What Can Be Learned from the Book “Die with Zero”?

If you are not already in the mindset / habit of continuously spending your money on life experiences to enrich your life while you are reasonably young, fit/healthy and able, rather than postponing it to some distant future, that may or may not happen, then this book is for you. Die With Zero: Getting All You Can from Your Money and Your Life is about focusing on net fulfillment rather than net worth. Delayed gratification is one of the surest indicators of success, but you can actually have too much of it, if you in indeed never enjoy it. There is little use in saving your money through your entire life, if you never spend and enjoy the fruits of your labor.

The author William O. Perkins III (Bill Perkins) studied Electrical and Electronics Engineering from the University of Iowa. After graduation he worked under natural gas trader John D. Arnold for several years before starting his own hedge fund. During his career, Perkins directed NorthernStar Natural Gas and was the CEO of Cutuco Energy Central America. Perkins actively traded the stock market turning a $1.25 million profit trading Goldman Sachs in September 2008. In 2009 Perkins became involved in film production, producing various films including After.Life (2009), Unthinkable (2010), and Cat Run (2011). Perkins focuses on venture capital and energy markets. He founded Small Ventures USA, L.P in 1997 and later joined Centaurus Energy in 2002. He currently manages the Houston-based energy hedge fund, Skylar Capital.

Perkins is also a high stakes poker player who has entered multiple events including the World Series of Poker, Big One for One Drop, PokerStars Big Game, PokerStars Caribbean Adventure and “High stakes poker” as well as Poker Night On Wall Street. As of 2019, his total live tournament winnings exceed $5,400,000. Perkins is friends with Dan Bilzerian and they are often seen together.

According to the author “Die with Zero” is a labor of love project: Perkins has been developing the principles outlined in the book since his first job making $16,000 a year in the 90’s as a screen clerk for the New York Mercantile Exchange. You can find the website for the book here.

Below are the key points from the book along with some reflections.

I highly recommend this book. The key points are meant as a preview and not a replacement for the original work. If you are intrigued after reading this, please consider purchasing the original book to get the full experience as the author intended it to be.

Key Points

Suggested principles to your life

1. Maximize your positive life experiences
2. Start investing in experiences early
3. Aim to die with zero
4. Use all available tools to help you die with zero
5. Give money to your kids and/or charity when it has the most impact
6. Do not live your life on autopilot
7. Think of your life as distinct seasons (or time buckets)
8. Know when to stop focusing on growing your wealth
9. Take your biggest risks when you have little to lose

The core message of the book: If you have got any money left in your bank account by the time you die, you have done something wrong. The author of the book, Bill Perkins, explains we all need to make money to survive e.g. buying food, paying rent, but once we have covered our basic needs then we should use that time and money we have left from survival to essentially buy more meaningful and fulfilling experiences like traveling or going to the cinema.

If we assume that beyond having the basics covered, life is about having fulfilling, enriching and meaningful experiences, then in an ideal world we would just trade in our life energy directly for those experiences. However, in the real world money is a middleman between life energy and fulfilling experiences. Most of us do not know when we are going to die, but the expected lifespan is about 80-85 years. If you have 50 000 USD left in the bank at that stage, that money represents

• the extra several months that we worked to earn that after tax fifty thousand dollars, and
• that 50k represents all of the experiences that we did not spend that money on, such as going on 10-20 holidays or 200 fancy restaurant meals or even just an extra year of retirement.

The argument is that basically all of this life energy that we traded has basically been wasted because all that money that we earned is just gathering dust and it is not useful to us at all once we are dead.

This Raises a Series of Questions/Objections, Such as

• What if you run out of money when you are old?
  Apparently most people who save, actually save way too much and spend much less during their retirement than they thought. In the book this is backed up by numerous studies that Bill Perkins cites. The main point is that we fear running out of money a lot more than than what is warranted.
  
• What about leaving money to your kids?
  Dying with zero could seem like a really selfish thing to do, since you most likely would want to leave money to your kids. However, if you do want to give money to your kids, it would be better to pass it to them when they are young rather than when you die. Also, you could give it in several smaller installments along the way, rather than as one big lump sum.
  
  If we only give away money when we die, then our kids will be around 50-60 years old when they receive their inheritance. This is not ideal, as when you are 50-60 years old and you get a big monetary gift, it does not actually help you that much because at that point you have already have a job, house and savings of your own. Thus, you will benefit a lot less from that money when you are 50-60 years old. However, if you received the same when you were somewhere between 25-35 years, then it be of tremendous help towards e.g. getting your first house, invest in starting your own company, or better be able to afford having kids by having some form of financial safety net. Having those amazing life experiences instead of grinding away your 20s trying to make rent, and potentially making poor decisions such as settling for a job you do not particularly like because you need the money to survive.
  
• What about giving money to charity?
  The causes that various kinds of charities support typically need money right now (famine, war, environmental damage, etc.). Due the compounding effects donations may have in alleviating different forms of suffering in the world it is much better to donate earlier to contribute to fixing these issues, sooner rather than later. Thus, waiting until you die before you donate is suboptimal. Also the joy of giving as well as seeing the results of your donations, is better enjoyed while alive.

If you have no disposable income, then by definition you need to spend your money right now just to survive. Thus, you are probably already using your money as efficiently as you can, in which case this book is really not for you right now.

3 reasons for trading money for experiences especially in your 20s and 30s

When we are in our 20s and 30s we should spend more money on fun and exciting things like going on adventures and doing cool stuff with friends all around the world. There are three main reasons for this:

• Earning power
  Our earning power generally increases as we get older. Thus, what seems like a big chunk of money when we are 20 years old is much less significant when we are 40 years old with a house, kids, an established career and a lot more money coming in. As our earning power goes up our happiness from spending 25 USD (or some other small amount) actually goes down over time. If you are young, say, in your teens or 20s, then you do not need to overly obsess about saving lots of money, because that money could be better spent on experiences right now, since the same amount of money spent on experiences 30-40 years from now is going to matter a lot less.
  
• Memory dividends
  Every year, good experiences that we have had in the past give us a return on investment, because every positive experience we have also creates memories in addition to the experience itself. If e.g. you and your friends go on an amazing 8-weeks interrail journey through Europe when you are 20 years old then you will probably have at least 15+ additional years to enjoy those memories and reminisce on the trip whenever you are hanging out and reflect on the wonderful moments and the lessons you have learned from it.
  
  Consider deciding that you were not going to take that trip and instead grind at work for an extra 8 weeks to make a little bit more money, to save up a little more. Then you would go on that trip when you are, say, 40 years old. You would be a bit more financially secure because of that extra two months of earnings, but you will have missed out on almost 20 years of good memories, extra life experience, new friends you met along the way and potentially other life choices based on the experiences you had during the trip.
  
• Old age
  When we are old then we naturally can not do all the things that we actually want to do and even if we can afford it, we might not be fit and healthy enough to actually really enjoy the experiences we postpone for ourselves. It is almost an inverse relationship between how much money we can make over time and how healthy we actually are to enjoy that experience as we get older.

Be aware that high earners tend to have a strong tendency to over-save and under-spend due to being risk averse. Instead lean towards a little bit more towards spending money and actually allowing ourselves to spend money on those experiences especially when we are young. However, keep in mind that the key point is not literally to die with zero in the bank account, but rather consider this as a big idea and that this aim makes you think twice about what you are doing with your money and what you are doing with your life.

How to Think About Time Buckets in Life

Based on the lessons in the book, you may want to consider your life as time buckets. At each stage of our life we are typically going to have different levels of “free time“, “money” and “health“.

• when we are young (0 – 31 years old): we have loads of free time, and good health, but no money.
• when we are middle aged (31-60 years old): limited time, decent amount of health and a decent amount of money.
• when we are old (60+): we have loads of money, loads of time, but limited health & energy.

Based on this realization, it makes sense to allocate different time buckets for each part of your life, so that you can use these resources most appropriately at each particular stage of life. Practically speaking, you take this principle a bit further and split your life into chunks of 5-10 years, and make a conscious decisions about what experiences you would like to have in each segment.

For instance, if you really would like to walk across the US, or cycle through South America, climb one or more of the Seven Summits, or something else physically challenging, you should probably work towards doing that before you are 50 years old (perhaps even before your 35 years old) while you are still reasonably fit to actually do it. While taking a cruise from Patagonia to Antarctica, or taking a ferry up the Norwegian coastline to take in the scenic coastal towns, marvel at the mountains, fjords and the northern light is an expensive endeavor, but not physically challenging and can be saved for old age.

Be bold, but not foolish. Meaning, we should take our biggest risks when we are young and do not have much to lose. This is an asymmetric risk-reward situation, where the downside is low, but the upside can be huge. Such as trying to start a new business when you are young before you have a partner/spouse or any kids. The downside if the business fails is, low (you can always make some money doing something else, or starting to work for some company), whereas if that crazy idea of yours works out, then the sky is the limit. Also, the compounding effects of an early success can be enjoyed for the rest of your life.

It is also easier to be more adventurous with regards to travel and living. You can move to a new continent, country or city, which will give you more perspective, life experience, enhance your network, allow you to meet new friends, while the risks and logistical challenges are very low. If it does not work out, you will have plenty of time and energy to recover.

There is also a downside of not taking enough risks when you are young, healthy and able, as this might lead you to potentially spend a lifetime of wondering “what if…”. If things do not turn out great, we usually learn from that and are left with life lessons and positive memories. That time when we gave something 100% of our efforts, we also felt more alive and we learned something about ourselves and what we are capable of. When we are older large financial risks are generally not worth taking, because it can leave us with not enough money to retire and not enough time to make that money back if it does not work out.

Keep in Mind

The book has some interesting lessons that we can learn, but keep in mind to not take it too literally as it is more about the mindset and principles then following it by the letter.

That being said, there are a few things in the book that can be questioned or challenged a bit:

• Money does not necessarily equal life energy, which is a main point made early in the book.
  In some cases with a small initial effort, a small piece of work can snowball and can create more and more wealth almost effortlessly. One can build up one or more passive income streams, which over time leads to very little work beyond a certain age in your life, thus you break out of the typical grind that most people are in, and you can thereby have money, health and free time in a larger portion of your life. That would also mean that the notion that money represents significant amount of spent life energy (to acquire that money through a certain job) as it would for many people, and as postulated in the book.
  
• Money equals optionality, through liquidity. By having easily accessible cash in the bank, or in safe investments you can act quickly and decisively if an interesting opportunity comes along, or in the face of a sudden emergency situation. In other words, keeping your options open, optionality, is good. However, if taken too far you might end up holding on to a large amount of money all the way up to your death bed, just to keep options open. Thus, optionality is not useful if not exercised, so that you stand to benefit from it, before you die.
  
• The book focus a lot on spending your money on experiences, but spending it on learning new things and personal growth (educating yourself) could have been more highlighted. Although, one could argue that in this day and age, information is free, so educating oneself does not require one to spend much money.

There are loads of interviews with Bill Perkins about the book, that you can check out. The one below is from “Power Lunch”, on CNBC.