Much of what I believe has been assimilated from a variety of different sources each of which has influenced how I understood and used the next source and so on. Much as I try I can not identify a single “school” of thought that forms my philosophy. I am not a lifestyle designer (in the modern sense of backpacking through Thailand and blogging about it with a laptop); I am not into simple living for its own sake; I am not a hippie; I am not …
The fact is I am a little bit of all. My background, when I was 24, is as follows
- I grew up in an non-Anglo-Saxon country which means that I am not accustomed to use of consumer credit. The idea of going into debt for anything but a mortgage and a car is alien to me. I can not imagine a much worse position than being in debt from buying hamburgers, computer games, and plastic appliances.
- I used to be a cyber-techno geek believing in the Kurtzweil’s singularity and that civilization was growing on an exponentially increasing curve. Anything I could do to help that would make my life meaningful. I chose to become a physicist and my goal was to add to the knowledge database of humankind.
- While I was quite good at trivia(l pursuit), I knew little of the world. By little I assume that I probably knew as much as the next person. I knew far less than I know now. In particular, I had a somewhat snobbish attitude to anything having to do with finance, economics, politics, … and other socio-economic constructs. (Not something I’m proud of today.)
Then something changed. I credit the spark to 1) Moving to another country (to pursue graduate studies) and 2) Having an internet hookup in my dorm room and no TV which allowed for much reading.
My influences in temporal order are:
- Reading I want the world plus 5%. BAM! Eye opener! I was so impressed I even decided to translate the piece into Danish. I resolved never to pay one dime in mortgage interest. Instead of saving up to buy bigger and bigger computers, I took on a much larger goal: To buy a house, in cash. Furthermore, it began to make it clear to me that I couldn’t just ignore economics. It was an important subject to understand.
- Around the same time, I discovered anti-consumerism. I believe the website I found, or at least the one I remember I found was verdant.net.
- At the same time I discovered the existence of peak oil. That was back in late 2000 and I got fairly involved in the “movement” which back then hadn’t reached to popularity it was to reach in 2006-07 with increasing oil prices. For a while I ran one of the most popular websites on oil depletion (in the top 5). I began learning ways to get by without cheap energy. I experimented with turning off the thermostat completely. Reading by candlelight, knitting, stocking up, … many things that could be considered frugal; but that wasn’t the reason I was doing them. I was preparing.
- I began to study economics, that is to say, it was no formal study. I started reading everything posted on financialsense.com. That website has an Austrian bend and follows the school of Ludwig von Mises rather than the Keynesian school that most formal education does. This lead me to believe that the oil shortage would not lead to a sudden “run for the hills” crash but rather a slow decline where the gap between the haves and the havenots would increase. The same website also discussed investments. So far I had just stored all my money in savings accounts. Now I began buying stocks.
- I read Rich Dad Poor Dad and Your money or your life. The idea of passive income was novel to me. I made a program calculating my passive income. At the time I already had a “substantial” amount of money. It did not take long to realize that increasing my portfolio yield from the measly 2% of my bank account to 4% through investing would result in an annual income increase of a few thousand. That was a fairly high rate of return.
- I began to study investing in earnest. I have read a lot about using options. At some point I even tried to get into Wall Street (that was about a year before everything fell down) and landed a couple of early phone interviews.
- I started ERE. About half a year later, I started writing the ERE book. This lead to larger study of management, ecology, sociology, etc. In particular, I consolidated everything into a larger theory—obviously, you can read all about that in the book (shameless plug inserted).
So there’s the mix for you. Now we can discuss whether the final result was the result of a sequence of unlikely events or whether there would have been several paths to the same destination. It is possible that if I had missed any one of these events I would now be an engineer working for a big conglomerate saddled up with consumer debt and a collection of old electronics in my two car garage, etc. Who knows …