About Gordo Byrn

I write for my kids

Marriage Mindset

Ax_Dad

I’ve found these helpful.

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At its core, what’s marriage?

Marriage is an agreement to never intentionally harm each other.

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I have a strange, and recurring, expectation => a desire to see my spouse happy doing things that I find difficult.

It is unreasonable to expect my spouse to be happy doing things I find difficult.

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Early in our relationship, I made a wise decision.

I gave up trying to teach my wife anything about nutrition.

I should have extended this attitude across a wider range of topics.

I didn’t marry for the opportunity to teach competency to my spouse.

I married for the opportunity to serve.

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Our children have two habits that cause problems in our house: (1) “accidentally” physically hurting each other; and (2) the use of biting “humor” to tweak each other.

Make a habit of avoiding unnecessary conflict.

Start by noticing, there is a lot of it, particularly internally.

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Winners want the ball.

To be fit for leadership, I need to figure out how to deal with this.

“This” being whatever happens to be upsetting me at the minute.

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I don’t need to “figure out” everything.

What I need to figure out is my reaction to the normal ups and downs of life!

I am absolutely certain, my future self will say I could have chilled out more.

Make a habit of yielding as much as possible.

Basic Week Parenting

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When I was training seriously, I’d start most seasons with 13-weeks where I would “stay put and roll the week.” Having a simple, basic week is a powerful tool for getting stuff done and avoids the cost of variation.

The cost of variation is the energy required to consider alternatives, to choose and to negotiate for “space” for ourselves.

When you are at the limit of your ability, patience or capacity to recover => eliminating unnecessary variation (and associated conflicts) can be a big help. I’ve brought a similar approach to my family.

I’ll use my son’s schedule as an example, here’s what he’s doing November to April:

  • Monday – school/soccer
  • Tuesday – school/water polo
  • Wednesday – choir/school/jiujitsu
  • Thursday – school/swim lesson
  • Friday – school/go to mountains
  • Saturday – ski group/movie night
  • Sunday – family ski/back home

Every-single-morning, he’s going to read for 20 minutes before doing anything. He is usually reading by 6:31am.

Despite everyone “knowing” the schedule, we write it out and place it on the kitchen counter. This lets everyone have a look and get comfortable with the plan.

There is variety between the days, but little variation between the weeks. For example, I don’t need to worry about what we are going to do on a rainy February weekend.

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The bulk of my “life” fits into the time before my kids wake up, when they are at school and my “days off.” In the winter, many weeks, my wife handles the kids from end of school Thursday to Friday evening.

Bedtimes, my own included, are set so we can wake up and keep the week rolling. When we start to get run down bedtimes move earlier and earlier.

I give myself zero flexibility with my own wake-up time => “no excuses wake-up” eliminates energy spent on choice.

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Some principles we use.

Sleep, school work and healthy eating is our highest priority. Create the habits and energy to outperform.

Kids don’t know what they want. Our minds are hardwired to complain about every single change and variation => just look inside! Absent a repeating schedule, you are certain to have endless negotiations. Exhausting, when you don’t have energy to spare.

My kids want: love, to demonstrate competence and acceptance => the schedule needs to provide everyone with a chance to meet their basic human needs.

Clear ownership of responsibilities. Who is doing what? The kids are hardwired to compete for your time. Lay out the mommy/daddy times, make it equitable. With our preschoolers, showing them their “mommy days” was very important to reduce conflict and let mom see she was doing enough.

Keep it rolling at grade level. I do not care about the relative performance of my kids. I am most interested in identifying holes. If you have a future Rhodes scholar in the house then it will become apparent in its own time. However, if you miss the fact that your little one doesn’t know how to read then it will severely damage self-confidence, their attitude toward education and their capacity to teach themselves.

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My constraints are extremely useful as they keep me from over-doing-it. I have a track record of burying myself with fatigue.

My goal is to do what needs to be done, strengthen my marriage and have peace of mind => to know I am executing to the best of my ability, most days. I know what I want.

Because I witness my internal dialogue, I am constantly reminded of my shortcomings!

Meeting a reasonable basic week gives me an anchor and avoids the temptation to increase my expectations of myself.

Simplicity and repetition.

 

Diversity of Thought – Things we can’t imagine

2020-01-05 14.39.11-1.jpgA popular theme in the media is handwringing about the divisive nature of political discussion. Everything would be much better “if we could just get along.”

I’m not sure.

Social systems tend to overshoot, overreact, over-everything. When we have widespread agreement (think totalitarian states) humans tend to drive the bus off the road.

Can you name an area where we have wide-spread agreement across the political spectrum?

I can.

Deficits, borrowing, bonding.

Left-right, north-south, east-west, up-down, local-state-national-continental => near total agreement on the benign nature of government debt.

Because disagreement limits the size of potential errors, total agreement worries me.

A surprise in my 2019 was my state’s voters not approving a change to our taxpayer’s bill of rights. It is the only constraint, on the ambitions of government, I noticed last year.

We should not expect government (or friends & family) to “do the right thing” in advance of a crisis. Human nature isn’t designed to work that way. An increase in our collective tolerance of regulation and taxation (ie pain) doesn’t happen until after a crisis.

Our collective problems won’t be addressed until after they blow up.

My individual risks, however, can be addressed right now.

A collective belief in the benign nature of debt is self-reinforcing. While the debt cycle expands, asset values are inflated, consumption is pulled forward and economic growth is nudged upwards. Because of its ability to feed on itself, debt expansion can continue for a very long time, particularly with interest rates near zero. Ultra-low rates enable lenders to fool themselves about the credit quality of the marginal borrower.

What to do?

Life is not filled with only bad news! Am I able to take advantage of unexpected positive surprises?

It’s counterintuitive but I’m positioning myself to borrow a lot of money. My 2020 project is creating an option to borrowing 30-years fixed at an interest rate that none of us can currently imagine.

How might unexpected negative surprises wipe me out?

Consider who is getting out of hand with their current borrowings. What’s the credit quality of… your employer? your family? your largest customers? your local/state/national government?

Do you work for a high-leveraged company, in a state with massive unfunded pension liabilities, while rolling your credit card balance each month?

Hidden liabilities lie (mostly) hidden. Ponzi schemes, unfunded retirement benefits, promises for future spending, fixed price contracts… think about your life. Where do you have exposure to a single person, CEO, manager, employee, fund, investment? In an easy-money environment, it is possible to hide significant liabilities.

Things we can’t imagine are likely to be underpriced.

Kinda tough to imagine the unimaginable! What seems impossible to imagine? Inflation, interest rates at historical norms, rapid nominal growth, credit crisis in a large sovereign, large hot-war…

For me, the goal is not to predict the outcome. My main goal is to protect my lifestyle from shocks and surprises.

To make it real, I ask, “what could blow up ski season?” Health, injuries, illness => my current risks are more human, than financial. Think beyond the money.

To focus on new ideas requires us to reduce the noise in our lives. Are you engaging in a policy of constant distraction?

There is a lot we can do to manage our exposure to the errors of others. Bad companies, bad relationships, bad government… many of us have the ability to pack up and leave. I’ve lived and worked in eight different countries, on three continents. Gradually working towards a situation where the main person who can hurt me is myself!

As a young man, I spent many years exposed to the errors of a single individual (my bosses and my business partners). More common is exposure to the errors of a single corporation.

With preparation, you can benefit in times of stress, but first you must survive.

Positive Change

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My inkling for change starts with a feeling that I should take a break from doing something, or seeing someone.

The “someone” breaks happen because I notice that my inner life becomes unpleasant. I don’t like my thoughts when I’m around the person. So I take a break and pay attention.

The “something” breaks happen because I ask myself the question… “where is this choice, repeated, likely to take me?” Eating habits and a couple daily beers would be examples from my life.

Anger, self pity, inaction in the face of adversity, getting really upset about external reality… other areas where “I should take a break”.

Politics, ethical lapses of others, the drama in your media feed… do you need more? So nice to dial it down.

Unfortunately, by the time I notice something is damaging me it’s already become a negative habit.

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Do It Now => If take-a-break thoughts stick around then I don’t wait for lent, don’t wait for New Years, don’t wait until later.

I make a change for a month and pay attention.

A month will not create a habit but it is enough time to see if it might be worth the long-term effort that’s going to be required to change.

The sooner I start, the sooner it will get easier to live with the change.

After 500-days, my habits roll along, mostly on autopilot. My job (on the far side of change) is to not screw up the streak, and reduce life stress when old habits start to tempt me.

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The Drain of Self-Justification => resist the urge to justify yourself with others. You are going to need that mojo for something useful!

Don’t say goodbye, don’t give a huge explanation, don’t burn bridges… Because…

First, and most importantly, I need all my energy to sort my own life out.

Second, I’m going to feel differently about this situation (and every situation!) later and don’t want to go on-the-record in my mind.

Finally, do what you need to do and be low-key about it.

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Peers => pretty clear that you don’t want to hang around your dealer, anger-buddies or gluttony-appreciation crew. The “not do” is a whole lot easier to see.

As a guy who enjoys periodic isolation, it can be easy to think that the answer is walling myself off. Lasting change needs to happen in a way than enables me to live in the world, to connect with others.

What do I want more of?

More of the person who makes me want to improve => I married her.

More of the people who motivate me to set a better example => my kids.

More of the wisdom to see the difficulties I experience are coming from the pain of change NOT from anything to do with other people.

It is not about what we think it is about. All of my difficulties are arising inside of me.

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Stress => as an elite athlete, the spring and summer would be spent with a focus on “doing.” Training stress would be high as I prepared for a race. Fall was a time for racing, then assessing. Winter was when I dropped stress down and addressed issues that had arisen during the high-stress period of the summer (or tried to put my life back together after six-months of ignoring most non-sport items).

Unfortunately, the lifecycle of a family doesn’t work on an annual basis!

As a father, I couldn’t just hold on until November…

Being newlyweds was an amazing time and I had my life dialed.

As we added, babies and financial stress => 2008-2015 => my “bad” habits started to return. Financial stress and toddlers are a potent combination if you’re prone to escapism.

I’m not sure if I realized what was happening but I noticed moments when I said to myself “I should probably take a break from this.”

In times of high-stress, keep it together as best you can. It’s going to be tough, for a while. I had a buddy advise, “just don’t get fat.” He’d gotten fat.

Once our youngest started kindergarten, I had the capacity to start making progress (back towards where I was in 2004!).

  • 500 days to make a new habit.
  • Don’t mess with a streak.
  • Pay attention to your triggers => people, places, situations.

So if you are thinking about change… choose one thing, with a low bar and do it daily for 500 days.

Difficult games can be fun to play.

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PS – As my friend, Doc Hellemans, says… “exercise is medicine” – picture above is from my 51st birthday lunch.

2019 Wrap Up

2019-12-20 07.28.00Closing out 50 and wanted to jot down a couple thoughts.

The single greatest surprise of 50 was discovering I can make progress on difficult things => from my personality quirks to fatherhood to strength training.

I thought I’d be spending most my time managing my “decline.” Got that wrong.

That said, the declining energy of age is real. So I’d encourage you to climb your mountains. Don’t wait!

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For good and bad, life runs on habit energy.

Far more valuable than financial returns, our daily habits will compound across the decades of our lives.

20+ years of the following:

  • Daily movement
  • Be a better guy
  • Apply the energy from negative emotions in a positive manner => internal improvement beats external justification

For me, practicing with intent (say with parenting or marriage) requires mental effort. This effort is “expensive” and not fun. I spend a lot of time lowering the stakes and simplifying.

When you are fall short, have a look around. Consider if your goals are too complex and your environment too stressful. I can be easily overwhelmed during the holidays.

Sleep, weight, anger, cravings => we have patterns that emerge in stressful times. As a young man, I’d muddle through by giving less to my relationships. These days, I create space in my week and back off my physical output.

I miss grinding through but it’s counterproductive (and being exhausted never was all that fun).

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The next big transition will happen when my kids move out. This requires a set of skills that don’t come naturally to me.

So the 20+ years that I’m going to spend as a parent, with three kids in my house, are an opportunity to practice getting along with people.

I’m extremely fortunate to be married to a woman that finds human quirks entertaining.

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Finally, I gave this advice to a friend many years ago, when he was the age I am now.

You might die but probably not.

So it’s worth working on the things that will prove useful to your future self.

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Rent vs Buy in Vanity Markets

2019-12-07 09.28.44A vanity market is one where the main benefit you gain from ownership is telling your pals that you own.

Similar to my observation that I was wired to buy a “big” house, there are other purchases our ego gravitates towards: cottage at the lake, ski chalet, big-city pied-a-terre, beach house, farm…

Our ego’s weaknesses depend on our cultural background, childhood memories, current mood and social situation.

My ego can lead me far astray, particularly with non-yielding real estate, and depreciating assets.

I’ve been battling with myself since I first visited Vail, Colorado. I’ll illustrate with real figures from the neighborhood of East Vail. It is a niche market, which I’ve been following for 16 years.

The “buy” => $1 million buys you the opportunity to spend another $375,000 to renovate, and furnish, a property that was build in the 1970s. After your renovation is done you pay ~$25,000 per annum in taxes, insurance, HOA and running costs.

The “rent” => $25,000 to $40,000 all-in rental cost for the same property.

Something we noticed about skiing, most skiers don’t ski.

Put this observation another way… there’s a lot of empty real estate around.

I’m sure every empty place has a history of buyers, who were certain they’d use the property more often than they do.

A useful rule of thumb is to assume that every $1 million, in a vanity property, costs your family $50,000 per annum. Renting makes (some of the) opportunity cost real, and allows you to calculate the cost-per-night of what you’re using.

Above is what you can see and calculate.

What about what you don’t see?

#1 => the option to change your mind, without cost or hassle. This is a powerful argument when framed correctly.

Honey, the kids are going to grow up and leave. When that happens, our life will change in ways that are impossible to predict. We should maintain the flexibility to change our minds.

#2 => the option to buy in a downturn. About once a decade, property values snap downward. Waiting does not feel like a valuable option but it is. I’ve seen brief, 50% markdowns numerous times.

#3 => what I think I will like does not match what I actually like. I am a master at fooling myself. Fooling myself with regard to location, views, amenities, garages, layouts… you name it.

Renting “forces” me into different types of properties. Because mistakes are so expensive, I write down the lessons from every new property.

Here’s the best lesson of all…

Assets don’t create the life you want to lead.

Focus on shared experiences with the people you love.

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Family Real Estate 2019

2019-12-01 17.07.49I like investing in residential real estate for several reasons:

  • The market is dominated by unsophisticated buyers/sellers, who are often driven by external events and emotions;
  • The availability of long-term fixed-rate non-recourse finance; and
  • Favorable tax treatment.

There are some drawbacks:

  • It is extremely expensive to buy and sell => a mistake will cost me 10% (gross), if I am lucky. If borrowing, even conservatively, then I can lose 35-50% of my equity in a year.
  • It is lumpy => if you need the money back then it is very difficult to gradually drawdown your investment.
  • It is illiquid => if we _really_ need to cash out then we won’t be able to cash out
  • Humans are hardwired to over-buy => as soon as I could afford a huge home, I bought one. It took me years to get my capital back. I was very lucky => I purchased with a large margin of safety (no leverage, big site, big building, prime neighborhood).

Taking the above, together, real estate is a useful core holding for money that won’t be needed for 10+ years.

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I follow two types of markets:

Markets where growth in prices is driving by “wealth feelings” in the top 0.01% of society => Vail mountainside homes, Boulder view properties. These properties have done well, appreciating to levels where implied yields are -2% to 2%.

I prefer to invest in traditional markets => markets where price growth is backed by a combination of real-economic growth (ability to pay), construction inflation (replacement cost) and discounted cash flow (net yields above my cost of capital).

Both markets are influenced by the availability of credit. Both markets benefit from scarcity and desirability in location selection.

Remember that even a “cash buyer” is influenced by easy credit. Credit conditions influence the value of ALL assets => wealth effects. These wealth effects cut both ways => highly wealthy people can feel “poor” when their balance sheets are shrinking.

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When I buy, I create a margin of safety by seeking:

  • Land for cheap => is there extra land I could sell off or am I buying in a very desirable location.
  • A lot of square footage for cheap => ideally, I’d like to get the land for “free” by paying less than the replacement cost for the building. Even if you never build, it helps to know building costs.
  • Distressed seller => life happens, often at inconvenient times.
  • Closed credit markets => by ensuring I have the ability to hold through tough times, I can use unallocated capital to buy during down markets.

I’ve been preparing for my next deal by improving my credit worthiness:

  • Building up a capital reserve.
  • Improving my credit rating – paying credit cards early, taking advantage of a 60-month 0% car loan offer, always paying my mortgage on time => taken together these strategies added 80 points to my credit score from 2012 to 2019.
  • Reducing leverage => paying down my mortgage and car loan. Closing out my second mortgage.

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We’ve seen significant house price inflation in Boulder => supported by: (a) rising construction costs, (b) local economic growth, (c) inward migration of wealthy coastal buyers, and (d) easy credit terms.

In 2019, I looked at deals to increase investment in Boulder (buying apartments and renovating houses). In the end, we decided to decrease investment in real estate through a sale-and-leaseback of our home. 

The leaseback costs me some tax (today) and positions me to borrow long at favorable terms. The option also costs me the future capital appreciation of my home, which won’t be mine any more. We retain exposure to the Boulder market through rental properties we own.

I’ve structured the deal with vendor finance, allowing a gradual drawdown of the proceeds. The net monthly cash flow covers our cost of living through my youngest daughter’s high school graduation. Having our cost of living covered protects my ability to control my schedule => highly valuable to my family in a way that’s difficult to quantify.

This is the cheapest way for me to sell real estate and positions us to buy when conditions swing in our favor.

Raise money before you need it.