. I made mine when I was a tween!
Anyway, here’s a formula he throws out:
Survival threshold = 0.7 x (cost to live one year) x (years left to live)
He makes up the number 0.7 as far as I can tell. But here’s what I’d need to survive according to his formula.
0.7 x (25,000) x (56) = $980,000.
I don’t know. It all seems a bit…ethereal. Nebulous? I think I prefer the 4% rule because it’s backed by the Trinity study. Maybe we’re all just making shit up, though. The 4% rule assumes a 7% rate of return and a 3% inflation rate, which wasn’t remotely true last year. It’s probably an outlier.
I don’t know.
He has some stuff I like, such as advocating for experiences over things. I’m all in for that. Experiences are my jam. He also agrees “at a certain point it makes a lot more sense to spend money doing the things you love than to simply earn more money.”
FI in a nutshell.
So, to the typical questions: what if you have medical expenses later in life?
You probably will. He recommends long-term care insurance.
What if you have kids and you want to leave them with an inheritance?
Give them money now! I like that idea, too. Watch them enjoy the money. Don’t wait until you’re dead. Although he seems to think the peak utility of money, the time when it can bring optimal usefulness or enjoyment, occurs at thirty. When you’re sixty, you’re an invalid apparently and unable to experience happiness.
I also agree that one should exchange money for free time and I like the tagline, “a common sense guide to living rich instead of dying rich.”
I do like the push to spend more money as well. It’s something I’ve been thinking about for a while and I appreciate the vote.
“If you don’t want to squander your life energy, you should aim to spend all your money before you die.”
Okay.
I just read about this billionaire who gave away all his money in his lifetime. Starting with $8 billion, he left himself about $2 million. He rented a modest apartment in San Francisco, flew coach, bought off the rack, took the subway and gave his money away anonymously. He’s someone to really look up to. The author mentions him in his book too.
One of my life bucket list items is to be generous, so I’m taking notes.
Have you read this book? What did you think?
I read it and liked the idea of doing experiences and travel young but you’re always thinking in the back of your mind how do I fund all of this? Yes it would be great to give and receive your inheritance early but you never know if that will leave you with nothing. I didn’t agree with everything but thought it was thought provoking. And having just come back from Europe and seeing people travel pushing around their walkers, I know I don’t want to do that
The author recommends an annuity, but I’m not comfortable with that idea. I’d rather manage my own money. And agree with not wanting to travel when I have to use a walker! Although I don’t know if the alternative is better.
I haven’t read the book but someone in my FI group mentioned it to me yesterday. He was suggesting a bucketlist of sorts- like figuring out how I want to live, how much it will cost to travel the kind of way I want to travel and how often, how much I would actually need to live at an All Inclusive 😉 this way I could know how much I actually need to be saving and what I can spend now so I can still enjoy my life before my youthful retirement.
I’ve only done the all inclusive once before in Goa, India and it was fabulous. I want to do that again.
Your friend has good advice.
Great topic to think about. I’m 67 and retired. I urge people your age trying to make these decisions to find a way to make their future Self seem like the same person as them today, so they provide for themselves later. If you fail to provide while young for your mature self, you’ll have to earn a ton more that compounding, consistency, and time would have done for you.
The 4% “rule” is backward-looking, and actually not a rule. The media gave it that label. And (surprise) it can lead to massive underspending (read: cramped lifestyle) as well as overspending. Look at some alternatives that build on that analysis (search for ‘safe withdrawal rates’).
Also, fund those Roth IRAs. Tax-deferred savings (401k, IRA) have a built-in bite. Lots of us (like me) are making MORE in retirement than when they worked, and taxes are a pain in the tush. Roth IRAs can ease that pain.
You are right, don’t save all of your joy to have later, there are no guarantees you’ll a) get there, or b) be able to enjoy it.
Great article, thank you for taking time to write!
All excellent points. Thanks for commenting! Appreciate the viewpoint from someone a little older.
When I first heard about this book, my initial reaction was fear because I thought the premise was to live on a very tight margin. Sounds like that isn’t quite the message it’s giving. Ultimately, I think the best thing is for young people to be educated on personal finances and FIRE so they are aware it exists. Hopefully their life situation is one in which they can decide what’s more important for them and plan accordingly, or at least strive to live they way they want at any given time.
Having said that, reading the Financial Independence subreddit shows me there are a number of young FI-educated people who can’t seem to enjoy life because they are so focused on reaching FI. And I get that. I do like the tagline you pulled out “a common sense guide to living rich instead of dying rich.” There’s got to be a balance. Once someone is educated on finances and can start working towards FI, then it’s really a personal journey of themselves and their life. What’s important to them?
I’m presently taking time off work to focus on family. I had been grinding away to FIRE, but with young kids and older parents I realized now is the time to step away from work for a bit. I’m lucky I have this option, and part of the reason I do, is because of learning of FIRE a while back.
Money gives you options. I’m glad you’re doing what you feel you need to. I also agree it’s easy to get obsessed with the penny-pinching and go too far. Excellent comment.
In college I passed on a 4 week cross country road trip with my best friends because my Dad told me I should work, not be frivolous, and I was concerned about the $600 it was going to cost. Stupid. Still regret that decision. My friends had a great time doing something we never again had the time and freedom to do.
I also did a lot of work and saving I don’t (at all) regret having a 1.3M net worth at 42, a vested military reserve pension coming at 60, and a very solid career.
It’s a balance – FOMO or YOLO can lead to misery and purposelessness, but so can Scrooging through life. Work hard at something that matters, spend responsibly, and stop to do the things you can only do NOW from time to time.
Oh man! That hits me in the guts. My biggest regrets in life are the trips I didn’t take, so that would also torture me. Appreciate the thoughtful comment.
My approach has been mixed. At 18 I worked for a year in construction (best job ever), but then used the money to travel all over Europe with friends, go to Iceland, and explore the world a bit.
I then decided to do what I enjoyed (electronics) for a career and went to Polytechnic to study. I traveled a lot for work (mostly Africa). Saved. But when I needed a break I took a break. I also did contracting, which gives you time off between contracts to travel, rest, read, whatever. Somewhere in there I got married, raised a family, got divorced, travelled some more, met someone else (17 years together and counting)…life…
FIRE is an interesting one, because if you look at the “big beasts” of FIRE, they mostly changed careers…MMM did not need to save up 25x annual salary to change to carpentry etc…LivingaFi went back to work…sure, they didn’t need to, but relatively small sums saved give you huge options. You can change career on 6 months of savings etc… (I’ve done it on less)
I guess it’s the old saying, find a job you love, and you never work a day. I found something I do love (and then changed when I fell out of love), but still had plenty of time off to do other things too. No regrets.
I have saved, but not at the expense of living a life. I won’t be leaving my kids millions, but they have their own money, and what I leave will be more than enough for them and my partner…
I won’t be leaving anyone millions either. I agree they have their own money and don’t need mine.
Just read LivingaFI’s last post. Informative about life and struggles post-FI. Thanks for sharing.
I agree with your initial skepticism about the high spend 20’s advice – especially because saving or investing that young is an act of self care and wisdom (compounding)-but I did agree about the importance of building experience and social capital. After reading DWZ, I had a good think about the rest of my life in 5 year chunks and when to really plan the big life dream events. That was helpful for me as a Gen X FIer considering options. It is a fast read, not that well written in places, but the message is sincere and kind. The ideas do linger and have power. Here we are discussing them. Thanks for your blog and your insights, meanwhile.
He mentions a ghost writer, so I wonder if he had help writing it?
Although the book made some good points, overall I finished it feeling very sorry for the author. He’s clearly never experienced the true joy of a real, purposeful, simple family life. he spends his time trying to buy happiness, very sad. Look instead to the blue zones, there are some great examples there of people who still know how to live well
What are the blue zones?
Check out the Blue Zones books by Dan Buettner — currently reading The Blue Zones Secrets for Living Longer and enjoying the glimpse into these special places on Earth where people seem to thrive best when they focus on the basics like living simply, spending time outside, caring for family, and working hard. There is also a Netflix documentary but I have not seen that yet.
Appreciate the recommendation!
Old Soul has it right, “It’s a balance”. And it depends upon all sorts of things you can’t control (your background, your circumstances, when you actually die) and things you can (lifestyle, jobs). So find a mix you’re happy with and check in on yourself every few years to see if your outlook has changed so that you don’t drift along in a sub-optimal (for you) way.
Yeah, don’t live your life on autopilot seemed to be part of his message
My experience (I’m now a healthy 70) is that you form the most indelible memories in your late teens and twenties, later life becomes more of a blur. If you are able to make great memories when your a young adult and save the heavy lifting for later.
Interesting! Appreciate the perspective. I have lots of memories from my thirties, but I hear you that the memories from childhood are more indelible. Great word.
Great blog post and hope all is well with you, BF, and family!
I read this book some time ago on the recommendation of a friend and I really enjoyed it. It has allowed me to be little less “worried” about “having enough for the future” and helped convince me to continue being retired. I’ve been an avid fan of the FIRE movement and initially found your blog through your interview with Mr. Money Mustache. I retired at 49 years old (after serving 29 years in the US Navy); and was very fortunate to have a pension and lifelong healthcare.
Even so, as a physician my professional culture does not condone retiring early… hehe. So it was a real challenge to retire.. and stay retired (even taking a job for 9 months that matched incredible intensity with beautiful surroundings (The Bahamas) and fantastic pay. Ultimately that facility closed during budget cuts, but amazingly, what I felt when it closed was relief. That was about 1.5 years ago and I continue to remain retired (which is easier, of course, with the pension factor above and beyond savings and investments – that is, freeing me from the 4% realities).
In any event, that’s a waxing way to say that this book helped me keep things in focus… and realize that I had enough… and barring desire for sports cars or boats… I would be just fine. Of course, your blog… and MMM’s have helped tremendously too.. so thank you for that! It’s great to see you blogging more regularly again.
All the best,
Drew
Thanks for commenting, Drew. I always wonder about FIRE physicians. Do they feel guilty for giving up all that schooling? I gave up three years of law school and that was a little hard. I can’t imagine eight years.
Before “Die With Zero,” there was a book along those lines published back in 1997 called “Die Broke.” Written by Stephen Pollan and Mark Levine. Written at a time when Generation X was coming of age in the workforce and following some of the same “rules” or “life model paradigms” the Baby Boomers were following in terms of career and finance (which were not working in my case). Not sure if it’s still in publication but if you’re able to come across it, give it a read (you don’t have to read the whole thing). Since I’m GenX, I have to admit that Die Broke was one of the cornerstone books (along with “Your Money Or Your Life”) that led me onto the path where I am today (going on 58 and semi-retired for over 15 years – and blessed). JL Collins felt that the book was poorly written and he may be right (he was an English major), but I came across this book long before the Internet started to gather it’s flying feathers and the movement we’ve come to know as FIRE. Granted, some of the stuff in Die Broke is outdated (remember, it was published in 1997) but some of the approach may have morphed into the FI movement in some way. Just my 2 cents. Keep the change.
Love your last sentence. 🙂 My library doesn’t have Die Broke, unfortunately. It sounds similiar. Thanks for the suggestion!
The memories we’ll have of our travels in our 20s will be different than the memories we’ll have in our 60s.
As we age, we mature and become wiser. In our 20s, we’re less likely to appreciate architecture or a well made meal. Whereas in our 60s, we’re not going to leap into waterfalls. Thus, each person has to decide why they’re traveling.
That’s exactly the author’s point! If you’re into jumping into waterfalls, don’t wait until you’re retired in your sixties to travel. Thanks for commenting.
Thanks for the note back. Just getting to this now.. ah life. Always moving too quickly.. haha. In any event, I can’t comment for all physicians, but for me there is no guilt on giving ups the schooling. In my mind, I utilized that schooling extensively… helped countless people.. worked hard.. etc. etc. Exiting the workforce a good bit earlier than others doesn’t change that (in my mind at least.. hehe). I see it as a bouillon cube of effort vice a blander soup. I just condensed all that training and knowledge into a tighter time frame. 😀 But, with all that said, I do have plenty of physician friends and colleagues who feel differently. So perhaps I’m a bit of an enigma.
I’m glad you feel no guilt. You deserve to be happy and if doctoring doesn’t make you happy, maybe early retirement will.
So far it seems to be doing the trick! Hehe. Each year I become more and more satisfied with being retired and just enjoying the time I have. I know you can relate 🙂 Anyhoo, great to chat as always, and I look forward to keeping up with your future posts! Hope all is wonderful with you.
Is there a consistent and reliable place that you look for investment return and inflation % per year? I recently dumped everything into index funds and having a difficult time finding these #’s. Especially for recent years. Thanks for the great posts!
I don’t really look at those numbers. Maybe I should.
When I do look for those numbers (rarely), I usually just google it and then pick a government website or vanguard source that looks legitimate. Sorry I’m not more helpful.
I have traveled mostly while in my 20s and 30s – not the backpacking across Europe thing. In my 40s and 50s when I traveled it was more for a specific purpose, not just to travel. Now, if I think back to some of the early trips I took, maybe I’ll have to do some of them again – the world has changed a lot and what I saw and experienced isn’t real anymore.
Charles Feeney is a fascinating person. I don’t know if his children are following his example but, while he left them modest fortunes, their mother left them very nicely off.
I’ll have to read more about Feeney. I agree he seems like a fascinating person.