I got a check for $25k and I blew it
Why financial literacy should be mandatory in high school
Hey reader,
This week in Mountain Remote, I dive deep into a situation that happened to me when I was 19 years old. Had I been better with money in my early twenties, I could be sitting on a semi-sizeable net worth right now. But I blew it, at least partly.
Live and learn. I’m still a very fortunate person, with immense privilege as a straight white American male. I just can’t help but wish I’d learned financial literacy at a younger age, and wish the same for others, as well. I plan to teach my daughter this lesson as soon as possible.
Thank you, as always, for being part of the Mountain Remote community. I hope you find a takeaway in today’s essay.
Community Shoutouts
Welcome to the five new subscribers since last week’s essay! This newsletter is all about optimizing for a remote work lifestyle in the mountains — and I hope you learn from my mistakes.
Today’s essay was inspired by an episode of the Tropical MBA podcast (my favorite) featuring The Financial Samurai. It got me thinking about how I used to optimize only for today — and how much that prevented me from getting ahead. I also recommend TFS weekly newsletter.
Thanks to Jeff for sharing a conversation about punk rock bands with me after reading last week’s essay.
Now, let’s find the mistake.
I got a check for $25k and I blew it
“You’re gonna hit that f*cking that car, dude,” I said, the alarm present in my voice. The date was January 13, 2003, and I was in the shotgun seat of a 1995 Subaru Impreza cruising through Durango, Colorado, on our way back to the Fort Lewis College dorms after a day of snowboarding at Purgatory Resort.
John was asleep in the back seat. He’d been up all night partying with the driver, Mike, and had been lackluster on the mountain all day. Mike had shifted into the suicide lane in between the two driving lanes on Durango’s Main Avenue, just south of 20th Street. At first, I figured he planned to turn into the upcoming gas station on the left. But when we drove right past it, while continuing to shift left towards the opposite lane, I started to worry.
A car was heading straight towards us.
“Hey man, you see that car coming?”
By the time we’d passed through the intersection at 18th Street, we were entirely in the opposite lane.
“DUDE! YOU’RE GOING TO HIT THAT F*CKING CAR!”
Then it happened.
We collided head-on with the oncoming vehicle. Semi-fortunately, its driver saw us coming and had slowed to about 15 MPH. We hit it going 25 MPH.
The front of Mike’s Subaru crunched inward like an accordion. Squeaking car parts and a loud boom ensued. The dashboard slammed into my legs. In a violent display of physics, the Pauli Exclusion Principle took hold. The force of the impact sent both vehicles backward a few feet, ours now askew and facing the left curb as we’d hit at about a 15-degree angle.
Then, all was silent. Time stood still.
I looked over at Mike. He leaned against the window of the driver-side door. I couldn’t tell if he’d been knocked out or had been asleep the whole time (it turned out to be the latter). John was jolted awake to a haze of chaos.
A few moments went by. I don’t know how long they were. Then, suddenly, panic took hold. I felt an urgent need to get out of the vehicle. The passenger door squeaked open with the force of my push.
My left foot hit the ground first. My leg did not follow. Instead, it collapsed, cracked, and sent me tumbling out of the vehicle onto the street.
Pain shot to my brain, a pain I’d never felt and wasn’t prepared for. I shrieked, laying on my side on Main Avenue. A stream of profanities followed. My leg was twisted behind me at an angle I’d never seen before. It looked like the worst of the pictures on College Humor.
A middle-aged woman, who’d been walking along the sidewalk and saw the accident, heard the vulgar yelling and ran up to me in the middle of the northbound lane.
“You're going to be OK,” she said. “The ambulance is on its way. The best thing you can do is try to be calm.”
“I’M NOT GOING TO CALM DOWN I BROKE MY F*CKING LEG!!! WHAT THE F*CK IS HAPPENING?”
If you must get into a head-on collision, it’s best to do so only a few blocks from a hospital. It seemed like an eternity to me, but I was told later that the ambulance arrived in less than three minutes.
I was loaded onto a stretcher and put into the ambulance. The next thing I remember is waking up in a hospital bed several hours later.
Reconciliation
Among the first visitors to my hospital room were two police officers. They asked me if the driver had been drinking (he had not). They then informed me they had found marijuana paraphernalia in the vehicle and asked if he’d been smoking.
I lied to protect my friend.
The police then informed me that I should consult with a personal injury lawyer. Mike came from a wealthy east coast family (this I already knew), and his insurance would be responsible for reparations, they said. They asked if I wanted to press charges against Mike, and I declined.
A few years later, a check for $25,000 arrived in the mail, part of the settlement I received.
What I did with the money vs. what I should have done
At the time, I thought I handled the money pretty well. I paid off $7,000 in student loans. I cleared the remaining balance on my car, about $4,500. I took a solo road trip up California’s Pacific Coast Highway and visited friends along the way. I also paid off a few grand in credit card debt for myself and my partner.
All of this was good.
I enjoyed too many nights out at the bar and had money in my pocket during a summer tour with my band. But the biggest mistake happened when I paid a visit to Wells Fargo to ask about opening a Closed Deposit (CD) with the remaining $5,000. I opened a 3-year CD and earned about $120. Once the term was completed, I moved the money to another bank and opened a 5-year CD, earning about $200. After eight years, I’d earned about $320 in passive income.
Had I invested that $5,000 in Vanguard’s 500 Index Fund, I’d have $20,656.50 today (enough to completely reimburse myself for the debt I paid off):
Shares of VFINX on July 1, 2009, were $85.10.
$5,000 divided by 85.1 = 58.75 shares
VFINX is worth $351.6 at the time of writing.
58.75 x $351.6 = $20,656.50
But I didn’t do that, because I didn’t know a damn thing about investing back then. I didn’t know what an index fund was, or that investing in the stock market was even a possibility for me. Even if I’d known, I likely would have made an excuse not to do it, claiming it to be against my “values.”
Now, let’s look at what that money would have looked like if I’d bought a small condo in Durango. According to The Durango Herald, average home prices in 2009 in Durango were about $350,000. I would have been spending far less — around $100,000 max for a two-bedroom, one-bathroom condo.
With just $5,000 down, and my annual income at the time being just under $20,000, I likely would have needed my parents to co-sign, and still may not have been approved for a mortgage. But if I’d taken the entire check and put it down, I’d have a 20 percent down payment. I could have found a roommate to split the mortgage cost, or even to pay most of it, given that the average rent in Durango at that time was $859 (the mortgage would have been about $606, according to Google’s mortgage loan calculator.)
I’d have been living for incredibly cheap with an appreciating asset that today would be worth nearly $300,000. I could have used the money I saved with such cheap rent to pay down my other debts.
In essence, I optimized for today rather than optimizing for the long-term.
Where the issue lies
It’s a shame that financial literacy isn’t taught in high school. Granted, as a teenager, I may not have given a crap about financial literacy anyhow. But the problem is that the financial illiteracy I describe above isn’t uncommon, and is actually the norm.
And of course, having a settlement check is something most people don’t have. I’m hesitant to call myself fortunate that this happened because I now have a metal rod in my leg that very likely will cause problems as I age. I can already feel the weather shifts as they come in.
I also suffered immense pain and had to take a semester out of college in order to recover. I hobbled around on crutches for months and had a noticeable limp for over a year afterward.
Not spending that money on a long-term investment like index funds or a condo hasn’t ruined my life, or even set me back. And I didn’t blow the entirety of it, the bulk was used for good purposes. But it could have become so much more — if I’d sold the hypothetical condo at age 30 (the age at which I actually entered the real estate market for the first time) I’d have been able to put a sizeable chunk down on a better property AND buy in heavily to an index fund. With money left over to do any number of road trips.
I cringe thinking about all the powder days I’m missing because I should have done what I’m doing now, 13 years ago.
The good news is that it’s never too late to start.
Mountain Remote news and further reading
Coworking spaces are increasingly common at (or adjacent to) ski resorts. I recently discovered SkiWork, based in Winter Park, and plan to pay them a visit this coming winter. A few other options for those in Colorado:
Gravity Haus (Breckenridge, Vail, Winter Park). I’ve worked at the StarterHaus coworking space in the Breck location and found it to be superb. Gravity Haus offers memberships that include lodging and events, in addition to coworking.
AltSpace Telluride (also locations in Montrose and Grand Junction). I’m a member in GJ, and hope to make it to the Telluride location this winter.
The SkiLocker in Steamboat Springs.
You don’t have to be a writer or developer to work remotely. These seven industries are increasingly hiring remote staff, and the Dynamite Jobs job board posts only remote jobs.
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Thanks for reading, see you next week!