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I’m far from a genius. In fact, I think I have a rather pedestrian mind. But I also think I’ve stumbled upon some profound insights in the course of writing this blog. And when one of those profound insights is confirmed by a famous blogger, which happened last week, I can’t resist the all-too-human urge to gloat.
So let the gloating begin.
Egotrage
Many Americans are struggling financially, not because they make too little, but because they spend too much. They could dramatically change their fortunes by adopting one simple strategy: egotrage. Drive a crappy car, wear Walmart clothes, eschew dining out, lattes, and cable television, live in a modest home, or suffer the infamy of having a “menial” job for a side hustle—these are just some of the ways struggling Americans with decent incomes can free up money to pay off debt, establish an emergency fund, or make an audacious financial goal a reality (i.e., retire early, start a business, travel the world, etc.). But in order to do this, our nicely compensated but financially struggling person must subdue his or her ego. He or she must be willing to engage in financial behavior that belies his or her socioeconomic status; that is, he or she must be willing to look like a poor or working-class person in some respect.
Last week, one of the more esteemed members of the FI community, Physician on Fire (PoF), wrote a post about the $90,000 house he just bought. And, no, he didn’t buy the house to rent out. He bought the house to live in with his wife and kids.
Why This Is Egotrage
This is a beautiful example of egotrage for three reasons.
1. PoF is rich. He’s a practicing anesthesiologist in his early 40s who has already saved more than 30 times his annual living expenses. In 2018, PoF’s living expenses for the year amounted to $66,000. This means his portfolio is worth at least $2 million. He has no debt, put a quarter of a million dollars in a donor advised fund, and his blog made over $100,000 last year. Yep, the dude’s got bucks. I consider myself rich, but PoF makes me look like a piker.
2. The price of PoF’s new home seriously belies his socioeconomic status. According to Zillow, the median sales price of a home in the United States is currently $235,500. This means the price of PoF’s new home is 62 percent below that median.
To put this into perspective, I went to Bankrate and calculated the monthly mortgage payment for a $90,000 home with some very conservative inputs (e.g., five percent down payment, highest interest rate option, and doubling the default estimates for insurance and property tax). The monthly payment was $691. If we assume a mortgage to income ratio of 28 percent as our maximum threshold for affordability, a person with a household income of $29,614 could theoretically buy this home ($691 times 12 divided by .28 equals $29,614). A household income of $29,614, in turn, is at the 25th percentile on the income distribution scale. Seventy-five percent of American households make more. So, yeah, when it comes to housing, PoF is slumming bigtime.
3. He slummed on housing because he valued an audacious financial goal more. From what I can gather, PoF wants to do anesthesiology part-time, continue championing the pillars of FI to the medical community, and take his family abroad for three or so months every year. A big monster house befitting a successful doctor/blogger would only complicate the pursuit of these goals. Would you want to own a big monster house knowing it would be vacant for a good chunk of the year? I wouldn’t. And neither does PoF. He’d rather have a perfectly adequate but unglamorous home—which his $90,000 home surely epitomizes—and devote his time, money, and energy to the things he really values.
Egotrage Is the Answer
When PoF reflects on his life many years from now, do you think he’ll regret not sheltering his family in the best damn home he could afford? I doubt it. Call me nuts, but I think he’ll look back at the time and adventures he had with his wife, children, and grandchildren and conclude that he is one of the richest people to have ever walked the earth.
Now I have a question for you. If PoF can “demean” himself by living in a working-class person’s home, why can’t you—get the smelling salts ready—”demean” yourself by living in a trailer? After all, wouldn’t egotraging to a single-wide, providing you’re currently bearing the costs of the typical middle-class home, dramatically lower your housing expenses and allow you to save a boatload of money in a relatively short time (5 to 10 years)?
If I said it once, I’ve said it a thousand times. Egotrage is the key to making an ordinary person rich. Thank you PoF for proving this groovyism, for showing a skeptical world that the easiest way to soar financially is to humble yourself socially.
Quick aside. While I was writing this post, I came across a YouTube video that nicely echos my faith in the power of egotrage. Check it out.
Final Thoughts
Okay, groovy freedomist, that’s all I got. What say you? Do I have reason to gloat? Is egotrage—a name I coined to promote strategic slumming—clearly something your everyday American can use to advance his or her financial fortunes? Or am I a delusional jerk? Let me know what you think when you get a chance. Peace.
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