- Naval
After I started earning decent money, I intuitively knew that given my situation, I needed to save as much as possible and not indulge in the natural tendency to up my living standards. This was partially motivated by the FIRE (Financial Independence Retire Early) movement, partially by the economic hole I saw my parents digging under themselves, partially by Dave Ramsey's pay-off-all-debts mentality, partially by the increased financial responsibility for my fiance and family, and finally, by the fear of getting again to zero.
If I were to compare my life to an investment, it would most likely be a cryptocurrency. Volatile as hell. When you only support yourself, your expenses don't vary much. Your daily life is pretty much the same, so your life is more like a steady bond. In my case, the variance of expenses is much higher, which made me come up with a rule:
Every 10k that I save is a pillow for 1 bad thing happening:
- ER bill
- Dad's truck breaking
- Relatives requiring an immediate financial help
Each of these is on the 10k order of magnitude, thus by building up your saving you are protecting yourself from the worst possible case - all the bad things happening at once. And since my life is crypto, I knew that it not only is not improbable but rather inevitable.
This is exactly what happened recently. Luckily for me, I have accumulated enough pillows to exactly offset the wrecking train approaching me at full speed. However, if this wrecking train was only a bit faster, then all hell would have broken loose.
People say money doesn't solve your problems, but it sure does solve your money problems.