Developing a Money Discipline

The Making of a Money Mindset (Part 3): Developing a Money Discipline

This is part 3 in The Making of a Money Mindset series. Below I explore what running a million dollar company taught me about managing my own money and the key lessons and experiences that developed my money discipline. 

If you haven’t already, I’d recommend reading Part 1: Learning the Value of Money and Part 2: Experiences in the “Real World” first. This post picks up where those two left off. Enjoy 🙂

 

BE RESOURCEFUL.

Those two words hung just above eye-level at my desk. I read them everyday. Ian, the CEO and my new boss, had scribbled them on a piece of printer paper in black sharpie with green and pink highlighter accents.

It was a daily reminder of what he was paying me to do.

The startup mindset, especially the very early, not-sure-if-we’ll-be-here-next-month startup mindset, was radically different to anything I’d ever been exposed to. Our one job was to upset the status quo. Our livelihoods—my livelihood—depended on it. I was the company’s first hire—my starting salary the second largest recurring expense after inventory. It was what you might call a “results-oriented environment.”

The company had established a minimum viable product. This meant we had a product that a few customers didn’t think was complete shit,1 a small, fluctuating revenue stream (equal parts exhilarating and terrifying, very much like riding a roller coaster), no money to speak of and a wisp of an idea how we might one day have some.

It was 2009, still the wild west days for e-commerce. Innovations like PayPal and Skype had opened up a world of opportunities that had only been available to well-financed, international conglomerates. Now with with almost no capital and a bare bones team, you could have a manufacturing office in China, a web team in the Philippines and access to customers across the entire North American continent.

Niche markets were opening up everywhere online. It was exciting. It was scary. It was the place to be. We were changing our little nook of the world. You could now buy modern cat furniture and valet parking equipment online. You’re welcome.

We were completely bootstrapped. No one would give us a loan. In the early days I was never certain how close we straddled the line between business and bankrupt, but I was pretty sure that the reason payroll sometimes came a few days late wasn’t because Ian had “forgot.”

Be full of resources.

Ian was living those words. He’d plowed all his savings into the fledgling company and left his corporate job. Now he was making another bet, one as alarming as it was risky: he was betting on twenty-two-year-old Alasdair Plambeck. It wasn’t a bet I would have made.

But Ian was an entrepreneur. He thrived on seeing value where others hadn’t. Whether it was desperation or vision, he saw an asset worth investing in: me.

In five years working with him, it was the most valuable lesson he ever taught me.

THE BEST CREDITOR I’VE EVER HAD

“Live like no one else so you can live like no one else.” – Dave Ramsey

Out of necessity I took out two loans in college with family. There was no interest—except the interest my Dad began taking in my finances now that I had an income. It was rarely direct: a joke here or an off-comment there. Even so, I couldn’t shake the sense that my life had inadvertently picked up a backseat driver.

At first I shrugged these reminders off. It was just Dad being Dad. But the truth was I didn’t like feeling beholden. How was I to feel toward someone who—intentionally or not—constantly reminded me I was? Dad was over 400 miles away, but my obligation to him hovered over me everywhere I went. At first I felt guilty. Then guilt gave way to resentment.

Around this time I came across an interview with tech billionaire Mark Cuban on building wealth. He gave the following advice to college graduates:

Live like you are still in college.

It was practical and immediately applicable. Maybe more importantly, it was one of the few things I actually knew how to do.

At the time, everything I earned was sucked up in the high cost of living in San Diego. Still, I made small efforts to save where I could. They didn’t amount to much on their own, but I was persistent. I packed my own lunches. I cooked my own meals. I put off purchases for everything. I drove a beat up station wagon with a tape deck and cigarette burns in the upholstery. I drank Budlight instead of Corona.

It wasn’t glamorous—if you’ve had a Budlight you know. I was working ten hours a day, struggling to learn the ropes at a high-stress job where I would occasionally be screamed at by a customer over the phone when I botched a job.2 I spent two more hours each day in San Diego traffic, which was always bumper to bumper when I was going home. I’d arrive back to my shared two bedroom one bath apartment (affectionately called the man cave) braindead, of the world but not in it. One evening I lost my wallet and later found it in the fridge.

Donkeys on a trail in Nepal.
Climbing up a donkey trail in Nepal.

On the really hard days, it was the little things that got me through. Eating a shitty sandwich for lunch at my desk—the tomato ALWAYS made the bread go soggy—that cost me 15 minutes of precious sleep to make was not one of those things.

However I learned the stoic art of enduring, sometimes even relishing, these small discomforts. It felt far worse to be in debt than it did to be coming out of debt, no matter how slowly. I was a warrior, fighting against The Man. At the very least my choices were my own.

Then one day there were no payments left. The only trace of debt left were the thrifty habits it had formed in me. It was liberating. What to do with the money I was saving now?

 

THE NEW CAR DAD NEVER BOUGHT ME

“Action expresses priorities.”  -Gandhi

I joined the ranks of the working the same month my dad was forced out of them—for the third time. It was June 2009: the trough of the Great Recession. In total, my dad would spend two full years unemployed.

While the economic storm hit him hard, it never rocked the boat at home. We didn’t lose our house. My brother wasn’t yanked out of private school. I didn’t take out student loans to stay in college. Mom didn’t get a second job. Our lives remained abnormally steady. The biggest change seemed to be that Dad golfed a hell of a lot more.

My family was spared the hard fall so many others weren’t because of my parent’s financial safety net. Despite Dad’s lengthy unemployment, widespread economic turmoil, and skyrocketing tuition fees, family life remained unaffected; my brother and I continued to receive a debt-free education—one of my parent’s life goals.

It was a much better gift than the new car I never got in high school.3

NOT WHAT IT SEEMS

Growing up, the world appeared so solid and real to me. I took everything at face value.

When the recession hit, it was like there’d been a glitch in the program. For a moment, a green, matrix-like world of debt was exposed behind the flatscreen TVs, luxury cars and fancy homes. I was stunned how much of the world operated on debt; how many of the outwardly affluent were anything but.

Boats in Varanasi.
The Ganges River in Varanasi, India.

Debt had brought the world to its knees and filled its unsteady heart with fear, anxiety and uncertainty. How much suffering could have been avoided?

The glitch was fixed and the material world flickered back into existence but my faith in it never quite did.

FUCK YOU AND FUCK YES

“Some of our biggest successes can’t be planned, but they can be anticipated.”     -Jeff Goins

Getting out of debt and building a safety net had been my first two financial priorities. I had distanced myself from financial uncertainty. Now I needed to find something worth running towards. The problem was I had no clue what that something was.

There was no clear vision of world travel, buying a house or building a business. I didn’t know what I wanted in the slightest…except that I wanted to be able to say no.

Nassim Taleb defines Fuck You Money as “the amount of money you need to have before you can say ‘F#$k You’ to your superior before you hang up the phone.” I’ve never said fuck you to my superior, but I’ll admit to enjoying having the option.

Not knowing what I wanted was “a good problem to have,” to borrow a line Ian, my superior, liked to use.4 Having a Fuck You stash allowed me to have that problem. It was a start.

As I kept contemplating my Good Problem To Have, that impromptu trip I took to Oxford back in college kept resurfacing in my mind. It was an extraordinary trip—a trip I never could have imagined. It had expanded my world and I with it. But I hadn’t “made” it happen. I had been curious, openminded, and financially prepared. Then it happened.

In the startup world the term runway refers to how long a company can operate in the red before going bankrupt. It’s a critical piece of the formula for getting a new venture off the ground. It allows for experimentation and gives time for hard work to begin to pay off. Runway isn’t the only thing a new business needs—there are no substitutes for taking the leap, doing the work, and getting lucky—but it’s hard to succeed without it.

The longer our runway, the better the chances something new can take flight. The better the chances we build a life we say “fuck yes” to.

That was worth running towards.

Helicopter taking off at Everest Base Camp.
Helicopter taking off at Everest Base Camp.
FREEDOM = RESPONSIBILITY

“Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.”
-Viktor E. Frankl

Startups move fast.

Within 3 months of being hired I was running the business alone while my CEO was in Asia for a few months. Around 6 months I hired my first employee, our warehouse manager who was a bodybuilder twice my age and three times my body mass. Within a year I was directing our manufacturing team in China and our web team in the the Philippines.

My freedom at work grew with my responsibilities. I had my own team. I set my own schedule. I took time off to travel when I wanted. I set company policy and introduced new initiatives. I built a business I wanted to be a part of and I was paid well to do it.

Whenever I got good at my work I stopped doing it. I delegated it, hired someone to do it or automated it. Each time I put myself out of a job it terrified me.

What will I do now?

I had to choose.

A foggy forest trail.

Eventually I took on so many responsibilities that I was the general manager of what was now a multi-million dollar, multinational business with a team nearing 20. I didn’t wait for someone to give me that role. I took it.

The paradoxical truth about freedom is that it comes with responsibility.

My freedom grew as I took responsibility for my life.

TOMORROW NEVER COMES

“The Principle of Priority states (a) you must know the difference between what is urgent and what is important, and (b) you must do what’s important first.”
-Steven Pressfield

A typical day early on at my job looked like this: I’d get into the office, boot up my computer, settle down to work on Important—crack knuckles—and then, on cue, the phone would ring. It’d be Urgent so I’d deal with Urgent before returning to Important. Then the phone rang again. It was Urgent again. The next thing I knew it was 7:00 PM. Important would have to wait until tomorrow. But when tomorrow came Urgent always called.

Entire weeks were swallowed up by Urgent. Urgent, Urgent, Urgent. Early mornings were the only time Urgent slept. I woke up early and began working on Important then but Urgent was still keeping me late into the evenings.

Finally I had enough of Urgent. I would leave the office by 5:00 PM. Urgent be damned! The next day I got in early and worked on Important. Later, when Urgent arrived, I was ready for it. When it was 5:00 and Urgent was still around, I walked out the door. Nothing blew up. Urgent called back tomorrow.

The problem wasn’t Urgent. The problem was I wasn’t doing Important first.

My runway was Important. When I got paid, I paid Important first. Every time.

I made saving my default. I made it require conscious choice not to save. By 25 I was saving over 40% of my income with little effort.

Working the fields in Nepal.
A farmer tilling fields in Nepal.
MORE PAIN MORE GAIN

“I kept account of every farthing I spent, and my expenses were carefully calculated. Every little item, such as omnibus fares or postage or a couple of coppers spent on newspapers, would be entered, and the balance struck every evening before going to bed. That habit has stayed with me ever since, and I know that as a result, though I have had to handle public funds amounting to lakhs, I have succeeded in exercising strict economy in their disbursement, and instead of outstanding debts have had invariably a surplus balance in respect of all the movements I have led. Let every youth take a leaf out of my book and make it a point to account for everything that comes into and goes out of his pocket, and like me he is sure to be a gainer in the end.”
-Gandhi

As the company grew so did its finances, which now amounted to millions of dollars and thousands of transactions annually. For years our attention had been so singularly focused on revenue that when money began flowing in we had no system in place to manage it. We were bleeding cash, but we rarely knew where from.

Our accounts were severely disorganized. We couldn’t anticipate when we’d be paid or when we’d have to pay others. Despite being profitable we found ourselves in anxiety-inducing cash crunches where money was on the the books but not in the bank. It’d take us days to sort things out. We could never totally trust the numbers which always made it hard for us to plan ahead.

Finally I overhauled all of our accounting procedures. It was akin to taking apart a car while still on the freeway. The project went on over a year. Confronting our financial negligence was incredibly painful. Sometimes it was downright embarrassing.

But we slowly started to see where our money was going and when we did action followed. Unnecessary expenses were eliminated, expensive problem areas were identified and dealt with, overdue accounts were paid, and delinquent clients collected on. We implemented a monthly check in. Cash began circulating freely through the company. There were fewer financial crises, sick areas were tended to and the future prepared for.

We had known our finances had been unhealthy for a long time but that hadn’t changed anything. It was when we began paying attention to them that our behavior changed and the company became noticeably healthier. Where attention goes, energy flows.

It would be another year until I made the connection to my own finances and instituted the same monthly check in process I used for managing millions at work to manage my money at home. I tracked every account and every expense. Every month. It worked.

By then I’d taken Ian’s early lesson to heart. I had invested in myself. I had built a runway.

I had learned that pain can be our most powerful ally for change.

Now I was ready to learn how to say “fuck yes.”

I was taking the leap.

Waiting for the next wave in Sri Lanka.
Waiting for the next wave in Sri Lanka.
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  1. Many still did think it was shit.
  2. One particularly memorable day I was instructed to “fuck off” before the line went dead.
  3. To my undying teenage chagrin.
  4. I borrowed it frequently when I began managing my own employees. I found it useful for just about every situation.

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Hello. I’m Alasdair.

Hello. I’m Alasdair.

I believe that being aware of who I am and mindful of who I am becoming is the best investment I can make in my life —and that when we focus our efforts within, the rewards naturally flow outward to those we love and through the communities we belong to.