Sooner or Later?

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It is easy to get motivated for short term rewards.

The carton of ice cream in the freezer need only be scooped into a bowl, The scoop picked up with a spoon, the spoon lifted to the mouth, and seconds later, heaven.

A smooth,cool, sucrose and lipid rich emulsion melts over your tongue. Pleasure was predicted. And pleasure was delivered. And it only took about 30 seconds.

Which is why this is not a blog about how to eat ice cream. I’m pretty sure you’ve got that covered.

But even if you’re a monk like supersaver, early retirement does not deliver instant rewards.

As an example, an ultra disciplined, non-car owner, beans and rice eater, who saves 75% of his take-home income, must work seven years before reaching early retirement.

Now in the grand scheme of things 7 years is certainly not much. But we’re not talking grand schemes here. Were talking about human cognition which (as already mentioned) is very biased towards short-term rewards. And on this level, seven years may as well be never.

But if I didn’t believe early retirement and financial independence were goals worth pursuing, I would never have started this blog.

So What are some tricks that I use, to transform saving for retirement into a pursuit of instant gratification (in order to improve my odds of success?)

1. Pay yourself first.

I’ve already written about this angle, but automatically diverting part of your paycheck to savings each month is a very powerful technique indeed.

The trick here is not so much changing your perception of what’s pleasurable, as it is taking spending choices out of your hands entirely.

This is a prescient technique that basically says “I know that the way I make decisions is irrational, so I will not make any decisions at all. This money will be saved automatically whether I choose to do anything or not.”

This is the Odysseus move. You metaphorically Strap yourself to the mast, and have your shipmates plug their ears with wax so that you can hear the siren’s song (of spending money) but not act on it.

2. Entertain a gambling addiction.


Let Kenny teach you good financial decision making skills…

I think I’ve already mentioned that I’m not much of a gambler.

I know that I’ve mentioned that I’m a firm believer in passive investing.

But what’s one of the first things I do after waking up each morning on the West Coast?

I look on my phone to see how the stock market is doing.

Which is kind of a strange thing for a passive investor who doesn’t like gambling to do. Right?

I’m not timing the market so no matter what the market does, if my will is strong, I won’t execute any trades.

So what am I getting out of it?

I’m gambling. Much as a horse race becomes more interesting when you have two dollars on a horse to place, or the Super Bowl becomes more interesting when you have a couple dollars in a pool, I’m deriving pleasure from having skin in the game.

And it’s pretty addicting to be sure. Which certainly motivates me (at the all important sub-cortical level where immediate gratification resides) to keep on adding more savings to the pot.

3. Go ahead, count your chickens.

It is very satisfying to visualize the power of your saved money.

It is also very easy.

Just go to an online financial calculator and have some fun.

Let’s say I want to retire in 15 years with an investment income of $40,000 a year. And I’m starting off from zero. No savings, no debt.

This means that my goal nest egg is $1 million.

(click on the hyperlink if you want a more detailed post on the math behind these assumptions.)

So how much should I save every month, assuming 7% returns in the stock market?

I need only plug my age, my desired age to be a millionaire, my amount already invested, and my assumed return (7%) into a handy-dandy financial calculator. And voila, there it is : $3154.95.

Or how about an even simpler calculation. (Courtesy of Mr. Money Mustache.)

Let’s say I start each day off with a Starbucks latte for two dollars.

How much would I save in 10 years At a 7% rate of return if I instead invested my coffee money in my retirement?

I need merely multiply my weekly expense by 752 or my monthly expense by 153.

So if my weekly expense is $14, then in 10 years I could reasonably expect to have $10,528 saved up.

Which (at least in my mind) changes the decision from “do I buy a latte or not?” to “should I buy a latte or a
Ferraro wood-burning pizza oven.”

if you’ll excuse me, I have a pizza dough technique to perfect…


I think I’ll pass on the vente latte


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8 Responses to “Sooner or Later?”

  1. Mark Ross March 5, 2014 at 6:18 am #

    Nice tips! I’m sure you can achieve financial independence and early retirement by just doing those. Good luck! :)

    • Miles Dividend M.D. March 5, 2014 at 10:18 am #

      Thanks Mark. I hope the tips prove helpful in you pursuits too.


  2. Kenneth March 5, 2014 at 6:59 am #

    Thanks for this, Alexi. Whether dieting to shed pounds, or saving money for financial independence, I certainly agree that it feels like forever (I’m doing both). I need to figure out some ways to do free celebrations (free of cost, or free of calories) to mark each day that I stayed the course.

    P.S. I’m down 17 pounds since the first of January!

    • Miles Dividend M.D. March 5, 2014 at 10:17 am #

      Great Job on the weight loss Kenneth.

      I’ve been doing some experimentation with a different (and much slower) method of weight loss. I chose this approach because it is one that I can imagine sticking with for the rest of my life as it fits my lifestyle. (Search under “vegan before six” on my search bar on the main page to read more if you’re interested.

      I find that paying attention to and satisfying my inner pleasure seeking animal is the main key for me to succeed in any long term endeavor.


  3. Free to Pursue March 5, 2014 at 7:04 am #

    I also like the “counting your chickens” method presented in the book “Your Money or Your Life”. I have a chart in our bedroom to help us visualize our net worth, monthly total earnings and monthly passive income. It’s great to add the new data every month. You get rewarded when the numbers are headed in the right direction.

    • Miles Dividend M.D. March 5, 2014 at 10:11 am #


      I’m not familiar with this method. I asssume it is some sort of an accounting trick that allows you to quantify (and become conscious) of your financial progress?

      I’d love to hear more specifics, and “your money or your life” is definitely on my to read list.


      • Free to Pursue March 6, 2014 at 7:48 am #

        The graph includes 4 trend lines updated monthly (scale as you need) and one goal line (#4).

        Line #1: your total earnings net of taxes (passive and earned)
        Line #2: your actual expenses
        Line #3: your monthly passive income
        Line #4: your monthly expense target line (what you think you will need to live on monthly once you are FI
        Line #5: your cumulative net worth

        First, you want the gap between your earnings (1) and your expenses (2) to grow over time. It’s nice to see that happen visually.

        Second, you want to see your monthly passive income (3) (investment income and other non-job-related income) grow over time. You want this line to eventually cross your target future monthly expenses (4). Once it does, you know you are at the FI crossroads and you can decide when you want to either stop working or maybe change your employment to something that may pay less but that you enjoy more. You have essentially “purchased” your freedom to spend your time as you wish.

        Third, the net worth (5) line takes into account your assets, investments and other income-producing assets and passive income that you are reinvesting to expedite growth. This line should constantly head north and its ascent accelerates over time, assuming you do not tap into 100% of your passive, investment-return income as soon as (3) & (4) intersect.

        I hope the above makes sense. I think the YMOYL book is a great resource to further explore the whys and hows of the above.

        • Miles Dividend M.D. March 6, 2014 at 10:04 am #


          I can see how that would be a powerful motivator for making smart financial decisions.

          Thanks for the excellent explanation.


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