Morgan Housel on The Art of Spending Money and Why Independence Is the Real Luxury

23:27And I think it's not uncommon, that even if you look at multi-billionaires, deca-billionaires, centa-billionaires, they worry about losing it. Sometimes it's rational because a lot of them have all of their net worth in one stock. So like the odds that they can lose it all is actually like not that small. But it's interesting that there seems to be no satiation where at X net worth, I'll stop worrying about losing it. And it's true that when you have nothing, you don't worry about losing, you have nothing to lose. So that thought's never in your head. And what you tell yourself is, if only my net worth was a million dollars, $10 million, whatever, then I wouldn't have to worry anymore.

24:01But once you have$10 million, you're like, well, what about inflation? What about taxes? What if I make a stupid investment? What about leverage? You just exchange one worry for the next. And I think a lot of that is just whatever hole you were trying to fill with money is not being filled. And I think that's true in that situation because there are people who do a very good job at saying, once my net worth is a million dollars, that's all I'm going to need. And I'm totally content after that. Daniel Kahneman, And the late psychologist told the story that he went to his financial advisor. He was in his seventies at the time.

24:31And he said, I have no desire to earn any more money. I have no desire to see my net worth higher than it is right now. I just want to live comfortably on what I have. And the financial advisor told him, I can't work with you. And because to the financial advisor, it was like so antithetical that somebody would not want more money. And Common was like, I don't think it's that rare, actually, that I'm perfectly content. I don't have this desire to just keep accumulating more. And so some people do a very good job doing it. But the people who don't are the ones who tell themselves, if only I had a million dollars, my problems would go away.

25:03And then if they have a million dollars or whatever their goal is, they might even feel worse because they were like frantically shoving money into the hole, the hole in their soul. And then once that hole was filled, they realized they had the same feeling. And I think in that situation, it's something else. There's that the hole needs to be filled with something else. There's something else going on in your life and money's obviously not the issue. Right. And you provide so many stories and so many great pieces of advice in The Art of Spending and the prior book, The Psychology of Money. And the question I have is bridging that gap, like recognizing you have that hole in yourself.

25:36And then somehow, without ever having experienced true health before in terms of money, how do you cross that bridge so you are healthy? Is it a matter of reading and contemplating the many stories and pieces of advice you give? Or is there something else that someone could do or exercise to get that health? One statement here that I think is very unfortunate, I wish I didn't have to make this statement, but everything that I've learned about money leads me to believe this is true. Most of your personality and my personality, everyone's personality, is forged at conception. It's not learned in the real world.

26:12There is a part of it that is learned experience that you can kind of change your mind on. But some people are wired very differently than others. Of course, that's not a bold statement. And so I think a lot of people who have a lifelong issue with money or a lifelong non-issue with money, that is not a learned experience that you can really teach. That's just how they're wired. Charlie Munger stated this very starkly. He said, when you are teaching money matters to young people, they either understand it instantly or never. Those are the two time periods in which they get it. I think there's a lot of truth to that.

26:42But I do think around the edges, you can recognize the social games that get played with money, the desire for attention from strangers, the constantly ratcheting of expectations, the moving of the goalposts. You can recognize the games that are being played and become a little bit more cognizant of the forces that are around you. I have to do this with myself. Someone who I think I can say has done a pretty good job at keeping my expectations in check and saving and using money for independence. Not perfect, but I think I've done a decent job of that. Almost daily, I have to remind myself because I'll get stuck in a trap of like, if only we had a bigger house.

27:18Oh, look at that car. If only I had that. Oh, look at his jacket. What if I had that jacket? And I have to remind myself, yes, some of those things are worth purchasing and I do purchase, but I'm not going to get the attention that I assume. It is so common to assume that if I had that jacket, people would pay attention to me and say, oh, look at Morgan. He's looking good. It's not how it works. It's almost never how it works. And by by the way, that guy whose jacket I just saw, I don't care about him. I just care about his jacket. But I'd want his jacket because I then think people will care about me.

27:48It was like, don't you like, you have to constantly remind yourself of how stupid that game can be. And when you do, I think for me, it has pushed me closer towards, I want to use my money to help my immediate family and give myself independence and have some nice things that I have my quirky desires for. But I have to remind myself daily of the fact that I'm not going to get the attention that I intuitively assume I will. Yeah, and you mentioned something in the book, something like seeking the jealousy of others or doing things that you think will make people jealous of you is like outsourcing your critical thinking to other people.

28:24And I thought that was a valuable quote. You can't ever make decisions by outsourcing decision-making skills to other people who are not you. So much of that is because you can't see a full holistic picture of their life. So if you are looking at somebody else, you can see their house, you can see their clothes, you can see their car. You cannot see their mental health by and large. You can't see their relationships. You can't see their physical health. You can't see how well they're sleeping at night. You can't see their conscience. All the things that actually create a good life, you are blind to.

28:55And so if you're looking at someone's material possessions and saying, they have a great life, I want that life. If only I had that, then I would be happy. you're seeing maybe 2 % of what actually matters in their life. And you see that all the time. Right in the book, of the top 10 richest men in the world, there are a cumulative 15 divorces among the top 10. And so a group, and obviously it's a tiny sample size, you can't really draw any conclusions from that, but here are a group of men who are among the most admired men in the entire universe. And actually, if you dig not that deep into their life, you dig like one layer down into their life, there's a lot of things where it's like, no, that's actually a pretty shitty life.

29:32Like for a lot of them, And they've been through some very hard times. And I think, so you have to take the whole package. You have to get a holistic view of someone's life before you can like reasonably be jealous or envious or even have a sense of admiration of who they are. Yeah, it's really true. And, you know, but then, you know, and I do like this idea, this exercise of really thinking about what makes you happy and not putting money in there. because money is a tool for what makes you happy. And maybe you could say, I love going to sleep at night, not knowing I'm not in debt. So in that sense, money can make you happy.

30:09But thinking about the other things like living a simple life or doing a certain activity that you don't normally do. There's other things that, you know, listing these things that make you happy and then try and decide, does having more money get me closer to these activities? I think that is a useful exercise for distinguishing between money and what actually makes you happy. So what should you spend your money on? Should it be freedom? Should it be some of these activities or experiences? Should it be accumulating more money? I think that helps sort of decide things a little better. Yeah, I think for me personally, having a higher net worth than I did in previous years, a lot of what it's done for me is just a reduction of anxiety.

30:50And so for example, 10 years ago, if my water heater blew out, I would have been devastated. That would have crushed me for a month. But now if it were to happen today, it's kind of like, oh, well, that's a shame. Let's go call the plumber and take whatever quote he gives us. And so that's just a reduction of anxiety. It's not happiness. It's not that because the hot water heater broke, I'm happy, but it's a reduction of anxiety. And that's super important. That's really what it's been for me. The other thing to that point is happiness is always for everybody a five-minute emotion. You are like, almost nobody is ever happy for more than five minutes.

31:26In a similar way that if you hear the funniest joke in the world, you don't laugh for seven years, you laugh for 30 seconds. Humor is a 30 second emotion and happiness is very similar. It's always fleeting. So I think what people actually want when they daydream about having more money and what that life would be, what you are actually daydreaming about is contentment. You're imagining yourself in that bigger house with that fancy car, whatever it might be, and being perfectly content with those things. But what is more likely to occur for more people is that if they get in the bigger house, they are happy for about five minutes.

31:58And then they look across the street to their neighbors whose house is bigger and they start being envious and dreaming of that. They're not content. And so I think the emotion that you want to chase with money is not happiness because you're never going to achieve that. It's contentment. It's getting to a point where you say, I'm good. I have everything I want. I have the independence I want. I can spend the time with the people who I want. That's what you're going for. It's not necessarily happiness though. But in terms of like the, you mentioned a lot about savings and I'm not the same type of saver you are as I can gather from your books.

32:30Like for instance, when people are in their twenties, I think it's always important to have some amount saved just in case of worst case scenarios, like a parent gets sick, you have to take care of them, you lose a job, whatever. But at some point, because the earning power of someone in their twenties is going to go up so much higher than inflation, not in all cases, but in many cases, saving an extra$100 a month when you're 23 years old is sort of inconsequential. If you already have like six months of runway set aside, I don't think a young person really needs more than that. Because by the way, that six months runway, you might make in two weeks when you're 35 or 45.

33:13So I don't know. And I understand the compounding miracle. I get it. And also, by the way, in The Art of Spending Money, I appreciate your comments about how time compounds also, which is a very important discussion. But I think saving, I don't know, maybe you agree, maybe you disagree. I think savings in your very early 20s when you're first starting your career is not as important as later on. I could come down on either side of this. I think I can argue both sides of this with equal confidence. So I don't know really where I come down on this. But I agree. I was thinking about this the other day that when I was 19, if I saved $100, that was a heroic feat.

33:49Like$100 when you're 19 is a lot of money. And I invested that money. So let's say today, I don't know what the math is. Let's say today that's worth$500, which doesn't mean a lot to me. And so could I have had an amazing night out when I was 19 with my friends for that$100 or invested it into an amount of money that means nothing to me today? That's kind of a weird way to put it. But here's where I could take the other side. It is very difficult to live paycheck to paycheck and go into debt and have a YOLO mentality in your 20s and then flip a switch in your 30s and say, now I'm gonna become a big saver.

34:20Very difficult to actually make that transition. And I think it's difficult to have good saving habits in your 30s and 40s unless you start them in your 20s. I think that's probably true for most people. So I see both sides of that equation. It's funny you bring this up because I was literally thinking about it last night. The$100 when I was 19 is$500, which means nothing to me today. I was thinking about that last night, But I also think if I didn't do that at 19, I would not have the saving habits today in my 40s that I think have made a big difference in my life. I think that's an excellent point.

34:50And that could potentially change my mind about this. And you sort of make that point in The Art of Spending when you say, don't view it as savings, view it as spending on future independence or spending on independence now. So if you have that satisfied feeling that that$100 of savings that month is going to create this enormous independence for you in the future, then that could feel very pleasurable and give you this feeling of contentment that we're, you know, what could be better anyway? So, you know, the book started to make it understandable to me. And what you just said also makes it understandable to me.

35:23I could see both sides of it now as well. I just have known that in the past when young people ask me for advice, I always say after that, after you have that, and I say this to my kids, after you have that first six months, they're in their 20s. So I say to them, if you have that first six months, if you have six months of savings so that you could do nothing for six months, that's good enough. And then just focus on improving your skills, being good at what you do. And I'm not saying go out and party all the time. I don't necessarily encourage them to strain their life by saving an extra dollar or two where they're living in New York City, which is already expensive and a hard place to live and so on.

35:59Yeah, no, I definitely do not disagree with that. I think that's wise advice that you give to people. The other part of this I've thought about is for a lot of people when they're adults, if you ask them, what are some of your greatest memories in life? Not everybody, but a lot of people will tell you high school and college. And again, not everyone, but a lot of people will be like, oh, it's so fun. We went to parties or hung out. We went to the lake. We stayed up till 3 a.m. And one common denominator of those years is most people have no money. And so the idea that you need to spend a lot of money to have great experiences, which is kind of tied into that point you just said, I think is almost usually the opposite.

36:31That in your 40s, when you probably are making more money than you ever have, is when people's lives tend to be more common that their lives are very monotonous and they're not doing that much. And in your late teens, that tends to be when you have no money and every day is an awesome adventure with you and your friends. So it's not really black and white that like in your 20s, you should go spend money and have these experiences, you're probably going to have awesome experiences anyway because you're probably not married. You probably don't have kids. You can probably jump around from city to city.

36:59And that's awesome. When I look back at my 20s, which were not perfect, I would do things differently. So I'm not saying that this is a template. I was a hyper saver. That's probably the right word. And I have endless memories of places I went. I lived in seven different cities and worked at tons of different companies and met tons of awesome people. And so I don't necessarily view it as sacrificing experiences. It was the experiences came because of the phase of life I was in, not because of the money I was or was not spending. Yeah, and also, and I think of this in my mid to late 20s. I had no money, but super happy, great experiences.

37:36But it's also because those great experiences were hard to have. I had to earn those experiences in ways other than spending for them because I had no money. Yeah, yeah. So you prize the things that you had to work hard for. Whereas if it's easy to buy something, it's not that interesting. Yeah, I think that's really true. If you don't know how to budget an economy, and everything is at your disposal, you can have anything you want. If you can have anything you want, you won't value any of it. In the same way that most people have all the oxygen they could ever want. You don't really think about it.

38:10You don't value it that much. Or maybe a more pertinent example, you and I can go get penicillin right now for$2 or whatever it costs. Like it's dirt cheap drugs and completely change our life, save our lives, maybe save our lives multiple times over the course of our life. But we don't think that much of it because it's by and large available to everyone for dirt cheap. And so there are things where they are incredibly life-changing, but if you don't have to economize for them, you don't value them as much as you otherwise would.

38:51you know and i've been wondering throughout all this like how does one build this mind so one is more psychologically healthy around money and spending and so on one exercise i try to do is imagining i'm from some other planet and i just i'm in this body for like the day i wake up thinking i'm in this body for the day so whether james alviter in quotes is up in the stock market or down in the stock market that day, you know, it doesn't matter. I have this opportunity right now to build from here. Rather than say where I was from or what I'm striving for, I could just simply build right here, right now.

39:27And that will give me pleasure for the day. And what an opportunity it is to start from wherever it is I'm starting, whether it's down or not, it doesn't matter. So kind of trying to reframe where one is at in life versus some ideal dream you've built up. Like I need this boat, I need this house, I need this stock to be at 6 ,000 instead of 5 ,000 or whatever. Yeah, like wiping yourself clean of all of your past expectations and also wiping yourself clean of the identities that you've built up over the years. A lot of people have financial identities. They might say, I am a saver. I am an investor.

40:01I'm a value investor. I'm a crypto investor, whatever it might be. Anytime in life where you say, I am a blank, no matter what that blank is, you've assigned yourself to a tribal identity. And it's very difficult to detach yourself from that once you have attached yourself to it. You see this a lot in politics, where if someone says, I'm a Democrat, I'm a Republican, their ability to think independently is completely out the window at that point. By and large, that tends to be the case. They've assigned themselves to a tribe and then you've outsourced your critical thinking to the tribe. And I think that's true for a lot of money habits as well.

40:32If you talk to a lot of financial advisors, they'll tell you one of the biggest problems that they face are people who have saved enough for retirement. People have been diligent savers. Now they're 65. they have$2 million in their IRA and they can go live a great life and they cannot bring themselves to spend it because their entire life, their financial identity has been, I'm a saver and my net worth goes up every year. And they can't bring themselves to drawing it down because it's antithetical to their identity, to the tribe that they've assigned themselves. I imagine that could be difficult.

41:00Like, what are you going to do when you reach that tipping point where the years ahead are as not as great as the years before? As a hyper saver, how are you going to reconcile with, oh, my net worth might go down every year. I don't know. And I think anyone would be foolish to think that they can look ahead and know exactly what that's going to be. You know, people don't have any sympathy or pity for these people. But a lot of times where you see very poor mental health are on former professional athletes. Because there was a period of time, usually in their early 20s, when they were literal superheroes, making millions of dollars a year, everyone lining up for their autograph, literally like the coolest people in the world.

41:42And then at age 40, they're kind of nobodies. Unless they're like Michael Jordan or someone and they remain famous forever, most of them are unknown. And maybe they're high school football coaches, great people, maybe they're good spouses, pillars of their community, but the identity that they used to have breaks and it breaks in a profound way. And that can be absolutely crushing. I saw my dad go through this. He was a doctor and he retired. It was like his dream to retire. He was exhausted. And six months later, I think it bothered him that when he looked in the mirror, he could no longer say, I'm a doctor.

42:13That was his identity. So he went back to work. And I think a lot of people are unaware of the identities that they've assigned to themselves. And so in your little daydream of being the alien, it feels good to, for at least for a day, wipe yourself clear, like wipe the slate clear and be like, if I have no expectations and no identity, who would I want to be today? And only in that moment, do you really recognize the identities that you've tied yourself to. It's hard though, because like, as you mentioned earlier, we're tribal animals. We've been that way for millions of years. Before there were Homo sapiens, primates are tribal animals.

42:47I was a day trader in the early 2000s and how much money I was up or down on the month, week, year, whatever, that was my identity and my job. You can't really get away from that. What I would try to do is I would try to diversify tribes. If I had a bad day in the market, I would go to Yahoo games and play chess and try to win and just diversify things that I loved that had nothing to do with each other. If I'm bad at one that day, I could be maybe good at another that day. Yeah. I like that idea. There's a great quote from Paul Graham, the investor, and he says, keep your identity small. Very simple quote, but that's really like, be very careful what you tie your identity to.

43:29I was talking to Tim Ferriss about this a couple of The world knew Tim Ferriss, the author. That's who he was, Tim Ferriss, the author. And if you go to today, if you ask people who's Tim Ferriss, he's the podcaster. Like that's actually a pretty profound jump. Those are very different things, writing versus podcasting. And I asked him like, did you used to have this identity of Tim Ferriss, the author? When you look back at your career, now you're Tim Ferriss, the podcaster. Does it bother you? And like, he didn't really seem to have any issue with making that jump. But I think it's actually a pretty rare thing that you can detach from who you used to be and become somebody completely different.

44:08Like a very extreme example of that is Will Smith, who was like rapper and then actor, very, very different things at very different points in his life. It's rare that people make that transition and can break off from who they used to be and become somebody completely different. I think you have had periods of that in your life. You've been a day trader, an investor, a podcaster. You've done many different facets of it. I'm curious, I'll pose the question to you. When you became a different person in your career, especially someone that has a public face that people know, and now you're doing something different.

44:39Did that impact the person you saw in the mirror? Did it bother you when you became somebody else different? Very rarely, because I almost always have a rule. Or not a rule. It's not a rule. I'm only able to do things I'm obsessed with. So I'm only, like, for instance, I wouldn't do this podcast if I wasn't just in love with podcasting and talking to people and learning from people and so on. Like, I've been obsessed with this for 10 years. investing. I only was really a professional investor when I was obsessed with investing. And I've had on and off periods of that. And I actually was a standup comedian for six years because I was obsessed with it.

45:17I would watch comedy videos all day and then perform at night. And I was obsessed. And then once I was not obsessed anymore, I stopped doing it. I didn't care. When I did it, I was very much obsessed with the hierarchy of it. Once I stopped being obsessed, I didn't care at all about it. But one way this has affected me lately is from 2004 to 2021, I wrote literally one or two books a year. So I wrote 3 ,000 words a day. I read every day. I read an enormous amount every day. I was obsessed. That's all I would do all day was reading and writing for most of those periods. And since 2021, I have not written a book for various reasons.

45:57And that has bothered me, that people might not know me. Like when you listen to the things I've done in the past, I've done many things, but the one thing you didn't list was writer. And that rung in my head because that is the one thing that where I still love it, I haven't done it, and it's starting to bother me that I've identified so much with I am a writer that I am starting to feel anxiety of not writing as much these days. But I'm curious though, if I said, James, you have to write a book tomorrow, you have to start writing a book tomorrow, do you think you could do it at the level and the skill that you did when you were in your frantic writing days?

46:39I don't know. I think actually my skills are better because it's like a normal thing. And I'm sure this happens to you when you look back at something you wrote 10 years ago, you think, oh my God, that's crap. I could do so much better now. But at the same time, I don't know if I have the focus to do it right now. Whereas I always had that focus earlier. And I don't know why it's just something I'm going through, but I tell people there's things I'm writing, but I just am not able to finish them. So I don't know the answer. I think what bothers a lot of people with losing identity is looking in the mirror and saying, I can't be that person.

47:17I wasn't like that person used to be really good. Back to the athletes, why it would be so devastating. If you look back at yourself when you were 22 and you were an NFL player and you were so incredibly good and now you're 45 and your body's broken, that's a very difficult thing to come to terms with. It's not that I used to be a different person. It's that I can't be the person I used to be. That can be very difficult. I think that's a big part of your tribal identity. The other part is like the sunk cost fallacy. If you put a lot of effort into forming an identity, it's very difficult to tell yourself that actually it was wrong.

47:45You see that in politics a lot. People will spend a lifetime building their political identity of whichever side they're on. And then even if they are exposed to conflicting information, your propensity to reject that conflicting information is very high because you're like, I spent a lifetime of debate and critical thinking to form this identity. And it's gonna be very difficult for me to break it down. I always wonder about that. Like these, you know, congressmen or senators or governors who then lose an election and there's really nothing else for them to do in politics. and they have to go back to some other life that they had before, like how they're able to deal with that.

48:19You don't really hear a lot of stories about that, like what they do the next 40 years of their lives. But it is interesting because we're not, people always ask, should you focus on one thing in your teens and early 20s and just do that for the rest of your life? Because the law of compounding works there. But it's very hard to do that. And often, as David Epstein talks about in his book, Range, Often it's good to do a diverse amount of things, and then you're sort of the best in the world at the intersection of all that, and there's some pleasure in that as well. I don't know. It's an unknown.

48:52I go through this because I always think, oh, what if I, instead of having all these different obsessions, what if I had just done one thing from the beginning, focused on that the whole time, and I would be the best in the world at that one thing? Because that has to be a pleasure to be the best in the world at something. But as you point out, it ends, no matter what, it ends eventually. Right. Right. I have conflicting thoughts about this. I don't mean to pass judgment on people, but I always kind of wince when someone will say, I'm a 12-time entrepreneur. I founded 12 companies. I'm like, is that good?

49:22It sounds like you've never stuck with anything. It sounds like you start something and immediately abandon it and move on to the next thing. And I really admire people, and this is subjective, people might disagree with this, but I really admire people who've done the same thing for 50 years. Like a professor who's like, I've taught at Harvard for 50 years. I've worked at this company for 50 years. I'm like, God, the compounded memories, the compounded skills, the compounded institutional knowledge is unbelievable in that situation versus a person who's jumping around from job to job. I can also see the David Epstein point of particularly when you're young, you have to try a million things to find your thing.

49:56And maybe it's just people who are blessed to find their thing early on that they can stick with for 50 years. That's the exception to the rule versus the people who need to jump around to it. I think I got very lucky. Haphazardly stumbled into financial writing. It was not the plan, it was not the dream, it was not the goal. Haphazardly stumbled into it and realized that I enjoyed it and that's all I've done ever since. I've never had any other professional job other than writing about money. But I could easily see that if I went down a different route, if I tried to become a hedge fund manager or trader, whatever it would be, that I would have had to jump around to different things before I found something that actually fed my soul.

50:34Yeah. And I guess, I guess it goes both ways. Like let's say at the end of a life, the value you bring to future generations is your wisdom that you've accumulated over the years. And if you're a Nobel prize winner of physics, because you've spent 50 years doing physics, obviously you can inspire a generation of young physicists about which directions to go. When is a time to give up one direction and pursue another field and on and on. But let's say you've lived in a hundred different countries instead of one, and you've immersed yourself in the culture of a hundred different countries or 12 different countries instead of just one, that's a different kind of wisdom that you're able to impart on future generations.

51:12So, you know, I think it's Arthur Brooks who talks about this, that the brain changes as we get older. So even if you do just love one thing, like let's say when you're younger and you're writing about finance, maybe you're writing about very specific things like the benefits of 401ks or stocks or this stock's good, this stock's bad. But then as you get older, your brain's just not going to be as good at that perhaps. And maybe it's going to be better at like what you're doing, like, oh no, money is more about the psychology. And here, if you really want to be, you know, accumulate a lot and then be happy with what you've accumulated, you have to approach it.

51:48So that style, you're still writing about finance and writing about money, but I'm not saying this is what you've done, but the context of it changed a little between youth and older age. Yeah, no, I think that's definitely true. I almost feel like this is not a fully hashed out thought, so I might rethink this through, but I almost feel like it should be one end of the barbell. That I think there could be a lot of value to having lived in 50 cities throughout your life. That can impart a lot of wisdom on you. I think there's a lot of value in having lived in the same house in the same city for 50 years too.

52:21Like both ends of the barbell can teach you incredible things about the world, about diversity in different cultures, about the value of compounding. We had this experience in the last year, my wife and I. We bought a new house a year ago, this house, about 12 months ago. By any metric, this house is an upgrade from our previous house. But in the previous house, we had so many cool memories. Our kids took their first step. Christmas morning when they still believed in Santa. First day of kindergarten. and all these memories that we just walked away from. And that hurt. It was so hard for me to deal with that, to be like, I'm such a firm believer and writer about the value of compounding.

52:56And I just slammed the door on those compounded memories. Now, of course, I still have the memories, but I would have loved where the spot in the house at the bottom of the stairs where my daughter took her first steps, I would have loved to see that location when she was 40 years old, you know, and remember the path. So I think you can contextualize life very well when you have compounded memories. And it pained me a little bit that I slammed the door shut on that compounding. So, but how can you reframe that so you still are compounding from that? Well, obviously she's still my daughter. He's still my son.

53:28I still get to see that. But I think, and we knew at the time when we sold the house and bought this one, we knew and I knew, I was very cognizant of like, this is breaking kind of a long-held dream of mine, which other people might disagree with, but I would love to live in the same house for 50 years. I think that's awesome. even if other people disagree with that. I think it'd be really cool. And I had to start the process over. And I think that's okay. Hopefully this is the house that we'll live in for 50 years now. Hopefully it won't change our mind again. But I knew it was a problem, but I think it actually turned out to be a bigger problem than I thought it would be.

53:59And I value that more than anything now. Like my personalities, I want to be the kind of person that has the same friends for life, lives in the same area for life, has the same wife for life, lives in the same house for life. I value that compounding of memories because I think memories compound faster and more durably than money can compound. Everyone knows how powerful compound interest in money can be. Compound interest with memories, I think, is even grander.

54:38I heard this interview recently with an elderly woman. She was in her 90s. and she said one of the benefits of growing old is that you get to time travel in your head. So she, as someone in her 90s, she could be like, oh, remember what the world was like in the 1960s? What music was like in the 1940s? You get to time travel in your head. So I think those compounded memories are a huge value of life. You know, that makes a lot of sense and it makes a lot of sense when you live in the same house the whole time. I think the memories, I'll be honest, even if this hurts you a little bit, I do think the memories compound better when you're in the same location because you're physically confronted with them.

55:13I don't have that experience with a house, but for instance, New York City, every intersection in all of Manhattan, I could walk on that intersection and be flooded with every memory that has ever happened to me on that exact intersection. And I've been everywhere in Manhattan. I've actually lived everywhere in Manhattan. So I've probably been on every intersection at many times. And I remember it. It's like physically, it's like almost watching a movie. I walk onto an intersection and I'm watching like 20 different movies at the same time of every memory I've had there. Whereas when I'm outside of New York City, I might not remember any of those things.

55:47And maybe I'll never remember those things again because I don't have a reason to. I think this is a very individualistic thing. My wife couldn't care less about the memories in our old house. She's like, what? We have pictures and the house is just a pile of lumber. Who cares? People are affected very differently by this. So I have an extreme, whereas... So in the past 10 years, I've probably lived in 100 different locations because I went through my Airbnb phase over these 10 years. But like right now on a trip and I'm about three or four miles from Stonehenge. So I'm in England and I'm staying in a house where this family who owns this house, they first bought it in the early 1800s and generation after generation, they've lived here ever since.

56:30And it's, it's complete. The landscape is empty. Like there's just miles of land. There's no one else around. and it must have been just such a nice, simple life for the kids. Like this is all they know is generations of family living here, growing up here in this incredibly simple atmosphere and place. And I appreciate the differences and almost could be jealous. Like, oh, what would my life have been like if I had that simplicity? But you never know really. So there's benefits of all of it. Yeah, and they might be looking at you would be like, oh, you're so lucky to live in the big city filled with opportunity and culture and nightlife.

57:09I think what a lot of people get joy and pleasure out of is just contrast. If you live three miles from Stonehenge, you probably daydream about Manhattan. Maybe. If you live in Manhattan, you dream about living in the quiet, beautiful, peaceful country. A lot of it is just people want change. They desire change from their daily routine. They want to escape from what they already know and experience something different. See, and it's funny because I actually think they look at me and hate me. because I didn't live the life they've lived and I admire their life. So I don't know. But this is your point where you can't outsource your thinking about yourself to what other people think about you because that goes down a dangerous road.

57:47But it is interesting though how this all ties back to our relationship with money that, you know, how you spend your money. Like, should you go live the simple life? Should you save for the expensive things? What is independence and freedom? Like when we're talking about independence, And there's always new things to worry about. Like what if inflation eats away at my independence when I thought I saved enough? What if there's a war and the dollar is not worth as much? And, you know, this is why you see these billionaires who are trying to constantly escape the feeling of nothing. They'll build the bunkers in New Zealand.

58:21They'll fund billions of dollars worth of anti-aging medicines. They'll invest in so many obscure, ludicrous things just in case their company or investments go away. And I think it's so hard to get out of that psychology to really feel contentment. So much of independence too is about the independence of thought and the independence of voice. So I won't say any names, but everybody knows some extremely wealthy billionaires who have all the money they could ever need, but they have to spend a lot of their time on their knees groveling to politicians and regulators. Is that independent? If you're worth$100 billion, but you have to say things that you know are not true to politicians in order to get a law change that's gonna benefit, is that really independence?

59:08Like, not really. And so I think it's more than financial independence. It's psychological, philosophical independence of being who you want. I think one person who has done this very, very well, two people, let's say, Nassim Taleb and Naval. are two people who, A, I think both have financial independence, but they both just say whatever the hell they want. They are not concerned about pissing anybody off. Both have been on this podcast too, and I like both of them, but it's very true. Naval even more than Nassim. Nassim I see getting into these almost obscene arguments on Twitter, and I'm like, why?

59:43I asked him, why do you have to argue with everybody on Twitter? You get into these really, and he says, oh, it's just fun. It's just exercise. So I don't know. And see, I think the same thing, but like with Tala, but I think he enjoys doing it. We can talk about why he enjoys doing it and you and I would not enjoy doing it, but he is not concerned at all with what anybody says about him. Charlie Munger was the same. People criticized him left and right for what he said. He could not give two shits what you said about him. And that's true independence. Yeah. And I think Naval is like that too.

1:00:13Naval has a real wisdom to him that's valuable to listen to. I almost cannot think of anything he's ever said to me or that I've read that he said that I didn't think was incredibly smart. So with Naval, there is a handful of things that he said that I disagree with. But then I'm like, that's the point. He says things that people disagree with, with no fear of repercussion. That's the point that I, the fact that I disagree is what's great about it. And then, but there are also people who are worth a hundred billion dollars who will never say anything disagreeable because they're terrified of the repercussions it's going to cause.

1:00:44That is not independence. Well, you know, when you were saying that, I'm sure we're thinking of the same image, like, and this is all politics aside. Like, I don't care about the politics of it. But at Trump's inauguration, you see all these billionaires sitting right behind him in the inauguration. And clearly they're all there, whether they want it to be or not. They're all there because they want to have favor with the guy who's going to be influencing the laws that will affect their companies. There's this hot mic moment where Zuckerberg says, I said 600 billion, what number should I have said?

1:01:17So here's a guy worth$200 billion who's worried. and it struck me that I wouldn't want to be that way. Again, this is politics. I'm not talking about it as politics. I wouldn't want to curry anyone's favor. Not that I would want people to hate me. I'd still want people to like me, but I wouldn't want to have to curry favor if I had$200 billion. I hate currying favor no matter what. You know, I'm the same way. You could, if there is a devil's advocate here, and that's what it is, because I don't think, I don't know if I believe what I'm about to say, but I think you could say that those politicians at the inauguration are not groveling.

1:01:51They're just smart. They're smart business people who are just know how to get things done. I think Trump made this comment many years ago when people pointed out that he once donated money to Hillary Clinton's campaign in the early 2000s. And he was like, yeah, I made friends with everybody. That's why, like, I'm a good businessman. I want to be everyone's best friend. And so is it groveling or is it just knowing how to get things done? I would never want to be the person who needs to sacrifice my morals for getting something done, particularly like a financial benefit. But you could look at those people and could make an argument that they are just very shrewd at getting what they want.

1:02:23And there is one definition of wisdom, which is wisdom is, or the definition of intelligence, I should say, which is intelligence is getting what you want. And they're very good at getting what they want, even if they have to sacrifice their morals to get there. And you could also argue that they love what they're doing. Like you mentioned in your book that Mark Zuckerberg in 2006 was offered a billion dollars by Yahoo for, or Yahoo offered a billion dollars for Facebook and Mark Zuckerberg would have walked away with 250 million. and the question is, he was 24 years old. He could have walked away with$250 million right then and why did he refuse it?

1:02:57And so I asked Peter Thiel, who was on the board of Facebook at the time and Peter Thiel said, oh, we were all hoping he wanted to take it. For us, it was big returns too. Mark Zuckerberg said, look, what am I gonna do with$250 million? I'm just gonna start a social network and try to make it popular. Well, I've already got that so I'm just gonna keep doing it. And, you know, that's certain kind of wisdom as well to really recognize what things, it's like what you were saying earlier, write down things that make you happy that money can't really buy. Like he already had, he was already doing what had made him happy.

1:03:28So he didn't need more money to do it. The vast majority of those extremely successful people, it's probably the wrong thing to say they like what they do. It's probably closer to say they have to do it. It is just so fundamental to their personality that they have to do it. Does Elon Musk wake up every morning happy? I think the answer is absolutely not. I think he wakes up every morning terrified that he has not accomplished X, Y, and Z, that he needs to build X, Y, and Z, and there's a long list of problems that need to be fixed, but he has to do that. I don't think he can live in a world which he just retires to some mansion and wakes up and goes for a walk and reads a newspaper.

1:04:00He can't do that. I would love that. That is consistent with my personality. It's absolutely not consistent to theirs, and that's why they're so successful. But let me ask you, you sell millions of copies of your books, you have half a million followers on Twitter, So you know when you say things, a lot of people are going to listen. Most people are going to agree. It's seldom you're going to have fights within your feed where most people aren't taking your side and defending your words. You know, when you write a new book like this book, The Art of Spending, people are going to buy it and there's going to be mostly or hopefully, you know, favorable comments on it.

1:04:32I think there will be. If you didn't have that, it's almost like this backstop on your opinions. You know what things you say are going to be heard and listened to. If that was all wiped to zero, do you think that would affect you emotionally? Obviously, it would affect a little, but like how much? I think I've been maybe unique as a writer in that I always say I write for an audience of one, which is me. I write things that I'm interested in. I try to solve problems that I have in my own life. I try to write stories in a voice that I find appealing. And if someone else finds them appealing too, awesome.

1:05:08but a lot of people won't. And that's okay. I don't want to pander to any specific audience. So when I write, I almost think that I'm writing a diary, like a journal just for myself. And I really go out of my way, at least most of the time, to not read any of the comments. I think you cannot take the praise seriously unless you take the criticism seriously as well. You can't read the praise and say, I'm so great, and then read the criticism and say, ah, they're trolls. You have to take nothing or everything. And most of the time, I take nothing. I write for an audience of one, and I just leave it be.

1:05:37and I know particularly if you sell a lot of copies, even if 1 % of people hate it, and it's probably more than that, but 1 % of 10 million copies is a lot of people who are going to tell you how terrible and stupid you are. So if you spend your time digging through those comments, you're going to find a lot of hate. Of course, it's going to hurt. So I guess to answer your question, I don't know if it would impact me that much because I don't spend that much time looking at it to begin with. Well, that's good. I think that's very healthy. I feel I have spent an undue amount of time building up followers.

1:06:06And now I don't, but for a period of time, it was very important to me. Like every day, was I going up? Was I going down? Did I get more years? Did this book sell more copies? And so on. I think books like yours really provide a valuable guide to at least cause people to think and avoid certain problems that often happen, like accumulating a lot of money and then going broke or just accumulating money to begin with. I think having a good psychology about it, you know, like as in the psychology of money or the art of spending, I think these things are incredibly important. And you've written great books.

1:06:45I've been inspired by them. I've learned from them. And it's also helped me not only learn for the future, but understand certain things that happened in my past a little better. I found your books incredibly valuable for that as well. So I don't make the same mistakes. And so thank you for that, Morgan Housel. I've tried for years to have you on my podcast. I'm so glad you had time to come on today. And again, The Art of Spending Money, Simple Choices for a Richer Life. People should definitely buy it. I was riveted to it. And you always write good books that I could read in a day also, which I appreciate.

1:07:19Awesome. Awesome. James, I followed you for probably decades now. I was going to say years, but I'm sure it's decades now too. And I've always admired your skill as a writer. I am a keen observer of good writing. And I think your ability to craft a sentence and turn a phrase and tell a narrative is wonderful. So I really appreciate you having me on. It's been an honor to come on. And I've followed you for many years as well. Thank you so much, Morgan. And I hope to talk to you soon. Thanks, James.

1:07:58This October, Fear is Free on Pluto TV with horror movie collections from Paranormal Activity, The Ring. You will die in seven days. Scream. And From Dusk Till Dawn. This is my kind of place. And don't miss the man-made nightmares in Mary Shelley's Frankenstein or the world-ending chaos in 28 Days Later. There's something in the blood. All the scares, all for free. Pluto TV. Stream now. Pay never.