How I got rich on the other hand

I am able to live with a low income, but I am so bad at making money on my own. I think that's the top obstacle on my path to freedom.

Simple is powerful. Great reminder. Thanks.

Loving these short to the point daily thoughts from you. Some folks would write something for 10 pages for ad revenue and just add fluff for the sake of more content.

You were rich because you discovered that you could eat little but peanut butter sandwiches and eggs and still be content. Others, despite having the discipline to spend less than they have, find they can't be content living under the privations that doing so entails. They do not feel free and cannot be considered rich.
Some use their desire for a luxurious life to fuel motivation to go earn more and do more good for the world. If it works for them, that's great. ☺ — Derek

I shared a house with four other people. (complete with white picket fence, just off Main Street in a major city) One of us, with his savings, went on to start his own business that is still going strong.

(Note: part of the reason some homeless are homeless is they value their freedom more than the rules needed for sharing a nice house; they even prefer the freedom of a park bench to the rules of a crude charity flophouse)

A lady said to me and another roommate with a groan, "Ohhh, you guys can save enough in a month to live for a month! And I can't." She was a full time bank teller, who liked her good life. I don't save that big a percentage anymore, but I keep remembering I could, if I chose to.

Of course I eat by the four food groups.
As for freedom from guilt at overspending, because I have a regular income, my trick is have LOTS of funds come out of my bank for investing every Friday. Anything left over is safely mine. (I used to save for holidays with my surplus, but now my boss makes it compulsory to withhold vacation pay)

Another trick to keep from blowing money (that I have read about) is to budget: either small amounts leading up to a treat, or non-monetary stuff that has enough compensation, so that you aren't tempted to binge. A teacher told us life is grey unless you have something to look forward to.

Many people in the U.S. now believe in living on the edge, (no wonder their government is badly in debt to other countries) but in my day we said, "A Boy Scout is thrifty."

I felt the same way after my first year of working. A lot of my friends were going off buying new Rolexes, but I couldn't care less knowing that 1) I have that money sitting in the bank account and 2) I have the option to do the same thing if I wanted to (even though I never would).

I consider the value of options to be much greater than the value of a new watch, car, or phone.

What IS 'being rich'? You could spend all you earn, and feel incredibly rich...

Derek, just curious if the peanut butter sandwich diet had any effect towards your body or health? Or just nothing happened? I asked this because in recent years there are so many anti-sugar and anti-carb advocates coming out warning people. I am not sure how true are they.

And also did you change your peanut butter sandwich diets after you had more money? like eating more of food that you like, or eating food with more varieties?

What you said is inspiring. Thanks for reminding us that being "rich" is not that much about getting more, but desiring less.
I made myself quit peanut butter because I loved it too much. Now I eat black beans and spinach a few times a day. ☺ — Derek

another classic

Simple and true. Now than you have much more than is reasonable to spend, what do you do with the suprlus cash? Do you invest it or just keep it in cash/T-bills?

I have practiced this spend less than you earn and amassed some surplus. However, I have invested only about 30% of it and feel a bit slacker about that. Probably this is out of fear, I don't want to loose my hard earned money or it is about the point that Mark (2019-10-30) # made. I want to keep options open. I don't know.

This post was purely about money, not the richness of life that is actually much more important.

I absolutely agree. Less is more. I hardly spend and seem to always have more $. My kids will be surprised at their inheritance.

Hurm. I'd say that you were "free", but not "rich".

To be rich, you'd have to NOT have to work AT ALL (e.g. play gigs gratis).

I'll add the CDBaby transaction let you be "wealthy" wherein you have the power to help to elevate others to be "free" and "rich".
Good distinction. I guess the unspoken idea here is that “rich” is a feeling, and people can feel it differently. I know some multi-millionaires that say they don't feel rich. — Derek

From all latests posts, this one is by far my favourite. So powerful, so simple, so illustrative.

Bravo.

You surprised me Derek. I'll think more about this perspective. Thanks!

Lest we forget, there is an old scientific word for this: LBYM

Living below your means.

Thanks Derek, nice advise!

Wise thoughts, DS. True wealth is having the freedom to do exactly what you want to do. Rich is the freedom to follow one's passions.

Dude! One of the greatest stories I’ve ever heard. I like when things are kept simple. I appreciate your emails because they are few and far between and always bring value. Keep up the great work.
-Dennis

This is a great reminder, thank you. Figuring out how to apply this simplicity while raising 2 teenagers on my own seems like a challenge, but I think just starting will help. I loved listening to you on Tim Ferriss' podcast, thanks for that too.

I had a similar eureka moment the first year I went into full-time freelancing. I was so scared of not making enough money, I ended up working so hard I earned more that year than ever before. By a lot. I didn't fully realize this until I filed my taxes for that war.

I also ended up buying a lot of material goods that year.

I realized I wasn't any happier than I was the previous years when I made far less. That was a shocker.

I'd already worked hard to pay off all debts and save up a freelancer emergency fund (6 months of living expenses).

These days, I see myself as being paid in freedom rather than money. Now I am also trying to be as wise with how I spend my freedom as I have learned to do with the money.

Love your podcast Derek!
Keep up the zen insights. I’m listening & learning everyday.
Love you man! 👍

I’ve always visited your site when I need to slow down. Thank you.

Thank you!

Growing up poor I used to think being Rich was about a monetary number. Now as I’ve matured in my career and finances, I’ve realized that good money habits will result in being Rich to be able to do what you want with whom you want in your limited time on this earth.

Our culture keeps waving it’s hand, showing us that our value and happiness is in what and how much we have. There’s so much pressure to be liked, famous monetarily successful that we are blinded to what really matters to us individually. Practicing Self-awareness, I trust, will guide me to what is individually valuable to me: Freedom of thought, curiosity, learning, time and energy to engage with life creativity.

Thanks Derek for being generous with your insights

I have a lot to learn from you. Thank you for your blogs.

Derek, thanks that was a reminder, also reading the comments helps. As you mentioned I learnt a long time ago to spend less than you earn, use savings as a bill. This enabled me to save and put money aside. I approach 60 and am out of work although am working on my next stage of life. I have been out of work for nearly a year and a bit, with some temporary work, filled with serious DIY work on the new house. Steels, bifolds, new floors, central heating etc.
The main lesson learnt from those tips ages ago was as you. I have a emergency fund which is keeping me above the water. Along the way, I have saved money and with being out of work means no expensive toys. Its also surprising how things happen. While out walking my wife saw a large 5 burner barbecue discarded. I had missed it, then the owner shouted out. Please take it if you want it. We went back with the car later, I cleaned it, tried it out and am pleased that we have a new barbecue with very little outlay. A new gas pipe and a clean.

It also doesn't hurt, I've noticed over the years, that you're a genuinely sincere person.

I think this is my favourite episode on the podcast (so far!). A simple reframe of a question everyone wants to know the answer to. A much better and more important answer than "I worked really hard to build a massive business then sold it for lots of money".

Derek, Thanks for leading me to your posts! Rich is certainly what we are when we learn to live on less than what we have and what we receive. We have stopped receiving a full salary about 10 years ago, and released it to what we love to do. Helping kids. We haven't had to skip a meal yet and love the freedom of not worrying where the funds are coming from. Oh yes working with the kids we could always use more, but the key is being thankful for what we have. And that includes no debt, and still a little surplus remaining as we build an cool gym to work with even more kids and their families in the Philippines.
Thanks again,
Darrell - Family Circus Children's ministries Davao City Philippines

Hi Derek,
this episode reminded me of the great book "The art of frugal hedonism" my friends wrote. It's so fun, engaging and full of truth. I would love to hear your thoughts on it.

Nice! I honestly have never thought to help my employer out when I quit. Very rarely have I ever left on good terms. They usually ticked me off enough, I told them to piss off. You must have really liked your gig at the library.
I did — Derek

Dear Mr. Sivers,

I thought this post was very inspiring! I feel the need to reread it again after posting this comment. It’s funny because at this time in my life I am technically poor but according to this article I am quite the opposite.

Many thanks!

Thank you! Your article helped me a lot!

Thought provoking!

Yeah, that's about right. When you marry and kids come along, it's bit different, from my experience.

I’ve always noticed that people forget what I call the first wealth, which is when you have enough money to live cheaply without working. But almost everybody I have known raised their standard of living as their income increased - and not unreasonably. I never got to that first wealth because of an early health issue, and maybe also because I don’t have good entrepreneurial instincts (though I certainly tried). But I also never had to stop creating because I never had to feed a large overhead.

It was Disney I think, in the era of Walt, who came up with "we don't make movies to make more money - we make money to make more movies".

Being able to create while living expenses are taken care of is the most liberating experience for me personaly. I always want to have enough money saved that even if I burn all of my bridges, I could still bunker up and work on something new without feeling immense pressure.

This is getting harder and harder as I'm not alone now, but together with my wife and son. However, true wealth and freedom is when both of us have options open. It was never about fancy things and money in the bank, though these things tend to pile up steadily when we follow what we love.

I think that if you are not the provider for children then it is easier to bank half of your earnings.

Loved it
Economists are also fond of “On the one hand but on the Other” kind of statements

Very powerful article

Falling in love with your blog and your thought leadership. Happened to stumble upon ur interview with Shane parish and now ur blog which is just pure gold. Cheers

Hi Derek, I've been following your work for a while now and looking forward to being part of your mailling list. I also live in NZ and absolutely understand your decision of coming back, lovely place, isn't it?

One thing I wanted to thank you is that you published the list of books you were reading in the past 10 or so years!! I am making my way through them and the are really eye opening, all fo them! Thank you so much!

Have a lovely day
Julia

Ah, just rereading this one Derek. Brilliant insight. So much value in this.

Desires expand as wealth increases, frequently at a faster pace, with the additional risk of confusing desires with needs.

Many years ago on a business trip to the States, I watched a Suze Orman program in which she talked about “Living within your needs” in contrast to “Living within your means”. I’ve found over time that I’m getting closer and closer to the former and experiencing a feeling of satisfaction that I haven’t experienced until now.

Why did you need $12,000? Why was the definitive amount you decided upon, and why did you need it first before feeling free to be a full time muso and quit your job?
That's the amount I had in my bank when I felt ready to quit. ☺ — Derek

My teacher provided an anecdote. In the context of, its who we are on the inside, and how we cultivate that aspect of ourselves or not, that has any lasting influence on our experience and life. So. A friend of theirs was really, really into music. It had been their long term ambition to save up enough money to invest in a seriously good turntable and home stereo setup, and all the vinyl they'd always wanted to own. After a very long time earning and saving money, the eventually achieved this singular focus. They realised their dream, and one day got to bring home and install the great turntable and stereo and new vinyl collection. And at that moment, they had a sudden realisation. This grand acquisition didn't actually change who they were as a person. It was, actually, meaningless to the fact of their true nature. The story was probably communicated a bit better than this but the essence is somewhat profound. Amazing the individual had that epiphany!

sive.rs/richand#comment-77050
I think saying it's fairly simple math. Expenses < Income = Freedom.
Don't get tricked to keep increasing your Expenses...if that's the case, you must always up your Income = never ending cycle = never free.
My take is it's easier said than done, although it sounds like I'm brainwashed my norms and it's hard to escape years of thinking "normally".

As for rich being a state of mind, I guess that could mean being free of any heavy feeling of debt.

I used to get paid and then go across the street to furniture store to make another payment on my hand carved no-nails rocking chair. The clerks said, "You can come and sit in your chair anytime you want to." I felt light.

I bought an original oil painting at a gallery. I was so poor, "on paper," that their forms did not have enough lines for all the payments I needed, so they put a page of foolscap in their payments binder for me. But in my head I was rich because I was not in debt. I felt light, and enjoyed visiting the gallery to make my payments. By leaving the painting in the store until fully paid for, I knew I could always walk away if I had any disasters in my life.

I suppose when I retire next year and have enough to live on, and can live within my poor means, debt free, then that will be another form of feeling rich.

Thank you for this reminder.

Yesterday my rich CEO and I were talking about personal finances, and feelings. He knows that "on paper" I am non-rich; and I said I have been in a good mood for years, finance-wise.

He said, "If you don't feel rich when you are poor, then you won't feel rich when you have money."

Listened and read! Thank you! =)

I love this! You were clever at 22! I wish I had been taught about money or had at least this level of financial intelligence when I was younger.
Congrats on all your successes!

"If you live cheaply, it’s easy to be free."

Hope that events since 2019 have shown you how false this is for anyone who does not share your privileged social position.

I'm very privileged myself (white, live in the US, people assume I'm a man, I have middle class family members who can provide assistance sometimes), but even for me your statement is false due to my disabilities. I live very cheaply, to the point of neglecting some needs. But my access to employment (and therefore income) is extremely limited -- 98% of jobs are ruled out by my disabilities, and the remaining 2% I'm not qualified for, because where would my multiply-disabled self have gotten the requisite experience?

And again, I'm very privileged -- MANY disabled people have a lot of expenses that abled people do not, far more expenses than I have, and there are few social supports or programs to cover those expenses. Disability benefits (which, like many disabled people, I don't receive due to lack of resources (physical, mental, temporal, financial) to navigate the arduous, invasive, intentionally dehumanizing application process) are not enough to live on, and there are severe limits to how much additional income/assets one is allowed to have. People on disability often cannot marry each other without losing their benefits. No amount of living cheaply (which is not equally possible for everyone in the first place) leads to freedom from such things.

This is without even considering the experiences of multiply marginalized people, who deal with more than the sum of the parts of ableism, racism, transphobia, etc.

So a more accurate version of your statement would have been "from my social position with the benefits it affords, it's easy to be free by living cheaply."

Few happen to love peanut butter sandwiches, not like but love. Which doesn't cost much, which naturally led to cheaper lifestyle.
I love peanut butter so much. I got excited just seeing it mentioned here in the comments! — Derek

Derek, thank you your communication, always hits home.😊
Lovely to hear from you, as always 🌹

"It’s not how much you have. It’s the difference between what you have and what you spend."

Most basic life lessons really are as simple as this but we can't accept it, so we complicate things and make life harder on ourselves. God is shaking his head!