Category Archives: Finance

This is a collection of posts about home finance, and maybe some rants about the stock market.

Is The American Dream Dead?

I’ve wrote posts about this topic before on Reddit a few times.

There’s truth to the idea that it’s much harder to start a life in the world today than it was fifty years ago, homes are more expensive and wage growth hasn’t necessarily kept pace with inflation over the last fifty years, adding to the fact that less and less Americans live in low CoLA cities means the American experience is even more skewed than it was 50 years ago. Setting that aside though, we also spend our money far differently than we did before, and many would say far less efficiently.

We have all of these relatively modern pulls on our disposable income that didn’t exist before. Keeping up a household in the 50s usually meant 2.5 kids, a family car, power and water bills, a television, etc. we have all that today, but also modern technology expenses: cable/sat subscription, cellphones, multiple TVs in most households, cars for each parent, internet bill. Just these extra things we see as necessities now eat up a huge chunk of the average American’s disposable income. We also buy things much differently than we did 50 years ago. Americans used to save huge amounts of their disposable income, and often paid cash for things. Credit was much harder to come by so you had to be frugal and delay gratification if you wanted that new TV or car. From my research, homes were one of the few things people financed, and revolving credit was very very low, with fairly low interest because it was so hard to get in general. Today we finance our lifestyles with revolving credit and are paying huge amounts of interest, while also rarely keeping a sufficient savings rate to be able to break that cycle.

The next big difference is how we live. 50 years ago the average American didn’t eat out very much at all, you cooked food at home every night from either fresh or frozen ingredients, and you generally were eating fairly inexpensive domestically available products. In modern times we all eat out multiple times a week, and have largely outsourced the role of food preparation to other people. When we do eat at home, many Americans opt for fancier fare, with exotic ingredients, or we keep expensive dietary habits. We also spend money on things like fancy coffees and convenience food that wouldn’t have happened much before. This has greatly increased the proportion of disposable income spent on food in the American household significantly over what was spent in the fifties.

So while the American experience has definitely changed, if you were to live like people did fifty years ago, you’d probably be surprised at how well you could live.
Credit, technology, and lifestyle has had a huge impact on the average American and it largely flies under the radar in these discussions. The beauty is, you can largely make a choice if you want to let them keep impacting your life.

What can make an entrepreneur successful?

What makes a successful entrepreneur and why?
Perseverance. No really. You can be a brilliant MIT graduate with all the connections in the world, and a groundbreaking technology, but nothing happens overnight. You have to be able to stick with it through all of the trials, all of the awful pitches, all of the no’s, being broke, being lonely, being frustrated. If you don’t have the grit and will to push through all of the negatives of being an entrepreneur, and just survive, you wont last too long. Rarely do you found the next Instagram or Snap chat, going viral overnight and being picked up for billions in a matter of a year or two. Often you slog through horrors until the market is ready for you, it might be 3 years, it might be 20 years.
 
What skills or traits do I need to be an entrepreneur? 
Entrepreneurs need to be able to take in a lot information, and glean some insights from it to apply to what they are doing. I read constantly, and am always surprised at what can spark ideas or solve problems. Being able to look at a 30,000 foot view of a problem, do a quick survey of an industry or area of science, and then zoom in on a solution is a really important ability to have.
Entrepreneurs usually need to be humble as well. There’s always someone who’s been there first, always someone who’s smarter than you, and always someone you can learn from. If you go in like you’re the end-all-be-all you wont attract the right people to make yourself successful.
 
How do I succeed? 
Beyond what I said above, you really need to commit to it. It’s a lifestyle, and if you have a family, the whole family becomes an entrepreneur family. It might mean no vacations, a smaller house, tighter budges, and often meager Christmases. If everyone isn’t committed to it, you’re going to have a lot of distracting strife. You have to be able to keep motivated and sacrifice today’s comforts for tomorrow’s returns, always looking at the long game.
 
Pro-Tips for entrepreneurs
  • Learn everything you can, from everyone you can.
  • Network like crazy, always provide value to people you meet, and be humble in the process.
  • Find a mentor who’s been there before.
  • Have your own house in order.
That last one is probably the most important part. Personally, professionally, financially, you have to have your ducks in a row or you’ll miss opportunities. Your finances need to be awesome so you can A) have enough money to take opportunities and make leaps of faith, and B) when you’re in due diligence you should probably have decent credit, or a great story why you don’t. I meet a lot of entrepreneurs that put more value on the lifestyle, and looking and acting like an entrepreneur than they do in actually being an entrepreneur. If you walk into my office hours with all the gadgets, a $2,000 suit, and a BMW, but complain you don’t have enough cash to bootstrap, I can’t feel sorry for you because you did that to yourself.