It’s often said in the self-help literature and online articles that social/emotional intelligence is a key determinant of economic success, particularly in helping people up the career ladder. I can say that this is true from experience, having witnessed brilliant people get fired due to their social incompetence, and having struggled controlling my own emotions under stress. But what does this mean us who strive for FIRE? We don’t want to fight our way to the top of the corporate ant-hill. It’s a losers game and a waste of the short life God bestowed on us. We don’t want to network our way to long career that can withstand any economic blow – we want to quit as early as possible and be fiscally sound enough to weather any storm. Yet despite all this, social intelligence is still a vital resource to getting ahead economically.
If we think about it, there are three ways to become wealthy:
- Save more than average
- Make more money than average with our time and labor
- Make money with our assets
- Make money with other people’s time, labor or assets
When the last scenario is discussed, it’s often in the form of starting businesses with employees, borrowing money from banks or investors for profitable assets, or creatively writing contracts and deals that give you an ownership stake in a business/asset without full participation in day-to-day operations. What’s less often addressed is the actual transfer of time, labor and assets from one person to the next. And no, I don’t mean theft!
What I mean is bartering. You exchange something that you don’t care about for something that you do, and as a result push your lifetime asset curve up and your cost curve down. This thought came to me recently as the result of my basement bathroom remodel. Three people have helped me on this project: my father, my roommate the general contractor, and his assistant. My Dad estimates that he’s spent 300 hours on the project and at $40/hr that equals $12,000 in labor. While I can get him an extremely nice Christmas present, there is no way I could ever repay him for what he’s put in. My living in a safe home and being at his beck and call when he needs me is all he requires. My roommate put in even more time, but I’ve only paid him a pittance for it – around $3,700 ($1,300 in immediate rent and $2,400 in deferring rent increases for the remainder of his stay). He also wants me to let his girlfriend move in, which I don’t care about because she’ll be in the basement too which I don’t use anyways. I’m sure he’d also like me to keep him in mind if I ever decide to start flipping houses, which I’d be more than happy to do so. (how many general contractors with 20+ experience does the average person know?) The only person I really paid in a way that hurt was the assistant, who needed $1,200 in cash for his labor. I would have really liked to keep that cash and pay down my debts. In all, while the bathroom will cost me between $11,000 to $14,000 in total, it should have been $30,000 more.
I’ll let that sink in for a moment: I saved $30,000 and increased the value of my house. All of that money invested over my lifetime easily equals six figures. I then also increased the rental income from my basement that would equal to another $36,000+ over ten years. If I were to put this out on the chart, my lifetime earnings max has grown greatly and I am much closer to retirement.
But while this is an extreme example, it could prove true in many other ways. Relatives can take turns watching each other’s kids to cut down on babysitting fees. Friends or experts you know with experience in real estate or personal finance may share a lifetime of experience for the cost of a meal or two. Neighbors are often willing to lend out tools (if you return them quickly!) if all you do is gossip, get their mail while they’re away, and aren’t a huge dick to them. It’s great when you can use a saw and nailgun without having to spend $1,000 to get the tools yourself! In some cases, retired tradesman may often being willing to advise you on a project and teach you a skill with minimal payment, if they don’t do the work themselves.**
In each situation you can at least save money and keep your costs down to a minimum. In others, you can leverage this bartering to build assets and skills that will put money in your pocket forever. On my most recent project, I’ve learned some skills – particularly demo work, tiling, and installing wainscoting – that will make me tens of thousands over the years. The only thing you really need to pay in is the time needed to become friends. So don’t be a couch potato; don’t be a cheap skate with your time. Get out there and meet people! You can be wealthy with others, or poor on your own.
**Note: Per my Dad, this may not work with electricians. They’ve had years of education and experience and it would take years to convey just the hundreds of ways you shouldn’t do things.