For some reason the holiday season always causes us to think about major life changing events and significant milestones. There are a few things that change the way you think about life. Most of them involve mental shifts and some simply come out of the blue. If you don’t experience some of them, you’ll never know what you’re missing out on and if you do experience them it’s not possible to replicate the feeling/change in beliefs in the future. Don’t bother chasing the high of getting rich with drugs/alcohol for example. Celebrities are Exhibit A for how it all ends. That said we’ll outline some of the big ones.
Escaping Near Poverty: Hopefully you didn’t have to experience this. There is a certain level of stress that causes premature aging. Worrying about bills, the rent and even food is not healthy at all. While many claim that it’s impossible to make socio-economic moves in the United States, we firmly disagree. It isn’t easy but it is 100% possible for people who really want to make a jump.
While we don’t have experience with the bottom 15% of the economy, starting at the bottom 25% is enough to never forget. Once you jump into the upper middle (top 20%) your stress levels go down to the point that you see it on your face in the mirror. You stopped aging. We can only imagine how this feels if you started in the bottom 10%.
Mathematically speaking, the average reader here is going to be starting somewhere in the center and the real inflection will occur when they break into the top 5%. If you break into the top 5%, you know it is only a matter of time before you become a one per-center for at least 5-8 years of your life. People begin to treat you differently and the following occurs: 1) you will almost certainly buy some stuff you said you would never buy, 2) you appreciate several things that you never understood – for example spa services and resort experiences and 3) you have a harder and harder time relating to your prior socio-economic class.
As a fun fact, the people who make it to the top 5% never end up buying material things for long periods of time. If they were really poor to start they will do a few dumb things (fast car or fancy watch) and then never really repeat it. Also. The ones who really hit it big $5-10M are harder to read. They either grew up in a rich family and were used to the fancy items or decided to say “f-it” and blend in with the materialistic crowd. Mathematically speaking, unless you find out through the grapevine that someone is ultra rich ($10M+)… If they are rocking tons of material things, they grew up upper middle class in the first place. Nothing wrong with it, just a simple observation. Oh they also take the most photos too, unsure why that is the case.
The long story short? A smart person who makes it up the ladder has no interest in moving backward. Zero. The amount of failures it took to get there and the expended effort is too large. Their standard dopamine levels are now naturally higher as well. Don’t let the “money doesn’t buy happiness” people fool you. It definitely decelerates (moving from $50K to $150K a year is huge, while moving from $500K to $600K isn’t really relevant), but it helps a ton as you work your way to the top 20% and then to the top 5%.
A Complete Failure: While the positive part is what everyone likes to talk about, if you push the boundaries long enough you will have an epic failure. Epic failure means you gave 130% of your effort and didn’t get anything. Except for the taste of crow.
From what we have seen, these typically occur in standard time frames. Generally? In your early 20s and later on in your mid-40s or so. The first failure is due to the learning curve. You quickly learn that passion is for losers and no one cares about your “interest” in the industry/activity. If you’re not good at it… life gives you nothing but Ls. Loss after loss after loss. You learn that your best isn’t always good enough.
The second major failure is due to hubris and optimism. If you’re successful, you believe you have the experience to swing for the fences. This doesn’t end well from what we’ve seen. There is a strange ebb and flow to success where it goes up through about late 30s, goes flat to down and then many people ramp back up later in life (mid 50s). Unsure why this is. One fun implied message here… if you’re already rich by age 30, swing that bat as hard as you can between 33-37. It seems to be the sweet spot. Does it guarantee success? No. Also it forces you to get rich early enough (30) to have a chance to swing hard at mid-30s.
Similar to a rubber band, the harder the fall is (earlier in your life) the bigger the snap back is. The catch? Over time the rubber band becomes weaker (just like your muscles) and would break if you put too much pressure on it over a long period of time. The point of all of this is that you want to take as much pain as possible up front while your body and mind will actually get better (not break).
A Health Scare: When you’re in your 20s… You’re invincible. Seriously. As many of you know we keep a basic personal journal (no we’re not religious about it and no it’s not long, 100-200 words is more than enough). Looking back the writing style was certainly weaker and the length was far too long. That said, it’s hard to believe how much your body can take at that age.
An example of someone who is 22? You can honestly do the following: 1) wake up go to work for 12-16 hours – including your side business, 2) somehow have energy for the gym, 3) sleep and repeat 5 days in a row, 4) decide to go out and “rage” extremely hard until 3am, 5) have no hangover the next day and work out!, 6) set up a few dates during the week and 7) go back to working 60+ hours a week.
This is not sustainable at all. Not even close to realistic by the time you’re 35+. If you decide to have kids, you end up doing something similar (in terms of work ethic) yet 99% of adults end up gaining a ton of weight and aging rapidly due to the sustained pressure to work constantly.
Notice… We’ve talked about running on all cylinders and somehow tied it to adults having kids. Why? Well they are heavily correlated. You continue to think you’re 20 years old until you hit your 30s. Then your body starts to age a bit and you have a serious injury or health issue. This causes you to reflect and many people end up having kids after this event. You realize you’re not invincible and life is eventually going to end. As usual we don’t give opinions on having kids as we’ve seen happy people in both camps. But. We’re pointing this out now. If you haven’t noticed it in the past, you’ll notice it now.
Making Money in Your Sleep: We wrote a few tweets on this but it is honestly life changing. People laugh at your first “sleep based income”. It could be a $500 dividend payment or a $500/month income stream from some poorly monetized internet project you were working on. You will never feel the same once you get the first check.
Why? You visibly see the compounding if you’re smart. If you were smart enough to build a small income stream that generates some money while doing nothing… You’ll be working extremely hard despite the income stream. This causes your savings *rate* to inflect without becoming a frugal monk.
Do some quick math and say you’re spending $5,000 a month. If you generate an extra $500 a month. This means you’re saving another 10%! That is not a joke. 10% of net income is a higher savings rate than the average american and you’re not even trying yet.
We’re not sure why it feels different but it just does. The main thing that occurs… your brain no longer believes that you have to add hours to make more money! It will never reverse after this shift in mentality. No matter what you do, people always think in terms of “time exchanged for money”. Once you have a money making machine in front of you… There is no turning back.
Significant Loss of Friends: If you think the friends you made in college will be around in 10 years we’ve got some bad news for you. Unless you were incredibly unsuccessful or incredibly lucky… You won’t know any of those people anymore. Why? Well the chances that 10 people in a group make it are slim.
If you attempt to hang onto the past all you are doing is dragging your net worth down. People joke about the saying “give me the five people you talk to most and i’ll tell you who you are”… but its 100% true. If you continue to hang out with people who are not going in the same direction, you are losing time spent with people who are.
What happens? Your relationships with people who didn’t make it deteriorate at rapid speeds. As we’ve said before. No matter how talented you are, anyone in your age band will think they are better than you. This is just a stone cold fact of life. It begins with “You changed man” and “Don’t you think you’re making people feel different”. Of course you changed, you didn’t work like a dog to remain in the same place. Also. It is not your fault if they are insecure as long as you’re not blabbing about money in front of them. Note: even if you never talk about money in front of them (ever) or mention your work (ever) this will still happen anyway.
So how does this shake out? Ultra rich people end up having a few people they trust (call it five people) then a ton of rich acquaintances. There is potential to make money with the acquaintances but the few people who have known you for 10+ years are in a different playing field entirely.
Death in Immediate Family: These types of events really put life into perspective. Sometimes they are actually not incredibly sad. For example if you have a relative who lived to age 90 and really saw/did everything they wanted while dying peacefully, that’s not incredibly damaging. We would classify these deaths as “safe” deaths.
The ones that are impactful typically involve: 1) a sudden accident that kills someone, 2) a sudden health event that leads to death, 3) a sudden overdose or extreme situation and 4) suicide/self inflicted death. All four of these are completely different and impact the psychology of the person closest to the event. Ideally, you never experience any of those four but once you see it… This changes your actions almost immediately.
While this is depressing, we’ll end on a social note. If someone tells you that someone “passed away” they are usually middle class. If someone says someone “died” they are usually rich as they went straight to the point. And. If someone says they “are with god now” or “went heaven” they are likely from a poorer background. This is something you learn if you’ve seen the three major economic buckets (started from the poorer background and worked up to well off/wealthy).
Life Turnarounds: We’ll end on one last life changing event, a positive note of course. Which is witnessing a life turnaround of either a family member or someone you have known for a long period of time. These are extremely hard to describe as you’re forced to realize that anyone can fix their lives. You’re beyond excited to see it happen and unsurprisingly you’re one of the only people to reach out with a congratulatory phone call.
The other thing this does? It forces you to work harder and actually improve your life at a much faster pace. As a rule of thumb, people who really turn their lives around do a large amount of the heavy lifting without help. So. The image and real life “anchor” is stuck in your brain forever. You essentially get an energy boost from someone else.
With that said we hope you enjoy the end of the year and don’t do anything foolish like waste money on overrated New Years Eve parties. Since we put the emotional roller coaster in here, if you have specific positive life changing events that most people go through we’d love to hear it!