JL Collins - The Godfather of the FI Movement
Reflections on my recent podcast discussion with JL Collins
Hello again, fellow Sloth Investors.
As promised in my last written piece, I’ll share further reflections from previously released content on the Sloth Investor YouTube channel at the end of each month.
For readers new to my Substack, here is what you can expect from the Sloth Investor regarding regular written content.
Mid-Month: A personal finance blog post
Final Weekend of the Month: In-depth discussion of content on the Sloth Investor YouTube channel.
The subject of this month's in-depth focus is JL Collins, often referred to as the 'Godfather of the FI (financial independence) movement'.
JL joined Jay (my podcast co-host) and I for episode 32 of the Sloth Investor Podcast at the tail end of 2023.
JL Collins Investing Biography
JL Collins has been investing since 1975.
In 2011, he started to write a series of letters to his daughter about money and investing, what had worked and painful lessons he had learned along the way.
These letters were re-shared on JL's website, the popularity of which led to the publication of his most widely read book to date, 'The Simple Path to Wealth', released in 2016.
'The Simple Path to Wealth' is one of my favourite personal finance books. A key reason?
JL’s focus on the opportunity costs of your spending decisions.
‘What If’ Analysis
Early on in 'The Simple Path to Wealth', JL Collins uses the term 'What If' to motivate his readers to think about the opportunity cost of the spending decisions that they customarily make.
He states:
“For now, we’re just doing a bit of ‘what if’ analysis to help you see that your money can buy you something far more valuable than stuff…it’s not hard. Stop thinking about what your money can buy. Start thinking about what your money can earn. And then think about what the money it earns can earn. Once you begin to do this, you’ll start to see that when you spend money, not only is that money gone forever, the money it might have earned is gone as well. And so on.”
I love what JL says about the opportunity costs of your spending decisions. These are my favourite two sentences in the entire book.
Stop thinking about what your money can buy.
Start thinking about what your money can earn.
The next time you’re trying to communicate the wonders of compound interest to someone, I strongly encourage you to re-iterate the significance of those two lines.
Debt - The Unacceptable Burden
I have a wide reading habit and barely a day seems to pass without me reading about increasing levels of consumer debt in my home country of the United Kingdom and other countries around the world.
If we take the UK as an example, as of November 2023 the average British household owed almost £2,500 on their credit card.
Citizens Advice Bureaux across England and Wales answered 163,218 enquiries concerning debt in December 2023, which was an increase of 6.52% from December 2022.
In fact, debt was the second largest advice category in December 2023 with 32,797 issues, behind Benefits and Tax Credits (55,294). Calls regarding debt were up 11.4% compared with December 2022.
Source: Moneycharity.org.uk
In 'The Simple Path to Wealth', JL Collins writes about the negative impact that debt has on your emotional wellbeing. He states:
“Your stress levels build. It feels as if you are being buried alive. The emotional and psychological effects of being saddled with debt are real and dangerous. You endure the same type of negative emotions experienced by an addict: shame, guilt, loneliness, and above all, helplessness. The fact that it’s a prison of your own making makes it all the more difficult. Your options can become so narrowed and your stress levels so high, you risk turning to self-destructive patterns that only reinforce the dependence on spending. Drinking perhaps, or smoking. Or, ironically, shopping and still more spending. It’s a dangerous, self-perpetuating cycle.”
Pathfinders
During our podcast discussion with JL Collins, Jay and I aimed to strike a balance between asking JL questions about 'The Simple Path to Wealth', his most widely known book and 'Pathfinders', his most recent book.
In 'Pathfinders, ' JL Collins brings together stories of individuals from around the globe striving to achieve financial independence.
As a podcast host, when I’m interviewing an author of a personal finance book, the ‘sweet-spot’ for me (in terms of duration) is a discussion that lasts around 40-50 mins. Half an hour doesn’t provide enough time for a rich enough discussion and once you begin to inch closer to the 60 minute mark, fatigue can potentially set in for both the guest and the co-hosts.
With JL Collins, Jay and I certainly achieved this ‘sweet-spot’, in terms of duration, but this means that there were some facets of the book that we didn’t touch on with him. For instance, there are numerous personal stories from the book that I would have been keen to discuss in detail with JL.
One of those stories features J. Gonzalez, who resides in Washington, USA. Here is an extract from J. Gonzalez’s story:
“I am a former child migrant worker. At the age of eight, I began working in the fields alongside my parents and siblings. I continued there until the age of 16. I grew up near a reservation, my community was poverty stricken, and child agricultural workers were common. My family lived paycheck to paycheck and my parents never even had a bank account. As you can imagine, ‘generational wealth’ was not part of our vocabulary, and it was assumed that none of the kids would receive any monetary assistance from our parents. As soon as we reached our teenage years, we were expected to provide for ourselves, and that is in fact what we did….at the age of 25, I finally discovered FI and JL’s Simple Path with the help of a coworker, after I mentioned that I didn’t have any retirement accounts and knew nothing about investing.
You’ll notice that I used the bold function to emphasise the point that J. Gonzalez made about discovering JL’s ‘Simple Path to Wealth’.
The reason for doing so is because it illuminates one of the chief takeaways from ‘Pathfinders’ for the Sloth Investor.
So, that takeaway is….
PRESENCE OF MIND
I’ll now expand a little more upon what I mean by these three words.
The Importance of ‘Presence of Mind’
For me, ‘presence of mind’ is crucial to one’s success in life. The Cambridge online dictionary defines presence of mind as:
‘the ability to make good decisions and to act quickly and calmly in a difficult situation or emergency’
When I reflect on presence of mind I think about a talk that Marco Pierre White, the Michelin starred chef, gave at Oxford University in 2016.
He states:
“Success is borne out out of luck. It’s awareness of mind that takes advantage of that opportunity. You will all be confronted with opportunity. You must take advantage of it because if you don’t take advantage of your opportunity you’ll never realise your dreams.”
If you’re keen to watch this section of the Marco’s talk then I suggest you begin watching from the 25:00 minute mark of the following video. Here it is:
I love listening to what Marco Pierre White has to say about presence of mind (yes…he uses the term ‘awareness of mind’ but I’m not going to quibble about the semantics of awareness of mind/presence of mind).
When I listen to Marco Pierre White, I infer from him the critical importance of acting decisively upon the serendipitous circumstances that present themselves to us throughout our lives.
There are countless examples of individuals demonstrating presence of mind throughout ‘Pathfinders’, whether this be the beginner investor who stumbled on JL’s writing online or the individual (like J. Gonzalez) who listened attentively to their co-worker when they spoke for the first time about JL, or the first-time investor looking with curiosity within the personal finance section of a bookshop who stumbled upon ‘The Simple Path to Wealth’ by chance. Again, ‘Pathfinders’ is crammed full of individuals that demonstrated presence of mind.
Just think about the successful people in your life, be they friends or family members, who demonstrated the presence of mind to take advantage of the fortunate circumstances in front of them at a specific point in their life.
I only have to think about the people, past and present, that I admire to recognise the presence of mind they demonstrated. Here are two notable examples for me:
On July 6th, 1957 John Lennon and Paul McCartney met for the first time at a local church fete. Lennon was impressed by McCartney’s impromptu version of Eddie Cochran’s ‘Twenty Flight Rock’. Although often dismissive of those younger than him, Lennon had the presence of mind to later enlist McCartney for his band ‘The Quarrymen’. McCartney accepted and you know what happened next.
In 1961, two English teenagers - former childhood classmates - were on the platform at Dartford railway station. One of the young men, Keith Richards, is off to art school in Sidcup (the same town where the Sloth Investor incidentally received his secondary education). The other young man, Mick Jagger, was about to begin his journey to the London School of Economics. Keith was alerted to the albums that Mick was holding under his arm. There was an album by rock and roll maestro Chuck Berry and one by blues legend Muddy Waters. Keith’s interest was piqued and he began talking to Mick about the albums. The rest is history…or as it currently stands….a band that will soon begin rehearsals for their 2024 tour.
Presence of mind…
When is the last time that you took advantage of serendipitous circumstances to improve your life?
That brings this discussion of JL Collins to a close.
You may be wondering at this point which book to begin with if you happen to be a first-time reader of JL Collins. For instance, should you start with ‘The Simple Path to Wealth’ or ‘Pathfinders’?
Well, that’s the question that JL asked me at the beginning of our recent discussion. If you haven’t yet watched the interview then make sure that you click on the YouTube link at the top of this article to hear my answer.
If you haven’t done so already, I would be grateful if you could keep up to date with my latest social media content by subscribing to this Substack, my YouTube channel and following me on X (formerly Twitter). You’ll find the links for all three at the bottom of this page.
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Below is a list of some of the upcoming guests on the Sloth Investor Podcast.
I hope that your 2024 has got off to a great start!
Bye for now!
Coming soon on the Sloth Investor Podcast
(in order of appearance)
Jared Dillian
Jared will be talking about the recent publication of his new personal finance book ‘No Worries - How to Live a Stress-Free Financial Life’.
Mary & Ken Okoroafor
Fresh from their recent appearance on ‘This Morning’, a popular daytime British television show, Mary and Ken will be discussing their new book ‘Financial Joy’.
Kristy Shen & Bryce Leung
Kristy and Bryce’s financial independence story has been featured in news outlets worldwide. Authors of ‘Quit Like a Millionaire’ Kristy and Bryce will join the Sloth Investor and Jay in the spring for an insightful discussion about personal finance.
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