How to build wealth

This is a collection of lessons, thoughts, ideas, and insights on time, money, freedom–and most importantly, wealth. I have formulated, discovered, collected, pondered, and refined these throughout my life. Items come and go as the way I look at the world is refined.

There is no particular order; use the headers to guide you. Dive in, look around, absorb, and reflect. Use what you learn. Ignore that which you find useless.

Renting your time

When you rent your time for money you’re saying no to financial freedom. In fact, you’re optimizing for reverse-freedom since every minute that passes and every dollar earned that is not productive is a net negative. A negative of at least 5% up to infinity.

Nothing is sacred

Just because you paid money for something doesn’t mean it holds that value. Jewelry is a good example; try offloading it when you’re most desperate for money. That $500 bracelet turns to $250 overnight.

Baumol’s Cost Disease

This is when salaries rise for jobs that see little to no increase in value or productivity creation in reaction to an increase in salaries for jobs where there is an increase in value or productivity creation. Also, see The Baumol Effect – Marginal Revolution.

Accurately price goods

When you pay for something, realize that you have to earn ~1.6x the price. E.g. if something costs $100, you have to earn $160 to pay for it. For big purchases, it’s closer to 1.5-2.0x.

The returned value of goods

When people buy things they think, “do I have the money to buy this?” Rather, you should ask, “does this purchase get me what I truly want?” or “how will this purchase affect me?”

Sunk costs

The money is gone, don’t bother trying to recover it; you’ll end up digging a deeper hole. Either way, the utility is negative; E.g. wearing shoes you don’t like because you spent money on them.

Trapped value

Remember, value is trapped in things only if you want it to be.

Discounts, coupons, and sales

The price is the price. There is no money that’s been saved. Money is still spent. If you only value something at the sale or discount price, then think hard as to whether you truly want or need it. If what you’re buying doesn’t have value at full price, why does is it suddenly have value at 20% off? It doesn’t. You’re just convincing yourself it does.


When you have a surplus of cash put it to work. If you can’t put it to work, put it out of reach. What do most people do with a surplus? Spend it.

Reduce things to their common denominator

Realize things for what they are. A Ferrari is metal, plastic, and leather. A home is just wood and nails.

Make money

Few people save money. Fewer people make more money.

Value is personal

Things cost money but return value. The amount of value returned is up to you.

Know why you want something first

When making a purchase, ask yourself, “does this purchase help me move me closer to obtaining what I truly want?”


Get good at distinguishing between something that’s entertaining vs. educational. Most things that steal your attention are entertainment.

The Endowment Effect

When getting rid of things, think “if I didn’t own this, would I buy it today?” If the answer is “no,” get rid of it. This taps into the Endowment Effect; the idea that you perceive things you own with more value than things you don’t.

You have some old shoes that you wouldn’t buy today because your style has changed. However, you can’t bring yourself to just get rid of them; even if someone offered you full price on the spot.

Time is time

If you’d drive an extra 15 minutes to save 50% off a $40 toaster why wouldn’t you drive that same 15 minutes to save $20 off a $500,000 mortgage?

The savings and effort are exactly the same. Time is time. The price of the good is irrelevant.

Opportunity costs

Think in terms of opportunity costs. If you have a $100 to spend on dinner you’re saying that money is best spent on food and not a gift or savings or investment or etc. The price of the meal is at the cost of all those things. This is true of time as well. You could either clean the house for an hour or converse with your partner or child.

Be indifferent to Loss

Most people feel 2x the pain when something is lost, in comparison to when something is gained. Do your best to level the two out. The end goal should be indifference to both.


Just-noticeable difference. E.g. When the price of something crosses over to the point where conscious thought kicks in and then the action is taken. In other words, ensure the unique characteristics of your product or service are noticeable.

More on sales and discounts

A discount is not money off. E.g. a 20% discount is 10x the cost rather than 10.2x the cost.

Budgets fail

Money is fungible; IOW it has no limits on what it can be spent on. If you pay an unforeseen expense your budget remains intact and you’ll still spend on, say, entertainment. If you spend $20 a week on Regular gas but the price drops to $16 a week because there is an oil surplus, people will upgrade to Premium rather than see the extra money as more savings or a few extra meals out or etc. IOW people ignore the opportunity costs, they just see it as money to spend. Also, see When Budgets Fail.

Gambling winnings

When gambling the money you win is not “other people’s money.” It’s all yours. Don’t separate the two, thinking, “if I lose my winnings, so what, I’ll still break even.” This is not how to think about it. Think of it as all one pot. This will help guarantee that poor decisions are not made such as big best on long shots to break even.

Property investment is a sign of a confused economy

The increase of value captured in property is proportional to a future loss in economic growth. Economically, as business and investment opportunities taper off or decline, money is moved into property. So in the future when the value that businesses and investments people depend on bringing isn’t there, there will be an economic downturn. So, rising property values equals a weak or failing economy.


People go to school so they can be paid more. Time is better spent learning how to make more passive income. If it can be taught, others can learn it.

Properly weigh your options

The problem with gambling, besides the obvious, is that people don’t weigh their options correctly. People like to zoom in on games and say things like Blackjack offers the best odds because you can calculate bets based on hands you’re dealt in comparison to the dealer’s. However what people ignore are the choices they’ve been presented, or rather, the interpretation of those choices.

E.g. If you’re up then you’re willing to take more risks with your money because you rationalize the money is not yours. “Any amount I lose isn’t my money anyway!” You’re more likely to keep betting thinking in terms of positive changes rather than negative changes. Worse if your down. If your down your more eager to make up for the loss by making riskier and riskier bets trying to buy your way out of the loss. And as your time progresses, the closer you come to leaving the casino the worse you behave.

How to spend money

Take how much excess you have and divide that by how long you’ll live. That’s how much you have to spend every year. E.g. Have a $1000 surplus? Going to live another 40 years? $1000/40 = $25 per year. Of course, people don’t do this or follow through or change behavior depending on where the money comes from. If you get a tax break you’ll likely see it as free money and spend it.

Don’t discount the future

If something will bring 100% pleasure now it should bring 100% pleasure later. Most people optimize pleasure for now; the value of purchases plummets as time moves forward.

Don’t justify purchased based on an unknown future

What’s funny is that people discount the future when they want something now but build up future value if it’s tied to something they want now. For example, people will buy a high-end computer thinking they are future-proofing their needs. Another example is buying an off-road vehicle for all the camping they plan to do in the future but only go once or twice, at which point buying a city car and renting for those trips would have been economically reasonable. I think of this as Pessimistic Spending.

Future utility

A discount now for future utility is not necessarily money saved. E.g. You buy a pack of 24 car washes today at 25% off. In your mind, you think it’s an investment and all you have to do is wash your car more than twice a month. The problem is you can’t predict the future. You don’t know when you’ll have time to wash your car or if the weather will permit. So it ends up being a waste.

Don’t spread your investments too thin

Real estate, banking, diversified portfolio investing: these are symptoms of not knowing what to do with your money, so you’re u just copy everyone else. Why bother trying new ideas when you can just ride the wave everyone else is pushing, albeit out of your control. Property investing is complacency. You’re saying everything has already been done or that you have no control over what is to be done.

Pessimistic investing

With property investing you’re saying that you’re so pessimistic and uncertain of the future that you’re willing to not only put all your net worth into on the line but also take on serious debt and financial obligation.

Don’t diversify your investments

The problem with a diversified portfolio is the premise. The hope is that a few winners will counterbalance the losers to the point of break-even or surplus. The problem is when the focus is on diversification identifying the real winners becomes secondary so your portfolio overall is mediocre. It’s better to offset your investments.

Offset your investments

A share in Apple (AAPL) can be offset by cash in the bank or an Option. It shouldn’t be offset by buying a share in a hot new startup or bonds.

Incentivize the long term

Salaries incentivize the present and near future. It doesn’t encourage efforts that emphasize the long-term. Show up to work and you’ll continue to be paid.

Don’t stop looking for new opportunities

Property investing encourages stagnation and has pushed unequally. If your out of ideas or are unsure what will be worth investing in, you end up putting money into property.

Endowment effect II

Valuing something you own more than its value outside your hands. E.g. People value a lottery ticket more than the cost they paid for it. I.e. They are highly unlikely to sell it. Think about how you’re unwilling to sell that piece of jewelry you bought but never wear. Would you buy it today? The answer is almost always no, but for some reason, you won’t sell it.

Don’t let someone else determine when you’re allowed to take time off

Opportunity costs apply to time as well. When a holiday rolls around, how do you spend it? It’s a gift. Do you take time off or do you use it to do important work? Of course, the goal should be to get to a place where holidays don’t exist.

Bad debt

Debt makes you think you can afford things. Need a new car? May as well get the most expensive one you can afford. That’s the thought process most people have. If you could truly afford something, you’d pat cash for it.

Good debt

Good debt is leverageable.

Bad debt

Bad debt is when you owe time.

There’s no such thing as a “cheap” add on

If presented with a “cheap” add on, such as adding leather seats to a new car for $500 more, realize it’s not $500. It’s $500 + interest + your time to earn ($500 x 1.3) + lost interest earned on that $500 ($700 over 10 years).

The price is the price

Don’t anchor yourself to the price of things. Just because you could sell your vintage guitar for $5000 today does not mean you should NOT sell it for $4000 a few years from now. You may end up waiting years more for it to go up again during which time that $4000 would have earned more than $1000.

There is no magic pill to eliminate pain

Does an action or purchase actually get you closer to what you want in life? Or is it just a quick antidote for pain?

Anchor goods at $0

Price is the main method people use to value something’s worth. This is why price anchoring works. Really, you should weigh in price as one small variable and it should be based on the price of $0 because that is the true anchor.

Money is a priority

It is not a resource. You either give it time and attention it needs or you don’t.

Get good at forecasting regret

People are bad at forecasting regret. They will take on debt to redo their kitchen without realizing the cost to their future selves.

Good pain is good

People chase happiness and they leverage debt to try and get themselves there. When you optimize for happiness you neglect to realize that pain cannot be avoided. Without it, there is no happiness.

The trillions of workers in your pocket

People too often refuse to leverage technology to their advantage, or they do it in ineffective ways. You have a trillion little workers in your pocket waiting to do your bidding. What tasks or projects are you going to have them working on? Flashing mindless moving pictures in front of your face? Or, Eliminate hours of mindless tasks.

The end of Income

Planning does not mean one should not live in the moment. Be afraid of turning 80 with no income and no savings.

Cash flow over savings

Perennial cash flow is more important than savings.

The unknowns of 401Ks

The problem with 401Ks is unknowns. They are expensive even with the tax incentives. You don’t know if your “employer’s match” will actually payout. You don’t know how much you’ll be taxed. You don’t know the deeper layers of tax. So, 401Ks are for mitigating risk. 401Ks force people to be “responsible” (i.e. not blow through the cash) even if it means paying more in taxes later on.

There’s always a hidden fee

The problem with financial professionals is the fees. Even if they don’t charge a percentage (even 1% charge could be 25% of your money) they are making money on the back end, on the funds they put you in which has all sorts of fees and charges. There’s always a hidden fee. The cost over time is exponential.

Be or Do – John Boyd

You have two paths to choose from 1) build a career, or 2) build value for others.

“And you’re going to have to make a decision about which direction you want to go.” He raised his hand and pointed. “If you go that way you can be somebody. You will have to make compromises and you will have to turn your back on your friends.

But you will be a member of the club and you will get promoted and you will get good assignments.” Then Boyd raised his other hand and pointed another direction. “Or you can go that way and you can do something — something for your country and for your Air Force and for yourself.

If you decide you want to do something, you may not get promoted and you may not get the good assignments and you certainly will not be a favorite of your superiors. But you won’t have to compromise yourself. You will be true to your friends and to yourself. And your work might make a difference. To be somebody or to do something.

In life there is often a roll call. That’s when you will have to make a decision. To be or to do? Which way will you go?”

John Boyd

Long-term thinking benefits the short term as well

Make decisions for the long term the majority of the time. Even if your runway is short, the immediate rewards of long-term thinking beat those of short-term thinking. E.g. eating an entire bag of chips gives you an immediate, pleasurable rush. Long term, it increases your risk of disease. NOT eating the bag of chips, short term, means your chemistry is in homeostasis. This means clarity and focus and readiness and personal agency. These all outweigh activating your taste receptors for a moment of pleasure.

Everything is an experiment.

Start small. Start simple. Treat everything like an experiment. Too big too soon means you can’t course-correct when necessary. You don’t know what you’re doing and neither does anyone else.


Realism is sometimes a mask for cynicism. Be honest. Have integrity.

It’s your responsibility

Never wonder, “who’s job is it?” The answer is always the same. Yours.

Conceive of unique ideas

Learning skills from others and holding ideas learned from others is good. But use it to get on a path to unique and one-of-a-kind truths.

How to have unique thoughts and ideas

Take advanced-level art classes. The first step, though, is taking entry-level art classes. At some point, you’ll figure out how to think with authenticity and then how to express your unique view and understanding of the world.

Use school for what it’s good for

School is mostly about rote memorization. Even when it appears ideas are being exchanged.

Do things in your name

Don’t hide from responsibility behind a group of people or an organization. Everything you do, do it in your own name.

Seek responsibility, not recognition

Recognition is different than responsibility. You take responsibility. You get recognition. Never take recognition.

Leverage the Internet

The Internet is the most effective and most accessible lever in the world. Will you use it?

Money problems

It’s rare to have problems where the only solution is more money. Changing behavior may be the solution you’re after. It’s just as easy as getting more money but can be counterintuitive. Counterintuitive ideas are at first confusing or just unnoticed.

Tell stories

Warby Parker was born because Luxottica controlled too much of the eyeglass product chain. They used incredible storytelling to sell this idea to customers, growing to a multi-billion dollar company. Their solution was to create a vertically integrated company, owning 100% of the product chain. Somehow they convinced people this is less than Luxottica. Lesson: tell great stories in great ways.

Buying a home

Buy a home when you want a home. Buying a home seems like an investment. It seems like you’re leveraging other people’s money. I.e. The gains are “free!” But this may not be the case. Gains are not yours. Much goes to the loan owner and taxes. The real problem happens when you start paying more thinking your chance of success remains constant.

And if gains go up in smoke you’re still out the loss on money not invested due to inflation. Telling yourself it’s financial sound is dangerous and leads to bad decisions. Buy a home because you want a home.

Competition vs. Authenticity

Competition limits resources create stress, offers no guidance, and reduces people to their worst. BE authentic. Be a monopoly in your personal and business lives.

Who’s turn is it?


When is it your turn?


Photo by Ivo Rainha from Pexels

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