Die With Zero - The Marshmallow test has failed us

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Die With Zero — A Contrarian Take on Personal Finanace

The marshmallow test has failed us.

People everywhere are delaying gratification for too long—or indefinitely—and patting themselves on the back for it.

We spend our waking hours doing everything we can to avoid squandering our money. What we don’t realize is that we’re squandering our lives in the process.

These are all things I learned from reading Die With Zero, a contrarian take on personal finance by Bill Perkins.

Enter Bill Perkins

I was first introduced to Perkins’ bouncy personality through watching high stakes poker tournaments, where the ex-hedge fund manager regularly battles studied poker professionals. There’s nothing poker pros love more than being seated next to a businessman. Perkins is well aware of this—and he couldn’t care less.

The poker sharks surrounding Perkins at highroller poker tournaments are sitting at the table because the math adds up: they expect to finish the $100,00 buy-in tournament with a higher net worth than what they had when they started, on average.

Modern poker has become more and more a game of math. The days of staring a player down to expose their tell or risking your entire stack of chips because of a gut feeling are fading away as new age internet players outnumber the old school ‘feel’ players. Today’s poker professionals weaponize probability and memorize complex decisions trees to gain edges on the field of fellow gamblers.

Perkins isn’t much of a ‘math guy’ at the poker tables, but his contrarian take on personal finance is a result of leveraging his engineering background to address the following question: how do we make the most of our time on earth?

By maximizing fulfilment by minimizing waste.

Perkins wants to die with zero, leaving no wasted energy behind at the end of his fulfilled life. And he believes you could benefit from doing the same thing. You don’t need to be a retired hedge fund manager to see why living according to Perkins’ principles could result in a memorable life.

Here are several of Perkins’ principles underlying his Die With Zero philosophy:

😀 Your life is the sum of your experiences. We can’t simply accumulate experiences right off the bat because experiences have a price. We need to take the intermediate step of earning money first.

💀 Dying with a massive bank account balance is a symptom of an unfulfilled life. Every dollar you don’t spend is a waste of Life Energy and a misallocation of time you’ll never get back.

When you experience something is more important than if you experience it at all, because our ability to enjoy different kinds of experiences changes as we age.

😖 You’re probably saving too much money “just in case”. There’s a better way to protect yourself from unforeseen events than mindlessly piling more money into your savings account.

💪 Your health is a multiplier of lifetime fulfillment. Healthy people have more fun. For longer.

Money as a Measure of Life Energy

Stumbling across the concept of Life Energy forever changed the way Perkins viewed money—and this transformation happened well before he had a chance to amass millions of dollars, so pay attention:

Life Energy is all the hours you’re alive to do things.
Whenever you work, you trade Life Energy for money.
Therefore, your money represents a receipt of spent Life Energy

This mindset changes everything. That new coat you were thinking about buying? That’s no longer just a $250 coat, that’s a coat that costs 10 non-refundable hours of your life at your $25/hour job. Is it worth it?

That’s up to you. The objective isn’t to minimize spending or practice frugality, but rather to expose the non-financial costs incurred with every purchase. Especially ones that cost time you’ll never get back.

Evaluating your life through the lens of Life Energy can be a real breakthrough. Jumping ship to a new company under the promise of a large raise sounds like a financial win. But if the extra income comes with added stress, a long commute, and a difficult manager, you’re paying a higher price in Life Energy for every dollar earned.

This is the core belief driving Perkins’ desire to die with zero: every dollar left behind represents unrealized experience. If you earn $45,000 year and die with $90,000 in the bank, that’s more than 2 entire years of hard work going to waste—considering you never redeemed your payment, you essentially worked 2 years for free.

Tiny Deaths

When you experience something is just as important as whether you experience it at all. Understanding this will instantly change your perspective on spending more money on experiences earlier in life.

  • Disney World is a dream come true at age 10, but a total drag at age 17
  • Navigating the jungles of Southeast Asia is the ultimate adventure in your 20s, but becomes too big of a mission to take on at age 50
  • Snowboarding the most famous mountains in the world is an admirable bucket list item—until you’re 70 or older… then it’s a death wish

The day you die and the day you stop being able to enjoy certain experiences are different things. If being mindful of your mortality is a superpower, then being mindful of impermanence is a hyperpower.

There’s a ‘last time’ you do everything we do. And we almost never see it coming:

  • A last time you walk your family dog around the block before you move out
  • A last time you read a familiar children’s book to your daughter before she unexpectedly grows bored of it
  • A last time your parents give you a hard time over something silly before they’re not around anymore

As Perkins puts it, the endpoints of experiences in your life are unknown. You will experience thousands of tiny deaths throughout your lifetime. Entire stages of your life expire without prior warning.

It’s crucial that we break out of our routines every now and then to do something memorable before it’s too late.

The Mindless Saving Loop

Nassim Taleb famously claimed the three most harmful addictions in life are heroin, carbohydrates, and a monthly salary.

Once we start saving money and marvel at the size of our savings, it’s hard to stop saving. We shift the goal posts: what was once a $5,000 emergency fund has become a $10,000 emergency fund, then a $20,000 emergency fund after completing further mental gymnastics and “what if” scenarios.

The habit of mindlessly saving more money is hard to break. Perkins shares that there are people in their 70s, still adding money to their savings for the future, refusing to dip into the massive amounts of Life Energy they’ve been accumulating for decades.

Most people focus on growing their savings so (a) they don’t run out of money when it comes time to retire, and (b) so they’re prepared for a medical disaster. The problem with this is that few people know how much money is enough money.

Let’s use a medical disaster as an example: how much money is enough? To put it bluntly: no amount of savings will cover the costliest outcomes. Cancer treatments can cost upwards of $500,000/year—your savings won’t save you in these scenarios.

Perkins uses the grim example above to illuminate how, when the costs of medical care are uncertain, people continually save more and more towards an impossible goal they will never reach. Saving for specific, attainable goals can be good. Saving indefinitely at the expense of your growth as a person and your memory bank, which you will later retire on, is shortsighted.

A solution to breaking free of the savings loop is to trust the professional risk calculators: buy insurance.

Insurance companies quantify risks better than we can as individuals. They take a healthy fee in the process of smoothing our uncertainty, but they’re also freeing us from mindlessly locking up money out of habit for the rest of our lives.

Insurance products worth knowing about:

  • If you’re afraid of dying too soon: you want protection against mortality risk (i.e. traditional life insurance)
  • If you’re afraid of living too long and running out of money: you want protection against longevity risk (annuities)

Perkins mentions these insurance products can be complicated. Annuities (longevity risk) are a bad investment on paper, yet a useful way to prevent over-saving. Consult a fee-based financial advisor on your own to discuss which insurance products (if any) are right for you.

The Best Investment You Can Make

Investing in your health is the best investment you can make. Do not write this off as a cliché.

Your health is a multiplier of lifetime fulfillment: investing in your health is investing in every single subsequent experience you have.

Nothing has a greater effect on your ability to enjoy experiences at any age than your health. And the best health insurance you can get comes in the form of preventative care.

Perkins makes an important distinction between your chronological age and your biological age. The average 60 year-old isn’t going to be in good enough shape to experience as much as the average 30 year-old. But there are exceptions to the rule.

By investing into your health early and often you can put yourself in a position to be an exception to the rule, extending the amount of time you have in this lifetime to enjoy physically demanding experiences.

Conclusion

The game of poker is about maximizing your probability of winning the most amount of chips possible. In Die With Zero, Bill Perkins argues the game of life is about maximizing fulfillment, leaving behind as little wasted Life Energy as possible.

There were many interesting concepts left out of this article, including why Perkins thinks we’re doing inheritances all wrong, why the 50/30/20 savings rule is busted, and when you should start dipping into your savings.

Buy ‘Die With Zero on Amazon