Chapter 10 - Radically Deviant Financial Strategies

You have my permission to cackle wildly if you happen to implement any of these techniques.

The Story of Gert: A Millionaire Life Without a Million Dollars

Over the decades, I have met people who live a magnificent life and have no job. I thought “Why do I have to work and they don’t? They must have a trust fund or something.” Nope. The answer turns out to be stupidly simple. My attempts to share what I learned were futile, until I came up with the story of Ferd and Gert.1

Ferd works a job for 40 hours per week. He spends about half an hour commuting each way – so that is now effectively 45 hours per week. Ferd spends 10 hours per week on feeding himself: driving to restaurants, waiting in line at restaurants, ordering, waiting…driving to grocery stores to get his favorite foods with the best price, shopping, waiting in line, etc. After his monthly expenses, Ferd has about $200 per month of disposable income. And maybe $800 in the bank. Ferd spends nearly all of his disposable income on fun things.

He is looking for entertainment and life substance. Ferd dreams of having a million dollars so that he doesn’t have to work anymore. If he had a million dollars, he could buy a better house, a better car, awesome toys, and he would no longer have to work at this sucky job – or any sucky job. Ferd earns $40,000 per year now. In twenty years, he will have had several small raises such that, by the time the years have passed, he will have earned, cumulatively, a million dollars.

Gert has realized the permaculture dream. She lives on a few acres and eats the food that grows there. During the warmer months, she spends some time harvesting and preserving food. During a week or two in the fall, Gert is working a good fifty hours a week. But for most of the year, she is working less than ten hours a week. Gert also spends about ten hours a week making her meals. Usually, it is something quick, but sometimes she makes something more elaborate. Neighbors sometimes buy some of Gert’s excess food. Once a year, she will help with a permaculture design for somebody. Gert has a little pickup, but she hasn’t fired it up in three months. She has about $300 per month of disposable income and $4000 in the bank. Gert has trouble spending this extra money. She’s not sure what to spend it on. It just sort of accumulates. Gert earns about $7000 per year now. She intends to earn less money in future years. Over the next twenty years, Gert will have earned $100,000.

If Gert had a million dollars, what would she do with it? How would her life change? Since Gert is a fictitious person in my head, I hereby declare that her life would not change. If your life does not change if you have a million dollars, then is it fair to say that you are living the life of a millionaire? Maybe we could call this being a “permaculture millionaire”?

Maybe Gert should write a book and tell the world all this. But…Gert doesn’t feel like it. Gert is a humble woman and thinks nobody would want to hear that. Gert is more of a reader than a writer anyways. Plus, there are already dozens of lovely permaculture books,2 so she doesn’t feel like she needs to write another one.

Maybe Gert should get more acres and sell more food…market the food to get more per pound than what people pay at Whole Foods – maybe get $20 per pound and have five or six people move onto her land and scale up.3 Set the pace for permaculturists all over the world! Nah, that sounds like a lot of hard work and stress.

Maybe Gert should teach some classes at her place so people can learn from her example? Gert doesn’t feel like a teacher. Plus, to pull this off, she would have to do advertising and marketing, which really isn’t her thing.

Maybe Gert should go onto the internet and tell the world about her lifestyle. She tried that a couple of times and was told by a few dozen people that she’s a lying monster and a shill. So she decided to not bring this stuff up on the internet anymore.4 I think the world has at least a million Gerts. Most might get an even easier life if they heard about permaculture, but they are, nonetheless, living the dream.

Not only is Gert not angry at bad guys, she doesn’t even know they exist.

I am thinking of giving Ferd a million dollars. But I think telling him about Gert might be of greater value.

Owning a Home Without Grovelling to a Bank

You have my permission to make rude gestures in the general direction of any bank if you implement any of these techniques.

When hearing about Gert for the first time, the most common response is “how did she get the land?” One possible approach to achieving Gert-hood is well-documented in Rob Roy’s book Mortgage Free.5

To sum up Rob’s entire book in one paragraph: Keep working your day job, significantly reduce your expenses, and save up a big chunk of money. Use this money to buy your land…yes, with cash.6 Next, build a rough shelter (basically a shack) on your land and move in. You won’t have to pay rent somewhere else, so you’ll have extra money to save up. While you are living in the shack, use the money you have been saving and your new shack-building skills to build a small house. Over the next number of years, keep adding on to and remodeling the house as your needs and budget allow until it becomes your dream home.

Now you have your dream home on your own land and no mortgage! Hurray! This strategy can definitely work…but living in a shack for a year doesn’t really jibe with a lot of people. Fair enough. Have no fear, for those of you not interested in the shack lifestyle, we’ll be introducing a luxury model at the end of the chapter.

Early Retirement Extreme

Another excellent example of how one might achieve Gert-hood is what Jacob Lund Fisker did. Once upon a time, Jacob worked as a nuclear astrophysicist. One day, he wanted to go out and play, but careers typically don’t allow that on a weekday. So, rather than spend the rest of his life doing what he was trained to do, he plotted and schemed a way to escape. He ended up retiring at the age of 33 – so very clever!

Leading up to his retirement, Jacob created a blog, book, and forum called Early Retirement Extreme (ERE) to share his ideas and philosophies with others on how to achieve financial independence and retire early.7 Thousands of people have shared online about their success with Jacob’s strategies. In a nutshell, Jacob begs you to consider the conventional retirement path, and then consider an extreme early retirement scenario. And then consider something in between that would be best for you. Even more, you might be willing to try a path where you retire in ten years, but after a few months (perhaps after an especially comical day at work), you might be willing to try something more extreme. It seems that a lot of people who start on this path end up retiring in three years.

A quick peek at what most consider as the most extreme path: Continue working a normal job, but live so frugally that you are squirreling away 75% of your income. Try to get your living expenses under $500 per month.8 Yes, this might seem really low but he outlines how it can be done. Invest that extra coin. When you have enough saved, you can then leave the rat race behind and spend the rest of your life in happy retirement. As a bonus, you might develop some hobbies that accidentally produce a bit more income. Oops!

Jacob is brilliant. I wish that I had learned of this when I was young. That said, while these techniques may work, the idea of living extremely frugally doesn’t really seem like it fits the idea of a more luxuriant life for a lot of people. Don’t worry, we’ll get to a more luxuriant approach soon.

Give a Gift to Your Future Self with Passive Income Streams

The stumble I experience with Jacob’s ERE is the investing part. It smells a lot like gambling to me. And since I am not a master of this type of gambling, I suspect that I will be on the losing end of the gamble while experts fleece my monies – and I am left with nothing but stabby thoughts about those experts.

Years ago, I stumbled onto “passive income streams.”9 Also called “residual income streams” or even “royalties.” The idea behind passive income streams is that you put in an effort now to create something, and over the years a small trickle of money comes in without much further effort.

I wrote an article on my richsoil website about ants and aphids back in 2002.10 It took me about two hours. I may have spent another two hours telling folks about it. This was one of my least popular articles. At some point, I stuck a couple of ads on the page and it consistently brought in about $60 per year every year. That may not sound like a lot, but it has now been 17 years, and I have made $960 from only four hours of work. That’s $240 per hour! Extrapolating these figures, if you were to work 40 hours per week for a whole year doing this kind of thing, you could make $30,000 per year…but after the first year, you will barely have to do anything. Sounds like a great retirement to me!

Some of my efforts in this space have never made me a dime. Some of them have needed me to foolishly spend money. Others have made me a little and a few have made me quite a bit. As with many things, I think the key is:

Try 100 things. Only 2 of them will work out, but you never know in advance which 2.11

One thing you can be assured of: if you do zero things, zero will work out.

Here’s an abbreviated list of passive income streams:12

The BEER Plan

Oh, sure, Jacob’s ERE and Rob’s Mortgage Free are genius. And yet I just can’t leave well enough alone. I now present to you my plan that will allow you to achieve Gert-hood without a lot of sacrifice involved. I call it “Better Extreme Early Retirement” (BEER). You know it is better, because the acronym spells something. And I predict more people will like it for mysterious, subliminal reasons.

The BEER plan goes as follows: Keep working your job. But for two hours every week, do something that you enjoy doing that might turn into a passive income stream. After doing this for a while, you might find that you get to a point where the amount of money you have coming in from passive income streams is greater than your monthly expenses. Since you have then effectively been earning a double income, you have saved up a lot of money. Perhaps now is the perfect time to buy your land.

Now, if you’re not into the Mortgage Free shack approach, just keep doing what you were doing, and you’ll continue to save a bunch of money. Using this money, you can go the route of building a small house on your land and then adding on to it later. Or you can keep saving up and then just build your house. Or, if you don’t feel like building a house, maybe you can save up enough money to the point where you can just pay someone else to do it for you.

The endgame of the BEER plan is to have land with a home and a permaculture garden. You get there because of passive income streams. The home and the garden make it so your annual expenses drop to nearly zero. But your passive income streams keep paying. It is possible that your income becomes ten times greater than your expenses…so I guess you don’t need that day job anymore.

A Clever Recipe for More Luxuriant Living at Half the Cost

The following recipe is a quick way to solve more than half of the problems we are concerned with in this book. It also reduces expenses by half or more, and, simultaneously, universally, dramatically, improves luxury.

This recipe also has an overwhelming downside. The solutions to the downside will not fit in this book. I have dedicated an enormous part of my life to trying to solve this one massive problem so that we can all harvest the magnificent benefits.

People avoid living with other people because there is just too much drama. If there was a big volume knob on drama, we could just turn it from “9” down to less than “1.” What remains is that we could live with twenty other people in a far more luxuriant environment.17 And it would cost less than half as much as living alone. For starters, rent (of house or land) could be split by twenty people. Nearly any item you buy, whether it be a couch, an electric tractor, or a jigsaw puzzle, could be split by twenty people. And whenever something breaks, it’s like having a 95% off coupon on repairs (and 95% of the time, the item magically repairs itself). Childcare could be shared. Food costs could be reduced through bulk ordering, and food is also more likely to get consumed before it goes bad.18 As an example, when I lived in a household of ten where all food was shared, the cost per person per month for all-organic food (including meat) was only $108.

The benefits are profound. Community living is a magnificent, radically deviant, phenomenally effective financial strategy. Possibly for experts only until we develop better recipes to reduce drama.19 We will explore the advantages of community living some more when we get to chapters 13 and 14.

A Few Experiments Being Conducted on Human Beings

As I am writing this, I am currently conducting four experiments that have active participants. I’ll need a few years of documented results before these ideas can have a book of their own, and then they can be expanded to work on thousands of properties: