The importance of personal finance and its connection to happiness

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personal finance and its connection to happinessI was born in Portugal, to an Italian and Canadian family.

Back in 2012, I applied for a research position in Germany, where I I lived the last 5 years, on a tier 1 university.

The position would allow me to do my PhD and with the opportunity to learn a new language sweetened  the pot. I was young and a bit naive and I had the feeling I could conquer the world.

The position was great and the environment at the university was awesome. I loved the project and the environment. The small city I moved into was lovely too.

There was a catch though: I needed to wait for 2 years to start my PhD.

After 8/9 months I was offered another position in a different German city, which would enable me to start my PhD right away, and I decided to take it.

I thought everything would be similar, from the city to the work environment and the PhD topic sounded really appealing.

Everyone told me not to go, because the city had a very bad reputation in terms of welcoming foreigners but I decided to take the plunge and do it.

I consider this to be one of the worst decisions I’ve ever taken.

I hated everything.

The environment at work was awful.

My colleges were not easy going, by boss was extremely demanding and the very little German I had acquired prior to that was clearly insufficient in the city where English seemed to be prohibited, because nobody spoke it.

One day, I woke up exhausted and paid my GP a visit. She recommended rest for 2 weeks, advice I followed. The problem is that as time went by I got even worse! I became depressed.

At the same time, because my blood-work was absolutely normal, and my GP admitted she had no idea what was going on. I saw every kind of specialist you can possibly imagine, and I did very evasive tests which were clearly a mistake.

I was misdiagnosed a few times – everything from bone marrow infections to chronic depression – until I visited a ME/CFS (Myalgic Encephalomyelitis / Chronic Fatigue Syndrome) specialist, after graduating PhD in medicine from Google, who confirmed that I had CFS. You probably have no idea what this disease is.

Sadly, its way more than fatigue. I experience extreme fatigue (which makes it hard to lift my toothbrush sometimes), dizziness, chronic muscle tension and a few other symptoms that leave me incapacitated. I learned how to manage some symptoms and I can get through life (some days are much better than others though).

The epiphany – financial freedom

In late 2014 I decided that I needed to do something about my situation because it became more and more unsustainable for me to go to the office.

I started to call the office sick often. I forced myself to go when I didn’t call in sick, which would make me feel even worse. What I really wanted is to have space and time.

Quitting my job sounded like the perfect solution, but what would I live off?

I thought about ways of still earning my salary without having to go to work (this is probably everybody’s dream – but in my case I had a very good reason to do that, because CFS was prevent me from having a normal job and I knew at sooner or later I would have to stop working if I continued doing what I was doing).

I had invested in stocks – with great success – since I was 16 years old so I was already used to the concept of passive income.

I though “how can I replicate this to a scale that enables me to live off of dividends?”.

This was the day that changed my life.

I sat down with a bunch of papers and a calculator and I started to project how much I could save (of my relatively large salary) and how much time would it take for me to live off the dividends. I started to educate myself on finances, reading over 100 books on personal finances and investment, which I eventually put together in this list, where I post summaries and reviews of that list (I advocate financial education for everyone because there is a lot of struggle out there and it doesn’t have to be like that).

In the myriad of questions I made on Google, some blogs about Early retirement popup up. Knowing that I wasn’t the first to think about retiring in my 30s was such a great relief: everyone up until then had told me I was crazy. I connected with some bloggers and told them my plan, and the responses were motivating. I knew I was onto something.

Today I am actually in piece with my past and my health condition; after all it was due to it that I started to work towards my early retirement. I deeply believe that my health condition activated a survival instinct in me and that was what gave me motivation to fight. It is worth mentioning that I started to help people, and friends in particular and I eventually set up a small consulting business, although I had to stop it due of my PhD (as my health condition didn’t let me do both).

My investments today

During my financial education process, I realized that Real Estate was a good type of investment.

Today, the bulk of my net worth is invested in Real Estate and I currently have minor positions in the stock market, because I think there may be a market correction soon.

My Real Estate investments yield up to 20% net a year, because I have specialized in deep-value deals, buying properties dirt cheap (especially distressed properties whose owners can’t / don’t want / believe they can’t be monetized)  and monetizing them with great tenants.

I am pretty much hands on, as far as my RE investments, having created unique platforms to announce my homes and sometimes doing the renovation and repair work myself. I often publish material on RE, including free real estate bookspro forma explanations and how to get rid of stuff, such as couches.

I am on track to retire by by 33-36. This year, I will be working on my health, and increase my net worth, at the same time I am creating new businesses and diversifying my sources of income. If my online businesses do well, I may well retire before I am 30.

Money and happiness – the relationship

I was always a very ambitious individual, but I never dreamed of being rich. In fact, before I developed CFS I didn’t thought about making more money than that I was already making. Life I pretty good and I’d get through it very smoothly. I was probably making $800/mo.

Yet, I was super happy and I didn’t see the necessity of making more money. I spent a lot of my time on projects that I liked, such as bodybuilding, random stuff on the internet, helping friends out at school, whatever. Financial freedom was definitely something that came up out of necessity, for me.

Many people ask me if more money means more happiness.

This is a question that I assessed pretty rigorously during these years, and here’s my take on it. For me, right now, having to go to work is very hard. I am very productive, but I need to take my time and do it at my own pace. So having to go to the office decreases my happiness and therefore becoming free from that will increase my happiness. Money is pretty much the only thing that can do so.

At the same, one fundamental question I’ve made when I decided to save aggressively, back in 2012, was “what are the things that I spend money with and do not increase my happiness?”.

I pretty much found out that unnecessary bank fees, paying premiums for specific products and memberships I really didn’t use were not increase my happiness. I spent most of my money on rent (due to my health condition I like to live close to where I work) and food (mostly organic high quality products).

Removing those would decrease my happiness, so I focused on the rest. And this is the fundamental question you need to ask yourself when saving, regardless your purpose is to retire by 33, buy a home or something else.

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