The best path to sustained financial success for retirement and beyond is the simple formula: earn, save and invest (simple to say or type, but very hard to do). Oddly enough for me, physical fitness challenges have come to typify a similar struggle toward wealth accumulation.
I’ll offer two stories to explain what I mean. The first parable deals with investing; the second one deals with saving.
First, a parable about investing:
I have found over my life that consistent investing in low cost index funds and index fund equivalents in my government Thrift Savings Plan, my wife’s 403(b)s and our Roth IRAs has been the best strategy for me to achieve results. It parallels the way that I’ve approached working out as well.
In my glory days (there wasn’t much glory as you’ll soon see), I was a sprinter in high school. While my 11 second 100-meter sprint time was enough to get me into semi-finals heats and the occasional final race, growing up in a populated city like Washington, D.C. meant that I was nearly always that last guy who crossed the finish line (just about the time you stopped paying attention when you watch a race).
I hated running. Hate is probably not a strong enough word. I really, really hated the practices where we ran long distances. I also hated the practices where we ran short sprints enough times that they became long distances. Those were the only two types of training sessions we had.
When I got to a Southeastern Conference (SEC) college where there was zero chance I would be able to make the track team (or any team for that matter), I immediately did the one thing that made the most sense given how much I hated running: I joined an organization where you run as part of your job (Army ROTC). That was 20 years ago; I’m still in the Army.
For reasons I don’t totally understand, some folks attribute your ability as an attorney and officer to your run time. Unfortunately, if I was a mediocre sprinter, I turned out to be an absolute turtle when it came to distance running.
Then, an interesting thing began to happen. The more I ran, the less I hated it and the better I got. To be clear, I didn’t finish that sentence with: “the more I loved it and I became really fast.” But, I eventually settled into a routine and built stamina and muscle memory for distance running that meant I began running respectable long-distance times.
There’s a profound similarity for me with my own investing journey. I tried all kinds of stocks and hairbrained schemes to get rich faster (certainly fodder for a future article or two), but they did not work. Some failed spectacularly.
As I mentioned at the outset, I have found that putting aside as much as we can directly into index funds is the only way I have been able to show good returns consistently over time. Slow and steady investing won the race for me.
Now, a parable about saving:
When I was deployed to Afghanistan in 2012, I worked 18 hours daily, 7 days a week – like most who deploy. To break up the long days, I worked out once or twice a day. By the end of the deployment I grew tired of monotonous gym routines, so I committed to doing the 60 days of Insanity, a workout developed by Shaun T.
I had heard from some of the folks in special operations, with whom I was deployed, that this workout would test my ability physically and mentally. It did.
I ached so badly after the first couple of workouts that I could barely walk. By the end of the third week, I was used to aching but dreaded the thought of pushing myself to the point where I felt sick and smelled like ammonia. (I thought I was alone in smelling like ammonia after these torturous workouts, but apparently, I’m not, and it turns out to not be a particularly good thing.) Yet, every single day I kept that promise.
As with my commitment to running, another funny thing happened somewhere during that year in Afghanistan: my body/muscle composition changed permanently for the better. Though not exactly unfit, I never really saw definitive muscle composition in the mirror despite having worked out my entire life (ok, let’s be honest: despite being a Soldier, I was a level or two above full-blown gelatinous cube on occasion, and we dare not speak about my diet and exercise program in the Wisconsin winters during law school).
Now that I’m kicking the tires on 40 years of life, much less effort is needed to sustain roughly the same physical results. I see the direct parallel between that time in Afghanistan and sustained frugality I’ve developed over my life.
When my wife was in medical school, we lived a pretty frugal lifestyle. She chose one of the most affordable public medical schools, which was also closest to where I was stationed. That helped us avoid incurring significant debt like so many doctors are forced to do along the path to practicing medicine.
My Army salary covered our living expenses and retirement savings. As Dave Ramsey likes to say, we ate rice and beans, but our version was more like Trader Joe’s in bulk (we had not yet discovered Costco and the magic of 3 pounds of coffee for $9!). We grew comfortable with keeping our spending low and our savings rate high even after she finished residency.
As anyone with kids will tell you, whatever was your biggest experience prior to having kids is not your biggest expense anymore. Much to my horror, the family savings rate has dwindled with the advent of kids, but we still manage to set aside some money for retirement every month. Because of our early lean years, we built the mental muscle to avoid spending (except on a car, but that’s also a story for another time) and luckily that has not atrophied over time.