I had an epiphany this week: Our financial present and futures are created from all of the micro-and-macro financial decisions in our pasts.
From a personal perspective, as I look back on my life, it wasn’t one lucky break or genius skill that sent us skyrocketing toward being rich. It was a routine set of every-day decisions, mindset, and attitude, on a micro and macro level, that led us be become relatively wealthy ($266K net worth), in a relatively short amount of time (6 years.)
As I realized this, my mind was thrust into a time-traveling speed warp. My entire life appeared in a collage of memories. These visions contained all of the micro and macro decisions I’ve made throughout my lifetime. These memories were the primordial substance that grew into the present and future I am living now.
As I stared into the collage of old memories, I saw our wealth is just a collection of micro and macro financial decisions that put us on the right path. Below is a list of the best micro-and-macro decisions that helped us succeed with our money:
Macro Decision #1: Skip the Expensive Wedding.
In 2015. we were in love and wanted to get married. But weddings are crazy-expensive and we wanted our marriage to start on a financially strong foundation. So we had a decision to make: Pay for an expensive wedding. Or do it on a tiny budget and learn how to invest the money we did have. We chose to avoid an expensive wedding by getting married for $600 in my parent’s living room with immediate-family only. We cooked a steak dinner after as a group, and we rode off into the sunset as a newly married couple with a lot of money still in our pockets.
It was a liberating, and stress-free experience to start building the life we wanted from day #1 of our marriage, rather than feeling the pressure to host and pay for a wedding that other people wanted more than us.
Macro Decision #2: Buy a Modest House.
Since we didn’t have the cost of a big wedding to pay off, we were able to buy a house with a 20% down payment to start our life together. But since we were young and still starting out, we couldn’t afford our dream house right away.
Our budget limited us to choose between a single-family home in a less desirable area, or a multi-family home (townhouse, twin-home) in a really nice area. After 3 months of looking, we found a side-by-side twin-home that had everything we wanted. It was in a top-5 school district; had easy access to freeways; was spacious with 2,000 square feet; and it backed against a nature preserve with miles of walking and biking trails right out of our back yard.
The only downside was that it was a duplex that shared a fire-wall with our neighbors. But because of that fact, it was $100,000 cheaper than a comparable single-family home in the area. Some people may have judged our decision, and looked down their noses at us buying a duplex, but we saw an awesome opportunity to save $100,000, have a low mortgage payment, and live in a really great location. All those qualities made it seem like a win-win-win for our first house, and we excitedly bought it. This is our home now:
Macro Decision #3: Buy an Investment Property with Extra Savings.
Since our payment on our first house was super-affordable (15% of our yearly income), and we were frugal with our lifestyle decisions, we had a lot of extra cash in our pockets leftover each month and we learned how to invest it in stocks.
Two years later, our neighbors, who owned the other half our twin-home,wanted to move, and they offered us the opportunity to buy their side of our duplex at a fair price. We bought it directly from them with a 25% down payment, and we both avoided paying realtor fees on the transaction. We then rented the other side of our twin home and we became landlords for the first time! Once the monthly principal payment is factored into the balance sheet, we basically make $100 per month to live in our 2000 square-foot home in a wonderful location. That’s called winning in life.
How the Right Combination of Micro and Macro Decisions changed our financial lives:
The important thing to notice in these macro financial decisions is that each decision built on each other. Meaning, each macro-decision made the next financial decision bigger and better. Without making the first macro-decision to skip a big wedding, the other big financial decisions like buying a house, and an investment property two years later, wouldn’t have been possible.
To sum it up, like the majority of wealthy people, we built wealth by avoiding luxury extravagances like big weddings, trophy houses, and fast cars. Instead, we chose humble and pragmatic solutions to our problems over and over again. Then we threw all of our remaining cash into investing accounts.
But the Power of Micro Decisions Led us to Macro Decisions:
In order for us to accomplish these macro-victories, we also had to master the micro-decisions which were the individual steps that led us to these macro-opportunities. Here are some of the micro-decisions we made that helped us save the money to take a shot at turning the macro-victories into reality.
Micro Decision #1: Do Your Own Dishes.
We cook almost all of our meals at home, and if we want to hang out with friends, we offer to cook dinner for them at our house. Don’t get me wrong, we like eating at restaurants, but it’s hard to justify the price of paying 3-5X the price when we can make similar food at home.
We can cook a great meal at home for $4-$10. We can cook a meal for 4 people for often $15 or less. If we were always eating and drinking with friends at bars and restaurants, it’s easily a $60 bill every time we went out. Saving $50 a meal doesn’t seem like a lot. But if you can save $50 per week from NOT eating and drinking at restaurants, that’s $2,600 per year in savings. After 4 years, that’s $10,400 in savings. $10,000+ in savings from is a nice head start of cash that will allow you to achieve macro-accomplishments.
Actually, now that I think about it, almost all of our money saving strategies stem from this one action: If we can do it ourselves, we do it ourselves. Every-time we can avoid paying someone else to do something we can do, we do it, and fearlessly invest the money we saved.
Micro Decision #2: Paying for coffee is a scam.
Rather than paying $3+ every morning for a cup of coffee when we moved into our house, we bought a $20 coffee pot and make our own cup of coffee for around .10 cents a cup. But if you like expensive retail coffee, and it’s a necessary part of your morning, enjoy being scammed. It’s a free country. In America, you get the freedom to spend money on any scam you like.
Micro Decision #3: Become Your Own Contractor.
Despite not having any prior construction knowledge, we learned how to do most home-improvement projects watching Youtube videos. We’ve done about 90% of our home improvement projects and upgrades ourselves. You can see some of our best projects here and here.
We’ve built showers and patios, and installed light fixtures and bathroom vanities. If I don’t know how to do something, I hire a professional, and then I watch them so I can learn how to do it next time the project comes up. Every time you can avoid paying an expensive contractor to do a project, you can pay yourself to do it, keep the money you save, and invest it into an emergency fund or index funds.
Micro Decision #4: Scalp the Scalpers.
We maximize our entertainment purchases by buying tickets off of resale ticket sites like stubhub on the day of the show. Sure, sometimes an event will go up in price. But most often, you’ll find awesome deals as sellers panic to sell tickets to an event they can’t attend. This year we saw Billy Joel in Madison Square Garden NYC for $45. I bought a $130 ticket to Roger Waters for $35. We went to Imagine Dragons concert for $15. I also love to golf. I use the golfnow app to help me find the best golfing deals near me. It’s not uncommon for me to get 18 holes with a cart for around $20 as long as I book the tee time over noon when most golfers are eating lunch. That’s some awesome cheap entertainment and an awesome way to save money!
Micro Decision #5: Travel Light.
Fancy and expensive vacations look incredible. But we enjoy big-time savings in the bank more. That’s why we love to road-trip and travel and spend $100 dollar bills during our vacations, rather than spew $1,000+ bundles into an expensive vacation vortex. Road tripping helps us save on flights and car rentals, and staying with close friends allows us to spend time with good friends, and avoid expensive hotels on our way.
Micro Decision #6: Buy Used.
We buy most of our “stuff” used on Craigslist or ebay as we can to drastically increase our savings rate to around 50%. But we’re not crazy: My wife has a firm rule that couches and mattresses have to be new. But almost everything else in our house is used. But here’s the secret, we still have awesome stuff! Since we’re buying used, we can afford to buy better quality so our stuff lasts us a long time. And most of the stuff we buy provides us free entertainment. We have nice bikes, skis, fishing poles, guitars, that can be used to create free entertainment whenever we’re bored in the house. And the best thing about buying stuff used for cheap, is that you can always sell it at any time to get your money back if you stop using it. Here’s a good example of me doing this last weekend:
I bought this saw 2 years ago for $120 at a clearance sale. Used it for 2 years, and just bought a nicer saw. Just sold this one for $150 on craigslist. I love buying and selling used stuff. You basically use it as long as you need it, and then sell to get your $ back. pic.twitter.com/dBzW5d94FU
— Wealth Well Done (@WealthWellDone) January 6, 2019
Thank you for reading. These are the memories I have of the millions of micro-and-macro decisions that helped us build our bridge toward the life we’ve always dreamed of living.
Please leave a comment below to inspire someone reading this after you. (Anonymous is fine)
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Love the post. You’re way ahead of where my wife and I when we were your age. You’re already doing well and it won’t be long before you’ll be FI.
Thanks Pete, we’re just trying to do what’s right and makes sense for us. Wealth, and Financial Independence, is just a combination of the right micro and macro decisions in each of our lives.
Awesome ideas. We didn’t have to buy properties back at home, but we’ll probably need to buy in few years here, in NYC, if we plan to remain here. But we’ll save money, probably sell something in our country for a hefty down payment and keep a low profile to reach our saving goals. Travel is always something we have in mind, but we save money by eating at home, not purchasing a lot of useless junk and being pretty frugal overall. Hope we’ll make it work.
As I tried to show in my article, the path to financial success rarely looks like a million dollar business idea, or a 1-in-a-million-stock-pick. It usually looks more like your words here: “We save money by eating at home, not purchasing a lot of useless junk and being pretty frugal overall. Hope we’ll make it work.” If you keep doing that over and over again, I have a feeling that over a long period of time, you’ll make it work. And if you can’t find a place to buy in NYC, there’s many more cities with much more affordable real estate all across this really cool country. Thanks Ramona.
Very and informative post about Micro and Macro building blocks. You have done a great job. Thanks for the sharing such a great post.
Thankfully. John Plix