Your point about how people often don’t want to spend capital once they retire is an interesting one.
I wonder if the answer could be in the logical conclusion of what it means to do the opposite. Ie if you start to use up your resources they will by definition one day run out.
The next logical step is to accept that one day you won’t need any more capital because you will be dead.
Therefore, by only spending income from your capital you can carry on with the illusion that you will live forever.
Time is money of course. But in a way, once you retire money is time. But of course we all know deep down it isn’t.
You sign up with an expected expiration date, say 90 years old, then are free to spend all your savings up until then. If you manage to outlive your expected expiration, the insurance will indefinitely cover you at your historical average rate of spending.
“Consider your savings a gift from your former self” sounded really familiar to me… then I remembered that you had a similar thought about fellowships in January! Was a helpful reframing that I've been trying to embody and wrote more about: https://kzhai.substack.com/p/034-too-unlovable-to-succeed-pt-7
> wasting time chasing a monthly recurring $100 when I could just try to spend more time thinking through what it make take to sell a $25,000 workshop to a company doing work I enjoy?
> people are seeking permission in the form of money to live their lives
I think it’s in some respects that people want permission to live, but that this is more an existential problem that even if solved wouldn’t solve the material problem.
People struggle more so to imagine services they can provide a sufficient number of companies that would be worth a lump sum payment of $25,000. They find it much easier to imagine providing $1,200 worth of services spread over the course of a year.
I could be wrong, but the economy supports far more of the latter opportunity, no?
On the $25k, yes - less but also less competition. I'd say it requires more effort to sell too. But probably not proprotional to $1,200. As I've increased prices, I've just got better clients - but theres a subtle link between confidence and price that i had to ramp up over years
I’d be very curious to learn what other sorts of models besides “project-priced” (lump sum) freelance work, or custom tailored workshops are possible offerings that people might seek out to avoid the monthly income mindset. As you say, we don’t hear about them, but many people might pursue them if we had a good list
I just did some GPT brainstorming off a prompt for "lump sum mindset" vs. "paycheck mindset"
Here was the prompt:
The “paycheck mindset” can be defined as the desire to want to do work that brings in consistent but smaller-ticket revenue. An example might be trying to find business models that bring in $100/month from a dozen clients, bringing in a total of $1,200. In other words, 12 smaller revenue events. The premise of this is to lower the risk for the customer, and spread risk of losing any given customer on the part of the service provider
A “lump sum mindset” can be defined as the desire to get fewer, but higher-revenue income events. An example might be running creative workshops or software training for a team at a company. In this model, one would bring in a $1,200 lump sum payment in a single event, rather than spread it over multiple events. The advantage with “lump sum mindset” is doing work that is perceived as higher value, both from the customer’s perspective and in that it’s more enjoyable for the service provider
Some of my own answers, as well as some of the better answers from GPT I liked after running it a few times:
What causes paycheck envy and what to do about it? Love the question!
One thought: Net income is a proxy for usefulness. So spending more than you make feels needy.
Why do we prefer steady income over windfalls? Because usefulness is not a score you tally up. It's a state of being. So no matter how "useful" you've been (roughly and inaccurately measured by income), once that stops, you feel like crap for thinking you're becoming a needy bum.
On a bit of a tangent, this may partially explain why people tend to favor dividend-paying stocks. They love seeing that usefulness come in.
Great point on the feeling of usefulness. This is helpful. The reality is all things converge on what it *feels like* to be on sabbatical. Maybe paycheck envy can be tackled by doing other useful things even if they don’t bring in cash.
Yeah. Got examples of useful things you could do that don't bring in cash? How do you know they're actually useful? And how do you convince your brain that's the case?
That’s so true about managing spend to cash flow, it’s been a very tough adjustment to think of my pre-earned income as available income, many years of programming are tough to break !
I definitely have paycheck envy, which is crazy because when I was employed I earned more than many of my friends and family. I “pay myself” from investment accounts into my checking account to trick my dumb monkey mind.
I love the reframing of money as a gift from your past self and I’ve also found that thinking about the randomness of money helps devalue it as well. Funny how we spend so much time learning the value of money, which leads to a modicum of success, and then have to unlearn it to some extent.
I do the same thing ! Monthly deposit from my savings to checking , I went one step further and put the savings in a different bank. Funny how the human brain works ...
Really feeling the idea for your next book. You’ve got to do a whole chapter (or section) on your approach to finding a node vs a niche.
oh yeah that will be in there - good reminder
As I’m not familiar with it, what’s an economic node?
mode not node
"find a mode" vs. "find a niche" = find a mode of creation you can sustain
I recommended reading James Carse’s Finite and Infinite Games. The concept of an infinite game is related to this idea.
Yeah I had a typo on that. My bad!
Ahh yes, and thanks
Your point about how people often don’t want to spend capital once they retire is an interesting one.
I wonder if the answer could be in the logical conclusion of what it means to do the opposite. Ie if you start to use up your resources they will by definition one day run out.
The next logical step is to accept that one day you won’t need any more capital because you will be dead.
Therefore, by only spending income from your capital you can carry on with the illusion that you will live forever.
Time is money of course. But in a way, once you retire money is time. But of course we all know deep down it isn’t.
Is there such a live as "outliving insurance"?
You sign up with an expected expiration date, say 90 years old, then are free to spend all your savings up until then. If you manage to outlive your expected expiration, the insurance will indefinitely cover you at your historical average rate of spending.
yeah annuities are basically this. https://www.fidelity.com/annuities/overview
“Consider your savings a gift from your former self” sounded really familiar to me… then I remembered that you had a similar thought about fellowships in January! Was a helpful reframing that I've been trying to embody and wrote more about: https://kzhai.substack.com/p/034-too-unlovable-to-succeed-pt-7
> wasting time chasing a monthly recurring $100 when I could just try to spend more time thinking through what it make take to sell a $25,000 workshop to a company doing work I enjoy?
> people are seeking permission in the form of money to live their lives
I think it’s in some respects that people want permission to live, but that this is more an existential problem that even if solved wouldn’t solve the material problem.
People struggle more so to imagine services they can provide a sufficient number of companies that would be worth a lump sum payment of $25,000. They find it much easier to imagine providing $1,200 worth of services spread over the course of a year.
I could be wrong, but the economy supports far more of the latter opportunity, no?
Yeah I think the existential point is spot on
On the $25k, yes - less but also less competition. I'd say it requires more effort to sell too. But probably not proprotional to $1,200. As I've increased prices, I've just got better clients - but theres a subtle link between confidence and price that i had to ramp up over years
I’d be very curious to learn what other sorts of models besides “project-priced” (lump sum) freelance work, or custom tailored workshops are possible offerings that people might seek out to avoid the monthly income mindset. As you say, we don’t hear about them, but many people might pursue them if we had a good list
i think its less other freelance things than other financial transaction modes. things ive seen:
- success payments (payment if helps hit metrics)
- gift payments (basic fee and then optional "pay what feels right" bonus)
- phantom equity (get payouts equivalent to an equity stake)
Interesting payment models!
I just did some GPT brainstorming off a prompt for "lump sum mindset" vs. "paycheck mindset"
Here was the prompt:
The “paycheck mindset” can be defined as the desire to want to do work that brings in consistent but smaller-ticket revenue. An example might be trying to find business models that bring in $100/month from a dozen clients, bringing in a total of $1,200. In other words, 12 smaller revenue events. The premise of this is to lower the risk for the customer, and spread risk of losing any given customer on the part of the service provider
A “lump sum mindset” can be defined as the desire to get fewer, but higher-revenue income events. An example might be running creative workshops or software training for a team at a company. In this model, one would bring in a $1,200 lump sum payment in a single event, rather than spread it over multiple events. The advantage with “lump sum mindset” is doing work that is perceived as higher value, both from the customer’s perspective and in that it’s more enjoyable for the service provider
Some of my own answers, as well as some of the better answers from GPT I liked after running it a few times:
Ghostwriting
Branding Campaign
Catering (as opposed to running a restaurant)
Market Research Analysis
Trend Analysis
Social Media Campaign
Workshop/corporate training/webinar
PR/Reputation management campaign
Exhibition Design
Event planning
Retreats
Strategic consulting
Business process optimization
Content strategy
Talent acquisition services
Copy-editing and proofreading
Corporate software training
Event photography
Home organization and decluttering
What causes paycheck envy and what to do about it? Love the question!
One thought: Net income is a proxy for usefulness. So spending more than you make feels needy.
Why do we prefer steady income over windfalls? Because usefulness is not a score you tally up. It's a state of being. So no matter how "useful" you've been (roughly and inaccurately measured by income), once that stops, you feel like crap for thinking you're becoming a needy bum.
On a bit of a tangent, this may partially explain why people tend to favor dividend-paying stocks. They love seeing that usefulness come in.
Great point on the feeling of usefulness. This is helpful. The reality is all things converge on what it *feels like* to be on sabbatical. Maybe paycheck envy can be tackled by doing other useful things even if they don’t bring in cash.
Yeah. Got examples of useful things you could do that don't bring in cash? How do you know they're actually useful? And how do you convince your brain that's the case?
That’s so true about managing spend to cash flow, it’s been a very tough adjustment to think of my pre-earned income as available income, many years of programming are tough to break !
I definitely have paycheck envy, which is crazy because when I was employed I earned more than many of my friends and family. I “pay myself” from investment accounts into my checking account to trick my dumb monkey mind.
I love the reframing of money as a gift from your past self and I’ve also found that thinking about the randomness of money helps devalue it as well. Funny how we spend so much time learning the value of money, which leads to a modicum of success, and then have to unlearn it to some extent.
Great looking squad by the way 💚
I do the same thing ! Monthly deposit from my savings to checking , I went one step further and put the savings in a different bank. Funny how the human brain works ...