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Welcome, 77 artists, 40 different points of Attica welcomes you by singing Erotokritos an epic romance written at 1713 by Vitsentzos Kornaros

Wednesday, August 9, 2017

I used to be homeless, and years later I've realized what too many people misunderstand about wealth

[GettyImages 507050328]Matt Cardy/Getty Images • Lyn Alden writes about her experience being homeless as a child, and shares insight that has helped her succeed later in life. • THE KEY IS TO LIVE SIMPLY — BY CHOICE — AND BUILD UP YOUR SAVINGS TO AVOID FINANCIAL UNCERTAINTY AND CIRCUMSTANCES OUT OF YOUR CONTROL. • EXPERIENCING THE GOOD AND BAD IN LIFE IS VALUABLE, AND THE BAD CAN HELP YOU GROW. When I was a child, I was homeless for several years. While most kids my age were starting elementary school, my mother and I were living in homeless shelters, cheap motels, and at the worst point, in a car for a while. We washed ourselves in public restrooms (sometimes we had to sneak in to do it, in the early morning when people weren't around), and whether we ate enough or not was based on the kindness of strangers.  I jumped around between schools a lot during kindergarten and first grade, and had some multi-month schooling gaps.  A homeless guy taught me how to play chess. Eventually my luck improved a bit, and I went to live with my elderly father in a trailer park, where I grew up until I left for college at 18. He didn't have much money, so I had to rely on $50,000 worth of student loans and part-time work to fund it. THAT ALL _SUCKED_, BUT NOW AT 29 MY FINANCES ARE SOLID. My student debts are a thing of the past, I have a large six figure investment portfolio that I continue to pour money into, there's plenty of cash set aside for liquidity, and I financially support my mother to help her make ends meet. The combination of a great income from engineering and finance, always maintaining a side hustle, having a minimalist (but admittedly not frugal) lifestyle, and consistently investing, has worked well. A lot of people don't like talking about money. Especially for things that feel awkward to admit, like having been in poverty. But for me, these experiences were incredibly valuable, and it's worth sharing what I learned from them. 1. IT'S THE UNCERTAINTY, NOT THE LACK OF COMFORTS, THAT CAUSES SUFFERING. Being homeless sucks, but it's not necessarily for the reasons we might assume. In extreme circumstances, like people in cities literally out in the cold streets for prolonged periods, or life in certain developing countries, the lack of comforts really does cause physical suffering. But most poverty in the developed world causes a different kind of suffering: constant stress and uncertainty. I mean, many well-off people use their vacations to go camping.  They PAY MONEY to live as though they're broke for a week, and it's fun!  And that's because it's just a game; we can enjoy the upsides of roughing it out in nature without experiencing any of the uncertainty and difficulties of people who don't have a choice. ALTHOUGH IT BECAME SCARY AND UNHAPPY AT THE END WHEN I WAS LIVING IN A CAR, FOR MOST OF MY TIME HOMELESS, I WAS HAPPY. KIDS DON'T NEED MUCH IN LIFE TO FEEL JOY. One day, a bunch of us children in a shelter were bored, so we decided to make a circus for our parents. We did a survey of our available skill sets, got some markers and cardboard and random odds and ends, and put on a show. Other times, my mother would take me to museums, which are cheap. She always had me reading, going to the beach, or otherwise doing something of value. But for her, I'm sure it was a lot less fun. She had the constant stress of uncertainty, of never feeling in control, and of not knowing where herself and her child were going to live next, or who might give us food. And trying (and succeeding) at being a good parent even in the worst of circumstances. People don't necessarily need to be homeless to have those stresses, either. A significant percentage of the population is living paycheck to paycheck, not knowing for sure how they will pay their bills next month. WE CAN APPLY THIS CONCEPT TO OUR DAILY LIFE TO BUILD SERIOUS WEALTH. VOLUNTARY SIMPLICITY IS JOY. Living simply, when it's a choice, doesn't have to detract from happiness at all. Material comforts have relatively little impact on happiness beyond a certain point. Living in simple conditions, cooking your own food, going to the beach or library or museums or hiking for your pastimes, and saving a ton of money in the process, can be a lot of fun. And it's _healthy_. Meanwhile, when your simple lifestyle allows you to build up your retirement savings, start an emergency fund, or pay off your debts, you begin to feel free. When you have enough money stashed away to cover your expenses for a long time, along with diverse income streams, it provides peace of mind. And considering that money problems are possibly the leading cause of relationship fights, good money habits can make for a more joyful partnership as well. When I was living with my father, family vacations consisted of him driving me and a friend to a local beach town, where we stayed in a little motel and spent time on the boardwalk. He would give me a big pile of spare coins that he had saved up for months as my vacation allowance to spend on arcades. In contrast, I've upped the scope of my vacations in more recent years, like spending three weeks in luxury hotels in Hong Kong, enjoying rooftop bars, fancy restaurants, and gorgeous mountain trails the whole time. But what I learned firsthand, at least for me, was that the fun of a trip is almost 100% based on who you are with, rather than how classy you travel. Luxuries are just the sprinkles on the sundae. [GettyImages 512027820]Giulio Di Sturco/Getty Images 2. YOU NEED _ALL_ PARTS OF YOUR FINANCIAL HOUSE IN ORDER, NOT JUST SOME In her youth, my mother earned a high income and had a sports car. But when things went (really) sour and her income stopped flowing, she had no savings. My father was the opposite. He lived in a trailer and never had a high income, but always had a fully stocked emergency fund and his credit score was 848. No joke, he literally complained to me wondering why they took off those two points. His only money problem was that he never had a wealth-building mindset. He paid every single bill on time without fail, and never spent more money than he earned. He had a pension to rely on for retirement, and always had five figures of cash stashed away so that liquidity was never a problem. He was generous to me, to neighbors, and to friends. (And to his girlfriends; he was a bit of a stud in his old age!) BUT HE NEVER DELIBERATELY SAVED EXTRA MONEY, AND NEVER COMPOUNDED IT TO MAKE IT GROW. In fact, he sold all his stocks in his small 401(k) at the bottom of the market during the 2001/2002 recession, and stayed in cash. Rather than holding onto his investments, he got turned off by the volatility and went to cash forever, and missed out on the recovery. To achieve financial freedom, all three components need to be in order:  Income, Saving, and Investing. Not just one or two. #1. INCOME: It's important to earn enough money to make an impact, however that is defined for you. Whether through education, entrepreneurship, or< side hustles, a bigger stream of income will lead to financial security more quickly. For example, someone who makes $30,000/year in after-tax income and has $20,000/year in expenses will have $10,000/year to use for paying off debt and saving for retirement. But if she can earn just $500/month after tax on the side, then although it only increases her income by 20%, it increases her potential savings rate by a full 60%. That makes a huge difference. #2. SAVING: Whether it's keeping a budget or something else, find a pattern that fits for you and that keeps your savings going up. A lot of pro athletes make millions and then go bankrupt five years later. Johnny Depp made more money than a hundred people do in a lifetime, but spent it all buying things like< $5 million cannons. No amount of income can fix poor spending habits. #3. INVESTMENTS: This is where a lot of people go wrong. They spend decades working and aren't much richer than the day they started, because they haven't been investing. Then they find themselves vulnerable to layoffs and pension cuts. Investing every month like clockwork, and achieving a good rate of return from a diversified portfolio, will allow you to reach financial freedom early. One of the best ways to really push yourself to build wealth is to track it. Most people don't. #3. WEALTH-BUILDING ISN'T ALWAYS A SMOOTH PROCESS. I started investing in stocks when I was 16. Admittedly, I had NO IDEA what I was doing, since to me, a stock was "undervalued" if it dropped a lot in price recently, since it was less valuable than before, and that's what Warren Buffett said to do, right? Or something like that. I didn't know about price-to-earnings ratios, analyzing the discounted cash flows, or any other way to fundamentally value an investment like people who wear suits do. But it was a start. I was tired of being broke, and of always being uncertain about the future or how I would afford things like school. I saw the two halves of my parents, and wanted to put their strengths together in such a way that I wouldn't have the same struggles they did. SO, I READ EVERY BOOK I COULD FIND ON INVESTING. I GOT EXCITED ABOUT SPREADSHEETS, AND TURNED ON BY COMPOUND RETURNS. WARREN BUFFETT (AND BATMAN, LET'S BE REAL) WAS MY HERO. When I was in college, I had it all figured out. I knew what the typical starting salary for an engineer was, could figure out all the basic expenses of life and how to keep them small, and calculated that if I put $2,000 in inflation-adjusted dollars away per month, and achieve a 7% average return on my investments, my money would grow like this over my career: [Screen Shot 2017 08 08 at 1.08.39 PM]Lyn Alden/Budgets Are Sexy BUT IN MY MID-TWENTIES, MY FATHER PASSED AWAY. I encountered health problems of my own as well, which lasted for a few years and resulted in big medical bills that weren't fully covered by insurance, which wasted many thousands of dollars while I was trying to work and save. And my mother started needing financial support. I hadn't accounted for all that in my projections… So, I started to go off track, and had a couple years where my wealth didn't grow at all, and even went down one year. My income was stagnant due to my lack of time and focus, and my expenses grew. I eventually got it back on track, and started pushing my income up and expenses back down. What I learned here was that we can't compare ourselves to others. I saw examples of people hitting a million dollars by age 30, or people whose net worth seemed to only go ever upward, and I thought, "what the hell!" But everyone encounters different curveballs in life, and the worst thing you can do is let a temporary setback drive you permanently off course. [GettyImages 478968598]Thomas Lohnes/Getty Images 4. EXPERIENCING BOTH THE GOOD AND THE BAD IN LIFE IS VALUABLE. Most of us go through life fearing certain things, and financial topics are near the top of the list. We worry that we'll lose our jobs, we worry about debt or retirement, we worry about recessions, and many of us imagine the worst – what if we're out on the street? What if we're _homeless_? In ancient Greece and Rome, Stoics used to practice voluntary discomfort as a form of self-improvement. They would identify things that they feared, and deliberately go out and experience them. At that point they could say, "is this what I feared?" Being homeless in my youth let me experience at least some small part of the rougher side of the spectrum. All these years later, it still helps put things into perspective when I encounter day-to-day problems. If not for that experience, I don't think I'd be as committed to wealth-building and financial freedom as I am today. But rather than stop there, I made a habit of practicing voluntary discomfort from time to time: MMA FIGHTING — I spent 12 years doing mixed martial arts, especially during my teenage years. I've been held down and punched repeatedly by a man twice my weight, on more than one occasion. My left knee was broken in a sparring match and still makes some interesting sounds to this day.  I fractured my right thumb when I hit a guy in the ribs with a hook punch and accidentally clipped his blocking elbow during my swing. I've been choked to submission and slammed to the floor more times than I can count. A professional fighter 15 pounds heavier and 15 years older than me beat me at a tournament so badly once that I cried a little. To this day, it all makes a lot of things in life seem less scary. FASTING — I used to think that if you don't eat, you just keep getting hungrier and hungrier, which frightened me. So, I decided to try a 3-day fast, with just water. As it turns out, once you cross a certain point of not eating, the body starts to tap into its own body fat for fuel more readily. If you go long enough, your brain starts running on ketones instead of glucose, which is known to suppress hunger in many people, and give you a sense of alertness. Many people fast during religious or spiritual experiences, partially because it creates a sense of mental clarity and even mild euphoria. I was less hungry on day 3 than I was on the first day, and I still occasionally do 1-day fasts. (Disclaimer: Maybe check with your doctor first before trying any weird eating habits, especially if you're on meds.) That experience ended up coming in handy, because a few months later, my town was struck by a thunderstorm deadly enough to have a Wikipedia page about it. I was about to go grocery shopping that morning, so literally the only food I had in my apartment when the storm hit was a single chocolate bar. Power was out for miles, stores were closed or emptied out, and more fallen trees than I had ever seen in my life were blocking roads. Three people were dead not too far away, and the county was declared a federal disaster area. But because I had already experienced what fasting really felt like, I didn't feel like there was much to worry about, and just thought calmly about how I should best approach this and get supplies from somewhere, eventually. It would have been a lot more stressful had I not already experienced what not eating is like. LACK OF CONTROL — I'm an orderly person that likes to plan everything in advance and have multiple backup plans. The idea of not being in control is unappealing. So, I once flew to Argentina without telling a single person where I was going, and rented an apartment in a middle class non-touristy neighborhood of Buenos Aires for three weeks. I don't speak a word of Spanish, and English isn't very common there. The whole trip consisted of me trying to navigate around the city to see things, with everything being 10x harder than usual because I didn't know what I was doing and couldn't speak very well. But it was memorable, and reminds me how easy life is with a car, and where I can speak to people and read signs. FINAL WORDS There's a Chinese proverb that goes, "wealth never survives three generations." From what Money Magazine has reported, it's true. A full 70% of wealthy families lose their wealth by the second generation, and 90% lose it by the third generation. That's an astounding statistic if you think about it. Not only do most of them not continue to build wealth from their starting point; they actually _lose_ what they already have. Partly that's because, according to the same article, two-thirds of people don't disclose almost anything about their wealth to their children. As the next generation grows up, they often don't have any of the money habits or hard work ethic of their parents that originally built the wealth from the ground up. Naturally, parents want to give their children a better life than they had. But often in doing so, the next generation becomes soft and pampered, unable to appreciate their money that they didn't have to earn themselves, and never developing the skills to maintain and build what they have. SO, IF YOU DON'T HAVE A LOT OF MONEY AND DIDN'T COME FROM A WELL-OFF BACKGROUND, THEN TAKE HEART! Although you may be disadvantaged in some ways, in other ways you have an advantage, because you're _hungry for more_, and you have to create what you want from scratch. Not a lot of people set out on a wealth-building lifestyle, but once you get on that train, you've got all the money habits in place that should keep you going up. And if you did come from money, and don't want to fall prey to the statistics, then try to continually rekindle that sense of energy and passion and vulnerability so that you can maintain all the advantages of having money without having the downsides of complacency. Practicing voluntary discomfort is useful in that sense. Either way, it's important to push yourself, to stay fresh by experiencing multiple sides of the world, and to put yourself in new and uncomfortable situations to learn and grow from them. BUT LIVE BELOW YOUR MEANS AND SAVE AND INVEST LIKE HELL, SO THAT AS MUCH OF THE DISCOMFORT AS POSSIBLE THAT YOU EXPERIENCE IN LIFE IS BY _CHOICE_. _Lyn blogs over at LynAlden.com, and holds a bachelor's in electronics engineering and a master's in engineering management with a focus on engineering economics. Much of her work involves budget planning, technical procurement, and project management. On the side she does website development and freelance writing, and creates in-depth guides on financial topics._ NOW WATCH: A mother and daughter stopped speaking after Trump was elected — here's their emotional first conversation 6 months later


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