What's Your Philosophy on Earnings and Personal Finance?

00:00:00.000 | [MUSIC PLAYING]

00:00:04.720 | This question comes from Raj.

00:00:08.240 | Raj asks, how do you think about earnings

00:00:11.080 | across your various income streams?

00:00:13.440 | And what's your philosophy of personal finance?

00:00:18.840 | Well, Raj, I'm all in on crypto.

00:00:22.560 | All my money's in crypto.

00:00:24.320 | I think that is the key.

00:00:25.760 | Next question.

00:00:28.400 | No, I do not have money in crypto.

00:00:31.640 | How do I think about personal finance?

00:00:35.120 | I am incredibly wary of lifestyle creep.

00:00:41.200 | If you live in a big city like I do in DC,

00:00:45.280 | you just know a lot of people.

00:00:46.800 | Or if you went to a fancy college like I went to,

00:00:49.480 | you just know a lot of people that have been

00:00:52.600 | snared by lifestyle creep.

00:00:55.400 | Make more money, increase the cost of my lifestyle.

00:00:58.920 | Ooh, nice stuff.

00:01:00.040 | Make even more money.

00:01:01.520 | I'm going to increase a little bit further.

00:01:03.360 | Move to this nicer house.

00:01:04.360 | Get this nicer car.

00:01:05.440 | Get that second house.

00:01:06.680 | And it creeps, creeps, creeps.

00:01:10.360 | And then you're spending all your money.

00:01:12.600 | You're stressed out, and you're stuck in your job.

00:01:15.760 | So I'm worried about that.

00:01:17.560 | I also have this mindset of everything can go away.

00:01:20.640 | So nothing scares me more than having a huge outlay

00:01:25.920 | I would have to meet every month just

00:01:28.200 | to keep our lifestyle rolling.

00:01:29.840 | And that if that money went away, that would be a problem.

00:01:32.280 | We couldn't afford a mortgage on our giant house anymore.

00:01:34.720 | We couldn't make the car payments, et cetera.

00:01:36.960 | So I'm a big believer in you fix a lifestyle

00:01:42.520 | that you really enjoy, that matches your deep life

00:01:46.120 | buckets, where you live, and how you spend your time.

00:01:50.920 | You want to come up with a lifestyle that you really like.

00:01:54.520 | And then don't inflate it.

00:01:57.360 | So if you end up making more money

00:01:59.840 | than you need to support that lifestyle, you save it.

00:02:03.680 | That's the general philosophy.

00:02:05.600 | Now, of course, upgrades will happen to this image,

00:02:09.640 | especially early on.

00:02:11.800 | So I do not live today the way I lived

00:02:14.640 | when I was a first-year grad student.

00:02:17.200 | I don't live today even the way I

00:02:18.720 | lived when my wife and I first--

00:02:21.520 | we first moved to DC.

00:02:23.240 | So you can do some--

00:02:25.080 | you do some upgrades to this vision,

00:02:26.880 | but you're very careful, very conservative about it.

00:02:29.840 | This is just my approach.

00:02:30.920 | I'm just telling you how I think about it.

00:02:33.040 | And then the money that comes in excess to that, for the most

00:02:36.160 | part, you save.

00:02:37.600 | And then I think from a stress perspective,

00:02:39.400 | it's fantastic because you don't feel like you're

00:02:42.480 | right on this line, that if anything goes wrong,

00:02:46.360 | if someone loses their job, if you have to--

00:02:48.600 | like I might--

00:02:49.760 | hey, I'm not going to take summer salary this summer

00:02:52.080 | as a professor.

00:02:52.920 | It's not going to be-- that's a huge catastrophic problem.

00:02:55.360 | So that's the way I think about it.

00:02:57.840 | And then what do I do with that savings?

00:03:00.440 | Well, I mean, in my position, I'm

00:03:02.720 | a huge believer in investing in yourself.

00:03:04.440 | So I put a lot of--

00:03:05.680 | the best investment you can make if you happen

00:03:08.640 | to be in an entrepreneurial-type field like I am

00:03:10.600 | is usually in yourself.

00:03:11.600 | So I invest--

00:03:13.360 | I am not skittish to invest in let's build out the podcast.

00:03:19.920 | I pay for my summer salary now out of my own book earnings

00:03:23.920 | so that I can write more.

00:03:25.880 | Because writing more actually then returns a lot more income,

00:03:29.400 | things like this.

00:03:30.160 | Invest in a new--

00:03:31.600 | whatever-- web presence for your business.

00:03:33.400 | So I'm really big in investing in myself

00:03:35.080 | because those payments really do-- that really pays off.

00:03:37.440 | And beyond that, I am boring.

00:03:40.360 | I'm a bogglehead, passive index.

00:03:43.360 | You're not going to beat the market.

00:03:45.000 | Your guy you know is not going to beat the market.

00:03:47.240 | This person that does derivatives for you

00:03:49.080 | is not beating the market.

00:03:51.080 | You're not rich enough to have access

00:03:53.040 | to the people that have access to the things that's

00:03:55.200 | going to let them beat the market.

00:03:56.620 | So let's not worry about it.

00:03:58.440 | Index funding-- we have a guy that

00:04:01.520 | has custodial access of the accounts

00:04:03.160 | and just does that for us.

00:04:04.560 | It's incredibly boring, incredibly boring dimension

00:04:08.040 | funds indexing because I don't want to think about it.

00:04:10.840 | The only other thing I will add is

00:04:13.720 | skim a little off of unexpected or extra money

00:04:16.440 | to do something fun but that doesn't

00:04:17.880 | inflate your lifestyle.

00:04:18.800 | I'm also a big believer in that.

00:04:20.280 | I started doing that even when I had no money.

00:04:22.640 | And then I'd make a little bit of money writing.

00:04:25.040 | I always had a philosophy of take

00:04:27.280 | a sliver of whatever is extra and just do whatever.

00:04:31.920 | Do whatever.

00:04:33.000 | As long as it doesn't inflate your lifestyle.

00:04:34.880 | Don't use it as the down payment on a car

00:04:37.040 | that you have to pay really heavy payments on.

00:04:39.120 | But go on a trip or buy something that's nice.

00:04:41.600 | Or you want to have some reward or fun with it.

00:04:43.880 | And that's great.

00:04:44.920 | You want to feel good about something went well.

00:04:48.120 | I sold a thing.

00:04:48.960 | I made some money.

00:04:50.480 | Take some of that money and go do something fun with it.

00:04:53.760 | I think that's fine.

00:04:55.160 | All right.

00:04:55.660 | So Raj, that's my philosophy.

00:04:56.860 | Let me summarize this all.

00:04:59.760 | Fix a lifestyle that's really good that you really enjoy

00:05:02.200 | but that you can easily afford with your current financial

00:05:05.300 | status.

00:05:05.840 | And then as you make more, that's great.

00:05:08.760 | Save that money.

00:05:09.720 | Don't inflate your lifestyle.

00:05:12.240 | I do boring stuff with my saving.

00:05:13.680 | But if you have a chance to invest in yourself,

00:05:15.640 | that's always the best investment you can make.

00:05:17.600 | And always take a sliver of things

00:05:19.320 | that are unexpected or extra or nice.

00:05:20.960 | Take a sliver to do something nice for yourself

00:05:22.920 | because life is short.

00:05:25.200 | Or if all that fails, it's all Dogecoin.

00:05:28.720 | I'm telling you, I have a system.

00:05:31.200 | I have a system.

00:05:32.080 | You have to-- you go to Dogecoin because you

00:05:35.560 | have to wait till a day of the week of the month

00:05:38.440 | that's a prime number, cyclically speaking.

00:05:40.660 | But actually, what you really want to do

00:05:42.280 | is take the days of the week and translate them

00:05:44.400 | onto a finite field that you can have a bijection from

00:05:48.120 | to the primes.

00:05:49.600 | And then you want to take a prime of the prime number

00:05:53.040 | finite field, invest on that day.

00:05:55.920 | 37 days later, sell.

00:05:57.440 | This is my system.

00:05:58.480 | That's the other thing I would say.

00:05:59.560 | So that will also make you a billionaire in about nine days.

00:06:02.060 | So you can do that, or you can do what I do,

00:06:06.180 | which is try to live reasonably, save what you make extra.

00:06:12.180 | [MUSIC PLAYING]

00:06:15.540 | (upbeat music)

00:06:18.120 | (upbeat music)

What's Your Philosophy on Earnings and Personal Finance?

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