BS investing, or my crypto misadventures

An evening drawing from last November.

After the recent crypto crash, I did a postmortem on my behavior. What started as casual interest and minor research in crypto last May morphed into me caught up in the wave of greed and irrational exuberance by November.

I thought I’d left that behavior behind after dabbling with (ill-informed) day trading in 2007?


What’s fascinating is that I didn’t need to change our investing approach—stocks plus commercial real estate were working great—but I got sucked in anyway.

Mostly I invested in “blue chip” (ha) crypto like Ethereum or Bitcoin, but I still feel embarrassed to have put (and lost) money in projects like Terra or some alt-coins that…uhh, didn’t do well.

Luckily, I only played with a small portion of our money. I didn’t mortgage the house or force a change in our lifestyle. A reminder to everyone: diversify!

My new #1 goal with investing is to do NOTHING, ZERO, ZILCH if I’m excited by a project or an investment. Before committing, I want to scrub the delusional new relationship energy from my brain.

All in all, I’m treating this as a cheap lesson with life-long impacts. It’s fascinating and instructional to see this chink in my armor. I think I’ve patched it, but shall remain vigilant!

All this leads me this excerpt from this excellent piece, On Bullshit in Investing.

Bullshit in investing, be it wild over-optimism, deception or fraud, is as old as time, precisely because it is hard to resist the promise of easy returns and to tell the difference between innovation and make-believe.

The first step in avoiding being taken for a ride is to recognize that you are a mark for people trying to get rich off your money.

Burn the principle into your brain that financial markets are large and competitive and have a lot of smart people in them.

Easy money-making opportunities are almost never real; professional mercenaries would have found and exploited them first.

High returns with low risk explained away by complicated and nontransparent strategies deserve great scrutiny.

Ask questions; be skeptical; do not assume that just because brand-name firms or authority figures are involved that all is well.

Let’s Talk About Money: How To Build A Strong Financial Foundation

Me rolling large in Laos in 2005! ($10 = lots of these bills.) Yes, I’m wearing a (free) shirt that says COLLEGE.

“What should I do with my money?” is a common question people ask me. They’ve snagged their first solid job or want to wipe out debt from student loans or credit cards. They’re excited to take the next step, and also overwhelmed by the sheer amount of options. Building a financial foundation sounds intimidating.

I love to share what I’ve learned from years of reading about financial topics, plus experience with living below our means and saving/investing. Nothing complicated, just concrete, actionable advice that I wish I’d received early on.

Rather than constrain these thoughts to individual emails, I decided to condense the ideas into a blog post.

This kicks off a multi-part series about getting your financial life in order. Referencing my favorite sites and resources, we’ll travel from deep in debt to launching investing to FIRE (financial independence, retire early) and beyond.

Today, I’ll start with the basics for setting yourself up for financial security down the road. All you van lifers (perhaps) have a head start on this, but I promise there are takeaways in here for everyone.

Getting Your House in Order

When you’re beginning your money journey, you need to build your financial house. And house construction starts from the ground up, not with choosing paint colors or light fixtures. Don’t get distracted with the fancy stuff when you need a foundation, walls and a roof.

Before you even think about investing any money, this means automated finances, ingrained spending habits, a safety buffer, and tracking those dollars.

It doesn’t make sense to heat a home that doesn’t have a door or windows. Investing money before you deal with credit card debt or nail down spending habits is the same.damn.thing.

Just Starting Out: Building the Foundation

Before you can run, you have to walk…but first you’ve gotta crawl. Luckily, you can learn from my mistakes!

When I got my first real job, I made the mistake of thinking, “F YEAH, IT’S TIME TO INVEST.” I was pulling in a paycheck, but after a year of overseas travel, I had zero savings and plenty of student loans.

I was living on a college student’s budget, so I wasn’t spending each paycheck. What did I do with the extra? It sure didn’t look like building a foundation; more like installing a fancy home automation system!

DAY TRADING. I was all over the Motley Fool looking for hot stocks. For suuuure Beacon Energy was going from a penny to $1.50 and Intuitive Surgery was headed to the moon. I was going to be RICH.

Never mind that a) I knew nothing about investing b) there are companies who hire geniuses to profit off over-confident idiots like me and c) even the billionaires who hire those geniuses often don’t beat the market.

Talk about misguided. I wasn’t investing, I was gambling.

With some losses (Beacon went to zero) and lots of reading, I managed to course-correct . Looking back, I wish someone had told me to do the following before even CONSIDERING investing money:

Treat ANY credit card debt or student loans like an emergency

Paraphrasing the mega-popular financial blogger Mr. Money Mustache, debt isn’t something you work on. It’s a HUGE, FLAMING EMERGENCY. For almost everyone, pay off credit cards and student loans before you invest anything!

Use the debt snowball approach: aggressively pay down the highest interest rate credit card, then attack the other with those funds. Here’s another approach.

Automate your finances

Humans are amazing at increasing spending as their income increases. “HOLY BANANAS, I’M RICH!” screams our inner child after a raise.

When you get a raise, celebrate by doing something fun. Then get back to basics. Instead of spending all your hard-earned cash, set up a system for managing your money that saves money before you even have a chance to spend it. This blog series on automating your finances is da bomb.

Rather than (more) new shoes and (another) expensive dinner since you can “afford them,” put your money on auto-pilot. Each paycheck, allocate a percentage to bills, savings, investing, an emergency fund (see below) and specific funds like wedding/house down payment/travel.

Why? If the money never hits your checking account, you’ll never miss it. This is a Super Money Hack, especially as your income increases. Keep living low to the ground and spending in line with your hierarchy of values and the savings will stack up.

Cut Your Spending Where It Matters

The financial wizards at Choose FI have The 10 Pillars of FI for gaining control of the big expenses in your life.

Lower your housing costs. Do you HAVE to live in an expensive coastal city, or does it just sound cool? Forget that – do some geo-hacking! You don’t have to live in the Philippines as a digital nomad either. Boise is an affordable city with amazing outdoor access and there are other fantastic cities that cost far less than places like San Francisco, Seattle or New York.

Even here in Bend (by no means cheap), there are two bedroom apartments for ~$1,000 and house prices that Californians and Seattlites drool over. (Note: I’m aware of the very-real affordable housing crisis, but the impacts of people moving from expensive to relatively affordable locations and driving up prices is outside the scope of this post.)

At the very least, be open to either roommates or a small, affordable space until your money is dialed. However, don’t skimp on location if it means you’ll be driving a ton versus walking or biking. We lived in a 550sf studio apartment (the “itty bitty!”) right in the heart of SE Portland for a year and it was awesome.

Bike whenever possible. aka Get Rich With…Bikes. There’s a reason the IRS reimbursement rate for travel is over $.50/mile – cars are expensive! I’m no car hater and totally get their utility. (I’m driving one today to go mountain biking.) However, when biking or walking is an easy alternative, leave the car at home.

If you must drive, get a cost-effective used vehicle. Cars and their insurance/maintenance costs crush bank accounts faster than King Kong landing on Bank of America without a parachute.

Forget cable. Get Netflix, read books, start a social group, pick up a new hobby…do ANYthing but pay for an expensive cable bill.

Switch to cheaper cell phone service. From Republic Wireless to Google Fi, there are many discount resellers of Verizon, Sprint or T-Mobile.
Once your debt is gone, use credit card rewards to get cash back or travel rewards. Pay off the balance each month. If you can’t control your spending yet, ignore this item like it’s a radioactive T-rex!

Carefully consider the value you gain from eating out. Go to restaurants when you really want to, not because it’s convenient. For example, Chelsea has an important standing lunch date with a friend that is worth the cost. I’d rather cook at home because it’s healthier, (usually) tastier, and cheaper. Plus my fledgling chef skills still need work…

Negotiate! Look at recurring expenses and ask “do I need this.” If the answer is no, see ya! Do you really need a shave club membership? Is the monthly subscription to a Game of Thrones costume box still serving you? If yes, ask “can I negotiate a better deal or change things up?” Phone call time!

For example, last week I called our internet provider and referenced a competitor’s intro deal. A five minute phone call yielded $11/mo in savings, PLUS they doubled our internet speed. I did a similar thing with my office lease.

Start an emergency fund once your debt is paid off

Whoa, all the value-based cost cutting worked and you paid off your debt? Now you get to stack some money.

Take what you were paying toward debt and roll that into savings. (Say you were spending $150/mo on credit cards. Immediately redirect that via your automated finances so that money goes to savings.)

Contribute to it until you get to 2-6 months expenses. (If you spend $3,000/mo, aim for $6-18k; put it in a money market account.) You’ll sleep better with a buffer and won’t have to tap into credit cards if your car transmission explodes or you lose your job.

Some people debate the need for an emergency fund. “That’s what credit cards are for.” I’d argue that until you feel totally in control of your spending, a cash pile is essential. The exact amount doesn’t matter, but having a buffer to handle big one-time costs is tremendously freeing.

Set up a financial tracking system for your money

If you don’t measure your money, you won’t control it. (I’d argue that you can’t.) I’m still surprised by how many people have ZERO clue how much they are spending.

That’s fine if you’re financially independent and can choose to stop working tomorrow. For everyone else, trust me – if you track your spending, it’ll help you save more. Notice I’m not saying create a budget. That comes later. Simply look at your spending each month!

I hear the retorts starting. “Too much time, I can’t possibly, you can’t tell me…” Whaaaaatever. You’ve got time!

Each month, I use Quicken to sync all our transactions and review our spending. This takes me less time than I spend texting my friends each day.

If you can’t invest that paltry amount in your personal finances, you’re not ready to get serious. The Home Shopping Network and the latest Danny Macaskill video can entertain you until then.


I’ve used Quicken for almost two decades and love the ability to run varied reports. The Deluxe version is <$50/year. For simpler online tools, try (free!) or YNAB (You Need a Budget).

Money Management is a Superpower

The magic of all these steps is that being debt free, automating your finances, having a buffer and knowing your spending habits is SUPER empowering. Celebrate because money is no longer your boss.

Now you’ll have cash in the bank in case of an emergency or if the economy tanks. Your credit cards are paying you with points or cash back rather than being a sinkhole of high-interest payments. You’re in control, and that’s a magnificent feeling.

Now what? Investing! Next time, we’ll talk about putting our hard-earned money to work for us instead of the owners of the fancy restaurant down the street.

Crowdfunding the Fair-Haired Dumbbell

Hanging with the old Ford

In 2007, I was a fresh-faced engineer working my first job after graduation and a year of travel. Flush with cash relative to years of penurious living, I wanted to invest my money, and not in old project cars like the above.

My reading list at the time was full of books about Warren Buffett and other money managers. Armed with tactics, I thought I could beat the market. I spent hours each day poring over stock charts, pretending I knew what I was doing.

I didn’t. When the 2008 financial meltdown nuked the market, I got hammered with (most) everyone else. Unfortunately, I had to sell at the bottom to free up cash after quitting my job, locking in the losses. My brilliant wife held onto her stocks through the chaos and came out way ahead.

What We Do Now

Eight years later, my investing style is much different. We mostly invest in index funds and via the stocks of a few companies whose services we use and like (e.g. Amazon, Netflix, Apple). I prefer set-and-forget weekly or monthly auto-investments through Wealthfront. This allows me to rarely think about the market crashing, burning, or whatever strong words the news uses for a 1% daily change. THE SKY IS FALLING! BUY GOLD AND PALLETS OF AMMO!

We also invest in what we know: real estate. Specifically, real estate in Portland, refuge for water-starved Californians searching for sub-seven-figure properties.

The problem is that single family real estate is a long-term play and requires managing the property, finding tenants, and being actively involved. On the other hand, commercial properties require a ton of cash to access or you have to buy a generic real estate investment trust (REIT) that holds shopping malls in the Midwest or office buildings in Florida. *Yawn*

As an alternative, we recently invested in a fun, different building named the Fair-Haired Dumbbell that breaks ground soon. A local developer (and cool dude) named Kevin Cavenaugh from Guerrilla Development is the brains behind this idea. They’ve done other interesting, successful projects in Portland, and this latest will house creative professionals on Portland’s east side. Update July 2016: Here’s a take on the project by the New York Times.

A digital mockup of the proposed Dumbbell. Photo credit Guerrilla Development.

A digital mockup of the proposed Dumbbell. Photo credit Guerrilla Development.

Why Do You Care?

We invested because we support Guerrilla’s mission to keep Portland awesome/weird and not just build boring structures with no zing. The exterior skin is a pattern by an Italian designer. Crazy, ugly, cool? At least it’s different.

Secondly, the Dumbbell is one of the first buildings in the country to use crowdfunding for part of its financing.

To do this, Kevin and Guerrilla Development worked to create an SEC-approved “Regulation A” offering. Basically, it’s a Kickstarter-style way to fund $1.5mm in equity in the Dumbbell. This allows someone to invest as little as $3,000 and get an 8% return from a chunk of the building profits. Certainly $3k isn’t chump change, but where else can you invest in a building for so little?

Sound intriguing? Check out Guerrilla’s investor page or watch their fun video about the project and why they crowdfunded it. We believe in this project and have recommended it to a number of friends. (Heads up that due to SEC regulations, this is only available to people who live in Washington, Oregon, California, Massachusetts, Virginia, and Washington D.C.)

I don’t benefit from writing about this, but merely love that crowdfunding opens commercial real estate to people who otherwise wouldn’t have access to it. I think (and hope!) we’ll be seeing a lot more of this type of financing structure in the future.

Dig this kind of article? Email me if you’d like to hear more about how we invest, what services we use, and other financial-related writing. If you’re into it, I may write more like it in the future.

Holding $50 USD each (in Laos currency) with my buddies Keif and Blythe in 2005. #poortravelingstudent

Holding $50 USD each (in Laos currency) with my buddies Keif and Blythe in a trip overseas in 2005. Yep, my shirt says COLLEGE and I wore glasses back then. #poortravelingstudent