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welcome to the best interest podcast
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where we believe Benjamin Franklin's
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advice that an investment in knowledge
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pays the best interest both in finances
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and in your life every episode teaches
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you personal finance and investing in
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simple terms now here's your host Jesse
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Kramer hello and welcome to episode 72
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of the best interest podcast my name is
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Jesse Kramer today we're welcoming Doug
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cunnington on to the Show Doug will
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share with us some of the cool aspects
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of his career path because it is really
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cool how he's gotten to where he is uh
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how that career led him to financial
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Independence and even some of how the
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philosophy of stoicism has helped Doug
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in his life but first as usual I have a
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little intro story today that I wanted
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to share with you guys and before that
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we have our review of the week Ashman
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Scoops left this review on Apple podcast
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Ashman or maybe his first name is Ashman
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Scoops I'm not sure Ashman Scoops said
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Jesse is an incredibly sharp guy the
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content he creates for his best interest
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podcast and blog is very informative and
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insightful he's got stuff for everyone
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from the amateur investor to the
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seasoned Financial expert highly
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recommended Ashman thank you for those
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kind words if you're listening to this
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reach out to me Jesse bestin interest.
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blog and we'll get you set up with some
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cool best interest gear all right today
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I wanted to read to you guys something
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that I wrote a couple years ago February
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of 2022 it's an article on the blog
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called career change is it a risk and
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one of the main reasons why I wanted to
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talk about this today is because Doug
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and I in the conversation that you'll be
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hearing in a few minutes we talk
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extensively about Doug's career and some
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of the career change that he went
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through some of it which was planned
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some of it was not planned but it's very
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interesting to hear when someone goes
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through career change because it can be
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scary it can be exciting it can lead to
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good things it can also lead to bad
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things and I just want to walk you
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through some of my thoughts as I left
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engineering this career that I had spent
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much of my life preparing for and went
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to switch over and and work where I'm
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currently working which is a a wealth
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management financial planning firm I was
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speaking to a friend of the blog Michael
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back in late January of 2022 two years
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ago and he said to me just straight up
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like Jesse your career change seems like
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a huge risk to me man what a question
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kind of punched me right in the gut and
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I wanted to give Michael a smart answer
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to his question so I paused for a second
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and I I thought to myself what exactly
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is risk I mean I think that's the the
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meat of the question if career change is
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a risk first we need to talk about what
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risk is I bet you have a gut feeling for
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risk you know it's one of those things
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you you know it when you see it as the
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US Supreme Court would say on its face
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most big decisions they they must be
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risky at least in some sense and here we
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go with this career change after five
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and a half years of engineering school
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and then seven years working full-time
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for an aerospace engineering firm
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switching careers for me must have been
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very risky now risk is also an important
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investing topic too and and we deal with
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plenty of other risks in our everyday
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lives but how do I Define risk how do
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you define risk and how does that
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definition apply to Michael's question
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if a career change is risky was my
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career change risky in in hindsight or
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maybe it wasn't risky at all so that's
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what I want to talk about right now over
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the next few minutes I want to talk
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about risk I want to talk about its
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various definitions and and what you can
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do to live and Thrive even with risk
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inside of your life so I want to start
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as I start many things on the best
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interest with our friend Warren Buffett
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both in 2022 and and even today I
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regularly listen to Warren Buffett
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specifically birkshire hathway
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shareholders meetings it's one of the
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things I do when I exercise because you
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know popup music just gets me going too
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fast dead serious if I listen to
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exciting music when I'm jogging I'm
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going to get tired after like 10 minutes
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because the exciting music just makes me
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want to run fast whereas if I'm
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listening to Warren and Charlie may he
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rest in peace I just jog at a pretty
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normal pace and I get to learn not even
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joking that's what I do I I really like
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this question and answer that Warren
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gave in the 1994 shareholders meeting
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it's all about risk as you might guess
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and we are going to play the question
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and answer for you right now it is going
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to take a couple minutes just FYI uh
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hello my name is Charles pile from Anor
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Michigan uh I'd like to ask you to
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expound on your view of risk in in the
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financial world and I asked that against
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the background of what appear to be a
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number of inconsistencies between your
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view of risk and the conventional view
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of risk uh I mentioned that in a recent
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article you pointed out an inconsistency
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in the use of beta as a measure of risk
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which is a common standard and I
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mentioned that uh derivatives are
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dangerous and yet you feel comfortable
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playing a derivatives through Solomon
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Brothers and uh betting on hurricanes is
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dangerous and yet you feel comfortable
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playing with hurricanes through
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insurance companies uh so it appears
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that you have some view of risk that's
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inconsistent with what would appear on
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the face of it to be the conventional uh
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view of risk well we do Define risk as
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the possibility of harm or injury and
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and in that
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respect we think it's it's it's it's
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it's inextricably wound up in in in your
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time Horizon for for holding an asset I
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mean if if your risk is that you're
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going if you intend to buy XYZ
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Corporation at 11:30 this morning and
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sell it out before the close today I
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mean that is in our view that is a very
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risky transaction because we think 50%
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of the time you're going to suffer some
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harm or injury uh if you have a time
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Horizon on a business we think that the
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risk of buying something like Coca-Cola
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at the price we bought it at a few years
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ago is essentially is so close to nil uh
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in terms of our perspective holding
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period but if you ask me the risk of
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buying Coca-Cola this morning and you're
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going to sell it tomorrow morning I say
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that is a that's a very risky
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transaction now as I pointed out in the
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annual
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report it became very
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fashionable uh in the academic world and
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then that spilled over into the
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financial markets to Define risk in
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terms of volatility if which beta became
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a
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measure uh but that measure that that is
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that is no measure of risk does the risk
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in terms of our in terms of our Supercat
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business is not that we lose money in
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any given year we know we're going to
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lose money in some given day that is for
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certain and and and we're extremely
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likely to lose money in in a given year
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our time Horizon of writing that
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business you know would be at least a
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decade and we think the probability of
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losing money over a decade is low so we
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feel that in terms of our Horizon
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of investment that that is not a risky
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business and it's a whole lot less risky
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than writing something that's much more
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predictable interesting thing is that
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using conventional measures of
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risk something whose return varies from
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year to year between plus 20% and plus
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80% is riskier as defined and something
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whose return is 5% a year every year it
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uh we just think the financial world is
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going on Haywire in terms of measures of
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risk we we look at what we do we are
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perfectly willing to lose money on a
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given transaction Arbitrage being an
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example uh any given insurance policy
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being another example we are perfectly
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willing to lose money on any given
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transaction we are not willing to enter
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into transactions in which we think the
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probability of doing a number of
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mutually independent events of a but of
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a similar type has an expectancy of loss
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and and uh we hope that we are entering
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into our transactions where our
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calculations of those probabilities have
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validity uh and to do so we try to
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narrow it down there are a whole bunch
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of things we just won't do because we
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don't think we can we can write the
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equation on them uh but we basically
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Charlie and I by Nature are are pretty
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risk averse but we are very willing to
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enter into transaction we if if if we
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knew it was an honest
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coin and someone wanted to uh give us 7
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to5 or something of the sort on one flip
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how much of berkshire's net worth would
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we put on that flip well we we would it
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it would sound like a big number to you
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it it would not be a huge percentage of
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the net worth but it would be it would
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be a significant number we will do
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things with probabilities favor us
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Charlie yeah we uh I would say we try
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and think like faat and Pascal as if
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they'd never heard of modern Finance
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Theory
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uh I really think that a lot of modern
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Finance Theory uh can only be described
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as disgust
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gusting now there are three important
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highlights from what Warren Buffett just
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said the first one risk is the
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probability of permanent harm or injury
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the second one risk is inextricably
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wound up in your time Horizon and then
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the third one risk is not the same as
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volatility let's apply all three of
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these points to answer Michael's
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question about my career and then we'll
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talk about risk in investing so is my
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career chains risky what's the first
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question well could I permanently harm
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or injure myself or harm or injure my
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career with this career change I don't
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think so I didn't think so in 2022 and I
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don't think so today as I see it the
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worst case scenario for my career change
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is that after a few years I I Scurry
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back to engineering with my tail between
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my legs because the career change just
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didn't work out and if I'm being really
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honest I'm probably going to get a pay
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bump if I do go back to engineering or
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if if I don't think I am I can say that
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now being two years into the successful
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change but at the time when I wrote this
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article I didn't know that but I did
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know that one of the most Surefire ways
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to get AR raay in engineering right now
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is to leave one company and go to a
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different one or to leave a company and
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then return to that same company in a
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few years that's how hot the engineering
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job market is and if I went back to
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engineering I'd probably get a pay bump
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so that's the worst case scenario for me
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in my career change and it's not that
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bad and in my opinion the probability of
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it occurring is low that's how I felt in
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2022 I feel even more strongly today
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whereas the best case scenario is that I
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love my new job which I do that I'm
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pursuing my passion which I believe I am
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and that I earn significantly more in my
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new career than my old one now that one
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I wouldn't say that I'm earning
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significantly more at least not yet but
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I am earning more it's only been two
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years I'm earning more now than I was in
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my old career
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so for me that's three for three as far
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as the best case scenario playing out so
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could I permanently harm or injure
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myself with my career change in my case
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I didn't think so and in fact I thought
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the odds were in my favor and thankfully
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the way the dice have fallen I believe
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that's turned out to be true okay so
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that we're going to check off the first
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definition of risk right there let's go
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on to Warren's second definition of risk
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the second definition is that or the
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second maybe important Point rather is
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that risk is inextricably wound up in
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your time Horizon so here I was forced
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to ask myself what exactly is my time
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Horizon while there are short-term
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repercussions to my career change I give
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them a fairly small waiting instead I'm
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thinking long term as I think we all
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should you know we do need to recognize
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the fact that the short term is real we
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need to give more waiting to the long
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term I think I can do many great things
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over a long time Horizon I'm hedging my
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short-term Risk by ensuring that all my
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finances are in order and that my new
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career can more than sustain me in the
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short run that's something I did and I
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knew that I was safe in the short run
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because my my financial house was in
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order whereas on the flip side was there
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a risk to me staying at my old job for
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the next 20 years absolutely there was
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the the risk is that I would permanently
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impair my Quality of Life by not fully
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enjoying 50 plus percent of my waking
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hours right I'm spending all this time
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at a job that it was fine it was
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mediocre I've said it time and again
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that engineering to me was okay it's not
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like I hated it I was comfortable there
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maybe a little bit numb no no pun
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intended Pink Floyd fans and and that to
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me was a risk there was a risk of
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staying at my old career for me changing
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careers and my time Horizon yes the
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longer I thought about my career change
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or the longer that I would be living the
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career change I actually think the less
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risky it would become we're only two
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years in but so far that one's looking
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good too and now the third important
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point point from what Warren Buffett was
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saying risk is not volatility did my
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career change cause a a short-term
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shakeup in my life absolutely it did
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absolutely it caused volatility one
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right away would just be the number of
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conversations of people like asking me
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like Hey Jessie just double-checking
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you're gonna quit engineering to pursue
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this thing that why why again because
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you've been blogging and podcasting
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about it and now you're gonna change
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your career over it yeah totally I get
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it great question fair question but to
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me that's volatility that's a volatile
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question that's not a risky question at
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least not in the long run some other
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things that shook up my life I had to
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buy a new wardrobe my day-to-day skill
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sets and tasks were completely different
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my commute at least at that time I was
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living on the west side of Rochester not
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that anyone out there cares but my old
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commute was five minutes my new commute
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was 20 minutes and there are plenty more
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tiny things but again it was all
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short-term volatility an Engineers work
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life is fairly stable and flat and
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predictable my new career has more
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successes it also has more failures and
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has a bit more Randomness my new career
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is more volatile but again that's not
00:14:06
risk to me that's just that's just a
00:14:08
trait of the new job and it's actually
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one that I like so to kind of wrap it
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all up and think about Michael's
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original question my career change had
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downsides both real and potential no
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doubt about it some of those were risks
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but I thought that at the time and I
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still think today they were relatively
00:14:23
small risks but more importantly I
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thought that the magnitude of the upside
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and the probability of The Upside far
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outweighed the downside risks the scales
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the probabilities they tipped in my
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favor just like Warren Buffett's coin
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flip from that audio we played before
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where he says he has seven to five odds
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in his favor if if Warren Buffett has
00:14:44
seven to five odds on a coin flip he's
00:14:46
going to take that wager every single
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time and similarly I had good odds for
00:14:50
my career change and it's something I
00:14:52
wanted to take now we can apply those
00:14:55
same definitions of risk to your
00:14:57
investing in fact I think it's extremely
00:14:59
helpful to do so so the first one risk
00:15:01
is the probability of permanent harm or
00:15:03
injury now each asset class stocks bonds
00:15:07
real estate Etc it has its own
00:15:08
probability of permanent harm or injury
00:15:12
if you're buying a single stock that's
00:15:14
pretty risky and here are some stats for
00:15:16
you 40% of individual stocks over the
00:15:19
history of the stock market
00:15:21
40% have seen a decline of 70% or more
00:15:26
from which they've never recovered
00:15:29
in other words 40% of stocks have seen a
00:15:31
scenario such as they were purchased for
00:15:34
$100 or at one point they were $100 per
00:15:37
stock they dropped down to
00:15:40
$30 and then they never recovered from
00:15:42
that that is permanent harm that's a
00:15:45
permanent impairment of the Investor's
00:15:47
Capital now let's compare that to an
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index fund of stocks the S&P 500 Index
00:15:53
Fund which has 500 stocks 500 companies
00:15:55
inside of it now for that there's near
00:15:58
zero risk yes we know that index funds
00:16:00
will rise and fall with the market
00:16:02
because the market suffers Corrections
00:16:04
and crashes but the market also tends to
00:16:07
recover at least it always has in the
00:16:09
past the harm that we feel is unlikely
00:16:12
to be permanent in the case of an index
00:16:15
fund of stocks so much less risk in my
00:16:19
opinion and in Warren Buffett's opinion
00:16:20
when it comes to an index fund when we
00:16:22
talk about something like Bitcoin risky
00:16:25
there's a non-zero chance that
00:16:26
cryptocurrency is an incredible Ponzi
00:16:29
scheme that permanently goes to zero I'm
00:16:31
not saying that's guaranteed I'm also
00:16:33
just saying that's a nonzero chance
00:16:35
parts of cryptocurrency do appear to be
00:16:37
real while many other parts are
00:16:40
obviously fraudulent obviously murky or
00:16:43
manipulated for that reason I think
00:16:45
someone should be very very careful when
00:16:47
investing in cryptocurrency they should
00:16:49
avoid exposing any sort of large part of
00:16:51
their portfolio to that kind of risk
00:16:54
okay now Warren's second statement about
00:16:56
risk let's think about it when it comes
00:16:58
to typical Investments Warren said risk
00:17:01
is inextricably wound up in your time
00:17:03
Horizon what time Horizon do you have
00:17:05
for your Investments that is one of the
00:17:07
fundamental questions of financial
00:17:09
planning and goals-based investing in
00:17:12
general but not always long termism
00:17:15
Trump's short-termism if you maintain a
00:17:18
longtime Horizon your Investments your
00:17:21
assets they become less risky over time
00:17:23
Warren Buffett's favorite holding period
00:17:25
he says is forever as long as he
00:17:27
identifies a strong company at a fair
00:17:29
price he sees little risk over that kind
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of time Horizon another example you
00:17:34
might have seen a figure before when it
00:17:36
comes to how long you need to hold an
00:17:39
S&P 500 Index Fund in order to guarantee
00:17:41
that you have a positive return if we
00:17:43
look back on historical returns and we
00:17:45
compare all one month periods in history
00:17:48
one month that's the period we're
00:17:49
looking at we'd see there's roughly a
00:17:51
60% chance that you have a positive
00:17:54
return roughly a 40% chance that you
00:17:56
have a negative return that's for one
00:17:58
month periods but if we go to 20 or 30y
00:18:02
year periods there's a 100% chance that
00:18:05
you would have made money in the S&P 500
00:18:08
over that kind of time if we go down to
00:18:10
say like a 10-year period there's like a
00:18:12
97% chance you would have made money a
00:18:15
3% chance you would have lost money so
00:18:17
at one month 60% chance of success at 10
00:18:21
or 20 or 30 years basically a 100%
00:18:24
chance of success so when Buffett says
00:18:27
that risk is in inextricably wound up in
00:18:29
your time Horizon that's what he's
00:18:30
talking about if you only have one month
00:18:32
to invest stocks aren't the right asset
00:18:35
class for you if you have 10 or 20 or 30
00:18:37
years all of a sudden stocks make a lot
00:18:39
more sense and then finally risk is not
00:18:43
volatility now let's compare two stocks
00:18:45
and I'm going to use some numbers here
00:18:46
so I'll try to go slow stock a has grown
00:18:49
between 10 and 20% per year for the last
00:18:53
10 years Stock B has shrunk by two to
00:18:56
three% per year for the past 10 years
00:18:59
which stock is riskier now if we used
00:19:02
volatility as a measure of risk the
00:19:04
answer would be that stock a is riskier
00:19:06
it's more volatile its range of outcomes
00:19:09
has been significantly wider than Stock
00:19:11
B but which stock would you rather own
00:19:13
which stock is better which is worse
00:19:15
stock a is obviously better it's grown
00:19:19
10 to 20% per year for the past 10 years
00:19:21
and Stock B is riskier it's constantly
00:19:24
and consistently shrinking so that's the
00:19:26
difference between volatility and true
00:19:28
risk while volatility can signal the
00:19:31
probability of permanent loss which is a
00:19:33
risk volatility cannot be called the
00:19:36
equivalent of risk the opposite
00:19:38
statement is true too consistency as
00:19:40
opposed to volatility is not the same as
00:19:43
lack of risk a consistently shrinking
00:19:45
company is going to go to zero
00:19:47
eventually that's permanent loss and as
00:19:50
Buffett would say that's a real risk but
00:19:53
I do think there's one exception and
00:19:55
it's a very important exception which is
00:19:57
why I want to highlight it
00:19:58
volatility although it's not risk it can
00:20:02
influence us to do dumb things such as
00:20:05
the thought process of well my tech
00:20:07
stocks are all down 20% this year and
00:20:09
I'm going to sell them all before they
00:20:11
go any lower that's a short-sighted
00:20:13
response that will lock in permanent
00:20:15
losses so volatility in that scenario
00:20:18
it's not the risk but it influences
00:20:21
risky Behavior so it's important that
00:20:23
investors out there realize that your
00:20:25
Investments most likely will be volatile
00:20:28
at during some part of the period in
00:20:30
which you hold them that's almost a
00:20:31
guarantee so that's why you want to make
00:20:33
sure that as I talk about on the blog
00:20:35
you want to run a fire drill for your
00:20:37
Investments a fire drill when the alarm
00:20:39
goes off where are you going to go what
00:20:42
are you going to do how are you going to
00:20:43
act too many investors out there when
00:20:46
that fire alarm goes off in their
00:20:48
portfolio and some things start dropping
00:20:50
and things look a little bit worrying
00:20:52
they Panic they they do the worst thing
00:20:54
possible they panic and they sell the
00:20:56
reason why I call it a fire drill is
00:20:58
let's think about real fire safety why
00:21:00
do four-year-old and six-year-old and
00:21:03
eight-year-old children do all these
00:21:05
fire drills in elementary school you
00:21:07
probably remember them why why why did
00:21:09
we do them all it's pretty simple
00:21:11
actually the reason why is because
00:21:13
during a real fire it's a pretty
00:21:15
stressful situation it's a little bit
00:21:17
scary it's loud it's panicky and we
00:21:20
don't want small children we don't want
00:21:22
anybody but especially small children we
00:21:24
don't want them to panic in that
00:21:25
scenario we want them to react
00:21:28
instinctively and know exactly what they
00:21:30
should be doing they should do a single
00:21:32
file line and they should walk to the
00:21:34
nearest exit and they should congregate
00:21:36
outside and I can remember from my
00:21:38
elementary school that's exactly what we
00:21:40
did every single fire drill it was
00:21:43
driven into us to the point where it
00:21:45
became Instinct and similarly in your
00:21:47
Investment Portfolio when the markets
00:21:50
drop you don't want to panic you want to
00:21:53
know exactly what you should be doing
00:21:54
and quite often the answer is you do
00:21:56
nothing maybe you rebal balance but more
00:21:59
or less you just waited out so that's
00:22:00
what I talk about when I say running a
00:22:02
fire drill for your Investments your
00:22:04
investments will be volatile that's
00:22:05
almost a guarantee make sure you run a
00:22:08
fire drill for your Investments okay as
00:22:10
we know risk is more than asking what's
00:22:13
the downside risk is about timing it's
00:22:15
about opportunity costs and it's about
00:22:17
the probability of something going to
00:22:19
zero it made me feel great about my
00:22:21
career change which two years on I can
00:22:23
say has been a fantastic success for me
00:22:26
and it makes me feel good about the way
00:22:28
invest and I hope it helps you guys too
00:22:30
here's a quick ad and then we'll get
00:22:32
back to the show did you know my written
00:22:34
Blog the best interest was nominated for
00:22:37
2022 personal finance blog of the year
00:22:40
and it's been highlighted in the Wall
00:22:41
Street Journal yahooo finance and on
00:22:43
CNBC I love writing especially when that
00:22:46
writing is to share financial education
00:22:48
and I usually write one or two articles
00:22:50
per week you can read them all at
00:22:53
bestter interest. blog again the web
00:22:56
address is bestest . blog check it out
00:23:00
let's get to today's guest Doug
00:23:02
cunnington Doug was at one time a
00:23:05
typical nine-to-five worker although as
00:23:08
he would say it perhaps it was more like
00:23:09
an 8 to8 career but Doug broke that mold
00:23:12
and we'll discuss the details today Doug
00:23:15
is now financially independent fi but
00:23:17
he's not yet retired early he still puts
00:23:19
in some time and energy into the various
00:23:21
projects that enabled him to leave that
00:23:24
8 to8 corporate career and we're going
00:23:26
to talk about many of those details
00:23:28
today it's pretty interesting actually
00:23:29
what Doug is doing to support himself
00:23:31
financially and among Doug's many
00:23:33
interesting projects He hosts a very
00:23:35
popular Financial Independence podcast
00:23:38
called Mile High fi alongside Carl
00:23:41
Jensen Carl appeared here on episode 63
00:23:44
of the best interest podcast so without
00:23:46
any further Ado here's Doug
00:23:48
[Music]
00:23:56
cunnington
00:23:58
Doug let's start with a bit of your
00:24:00
career story your career timeline I know
00:24:03
career is always an important thing to
00:24:05
talk about when it comes to fi I I know
00:24:07
at one point you worked a pretty
00:24:09
grueling corporate career so that's fact
00:24:11
one and eventually you left it and
00:24:12
became a successful entrepreneur and
00:24:15
then that enabled you to reach fi
00:24:17
Financial Independence but not quite
00:24:19
retire early I'm missing all of the fun
00:24:22
cool colorful details so I'm hoping
00:24:25
that's where you might be able to come
00:24:26
in and fill in all that blank space for
00:24:28
us I'm going to jump in in the middle
00:24:31
and then I'm going to backtrack a little
00:24:33
bit I didn't leave the corporate job on
00:24:36
my own I got laid off in
00:24:39
2015 and the cool part was it was the
00:24:43
greatest thing ever right I didn't have
00:24:45
to actually make the decision to quit my
00:24:47
job because it was a pretty good job
00:24:50
pretty good pay I was working remotely
00:24:53
at the time I had a ton of autonomy and
00:24:55
I probably wouldn't have left on my own
00:24:58
so I was able to grow some side hustles
00:25:01
up which I'll now leave into the story
00:25:04
and go back in time a little bit so I
00:25:06
went to school for engineering Computer
00:25:09
Engineering because someone told me hey
00:25:11
you're good at math maybe do engineering
00:25:14
this looks like a good degree I really
00:25:15
didn't have a reason to do it and I
00:25:20
ended up doing fine and I got a job as a
00:25:25
Management Consultant at Accenture so
00:25:28
pretty good company funny thing I I was
00:25:30
referred in there didn't make it in for
00:25:35
sort of the GPA cut off so I wouldn't
00:25:38
have been able to make it in on my own
00:25:40
just to like lay the foundation of I'm a
00:25:43
mediocre performer overall School in the
00:25:46
career in the job maybe that's why I got
00:25:48
laid off but extremely realistic about
00:25:50
it right so I was referred in and it
00:25:55
seemed exciting you know your in your
00:25:57
early early 20s you're traveling around
00:26:00
you are presented like a lot of stuff
00:26:02
and you're an expert but really we
00:26:04
didn't we didn't know anything because
00:26:05
it was our first job and we were put on
00:26:08
these different projects So eventually
00:26:11
the sexiness of travel and staying in
00:26:14
hotels and being a consultant it kind of
00:26:17
wore off pretty quick for me so I didn't
00:26:19
enjoy the travel lifestyle day in and
00:26:23
day out and you fly out on Monday or
00:26:25
maybe Sunday evening and then you fly
00:26:27
back on Thursday night just it's pretty
00:26:29
tough and there's always delays at the
00:26:31
airport So eventually I left that
00:26:34
company and started working at a
00:26:37
competitor where there was more
00:26:39
opportunity for some local projects so
00:26:41
that kind of worked out better but you
00:26:43
still ended up commuting and just long
00:26:46
days and projects that I I wasn't really
00:26:49
interested in so I kept trying to go up
00:26:53
the corporate ladder so I tried to
00:26:54
figure out how to make that work for me
00:26:56
and and slowly over time actually like
00:26:58
made that work and got promoted a couple
00:27:00
times but overall I was like I said kind
00:27:04
of mediocre at best and in
00:27:08
2013 I found a podcast called smart
00:27:11
passive income and that's what Pat Flynn
00:27:15
and it opened my eyes to this whole
00:27:17
world of side hustles which I had no
00:27:19
interest in entrepreneurship or starting
00:27:21
my own business or anything related to
00:27:24
online work and I had no experience in
00:27:26
that area either and it changed
00:27:29
everything I I got obsessed and I
00:27:31
started listening to all the episodes
00:27:33
and I thought oh this guy actually seems
00:27:35
like he's
00:27:36
trustworthy and eventually I thought it
00:27:39
doesn't sound like a scam because the
00:27:41
first couple times you hear about making
00:27:43
money online it sounds really like weird
00:27:46
you didn't realize that people were
00:27:47
making a lot of money online that kind
00:27:49
of changed everything for me and that
00:27:51
was in 2013 so I'll pause here because
00:27:54
that was 10 years of career in there
00:27:57
well just speaking of timing and years
00:27:59
for frame of reference for the listeners
00:28:01
this is not a personal question how old
00:28:02
are you today Doug as you speak to us 44
00:28:05
44 okay so in 2015 when you got laid off
00:28:08
or in 2013 when you heard the podcast
00:28:10
you were 34 in 2013 roughly 36 when the
00:28:13
layoff happened I'm just curious when
00:28:15
you got laid off you mentioned some
00:28:17
almost some relief that they made the
00:28:19
decision for you so to speak I mean was
00:28:22
that was it instantaneous relief was
00:28:24
there an hour or a day or a week of fear
00:28:27
or like what do I do next or were you
00:28:28
pretty much immediately like I've got
00:28:30
these side hustles which we will dive
00:28:32
into and now all of a sudden I have this
00:28:34
opportunity to pursue them more by that
00:28:37
time I was listening to Tim Ferris a lot
00:28:41
on his podcast and several other
00:28:44
entrepreneurship minded shows so my
00:28:47
mindset over those two years 2013 to
00:28:51
2015 it changed and I thought I want to
00:28:54
control my own destiny I don't want to
00:28:56
work for someone else
00:28:58
worked so hard to get a pretty small
00:29:01
bonus or maybe a raise and it really
00:29:03
just the math didn't work out from my
00:29:06
personal time capital and what I could
00:29:10
do for myself versus like working really
00:29:12
hard for a company because I I had tried
00:29:14
it and tried to get promoted and it
00:29:16
really it didn't pay off very much and I
00:29:19
didn't see a future where I worked at a
00:29:23
corporation for another 10 or 15 years
00:29:25
to have essentially the same job that I
00:29:27
was already doing and get paid a little
00:29:30
bit more and still be just as miserable
00:29:32
like 10 or 15 years later so I was
00:29:36
probably excited more than anything else
00:29:39
and one of the main reasons why is when
00:29:41
I first got started and I found smart
00:29:44
passive income I started taking action
00:29:47
immediately like failing pretty often
00:29:50
always on a small scale but I started my
00:29:52
first website after maybe four or six
00:29:55
weeks and again made every mistake in
00:29:58
the book I had no clue what I was doing
00:30:00
but I was learning with each iteration
00:30:03
so by the time I got laid off I had
00:30:06
already proven little glimpses of
00:30:09
success I saw that I could make
00:30:12
essentially replacement income for a few
00:30:14
months at a time before some roller
00:30:16
coaster ride situation happened but I
00:30:19
was earning several thousand dollars per
00:30:21
month and I think just the Highlight I
00:30:24
remember this because I was like setting
00:30:26
a goal so I set a goal to start a
00:30:29
website to earn like $350 per month and
00:30:33
I hit that goal within like two or three
00:30:35
months and then within six months total
00:30:38
it made $6,000 over $6,000 in that one
00:30:41
month and again there was a roller
00:30:43
coaster ride not everything was perfect
00:30:45
but by doing it one time I saw that it
00:30:48
was possible to make this like a
00:30:50
long-term thing when I got laid off I
00:30:54
was pretty happy because I knew that I
00:30:57
could do it because I did it before it
00:30:59
wasn't just seeing someone else do it I
00:31:01
literally had little uh Windows where I
00:31:04
executed exactly what I needed to do I'm
00:31:07
probably not the only one curious
00:31:08
listening right now what's the typical
00:31:11
business model for one of these websites
00:31:13
I mean we'll come back I want to hear
00:31:14
more about kind of the entrepreneurial
00:31:16
Journey from that 2013 2014 to today
00:31:19
which I assume involves maybe some of
00:31:21
these websites maturing and growing and
00:31:23
and supporting your lifestyle but this
00:31:25
$6,000 over six months is it add Revenue
00:31:29
are you selling a product what what's
00:31:31
going on at that time things shift all
00:31:34
the time and were kind of in an influx
00:31:36
in the market so things could change but
00:31:38
the general idea is you have a Content
00:31:41
website where you are providing reviews
00:31:46
on specific products so it's an
00:31:48
affiliate relationship in this case with
00:31:50
Amazon so maybe I have reviews for
00:31:55
camera gear for YouTube specifically
00:31:57
specifically so it's like DSLR cameras
00:32:00
and lenses and reviews and howto so you
00:32:03
can recommend a specific lens that works
00:32:06
really well for certain things and
00:32:08
someone is searching for that exactly on
00:32:12
Google and then they find your website
00:32:14
they land on your website they click the
00:32:16
link in the review they land at Amazon
00:32:20
or BH photo or somewhere else and if
00:32:23
they make a purchase then you get a
00:32:25
commission the other side right if it's
00:32:27
howto maybe there's not a product that
00:32:29
you're recommending it could be ad
00:32:31
Revenue it could be a direct
00:32:32
relationship with a specific company
00:32:34
maybe it's some sort of a a lens that
00:32:37
you could add on to your phone to have a
00:32:40
a better camera and maybe you have a
00:32:42
direct relationship to do ads there so
00:32:45
pretty straightforward it's the same
00:32:46
kind of Revenue that you would see
00:32:48
across the board as a simple business
00:32:50
model if you have attention if you have
00:32:52
traffic on your website then someone
00:32:54
wants to get in front of it very
00:32:56
interesting so between 2015 and today
00:33:00
have you just been building more and
00:33:01
more and more of these Niche websites
00:33:03
and and that's kind of become your
00:33:05
business your your entrepreneurial
00:33:07
business or or are there other facets to
00:33:10
Doug cunnington Inc I built several
00:33:14
websites in that time frame probably 20
00:33:17
say 14 to
00:33:19
2018 or so and spent a lot of time on
00:33:23
that I sold several of them you in the
00:33:27
six figures range and you know that
00:33:30
really moves the needle to do that I
00:33:32
mean you created something from scratch
00:33:33
it's not buying a property and fixing it
00:33:35
up it's literally you know you put in a
00:33:38
pretty small amount of capital I put in
00:33:40
a lot of time of course with writing and
00:33:42
Publishing content other activities but
00:33:46
overall it's like you're creating value
00:33:47
out of scratch and the other thing that
00:33:51
I I haven't mentioned it made everything
00:33:53
a lot more complicated and slowed the
00:33:55
business growth but now sitting here 10
00:33:58
years later it was a really great move
00:34:00
so I learned from podcasts and blogs so
00:34:04
immediately I thought I also want to
00:34:06
teach people with podcasts and and blogs
00:34:09
and other things just to to share my
00:34:11
journey right and you know it's
00:34:14
narcissistic probably but it's also a
00:34:17
way to keep you accountable if you're
00:34:18
like publishing content and there
00:34:21
there's a lot of benefits that come with
00:34:22
it the biggest thing that I did was I
00:34:24
started an email list and I immediately
00:34:27
started creating online courses or
00:34:30
digital products in 2013 so I barely
00:34:33
knew what I was doing but it turns out
00:34:36
you could teach people that are just a
00:34:38
little bit behind you and sometimes
00:34:40
you're the best person to teach them if
00:34:42
you're just a little bit ahead because
00:34:43
you remember what it was like to be a
00:34:45
couple steps behind where if you learn
00:34:47
from an expert like if I got a
00:34:50
basketball lesson from Michael Jordan it
00:34:54
wouldn't land right I'm not at the right
00:34:56
level
00:34:57
never was never will be so like
00:35:00
sometimes it's perfect to learn from
00:35:01
someone just ahead of you all that to
00:35:03
say I created really a personal brand
00:35:06
and a set of courses that I've iterated
00:35:10
and rebooted and kept up to date over
00:35:14
the last few years and really the whole
00:35:17
time I was earning about half the
00:35:18
revenue from digital online courses that
00:35:22
I created myself margins are super high
00:35:24
at the time that I started the first
00:35:27
course the platforms weren't as great
00:35:29
but now we could go sign up for
00:35:32
teachable or kajabi or whatever and have
00:35:33
an online course running in like one
00:35:35
hour like we don't even have to have a
00:35:37
website set up yet we could do it all
00:35:39
there so I earned about half of my
00:35:41
income and revenue from online courses
00:35:44
things that I created and then the other
00:35:46
half from affiliate marketing selling
00:35:49
the sites and that sort of thing like I
00:35:51
said it slowed my progress down in both
00:35:54
areas by splitting the time but it
00:35:57
really made it a much more kind of
00:35:59
defensible company because if something
00:36:03
went wrong in one area I still had half
00:36:05
the revenue which was completely
00:36:07
independent and that really it helps a
00:36:10
lot because there's a lot of things that
00:36:12
are outside of your control with some of
00:36:15
the details of the business model I feel
00:36:18
like you know my understanding and here
00:36:19
I am I I write and I podcast but I'm
00:36:21
also just kind of aware of the the
00:36:23
online marketing business model for a
00:36:27
bit of an Outsiders point of view but
00:36:28
also a little bit of an insiders I kind
00:36:29
of have a foot in each side of things it
00:36:31
seems a little bit like the Wild Wild
00:36:33
West in terms of things are always
00:36:35
changing and Google changes an algorithm
00:36:38
and Amazon changes a commission rate it
00:36:40
does seem like a challenging place to to
00:36:42
run a business so I could understand
00:36:44
that desire of yours to basically
00:36:46
diversify your revenue streams as as a
00:36:50
safety measure maybe we can talk Doug a
00:36:52
little bit about how this career change
00:36:55
and how your many side hustles or your
00:36:58
business kind of has segued into
00:37:00
Financial Independence for you when I
00:37:04
first found some of the side hustles I
00:37:08
immediately realized and people talk
00:37:10
about it it's scalable in a way that you
00:37:14
can't really scale at your job so even
00:37:17
if I did everything I was supposed to
00:37:19
and did a really good job which I
00:37:21
already mentioned before I was kind of a
00:37:23
middle performer so I wasn't knocking it
00:37:25
out of the park I wasn't getting those
00:37:27
you know 95th percentile performance
00:37:30
reviews basically you're only going to
00:37:34
get a limited fixed raise or a fixed
00:37:38
promotion and again I wasn't the kind of
00:37:41
person that could like jump from company
00:37:42
to company and keep getting raises
00:37:44
through my really good interviewing
00:37:46
skills or something like that so I
00:37:49
basically had a rough year when I first
00:37:53
was out on my own so the first year was
00:37:56
a little rougher still profitable but I
00:38:00
was trying to find my footing so I
00:38:01
wasn't scared like I mentioned before I
00:38:04
was excited but I did need to test a few
00:38:06
different business models to see what I
00:38:09
liked I found a couple things that I
00:38:10
didn't like like I didn't want to run an
00:38:12
agency and have clients I didn't like to
00:38:14
have to answer to people I wanted to
00:38:16
have a huge amount of autonomy because
00:38:18
of that the online courses and creating
00:38:21
sites were perfect for me and now you
00:38:23
have this autonomy to potentially not
00:38:26
retire early but take more time off than
00:38:28
maybe you did before when I did realize
00:38:31
that I I could earn a lot more money it
00:38:34
happened pretty quick so the first year
00:38:36
was a little rougher and then I was able
00:38:38
to really grow quite a bit and I was
00:38:40
earning far more than I was or that I
00:38:43
could earn at my old job even if I
00:38:46
worked there for like another 10 or 15
00:38:47
years again the scale is unbelievable
00:38:50
once you get into it and it happens very
00:38:53
fast it can happen really fast
00:38:56
especially
00:38:57
when there's very low overhead and again
00:38:58
you're selling your own digital products
00:39:01
which are very high margin anyway so all
00:39:03
that really change things the thing is
00:39:06
my wife and I we really didn't discover
00:39:09
the F movement and pay much attention to
00:39:12
it until we move to Longmont which is
00:39:14
somewhat an epicenter of the FI
00:39:18
Community there's a lot of people that
00:39:20
are uh popular bloggers or podcasters
00:39:23
that live in the vicinity here we did
00:39:26
did start saving a little bit more
00:39:30
around 2013 2014 so still right around
00:39:33
the same time when we realized that my
00:39:36
wife and I were individually
00:39:38
outperforming our advisors that were
00:39:41
supposed to be professionals and doing a
00:39:43
better job and we were just doing it
00:39:45
through some index funds or S&P 500 like
00:39:48
pretty simple stuff but we really didn't
00:39:50
know what we were doing so at that time
00:39:53
we fired our advisors and then my wife
00:39:56
found Mr Money Mustache just from an
00:39:59
investing standpoint so we took a look
00:40:02
we started investing in index funds and
00:40:04
then we didn't pay attention a lot of
00:40:06
our friends they find Mr Money Mustache
00:40:09
and they read the whole blog and then
00:40:11
they get obsessed and they go down the
00:40:13
rabbit hole we didn't do that we just
00:40:16
started investing and then went on with
00:40:18
our life I got laid off started earning
00:40:20
more it was some good years in the
00:40:22
market so fast forward like eight years
00:40:26
like that's a huge amount of money like
00:40:28
both my wife and I are middleaged going
00:40:30
through our careers we're earning more
00:40:32
money we're not spending that much more
00:40:34
sometimes we're cutting cost and like a
00:40:37
lot of the stories we just ended up
00:40:39
saving more now that said I had you know
00:40:42
some idea like oh we could stop working
00:40:44
but I am self-employed I've been
00:40:47
self-employed since 2015 and it was very
00:40:50
apparent to me that I could create a job
00:40:53
that I liked or that I didn't like so so
00:40:56
all along the way like that's the filter
00:40:58
like is this a job that I want to do at
00:41:01
the point where I was earning a lot and
00:41:04
had a lot of flexibility I started just
00:41:07
cutting off pieces of the business or
00:41:09
activities that I didn't want to do that
00:41:11
weren't fun and move forward so I ended
00:41:14
up with like a distilled version of a
00:41:17
fun job and I continue to do that day in
00:41:20
and day out of course you can't get away
00:41:22
from all the stuff like everyone
00:41:24
probably has to answer emails but I
00:41:26
could do it on my own terms instead of
00:41:29
you know what my boss wants to do so
00:41:31
you've got the fun distilled job and
00:41:33
you've got the fun distilled Hobbies or
00:41:36
passions on the side and I know one of
00:41:38
those very cool side projects is hosting
00:41:41
the mile high fi podcast with Carl
00:41:44
Jensen and on the podcast you talk with
00:41:46
tons of different people inside the FI
00:41:48
fire community and I'm sure many of your
00:41:51
listeners and I know this for a fact
00:41:52
many of your listeners send you their
00:41:54
interesting questions or things they've
00:41:57
seen or things they've read about the
00:41:58
fire community and we're exposed meaning
00:42:01
you and I or people who kind of work in
00:42:03
this fire fi investing space we're
00:42:05
exposed to the outside opinions of fire
00:42:08
from kind of mainstream Society some of
00:42:11
which are positive some of which are
00:42:12
negative so as a an fi fire expert or
00:42:16
very least a podcast host who's always
00:42:18
exposed to this stuff what do you think
00:42:19
Average Joe and Jane get right or get
00:42:22
wrong when it comes to financial
00:42:24
Independence and Fire one of the big
00:42:27
things I see really is a I think it's a
00:42:30
controversial topic that people put out
00:42:33
there just to get attention is that you
00:42:37
have to retire and stop working I don't
00:42:40
think the people that create this
00:42:42
content and then tell the average Joe
00:42:44
and Jane out there I don't think they
00:42:47
really think this but of course people
00:42:50
are probably going to do something
00:42:53
because they want to be productive
00:42:55
especially if you've managed to
00:42:57
accumulate enough money where you can
00:43:00
retire you're probably kind of driven or
00:43:03
you're interested and you will have some
00:43:06
side project that may or may not earn
00:43:08
money like you could do a sort of a
00:43:12
charity type situation or volunteer at a
00:43:16
nonprofit where you're not going to
00:43:19
create money specifically you'll create
00:43:22
value elsewhere in your community
00:43:23
perhaps but anyway the point is a lot of
00:43:25
people are like oh you retired and then
00:43:27
you don't do anything and perhaps I'm a
00:43:29
good example like I don't say that I'm
00:43:31
retired because I slowly morphed into
00:43:35
self-employment through being laid off
00:43:38
and then I like what I'm doing because
00:43:41
I've created a fun job I don't work that
00:43:43
many hours the work that I'm doing is
00:43:45
podcasting which I love mile high-fi I
00:43:48
chat with my friend and we have a fun
00:43:51
time recording and it's pretty low
00:43:54
overhead it's not a lot of work and it's
00:43:56
fun 90% of the time that's one thing
00:43:59
people get wrong the other side of the
00:44:01
coin is they just don't believe that
00:44:03
they can retire early because they
00:44:07
haven't been exposed to the ideas or
00:44:10
compound interest and like it's not
00:44:12
intuitive right so if they see a
00:44:15
compound interest table for the first
00:44:17
time that could really change things and
00:44:20
a lot of it has to do I think with like
00:44:22
who they hang around and what they're
00:44:25
exposed to if they never see it then it
00:44:27
seems really crazy but here in Longmont
00:44:31
I know a lot of people that are retired
00:44:33
or on the path so it's just totally
00:44:36
normal for someone to have free time on
00:44:39
a random Tuesday afternoon and you can
00:44:41
just call them and say hey you want to
00:44:42
go for a hike I I think that's one of
00:44:45
the biggest things that I see as well is
00:44:47
reiterating what you just said Doug is
00:44:49
I'll hear someone say okay so Doug's 44
00:44:52
you are still working but you probably
00:44:54
could pull the trigger and retire today
00:44:56
if you wanted to Doug I'm making a bit
00:44:57
of an assumption there but I see you
00:44:59
nodding your head yeah and but the
00:45:01
question they ask themselves is how is
00:45:03
that possible Doug could live to 84 or
00:45:05
94 and how is it possible that he has 50
00:45:08
years worth of expenses saved up right
00:45:10
now and the short answer is you might
00:45:13
not have all 50 years saved up right now
00:45:16
if you just look at the way that
00:45:17
Investments tend to perform over long
00:45:19
periods of time your rate of growth is
00:45:22
probably going to outpace your rate of
00:45:24
spending which means you're in a
00:45:26
position yeah and we're we're very
00:45:28
flexible too as far as the expenses for
00:45:32
optional stuff I think an easy one for
00:45:35
us to trim back on or trim up in the
00:45:38
case of some good years good returns
00:45:40
travel right so your trips can change
00:45:43
scope like we're still going to go on
00:45:44
vacations but maybe it's at a state park
00:45:49
that's close buy versus a European
00:45:51
Vacation something like that so pretty
00:45:53
easy to trim and the difference in that
00:45:55
could be like tens of thousands of
00:45:57
dollars so I think that's something just
00:46:00
having flexibility but that pays off in
00:46:03
almost all areas of your life to just be
00:46:05
flexible and you know deal with what you
00:46:07
can deal with yeah I think another
00:46:10
flexibility or or just something that
00:46:12
stands out to me about kind of the
00:46:13
conventional way that people think about
00:46:15
retirement this is a really interesting
00:46:18
stat that comes out of the Trinity study
00:46:20
which is kind of where the 4% rule comes
00:46:23
from and if listeners aren't familiar
00:46:25
you know the 4% rule is based on a
00:46:27
30-year retirement it says that you can
00:46:29
withdraw 4% of your portfolio per year
00:46:32
inflation adjusted and there's few other
00:46:33
nuances in there but in the back testing
00:46:36
of the 4% rule a retiree is just as
00:46:40
likely to
00:46:42
4X their retirement Nest EG as they are
00:46:47
to retire with one less dollar than they
00:46:49
started with so it it just kind of shows
00:46:52
you that there's so much margin built
00:46:54
into the 4% Rule and there's so much
00:46:56
margin built into the way that the
00:46:57
typical American thinks about retirement
00:47:00
that if you're willing to expose
00:47:02
yourself to not even that much more risk
00:47:03
or if you're willing to be flexible like
00:47:06
you just said Doug which the Trinity
00:47:07
study isn't flexible but if you're
00:47:09
willing to be flexible all of a sudden
00:47:11
you can open this door to an earlier
00:47:13
retirement and kind of reclaim a lot
00:47:15
more of your time that at least up till
00:47:18
now you thought you had to be working
00:47:20
for decades and one other thing I'll
00:47:22
throw in is you know I wasn't
00:47:26
a super high paid Tech employee I had I
00:47:29
had a good job but it was it was roughly
00:47:31
average for where I was working at the
00:47:34
time had bad Investments as far as real
00:47:38
estate our age dictated that when we
00:47:41
bought our first house it was like the
00:47:43
end of 2005 so kind of the worst time
00:47:45
that you can buy height of the market I
00:47:47
have a foreclosure from
00:47:49
2013 is that right so I have a
00:47:52
foreclosure which was strategic in
00:47:54
nature a whole other discussion but that
00:47:57
was like a lesson of like Risk
00:47:59
Management the the point being you could
00:48:02
have a mess behind you I got a handful
00:48:05
of things right a lot of other things
00:48:08
wrong but nothing catastrophic it maybe
00:48:11
seemed catastrophic letting a house go
00:48:13
into foreclosure seems really bad and I
00:48:16
would recommend people like do plenty of
00:48:18
research and all that but literally no
00:48:20
one told me hey do a strategic
00:48:22
foreclosure like no one said that's a
00:48:24
good idea and it turned out it was
00:48:26
awesome it was like one of the best
00:48:27
financial decisions that I could make
00:48:30
but you can have a financial mess behind
00:48:33
you and still come out pretty good
00:48:35
especially if you have a long-term view
00:48:37
with compound interest totally and the
00:48:39
other big idea there is we've got
00:48:42
listeners who are all over the age
00:48:43
Spectrum no matter when you're listening
00:48:46
you can still get your financial stuff
00:48:49
in order right now I I had a phone call
00:48:51
earlier this week with a 34y old
00:48:53
listener of the podcast who was is
00:48:55
telling me that for the first time in
00:48:57
his adult life he's really getting into
00:48:59
the nitty-gritty and and pulling his
00:49:01
financial house in order and he got of
00:49:03
express some regret to me that he hadn't
00:49:05
done it before but 34 I mean still very
00:49:09
young he's still got a lot of time and
00:49:10
and a lot of earning years ahead of him
00:49:12
if he needs them and some people are
00:49:14
sitting there at 44 or 54 or 64 and
00:49:17
having the same thoughts that the moral
00:49:19
of the story there is it's never too
00:49:20
late to kind of forget about some of the
00:49:22
mistakes you've made before and look
00:49:24
ahead here's a quick ad and then we'll
00:49:27
get back to the show serious question
00:49:30
why do podcasters constantly ask for
00:49:32
ratings and reviews yes they do help
00:49:34
highlight our shows to new listeners
00:49:36
they help strangers find us on Apple
00:49:38
podcast and Spotify it's totally true
00:49:40
and a good reason to ask for ratings and
00:49:42
reviews but I have something more
00:49:44
important at least more important to me
00:49:47
I want to know if you like this stuff I
00:49:49
want to know if you like my podcast
00:49:51
episodes my monologues my guests the
00:49:53
information I share with you and the
00:49:54
stories I tell I want to improve and
00:49:56
make your listening more enjoyable in
00:49:58
the process so yeah I would love to read
00:50:01
your reviews and sure if you throw a
00:50:03
rating in there too that's great if you
00:50:05
like what I'm doing please share it with
00:50:07
me it's such a great feeling to read
00:50:09
your feedback I'd love to read your
00:50:11
review or see a rating on Apple podcast
00:50:14
or Spotify thank you you you mentioned
00:50:17
side hustles earlier I kind of want to
00:50:19
come back into the side hustle topic
00:50:20
because it plays a prominent role in
00:50:23
your career path some side Hustle
00:50:26
it's a prominent topic on Mile High fi
00:50:29
where people will call in with some
00:50:30
questions about their side hustles how
00:50:32
does one determine if a side hustle in
00:50:35
their life is worthwhile or or put
00:50:37
another way when does a side hustle
00:50:39
become stupid for lack of a better term
00:50:42
versus when is it something that you
00:50:43
should potentially burn the ships for
00:50:45
and start pursuing full-time that's such
00:50:48
a tough one it's a great question I
00:50:51
think one of the main things to look at
00:50:53
is what your goal is with the side
00:50:56
hustle and I think the key little
00:50:59
distinction here is if you're working on
00:51:02
it and you're losing money or you're not
00:51:05
earning anything it's kind of a hobby
00:51:07
like you could form an LLC you can have
00:51:10
some tax advantages around that consult
00:51:14
with your accountant and professional
00:51:16
and all that stuff but if you're not
00:51:18
earning anything then it's probably more
00:51:20
of a hobby versus a side hustle that
00:51:23
said hobbies are f fantastic one of the
00:51:26
things we haven't talked about here
00:51:28
which is a key thing with mile highi is
00:51:30
happiness so mile highi often talks
00:51:33
about more advanced fi topics and post
00:51:37
fi when you hit your fi number or some
00:51:42
Milestone everything is not magically
00:51:45
going to get better like you still have
00:51:48
all the same things in your life now
00:51:51
maybe you just don't have to work of
00:51:53
course there's a case where you know if
00:51:54
you totally hate your job then not
00:51:58
working there is going to make you
00:51:59
happier but you still may have some
00:52:01
things to conquer some demons to deal
00:52:04
with and you could start working on that
00:52:08
before you hit your F number for that
00:52:10
reason having a hobby is great hobbies
00:52:14
are awesome and that is probably what
00:52:16
you should be spending more of your time
00:52:17
on when you don't have to work when you
00:52:21
are looking at it through that lens a
00:52:22
hobby can be okay so it doesn't mean
00:52:24
it's terrible and quit doing it so if
00:52:26
you don't like the side hustle and
00:52:28
you're not earning money it's probably
00:52:30
time to move on this should be like an
00:52:32
obvious thing but like sometimes we get
00:52:35
the sunk cost really weighing us down
00:52:37
and it's like we put in so much time we
00:52:40
invested money and you don't want to
00:52:42
move forward with it and people should
00:52:44
go read a little bit more about sunk
00:52:46
cost but if it just showed up this
00:52:49
project that you're working on if it
00:52:51
showed up today would you keep working
00:52:54
on it if you could just ignore ignore
00:52:55
the past all the investment of time and
00:52:57
money and other resources would you move
00:52:59
forward with it and if the answer is no
00:53:01
then you should probably stop doing it
00:53:03
as far as burning the ships I mean
00:53:05
there's a rare combination where you're
00:53:08
passionate and excited about the work
00:53:11
and it's starting to earn more money or
00:53:15
at least show some success and that's a
00:53:17
time where you should maybe really
00:53:19
seriously look at putting more time into
00:53:21
it that said like many five folks I am
00:53:25
more conservative so I I wouldn't
00:53:27
recommend folks burn their boats for
00:53:30
anything just have a conservative plan
00:53:32
that you could move forward with and
00:53:34
slowly make progress I can't remember
00:53:38
the exact quote but I've been reading a
00:53:40
lot of Morgan housel here recently and I
00:53:43
think he's quoting someone else but the
00:53:45
point is you want to have a plan that
00:53:49
makes a
00:53:51
forecast irrelevant you didn't even need
00:53:53
the forecast because the plan was
00:53:55
conservative enough to work and by
00:53:58
definition it's just really conservative
00:54:00
and the point is it's going to work out
00:54:02
you don't have to r on a lot of things
00:54:05
happening where they're out of your
00:54:07
control and I think that's what I I
00:54:09
would recommend so I wouldn't burn the
00:54:11
ships I would make sure you still have a
00:54:13
backup plan well that reminds me of one
00:54:16
of my all-time favorites is Warren
00:54:18
Buffett and one of Warren Buffett's
00:54:19
foundational investing principles is
00:54:22
margin for error and it doesn't have to
00:54:24
be just and investing principle it can
00:54:26
be a career planning principle it can be
00:54:28
something you just apply to your
00:54:29
everyday life I mean personally I'm one
00:54:31
of these people who I really like to
00:54:33
show up to meetings five minutes or 10
00:54:36
minutes early even if I'm just sitting
00:54:37
in the parking lot because I arrive too
00:54:39
early essentially but one of the reasons
00:54:41
why is you know I I build margin for
00:54:43
error into my day just in case I hit
00:54:45
traffic and anyway I think that
00:54:47
conservatism is a good way to go about
00:54:50
the side hustle question as well I I
00:54:53
only asked doug because I have had some
00:54:55
interactions before with people who are
00:54:56
say Uber drivers on the side day job
00:54:59
they do whatever 9 to5 they drive Uber
00:55:01
at night and they say this is my side
00:55:03
hustle I'm making a ton of money off of
00:55:05
it personally I see Uber driving or that
00:55:09
that kind of side hustle as a bit of a
00:55:10
dead end but then again I have a friend
00:55:13
and he's actually a friend of the
00:55:14
podcast and the blog who he started a
00:55:16
side hustle around the same time as you
00:55:18
actually I think it was right in that
00:55:20
20134 and then within the last couple
00:55:22
years he sold that business for many
00:55:25
millions of dollars and it started as
00:55:27
just this casual on the weekends in the
00:55:30
garage side hustle so it's very
00:55:31
interesting to see this wide spectrum
00:55:33
and and sometimes they're a waste of
00:55:34
time sometimes they turn out to be
00:55:36
amazing I'm just not sure I have the the
00:55:39
skills right now to to discern the
00:55:41
difference whereas I think maybe you do
00:55:43
that's generous of you to think I have
00:55:45
those skills but I think your friend's
00:55:47
example is really good because you know
00:55:49
I mentioned before me starting
00:55:51
essentially two business two businesses
00:55:55
alongside each other like slowed things
00:55:57
down and I have a friend who started a
00:56:01
site you know years ago and essentially
00:56:03
like he's only worked on that and I
00:56:05
think there is something to be said
00:56:07
where if you just focus on like one
00:56:09
project there's a lot of books about
00:56:11
this but if you just focus on one
00:56:12
project keep iterating keep improving
00:56:15
you will end up with some big exit like
00:56:18
that and I have a couple of friends who
00:56:20
actually have sold others that have held
00:56:22
on to their websites or projects or
00:56:24
whatever it might be
00:56:25
but yeah you end up with a pretty big
00:56:28
asset and it's it's amazing especially
00:56:30
when you start it from nothing and
00:56:33
you're creating all this value for the
00:56:35
world and someone else could actually
00:56:37
like take it farther or build their
00:56:40
business or maybe it's time for you to
00:56:42
move on like I slowly got bored building
00:56:45
new websites and dealing with some of
00:56:47
the ups and downs and shifted more into
00:56:51
content creation podcast YouTube and
00:56:54
move more more in that direction versus
00:56:56
like doing the same thing over and over
00:56:58
again and I think people have different
00:57:01
approaches to their careers I think for
00:57:04
me it's very interesting to learn new
00:57:06
things so as I'm winding down one thing
00:57:09
I'm doing more in another and it's kept
00:57:11
it you know very interesting and I'm
00:57:14
also putting it through the filter of do
00:57:16
I like doing this kind of work so I you
00:57:18
know I'm self-employed so it'd be really
00:57:20
silly for me to create a job that I
00:57:22
don't like well speaking of liking
00:57:24
things or not liking things or we've
00:57:26
covered some interesting territory along
00:57:28
that line today of maybe finding boredom
00:57:30
in a career versus excitement or dealing
00:57:32
with hardship in fire versus dealing
00:57:34
with a fun path in financial
00:57:36
Independence so I want to end on a bit
00:57:39
of a non-finance question along those
00:57:41
lines I know you've helped Carl your
00:57:44
co-host understanding and practicing
00:57:46
stoicism in his life because you are a
00:57:49
bit of a stoic in your life so can you
00:57:51
give us some of your maybe 8020 lessons
00:57:54
when it comes to
00:57:55
stoicism and then I I think in some ways
00:57:58
at least in my understanding of stoicism
00:58:00
there are some stoic things we can do in
00:58:02
our financial lives and I'm wondering if
00:58:04
you see stoicism applying to your
00:58:06
finances Carl and I recorded a show
00:58:09
about you know my stoic sort of
00:58:12
principles and ideas and stuff and I
00:58:14
didn't even realize that I was
00:58:17
displaying that I have a couple stoic
00:58:19
books but I don't I haven't paid
00:58:21
attention in a while so it was kind of
00:58:23
surprising that said
00:58:25
a couple things you know jump out
00:58:27
there's some things that we can control
00:58:30
and then most things we can't control
00:58:32
and really for me just dealing with that
00:58:35
helps a lot and I'm not I mean no one's
00:58:37
perfect right but I I hate sitting in
00:58:39
traffic or having uh a traffic situation
00:58:42
so me not commuting is a really good
00:58:44
thing obviously very far outside your
00:58:47
control it's a perfect example of like
00:58:51
maybe leaving a few minutes early
00:58:52
because you don't know what traffic is
00:58:54
is going to show up and there's always
00:58:58
someone going slower than you want
00:59:00
whenever you're in a hurry so
00:59:03
controlling the things that you can
00:59:04
control and just accepting what you
00:59:07
can't one of the others is viewing
00:59:11
obstacles as an opportunity for either
00:59:14
growth or just finding sort of like the
00:59:16
silver lining in that cloud Ryan holiday
00:59:19
wrote a whole book on this right so
00:59:22
pretty straightforward I think the the
00:59:25
final one which we're all getting older
00:59:27
second by second the final one here
00:59:30
really came to light in maybe a little
00:59:33
more serious way reading die with zero
00:59:36
and 4,000 weeks in the last year highly
00:59:39
recommend both of those books but they
00:59:42
make you think about dying and what's
00:59:46
that going to be like and really
00:59:48
appreciating each day and I think when
00:59:50
you put all those things together if you
00:59:52
can get most of that right most of the
00:59:54
the time you'll probably be pretty
00:59:56
content and satisfied hopefully and I
00:59:59
think those are the three main things
01:00:00
that I look at what about you Jesse do
01:00:02
you have any stoic or do you consider
01:00:04
yourself a stoic similar to you I I'm
01:00:06
looking over at my bookshelf I don't
01:00:08
think I own any stoic books but I've
01:00:11
definitely listened to my fair share of
01:00:13
Ryan holiday and some of stoicism I
01:00:16
think just falls out of if we all just
01:00:18
kind of take a pause and take a step
01:00:20
back and examine life I think naturally
01:00:23
we might come up with some stoic
01:00:25
philosophies of our own one of the
01:00:26
simplest being exactly what you said
01:00:28
before is there are a lot of things in
01:00:29
life that you cannot control and no
01:00:31
matter how much you're bothered by those
01:00:33
things it still doesn't change the fact
01:00:35
that you can't control them so why allow
01:00:37
yourself to get terribly bothered by
01:00:39
them in the first place that's kind of a
01:00:41
stoicism 101 and just thinking about a
01:00:44
little thing being when markets are down
01:00:46
in
01:00:47
2022 when the stock market was down
01:00:49
whatever 18% and the bond market was
01:00:51
down 14% I almost felt like an alien
01:00:55
in that some people around me or people
01:00:57
I was talking to or readers writing into
01:00:59
the blog with with tons of concern which
01:01:01
I do understand because it's
01:01:03
nerve-wracking when you see that your
01:01:04
account is down big but I can't control
01:01:07
the stock market or the bond market and
01:01:09
and neither can anyone listening what we
01:01:11
can control is our stock allocation say
01:01:13
or our investment allocation and there
01:01:15
are logical reasons why we made the
01:01:17
decisions we made before the year
01:01:19
started or in some previous time and
01:01:22
then the rest is out of your control how
01:01:24
the market actually perform is out of
01:01:25
your control having that bit of a stoic
01:01:27
mindset simply from to to apply to my
01:01:29
Investment Portfolio has been helpful I
01:01:31
I tend to not stress about it that much
01:01:33
and a lot of times when I look back on
01:01:36
days or conversations or whatever it
01:01:38
might be that brought a lot of stress I
01:01:41
realized that I had some stoic
01:01:43
shortcomings in those particular periods
01:01:46
where I allowed myself to be bothered by
01:01:48
something that at the end of the day
01:01:49
there's nothing I could have done about
01:01:51
it it's a constant practice as you
01:01:53
probably think too
01:01:55
yeah great example Doug we've talked
01:01:57
about Mile High fi a lot we've also
01:01:59
talked about some of your side projects
01:02:01
how can people listen to the podcast how
01:02:03
could people reach out to you and check
01:02:05
out some of the things that you're doing
01:02:06
yeah so mile highi were're on YouTube
01:02:09
and any of the big podcast players the
01:02:12
topics like I said are a lot of more
01:02:14
advanced topics or lifestyle topics so
01:02:18
when a person has in quotes graduated
01:02:21
from some of the basic ideas our show
01:02:24
seems to sort of pick up from there
01:02:26
because once you hear enough
01:02:27
conversations about the 4% rule you have
01:02:30
that lesson learned and you can move on
01:02:32
to some of the other ideas the other
01:02:34
thing to mention is I have my own show
01:02:38
it's on affiliate marketing and side
01:02:40
hustles called the Doug show if you're
01:02:42
in interested in like side hustles or
01:02:44
affiliate marketing you could check out
01:02:46
that stuff I have a YouTube channel just
01:02:48
under Doug cunnington where there's a
01:02:50
lot of I think I have 2,000 videos at
01:02:52
this point so I put in the Reps over
01:02:54
over there and if you want to learn
01:02:56
about some of that website stuff you
01:02:58
could check it out and I do live streams
01:03:00
uh usually once a week over there too
01:03:02
those are pretty fun pretty small
01:03:04
community really enjoy doing uh YouTube
01:03:06
as well now that you mentioned it Doug
01:03:08
your YouTube channel I think I saw it
01:03:10
earlier is pretty pretty big you've got
01:03:12
a lot of subscribers there so you you
01:03:14
said 2,000 videos there yes yeah 2,000
01:03:17
videos I think I just crossed like
01:03:19
70,000 subscribers it's just a vanity
01:03:21
metric and it's just been fun working in
01:03:24
different mediums like I I said I think
01:03:27
once I start getting a little bored with
01:03:29
one area I'll add on another layer so
01:03:32
the the growth has just been really slow
01:03:34
as I add different mediums to what I'm
01:03:38
producing very cool dog we will make
01:03:40
sure to throw all those links into the
01:03:42
show notes for anybody wanting to check
01:03:43
you out Doug cunnington thank you for
01:03:46
coming on to the best interest podcast
01:03:48
thanks
01:03:49
[Music]
01:03:51
Jesse thanks for tuning in to this
01:03:53
episode of the best interest podcast if
01:03:56
you have a question for Jesse to answer
01:03:57
on a future episode send him an email at
01:04:00
Jesse bestin interest. blog again that's
01:04:04
Jesse at bestter interest. blog did you
01:04:07
enjoy the show subscribe rate and review
01:04:09
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01:04:14
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01:04:16
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01:04:18
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01:04:23
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01:04:25
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01:04:27
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01:04:30
Financial advice and is not prescriptive
01:04:32
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