Life Capital – Why I Give (and Follow) Some Advice Over Others?

Have you ever been lost? It’s pretty frustrating, isn’t it?

We don’t know where we are, which means we don’t know how to get to where we want to be. A lot of us can relate to being in a large city not understanding a single thing the map is trying to tell us.

It’s not necessarily our fault. We’re just lost. We’re ignorant to our surroundings. We need someone to help us, like Bob (his name is not Bob) at the local Subway.

You want to know what’s even more frustrating: Choosing a path with the best of intentions and it ends up being a terrible idea.

We can all relate to this as well. For me, it almost cost me my life (slight exaggeration). Megan and I were in the Great Smokey Mountains a few years ago for a weekend trip of pancakes, hiking, blisters, waterfalls, and pancakes.

We arrived in the Volunteer State in the late afternoon. Our hiking would begin the next morning, but we needed something to do in the meantime before dinner. We had just enough time to be dangerous.


We decided to do a small hike up to Laurel Falls. Some would say it is strenuous. I say it was paved. You be the judge.

As you can imagine, there is a waterfall at the top of Laura Falls. But what you can’t imagine is that the trail continues past Laura Falls. You can’t imagine this because nobody hikes it. It’s not paved or marked or anything.

I talked Megan into continuing up the now-unpaved terrain. We had more time to kill and I promised her the view was amazing. So we walked. And walked. And walked. Every five minutes it would look like you were about to come upon a magnificent bluff. Unfortunately, the only bluff was the trail’s bluff that it had a bluff.

I was about to concede and go back, but I began to hear some sounds in the distance. It sounded like joyful playing. Maybe there was a waterpark up there or something.

As we continued to walk the sound turned into more of a screech. Still playful, though.

We continued to walk and the noise started to whimper.

Finally, like out of a scene of a Nicholas Cage movie, we hear leaves wrestling and branches breaking. I look over to my right and about 10 yards away there is a panicky cub hustling down the tree.

Now I know what you’re thinking. “It was only a cub!” But do you know where cubs come from? Mommy’s! And mommy’s don’t play around.

I think that’s why, in all of the commotion, the cub must have soiled himself and splattered it all down my legs and backside. He knew his mommy was not going to be amused.

Intentions Are Just…Intentions

Why was that experience more frustrating than just simply being lost? Because I chose that path myself. I had great intentions. I had great expectations for what lied ahead. I was adventurous. Willing to break the mold!

I chose an unpredictable path and was confused why it took me to an unpredictable destination. I didn’t just figure out my mistake in an instant. It was a gradual process. I began to blur the lines between lost and found. I was too invested into the process by the times I realized my error.

I was going to find a way to make it work. It didn’t work. I was hungry, tired, and afraid of bears.

The Next Day…


The next day, we hiked another trail. It was much more strenuous and well-worn path than the day prior, but much more enjoyable. It took us to an amazing view and was one of the highlights of the trip.

But why was this more enjoyable despite being more strenuous? Why was it a great memory despite my legs feeling like Jell-O? It was a predictable path that led us to a predictable destination!

It was a great reminder: My intentions don’t mean a darn thing! “Direction, not intentions, leads to destination.”

I didn’t have to worry about what was right and what was wrong. I chose a predictable path. All I had to do was follow it.

There were many times I thought to myself, “Why don’t we just climb straight up this mountain? That would be exhilarating! And interesting! And everyone would think I was cool! I could post it on the internet.”

But I talked myself out of it every time. People, all of which knew a lot more than me about the Smokey Mountains, kept following the path. They had done this before. They knew this path led to that destination.

There was still a possibility of being attacked by a bear. There was still a possibility of missing out on something. There was still a possibility that I could have gotten to the top faster. But by following a tried and true path, my risks were minimized and my life was maximized!


FinanciallyFitz – A Financial Blog Not Primarily Concerned With Finances

Money is undoubtedly an important component of our environment. But it is not THE environment.

FinanciallyFitz is not concerned about maximizing money. It’s concerned with maximizing Life Capital. And money is just a tiny part of that.

Life Capital includes factors such as money, security, reduced risk, freedom, opportunity, love, freedom from debt, faith, respect, integrity, family, contentment, gratitude, and charity. All of which distinguish us from being one big math equation. All of which make us human.

Maximizing Life Capital is what makes a life successful. Maximizing airline miles makes for a good story.

Maximizing Life Capital makes us wealthy. Debt helps us look wealthy.

Maximizing Life Capital gives us returns on life. Investing while in debt gives us returns on paper.

Do I talk about things that are fun? Does it make for a good story? Are the things I try to do in my own life always enjoyable? Do I remember my parents “taking advantage” of something while we were kids? Do I remember harvesting the fruits of quick wins?


But what I do remember, and believe in my heart, is that there truly is a predictable path that is free for anyone to travel. The path is well-traveled, not because of its glamour but because of its predictable destination.

There is always the risk that the path will lead us to somewhere different. There will always be things that are out of our control. But that doesn’t give us an excuse not to control the things that we can.

Which Path Are You Taking?


Financially speaking, there are three broad groups of people wandering this earth.

First, we have the ignorant. These people are not stupid. They were just never given the chance to learn. No one showed them how navigate this tricky world. For most, they can out earn their ignorance in the first one or two decades of working full-time, but eventually their ignorance catches up to them. This is the reality for most people.

Second, we have a new wave of people who care deeply about their financial condition and can’t wait to share their opinion. Now everyone’s favorite hobby is talk finances. It’s sexy. What kind of dividends can you get? Where can you go for free? What kind of tax deductions can you get? Tax-free? Tax-deferred? HSA? IRA? 401K? Index Funds? ETF? Financial Independence? Passive Income? This is amazing.

Finally, we have the last group – the directional; having a particular direction of motion, progression, or orientation. These people have been around for ages – they just never felt the need to talk to anyone about it. They didn’t pay attention to the new and latest. Instead, they trusted the tried and true.

How Do We Get Started On These Paths?

The ignorant don’t have a plan. No one cared enough to tell them car payments are not a mandatory part of life. No one showed them that it’s okay not to have a house payment. No one showed them how to budget. Someone convinced them the only financial path is apathy.

The Well-Intentioned are interesting. They are sophisticated. They can take advantage of any deal. Risk is just a board game if it means they will have more fun than you. They are great story tellers. They get free credit card rewards. They can leverage debt responsibly. They don’t budget, because who needs a budget when you have a Spending Plan. They look at their spreadsheet at least once a day. A good decision depends on your interest rate, age, what they saw on Yahoo! Finance, and whether or not it is backed up by their spreadsheet. Then they look at their spreadsheet one more time.

The Directional are boring. They follow a system built on priorities. They believe debt-freedom is the best investment. Emergency funds are non-negotiable. Investing comes after, and only after, becoming debt-free. They budget. Behavior conducive to meeting life goals are more important than anything else, even if it isn’t immediately backed up by a spreadsheet. They primarily use cash so they only purchase what they can afford.

Does it work? Sure. But is it optimal?

Let’s be honest, staying ignorant regarding your personal finances leads us nowhere. There is no amount of good that comes out of ignorance.

The Well-Intentioned are trying new things. They’re trying new techniques. Applying new advice.

But what do they often ask? “Does it work?” As it turns out, a lot of things work. But does that make it optimal? Does that make it good advice?

Notice who wins out at the very end? The well-intentioned.

This is a real possibility. I’m not debating that investing while in debt, leveraging debt, keeping a mortgage around, playing interest rates, using credit cards for rewards, etc. doesn’t work. It does work! Not for everyone, but it does work. It may even lead you to a healthier 401K balance.

But is that optimal? I don’t think so. Does it work for everyone? No. The highs can be high, but the lows can be low.

Remember, this graph is of Life Capital. Not money. There are many times the monetary impact will be great but the Life Capital will be negatively affected; just as there will be times when the Life Capital is high but the money was inferior. And there will be times when they are directly related, of course.


The Well-Intentioned can advise us to do things that result in some really fun times. Great vacations. Great returns. Healthy savings and retirement. Less responsibility. More money. The highs are high.


But there will inevitably be some down times. Fights? Stress? Divorce? Greed? Less opportunities and more obligations? The lows are low.low

How likely are these lows to end in divorce, depression and misery? I’m not sure. But we can’t just act like there’s not a higher probability of occurrence.

Are you willing to bare those risks? Great. We were not.

Red Line? Or Blue Line?

Early in our marriage we made decisions on how we were going to manage our money. Not because we were smart, but because we listened. We didn’t give ourselves the usual grace period of stupidity (although we have still done stupid things). While most – as in the loudest – were going one way we decided to go another.

There is one question we ask regarding any decision: “Does this put us on the blue line?” We don’t want perfect. We want consistently never devastatingly wrong. We don’t care about the really high high’s because we don’t need them; we just don’t want to have the really low low’s.

We were not going to do anything new. We were just going to do things we saw done successfully by other people…with our own eyes. People we looked up to.

If there wasn’t a proven track record of results, we weren’t going to do it. If it didn’t prioritize behavior, we weren’t going to do it. If it didn’t prioritize Life Capital, we weren’t going to do it.

If something was “on the fence”, we used science to back our decision. If science had proven it’s propensity towards undesired behavior, we weren’t going to do it.

We only followed advice that, if properly executed over our lifetime, had a huge amount of upside with very little downside.

We Had A Crazy Idea…

What if we just followed advice that would work for young, old, broke, and wealthy people ALL OF THE TIME. What if we just followed advice that, although might not always be perfect, was never wrong.

Not “it depends”. Not “if you can be responsible”. Not “if you have time to play reward games”. Not “depending on your interest rate.” Not “if your 30-years-old.”

Telling a 22-year-old with $100,000 in student loans that she should invest her extra money instead of paying towards the student loans might be really good advice. She could possibly get some great returns with a healthy 401k balance.

But…it could also terrible advice. She may not ever understand the power of being free from debt. She may live paycheck to paycheck the rest of her life. She’ll invest. Oh, and then she needs a house. Oh, and then she needs a car. Oh, and then she has children. But she has a good 401k?

If on the other hand, let’s say someone told her not to invest (or do anything) until the student loan was paid off. It’s possible that someone in the exact same situation would be better off when they’re 73-years-old. It’s possible that it won’t turn out to the best advice ever given.

But…it can’t be terrible advice! Worst case scenario is that she’s out of debt. Compounding interest doesn’t just disappear. Even if she was 30-years-old by the time she started investing, she would still have 30 more years of compounding interest.

Is it ideal? Maybe yes. Maybe no. Is it bad? Not nearly as bad as $100,000 worth of student loans.

That’s why they call it personal finance – it’s personal!

One size does not fit all…if you’re looking for a How-To Manual. There are a lot of How’s.

I follow a What-To Manual. And in doing so have come to the realization that the What-To-Do is not that personal at all – it’s shared by many. The ‘What’ points us in the correct direction and the ‘How’ is chosen as we travel. But without the ‘What’ the ‘How’ is useless.

Directional Advice

directionTrust me in the beginning I thought this advice was as boring and as disgusting as the next person.

Take budgeting for example…First off, I was not using food stamps and had showered within the last three days. Second, I was not about to start wearing cloth diapers. And finally, I was definitely opposed to hitchhiking with truck drivers; long-haul, of course. The royalties from Dateline after you’re murdered are not what you’d expect.

Obviously I had a few misconceptions on what a budget was. To put another way: I was ignorant.

Saying I didn’t need a budget was ignorant.

Saying that a budget would never work was ignorant.

Saying a budget was not for me was ignorant.

Saying a budget wouldn’t make our marriage stronger was ignorant.

Truth is…following this advice changed the trajectory of our lives. It changed our family tree when we only had one branch on it. It was one more reason to love and be loved by Megan. It put us on the same page by, literally, putting everything we wanted in life on the same page. What a gift!

Where does that show up in a textbook? Where does that show up on a prospectus? Where does that show up on a P&L report?

This is why getting out of debt takes precedence over investing. Yes, I know all about compounding interest. But you know what else compounds? Life Capital. Peace of mind. Freedom. Opportunities.

This is what getting out of debt does. This is what living directionally does.

This is why building an emergency fund takes precedence over buying a house.

This is why investing in retirement takes precedence over a child’s college education.

This is why I don’t care about credit card rewards. (Yes I know, some people fly all around the world for free.)

This is why I don’t care about leveraging debt. (Yes I know, sometimes the stock market outperforms, say, your mortgage interest rate.)

Why do I give simple-minded advice?

Because this simple-minded advice changed our life. And it can change anyone’s.

“One must never live in the thick of thin things. Focus only on your priorities, those activities which are truly meaningful. Your life will be uncluttered, rewarding and exceptionally peaceful. This I promise you.”

– Yogi Raman from The Monk Who Sole His Ferrari

Question: Do you agree or disagree? Do you think there really is Blue Line advice? And if there is, is it even worth trying to follow it (lack of spontaneity, adventure, etc.?)

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  1. Awesome post Luke. I feel like I was in the ignorant group for so long. I had no one to learn from and even the successful people I knew were just high income high spenders. Not quite the advice that you want to adhere to.

    I think implementing advice that works for you is key! I can remember the first time I landed on MMM’s site it was an article about hyper milling. I remember thinking, “What?!” and moving on. And it’s sad because I missed out on such an awesome blog for so long!
    Mrs. Crackin’ the Whip recently posted…We are never ever getting back togetherMy Profile

  2. I did like the story of how making your own path almost got you eaten by a bear. That’s quite a metaphor. I definitely fall more on the forging my own path side of life and there are definitely quite a few times I’m nearly eaten by a bear, but there are also a lot of cool bluffs that I find that others don’t.

    On the flip side, I totally agree that with some solid direction anyone can achieve just about anything. It might not be fun and it might give you Jell-o legs, but it can be done!
    Mel @ brokeGIRLrich recently posted…Being the Boss of Yourself SucksMy Profile

    • Hi Mel! Thanks! That’s a great point – finding bluffs that others don’t. For me, I have faith that I’ll see all the bluffs I need to and, more realistically, find out I’ve been overlooking the greatest bluffs the whole time.

      Thanks for stopping by, Mel!

  3. I’m not sure that I totally followed life capital (a post for another day?) but if it is what I think it is, I like the idea of creating a steady upward trajectory. Of course, wealth and circumstances are only so far in our control, but to the extent that you can mitigate risks to relationships and stability, I think it’s awesome.

    • Probably is… But a simple explanation: Think about plotting your Net Worth, which is financial capital. It’s important but it only tracks one variable of life – money. It tells you nothing about the quality of life. If we throw just two more variables (of many) into our plot of Net Worth – money, stess and risks – everyone’s plot will change; some for the better and some for the worse.

      Point being: I would be doing a lot of things differently if I was focused on Net Worth (which that focus would make sense considering I talk about finances). Like for instance not having a kid, flying all over the world for free and leveraging debt. But I want to grow and compound Life Capital (of which money plays a tiny part).

      Probably still confused, I know 🙂

  4. I enjoyed the reflection you put into this article! I do think there is a theoretical blue line that could represent the perfect path. The challenge with life is, well “life happens”. The economy, our jobs, our friends, our family, and even our spouses can uproot our best-laid plans.

    Great statement: “I didn’t have to worry about what was right and what was wrong. I chose a predictable path. All I had to do was follow it”

    Yes life is uncertain; however I think we should continue to strive for that predictable and directional blue line.
    Bryan@Just One More Year recently posted…YOLO: You Only Live OnceMy Profile

    • Thanks, Bryan. Those are all great points and ones I hope I conveyed. Life happens, but we don’t have to sit around waiting for it to “just happen”.

      I’m not saying its the right path for everyone. All I’m trying to say is there is such a path if you want to follow it. Thanks! 🙂

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