Thread by @yashkaf

For financial decisions you should think of yourself as a stock with a market price that reflects all your future earning and spending. This number is much more important that your current income or net worth, and yet everyone focuses on the latter because they're legible.

Let's say you're 25, can write a bit and do Excel and deal with corporate culture. This gives you a 80% chance of having a $50k+ job in a given year. If you plan to work for 25 years, this set of intangible assets is worth ~$1,000,000 to you. Your net worth is peanuts next to it.

This means that if you can go to a top MBA or coding camp and double your base salary, you should be willing to take $100k in debt to do it because it will increase your "market cap" by another million at least. You get 10x payoff, or at least 5x if you discount for uncertainty.

How about that $6 cappuccino you get every day at work? That's just $1,200 a year. If it makes your work life 2-3% more tolerable in the long run, it's worth it.

Advice like "avoid debt" and "skip the coffee" is too general. Imagine you own stock in your clone and ask yourself how getting this degree or developing this coffee habit will affect the share price. This gives you the benefit of the outside view and focuses on what's important.

If you think there's a 5% chance each year your degree will become useless or you'll hate it too much to do it you can just discount your future earnings by an extra 5% per year to account for it. That's what I meant by "accounting for risk".

https://twitter.com/shaispiegel93/status/1390714810774429698

You can do the same math for costs. E.g., if you choose to take a job in San Francisco (median 1 BR rent $2,600) vs San Diego ($1,800) that's a $100k difference in NPV if you discount by a 10% chance of moving cities each year. Could be worth it, but do the full NPV math.

One last thing: the NPV of a frugal, hard-working spouse and nerdy anti-consumerist friends who tell you about crypto instead of brands is easily in the millions. Way more important that what you pay in rent of your student loan APR or whatever transient number seems important.