Lessons from the 40/40 Club. My Masters Class. Part I.

March 10, 2022

I have a birthday this week. I’m not quite over the hill but I am admittedly nearing it. It’s been one helluva ride and as I turn the BIG 40 I can’t help but think about how incredibly blessed I am. As I stop to think about the last 40 years I think about all the intangible gifts or shall we say lessons I’ve received that I want to give to my children- lessons that have been passed along to me by family, friends, mentors, and others.

Note: these are in no particular order and in a world of political correctness, let me say that I am a black, privileged, well educated, Christian, cis gendered man. I am a husband, father of 4, son, brother, uncle, cousin, friend, and mentor and as such these are MY lessons which will inevitably mean it will not resonate with everyone.

  1. Every person has three versions of themselves to deal with:
  • The person they think others see.
  • The person they think they are.
  • The person they really are.

In this text, tweet, twerk world most people spend all of their time on the person others see which is typically an altered version of reality:

  • Staged pictures on a private jet.
  • Displaying a life of excess, leisure, and ease.
  • Rented cars and homes portrayed as being owned.

It’s a waste of time. The only person that really matters is who you really are. Are you comfortable with who you see when you look in the mirror? Take time to invest in that person and spend less time investing in the fake you others see.

Photo by Luigi Estuye, LUCREATIVE® on Unsplash

2. It’s not how much you earn, it’s how much you save. This lesson is courtesy of my Mom. She said it to me all the time growing up. When you are young you don’t have the experience and vision to understand the amazing power of compounding. And you might be reading this thinking the same thing. But stick with me. I want to illustrate this point with the stories of Kathleen Magowan, whom you have probably never heard of and Mike Tyson, who you probably know well.

Magowan, who died on August 7, 2011, taught first grade in Simsbury, CT for 35 years and never brought attention to herself. Magowan lived in a comfortable but unspectacular home on busy Route 10 in Simsbury that sold for less than $250,000 after her death — not because the house was small but because the house had not been renovated in decades (see point 7 below).

So when she showed up to a law firm and asked for help managing her estate, attorneys were initially confused as clients pursuing their help typically have a sophisticated corporate career or more visible assets. The attorneys ended up spending considerable time tabulating all the stocks, bonds, and other assets she had accumulated during her lifetime.

Attorneys were shocked when they determined her estate was worth $6 million dollars. Magowan left that money to 15 charities, along with money to seven relatives and neighbors.

Mike Tyson earned around $430 million from boxing and endorsements over his career. But how much did he save and invest? Here is a list of some of Mike’s expenses during his career:

  • $4.5 million on cars and motorbikes (19 vehicles he bought for friends)
  • $100,000 per month on jewelry and clothes
  • $400,000 on pigeons and a variety of big cats such as Siberian tigers
  • $125,000 per year for an animal trainer to take care of the big cats
  • $240,000 per month for walking around money that he spent in daily life “flexing”
  • $300,000 on lawn care and garden maintenance alone
  • $230,000 on cell phones, pagers, and phone bills

When you spend more than you earn it doesn’t matter how much you earn. Tyson also had legal issues, drug problems, divorces, an entourage the size of state of Texas, and other excessive expenses.

In 2022 it is estimated Tyson is worth $3 million. Had Magowan still be living today her estate would be worth approximately $25,357,394.

3. Make shit happen. This lesson is courtesy of my Dad. People fall into one or more of the following categories:

  • Some people make things happen.
  • Some people watch what happens.
  • Some people wonder what happened.

Spend time making things happen and less time watching others make things happen or wondering what happened. Credit goes to the person in the arena not the spectator on the sideline.

Photo by Nicholas Green on Unsplash

4. Timing is the essential ingredient in success: being the right person, at the right time, in the right place. The right sequence is vital.

Also, being the right person, at the right time, in the wrong place can be a set-up for disaster. So choose your friends and environment carefully.

Photo by Oladimeji Ajegbile on Unsplash

5. The key to becoming rich is saving and saving early. The problem is that saving is a long-term behavior and in the whole repertoire of human behavior, there are almost no behaviors in which we take the long-term future into account: smoking, overeating, unprotected sex. To counteract short-term impulses automate as much of your savings and investing as possible so you are not tempted with short-term distractions.

Photo by Towfiqu barbhuiya on Unsplash

6. The world will ask you who you are and if you don’t know; the world will tell you. When you let someone else create your world for you they will always make it too small.

7. Wealth is what you don’t see. If you see someone driving a $200,000 car, the only data point you have about their wealth is that they have $200,000 less than they did before they bought the car. Or they’re leasing the car, which truly offers no indication of wealth.

We tend to judge wealth by what we see. We can’t see people’s bank accounts, tax returns, crypto ledgers, or brokerage statements. So we rely on outward appearances to gauge financial success. Cars. Homes. Vacations. Instagram photos.

However, wealth, in fact, is what you don’t see. It’s the cars not purchased. The diamonds not bought. The renovations postponed, the clothes forgone and the first-class upgrade declined. It’s assets in the bank that haven’t yet been converted into the stuff you see.

Photo by Michael Dziedzic on Unsplash

8. Always do the math. Always consider the statistics. The Brookings Institution has spent a great deal of effort studying the issue of poverty and found avoiding poverty can be boiled down to three things:

  • Graduating from high school.
  • Waiting to get married until after age 21 and not having children until after being married.
  • Having a full-time job.

If you do all those three things, your chance of falling into poverty is just 2 percent. Meanwhile, you’ll have a 74 percent chance of being in the middle class.

The U.S. poverty rate in 2020 was 12%.

Math and stats aren’t just about economics, it impacts your health too.

According to the CDC Cigarette smoking is the leading cause of preventable death in the United States. Cigarette smoking causes more than 480,000 deaths each year in the U.S. This is nearly one in five deaths. Smoking causes more deaths each year than the following causes combined:

  • Human immunodeficiency virus (HIV); Illegal drug use; Alcohol use; Motor vehicle injuries; Firearm-related incidents

More than 10 times as many U.S. citizens have died prematurely from cigarette smoking than have died in all the wars fought by the United States.

Smoking causes about 90% of all lung cancer deaths. More women die from lung cancer each year than from breast cancer.

Smoking causes about 80% of all deaths from chronic obstructive pulmonary disease (COPD).

And still 34.1 million people smoke cigarettes' in the U.S.

The world is a complex environment but so much of it is recorded, tracked, and analyzed. You should utilize available data to best position yourself for future success. And always make sure the math works and stats support your action whether you are budgeting, thinking about smoking, or considering a college major.

Photo by Dan-Cristian Pădureț on Unsplash

9. The richest place on earth. The graveyard is the richest place on earth, because it is filled with all the hopes and dreams that were never fulfilled, the books that were never written, the songs that were never sung, the inventions that were never shared, the cures that were never discovered, all because someone was too afraid to take that first step, too busy to keep up with the problem, or not determined enough to carry out their dream. When your time is up your goal should be not to take anything with you.

Photo by Matt Botsford on Unsplash

10. Doing what you are good at pays better dividends than doing what you are passionate about. This is unpopular but true.

11. Mo’ money Mo’ problems. Biggie was partially correct. Money buys happiness in the same way drugs bring pleasure: Incredible if done right, dangerous if used to mask a weakness, meaningless if you have no one to share it with, and disastrous when no amount is enough.

Disclaimer: This is NOT an endorsement to do drugs.

12. Sugarwood. Ozarks is one of my favorite television series. The opening scene offers some good advice on money:

“Patience. Frugality. Sacrifice. When you boil it all down what do those three things have in common? Those are choices. Money is not peace of mind. Money is not happiness. Money is, at it’s essence, the measure of a person’s choices”.

13. Marry your best friend. Getting married is easy. Staying married is another matter. Your spouse is the most important partner you will ever have. The person you marry is someone you’re going to agree to have tens of thousands of meals with. You’ll spend countless hours watching TV and talking to them. They’re the person you’ll argue with and love with most. Make sure it’s someone you really, really like to be around.

Photo by Sandy Millar on Unsplash

14. Simplicity is beauty. Chick Fil A’s chicken sandwich is simple: one lightly breaded chicken breast with two pickles between a toasted, buttered bun. It’s been the same formula for over 50 years and yet no one has figured out how to do it better. By keeping things relatively simple they have figured out how to deliver a consistently delicious sandwich to the masses.

  • Being financially successful can be simple too. 50% of financial success is two things: (1) avoiding divorce and (2) minimizing taxes. The other 50% is these two things: (1) living below your means and (2) investing the savings in a low cost diversified index fund. Assuming you start working full time at age 21 and do this over 20+ years you’ll be a multimillionaire by the time you are in your early 40's. Too many people over complicate their financial plan and end up doing nothing. Keep it simple.

15. Hoya Paranoia. Becoming successful and staying successful require different attributes and just because you did the first does not guarantee the latter. Staying successful requires a certain level of paranoia. Take a look at this exchange between Charlie Rose and famed Venture Capitalist Michael Moritz of Sequoia Capital:

Charlie Rose: What’s made Sequoia successful?

Moritz: I think we’ve always been afraid of going out of business

Rose: Really? So it’s fear? Only the paranoid survive?

Moritz: There’s a lot of truth to that…We assume that tomorrow won’t be like yesterday. We can’t afford to rest on our laurels. We can’t be complacent. We can’t assume that yesterday’s success translates into tomorrow’s good fortune.

Lesson… don’t be fooled by your own achievements. The moment you begin to lean on what you historically achieved, the potential for future achievements goes down.

16. You should spend more time sweating than watching others sweat. Also, you should spend more time sweating than sweating others.

17. Deprive yourself of what you want, to give yourself what you need.

18. Honor the beginning, middle, and end of all relationships. Your best friend today might not be your best friend tomorrow. Your mentor, teacher, guru, might not be who you need to learn from in the next chapter. Not all relationships last forever. As you grow and mature, your intimate friendships will change. Water always seeks its own level.

19. Spend less on things and more on experiences. Buy the minivan, take the family on a vacation, and leave the Tesla at the dealership.

20. Under promise and over deliver. Setting and managing expectations is key to all relationships. The quickest way to lose valuable relationships is to over promise and under deliver and the quickest way to gain valuable relationships is to under promise and over deliver. The key is to set expectations and ensure you can exceed what you committed to the other person. Show up on time, be enthusiastic, and keep your promises. These 3 things alone will elevate you above 95% of people.

21. Getting rich and staying rich require two vastly different skills. Getting rich requires action, takings risks, leverage, and being positive. Staying rich requires the opposite skills: playing it safe, being fearful, some paranoia, and a lot of inaction.

22. Be grateful for everything and everyone. You’re going to encounter a lot more good people than bad people in life. Be grateful for the good ones because the bad ones will often make you feel like the good ones don’t exist.

23. Be consistent. Play the long game. Slow and steady consistency is the most powerful driver of growth. Jay-Z and Tom Brady are consistent. Vanilla Ice and Roseanne Barr are not. Try and get a little better at your craft every day. Similarly, good investing is not about getting very high returns. Good investing is about getting decent returns over decades. That’s when compounding runs wild.

24. What you do with a little is exactly what you will do with a lot. If you are broke praying that you hit the lottery won’t solve the problem. Statistics show you’ll likely end up broke again. The same bad habits you have now won’t disappear because the universe decided to give you a windfall. Getting money is one thing. Keeping it is another. It’s the habits that must be corrected.

When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire. This is especially true for young people.

Also, never play the lottery. It messes with your mindset. I made the mistake of playing once. I spent the night thinking about how nice it would be to win which means I wasn’t focused on making shit happen (lesson #3). Imagine habitual lottery players that play every day/week and the compounding effects on mindset and lost focus.

Photo by Erik Mclean on Unsplash

25. Your time on earth is limited. Enjoy it. Controlling your time is the highest dividend money pays. You should recite this quote to yourself daily:

Time: That which you are always trying to kill, but which ends in killing you”.

26. Live below your means. Or way below means if you are really smart. You can build wealth without a high income, but you have no chance of building wealth without a high savings rate (see #2 above).

27. Don’t confuse the final product with the process that led to the final product. The Tom Brady you see on Sundays is effortless, perfect, and flawless. Brady is the most accomplished NFL quarterback in the history of the game and largely considered the G.O.A.T. at his position. Brady ranks first all-time in:

  • Wins: 243; Pro Bowls: 15; Super Bowl MVP Awards: 5; Starts: 316; Completions: 7,263; Attempts: 11,317; Passing Yards: 84,520; Passing Touchdowns: 624; Three-Touchdown Games: 101; and Four-Touchdown Games: 39

But the Brady that entered the 2000 NFL Draft after an okay career at Michigan was average. Brady wasn’t even considered among the top quarterbacks in a weak draft class. Brady was the seventh of twelve quarterbacks selected and he was the 199th overall pick in the sixth round. Being selected in the sixth round of the NFL draft is a long shot to make any roster.

Even quarterbacks that are selected 1st overall in the Draft aren’t good enough at football that when they leave college they are ready to win seven super bowls, so imagine Brady’s situation.

So every professional athlete has to train 24/7 physically, spiritually, and mentally to become an impact player and Brady’s work ethic is a thing of legend. There are countless stories on the internet from former Brady teammates about things he did that even they considered crazy. One of my favorites is told by Jesse Holley who played with Brady in New England. Holley recalled that Brady, even after winning several super bowls, had a dedicated film person that would film just him at practice and Brady would watch the tape after every practice to make sure that every audible, play call, pass, handoff, and footwork placement was perfect. But the public doesn’t see that. They see the games on Sunday. They see the touchdowns. They see the stat sheet. They see the multi-million dollar contracts. But they don’t see the work, sacrifice, and attention to detail that goes into someone’s craft over a long period. So when you see someone who is really good at something. Try and understand the process they went through to reach that level of performance and don’t assume it is a natural gift because it is likely not.

28. Acquire assets, avoid liabilities and if you acquire an asset that ends up becoming a liability dispose of it. This is advice for managing your balance sheet and personal relationships.

29. Concern yourself less with what others think of you and more about what you think of you. I drive a minivan. I wanted one long before my wife let me buy one. I love it and wish I would have purchased one earlier. I tell everyone how great it is, how much the kids love it, and what a great value it is. And the reaction from others is always the same,

“I could never be seen driving a minivan”, or “I would lose my cool card if I drove that”.

In all of the reactions, not one comment about the actual merits of the car. All of the focus is on what others might think about them in a minivan (or reflecting their own judgement of others in a minivan). Which leads to two subpoints I want to make:

  • Spending money to show people how much money you have or how cool you are is the fastest way to have less money; and
  • Saving is the gap between your income and your ego.

30. Be responsible and take responsibility. If you are going to do something, do it all the way. Go all-in. Commit. And take responsibility for what happens (don’t blame others if the path doesn’t go the way you hoped).

31. The Road Not Taken by Robert Frost is probably my favorite poem. I had to memorize it in eighth grade and present it to my class. The message of the poem has stuck with me my entire life. If you do what everyone else is doing you are going to get the same results that everyone else is getting. Often this is acceptable to people because they don’t want to go at it alone. They want a friend to hold their hand.

“Two roads diverged in a wood, and I — I took the road less traveled by, And that has made all the difference”.

Photo by Joel & Jasmin Førestbird on Unsplash

32. For those to whom much is given much is required. The measure of your achievements is not what you actually accomplished. It is what you should have accomplished given your available resources and specific circumstances. This helps you temper your own results but also allows you to have sympathy for those less fortunate.

33. Train your mind+body. You’re capable of so much more than you think. But you have to want it and you have to want to invest in it. Your body can do amazing things. Really amazing things. But you have to want it and you have to want to invest in it.

Which leads to a subpoint on money and health or as some of you like to call it health and money. The one isn’t too useful without the other. These two topics impact everyone whether your interested in them or not. Make them a priority.

34. Learn what is enough. As you get older you’ll realize that someone always has more than you. Always. You’ll never have it all. But you’ll also learn that having enough is not that different from having it all.

35. Equity is the key to financial freedom. You’re not going to become rich solely renting out your time. You must own equity in appreciating assets: businesses, real estate, bonds, crypto, and stocks. Equity is accretive 24 hours a day. Labor is accretive only while you work.

As Edgar Bronfman, Sr. heir to the Seagram’s fortune, put it: “To turn $100 into $110 is work. To turn $100 million dollars into $110 million dollars is inevitable”.

That’s because if you only have $100 dollars in savings, it hard not to spend, and it’s hard to invest. But $100 Million dollars becomes $110 million dollars if you let it sit in the stock market for a year (~on average).

36. Always live with a margin of safety. Life is risky. Don’t be afraid to take some risks, but never risk more than you can afford to lose. There is no reason to risk what you have and need for what you don’t have and don’t need.

Photo by Matthew Waring on Unsplash

37. Learn to say no. You can be giving without being wasteful. The difference between successful people and very successful people is that very successful people say “no” to almost everything.

Photo by Florian Schmetz on Unsplash

38. Clutch the constructive criticism. Be authentic and open about your faults. You’ll be amazed at how many people want to help you get better when you open yourself up to criticism.

39. For males: don’t think with the wrong head. No matter how wealthy and successful you are, men still aren’t smart enough to learn this lesson.

Just look at Jeff Bezos. And Bill Gates. And Bill Clinton. And Tiger Woods. And Andrew Cuomo. And Donald Trump. And…you get the point.

These men built incredible companies and created massive wealth for themselves and others. These same men lost 50% of their personal wealth because they didn’t use their brain.

Back to Bezos. He’s famous for Amazon’s 14 core principles. Here is the one principle on Ownership which would have saved Bezos his marriage and $38 billion dollars :

“Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job.”

Translated from Amazon speak to this lesson:

“A strong man is a great man of wisdom who understands, his top priority is to his family. They think long term and don’t sacrifice the family’s long-term success for short-term desires. They act on behalf of the entire family, beyond just their own self-interest. They never say “I am willing to risk it all to pursue my personal desires.”

Be smart.

Photo by Robina Weermeijer on Unsplash

40. Avoid the quick and easy paths. Shortcuts are always longer roads in disguise.

If you found this helpful stay tuned for Part II.

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Evan Benson

Evan Benson

Tech and Finance.

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