SPECIAL: The Little Known World of FatFIRE

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resource i'm gonna tell you all about it i'm gonna tell you a few things that i've learned from it first i'm gonna tell you what it is but then i'm gonna tell you what i've learned from it then i'm going to tell you what it feels like at the different levels of according to people who use this resource so and that resource is called fat fire so it's a subreddit on reddit so if you go to reddit dot com slash r slash fat fire you'll find it or if you use google fat fire fat fire reddit you'll find it so f a t f i r e you'll you'll be able to find it now what is fat fire and why should you care about this well there's a great book called how to get rich it's horribly titled but it's a really really amazing book it changed my life it's about this guy or it's written by his guy named felix dennis so felix dennis was an entrepreneur in the sixty seventies eighties and nineties and eventually he died in the early two thousands i believe and he's did a bunch of stuff but he was most known as a newspaper and magazine publisher so in the sixty seventies eighties publishing was a great business it wasn't like today where it was a lot harder and it was kinda like the software of the time so you can create a magazine and you can make a fair bit of money and that's what he did and you probably don't know who he is if you're in america but you might know max magazine and that's one of the magazines that he founded but he had maybe ten twenty thirty different titles in england and when he died he was probably worth close to a billion dollars maybe seven hundred million pounds i believe and so he was a a wealthy successful rich guy who ended up writing about it it wasn't the other way around a guy who got wealthy writing about it which is important and he is very to the point he's almost like a richard branson meets a mick ja so he's kind of eccentric but he's a little bit raw and he's very to the point and he talks about his past doing drugs and drinking alcohol and partying and so he's like kind of an interesting get character and there's one sentence in there so the book talks about getting wealthy and like steps that he took and how his view on life is and how he manages people and really tactical stuff on running a business collecting money things like that but he gives an intro and he tells all the reasons why this book is interesting and then there's one sentence in there that caught my attention and he goes he basically says this whole book i'm gonna teach you how i got wealthy i'm gonna teach you what i've learned about wealth but i wanna preface this by saying one thing if i had my time again knowing what i know today i would dedicate myself to making just enough to live comfortably as quickly as i could by the time i was thirty five i would then cash out and retire to write poetry and plant trees then he goes on and say says but i was like a punch drunk a punch drunk boxer and i couldn't give up business although looking back i wish i did and and felix dennis i think he was in his late sixties he died unmarried without kids he seemed generally generally happy generally happy but he said that he wish he could have done it all over again and of course he does say that when he he would have wanted to to live comfortable he needed sixty to eighty million dollars which is definitely wealthy and that's a ton of money but his point was that he just wished that he wouldn't have kept going and that got me interested that changed my mindset because i think you know when you start businesses or when you try to get wealthy this is something you should do forever you and you and you shouldn't necessarily retire it was kind of funny hearing this guy say that so i got really interested in this idea about eight years ago and i built my life around it and eventually i found this subreddit called fat fire so fire means financially independent retired early and historically it it it met people whether you're a teacher a nurse just you work at a a big company you can make you know fifty hundred hundred and fifty two hundred fifty thousand dollars so a pretty good but maybe not outrageous a salary and you live very very very frugal and you work your hardest to save around five hundred thousand to a million to a million and a half dollars which you could definitely do if you make a hundred and fifty grand a year and you have a spouse that earns something like that and in doing that you save about a million bucks and you generally generally live off of three to four percent of that money which would be about forty thousand dollars that you live off of but you don't have to work and so you can retire early but fat fire is a little bit differently typically people refer to fire as this mentality of like saving a ton and then living frugal fat fire is different fat fire is people who wanna retire early and be financially independent but they don't wanna live frugal they wanna be fat so they wanna be willing to spend ten twenty thirty fifty thousand dollars a month in the retirement which means they need to save a whole lot of money or they need to sell business or they need to work somewhere that earns a whole lot of money and they can retire with a bunch jen the this number it varies you know on this subreddit most people would agree that that number is around five million dollars in liquid assets so you have a business that you sell or you're you and your spouse work really hard and you save up this money and you get around five million some people think it's a little bit lower at about three million people think it's much higher at ten million i would say it really depends on where you live if you live york city that number about ten if you live in a lower cost of living i would agree that number is about three and so it's people who wanna save that amount of money and then they wanna live off a percentage of it typically around three four five percent of that money and this subreddit is really interesting because there's about a hundred and fifty thousand people subscribed to it and people talk about stuff that you can't really talk about in public on twitter with your friends because it's kinda douche sheets it's kinda lame to talk about you know i've saved to a million how do i get the three million now or what investment strategy should i do which weapon wealth manager should i use do you guys what are some extravagant expenses that you guys spend on that make your life better like a chef a nanny whatever and it's really fun you get really interesting insights and so if you're already wealthy or on your way to becoming wealthy it's a really fun way to like share ideas and get intel and see how other people are doing things and and it makes your life a little bit better i've gotten a lot of amazing tips and if you're not wealthy it's a really great way to see how wealthy people think and it's a great way to ask certain questions and just to read the comments it's it's it's just a ton of amazing information that you can't find anywhere else and so i wanna tell you a little bit about the eight or nine most interesting things that i've learned from fat fire and then also i wanna talk to you about what there's this amazing comment where someone talks about the difference in wealth levels from ten million to thirty million to a hundred to a billion and what this person has seen is the difference it's someone who who has experienced that so first let me tell you a few things that i've learned about fat fire the first your safety withdrawal rate that's one of the biggest things that i learned and so basically what this means is your safety withdrawal rate is the amount of money that you can pull out of your nut so basically if you save five million or ten million or one million dollars how much money can you withdraw from that to live while it's continuing to grow your principal so if you look at the trailing in one hundred years the stock market has grown around seven and half percent a year of course you don't wanna just have your money grow and take that same seven percent every single year otherwise your principal is not gonna grow and then if the stock mart goes down one year and then down another year it's like oh shoot start getting a little nervous and so your safety withdrawal rate is the amount that you can withdraw while your principal still grows and based off of the trailing hundred hundred fifty years however long we've had the this data which it it's based off a a a famous study so it's quite a long for time it's how much money you can withdraw and basically never run out of money and your print principal still grows that number is around three to four percent some people think it's as high as five percent and so what that means is if you save ten million dollars you could spend around three hundred thousand to five hundred thousand dollars a year risk free of course you know a pandemic can happen or something crazy can happen and maybe your risk you you get a little scared but just looking at like a hundred years of stock market data that number is very very very safe that's really interesting the second thing that i've learned is this thing called an asset backed alone there's a bunch of different names for it it's basically a line of credit and so what this means is once you have saved like one two three million dollars you can go to a big bank like morgan stanley i imagine chase a lot of these big banks they have wealth divisions and if you have a little bit of money stayed with them you know a couple million bucks this is something that's absolutely crazy that i learned about in the subreddit years ago when i was early in my journey you can get a loan very easily up to seventy percent typically the the ranges vary up to seventy percent of your assets and you could use that money for a variety of things so you can use that money just to live you can use that money to invest in other stocks you can use that money to buy a house now get this oftentimes this loan is based off this thing called the i believe it's called the london bon exchange l and so it's the it's this the this bond exchange in london that sets the rates for certain bonds right now it's low it's like one percent and you can withdraw the again the ranges depend on how much you withdraw and how much money you have with the company but you can withdraw a fair amount of money up to seventy eight percent of your money with a interest rate that's incredibly low like one percent two percent super low and this is one of the ways there's many ways but this is one of the ways that the rich get richer so basically often and this is what i've learned about in this subreddit often people will use this loan and they'll live off the interest so they'll they'll have their not they're there's their their big liquid net worth stash away and and into equities and bonds and they'll withdraw this money and sometimes they'll invest that money back in the stock market which makes seven and half percent and then that one percent is what they owe back to the bank and they live off that six percent difference or they use that money to buy a house or they use that money to spend just on their life or they pay taxes and they don't pay that loan back until they die and before their kids aren't inherited any money they pay that loan back it's incredibly interesting it's it's something that blew my mind when i first learned about it the third thing most people who hit fat fire they keep working we have this idea of you just sold your company you just made all this money now you're gonna go retire to the beach some people do that what i've learned in fat fire and amongst my friends is people who do that they typically only do it for a very short amount of time sometimes that could be five or ten years which isn't that short oftentimes it's about a year then they get bored and they go back to work and that is not the goal that i've learned about about being wealthy it's not so you don't have to work it's so you can choose to live your life how you wanna live that means you can go and work at a nonprofit it means you can start a business it means you can go get a job but the whole point is that you have this thing that you can rely on this this place of solid to this place of of what a lot of people describe as f you this this fuck you position where you don't like your boss tell to f themselves you don't like the situation quit tell them that themselves you have what you need you don't need anyone that's the point of this is to be in the position where you don't need anyone not necessarily to stop working because what i've seen is most people virtually everyone i've seen goes back to work and so you think you wanna retire you'd be shocked after a few months a few years most people all go back to work the fourth thing that i've learned it's amazingly easy to spend a lot of money now a lot of you who are frugal of which which i consider myself be frugal as well i track my expenses it's a lot of people don't even i mean if you're wealthy a lot of people don't track their expenses that much or they just don't care and it's very easy for them to spend a lot of money there's some amazing threads on this subreddit and they'll say what's your expenses and people say i've spent around sixty five thousand dollars a month for the last twelve months and frankly i have no idea how it got that high i i didn't track it and i just tracked it for the sake of the subreddit and those are also some of the questions that people ask on the subreddit how much are you spending each month what are you spending on what are you spending on that makes you happier what are you spending on that is overrated and a lot of people will post their monthly burns it's astonishing high for a lot of people and they'll tell you often i have no idea how we got here and i'm not happier but sometimes they are you know there's a a a a few things that people like they like spending a lot of vacations they're like spending a lot on health which tends to be common but it's amazing how you guys may think oh i spend five ten grand a month i feel great i can't imagine spending more it's shocking some of these comment how they just upped their spend and they don't even realize it and they kinda get addicted to it but you don't have to spend a lot and that's another interesting thing there's a lot of posters on this subreddit jose say i spend fifteen thousand dollars a month i'm incredibly happy i feel like i live rich i feel like i have everything i need and i don't really my happiness i used to spend a lot doesn't really change with that spending i myself and in this category i i don't spend too much money a month and i'm i feel like i live quite wealthy and quite happy of around fifteen thousand dollars a month but when you have family when you which i don't i don't have kids and when you have when you live in a really fancy area like a new yorker or a san francisco it adds up fast if you have three kids and you wanna live live a high life and you'd be shocked and that's an interesting thing that i've learned in this subreddit now the sixth thing that i've learned is that there are definitely there's definitely a number that matters and the whole idea of fat fire is that you wanna know what your number is you wanna guess what your number is and you and you wanna get there as fast as possible you wanna put in a lot of work while you're young get to that number then decide what you wanna do and that's kinda like the premise of this of this community and from scrolling through this subreddit and reading it every day of which i do for years and years that number for a lot of people is like one to two million dollars where it's like alright i feel like i have security i mean i'm not gonna retire yet i don't feel uncomfortable comfortable retiring it but i feel pretty good with like two million dollars typically people who earn ten million on that subreddit say i can live anywhere i'm not flying private but i will never round of money and i feel very secure and i feel very very happy and i think that there's this like think with the wealthy people and they'll say yeah it doesn't make you happy in some regards that's true but i would say it's mostly true after you get over a threshold of around like one or two million from my reading this subreddit that's what i what i think is true that's the number seven a lot of people in the subreddit don't like wealth advisors so i have a lot of friends who are not very wealthy and there's giving a wealth advisor one percent of their money and i think personally i agree with the subreddit the general subreddit sentiment i think that wealth advisers if you are worth less than ten million dollars for most people i think it's crazy why i think that you could put most of your money depending on what your age is if you're pretty young i think you could be pretty aggressive and put eighty five to ninety percent into a vanguard total market fund and the rest in some general bonds and cash mix and not really work that hard and managing your money and not have a wealth advisor and i think you'll be totally fine i think if you have a a fee advisor and you're not doing really a lot of complicated stuff which most people don't need you don't really need a wealth adviser and that's what i learned about in this subreddit of course don't take anything about but i'm saying as advice so do your own research number eight for years i used to make a joke that i thought the only way that you can get really really wealthy is to start a business or become a salesperson because salesperson have salespeople people have unlimited upside starting a business also at you have a lot of upside i am so wrong there are so many people in this subreddit who have made an astounding amount of money ten twenty thirty forty million dollars working at large tech companies particularly it seems working at tech companies that they started when it was around one to two thousand people so it was a relatively stable they can earn a relatively large amount of money two three four hundred five hundred thousand dollars and they were also given some stock rs asus that either was ill liquid and they just held onto to it and then they wait until the company went public or it was already liquid was a company that was already public but it was incredibly fast growing i my company was acquired by hubspot one of the reasons why i wanted to tell to sell to them was because i thought their stock was gonna do really well i saw it from the outside and i thought this is looks like an interesting company enterprise saas undervalued in my opinion at the time and that's why one the reasons why i did the deal my wife works at airbnb has worked there for five years got in there before it went public i saw that and there so many people that work at facebook netflix you know the fangs so that's facebook amazon netflix google microsoft and there's other people who work at different companies like uber door dash things like that the companies that are really stable they got in when the company wasn't small so it's not like a totally lottery it's not a a lottery ticket it wasn't like they were in the first ten employees but they could've have been in the first handful of hundreds or the first thousand ish and they picked a good company that paid them a lot of money and they also got stock options and that works actually think joining an early stage startup is incredibly risky and i would say that these companies that i'm that i'm talking about they're not that risky compared to other things i don't think they're that risky and in this subreddit i learned there are just the the vast majority of these people don't seem to be entrepreneurs they seem to people who worked at companies and they worked for ten twenty years saving saving saving saving getting equity that went up in value and they hit fat fire status and finally number nine what i've learned in the subreddit is there are so many rich people who complain they do not live life there there's just a lot of threads and these are always fun and interesting to read of rich people saying they have eight nine ten fifteen million dollars but they're afraid to quit because they wanna earn a little bit more they're afraid of of running out they're afraid of a lot of different things they are not living life and i just learned that this money thing it can totally control you and you gotta let go sometimes and and live life it's an incredibly fascinating subreddit i think everyone should read it don't comment if you don't want to but just read it so it's called reddit fat fire it's amazing it will change your game and your mindset towards money towards life the name of the game is to save and earn as much as possible so you have a position of fu and you can keep working and you cannot keep working i think most people will keep working in some capacity but it just means you can get there as fast as possible and live a good life or at least live life on your terms alright everyone this episode is brought to you by hubspot crm platform it's very simple this is really easy stuff but it sounds complicated i'm gonna break it down it helps you make landing pages so you can align with key sales plays and even personalized content for a complete strategy so basically you wanna sell something you spin up this landing page people come they see it it's customized to the person seeing it boom you get the sale number two documents you can use documents to manage a library of approved sales enabled assets so your content will always be on brand and three quotes create a beautiful looking quote or proposal in seconds hubspot quoting capabilities often also give you the option to collect e signatures or receive payment via stripe oh music to my ears hubspot learn more about how you could scale your company without scaling complexity using hubspot dot com now i wanna get to the interesting part so there's an amazing comment that has been shared a ton and it's where there's a a poster who says i'm you know i'm relatively wealthy but for some reason i've been around a lot of wealthy people my whole life because of the work that i do and the group that i run in i've been surrounded with a bunch of people who are worth tens of millions hundreds of millions and i've actually dated the daughter of a billionaire several several years ago so i've gotten an interesting peak into people's lives on on what it means to be wealthy and they broke it down and i'm gonna read to you some of the highlights alright so there's levels to different wealth so this poster says he thinks the levels are ten million to thirty million thirty million to a hundred million a hundred million to a billion over a billion and then he has a totally separate category that i didn't mention too much which is tens of billions the ten to million liquid crowd at this level you can live how you want your needs are met you can live comfortably at four to five star level you can book a two thousand dollar suite for a special occasion you can fly internationally first class sometimes you have a very nice house you could afford any healthcare you need no emergency financial situation can destroy your life but you are not rich in the way that money doesn't matter you still have to be prudent and careful with most decisions unless you're the upper end of the scale where you truly become insulated from personal financial stress because business stress exist at all levels the banking world still doesn't classify you though as ultra high net worth the next level thirty to a hundred million at this point you start playing with the big boys you can fly private although you normally charter a jet or you have a fractional owned jet through netflix checks or something like that you stay at five star hotels so you have multiple residences you vacation in the prime time so you can ski and ski out at ave villa and aspen for christmas or go to monaco for the grand prix things like that you're willing to spend five k to twenty k per night you run or have a controlling interest in a big company and you socialize with congressman senators community leaders things like that in beverly hills though you still just a minor player at eighty million unless you really throw your weight around and pay out the nose you might not even get a table at the city's hottest restaurants you can buy any car you want you have personal assistance and you're starting to have people who handle things for you you can travel anywhere and style you can buy pretty much anything that normal people would think of as rich people stuff that's pretty interesting alright a hundred million to a billion it's a wide range but life doesn't change much worth two hundred million to nine hundred million at this point you have a private jet multiple homes with staff elite cars in each home ownership or significant control over a business that most people have heard of you're able to socialize with movie stars politicians rockstar stars corporate elite aristocrats everything you may not get enough invite to every party but you certainly can go anywhere you want you have people and you have staff in the world is full of yes men your ability to buy things becomes an art you have a fancy ferrari though that you love but your billionaire friend thinks it doesn't really handle well and has a one of only five existing in the world type of car and you become en you have a bunch of beautiful women who wanna be with you you probably won't be emotionally connected to them and damn it's incredibly hard to build relationships at this level now finally here's what the sky says about a billion i'm going to exclude the ten billion crowd because they live head of state life but at one billion life changes you could buy anything anything in broad terms this is what you can buy access you now can just have your staff contact anyone and they will call you back i've seen this hand and it's mind blowing the level of access in respect that one billion gets you in this case i wanna speak with a very well known billionaire businessman and billionaire one called billionaire two and mentioned that we should chat and boom got it yes you can buy influence as a billionaire you have many ways to shape public policy and public debate and you use them this is not an evil way the ones that i know are passionate about ideas and trying to do what they feel best just like you would but they just had an hour with the governor governor privately or the secretary health and they buy ads or lobbyists the amount of influence you can get can be heavy time you can buy time yes literally never wait for anything travel you fly private show up at the airport sit down in the plane the door closes and take off in two minutes you fly directly to where you're going the plane waits for you if you decide you wanna leave at any time you dry or you or you take a helicopter and the pilots and steward are your employees they're waiting to take care and handle you how about dinner your driver drops you off at the front door weights a few blocks away for however long you need the best tables waiting for you the celebrity chef has prepared a meal for you because you gave him so much catering business he wants to be very happy and he ensures service is impeccable golf your club is so exclusive there is always a tea and no wait time going to the super bowl grammy you are whisk behind velvet ropes and escorted to pass any in all lines experiences dream of it and you can have it want to play tennis with pete san not him in particular but you get the idea call his people for a donation of a hundred thousand dollars there's charity you could play it you could probably play a match with him like blink one eighty two there's a price and they would simply come and play your private party la art your people go range for the curator of the louvre to show you around and even show you masterpieces that you have not even know existed love nascar how about racing the top driver on a closed track love science have dinner with bill nye and neil d girls tyson love politics have hillary clinton come speaking of the dinner for you and your friends just pay her speaking fee your mind is the only limit to what is available because donations and fees can get you anyone the same is true with stuff if you like piano how about only one mo used to compose music this type of stuff you can do too impact your money literally changes the world and changes lives it is almost too much of a burden to think about clean water for a whole village chu change a dying child needs a transplant hell you could just build and fund the hospital and get it done respect the respect you have at this levels over the top you are the man in almost every circle governors look up to you fortune to five hundred ceos look up to you president and king looked up to you as a peer perspective the wealthiest person i've spent time with makes four hundred million dollars a year i couldn't get my mind around this okay let's compare with someone who makes forty thousand dollars a year four hundred million dollars is ten thousand times more let's look at the prices you might look at a new lamb two hundred and thirty five thousand became twenty three dollars and fifty cents first class ticket international ten thousand dollars becomes one dollar a full time executive helper eight grand a month becomes eighty cents a month a ten million piece of art one thousand dollars expensive so you have to plan a bit but the best week in new york city ten thousand dollars a night that's like one dollar a night a fifty million dollar home in hampton five thousand dollars there's literally nothing you can't buy except love sorry to sound so tight but nearly impossible to have emotional relationship at this level it is hard to sacrifice for another person when you're never asked to sacrifice for anything money can solve all problems so you offer it your time is so valuable and it makes you lose connections with people it's hard to find love it's hard to find relationships that's the guy answer he was in the subreddit there's a lot of a amazing stuff about the subreddit i love it so there it is it's called fat fire i also think you should read the book how to get rich by felix dennis but for sure check out the subreddit it's amazing talk to you soon let me know if you like this episode the sam and twitter we can do more of them talk soon