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3 Personal Finance Lessons From Fight Club

Posted in Money

I used to be a materialist to prove a point to others. Then I became an anti-materialist to prove a different point. Later I realized that I don’t own enough stuff to prove my anti-materialistic point, so I became just enough of a materialist to prove that materialism was evil.

When ZeroHedge first began, they used a reference to the cult-classic, Fight Club, which in their minds promoted an anti-materialistic outlook. While Fight Club did address materialism in the movie, it taught a much different lesson on it than you may read across the internet, among several other important financial lessons. In this post, we look at some important financial lessons from Fight Club, from increasing difficulty to focusing on our self-honesty and self-discipline over materialism or its opposite.

This is your pain. This is your focus.

In the most powerful scene of the movie, Tyler burns Jack’s (the narrator) hand to strengthen Jack against the reality of pain. Pain is unavoidable; it’s only a matter of when not if, and weak people try to escape it through denial, entertainment, or feigning ignorance of its reality. In his book, The New Paradigm For Financial Markets, George Soros warned that “if you [escape] from reality, it’s is liable to catch up with you” and this is generally even more painful than if you had faced it.

In the scene, Jack does exactly what we expect – he tries to escape into meditation, beautiful scenery and nice places he’s traveled. The pain still exists and it continues to hurt. Tyler slaps him, adding more pain and tells him, “This is the greatest moment of your life and you’re trying to run away from it” (paraphrased). Tyler goes to a further extreme – stripping Jack of all his comfort – “God hates you; God detests you” (paraphrased). The last vestige of hope that people often run to is religion and Tyler kills it. In other words, “You are in pain and everything in existence is working against you to increase that pain. Everyone – including God – hates you.” Jack loses everything in that moment, and yet, in losing everything he experiences freedom. His pain is inevitable, his loneliness is part of his existence, and now the challenge is showing how much he can take.

Financial advisers love to talk about money from the angle of achieving comfort, but there is no guarantee of comfort and this is one reason that some of them failed to see the length of zero interest rates, or negative interest rates. Life doesn’t guarantee success; as we emphasize in our course, retire early with cryptocurrencies, “Only trade with money that you’re willing to lose because losses are guaranteed.” And guess what? That’s true with everything; reality is cruel and it will make sure that you lose, then lose some more, and then lose even more. To deny this truth is to escape and when you finally realize the truth, you’ll wish you had accepted it a long time ago. The sooner you realize this truth the more you’ll expect losses will occur, but then you are free to live knowing this is guaranteed. I’ve experienced four investments going completely bankrupt; but who cares? I’ve had investments return 2600% in less than six months. I am free to experience the latter only because I am willing to experience the former. I will never win without pain – pain will be part of the winning process.

In a similar manner, when I worked as a financial adviser for a season, I observed that people would try to offset a difficult financial period by spending money on something they didn’t need. For an example, a costly medical problem would be the painful event and the rationalized event would be buying a new car. Financially, I watched as this hurt them even more – it strained their finances. I’ve done this too – offsetting costly seasons with even more costs, which didn’t help, but only hurt. We seldom do the more rational action – temporarily increasing income to offset the loss. Increasing pain during an already painful event hurts only for a season; after that season passes – and they always do – life begins to feel exciting since the negative event actually strengthened resolve.

Action steps. When you enter a difficult season in life – whether financial, personal, etc, double down on the difficulty. For an example, if you experience a costly event, work a second or third job to offset the event instead of trying to escape the pain – a common activity. Every painful financial season passes and if you have the strength to increase the pain – and all pain is temporary – you will exit the season with more strength and confidence.

This is a great second of your life

The truth is that the poorest in the United States live better than many Roman Emperors. A Roman Emperor, as powerful as he was, could not have flipped a switch and turned on the lights; he could not have gone to the gym at midnight; he could not have cooked his food in a minute or less; he could not have known as much as we do, even if he wanted to; his access to healthcare pales compared to ours. The richest in Rome had lives that absolutely suck compared to ours today. And yet, we complain about our life. In the above scene, Tyler threatens to kill a person – a very violent move but one with a powerful point. In the end, the man runs off and Tyler tells Jack, “Tomorrow will be the most beautiful day in his life” (paraphrased). Seeing our end only reminds us of how beautiful this second is and the reason is because it creates a contrast: when we’re miserable about where we are in life it’s because we’re choosing a contrast that makes us miserable. This is a choice though; we could easily pick a contrast that makes us happy to be alive now.

We can use this for gratitude and be thankful for our time on the Earth. We cannot compare ourselves to others because we don’t see all the variables in their life – maybe they look financially successful, but lost their wife when they were younger? Maybe they own a really cool house, but work ninety hours a week to keep it looking cool? Maybe they’re billionaires, but they have a very narrow view of reality that would drive us insane. It’s easy to be mentally lazy and think everything would be better if we were someone else, yet we’re only the best at being who we are.

Action steps. Be financially grateful every day because historically you live better than 99.9% of people throughout history. If you struggle with gratitude, enter a contrast that reminds you how rich your life is; a great example of this is some churches will go on missions to poor countries to help build infrastructure and this contrast reminds people how grateful they should be, while also helping people in need.

Materialism and anti-materialism both miss the point

I do laugh about how people interpret Fight Club’s message as anti-materialism because they clearly weren’t paying attention to the latter half of the movie. ZeroHedge is a great example of this, quoting the line of “The possessions you own end up owning you” which is misunderstanding Fight Club’s message. As Jack follows Tyler into an anti-materialistic stance, he and Tyler form a cult – “Fight Club” – and it begins to consume their life in the same way that materialism consumed Jack’s life before it. Eventually, his cult goes to extremes, plotting to destroy all the credit card companies to “reset the debt clock and cause a collapse of civilization” (paraphrased).

Like rampant materialism, the anti-materialists go too far as well. In hating materialism, they try to destroy everything – “we’ll have a world with nothing!” Is that better than rampant materialism? No. I’ve observed in studying people that they’ll often pick the opposite extreme of a view when they discover it’s wrong than they will pick a more moderate stance. For example, I would agree that rampant materialism is destructive and wasteful, but hating everything that exists is the exact same problem. Why can’t people be pragmatically materialistic – owning things that serve a purpose rather than owning stuff for the sake of owning stuff? Tyler never addresses this much more moderate view – the possessions that we own which serve a purpose in our life do not own us, rather they do work for us and we are their master. No one needs to be a genius to see how Tyler misses this point. A beautiful scene at the end of the movie is when Jack finally realizes this – and he shoots himself, killing Tyler who we learn is really Jack’s alter ego (Jack does not die, rather Tyler does).

Jack realizes that he needs to learn self-discipline and self-honesty; do our possession serve us, or do they make us slaves? Our we spending out of control, or are we disciplined in our spending? As Juvenal from the Roman Empire writes, “A man should know and study his own measure in great things and small alike: even when buying fish don’t go hankering after a salmon on an income only suited to catfish.” If we never learn self-honesty and self-discipline, we’ll be constantly pulled to extremes because extremes attract people without both; we can’t look and we what we’ve become and we can’t control what we become.

With money, rather than buying an ideology of “only index funds” or “never debt” or “minimalism for the win”, ask yourself what’s useful to you and realize that this will be different for you than for others. In addition, consider a seasonal view of finances – for instance, I used to say that I was only frugal for a season (true). Once the season passes, I can move on to the next season. Extremes exist, but be honest with yourself about whether you’re engaging in useless self-denial when there’s a purpose for a need, or in whether you’re actually rationalizing a want as a need. We do not have to pick an extreme view – we can be pragmatic with how we look at life in the same way that we can be pragmatic with what we own and do.

Action steps. First, instead of rejecting materialism, let’s take an account of what we need. Second, constant denial of wants can be unhealthy too, in the same manner that an over-obsession of wants is unhealthy. Be self-honest about what you want and what impacts your life, then exercise the self-discipline to enforce this. Third, rather than a focus on the good or evil of materialism or its opposite, let’s focus on mastering self-discipline and self-honesty, as a lack of both weaken us.

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