Live Your Own Life

People are often surprised at the amount of time that I spend trying to find out about what it is they that want, their likes and dislikes. I hate to say this. I am also a little surprised that I feel I have to say it. There are many people that are living someone else’s life. They are devoting their resources: time, energy, and possessions to items that are not truly important to them. Instead of focusing on what they may list as truly important,  they instead spend time keeping up with the Jones’s… buying a certain type of house, a certain type of car, etc. not because they truly want that, but in order to keep up appearances.

Are our lives truly so dictated by others? Do we find ourselves succumbing to the same peer pressure that we as a society preach against to our children? I run across a number of couples each year who I have to give permission to live their own lives. That if time doing something is important to them, then focus on the things that will allow them to do that without worry rather than building up a bunch of stuff that would please someone else. If you have to buy something to impress your friends, perhaps you should ask yourself if they are really your friends.

I read through this article and realize that many will take a look at this and think to themselves, where is the financial planning here? There are no numbers. There are no investment selections. There are no directions for special tax treatment. There is no protection or estate planning. To those of you who are wondering, I challenge you to contact me, because there are many people who are wasting hundreds of thousands of dollars if not millions living someone else’s life. By first deciding to bark up the right tree, one can save years of heartache.


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When Time is More Important Than Money

For most people that are affluent, there comes a time in their lives where time is by far a more precious commodity than money. Often they have either reached a point where they are truly wealthy  and will not need to work another day in their lives or they are very close to it.

At this point it is important to ask what it is that you truly enjoy. Is it your work or is it something else? Would you rather be volunteering or puttering around the house? Perhaps you have not quite reached the stage where you cannot decide to quit work entirely, but you could take a drastic cut in salary or income and decide to try consulting, part-time work or a new profession altogether.

But why would time ever become more important than money?

There is an important concept in economics known as the law of diminishing returns. It effectively says that an additional unit of X in general gives less satisfaction than the one before it.

To illustrate, think about the pride you may feel if you saved your first $100,000. Now imagine that you have already saved $1,000,000. Is the next $100,000 really as exciting as the first $100,000? If you are like most people, the answer is probably no. But $100,000 is still $100,000 isn’t it? Yes. But its relative usefulness has gone down.

Given that time is a finite resource (we each have 168 hours in our week), It is easy then to see if you already have all of the money that you need that time to do what one wants becomes more important than the additional money one may accumulate. It is important to recognize however that if one wants to fully get out of the “rat race” one have enough wealth to live the lifestyle one wants to live…

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The Benefits of a Roommate

In previous articles, I have pointed out that Americans have more space than they had 100 years ago. I have also pointed out that this space tends to cost more in terms of taxes, upkeep, and utility costs. Besides living in a smaller space, what can one do to leverage the space that one has currently?

May I suggest the benefits of having a roommate or renting out a room as a possible alternative? Often I will hear people say that they would like to be able to have a rental, and yet question when I suggest starting by letting out a spare bedroom. Sometimes they may point out that this is for when family/friends come to visit. Or they may say that they value their privacy and do not want anyone else sharing a space with them.

Let us take a look at some of the financial implications of being able to rent out a room for $450/month. Let us assume that you have a vacancy rate of 10% or that it takes a little more than a month to find a roommate. Let us also assume that due to various reasons that it costs $600/year to have the roommate in terms of upkeep costs, etc. Doing the math in this situation we would come up with an additional $4,260 in income.

If we were to have multiple rooms available to let, this figure could be increased accordingly. It is acknowledged that this amount could vary depending on the room in question.

What could you do with an extra $4,000+/year in income? What if you were to have this extra amount set aside for four or five years?  Would you then potentially be able to purchase a small rental unit of your own, or at the very least be in a position where the possibility is much more feasible?

For some people, the cost of loss of privacy is not worth it. I understand this. For those that do not mind, there may be some opportunity to be had in terms of improved cash flow and potential investment savings.

Let us take a look at the long term effects of having a roommate as described in our hypothetical example if you were able increase your rent by 3% per year and what would happen if you were able to get 3%, 5%, and 7% returns on your money respectively.

As you can see, we are talking about an opportunity cost that could be equal to several hundred thousand dollars over the course of 30 years. Now granted, this amount could vary based on returns and your tax rate. However, given the amount of money that is at stake, it behooves the question for many Americans, how much is your privacy really worth?

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In recent times there has been discussion of the 1% vs. the 99%. Strangely enough, in order to be in the top 5% of net worth you have to have $1.5 million in net worth including your home. The question is does a large net worth make you “wealthy?”

It depends.

Perhaps the best explanation that I have run across on what wealth means is that it is how long you could live given your current lifestyle, net worth, and investment income without working another day.

What sort of lifestyle are you living? If you need $300,000/year to live and have a net worth or $1.5 million, you are certainly wealthier than most. I would argue that you are not necessarily wealthy.

You would most likely have a little over 5 years-worth of wealth. That is to say you could live your current lifestyle for a little over 5 years (I am assuming at least some of it produces income) without working.

Now, what if we to have a true makeover and you were to cut your expenses down to $40K-50K per year and most likely live in a more modest home? All of a sudden, I would probably say that you are wealthy. Chances are you could live the rest of your life without working.

For those of us who are the 95%, I have several pieces of good news. One of the first is that you do not need to be in the 5% of net worth to enjoy life and enjoy it responsibly. For example, let us say that you own your own home. And you have $3,000/month in expenses as a couple. Let us also say that as a couple you bring in $2,000/month in social security. It is altogether possible with $300,000 in investments you could live a very comfortable retirement. The second is that you can usually make changes to adjust your lifestyle which can increase your wealth. The third is that it is never too late to increase wealth.

Wealth is a function not only of net worth/income producing assets; it is a function of our expenses as well. It is altogether possible that a man who owns a car wash and lives a modest lifestyle can be wealthier than celebrities who make millions, but spend it as fast as they make it.

On the other hand, if you increase your expenses, it is easy to lose wealth as well.

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Provocative: Your Home

Often I will hear people associated with real estate talk about someone’s most important asset being their home. For the sake of argument, let us forget the importance of health and the ability to work which I hope can easily be argued are more important than one’s home.

I will say this: if your home remains your most important asset, chances are that you will never become wealthy. Let me reiterate, if your home remains your most important asset, chances are that you will never become wealthy.

For some people this may come as a shock. After all, we have been taught about the importance of having a home and not flushing down money with rent. There is a certain degree of truth to this. I will even suggest that there is a large degree of truth to this if we are comparing similar spaces. The problem lies in that the average owned home is not similar to the average rental. They tend to be substantially larger, nicer and more expensive.

This may not in and of itself be a problem, but for the average American what value does a home provide other than a place to live? I will suggest not much. If you are skilled at restoring and fixing up houses in order to flip them, you may be an exception to this rule. If you rent out rooms of your place so that it is actually generating money for you, then definitely consider yourself an exception as well. For many, however their home is a box where they live that is taxed, subject to utilities, and serves as a storehouse for their stuff. If all you do is keep on upgrading to a larger and fancier box, and get used to a more expensive lifestyle correspondingly, you may be setting yourself up for failure.

The problem is simply this, for most people, one’s home does not serve as a source of generating wealth. It tends to rather be a means of forced savings assuming that one does not continually take out money in the forms of lines of credit, etc.

In order to become wealthy, you need to have assets that either grow or produce income in some fashion. This could be through a variety of means whether through the rental of real estate, a successful small business, or through the growth of securities in a portfolio. It is unlikely that this will occur

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Interview on Interior Design with Marcelle Guilbeau



Many people tell me that they would like to redecorate their home. I am not an interior design expert, so I took the liberty of interviewing Nashville area interior designer, Marcelle Guilbeau for some of her thoughts on what people should know about interior design.

James: So what do you think is important for people to know about interior design, from a practical perspective?   After all, a lot of life’s decisions, no matter how we care to admit it, have to do with emotions.  Wouldn’t you say that putting together the home décor at least in some part involves emotion in order to truly be practical?  For example, say I buy a sweater, but then it turns out I hate it.  Consequently, there is no utility for me as it just sits in my closet!

Marcelle:  Right!  Say you’ve just bought your first home, and you need a living room full of furniture.  So you go out and buy it all for a deal.  Then a few weeks pass by, and now it’s not working – you just don’t know what’s wrong.  You’ve spent $300 or $3,000 or even $30,000 – but now that money’s gone.  So yeah, it’s like the sweater.  Only the sweater can sit in the closet, but the living room furniture is now making you miserable!

James:   Given that we really should give some thought to the stuff we have in our houses – if we’re going to be spending all this money on it – how important is it that we discover our own style?

Marcelle:  It’s just like your wardrobe:  if you get it right, you feel good about yourself, confident and comfortable.  And when you do get it right, you save yourself the time and money of making costly mistakes.

James:  What are some indicators that someone’s not living their own style?

Marcelle:  Some things I hear are, “I need to get the grandma out of my house”:  That means you’ve inherited family furniture that’s outdated and not you.  Or, “I’ve tried and I’ve tried, but it still feels unfinished”:  You’re looking for clarity and a sense of your own identity.  Or, “I just want to feel like a grownup”:  You’re ready to get grounded in your own house– your own life!   Or, “I can’t believe I did it again!” – splurged on a bunch of tchotchkes, but it didn’t do the trick.

James:  So how do you help someone discover their own style?

Marcelle:  It’s a very back-and-forth process.  When I meet with someone, I have in the back of my mind four design styles:  traditional, modern, practical, and whimsical.  I like to help people not only find their own style, but blend it with other tastes in their own way – and that’s what makes it their own personal style.  So for instance, I had a client recently who asked, “Can you combine the Shaker (traditional, practical) style with Modern?”  She had lots of inherited family pieces from her family that were in that simple Shaker style, and she wanted to update her master bedroom to be very urban loft feeling, with some lush sensuality (whimsical style – good for “rejuvenation) sprinkled in.  What we came up with was so cool, and so totally her!

James:  What about couples, where each individual has a very different sense of style?  How do you blend those two so each is happy?

Marcelle:  I get a lot of detail on their individual “styles”.  Then I find likes they share in common.  We start building a design palette that they both like, together.  For instance, one husband’s taste was “modern” and the wife’s was “traditional”.  She likes furniture that looks like furniture.  But it turns out the husband doesn’t mind the overall traditional shape of traditional style furniture.  He’s more of a minimalist who prefers simple forms over lots of detail.  In exploring the wife’s definition of “traditional”, she was really part traditional, and part “whimsical” – sensual and romantic. So we found some midcentury furniture styles that they both liked.  He appreciated the simplified forms and clean color palette we put together;  she got to have her whimsy channeled in rich colors, textures and patterns in the fabrics and wallpapers.

James:  Let’s say someone has gone through the entire process, figuring out their style and implementing it.  Do you find people feel more comfortable, and less inclined to escape?  Do you think they are more in balance, at peace?

Marcelle:  Absolutely.  One woman who worked with me recently said, “I can’t believe it.  I just want to come home, and be in my living room.  I never want to go out!”  Another lovely couple, some empty nesters, designed a dream home with me and David, in the English Country style on some property they love.  They are “traditional” (they love their family, and wanted all to feel welcome to visit) yet “practical” – they wanted a house that was easy to clean and maintain.  Since they’ve moved in, certain aging family members have fallen ill, and they have been able to take them in and care for them in their home in relative comfort.  Though it may sound sad, I think they are getting tremendous value out of this.

James:  Would it then be fair to say if you truly find your own style, you become at peace with your home, and you may not need as much?  That’s to say, you may not be spending time and money to scratch some itch that can’t be satisfied otherwise.

Marcelle:  Absolutely, that’s absolutely right.

James:   Marcelle’s going to be giving a workshop soon on “finding your own style”, where you too can become at peace with your home.  It’ll be on February 2nd, at the University School of Nashville’s Evening Classes.  You can register for it at

If you want to know more about the class itself, check out Marcelle’s website at