6 ms·

Overall, I think this is great article, but I have two quibbles: 1. Start a business if you want to get rich: you can also start a business if you want to lose

Overall, I think this is great article, but I have two quibbles: 1. Start a business if you want to get rich: you can also start a business if you want to lose a lot of money. I lost nearly $100k that would have otherwise gone into my retirement trying to start a business. Most businesses fail. So think starting a business should be seen as a high-risk investment. 2. You can't get rich on a salary: My wife and I have never made six-figure salaries. We are in our mid-40s and we will be breaking $1 million in retirement savings this year if the economy stays stable. We did this by maxing out our 401k contributions since our 20s. Becoming a millionaire is a lot of hard work, but if the recommendations in this article are too extreme I've always appreciated Elizabeth Warren's advice of 50/30/20: 50% of spending on necessities, 30% on fun, and 20% on savings. Using this a guide, I've been able to tell when I need to downsize my spending and I've been able to spend on fun without feeling guilty.

kelukelugames 9y ago
You can get rich on salary. I think a portion of us are making more than 200k, 300k, or even higher in income per year.
- cryoshon 9y ago
  what, a laughably small proportion relative to the country's population? median income is in the 50k range...
  - randlet 9y ago
    Yes, and that's median household income, not individual. It's closer to $60k in the US [1] but your point still stands. [1] http://www.businessinsider.com/us-census-median-income-2017-9 http://www.businessinsider.com/us-census-median-income-2017-...
    - adventured 9y ago
      No, that's the median full-time wage. It'll be just near $50,000 for 2018. Two full-time incomes for a household, you can easily get to $85,000 to $120,000. What you're referring to, includes every person that generates any bit of consequential income. Part-time workers, or people earning $8k-$10k over the Summer, are included in the total median figure (which is closer to $30k).
      - deleted 9y ago
        [deleted]
  - Retric 9y ago
    More than you might think. 1 in 20 people make over 200k / year. 400k is not enough to get someone into the top 1%. So, several million Americans are making 1/4 million + per year before taxes. Which is why millionaire does not really qualify someone as rich anymore. Consider 1 million in 1915 is the equivalent of ~25 million in 2017 which is closer to what most people think of as rich.
    - deleted 9y ago
      [deleted]
    - commandlinefan 9y ago
      Hm - well, according to this: http://graphics.wsj.com/what-percent/ http://graphics.wsj.com/what-percent/ 200k/year put you in the top 2% just a few years ago.
      - Retric 9y ago
        Slightly different measurement, on their graph 20% of people made less than 10k/year and they list and use: $27,000 was the rounded median individual income in 2014. But, they are not measuring people on a salary.
        badestrand 9y ago
        > But, they are not measuring people on a salary. Well, you weren't either so it seems fair. "1 in 20 people make over 200k / year" -> As you probably meant full income earners it would be interesting to see what it would be if measured actually for "people".
        Retric 9y ago
        People in the highest income brackets tend be working full time significantly more in large part because people near retirement get both dividends and a full time salary, but people in retirement are generally drawing down their wealth. So, they may not be making 420k exclusively from their job, but 200+k / year is surprisingly common.
  - maxander 9y ago
    I think he meant “us” as HNers, who include a relatively high proportion of highly paid engineers and the like.
    - manicdee 9y ago
      I mean, you can't include poor people in your statistics when you're talking about how easy it is to get rich!
ben_jones 9y ago
One size fits all rules don't apply here. If you're pulling six figures in the bay area you could easily be spending 50% of your take home on rent. Another 20% on other necessities. Toss in an individual with college debt, or medical issues, or financial family obligations, and you might not even have the option of accruing any wealth at all.
- deleted 9y ago
  [deleted]
- notheguyouthink 9y ago
  Eh.. sort of. I lot of people argue you shouldn't spend more than a 3rd of your income on home. You argue that it's %50 in the Bay Area.. but I don't think that invalidates the 3rd rule - that's simply a bad area/job. If I make $300k in a place where it costs $280k to live, I'm basically poor. It doesn't invalidate the 3rd rule, or this 50/30/20 thing - if anything, I'd argue it validates it.
- Veelox 9y ago
  >If you're pulling six figures in the bay area you could easily be spending 50% of your take home on rent. You also put up with a longer commute, less house, or a less nice neighborhood and keep your rent under 30% of take home pay. Edit: Per [0] if you make $100k you end up with $5752 a month in take home pay. At 30% that would give us $1725.60 a month for rent. Checking craigslist [1] there are 55 places available for less than that if you are willing to rent just a room. [0] https://smartasset.com/taxes/california-paycheck-calculator#BbzEXowAAD https://smartasset.com/taxes/california-paycheck-calculator#... [1] https://sfbay.craigslist.org/search/pen/roo?nh=81&max_price=1725&availabilityMode=0 https://sfbay.craigslist.org/search/pen/roo?nh=81&max_price=...
  - tomkarlo 9y ago
    That's easy, if you're single. But "renting just a room" isn't really an option for couples, or families. That said, if you're moving to the Bay Area for a job, you need to take into account that six figures here is not the same as six figures anywhere else.
rwmj 9y ago
Yes that part of the article was classic survivorship bias. Ask 100 millionaires how they got rich, and 62 of them started a business! They should ask 100 people who started a business how many became millionaires.
- ejanus 9y ago
  Odds are high
nunez 9y ago
> . You can't get rich on a salary: My wife and I have never made six-figure salaries. We are in our mid-40s and we will be breaking $1 million in retirement savings this year if the economy stays stable. We did this by maxing out our 401k contributions since our 20s. Definitely not true. Or are the $1MM+/year jobs a myth to you?
- TheAdamAndChe 9y ago
  They're not a myth, but they're also just reserved for the top performers within niche specialties, which by definition does not include most people.
  - gowld 9y ago
    "can" != "most"

kelukelugames 9y ago

You can get rich on salary. I think a portion of us are making more than 200k, 300k, or even higher in income per year.

cryoshon 9y ago
what, a laughably small proportion relative to the country's population? median income is in the 50k range...
- randlet 9y ago
  Yes, and that's median household income, not individual. It's closer to $60k in the US [1] but your point still stands. [1] http://www.businessinsider.com/us-census-median-income-2017-9 http://www.businessinsider.com/us-census-median-income-2017-...
  - adventured 9y ago
    No, that's the median full-time wage. It'll be just near $50,000 for 2018. Two full-time incomes for a household, you can easily get to $85,000 to $120,000. What you're referring to, includes every person that generates any bit of consequential income. Part-time workers, or people earning $8k-$10k over the Summer, are included in the total median figure (which is closer to $30k).
    - deleted 9y ago
      [deleted]
- Retric 9y ago
  More than you might think. 1 in 20 people make over 200k / year. 400k is not enough to get someone into the top 1%. So, several million Americans are making 1/4 million + per year before taxes. Which is why millionaire does not really qualify someone as rich anymore. Consider 1 million in 1915 is the equivalent of ~25 million in 2017 which is closer to what most people think of as rich.
  - deleted 9y ago
    [deleted]
  - commandlinefan 9y ago
    Hm - well, according to this: http://graphics.wsj.com/what-percent/ http://graphics.wsj.com/what-percent/ 200k/year put you in the top 2% just a few years ago.
    - Retric 9y ago
      Slightly different measurement, on their graph 20% of people made less than 10k/year and they list and use: $27,000 was the rounded median individual income in 2014. But, they are not measuring people on a salary.
      - badestrand 9y ago
        > But, they are not measuring people on a salary. Well, you weren't either so it seems fair. "1 in 20 people make over 200k / year" -> As you probably meant full income earners it would be interesting to see what it would be if measured actually for "people".
        Retric 9y ago
        People in the highest income brackets tend be working full time significantly more in large part because people near retirement get both dividends and a full time salary, but people in retirement are generally drawing down their wealth. So, they may not be making 420k exclusively from their job, but 200+k / year is surprisingly common.
- maxander 9y ago
  I think he meant “us” as HNers, who include a relatively high proportion of highly paid engineers and the like.
  - manicdee 9y ago
    I mean, you can't include poor people in your statistics when you're talking about how easy it is to get rich!

ben_jones 9y ago

One size fits all rules don't apply here. If you're pulling six figures in the bay area you could easily be spending 50% of your take home on rent. Another 20% on other necessities. Toss in an individual with college debt, or medical issues, or financial family obligations, and you might not even have the option of accruing any wealth at all.

deleted 9y ago
[deleted]
notheguyouthink 9y ago
Eh.. sort of. I lot of people argue you shouldn't spend more than a 3rd of your income on home. You argue that it's %50 in the Bay Area.. but I don't think that invalidates the 3rd rule - that's simply a bad area/job. If I make $300k in a place where it costs $280k to live, I'm basically poor. It doesn't invalidate the 3rd rule, or this 50/30/20 thing - if anything, I'd argue it validates it.
Veelox 9y ago
>If you're pulling six figures in the bay area you could easily be spending 50% of your take home on rent. You also put up with a longer commute, less house, or a less nice neighborhood and keep your rent under 30% of take home pay. Edit: Per [0] if you make $100k you end up with $5752 a month in take home pay. At 30% that would give us $1725.60 a month for rent. Checking craigslist [1] there are 55 places available for less than that if you are willing to rent just a room. [0] https://smartasset.com/taxes/california-paycheck-calculator#BbzEXowAAD https://smartasset.com/taxes/california-paycheck-calculator#... [1] https://sfbay.craigslist.org/search/pen/roo?nh=81&max_price=1725&availabilityMode=0 https://sfbay.craigslist.org/search/pen/roo?nh=81&max_price=...
- tomkarlo 9y ago
  That's easy, if you're single. But "renting just a room" isn't really an option for couples, or families. That said, if you're moving to the Bay Area for a job, you need to take into account that six figures here is not the same as six figures anywhere else.

rwmj 9y ago

Yes that part of the article was classic survivorship bias. Ask 100 millionaires how they got rich, and 62 of them started a business! They should ask 100 people who started a business how many became millionaires.

ejanus 9y ago
Odds are high

nunez 9y ago

> . You can't get rich on a salary: My wife and I have never made six-figure salaries. We are in our mid-40s and we will be breaking $1 million in retirement savings this year if the economy stays stable. We did this by maxing out our 401k contributions since our 20s. Definitely not true. Or are the $1MM+/year jobs a myth to you?

TheAdamAndChe 9y ago
They're not a myth, but they're also just reserved for the top performers within niche specialties, which by definition does not include most people.
- gowld 9y ago
  "can" != "most"