Free Your Chains

As any regular readers know, this blog is mainly focused on dividend growth investing but is not solely about such. I also like to delve into frugality, retiring early, the philosophy on consumption, budgeting and so on. Today, I’d like to talk a little about the chains of consumption.

I read Plato’s Allegory of the Cave when I was in my teens, and although I didn’t know it at the time this allegory forever changed my view on life. I highly recommend anyone who hasn’t already read it to seek it out and let me know what they think.

The basic premise behind the allegory is that there are prisoners in a cave, who have been chained to the walls of the cave for all their lives. They are unable to turn their heads. They entertain themselves by looking at shadows on the walls in front of them, shadows that are cast by puppeteers around a fire behind them. They take these shadows as reality and the chains as part of life. They try to guess which shadow is going to come next and take great pleasure in these shadows. One day, one of the prisoners is freed. He is temporarily blinded by the fire and doesn’t understand how the figures are casting shadows on the wall. Later, he leaves the cave and is blinded by the sun. It takes him a while to understand the true way of the world and later pities the prisoners still chained to the walls of the cave.

I was once chained to these walls, burdened by a work-earn-spend-consume-work cycle. I knew of no other way. I thought that this was the only way life could be lived, because that’s what everyone else was doing. The shadows being cast on the walls (commercials of new cars, visions of expensive vacations) showed me what life is, and I had no reason to doubt this as truth. Everyone around me was also chained to these walls, looking at the shadows, working to earn and earning to spend, so I was simply in the same predicament as everyone else. How bad can that be? Worse than I thought. These chains made up of debt and needless consumption are extremely hard to break.

I was freed from those chains in mid-2010. I started to seek out an alternative way of living and stumbled upon one of the only real books I’ve ever sought out on my own. I read Your Money Or Your Life, a book that discussed your life in terms of time and energy and not in terms of money. When you are working for a paycheck, you are basically exchanging units of your life energy for money. Life energy is limited, as you only live so long and one day you will no longer be alive. How much of that limited time that you’re given is worth exchanging for a big house (and mortgage), a newer car, a new wardrobe? How many chains do you want attached to your wrists? I decided that I wanted no chains at all, and I walked out of the cave. It was blinding at first, but my eyes have adjusted now.

I have learned that my time here on Earth is limited and that every minute that passes by is one less unit of life energy that I have left. I don’t want to spend 50% or more of this available time at an office trying to climb a corporate ladder to nowhere. I have learned that if you pay attention to the shadows (commercials for consumption), instead of the puppeteers (marketing companies for products) you’ll never escape those chains. I’m not saying to never spend money, but simply to be thoughtful about your consumption. Having a 5-bedroom house when you have no children, three cars when there are only two people using them, or keeping your thermostat at 80 in the winter are all ways of living that could, and should, be changed. Getting away from the endless pursuit of stuff will only benefit you. It’s benefited me.

My basic plan, now that I’m no longer bound, is to be mindful of all expenses. I budget every single dollar I earn and spend, I moved to a state with no state income taxes and free outdoor activities, I cut out expenses like my mobile phone, cable, I sold my car and take the bus, and I rent a cheap apartment that is located on the bus line that takes me to work. I take my excess savings and I invest in companies that produce products that people use everyday. Think beverages, food, gas, medicine, toothpaste and the like. Even frugal people still need to brush their teeth! These companies reward investors with regular distributions, in the form of dividends, and with those distributions I hope to one day be able to pay 100% of my limited expenses and have money left over.

What about you? Are you bound by your own chains? Have you stepped out of the cave?

Thanks for reading.

Photo Credit: jscreationzs

Comments

  1. Anonymous says

    Where you get a commission check. Is this used for last months expensives or the month it was received? Do you pay yourself first at all or just pay yourself was is left?

  2. says

    Anonymous,

    Thanks for stopping by!

    I calculate my expenses and income on a running basis. When I receive my commission check at the beginning of every month I try to anticipate how many expenses I’ll likely have and invest the rest. I also have at least a few thousand in the bank at any given time to smooth any errors in calculations. I run a pretty tight ship in terms of budgeting so I have it down to a science at this point.

    I hope this helps.

    Best wishes!

  3. William says

    I stepped out of the cave a few years ago, and then out of a second cave sometime last year.

    Let me say up front that I continue to enjoy your blog and following your progress, as for the past couple of years I had been on a similar path myself. I wish you the very best and hope your plans work out as you have drawn them up.

    That said, I think the dream of living off dividends is no longer feasible in this age of government sponsored fraud and dwindling resources.

    The second cave that I stepped out of is the realization that our entire financial system (and our government, same thing!) is utterly corrupt to the core and that spending my life working for a paycheck, even if it was for early retirement, was a poor way to spend my life. My savings, my investments, all could be gone in an instant (read about MF Global and the loss of segregated customer accounts) when the house of debt comes crashing down.

    This is something that I haven’t seen you address. You seem completely unaware of it, but how can that be? You are obviously an intelligent guy, how is it that you do you not see the rampant fraud that has infested both Wall Street and Washington? Have you seen anybody prosecuted for mortgage gate? Do you not see the open looting being done by the members of Congress?

    It is clear to me and to anyone who has stepped out of the second cave that spending your precious time merely accumulating money which is based on debt is a waste of life. Simply put, the debts cannot be paid, when it is called in (and they WILL be called in), most of the money (including yours) will cease to exist, as it actually never did.

    When the gig is finally up (as it nearly is in the EU now), portfolios, bank accounts, 401K’s, etc will either become worthless, be confiscated, or heavily taxed by the bankrupt government.

    Again, read about the ramifications of the MF Global collapse. Those stocks you think you own? You don’t, not unless you have printed paper certificates. Read some blogs that aren’t just cheerleaders for the markets, people like Charles Hugh Smith, Karl Denniger, or Chris Martenson.

    Okay, I’m starting to ramble here, sorry, but yes, I stepped out of the cave. The bigger point is that there is more than one cave. It looks like you are still watching the shadows on the wall of the second one, the shadows made by Warren Buffett and CNBC, that tell you to continue to give the capital markets your time and money.

  4. says

    I am not too sure dividend investors have to worry about their brokerage firms if you are with someone like Fidelity, Vanguard, Charles Schwab or TD Ameritrade. Those firms do advertise themselves as being for the average investor. MF Global was a broker’s broker. They dealt in a lot of exotic instruments that I think most people (if not all people) should stay away from.

  5. says

    William,

    Thanks for stopping by. I appreciate your encouragement!

    I am familiar with the downfall at MF Global. As I understand it, they misappropriated funds by using what was supposed to be segregated client money and used that money in heavily leveraged plays in risky European sovereign debt that went sour. Apparently, they walked a fine line along what is legal and illegal when you’re talking about using client’s funds on sovereign debt. As I seem to recall, the main issue is that the debt wasn’t AAA, and the debt was graded higher than it should have been and MF knew this and invested anyway (obviously looking for a home run).

    There are some things to understand here. They were a firm that primarily dealt with traders and commodities futures, option contracts and derivatives. Most retail stock investors are partially covered by SIPC, of which my broker (Scottrade) is a member. As I understand, a large number of the investors in the MF Global will get their money back.

    This is all really beside the point. The point is that what you’re talking about is a massive catastrophic failure of the financial system, and, consequently, national governments. You’re talking about money ceasing to exist, bank accounts becoming worthless, and governments (for as long as they’ll continue to exist) seizing assets. That sounds like some kind of doomsday apocalypse. If that’s what you believe will happen then there is really nothing you can do. Invest or don’t invest, work or don’t work, pay or don’t pay your bills. It wouldn’t matter, because the world as we know it is coming to an end. I simply do not share your pessimistic view on the future of our world.

    If you believe that money will cease to exist, then I don’t really understand what you will do? Will you load up on guns, ammo, food, water and try to do subsistence farming in the country? If money is worthless, and assets are getting seized your farm and the food you grow will also be seized. I suppose you’ll live in a bomb shelter?

    I truly hope that you’re wrong. But, if you are correct there are many, many people who have a lot more to lose than I do. I have a relatively small amount of money and there are people out there with much more money and power than I who will do everything they can to make sure something like what you’re describing doesn’t happen.

    I do agree that debt is a problem. I think austerity measures at home and abroad have to be adopted and belts will have to be tightened over the next decade or so. The growth we experienced over the last 30 years will have to slow and unwind some of the leverage. I just don’t agree that this will lead to the end of a global economy.

    Best wishes!

  6. says

    MoneyCone,

    Glad you stopped by.

    I definitely recommend YMOYL. It’s a great book that really gave me some perspective on life, time and money as well as the relationship between the three.

    Take care!

  7. William says

    I suggest buying actual tangible goods and building community. If you have extra money, buy some land that can produce food.

    I hope I’m wrong too, though the math says different.

    Good luck to everyone.

  8. says

    Very cool post. I have stepped out of my chains somewhat, in that I actually started a small business on the side from my regular job. I actually enjoy my main job, so its its not like I’m sick of that but more that I had this urge to do something for myself – I guess like reaping the fruits of my own labor so to speak! – rather then have a large entity benefit from my labor. I am stuck in a rather cold area, so for now, I can only dream of a place like Florida…..

  9. says

    Mantra,

    I’ve had the same sort of revelation that you describe here some years ago. The real epiphany for me was doing the math to determine that it was even possible to earn enough money outside of work to live. I have family and friends who are wealthier than I am and don’t even realize the possibilities. They keep grinding the stone.

    Just wondering, you might get ahead of schedule through online income. Have you factored that potential boost to your plan?

    sfi

  10. says

    farmland,

    Sounds like you’re moving in the right direction there. Enjoying your job is great, and if I enjoyed my job a little more I probably wouldn’t be as aggressive as I am being now…but I’d still want to move in the same general direction. No matter how great a job is, it’s still a job. Just my opinion.

    Best wishes!

  11. says

    SFI,

    Thanks for stopping by.

    I hear you. I know, and deal with in my daily life, people who are far wealthier than I am in terms of income, but are likely going to be working for many more years than I. There’s a difference between someone who makes a ton of money, and someone who is truly wealthy. I’ll never be the former, so I’ll shoot for the latter.

    Online income is not something I’ve thought of, but certainly wouldn’t mind. I really don’t know anything about that, but this blog has averaged maybe $30 a month since inception and while that’s nothing one could live off it is certainly much appreciated!

    Any tips on online income would be very helpful if you have any!

    Take care.

  12. says

    Great post. And yes, I too read Your Money Or Your Life and it really is a great book, an eye opener. Good luck to you and you have a good blog going here, visit it about once a week.

  13. says

    mrledocall,

    Thanks!

    YMOYL was a wonderful book, wasn’t it? I’m glad you enjoyed it and it opened your eyes. It was very influential for me.

    I’m glad you stop by. Thanks for the support and encouragement. It means a lot.

    Happy holidays!

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