Die With Zero: Why You Should Start Spending Now
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What kind of money for the rest of us? This is a personal finance show on money, how IT works, how to invest IT and how to live without worrying about IT host David stein. Today is is episode 4 forty six。 It's titled die with zero, why you should start spending now.

I recently finish two books that seemed to resonate with the personal finance community. They have sold well. The books have been recommended to me.

I've seen them on social media. The first is die with zero, getting all you can with your money and your life, by bill perkins. The second is the pathless path, imagining a new story for work in life by paul Miller.

I admit I was reluctant to read them. I assumed that I was zero was about aneugh ties, something we have covered numerous times on the show, including up so thirty two, which was titled die broke. The pathless path had a more appealing title, but I felt like something i've already been on for more than a decade, and I wasn't sure how helpful they would be.

Both perkins in Miller have taken unconventional paths. Perkins is in his fifties. He was a successful energy trader. He's still a hetch fund manager, a halloy wood film producer, and spends time at high stakes tournaments playing poker.

Paul Miller is Younger as and as thirties, is an independent writer, free Lancer coach, is not financially independent at this point. Perkins obviously is, although he says he's not a billionaire, but that sounds like he's very wealthy because he said he was one of the most successful energy traders in history. Both books provide insights on answering this question.

I'll use perkin's phrasing of the question, what is the best way to allocate our life energy before we die? Perkins was trained as an engineer, so he sees this question an optimization problem, how to maximize for filming while minimizing waste. And the problem he says for trying to solve is total life enjoyment is such an optimization problem.

In his mind, he's developed an APP, and i've not used to APP, but he talks about different experiences, can have different experiences points, because he believes the goal is to maximize our fulfilment across our lifespan by having experiences. And it's it's figuring out the right baLance between earning money and then spending that money on experiences. And because in his mind, is a complex optimization problem, that's why he developed an APP.

I disagree. I believe we should strive to achieve fulfillment in our life. But I don't see IT as an optimization problem when I hear the word optimization, even with an investing, I tend to pull back because there are so many uncertainties.

There isn't a formula to have a fulfilling life. There isn't an opt more answer. Perkins believes the way that we maximize our fulfillment is by achieving the biggest peaks we can through a combination of our time and money. And then by investing in these experiences will have long lasting memories that we can reflect on, even as our health declines and he causes a memory dividend. Essentially, our experiences and memories compound over time.

He is so focused on optimization that he he says he has an APP on his phone that shows how many days, weeks, even hours, I suspect, until he's expected to die if he dies at his actual life expectancy. I find that appalling. But i'm not an engineer and that's fine that he finds that are useful.

One of the things that perkins points out, it's true is that our health does decline over time, and that is Better to do some things that are more physically demanding when we're Young, he writes. Too many of us still view ourselves on an ongoing basis as being in our twenty years, even though our real age is somewhere in our fifty, sixty or even seventies. While it's admirable to view oneself as Young and heart is also necessary to be more realistic and objective about your body and how aging yet to be mindful and aware of your physical limits and how they are steadily and coaching upon you as you get older, whether you like IT or not.

Not true. I didn't really care for his view of aging. IT was IT seemed overly pessimistic, and I could have been from his life experiences, but he write, as you get older, your health, the client and your interest gradually narrow.

Just as your sex drive diminishes, your creativity usually declines to. And when you're extremely old and frayed, no matter what your level of interest is, just about all you can do is sit and eat tapioca. Putting at that point, money is useless to you because all you need or want is to line in bed and watch jeopardy.

That's true sometimes, particularly if someone gets dementia, but not always. Some of my most cherished friendships today are with individuals living, active, fulfilling and creative lives in their eighties and the nineties. They're not living off of their memory dividend.

They're creating new memories every day. And I think bad should be a goal. Not worried so much about we're gonna and die because we are. But and I this is really the point of perkins book to make deliberate choices, deliberate choices of how we spend our money in our time, and that's how we make the most of our life energy. He suggests using time buckets, which is different from a bucket list.

Time buckets are, look at your twenty, thirty, forty, fifty, sixty, seventy, eighty in which activity sufficient balancing the the money we have, the free time we have and the health which activity would fit best in that bucket. That presumes you have a long list of things that you want to do. I don't i've done many things already.

I enjoy the journey and I I just not that type of planner with this list of places I want to go and things I want to do well. And I could because I mean my fifties. So I quit my job over eleven years ago.

So many of those things i've done, I recognize, for example, that there are many countries that I will never visit. I probably will never go to china or south africa because there's other places I want to go more and I want to go back to. And and I have found is if you've traveled in developing market countries, there is some similarities, a third world country there, obviously cultural differences, but there are definitely some some similarities ties the same for advanced countries.

And so we don't need to see every single country in the world unless that is your goal. There is a difference, though, between making deliberate choices and maximize trying to maximize our fulfillment and equating maximizing fulfillment with maximizing the number of experiences that we had. There's a difference between quality over quantity.

The example perkins gives is if you have a week's worth of vacation and maybe it's the first time you've been there and you're not sure when you're onna go back and so you want to plan ahead, he writes, to make sure we pack in as many landMarks, tours, activities and other experiences unique to the place we're visiting. That's a lot of time pressure when you're on vacation. I don't travel like that many people do.

And I think it's it's the fear of missing out of not being able to go back again. We have friends that are going to the U. K, where they went to the U.

K, A month ago, they use london as a base, but as part of their, I think they might have been there for lesson two weeks. They flew to ireland, they flew to scotland, they flew to france, and I felt very maximum list, but there thought was, were bringing our kids. So we want them to get a taste of a number of different places that they hopefully can return to at a later time.

The pro I go into the U. K. Here in a few weeks will be there three weeks. We're going to three places, london, say nives and leads, that's IT.

And the amount of planning that we've done for what we're going to do in each of those places is very minimal. We have some acquaintances that will meet up with and say lives and leads, but we're gna let the trip evolve. The journey evolved when we're there.

Miller, in his book, quote, louder in the data chain, less and less do you need to force things until finally you arrive at non action. When nothing is done, nothing is left and done. True mastery can be gained by letting things go their own way.

IT can't be gained by interfering. Now we're not saying don't do anything, but sometimes we just to take a step back, slow down and let IT IT off. Milla also caught john stein back, the author that wrote, if it's right, IT happens. The main thing is not to hurry. Nothing good gets away.

When we're so worried about we're going to die and trying to maximize the number of experiences that we have, there's a lot of time pressure in that we find even they were worried about dying in the future or even leaning into the next activity, leaning into the future rather than stay present in what the current activity is. If you if were so list bound king IT off getting experience as we might miss out on the experience that we're having today. And that's what those two quotes are getting at.

Just let life evolve, but still make deliberate choices. There is a baLance there. We need as perkins's to get off.

Autopilot perhaps is part that we do need to make a change. Maybe we need to move. Maybe we need a different job, a different career, maybe we need to work less so we can travel more.

And those major life changes are in fear. I know that I wanted to quit my job as an institutional investment advisor in two thousand and eight. I was involved in a forum that seth goldin had put together with a lot of independent professionals. They were doing things on their own. I was one of the few people that had a traditional job, but he took me three years before I eventually quit.

IT was a competition between the fear of the unknown, the fear of what you're gonna be like against the fear of missing out if I didn't quit, and the fear of being trapped in his career and basically waiting at the clock, making more money. The perl had something that he wanted to do in two thousand and nine, and I was fearful that SHE wanted to travel with her family for several months at a time, and in this case, to go to main. And I was resistant.

IT sounded like kind of a hassle. What about the kids with school? And SHE pushed us, and we did.

The kids homeschool. They did projects, and we had the most amazing to the three months. In main. IT was life changing.

In fact, IT set us up for the next year to have the courage to basically commute to sun valley for school, for two of our kids, tween there and export. So we would spend the weeks in sun valley, would come back to expert on the weekend. That was an amazing time, but we had to overcome the fear.

And what are some of these fears of making a change? Miller had hundred to conversations with people, and the fears fall into five areas. First, this success, what if i'm not good enough? I remember feeling that if if I can make money on my own, nobody help me. Second is money.

What if I go broke? health? What if I get sick? belonging? Will I still be love? Or anybody care if I quit my job and go out on my own and i'm not I don't have this title anymore as an institutional money manager, don't have a following. I just, just me.

What about happiness? What if i'm not happy? Those are very big fears. And Miller shares and exercise the team fairs recommends of six steps.

First, write down the change you're making and then list out and step to all the worst possible outcomes. Step three is identify actions you could take to to mitigate those bad outcomes for us. List some steps of actions you could take to get back to where you are today. If you flat out fail, what could you take in order to regain your footing to where you were?

Five, is the list out some benefits of the attempt if IT doesn't work, if IT fails, what would be some of the benefits? What would you learn? Or if he was partially successful, what would you being from that? And then the six step is, what is the cost of an action in three months, twelve months or in a few years? So there's concrete steps we can take to overcome the fear if we feel compelled to make the change.

And if you like, I was fear of making the change verses fear of missing out from not making the change. Before we continue, let me pause and share some words from this weak sponsors. Sometimes it's just nice to sit back, relax, maybe even take a nap.

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Retirees that have more than five hundred thousand dollars in savings when the retire spent, only twelve percent of that next stage by the time they died, or in the first twenty years to a very, very small one third of our retirees actually increased their assets after retirement that their nesting kept growing. Surprisingly, individuals with pensions that have that guaranteed income sore so then actually could spend their nastagio only spent about four percent of their assets down in the first eighteen years of retirement compared to those they didn't have a pension spent about a third in the first eighteen years of retirement. And why is that? Well, the fear running out of money is a big fear.

And it's also just being used to spending only what we receive an income because that's what we did throughout our working lives. In fact, we spent less than what we received and income because we were saving. So the idea of spending more and actually drawing down the retirement pull, the mistake is, isn't terrifying.

Perkins points out that in order to die with zero, we're going to hit peak networks much sooner than we think electives as they've done a number generation theyve think that ages twenty forty five and sixty. As I thought about that, I realized, yeah, i've probably already hit my peak network. I quit my job when I was forty six.

If I count the receivable that my company owed me, that they paid out over seven years, that was effectively my peak net worth. I have not saved any money. And over a decade, if we're talking about actually spending less than I receive an income, that's taken some adjustment.

And I I just sort of just realize that. But the idea that were at a peak net worth can be solvers to sum extend. I always thought, well, maybe I should save more or grow my network.

Th but part of this is is competitive. Why do billionaires keep trying to make more money? Because they want to be bigger billionaire. There is a competition. Money is used to keep score. There's this desire for more, not because we can spend IT, because it's very, very difficult to spend a billion dollars IT can be difficult to spend one hundred million dollars.

And so the idea of continuing to try to grow a network to keep score, what does that cost us in terms of our time, in terms of our health, in terms of the experiences that we give up? What is the cost of trying to continue to make more, more, more to to the planet at some point that we have to start spending? One of the exercises that I have done recently is on money for the restful plus or our membership community.

We have to online calculators, and there's also a number of spread sheet to help figure out expected return of our assets to category them. But these online calculators, once a retirement savings calculator, to help you figure out how big will your next day grow using different assumption. But the second is a retirement spending calculator.

Here's what I did to sort of dalian, how much should I be spending of my nesting? And so I excluded my individual retirement account, which I have not added to an over a decade. So IT just grows based on the investment returns are not drawing down on IT.

But my thought is at some point at eight seventy or later, i'll use IT to purchase an immediate annuity so that I have a guaranteed income source to compliment as a security, which i'll take presumably around eight seventy, not that i'm planning on, on retiring but still sort of long term plan. Those are guaranteed income sources. Then I excluded our primary residence and two sons, I excluded the value of our cabin in idaho, and that gave me baLance.

Our taxable investments, which are highly diversified between public securities and private investments, include speculation like gold in crypto currency, private capital, public stocks, preferred stocks, reads just a large variety. And I put that into this retirement calculator, and I assumed that annual inflation rate was two point six percent, that the annual return was conservative at at five point three percent. And then I beg into the spending rate of that taxi plastic that would last thirty nine years.

So until i'm in my mid nineties and it's a four percent spending rate and then IT shows, well, how much is that should I be spending from that taxable stake each year? And that amount is increased by the rate of inflation, and we'll spend that amount this year. And there's been times in, in the past years where we've spent more of that out of our investments and somewhere we've spent less. But that's an annual exercise.

I'll do see what the returns were in that particular year, what the baLances is of that taxi plastic and how much do we need to spend out of IT so that, that taxable estates is at zero in urban nineties? Going through that exercise helped me certainly to put the numbers together with understand that how does this next stage equate to annual spending from IT? And I still have a margin of safety because we have the ira that could be rolled over to annuity.

We have the equity in the homes, but it's just start because IT is a chAllenge to start spending, and some of that spending can be giving money away to people in need. IT could be, instead of waiting until we died to pass on an inherits to our children to give them some of that. Now we did that recently because I gave my two sons twenty five percent of our family business.

So recognize that many of us probably have hit our peak network, and we need to start thinking about how we're going to spend that down, even perhaps before we hit traditional retirement age. And percepts points out, maybe you like your job, maybe you enjoy what you're doing, maybe you still make a bunch of money in a job that you find fulfilling. And he says, that's great, but still go through the math to figure out how much you need to spend and give away from that.

So you die with zero, with the whole idea that if there's money left that hasn't been given away to others or spent that that is life energy that was expanded, earning those sums that could have had to more fulfilling experiences. What I found missing from the die was zero book. And maybe I was because I was so focused on optimization was the importance of relationships and the time that IT takes to build those relationships.

One of the biggest risk for the elderly is loneliness because they don't have friends in. And something I certainly have thought about as we've settled in two son and have had this cabinet in iho at this location for six years now, is keep investing in our relationships, make time for friends and invite people over IT can take years, if not decades, to build those strong relationships that will last into our seventies ties, eighties and nineties. And that could mean staying much of the time in one place to build that out.

The second aspect is rather than maximizing the number experiences, if there's something that we truly joy, just the satisfaction of building that craft over time, you're in and you're out. Getting Better at IT, there was a recent interview with the CNN anchor, Anderson Cooper. The interviewer was shocked that Cooper wasn't that vested in where the media and journalism industry was going.

In interview says, this is the future of your job. How could you not interest you? Cooper replies. You're not going to believe my answer, but i'm going to say, anyway, what interest me about my job is being able to go places and step into people's lives.

The business side of news, I used to worry about this stuff twenty years ago when I first started, I would stay up at night. Do I have a future? One of my ratings that was not sustainable for me.

I don't like that sort of pressure for me. The solution was to focus on what I had control over getting Better at interviews, improve my writing, stop saying, um I get all the business stuff that just doesn't interest me. Do I have a future? I'm fifteen, six years old.

How much longer can I be doing this? I don't know. I fully expect someday my services will no longer be required or of interest.

And like in a charlie Browns spelling be, some voice will go wamp wamp bombed, and then I will blip off the screen. That is the way of this world. And i've been extraordinary lucky.

So I don't worry about the long term trajectory Coopers is focusing on, on what he can control, getting Better at what he does because we don't know what they are, come will be and often times, whatever the outcome is, whether it's good or bad or what's say good, the the accusation in the reward through temporarily and they won't make us happy. It's the satisfaction of doing one's craft, of being creative. That's what the most satisfying.

And doing something that we can do into our seventies, eighties and nineties and and discovering what those are so that there is a longevity component is the quality other experiences in our activity not to gain as many experience points as we can to get peak experience? There's suddenly that comes from doing one thing consistently long term and getting Better at IT. So i'm on a pathless path.

Have been for over a decade. I suspect many of you are also, even if you continue to work, I work, but it's been in eleven years since I left my investment advisory firm. IT will be ten years, next years, since we founded money for the rest of us.

Working with my sons on a daily basis has been incredibly rewarding with my daughter on a part time basis. As I look to the future, i'm going to spend our next stage down the paranoid. What I find the most satisfaction is working in creating podcast in writing.

I I realized how much I have missed writing a book, and I have mentioned them working on another book, but I said to decide for eighteen months while we worked on asset camp. But i've recently picked IT up again. And when I vision my life two decades from now, IT looks a lot like today.

I go out and take a couple of walks each day. Maybe I fish, hike, I write, I produce, I do something creative, I interact with family and friends. To me, those are rich, rewarding experiences that I can use a point system for.

And if there is something the problem, and I have a list of places we want to go, but we don't know year because we're onna wait, like loud says, and we'll know at the time that this is a year we need to go to this place and we'll do IT. But IT isn't so scheduled out. We remain open and flexible and enjoy the journey.

That episode four forty six. Thanks for listening. I have loved teaching you about investing on this podcast for over nine years.

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Everything i've shared with you in this episode been for general education. I've not considered your specific risk situation. We've not provided investment advice. This is simply general education on money investing in the economy. Have a great week.