5 ms·

Yeah, I'm not getting where that number comes from. (And I love the suggestion that it's merely "upper middle class".) Personally, I can live a pretty nice li

Yeah, I'm not getting where that number comes from. (And I love the suggestion that it's merely "upper middle class".) Personally, I can live a pretty nice lifestyle on "only" a couple thousand in disposable income a month. I really can't imagine what I would do with $20-25,000 / month to spend. With that in mind, I tried a few numbers in the spreadsheet. Just to be more "realistic" I dropped the payday back down to $4.5mil. I'm also assuming that the first thing I would do is to pay off my mortgage, so what remains is basically entirely discretionary spending. On a restrained budget of $50K/yr ($4K/mo), my assets grow faster than I'm spending, and I die with $20M in the bank. On a more extravagant $100K/yr (over $8K/mo), things are a bit closer, but still earning more than I spend and leveling out at about $7M in the bank. The crossover point is about $125K, leaving you broke at 70. So, I'm going to say that, yes, I really could retire and not work again with a $5-10M payout.

sambe 16y ago
I seriously don't mean this in an insulting/trollish way but I think you are either lacking imagination or underestimating how quickly you can adapt to a richer lifestyle. Given you are even here and thinking about entrepreneurial rewards I'd guess the latter. On the other hand perhaps I underestimate how... modest you like to live? Whilst I also raised my eyebrows at "upper middle class", I know people in that range who have spent rather too much and fallen (not totally) in only a handful of years. They never seemed stupid or excessive. It's probably partly to do with expectations: exactly the bias this article tries to correct.
- kscaldef 16y ago
  It was more of a rhetorical device. It's not that I can't imagine how to blow through tens of thousands of dollars a month. It's that that lifestyle just isn't appealing to me.
  - drusenko 16y ago
    Spending 10's of thousands a month is getting up there, but "blowing through" more than $4k per month isn't necessarily an extravagant lifestyle. My guess would be that you don't live an as expensive a metro area as the author is basing his calculations on. In a place like San Francisco, a few non-frivolous expenses can add up quickly: - Your residence. A decent 2 bedroom place in a desirable part of San Francisco will run $3,000 per month in rent, a mortgage will be much higher. We're not talking anything extravagant here, just 600-900 sq ft. - Travel. Paying for more than one person to travel to visit family/friends a few times a year can easily add up to $1,000 or more per month. We're not talking luxury vacations here, either -- just basic airfare (coach) and accommodations. - Health expenses. As you earn more, you'll probably be more likely to spend more on optional health items. Things like LASIK for example. Also, as you get older, these expenses will get much larger. - Kids. It doesn't even have to be private school we're talking about, but I imagine that clothing/feeding/entertaining more than one person adds up quickly. - Any time/money trade-off. You have a limited amount of time and, similar to health expenses, you will be more likely to spend money to save time as you earn more. Each person's choices will be different here, but again, we're not talking luxury. Maybe paying for parking instead of a time intensive bus trip? Or arranging for laundry service? Or paying an unjust $40 bill that would otherwise take you 5 hours to fight? Notice there's no talk of fancy cars, big screen TVs, luxury trips, large mansions, or extravagant dinners. I think this is the definition of "upper-middle class" that Tony is talking about. Nothing fancy, but a few things to make your life more convenient.
    - wallflower 16y ago
      Exactly! Tom Wolfe's "Bonfire of the Vanities" (Going broke on a million a year), p.137 "One breath of scandal, and not only would the Giscard scheme collapse but his very career would be finished! And what would he do then? I’m already going broke on a million a year! The appalling figures came popping up into his brain. Last year his income had been $980,000. But he had to pay out $21,000 a month for the $1.8 million loan he had to take out to buy the apartment... Of the $560,000 remaining of his income last year, $44,400 was required for the apartment’s monthly maintenance fee… $18,000 for heat, utilities, insurance and repairs, $6,000 for lawn and hedge cutting, $8,000 for taxes. Entertaining at home and in restaurants had come to $37,000. This was a modest sum compared to what other people spent."
- Kisil 16y ago
  It seems obvious to you and many others here that everyone slides down the slippery spending slope. I have the same problem understanding this position that I have understanding "compulsive shoppers" who buy luxury goods on credit cards. Wouldn't one just... not do it? It seems that the type of person who overspends when rich will also overspend when poor, i.e. that it's more a function of willpower than income level. I don't overspend now; why would having more money make me any more likely to overspend? I'm starting to think there's some major psychological division here; why is it so hard for you to imagine having willpower, or for me to imagine not having it? I'd like to say it's just that there aren't that many more things I want, but perhaps that feeling is a higher function of willpower, and I've just conditioned myself not to want things I can't afford. If this kind of cognitive shielding is involved, it might partially explain why the two sides have so much trouble relating.
sambe 16y ago
Also, perhaps you are young and naive like me and don't think about the real cost of kids ;)
- kscaldef 16y ago
  Or maybe I do have a child and have figured out that you don't actually have to send them to private school, pay for their college (my parents didn't for me), buy them a new car for their 16th birthday, etc.
  - brianobush 16y ago
    Kids are expensive w/o doing all that rich kid stuff. With three kids I have Tae Kwon Do, Abacus, piano, Kumon and they go to public schools. Add on school supplies, clothing, shoes, good will bikes, etc and it gets expensive fast w/o even looking expensive.
    - kscaldef 16y ago
      For my daughter, I spend about $100/mo on extracurricular activites, $25/mo (averaged over the year) on clothes, $50 once a year on school supplies, a $100 bike will last her for a couple years. Yeah, how do those plebes manage to raise kids with their pathetic 5-figure salaries...
      - brianobush 16y ago
        Well, I wasn't saying it was impossible, just expensive. Also, I don't know where you live, but one child's extracurricular activities for me is ~400 (100 piano+100 TKD+100 kumon+100 math) and during the summer it is higher since they have camps to attend (since there are no crops to harvest). Once your daughter gets older, I guarantee your clothing costs will increase.
        kscaldef 16y ago
        Well, yes, it's true. My daughter doesn't have 4 extracurricular activities going at once, she has one or two... or sometimes even none at all! The rest of the time, she and her friends just have unstructured play. And, yes, her clothes will get a bit more expensive as she gets older, but I don't expect my spending there will ever more than double. If she feels that she needs more or fancier clothes, she can get a job to pay for them.
neild 16y ago
So, I'm going to say that, yes, I really could retire and not work again with a $5-10M payout. I calculated some time ago that ~$4M would be enough for me to never think about money again. I could do anything that I wanted to do for the rest of my life. A key point, of course, is that I could do anything that I wanted to do--I don't want a Maserati or my own private jet or any of the other customary extravagances of the idle rich. I'd say that most people who couldn't retire on $4M would not be able to retire on ten times that amount--you could give them $1M a year and they'd find a way to squander it. It's amazingly easy to spend money if you have expensive tastes.

sambe 16y ago

I seriously don't mean this in an insulting/trollish way but I think you are either lacking imagination or underestimating how quickly you can adapt to a richer lifestyle. Given you are even here and thinking about entrepreneurial rewards I'd guess the latter. On the other hand perhaps I underestimate how... modest you like to live? Whilst I also raised my eyebrows at "upper middle class", I know people in that range who have spent rather too much and fallen (not totally) in only a handful of years. They never seemed stupid or excessive. It's probably partly to do with expectations: exactly the bias this article tries to correct.

kscaldef 16y ago
It was more of a rhetorical device. It's not that I can't imagine how to blow through tens of thousands of dollars a month. It's that that lifestyle just isn't appealing to me.
- drusenko 16y ago
  Spending 10's of thousands a month is getting up there, but "blowing through" more than $4k per month isn't necessarily an extravagant lifestyle. My guess would be that you don't live an as expensive a metro area as the author is basing his calculations on. In a place like San Francisco, a few non-frivolous expenses can add up quickly: - Your residence. A decent 2 bedroom place in a desirable part of San Francisco will run $3,000 per month in rent, a mortgage will be much higher. We're not talking anything extravagant here, just 600-900 sq ft. - Travel. Paying for more than one person to travel to visit family/friends a few times a year can easily add up to $1,000 or more per month. We're not talking luxury vacations here, either -- just basic airfare (coach) and accommodations. - Health expenses. As you earn more, you'll probably be more likely to spend more on optional health items. Things like LASIK for example. Also, as you get older, these expenses will get much larger. - Kids. It doesn't even have to be private school we're talking about, but I imagine that clothing/feeding/entertaining more than one person adds up quickly. - Any time/money trade-off. You have a limited amount of time and, similar to health expenses, you will be more likely to spend money to save time as you earn more. Each person's choices will be different here, but again, we're not talking luxury. Maybe paying for parking instead of a time intensive bus trip? Or arranging for laundry service? Or paying an unjust $40 bill that would otherwise take you 5 hours to fight? Notice there's no talk of fancy cars, big screen TVs, luxury trips, large mansions, or extravagant dinners. I think this is the definition of "upper-middle class" that Tony is talking about. Nothing fancy, but a few things to make your life more convenient.
  - wallflower 16y ago
    Exactly! Tom Wolfe's "Bonfire of the Vanities" (Going broke on a million a year), p.137 "One breath of scandal, and not only would the Giscard scheme collapse but his very career would be finished! And what would he do then? I’m already going broke on a million a year! The appalling figures came popping up into his brain. Last year his income had been $980,000. But he had to pay out $21,000 a month for the $1.8 million loan he had to take out to buy the apartment... Of the $560,000 remaining of his income last year, $44,400 was required for the apartment’s monthly maintenance fee… $18,000 for heat, utilities, insurance and repairs, $6,000 for lawn and hedge cutting, $8,000 for taxes. Entertaining at home and in restaurants had come to $37,000. This was a modest sum compared to what other people spent."
Kisil 16y ago
It seems obvious to you and many others here that everyone slides down the slippery spending slope. I have the same problem understanding this position that I have understanding "compulsive shoppers" who buy luxury goods on credit cards. Wouldn't one just... not do it? It seems that the type of person who overspends when rich will also overspend when poor, i.e. that it's more a function of willpower than income level. I don't overspend now; why would having more money make me any more likely to overspend? I'm starting to think there's some major psychological division here; why is it so hard for you to imagine having willpower, or for me to imagine not having it? I'd like to say it's just that there aren't that many more things I want, but perhaps that feeling is a higher function of willpower, and I've just conditioned myself not to want things I can't afford. If this kind of cognitive shielding is involved, it might partially explain why the two sides have so much trouble relating.

sambe 16y ago

Also, perhaps you are young and naive like me and don't think about the real cost of kids ;)

kscaldef 16y ago
Or maybe I do have a child and have figured out that you don't actually have to send them to private school, pay for their college (my parents didn't for me), buy them a new car for their 16th birthday, etc.
- brianobush 16y ago
  Kids are expensive w/o doing all that rich kid stuff. With three kids I have Tae Kwon Do, Abacus, piano, Kumon and they go to public schools. Add on school supplies, clothing, shoes, good will bikes, etc and it gets expensive fast w/o even looking expensive.
  - kscaldef 16y ago
    For my daughter, I spend about $100/mo on extracurricular activites, $25/mo (averaged over the year) on clothes, $50 once a year on school supplies, a $100 bike will last her for a couple years. Yeah, how do those plebes manage to raise kids with their pathetic 5-figure salaries...
    - brianobush 16y ago
      Well, I wasn't saying it was impossible, just expensive. Also, I don't know where you live, but one child's extracurricular activities for me is ~400 (100 piano+100 TKD+100 kumon+100 math) and during the summer it is higher since they have camps to attend (since there are no crops to harvest). Once your daughter gets older, I guarantee your clothing costs will increase.
      - kscaldef 16y ago
        Well, yes, it's true. My daughter doesn't have 4 extracurricular activities going at once, she has one or two... or sometimes even none at all! The rest of the time, she and her friends just have unstructured play. And, yes, her clothes will get a bit more expensive as she gets older, but I don't expect my spending there will ever more than double. If she feels that she needs more or fancier clothes, she can get a job to pay for them.

neild 16y ago

So, I'm going to say that, yes, I really could retire and not work again with a $5-10M payout. I calculated some time ago that ~$4M would be enough for me to never think about money again. I could do anything that I wanted to do for the rest of my life. A key point, of course, is that I could do anything that I wanted to do--I don't want a Maserati or my own private jet or any of the other customary extravagances of the idle rich. I'd say that most people who couldn't retire on $4M would not be able to retire on ten times that amount--you could give them $1M a year and they'd find a way to squander it. It's amazingly easy to spend money if you have expensive tastes.