My initial capital came from drawing down on the credit cards that every graduating senior receives in the mail. I think I drew down $60,000 or so. I’m not recommending that anyone ever do what I did, but the moral is that you have to bootstrap some type of plan and it’s normally not very pretty. I also lived on $1,000 per month for the next 10 years. Of course, that was in 1980’s dollars, which bought a whole lot more back then.That was my income from age 22 to around 32. I had a surprisingly high quality of life during that period, I had a nice apartment (around $600/month) and ate well, but I didn’t have any outside activity besides working. I basically worked, ate and slept, 7 days a week. I also went to a gym every day, which is why I did not die of a heart attack at age 30 or something. The reason I paid myself so little was that I was racing to pay down as much debt as I could. That was not my idea – that’s what the bank wanted. I had a fairly high net worth, but very little cash flow as a result. But my wife and I look back on those days of $1,000 per month with nostalgia, as we really had a great time on very little cash flow.
Most people don’t believe it, but having gone from no cash flow to a ton of cash flow, I can honestly say that most people’s problems are not money related. People tell me, “my life would be so much better if I had more money”. Well, that’s true to a certain extent, but the best things in life are free (not to steal the Beatle’s quote) and if you have a good family relationship and good health and a good sense of humor and a lot of activity, you are going to be happier than a billionaire many times over who lacks even one of those items.
Money is a tool, and you have to be a master of it. The key is “quality of life” and you need to be able to provide a good quality of life for your family regardless of income. At the same time, recognize that the most important thing that money can buy you is freedom from not having to do what you hate to do. Debt can be a monster if you get on the wrong side of it, so pay it down as fast as possible, even if it means sacrificing in the current moment.
There’s an old saying that “a good farmer lives poor and dies rich”. I’m from Missouri and I guarantee that’s the truth. Building a net worth is fun, but it’s the building that’s fun, not the spending of it.