I have a lifestyle that is different to many people, and I have been encouraged to write about it. According to my friends, I am “living the dream”. I get up in the morning and can choose to do anything I want. I don’t work for money any more. I’ve been able to do this since I was 38 (I’m 48 now). I don’t appear to want for anything (material).

This is not a HowTo on retiring young, just a little about my story. Use it as a source of ideas.

Ten years ago I had an executive job in the sat-com industry, and prior to that I had a moderately successful small business, and a stint in academia. Although I was an effective manager, small businessman, and engineer, I was consistently dissatisfied. I did enjoy some parts of these jobs: Digital Signal Processing (DSP), open source, helping people, engineering, teaching thereof, annoying my managers, doing coffee and extremely long pub lunches. Rather than knuckle under and be a good corporate lad I decided to to focus on what I enjoyed most. Especially the coffee and pub lunches.

So I quit corporate life to be a full time “hacker”. I use the term hacker in the positive sense: I develop clever technology. Then, rather than using it to make a profit, I give the technology away in the hope that it will help people. I’ve had some success at this goal over the last 10 years.

My corporate wardrobe is now my pajamas. I spend most of the day sitting on my couch (thanks Dave for the couch BTW!) hacking on my laptop, with daily forays on my bike to a cafe by the beach. This gets me exercise, some social connection, and caffeine.

Once a month I travel interstate to a friends house, borrow their bike, cook for them, and sit on their couch and hack. Mixing a bit of travel with my “work”.

At the moment I average 6 hours of real, focused, head over the laptop work a day. Which is the equivalent of 2 days in a “real job” where you have meetings, managers to annoy, and pub lunches to attend.

Influences

In my final years of corporate life I listened to podcasts about using technology to help people by a guy called David Bornstein. This idea was quite appealing, a good use of my skills.

At the same time a couple of friends (Scott and Horse) put the idea in my head of lifestyles not aimed merely at continual material accumulation. One of them had paid off his house but didn’t see any reason to “upgrade” with more debt; the other just bailed on an engineering career to play volleyball and guitar, living off his savings for a bit. Huh? I found myself admiring them.

Volunteer work my Father did for disabled people.

A book called Affluenza by Clive Hamilton, which deals with our growing addiction to materialistic lifestyles.

Travel. Especially to the developing world, Timor Leste, India, townships in South Africa.

But How Do You Get Money to Live?

Money you need = income – how much you spend.

I live frugally, but am always happy to spend money on my kids (for stuff they really need) or entertaining friends. Most nights I dine in rather than going out, and can cook a bunch of meals in 10 minutes that feed 4 people for $10.

My living costs (including food, bills, housing, schooling, medical, transport) are about $40,000/pa, before any discretionary purchases like new IT or holidays. That is for a household of 2.5 people (I share care of one child).

I drive an electric car which costs very little to drive and maintain, which I supplement with the occasional loan/rental of petrol cars.

My kids go to public schools; my peers spend up to $40k/year on private education. I am home every day for them when school ends, can help them in almost any subject (although they never ask of course as I am their Dad), and attend every interview to monitor their progress at school.

I am not convinced there is any significant advantage from private schools, but acknowledge the emotional buttons and peer group pressure around private education is strong for many parents. My kids are doing pretty well, e.g. one at University, another getting good grades at the best science and maths school in the state.

I get income from a variety of sources, but the total is rather low compared to my peers. And that’s OK. Currently there is some income from SM1000 sales. In the past it’s been from VOIP products like the IP0X VOIP systems and a little contract work. I have some passive income from shares, enough to cover my rent. So it’s a bit like owning my home. These shares have been accumulated over 20 years simply by saving and reinvesting. No get rich quick schemes here.

Planning is good if you want to get somewhere. Here is a simple financial plan, start with $10k, start saving $100/week (5% more every year), invest at 10% (you get to work out where). Repeat for 20 years and you have enough to buy a house, or generate some passive income. Yes I know it doesn’t include inflation, and returns vary over time, blah, blah, blah. Your turn – come up with a model that does include these factors.

In Australia the government gives much of the population “middle class welfare”, a few $100/week which covers much of my food and bills. We also have free public health care. So the country you live in helps. On the down side the houses here are really expensive to buy, an average of $500,000 (10 years average income), and public transport poor. Every country has it’s pros and cons.

I have modest financial skills and good habits. Primarily the ability to spend less than I earn and avoidance of debt. I use a trusted share broker to choose conservative shares, but I decide the overall strategy. Some people like real estate for investment, it doesn’t really matter.

Saving and time is the key. Conversely if you can’t save, it doesn’t matter if you earn $200k. At the end of your time you will have nothing but a pile of debt, useless possessions, an endless need to work hard, broken relationships, and stress.

Every few years I go without income and live off savings for 12 months while I develop a new product. Living off savings for a while has ceased to worry me. However I understand most people are 1 pay cheque away from serious financial trouble. How about you? How long could you live without a pay cheque? It’s a good check on your financial health.

Effective Altruism

I’ve recently realised that working for free to help people is Altruism. So instead of traveling to a village to help less fortunate people I’d like to invent a widget (or part of a widget) that might let 1000’s of villages communicate. Or something like that. At the moment I’m focused on digital voice over HF radio that has many applications, e.g. in humanitarian and remote communications. I’m inventing technology building blocks that let me help the world a little bit, and stretch my professional skills (it’s post doctoral R&D in my field of signal processing).

Now, if you can name an enterprise, you can engineer it. Use numbers to make it better.

So, I’m currently reading a book called The Most Good You Can Do by Peter Singer. This guy is applying a numerical framework to “Effective Altruism”. Engineering it. For example he calculates the impact of donating a kidney (really!), or saving a persons life with $x versus preventing blindness in 10 people with the same $x. Is it better to work for 200k and donate 150 to a charity, or work for 50k in the same charity? Quite an easy to read book, but some fascinating ideas.

Thoughts

I have to think carefully and be sensitive to connect with the life of people with “real jobs”. When my friends head off to work every day, it’s a mental shift for me to understand. Yes I understand we need to be fed and housed. However I note a large portion of this work seems to be around paying for things we don’t really need, or making minimum payments on enormous debt. Wage slavery? But hey, my bank shares keep going up, and the dividends keep getting bigger, so who I am to question this system!

Until age 38 I was very focused on material accumulation. I had a Porsche 911 (called Helmut), several investment properties, and several pairs of trousers. At that stage I just ran out of things to buy. That was disconcerting for someone who came of age in the 1980’s. It felt, inexplicably, like a miserable debt free life. So I had a bit of a think. It’s taken me a little while to shift my attitude to money, however I am gradually letting go. Old habits die hard. I still feel bad when not saving and accumulating.

Re money all you need is the ability to save and time. Many people seem compelled to piss every cent they get down the drain. This is encouraged by the “growth paradigm” that governments push, easy debt, materialism, and lack of financial literacy.

Here is how I’m making my kids rich. It’s working too – they are in a better position than I was at their age and a million miles ahead of their peers. Or for that matter a lot of people my age (30 years older than them). It’s not just their net worth either: I get them involved, building their skills in handling money and investing. Showing a 9 year old a dividend statement. Getting a 17 year old to build a spreadsheet predicting growth of his assets over 10 years. Giving a child part of my web business to run. Making them wait for new material possessions. Not giving them everything they want, of that their friends have. Forming good habits early.

I struggle with the idea of debt for non-essential items, or huge, barely serviceable debt that is impossible to pay down quickly. Certainly not for a bigger house or a $500 outfit or gadgets “paid” for on a credit card. Or strongly depreciating items like cars (unless it’s electric of course). Useless debt turns the financial model above on it’s head. If you waste $100/week now YOU get to pay the banks $500k over 20 years. Then go back to work to do it again for another 20!

I am very fortunate and feel I must help others with my good fortune. We are all going to die one day. Everything that matters to us, everything we ever owned, every problem we have – will all be dust. Quickly forgotten, after a few kind words at your funeral. However helping improve the lives of others matters. That can endure. I can’t imagine a life where I am not helping others. Working just for more toys or my own needs is not enough.

So now I’m going to sit on my couch, do some hacking, then give it away.

And no – you are not going to see me in my PJs!

Reading Further

A Miserable Debt Free Life Part 2