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“I may never own a Mercedes but I’ll always be able to say what needs to be said when it needs to be said.”
— Jim. L. Collins.
A year ago, our department had been given the order to pick a bunch of poor saps to get fired. One of them was my best friend who had not only lost her mother but also her grandmother and her uncle, all within the course of a year. Good times.
Every day, familiar faces would disappear, replaced with unfamiliar ones that more often than not, communicated to us remotely via computer screens from India. The reason so many people were getting laid off was blamed on budget cuts, even though the company had just reported a corporate profit of $2 Billion dollars.
Everyone I knew was losing sleep and on anxiety meds.
Understandably, hostility surrounded these new, unfamiliar faces. And in hush whispers, people would huddle in groups, conspiring about not sharing information with these “fucking Indians”, to keep “those fuckers from stealing our jobs.”
I could see that the horrible things happening to my co-workers were not the fault of the newcomers. After all, they had homes to take care of and families to feed too. And in fact, they were squeezed even harder than my co-workers, working around the clock and in one case even missing the birth of their own child for a tiny fraction of what my co-workers were getting paid.
But every time I shared information or stood up for them, I was seen as a traitor.
But I didn’t care. Since I had enough F-U money and no longer needed my job, I could say what was on my mind and be objective about the whole thing.
That was when I realized the true power of F-U money. F-U money lets us be our authentic selves, without having to compromise our beliefs for money.
And recently, I experienced the benefits of F-U money yet again.
Ever since this blog took off, we’ve been asked to plaster it with ads that in no way shape or form benefit our readers, in exchange for fat wads of cash.
Once again, because of F-U money, I chose “telling it like it is” over making lots of dough.
I hate hypocrisy, lies, and general fake-ness with the heat of a thousand suns, so being able to tell it like it is makes me ridiculously happy. That’s why I don’t give a shit how much money a company offers me to promote their crappy product. The only things I care about are a) being able to tell it like it is, and b) only recommending products we love and use ourselves c) keeping this site free for everyone
Financial education is a right, not a privilege. Everyone DESERVES to know exactly how investing works, without being thrown all sorts of Wall Street bullshit and having their hard-earned money stolen by shitty mutual funds with 2% MERs.
And it is because of F-U money that I’m able to say exactly what I think, without the fear of losing my livelihood or selling out.
So how did I stumble on the idea of F-U money and its role in keeping us honest?
The first person who taught me about the value of F-U money, way before this blog was born and way before we became FI.
For those of you who don’t know J.L Collins, I like to refer to him as “The Godfather of the whole FIRE movement” because he’s been financially independent since 1989. Along with Mr.Money Moustache, he’s one of the first people who started blogging about FIRE (Financial Independence Retire Early) online.
So after fan-girling over his blog for the past few years, when I found out Jim wrote a book, I immediately ordered it from Amazon:
And let me tell you, it is worth every penny.
It’s honest and authentic:
Jim wrote the book as a way to teach his daughter, Jessica, about investing. So you know there’s no hidden agenda there, as all the advice in the book is something he wants his own daughter to follow.
It’s self deprecating
Jim talks about all the investing mistakes (choosing individual stocks, selling at the bottom in 1980s) he made during the last 20 years. This takes a tremendous amount of self-awareness and courage. Admitting you were wrong is NOT easy, but Jim does it effortlessly. All in the name of teaching you what he learned from his mistakes so you won’t make the same ones.
It’s fun to read
Most investment books are boring as all HELL. This one isn’t. Jim even compares stocks to booze. And anyone who talks that much about booze while still being coherently able to explain complex investing concepts gets my seal of approval!
It’s simple and straight forward
Wall Street LOVES making investing seem complex (CDOs = Collateralized Debt Obligation? Stop. Just stop. I know you get your rocks off by jamming nonsensical words together. I’m not buying it.). But Jim talks about investing in only 2 ETFs. Simple and straight forward. And who doesn’t appreciate simplicity right?
Even the “Acknowledgments” section is funny
As an children’s author and avid reader, I hardly ever read the acknowledgement section of a book. Why? Because it’s insanely boring. But not in this book. That’s how you know Jim put a monumental amount of effort into making this book entertaining. He puts 110% effort into everything in this book…including the dismissive Acknowledgements section.
To give you a taste, here are the titles of some of my favourite chapters:
• Why You Need F-U Money
• There’s a major market crash coming!!! And even famous economists can’t save you!
• Index funds are really just for lazy people right?
• You, too, can be conned
• Portfolio Ideas to Build And Keep Your Wealth
See? Definitely not boring.
Now, in the interest of honesty, I have to admit, we do have some differences of opinions. But that’s okay, if everyone agreed on the same things all the time, the world would be a SUPER boring place.
Here are some of the things Jim and us disagree on:
100% equity portfolio:
Jim advocates for the 100% equity portfolio and then stepping it back to 75/25 when you retire. Being allocate more heavily in equities gives you higher returns over the long run.
We advocate for the 60/40 portfolio. While we are all for higher returns, we prefer to be more conservative so we can sleep at night. To me the most important thing is to not panic and sell at the bottom. And by living off the 3% dividends/fixed income from our 60/40 portfolio, we won’t have to.
Dollar Cost Averaging
Jim is not a fan of DCA and would rather you dump your money in all at once, since history has shown the market always goes up, so the longer your money is in the market, the more money you’ll make.
Put all your eggs in one basket and forget about it.
Jim doesn’t believe rebalancing your portfolio is necessary if you can mentally tough it out. He believes the great irony of investing is that the more you watch and fiddle with your holdings the less well you are likely to do.
Since rebalancing saved our asses in 2008, we prefer to have enough in our fixed income assets to allow us to rebalance during market crashes.
Don’t bother with international stocks.
Since the largest companies in the S&P 500 are all international business, which generate 50% or more of their sales and profits overseas, Jim argues international exposure is covered with VTSAX.
We believe having some international exposure (around 20% in our portfolio) is good since it provides additional diversification.
As you can see, compared to Jim (and most of the other FI bloggers), we’re pretty conservative. Maybe it’s our Canadian-ness or our pesky engineering brains constantly needing to hedge against risk, but we tend to have a lot of backup plans, and backup plans for the backup plans, when most other bloggers are optimistic that everything will turn out all right and believe that we should all just toughen up and ride the market.
But…despite our differences, our overall message is the same:
Investing is the key to wealth generation over the long term and FU money will set you free.
Ever since we started the blog, we’ve been getting lots of questions about how to get started with investing,
If you’re American, this is your investing bible (as it talks about the Vanguard ETFs you need to buy and how to minimize your taxes):
Full disclosure: This is an affiliate link so we will get a small percentage of the book price if you buy from this link. But if you prefer to get the book from the library, we won’t judge 🙂 As long as you read it, we’re happy.
But no talk about F-U money would be complete without bringing in The Godfather himself to talk about it. After watching this video, you’ll understand why we like Jim so much.