Thrift Stores, Police Commanders, Lazy Investing — Cruising Around (August 6, 2019)

The Cruising Around “best of” series

There is a lot of insightful personal finance content online today. Cruising Around is a new series that highlights some of the best material being written. Keeping in line with the Sitting Poolside interviews leisurely theme, each Cruising Around post will take you to the internet’s best destinations. Read on to enjoy each excursion!

The itinerary

  • Is it Wrong to Shop at Thrift Stores When You Aren’t Poor?
  • Money Can’t Buy Happiness
  • Working 75 Hours a Week and Nothing to Show For It
  • Financial Freedom by Making Decisions Like a Police Commander
  • 3 Fund Portfolio: The Lazy way to Invest

Thrift stores

Nathan from Millionaire Dojo examines this question — is it wrong to shop at thrift stores when you aren’t poor?

“I mainly shop at thrift stores only to buy items and sell them for a profit on eBay. While you could say I’m taking things away from the poor, I look at it differently…”

The SR Wife and I like to shop at thrift stores too, so this question hit close to home. Our coffee table, for example, is from a thrift store visit right after we bought our house!

Ultimately, Nathan concludes that it’s not wrong to thrift when you aren’t poor. By donating to and buying from the thrift stores, he’s helping to support their business model. Plus, there’s not a shortage of inventory — there are still plenty of goods at the store available for others.

What’s your perspective? Is thrifting, or any other low-cost activity, unethical if you aren’t poor? It can become a complex question.

Can money buy happiness?

This is something that we all wrestle with — what role should money have in our lives?

Certainly, money can buy you stability and even flexibility, so it has value. If it can improve your life, that must mean it can make you happy, right? As The Finance Twins describe, “research shows that after you have enough to cover the basic necessities in life, all of those extra things won’t bring you any extra long-term happiness. But we don’t even need the research to know that, because we have lived it ourselves.”

One of The Finance Twins is a doctor, and he has experience treating patience near the end of their lives. This insight was most powerful and sobering to me:

“You see, regardless of their age, those that want more time, want and need it to repair broken relationships. Relationships with friends, siblings, children, and parents… when it comes time to face your mortality know that money and objects won’t matter.”

How should this affect our view of money now? We need to view wealth only has a tool. I’ve heard it phrased “love people, use things — not the other way around.”

Working 75 hours per week

Brian from Debt Discipline shares his early career experience, when he worked 75 hours per week for a year. The worst part, in hindsight, was that he saved very little during that period so he didn’t benefit financially from his long hours.

“I wish I knew that working 75 hours a week could be a financial blessing for my future family and me. Instead, I did what most naive money people do I went full ‘YOLO’ [You Only Live Once] and lived beyond my means.”

Brian was later promoted, reduced his hours, and he now pursues focused financial discipline. Looking back, he wishes that he had sought more input through reading and seeking advice from people he respected.

Was there a financial “Dark Age” in your life — a period when you worked hard, but weren’t able to save any money for the long-term?

In Brian’s life, this was a short period that became a turning point. But, like The Finance Twins discussed, we need to be careful not to just work our lives away — even for financial gain. What is most important to you in life? Do you have a plan in place to intentionally take steps towards achieving those goals?

Make decisions like a police commander

Cashflow Cop is a financial blogger and a police officer in the UK. He describes the police National Decision Model and breaks down its relevance to personal finance decision-making.

There are five steps in the cycle, and each step is influenced by the code of ethics. The steps are 1) Gather information, 2) Assess the risk and develop a strategy, 3) Consider powers and policy, 4) Identify options and contingencies, and 5) Take action and review what happened. Step 5 then turns back into Step 1; it’s a cycle rather than a linear five step progression.

“The ‘Risk Principles’ remind me that just as risk cannot be eliminated in Policing, there will always be a degree of risk in any investment.  The decisions I make today is based on the information, the skills and the experience I have at the moment the decision is made.  Things might go wrong, but hindsight is a gift for the future, not a punishment for the past.”

When making an investment decision, or really any decision, these are excellent factors to consider. Our decisions about our lives are not made in a vacuum — each decision has ramifications. We can improve our decision-making and our lives in general by reviewing the outcomes and using that information for future decisions.

If you’d like to learn more about Cashflow Cop, check out his Sitting Poolside interview here.

The lazy portfolio

Speaking of investment decision-making, this next post gives us an actionable plan. Kevin, the blogger at Just Start Investing, discusses the value of a “lazy” portfolio — one that only involves three funds.

“It’s called ‘lazy’ because of how simple it is to set up and manage. Though, for once in your life, investing with a lazy portfolio is a situation where being lazy can pay off.

A 3 Fund Portfolio historically has a higher probability of providing a superior return to actively managed portfolios. This is because actively managed funds have a tendency to underperform the market, while a lazy portfolio simply attempts to match market returns while keeping costs low.”

This is a powerful, and practical insight for our financial lives. Investing doesn’t have to be complex to be effective. The SR Wife and I implement a similar approach with our own self-imposed investing rules.  Kevin and I would agree that 1) diversification and 2) keeping investment expense ratios low can go a long way in achieving strong long-term investment performance.

If you’d like to learn more about Kevin from Just Start Investing, check out his Sitting Poolside interview here.

I hope you enjoyed this maiden voyage of the Cruising Around series. Check out more from these writers and others — like Brian discussed in his post above, wisdom from others is the most effective way to learn how to improve our own lives.