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Lately, annoyances around my house actually bring a smile to my face. They are reminders. Reminders of a life I’ve chosen. And reminders of a life I haven’t chosen.

There’s a laundry pile in my bedroom. I haven’t had time to fold it. I used to be annoyed by this. But now, it’s a reminder that I’ve chosen to go on a bike ride or spend time with my kids.

There’s a camping trailer in my garage, taking up way too much space. It used to annoy me, but now I think of it as a reminder that having a cozy, organized, home-oriented garage isn’t my priority. Travel and adventure are my priorities.

My home phone lines are cancelled (I know, I know, the younger generation laughs at the idea of having a land line at home, but it used to be the norm). It’s no longer an annoyance to miss this – now it’s a reminder that we’ve chosen to streamline our expenses so we can live more, work less.

There are other examples, but these get the point across. Life is all about trade-offs. You can’t have it all. Even rich people can’t have it all, because they still have limited time and energy. The above examples are trade-off’s I’ve made. They make my life better, even though they require a sacrifice. But in most cases, the sacrifice isn’t really something THAT MATTERS TO ME. Instead, it’s just sacrificing a stupid societal norm, which means nothing. Such as folding laundry.

These things are reminders that I’m trying to do my own thinking. I’m trying to use my resources (time, money, energy) on what matters, not on where the herd is going.

They are the strings around my finger that remind me what road I’m taking, in case I forget. Because we all forget sometimes.

I love the work of Tim Ferriss, and on a recent podcast episode he interviewed someone who talked about choosing our failures instead of our successes. (I highly recommend Tim’s book – life changing)

We often ask ourselves, “what do I want to succeed at today?” Maybe it’s going grocery shopping. Or maybe it’s something much more grand – finishing a college degree so that you can get a good job.

What we don’t realize is, every time we pick something to succeed at, it means we are also picking something to fail at. Life has limited time, money, resources. By succeeding at something, you are ignoring something else. Maybe that’s OK; maybe you aren’t ignoring anything important. But just maybe, you are ignoring something important.

So, instead of asking yourself what you want to succeed at today, ask yourself what you are OK with failing today. This frames the question in a way that you can identify things you are ignoring in your life, which you wish you weren’t ignoring.

An example for me, is that the men in my family have always been relatively guilt-stricken over doing a “perfect” job at work. We stress about making sure we are always making the best choices and treating those who work for us perfectly. OK, this is a worthy goal. But the obsession over perfection here, may mean that I’m failing in other areas – like raising my family. Framing it this way, it helps me to see things in a new light, and to realize that actually, I’d rather succeed in raising my family and fail sometimes at work. I’m not talking about making any really bad decisions at work or being lazy, I’m just talking about dumping the perfectionism. What are you willing to fail at today?

As you can see (below), this week I succeeded in buying my kids two awesome new mountain bikes. This means I failed at putting that $1000 into a retirement account. But when I frame it this way, it’s easy for me to see which I’d rather fail at. I’d definitely rather fail at investing than fail to pass on to my kids the joy of mountain biking, my favorite sport.

Bonus topic: The question of what to fail at becomes harder and harder to answer the older and more successful you become. When you are young, it’s easy to put off big purchases because you don’t have kids yet, and you don’t have any money, and the goal of getting financial stability is all-encompassing. You save, invest, buy a house, eat beans. Great. But as you get older, the numbers become more abstract. Will it really make that much of a difference to put 5% more in my retirement account this year? Will that be better than buying mountain bikes? Not such an easy question. Because saving for retirement is a very volatile proposition, and depends on a lot of things like – how the stock market will do, how long I will live, etc.

Therefore, since I can’t predict the future, I simply have to choose what I want to fail at today. I can’t succeed at everything. Today, I succeeded in getting my kids on some dirt trails. Honestly, I don’t really care what I sacrificed to achieve that goal, because it was worth it!

(and yes, maybe disc brakes for a 5 year old is a little overkill, but the bike is geared fantastically for Tahoe hills and it has 2.8 tires! Duh!)

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I’m not able to pay all my bills by passive income yet. But that doesn’t mean I haven’t made any progress.

In theory, we know that passive income can help you pay your bills. But what does it actually feel like? Well, here’s a glimpse I’ve had this month…

I’ve been trying to put work on autopilot this summer, to take a lot of time off and hang out with the family. At the end of this month, I realized I hadn’t gotten a lot of work done and the finances were getting squeezed a little. Just as I was thinking, “man I better go do some projects,” I checked my online banking and a few bits of passive income had just hit my account from various investments… and bam, just like that, my spreadsheet was healthy again. This was a cool feeling. You can tell someone how fun it is to ride a bike, but until they’ve actually DONE it, it’s meaningless. I think the same is roughly true for passive income – actually feeling it means so much more than just talking about it.

I still have a long way to go before the numbers are more substantial. But I’m glad I’ve got some emotion behind my motivation now. That was a super cool feeling!

I care much more about analyzing my finances in a theoretical “bad year” than I do in a good year. Why? Because the bad year (a low income year) is the one when my lifestyle would be threatened. In the good year, nothing is threatened. So, I think of my good years as “future proofing” seasons when I do what it takes to get life ready for the inevitable bad income year.

This is in contrast to most people who look at good years as a time to prepare for retirement. For me, the primary goal in a good year is to prepare for the bad year before retirement. The secondary goal is to prepare for retirement. And the holy grail is to do BOTH at the same time, which, thanks to this awesome discovery, is possible.

Why am I so worried about the bad years? Because…most people, if they have a bad year, either have a TON of stress, or they have to go work MORE, or in CRAPPIER jobs. I don’t want to do either. In a bad year, I still want to be able to enjoy life and enjoy my family. So preparing for the bad year is super important. I’m self-employed, so my income varies, so it’s even more important. But even someone with a regular “job” could lose that job and be forced to get a terrible job, if they aren’t prepared for the bad year.

So, what are some things you can do when income is good, to prepare for the bad year?

  • Pay down debt
  • Get reliable cars
  • Make big house repairs like a new roof, so these don’t hit in a bad year
  • Develop streams of passive income
  • Streamline and consolidate core expenses
  • (these are just some examples)

Another important thing to do, is to optimize your tax situation for the bad year. One thing I’ve been focusing on a lot is trying to hold investments that pay qualified dividends, in my taxable account. This is because, in a bad year, my tax bracket will be lower and these dividends will be taxed at a rate of ZERO! Yes, the US Government currently taxes qualified dividends at ZERO, if you fall below a certain tax bracket.

On the other hand, T-IRA income is always taxed as ordinary income, so you should go for the highest return investments, not those which are tax advantaged.

So, knowing how to invest and plan in good income years, in preparation for the bad income years, is an important step. It’s kind of like, if the sun is shining and the weather is good, you start preparing for winter. You need to know what winter will bring – cold, snow, wind. You need to know how to prepare for these things. Same thing with money. You need to know how your tax situation will change in a bad year, and how to optimize for that.

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This blog post was a big “ah ha” moment for me.

Lately, I’ve been having a really hard time getting work done in my home office. After careful thought, I’ve realized I actually don’t mind doing the work. The thing I mind is being away from my family.

In agrarian society, if I worked my own farm, my kids would be intimately involved in running the farm. They’d be with me, learning, relating, together. Maybe not all the time. But a lot of the time.

After the industrial revolution, and especially now with the tech revolution, we instead “go” to work. We leave our families. We disconnect. We partake in some advanced work that’s too “complex” for children to do, in a workplace where children aren’t allowed, miles away from where our children live. Even if we work from home, it is often work that requires us to shut ourselves away from our family to concentrate and peck away at a computer screen sending digital signals off into cyberspace (who cares???).

In striving for work flexibility and financial independence, I realize that this problem is actually what I’m out to solve. If I lived on a farm, I’m not so sure I’d care about work flexibility and financial independence, because I’d be with my family on a regular basis. But because I don’t have any farming skills and I don’t own a farm, it seems that the only way to truly be around my family as much as I want, is to have flexible work.

This blog post is such an “ah ha” moment for me because I used to think that my motivation for wanting passive income, and early retirement, was so that I could stop working. Right? I mean, isn’t that why people want passive income and early retirement?  So they can stop working? But after really seeing this new way of looking at it, I realize that I don’t want to stop working. I’d be happy to be working and productive for the rest of my life! I just want to stop working in front of a computer screen away from my kids. I’d much rather be working outside, with my kids, teaching them about life and how to do stuff. If I get done with the day and I’m sweaty and tired, that’s fine. Hard work isn’t the problem. The kind of work is the problem.

I yearn for the day when my work will be more connected with my family, like taking my son out and teaching him how to hunt, or plow a field – I yearn for a time when the paths of work and family cross. I don’t foresee it happening any time soon, so in the meantime, I’ll try to accomplish my goal (spending time with my family) by having work flexibility.

I admire and often think of another blogger who, after achieving some degree of financial success, bought a farm, and pretty much went off the grid. He decided he didn’t want to spend all day looking at a computer screen, (or fill in the blank advanced tech job), so he hardly ever checks his email and only does bills, and other online chores, occasionally. He spends the rest of his time outside (imagine that!) with his family. It’s funny how I’m reading about more and more people doing this. I really suggest you click on that link above, because he does such a fantastic job of explaining why he left spreadsheets and computer screens behind, in search of nature and in his case, a farm.

It’s sort of this idea that when you’ve made enough money, you can afford to pretend that you live in the 1700’s and get back to a natural way of living. While I don’t foresee myself following this path anytime soon (maybe I don’t have enough guts?), there are baby steps I can be taking in this direction. The first step, for me, is a flexible schedule. The 2nd step is less consumerism, so I can rely on money less. The third step is optimizing our finances (passive income and a solid financial plan). I’d actually say, also, that camping plays a big role in this process – it puts me in a “temporary” agrarian setting where my family are all connected and working together on basic, physical tasks for that day’s work. And it’s no wonder that camping is the one activity which rejuvinates me and and makes me feel closer to my family, than any other activity.

I think the desire to get away from “modern work” is only getting stronger year by year, with new generations of workers. Why? Because work is becoming a bigger and bigger part of our lives. 30 years ago, yes we went to work, but we didn’t bring it home with us. We disconnected from work more often. But now, we are always connected to work – we are always checking email and sending meaningless digital signals off into cyberspace, at all hours of the day and night. So, as we become more out of balance with nature and family, we commensurately crave that balance more intensely.

In conclusion, I think this is such an interesting area to examine. Our work lives – where we spend SO MUCH of our waking hours – are so disconnected from our families. Is this how it’s supposed to be? Should we give in to society’s new, industrialized, definition of “work”? What can we do to take our power back and design a more natural life where everything is integrated? Some questions to ponder.

Ultimately, I think the goal for me is to make family time, nature, being outside – the goal is to make it so that these things aren’t just things that happen on evenings and weekends. They are THE things that I fill my days with, instead of things I squeeze in between the insanities of daily life.