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The math on this makes no sense at all. > - Live off of $15k a year. Don't buy a house. Don't buy a fancy car. Just save. - Do this for a year. - Land a jo

The math on this makes no sense at all. > - Live off of $15k a year. Don't buy a house. Don't buy a fancy car. Just save. - Do this for a year. - Land a job that makes you $100k a year. Save the rest. Max out your 401k contribution. - Celebrate by living off of $30k a year. - Do this for three years. - Land a job that makes you $140k a year. Save the rest. Max out your 401k contribution. Get a Roth, put $5k a year into that. - Celebrate by living off of $60k a year. - Do this for three years. > He is talking about SAVING, $500,000. Then needing to liquidate your 401k, just to take off a year? If he is capable of living on 60k before this, he should be able to live almost 10 years just on his savings without liquidating the 401k.

scarmig 9y ago
He did apparently have a girlfriend during his sabbatical, whom he supported. I suspect most of those budgets were aspirational as well, and he ended up spending 10k more for each of them.
stevenwoo 9y ago
He mentions in the course of the article putting a big down payment on a house after his big hit because his girlfriend/wife got tired of living in a small apartment, so he still has mortgage payments to make, plus his family didn't want to live frugally forever.
castle-bravo 9y ago
Yeah it doesn't make any sense at all. He grossed over 800k on a video game, loves programming, but after another three years he has to go back to his day job? It sounds like he's burning over 100k/year and lying about his expenses in this report. In any case, there's a lot of information left out.
- amirrajan 9y ago
  I give you my Armchair Expert of the Year Award. Congrats :-) Must be nice to live in a world without having to give Apple 30%, insurance premiums, taxes, and royalties/partnership splits. Take this comment in good spirit. We all make mistakes. Nothing but love for you. Go build awesome things. Hire a CPA for all the math related stuff.
  - sremani 9y ago
    I see this every day, people take the gross income number to the bank. In software world, the operational costs are less compared to other domains, but there are still costs and taxes. Apple taking 30% cut is insane.
    - Rapzid 9y ago
      YESSS.. By itself it's just business right? The price of doing business. Don't like it? Go somewhere else. But that somewhere else is Android and Google ALSO charges 30%? Hmmm.. This duopoly situation isn't really good developers. Apple taking 30% cut and tossing it on their pile of 250b in cash; that's a depressing image.
      - tootie 9y ago
        It's interesting because Android is decidedly not locked in to Google's Play Store, yet it's entirely dominant in the Android app market regardless. Amazon's App Store is still kicking and side-loading is easy enough, but seems like very few users take advantage.
    - briandear 9y ago
      So don’t sell in the App Store. Set up all that distribution, collect correct sales taxes for every country in the world, accept payment from anywhere — deal with a potentially high rate of chargebacks and the fees associated with that, also create a search and discover platform so that people can find your game nobody ever heard of until they visited the App Store. Also, do it in nearly every language on the planet, accepting almost every currency. Also handle actually hosting your content and securing downloads to boot authorized devices. I’m not sure 30% is expensive enough compared to doing all of that yourself. Dark Room would not have sold $800,000 anywhere else. The author even said Google Play was an order of magnitude less than Apple.. so is an order of magnitude worth 30%? It seems like a lot of people would trip over a dollar to save a nickel.
  - castle-bravo 9y ago
    You're right; my post was a mistake. I regret that I didn't read the article too carefully before posting. Alarmingly, instead of getting ignored or downvoted, I got a bunch of upvotes. What gives?
- sulam 9y ago
  He also said he has 10 years of emergency funds saved. IOW, he's saving and not touching the retirement. Good for him!
- prewett 9y ago
  He has a revenue sharing agreement with the original creator of A Dark Room, which I think is 50%. Self-employment taxes plus regular taxes will be somewhere around 35%. Apple takes 30%. So, ($800k * (100 - 30)%) * 50% * (100 - 35)% is $182k. So not bad, but it's only $60k/yr for three years.
  - mentos 9y ago
    I really feel like Apple's 30% tax is not optimal and a lower % would actually stimulate more development for them
    - moron4hire 9y ago
      I don't think quantity, or rather the lack thereof, is the problem with any app store.
      - deleted 9y ago
        [deleted]
    - cornholio 9y ago
      I'm sure Apple made a complex assessment to determine 30% as 'optimal'. The problem here is the oversupply of apps and the undersupply of paying customers - Apple has a duty to it's shareholders to skim that market as much as possible. While it might appear unfair for Apple to take such a large cut of 'your' money, Apple looks at this the other way around: you cost them quite a lot of the money their customers are willing to spend on apps.
      - mgkimsal 9y ago
        "I'm sure Apple made a complex assessment to determine 30% as 'optimal'." Given that they've never actually run any large scale tests of the effect of different rates, it's probably safer to say this is a number that just 'feels right' - it doesn't look 'too greedy' up front, but isn't too low that shareholders might think they're leaving money on the table. Dropping it to 22 or 25% for a couple of years would give some real numbers as to what the true impact would be. Even if the numbers were studied years ago, the current behaviour and ecosystem would be different. As an apple shareholder, I would prefer that they explore other rates and then demonstrate that this is the best one.
- MattRix 9y ago
  He says he has a decade worth of emergency funds saved up.
ojbyrne 9y ago
The other thing is it doesn’t seem like he’s generated that much wealth. If you’re taking half a million out of savings, working for a year to maybe double it (at long odds, 10-1 or 1000-1 as the article suggests), isn’t a trip to Vegas a viable alternative?
GuiA 9y ago
4% withdrawal rate is a conservative figure often used to live “forever” from a portfolio (use 3% if you want to be more conservative, 5-6% for more risk friendly). To get $30k a year, that’s a starting portfolio of $750k. [0] If you’re making $140k a year and living frugally, you can amass $750k in less than 10 years, perhaps even 5-7 if you are really frugal + lucky with the market. It’s within reach of most software engineers, to be honest - but of course many people prefer the regular ski trips, new Tesla every few years, and so on. But if your dream is to work on your own stuff free of bosses/corporate politics/etc, it might be worth doing. $30k a year won’t be much of a living in the Bay Area or New York, but for a single dependent person it’s quite alright; and in many mid sized European cities with socialized healthcare/university/etc, it’ll even let you raise a kid or two without having to sacrifice much. [0]: http://www.firecalc.com/ http://www.firecalc.com/ gives us an 80% chance of success for a $750k portfolio on $30k withdrawal a year over 50 years. If you’re new to this and want to delve further, check out https://www.reddit.com/r/financialindependence/ https://www.reddit.com/r/financialindependence/
- FireBeyond 9y ago
  The problem with your assumption is you're "living frugally" not for the ten years to make your portfolio withdrawal rate, you're doing it _for the rest of your life_. You live on $30K / year (in the Bay Area/NY, where you're most likely to find a starting / junior / midrange position that offers $140K - remembering that needs to be liquid)... and after your ten years of "living frugally" (and let's be clear, it's gonna be frugal with $2500/month rent for a 1br 600 sqft apartment eating up well, 100% of your after-savings income, so you're going to be rooming with someone)... That's what you've got for the rest of your life. Your $750K nest egg will give you an 80% chance of being able to supply $30K/year. Sure, now you can use it to work on your own stuff, but until (and unless) that catches on...
  - beambot 9y ago
    You can always still work (job, contract, consulting, etc) even if you're "soft retired." It's just that you have a lot more freedom in the selection, and you can pursue things that carry more personal fulfillment than MegaCorp job with lots of responsibilities. As for living frugally: Don't live _in_ SF. For a short BART or Caltrain ride, you can live in a $1500/mo. apartment that is beautiful.
michaelt 9y ago
Could be that the $100k is pretax and the $30k spending is post-tax. That'd roughly halve the amount going into savings, if tax is a third, he's spending a third, and he's saving a third. Of course, he'd still have savings of $220k+
ajkjk 9y ago
Those numbers are ridiculous. I saved up about $100k in 3 years at a tech job and I haven't worked in the last two years on that, no problem (living in a not-inexpensive US city with a car, also).
- midnightclubbed 9y ago
  His actual income (after Apple and paying the original game creator) was $276k - which replenished the savings he had cashed-out for development time and then gave him several more years of development on sequels/prequels.
  - qzervaas 9y ago
    Apple only report to you the remaining 70%, so the 800k is after the 30% is deducted. Edit: It seems the $800k includes Apple's cut. As an app developer myself, even considering that amount is torturing yourself. Apple _only_ report the remaining 70%, especially when you consider promo codes, refunds, etc... - doing a crude sales*price is somewhat inaccurate. (Fun fact: I'm an Australian developer. Of the amount I get paid, I also need to deduct sales tax for any sales I make to Australian consumers. For a 99c app, I would make 63c for Australian sales and 70c for other countries).
- codingdave 9y ago
  It isn't that you cannot live for 10 years off a large chunk of change... it is that you don't know what will happen during those 10 years. If you are fully stocked up on health, disability, life, and home insurance, you are probably OK. But most people I know who are taking time off are not fully insured for all possible scenarios, with backup plans in place. So instead, they hoard their savings.
- baby 9y ago
  What do you do with 100k of savings? What's next?
  - infinite8s 9y ago
    Keep saving. You probably plan on living to an old age?
k__ 9y ago
lol, I did a year off with 10k.
- pinchharmonic 9y ago
  Nice! Where did you go/what was your living style like?
  - k__ 9y ago
    To the library. Lived in a shared flat. lol
    - pinchharmonic 9y ago
      So basically you just studied/worked on projects for a year, lived very cheaply in a shared flat, cooked your own food? Worth it do you think?
      - k__ 9y ago
        Pretty much, yes. Gave me new perspectives on life. Went into self-employment after that year. Also I invested much time in my peronal life, stopped doing monogamy and had much time for my two partners.
      - wsc981 9y ago
        For that kind of money, I would rather go to a different country as well. Like Thailand. Find a nice place in a city with a co-working space. If you'd be ok eating asian food, life can be very cheap (1,5 USD a meal depending on where you buy the food). A nice apartment + gym + swimming pool can be rented pretty cheap as well, maybe starting around 300 USD a month and more expensive depending on the size of the apartment.
        k__ 9y ago
        I'm not the traveling kind of guy. Also I have many close people here where I live.

scarmig 9y ago

He did apparently have a girlfriend during his sabbatical, whom he supported. I suspect most of those budgets were aspirational as well, and he ended up spending 10k more for each of them.

stevenwoo 9y ago

He mentions in the course of the article putting a big down payment on a house after his big hit because his girlfriend/wife got tired of living in a small apartment, so he still has mortgage payments to make, plus his family didn't want to live frugally forever.

castle-bravo 9y ago

Yeah it doesn't make any sense at all. He grossed over 800k on a video game, loves programming, but after another three years he has to go back to his day job? It sounds like he's burning over 100k/year and lying about his expenses in this report. In any case, there's a lot of information left out.

amirrajan 9y ago
I give you my Armchair Expert of the Year Award. Congrats :-) Must be nice to live in a world without having to give Apple 30%, insurance premiums, taxes, and royalties/partnership splits. Take this comment in good spirit. We all make mistakes. Nothing but love for you. Go build awesome things. Hire a CPA for all the math related stuff.
- sremani 9y ago
  I see this every day, people take the gross income number to the bank. In software world, the operational costs are less compared to other domains, but there are still costs and taxes. Apple taking 30% cut is insane.
  - Rapzid 9y ago
    YESSS.. By itself it's just business right? The price of doing business. Don't like it? Go somewhere else. But that somewhere else is Android and Google ALSO charges 30%? Hmmm.. This duopoly situation isn't really good developers. Apple taking 30% cut and tossing it on their pile of 250b in cash; that's a depressing image.
    - tootie 9y ago
      It's interesting because Android is decidedly not locked in to Google's Play Store, yet it's entirely dominant in the Android app market regardless. Amazon's App Store is still kicking and side-loading is easy enough, but seems like very few users take advantage.
  - briandear 9y ago
    So don’t sell in the App Store. Set up all that distribution, collect correct sales taxes for every country in the world, accept payment from anywhere — deal with a potentially high rate of chargebacks and the fees associated with that, also create a search and discover platform so that people can find your game nobody ever heard of until they visited the App Store. Also, do it in nearly every language on the planet, accepting almost every currency. Also handle actually hosting your content and securing downloads to boot authorized devices. I’m not sure 30% is expensive enough compared to doing all of that yourself. Dark Room would not have sold $800,000 anywhere else. The author even said Google Play was an order of magnitude less than Apple.. so is an order of magnitude worth 30%? It seems like a lot of people would trip over a dollar to save a nickel.
- castle-bravo 9y ago
  You're right; my post was a mistake. I regret that I didn't read the article too carefully before posting. Alarmingly, instead of getting ignored or downvoted, I got a bunch of upvotes. What gives?
sulam 9y ago
He also said he has 10 years of emergency funds saved. IOW, he's saving and not touching the retirement. Good for him!
prewett 9y ago
He has a revenue sharing agreement with the original creator of A Dark Room, which I think is 50%. Self-employment taxes plus regular taxes will be somewhere around 35%. Apple takes 30%. So, ($800k * (100 - 30)%) * 50% * (100 - 35)% is $182k. So not bad, but it's only $60k/yr for three years.
- mentos 9y ago
  I really feel like Apple's 30% tax is not optimal and a lower % would actually stimulate more development for them
  - moron4hire 9y ago
    I don't think quantity, or rather the lack thereof, is the problem with any app store.
    - deleted 9y ago
      [deleted]
  - cornholio 9y ago
    I'm sure Apple made a complex assessment to determine 30% as 'optimal'. The problem here is the oversupply of apps and the undersupply of paying customers - Apple has a duty to it's shareholders to skim that market as much as possible. While it might appear unfair for Apple to take such a large cut of 'your' money, Apple looks at this the other way around: you cost them quite a lot of the money their customers are willing to spend on apps.
    - mgkimsal 9y ago
      "I'm sure Apple made a complex assessment to determine 30% as 'optimal'." Given that they've never actually run any large scale tests of the effect of different rates, it's probably safer to say this is a number that just 'feels right' - it doesn't look 'too greedy' up front, but isn't too low that shareholders might think they're leaving money on the table. Dropping it to 22 or 25% for a couple of years would give some real numbers as to what the true impact would be. Even if the numbers were studied years ago, the current behaviour and ecosystem would be different. As an apple shareholder, I would prefer that they explore other rates and then demonstrate that this is the best one.
MattRix 9y ago
He says he has a decade worth of emergency funds saved up.

ojbyrne 9y ago

The other thing is it doesn’t seem like he’s generated that much wealth. If you’re taking half a million out of savings, working for a year to maybe double it (at long odds, 10-1 or 1000-1 as the article suggests), isn’t a trip to Vegas a viable alternative?

GuiA 9y ago

4% withdrawal rate is a conservative figure often used to live “forever” from a portfolio (use 3% if you want to be more conservative, 5-6% for more risk friendly). To get $30k a year, that’s a starting portfolio of $750k. [0] If you’re making $140k a year and living frugally, you can amass $750k in less than 10 years, perhaps even 5-7 if you are really frugal + lucky with the market. It’s within reach of most software engineers, to be honest - but of course many people prefer the regular ski trips, new Tesla every few years, and so on. But if your dream is to work on your own stuff free of bosses/corporate politics/etc, it might be worth doing. $30k a year won’t be much of a living in the Bay Area or New York, but for a single dependent person it’s quite alright; and in many mid sized European cities with socialized healthcare/university/etc, it’ll even let you raise a kid or two without having to sacrifice much. [0]: http://www.firecalc.com/ http://www.firecalc.com/ gives us an 80% chance of success for a $750k portfolio on $30k withdrawal a year over 50 years. If you’re new to this and want to delve further, check out https://www.reddit.com/r/financialindependence/ https://www.reddit.com/r/financialindependence/

FireBeyond 9y ago
The problem with your assumption is you're "living frugally" not for the ten years to make your portfolio withdrawal rate, you're doing it _for the rest of your life_. You live on $30K / year (in the Bay Area/NY, where you're most likely to find a starting / junior / midrange position that offers $140K - remembering that needs to be liquid)... and after your ten years of "living frugally" (and let's be clear, it's gonna be frugal with $2500/month rent for a 1br 600 sqft apartment eating up well, 100% of your after-savings income, so you're going to be rooming with someone)... That's what you've got for the rest of your life. Your $750K nest egg will give you an 80% chance of being able to supply $30K/year. Sure, now you can use it to work on your own stuff, but until (and unless) that catches on...
- beambot 9y ago
  You can always still work (job, contract, consulting, etc) even if you're "soft retired." It's just that you have a lot more freedom in the selection, and you can pursue things that carry more personal fulfillment than MegaCorp job with lots of responsibilities. As for living frugally: Don't live _in_ SF. For a short BART or Caltrain ride, you can live in a $1500/mo. apartment that is beautiful.

michaelt 9y ago

Could be that the $100k is pretax and the $30k spending is post-tax. That'd roughly halve the amount going into savings, if tax is a third, he's spending a third, and he's saving a third. Of course, he'd still have savings of $220k+

ajkjk 9y ago

Those numbers are ridiculous. I saved up about $100k in 3 years at a tech job and I haven't worked in the last two years on that, no problem (living in a not-inexpensive US city with a car, also).

midnightclubbed 9y ago
His actual income (after Apple and paying the original game creator) was $276k - which replenished the savings he had cashed-out for development time and then gave him several more years of development on sequels/prequels.
- qzervaas 9y ago
  Apple only report to you the remaining 70%, so the 800k is after the 30% is deducted. Edit: It seems the $800k includes Apple's cut. As an app developer myself, even considering that amount is torturing yourself. Apple _only_ report the remaining 70%, especially when you consider promo codes, refunds, etc... - doing a crude sales*price is somewhat inaccurate. (Fun fact: I'm an Australian developer. Of the amount I get paid, I also need to deduct sales tax for any sales I make to Australian consumers. For a 99c app, I would make 63c for Australian sales and 70c for other countries).
codingdave 9y ago
It isn't that you cannot live for 10 years off a large chunk of change... it is that you don't know what will happen during those 10 years. If you are fully stocked up on health, disability, life, and home insurance, you are probably OK. But most people I know who are taking time off are not fully insured for all possible scenarios, with backup plans in place. So instead, they hoard their savings.
baby 9y ago
What do you do with 100k of savings? What's next?
- infinite8s 9y ago
  Keep saving. You probably plan on living to an old age?

k__ 9y ago

lol, I did a year off with 10k.

pinchharmonic 9y ago
Nice! Where did you go/what was your living style like?
- k__ 9y ago
  To the library. Lived in a shared flat. lol
  - pinchharmonic 9y ago
    So basically you just studied/worked on projects for a year, lived very cheaply in a shared flat, cooked your own food? Worth it do you think?
    - k__ 9y ago
      Pretty much, yes. Gave me new perspectives on life. Went into self-employment after that year. Also I invested much time in my peronal life, stopped doing monogamy and had much time for my two partners.
    - wsc981 9y ago
      For that kind of money, I would rather go to a different country as well. Like Thailand. Find a nice place in a city with a co-working space. If you'd be ok eating asian food, life can be very cheap (1,5 USD a meal depending on where you buy the food). A nice apartment + gym + swimming pool can be rented pretty cheap as well, maybe starting around 300 USD a month and more expensive depending on the size of the apartment.
      - k__ 9y ago
        I'm not the traveling kind of guy. Also I have many close people here where I live.