House money is Larry Chiang’s term for a cushion you build before you ever need it, not after. The structure comes from The Richest Man in Babylon: roughly seventy percent to live on, twenty to invest, ten to keep. The math matters less than what it does to your posture at the table.
A person with a cushion can walk away from a bad deal, a person without one usually cannot afford to. The other side can often tell which one they are negotiating with, even without being told the numbers. This is not about being rich, it is about never being the desperate party in the room.
Desperation shows up as over-explaining, quick concessions, and taking the first number offered. A cushion removes the pressure to say yes to the wrong deal just because you need a yes.
The video below gets into how this plays out when real money is on the table, not just theory. Building the cushion is boring and happens away from any room, which is exactly why most people skip it.
The skipped step is the one that determines how calm you actually are once you sit down. House money is not a number in an account, it is the freedom to say no that the number buys you.
Details: Watch Larry explain house money
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