Cheap, Simple, and Easy

I think it is easy to confuse the trees from the financial forest. In my opinion, financial plans should have roughly four legs. The table should be propped up with W2 wages, broadly indexed stocks, real estate, and side hustles. That’s it. There really don’t need to be further layers of complexity (I guess you could also add in the appropriate insurance). Yet time and again, the majority feel that financial independence is built on some magical formula that is difficult to comprehend and duplicate. Although hard to achieve, in reality financial independence is simple. Better yet: cheap, simple and easy.

These three guiding principles often dictate the majority of my financial moves. If a new plan or investment doesn’t meet this litmus test, it is very likely to be discarded.

Cheap

I’m not referring to the derogatory term here. The better idiom is valuism. I look to find good values and buy at a discount. This could be in the form of flexing my frugal muscles and buying used. Or we could be talking about investment property and hunting foreclosures. And, of course, the stock market is no exception. I especially like to buy when the market is down.

Not only purchases, but also with the business asset class. I started my concierge medical practice with less than a thousand dollars. I am a big fan of lean start-up principles and often start lean side hustles.

Unlike the common saying, I try not to spend money to make money. I would rather leverage human capital to produce my perpetual money-making machines. The problem with capital intensive projects is that they consume the capital that could otherwise be compounding in the stock market.

Cheap, simple, and easy. You work for your money and let your money work for you.

Simple

I never invest in financial instruments I don’t understand. I never start businesses or become a partner in models that don’t make sense. If I, with my medical degree, can’t immediately see the purpose and the benefit of a financial endeavor, then it is not right for me.

I don’t care about explosive returns. I don’t care about taking advantage of inefficiencies. If I can’t quickly discern where exactly I am putting my money or time, I run away as fast as I can.

Simple is the new complex. If you keep things cheap, simple, and easy you are bound to eventually succeed.

Easy

Money is an intermediary. We exchange goods and services that we produce for goods and services that we need. Life is too short to get caught up in difficulties. Too short to get caught up in complications. I am not saying don’t ever do anything that is difficult. I am saying don’t make everything difficult.

Becoming a doctor was difficult but worthwhile. Making money as a doctor should be easy. Leverage medical skills and turn them into revenue streams. Take advantage of the main hustle in the form of a medical practice and then develop a few lazy side hustles to uncorrelate income.

Real estate is no different. If you find the perfect property at the perfect price but it needs extensive renovation, or it is in a bad area that will be hard to find renters… run away.

Or if you find the perfect business but in order to afford the minimum investment you need to over leverage your house…run away.

If it isn’t cheap, simple, and easy…run away.

Final Thoughts

Life can be complex. Relationships are difficult. Don’t expect the same for your finances. Cheap, simple, and easy.

It is the financial mantra that I live by.

How about you?