No Worries

1. You Must Genuinely Want More Money

Money is a choice.

Desire is fundamental. Achieving financial well-being starts with a genuine desire for more money, free from ethical or political hang-ups about wealth. Many people settle for less because they prioritize other things or feel conflicted about wanting material possessions. This is an economic choice, but you must be honest about it.

Effort is required. Money doesn't just appear; you have to actively pursue it. This involves effort, whether seeking raises, working longer hours, getting a second job, changing careers, acquiring new skills through education, or starting a business. Entrepreneurship, while hard, offers the greatest potential for life-changing income and personal fulfillment.

Mindset matters. Ultimately, making more money is about your mindset and identity. You may need to challenge your self-perception as an "average Joe" and embrace the idea that you can achieve significant wealth through hard work and taking action. This shift in attitude is the necessary first step before any financial strategies can be effective.

2. Financial Success Hinges on a Few Big Decisions

Get the big decisions right, and you won’t have to worry about the small decisions.

Small savings are overrated. Conventional personal finance often focuses on minor austerity measures like skipping coffee or clipping coupons, promising wealth over decades. While the math might technically work, these small sacrifices lead to misery and are often unsustainable, distracting from the real issues. Enjoy your coffee.

Big decisions dominate. True financial well-being is determined by a handful of major choices, not a million small ones. Getting these right has a vastly larger impact than daily penny-pinching. The three most critical decisions are related to your house, your car, and your student loans.

Impact is exponential. Mistakes in these big areas can cost hundreds of thousands of dollars in interest and lost opportunity over a lifetime.

• An extra $100k on a house: ~$110k in interest over the loan life.
• An $80k car financed: ~$20k in interest.
• $300k in student loans: Can be crippling for life.
  Focusing energy on making smart choices in these few areas provides disproportionate financial benefits and reduces stress.

3. Debt and Risk Are the Only Sources of Financial Stress

Debt and risk are the two sources of financial stress—there are no others.

Stress isn't poverty. Financial stress doesn't come from simply not having money; many broke people are financially stress-free because they have no debt and no risky investments. Stress arises from the obligations of debt and the uncertainty of risk.

Debt creates obligations. Having debt means fixed monthly payments that cause stress, especially when cash is tight. Mortgages, car loans, credit cards, and student loans all create this burden. Eliminating debt, even gradually, brings immense relief and increases net worth as free cash flow goes to equity.

Risk creates uncertainty. Investing involves financial market risk, which translates to volatility and potential losses. This uncertainty causes stress and often leads people to make poor, emotionally driven decisions like selling low. Managing risk, not just chasing returns, is crucial for peace of mind.

4. Focus on Increasing Revenue, Not Just Cutting Expenses

The most elegant solution to the problem of not having enough money is… to make more money.

Austerity is painful. Trying to get rich solely by cutting expenses to the bone is a difficult, often miserable path that distorts your relationship with money. It requires constant denial of small comforts and can lead to a scarcity mentality.

Growth drives wealth. Like a successful corporation, your household's financial health is best improved by focusing on the revenue side – increasing your income. This is often more enjoyable and scalable than relentless cost-cutting. Ideas include:

• Getting raises (by building relationships with bosses)
• Working more hours or getting a second job
• Changing to a higher-paying career
• Starting a business (the most powerful method)

Abundance mindset. Focusing on revenue fosters an abundance mentality, believing wealth can be created, not just divided. This frees you from constant worry about small expenses and allows you to pursue opportunities, gain upside exposure (like equity or investments), and even be more generous.

5. Avoid the Extremes: Neither Cheap F**ks and High Rollers Find Peace

The thing that both CFs and high rollers both have in common is that they are ruled by money.

Extremes cause stress. People often fall into one of two unhealthy financial archetypes: the "Cheap F**k" (CF) who hoards money and denies themselves and others, or the "High Roller" who overspends and lives beyond their means. Both are ruled by money and experience significant stress, albeit different kinds.

Materialism is natural. The CF denies the natural human desire for material things that can bring happiness and make life easier. Their austerity, while potentially building wealth, often leads to strained relationships and missed opportunities for enjoyment and generosity.

Balance is key. A healthy relationship with money involves finding a middle ground: saving diligently but also spending judiciously on things that bring enjoyment. This requires delayed gratification – accumulating wealth early in life – but also the willingness to spend and enjoy it later, avoiding the trap of perpetual accumulation.

6. Relationships and Money: Choose Your Partner Wisely

The most important personal finance decision you will make in your life is: Who to marry.

Compatibility is crucial. Financial disagreements are a major cause of marital stress and divorce. Choosing a partner who shares your fundamental values and attitudes towards money – whether you are both savers or both comfortable with spending (within reason) – is paramount for a stress-free relationship.

Separate finances can help. While counterintuitive to the "our money" ideal, keeping finances separate can prevent arguments by clearly defining who is responsible for what and eliminating resentment over spending habits. Shared expenses can be split proportionally based on income.

Teamwork on big decisions. Regardless of how daily finances are managed, major decisions like buying a house, car, or funding education must be made together as a team. Both partners need financial literacy and awareness of the household's financial situation to avoid being trapped or taken advantage of.

7. Embrace the Power and Option Value of Cash

Having a huge cash position is dealing from a position of power.

Cash provides safety. Holding a significant amount of cash, ideally 6-12 months of expenses in an emergency fund, is crucial for minimizing financial stress. This cushion protects against job loss, unexpected bills, or emergencies without derailing your finances or forcing bad decisions.

Cash offers options. Beyond emergencies, cash provides liquidity and the option to seize unexpected opportunities, whether a great investment, a dream house, or a vintage car. Being asset-rich but cash-poor makes you fragile and unable to act when opportunities arise.

Liquidity reduces fragility. While financial experts may view cash as a drag on returns, its value lies in its stability and availability. It reduces portfolio volatility and provides peace of mind, which is invaluable. Aim to keep around 20% of your net worth in cash for safety, opportunity, and portfolio stability.

8. Credit Cards Are for Convenience, Not Carrying Balances

Understand that credit cards are a convenient way to pay for things. But they are a profoundly bad way to borrow money.

Convenience vs. debt. Credit cards are useful tools for electronic payments and building credit, essential for modern life. However, they become a major source of stress when used to carry a balance, incurring high interest charges that compound rapidly.

Avoid interest at all costs. The golden rule of credit cards is simple: pay off the entire balance every month. If you can't afford to pay for a purchase with cash you already have, you shouldn't put it on a credit card. Paying interest on discretionary items is financially destructive.

Monitor spending closely. Use credit card apps to check your balance frequently (ideally weekly) to stay aware of your spending and make course corrections before the end of the month. This prevents surprises and helps maintain control over your budget.

9. Buying a House: The Second Most Important Decision

Buying a house is the second most important financial decision you will make in your life. And people routinely mess it up.

Emotional pitfalls. The biggest mistake people make when buying a house is letting emotion override rational financial planning. Falling in love with a house that is too expensive leads to taking on excessive debt that cripples other financial goals like saving for retirement.

Affordability rules. A key principle is that housing costs (mortgage, insurance, taxes) should not exceed 25% of your income. While challenging in expensive areas, exceeding this limit creates significant stress and financial strain.

Leverage is risky. Most people finance a house with a mortgage, using leverage (borrowing against the asset). While this can amplify gains when prices rise, it also magnifies losses if prices fall, potentially wiping out equity and leaving you underwater, as seen in 2008.

10. Student Loans: The Debt You Can't Escape

The biggest reason that student loans are the worst thing in the world is because you cannot discharge them in bankruptcy.

Undischargeable burden. Unlike most other forms of debt (mortgages, car loans, credit cards), student loans generally cannot be eliminated through bankruptcy, making them a lifelong obligation. This traps many borrowers, causing immense stress and hindering major life milestones like marriage or buying a home.

High costs, uncertain returns. The cost of higher education has soared, often fueled by easy access to government loans regardless of creditworthiness or future earning potential of the degree. Many graduates face crippling debt loads with insufficient income to pay them back, especially from lower-tier or non-vocational programs.

Income is the solution. For those burdened by student debt, especially from expensive or low-return degrees, the only realistic path to freedom is significantly increasing income. This may require changing careers or pursuing higher-paying opportunities, even if outside their field of study, as cutting expenses alone is rarely enough.

11. Buying a Car Requires Preparation and Rationality

The goal should be to pay cash for a car.

Depreciating asset. Cars are expensive, rapidly depreciating assets. Financing a car means borrowing against something that loses value, a fundamentally poor financial decision compared to borrowing for an appreciating asset like real estate (though even that has risks).

Avoid long loans. Car dealerships often push long-term loans (6, 7, 8+ years) to make monthly payments seem affordable, but this results in paying significantly more interest over the life of the loan. Never take a car loan longer than five years; if you can't afford the car on a five-year term, buy a cheaper one.

Be prepared. Car dealerships are designed to manipulate emotions and take advantage of financial unsophistication. Research car values beforehand, be willing to walk away if the deal isn't right, and focus on the total price and interest rate, not just the monthly payment. Paying cash eliminates financing stress and saves thousands in interest.

12. Investing: Manage Risk First with the Awesome Portfolio

The most important thing about investing is to stay invested, so you can keep compounding.

Volatility causes stress. While stocks offer potential for high returns, their volatility causes significant stress and often leads investors to make poor decisions like selling during market downturns, interrupting the crucial process of compounding wealth over time.

Diversification beyond stocks/bonds. The traditional 60/40 stock/bond portfolio doesn't always provide adequate diversification, as seen in 2022 when both asset classes fell. A truly diversified portfolio should include hard assets like real estate and gold, which can offer protection against inflation and reduce overall volatility.

The Awesome Portfolio. A simple, boring, and diversified approach is key to stress-free investing. The "Awesome Portfolio" proposes a 20% allocation to each of:

• Stocks
• Bonds
• Cash
• Gold
• Real Estate
  This mix has historically provided solid returns with significantly lower volatility and smaller drawdowns than stock-heavy portfolios, making it easier to stay invested through market cycles.

Last updated: June 1, 2025