{ in·deed·a·bly }

adverb: to competently express interest, surprise, disbelief, or contempt

Observed in the wild

A monsoon-like storm scudded through London. Despite wielding an umbrella and wearing a spray jacket, the rain drops ricocheted off the pavement to soak my jeans and boots.

After scrambling through the front door, my kids were instructed to peel off their sodden clothes and go for a nice warm bath.

Predictably, things didn’t go quite to plan.

The youngest stripped off in the open door way, gleefully mooning the street, before running around the house doing his best Kung Fu Panda imitation.

The eldest, by far the wettest of us all because apparently it isn’t cool to carry an umbrella, squelched his way towards the washing machine.

Dad! It’s raining inside. Again!

Shrugging off my own coat, I hurried into the family room where a steady drip of water had soaked my lady wife’s brand new lounge suite. Feelings of resignation and impending doom settled like a lead weight upon my shoulders.

Oh sh…” I began, about to launch into a torrent of four letter words expressing the extent of my displeasure with my recalcitrant landlord.

Skadoosh!” the older boy swiftly interjected with a meaningfully raised eyebrow.

My lady wife had recently introduced a swear jar, after the younger boy had called out “bollocks!” when he had caught his Year 1 teacher telling a lie to the class. His pronunciation had a distinct Australian accent, leaving little doubt where he had picked up the new word.

I had been conflicted.

On the one hand I was proud of him, the word usage was perfect given the context.

On the other hand, I was slightly horrified at how quickly the word became a favourite addition to the vocabularies of his classmates. In the case of the newly arrived Portuguese boy, it was the third English word he had learned. His parents must have been so proud.

I have always had difficulty with the hypocrisy of explaining societal rules to my children that I didn’t believe in myself. For example, why is showing a naked elbow or bellybutton ok, but exposing a bare boob or backside in public frowned upon?

Given my younger son’s exhibitionist performance in the doorway moments earlier, it appears my delivery had lacked conviction and fallen on deaf ears.

My lady wife had argued that my now empty money box proved I swear too often.

I had disagreed, insisting it showed I hardly ever used cash any more.

Without looking up from the Kung Fu Panda cartoon he had been engrossed in, my younger son muttered “bollocks!”.

That answered that question!

Getting pwned

After putting a bucket under the leak, I attempted to call the landlord.

No answer.

Then I remembered they were holidaying. Again. This time cruising the Northwest Passage.

How can the landlord afford to go on so many holidays?” asked my elder son, as he put his wet clothes in the washing machine.

I was about to respond that I didn’t know, when it occurred to me that I knew very well indeed.

My landlord was a slightly early retiree. My rent funded their retirement in its entirety.

Decades ago they had bought a cramped terrace house with dodgy electrics and a leaky roof. It was located in an undesirable neighbourhood with failing schools. The local high street had contained a motley assortment of boarded up shopfronts, bookies, charity shops, pawn brokers and pubs.

They had grafted and scraped by, working to raise their kids and pay off their mortgage.

Some twenty years after buying the house they conquered the mortgage, and became debt free. Suddenly they could afford to do those home renovation projects they had always dreamed of.

By that point the neighbourhood had gentrified. The schools were outstanding. The high street now contained florists, hipster cafes, sandwich shops, and a full set of supermarkets.

Inevitably, as soon as the building work was completed their now adult children moved out. One heading off to university, the other moving abroad in search of opportunity.

The landlord had twin epiphanies. First, they were no longer tethered to the neighbourhood schools. Second, they were now rattling around inside too much house.

So they packed up. Relocated to a coastal town close to a sandy beach. Rented out their beautifully renovated house. It was no longer cramped, but still possessed dodgy electrics and a leaky roof.

A succession of tenants quickly paid off the mortgage on the landlord’s new home.

Their early retired existence providing a textbook case study of geographic arbitrage in action.

Most of the time I am impressed with the landlord’s financial acumen. Through a combination of hard work, good fortune, and being open to opportunities they have created a sustainable business that generates sufficient free cash flow to support their lifestyle.

My inner saboteur rightly queries their concentration of risk, home market bias, lack of diversification, and shortsighted wilful neglect of maintenance issues.

However, for once he is easy to ignore. He pays too much rent to live in a house with dodgy electrics and a leaky roof. Meanwhile the landlord lives by the beach, when they aren’t off globetrotting!

Getting shorn

Earlier that day we had visited the barber for haircuts. We’ve been going to the same place for years, and it has been fascinating to watch as the business has evolved.

Years ago it was a struggling shop offering a commodity service. Run by the owner operator, and employing a couple of casual staff. The target market was the local Middle Eastern community, many of whom would visit for a chat and some company, but seldom pay for a haircut.

Eventually the owner realised that while that customer base made for an enjoyable day, it didn’t pay the bills.

He had observed changes occurring in the neighbourhood.

The traditional locals were dying, moving away, or being priced out.

In their place were a younger generation of more image conscious and free spending tenants.

The greasy spoon cafes, and overpriced corner stores specialising in alcohol and sweets, were being replaced by artisan boulangeries and coffee shops staffed by hipster baristas.

Retail rents were soaring.

The owner needed to try something new.

He had observed an increasing number of drop-ins wanted beard trims, grooming, and haircuts matching celebrity photos they displayed on their smartphones.

Over the next year he started targeting these vain monied young men.

He and his staff grew beards and started wearing fitted t-shirts. Which swiftly led to regular trips to the gym!

He doubled his prices. Then doubled them again.

Business boomed.

He renovated the shop, replacing the motley assortment of battered decades old second-hand chairs with dark wood panelling, sleek leather barbershop chairs, and kitsch hipster “barber shop in a box” decorations.

The owner couldn’t keep up with the demand. His casual staff became full timers. He hired several more.

Today it occurred to me that I hadn’t seen the owner for quite a while. When I asked the guy cutting my hair about it, he laughed and said the owner rarely cut hair anymore. He didn’t have to, the shop was making so much money.

Apparently the owner’s new focus was identifying locations to open more stores, seeking to replicate the successful formula. He planned to appoint a professional manager to run the chain of stores, and never need to work again.

I’m genuinely pleased for the owner. He is a lovely guy, and thoroughly deserves his newfound success.

It will be interesting to see how he copes with early retirement, whether he becomes one of those guys who spends his days hanging out with their friends, like the old men once did in his barber shop.

Getting pretty

Not far from the barber shop is a beauty spa that my lady wife occasionally frequents. They do massages, nail painting and generally make their clientele feel glamorous and pampered.

The lady who runs the spa has a similar story to the barber. As she adjusted her business to the changing desires of the local neighbourhood, she observed that many of the customers insisted on being serviced by the same person each visit.

Her local gym offered the services of several personal trainers. Each was a sole trader running a business helping clients to achieve their fitness goals. Each trainer paid the gym a monthly rent for the use of the facilities.

The owner decided to implement a similar arrangement with her employees.

She offered them the opportunity to develop their own businesses out of her beauty spa premises. They would rent a massage table or stool at the nail bar, then keep whatever profits they generated servicing their clients.

The owner provided shared services including cleaning, reception facilities, and utilities.

The spa evolved into a form of business incubator.

Ambitious successful staff graduated to open their own stores, often with angel investment assistance from the owner.

Successful, but less ambitious staff rented the tables or stools in the owner’s store.

Unsuccessful staff washed out, unable to earn enough to pay the rent.

Custom increased and prices rose, as the girls strove to establish their own businesses. Over time the owner increased the rents she charged the girls to operate out of her store.

The owner was provided with a sustainably reliable income, and a rewarding sense of mentorship developing the business acumen of her girls.

The burden of attracting and retaining customers shifted to the girls working in the store.

Best of all, the owner was shielded from the increasing competitive pressures of a commodity industry. Cut price nail bar operators were locked in a race to the bottom, increasingly dependent on unpaid family labour or underpaying staff who for a variety of reasons weren’t in a position to complain.

Observed in the wild

There are people leading financially independent lives all around us. Once we look for them, they are readily observed in the wild.

They don’t write blogs, or seek publicity in the mainstream media for simply having got their financial acts together. In fact the majority of them have never heard of the FIRE “movement”.

These are the angel investors, business owners, inventors, landlords, and property developers.

Many invest a portion of their capital in low cost index trackers, but few generated their wealth that way.

Their businesses generally weren’t established as “side hustles”, where dreamers and wannabe entrepreneurs allocate only the occasional hour stolen away from other activities to their commercial endeavours.

No, their businesses were what the owner did for a living, often times the way they identify themselves.

Walid the barber.

Jade the beautician.

What separated those reaching financial independence from those who were simply collecting a salary, is the fact that they owned the vehicle of their wealth creation.

They took a risk.

Established a business.

Identified opportunities.

Developed sustainably recurring cash flows.

Sought ways to replicate and scale a successful formula.

These endeavours don’t always work, indeed a great many fail.

However, when they do the owners are rewarded with the luxury of choice that only financial independence can provides. That luxury the Kung Fu Panda might describe as “awesomeness that knows no bounds”.


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  1. Dr FIRE 21 August 2019

    You’ve pretty much summed up the book, The Millionaire Next Door!

    I think owning a business is the quickest way to achieve “financial independence,” but it is of course not easy, and certainly not for everyone.

    • {in·deed·a·bly} 21 August 2019 — Post author

      Thanks Dr FIRE.

      The Millionaire Next Door was a fascinating book. Unfortunately the only lesson many folks in the FIRE movement took from it was to live below your means. Which is certainly sound advice, but it misses one of the key points that the author’s research revealed about the main routes via which wealth is created.

      The truth is that coupon clipping, life hacks, and index trackers just aren’t going to get most people anywhere near being able to remove the financial imperative from their time investment decisions.

  2. Dr FIRE 22 August 2019

    I recently finished it, which is why it’s still fresh in my mind.

    I agree that those steps won’t lead to financial freedom for most people (unless they have a huge wage and can put away upwards of £20K per year). But following those steps over a period of several years will still be beneficial. Being debt free and having £100K in an ISA at the age of 50 may not qualify as financially independent, but it will surely put them in a better position than most.

    • {in·deed·a·bly} 22 August 2019 — Post author

      £100k in an ISA is certainly a good beginning, but it is nowhere near an ending. Consider the following:

      When you think about it, that £100k will only throw off an annual free cash flow of between £2,500 and £5,000 per year tax free.

      Which sounds great, until you consider the median equivalised household disposable income is £29,400. Of that the household savings rate was only 3.9%.

      What that means is the individual needs to find £28,253 to make ends meet each year, at 2019 purchasing power.

      The 4% “safe” withdrawal rate evangelists would tell you that means the individual needs a nest egg of over £700,000 to fund their 30 year retirement, or seven times that ISA balance.

      Those who prefer to live off passive income streams would need between 6 and 11 times more.

      If that 50 year old individual owned their own house outright, then that required income figure would reduce by a bit.

      My point here isn’t to throw bricks at the commendable achievement of someone having squirrelled away £100k in an ISA by the time they are 50. Rather it is to demonstrate that this target isn’t nearly ambitious enough.

      As you correctly observe, very few employees earn a sufficiently high wage that they could realistically afford to save up that vast sum. Hence the need to look for avenues where they can actually create wealth for themselves.

What say you?

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