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> The bad news is that 1M isn’t what it used to be. It would take 20M to match the buying power of 1M from a century ago. Wholly disagree with the purchasing p

> The bad news is that 1M isn’t what it used to be. It would take 20M to match the buying power of 1M from a century ago. Wholly disagree with the purchasing power notion. I have lived frugally for years and 1M is enough to set me up for life (providing I don't have kids). This is because budgeting is now an ingrained habit and I wouldn't suddenly stop budgeting just because I can now spend more on things.

war1025 7y ago
Having kids is the wrench in the gears for many people I'd guess. There's a reason for the term DINK (Dual income, no kids). Edit: Also to clarify, I absolutely agree with the living frugally thing, and think most people would be in general better off if they focused less on spending every penny they make.
- lotsofpulp 7y ago
  The second you have dependents, the equation changes. Now you're optimizing not just for your remaining years of life, but for your children and possibly their children. Which, in most cases, means living in higher cost of living areas to get them in better schools and access to wealthier networks. Also, any adverse health events can sink your whole family, so you need to keep on the treadmill until you have sufficient passive income to keep any health issues from causing financial insecurity. I have noticed that my friends and family that grew up in higher cost of living, higher income areas and went into the standard higher paying careers (doctor/lawyer/finance/engineering) are more financially secure than those who weren't as fortunate or focused on the rat race. At what mental/other cost though, I can't say. Edit: The most financially secure are those who invested in commercial real estate and development.
  - _bxg1 7y ago
    Yeah, the author curiously neglected to factor dependents into all his numbers, which makes a massive difference. I think lots of people have kids as a "default option" in their life roadmap, without considering how big of a sacrifice it will be in terms of time and money (and the fact that it's optional!). It's important to put things in perspective before making that kind of decision; making kids may be free, but raising them is anything but.
- Spooky23 7y ago
  The costs of having children are dramatically over-costed on internet forums. People going the DINK route are mostly prioritizing careers over life. It's a vicious cycle for many, who end up changing their mind and spending alot of money and opportunity cost trying to make up for it.
  - lotsofpulp 7y ago
    It's not the cost of birthing/feeding/clothing/daycaring. It's the cost of having a house in the best school district you can afford, sending your kids on ski trips or international vacations with their friends who also have higher income parents, and various other activities that are involved with being in the "up and coming" social group.
    - stevekemp2 7y ago
      I think that's an America-centric view. In a lot of places in Europe it wouldn't matter what neighborhood you lived in - the schools available would be equally good.
      - gowld 7y ago
        That covers one segment of the conversation, but "move to Europe" isn't a solution for most people not in Europe.
      - war1025 7y ago
        It's not event an America-centric view, it's an urban America view. Live in a district that has only one school for each grade level, and suddenly the rich kids and the poor kids get the same education opportunities. I personally believe that's one of the reasons the upper midwest consistently has the best overall ranked schools in America.
    - mac01021 7y ago
      It is the cost of daycare and regular living stuff. At least for me with my 2 year old. - Daycare is 18k per year. - Extra seat on airplanes, depending on your travel habits could be 2k - Food, diapers, increased medical premiums might all total around 1500 That's like a 30% pay cut for a lot of people.
jedberg 7y ago
That just means you can live on a budget of $40K a year, which is totally reasonable for a single person who isn't in a big city. And that's great! If that's what you want to do, then by all means. But that life isn't for everyone. And if you plan to have kids and go on vacations, then purchasing power is important. I have a friend who did exactly that. We worked together in tech for 10 years, he lived super frugally here in the Bay Area, and then when he had saved $1M, he retired back to his native Kansas, bought a house for under $100K, and just kicks back enjoying his time.
- turk73 7y ago
  Except it's not that realistic. I have more than that generating passive income and I still can't yet quit my job even though I live in moderate cost of living state. That COL is rising, especially insurance and upcoming education costs. I've been trying to work it out, but mostly I just need to add to the pile until the passive numbers work out better an do so reliably in good and bad years. $40K on $1M means you have to be 100% in risk assets (stocks). Technically, if you had your whole million in say, an S&P 500 index fund, you could probably safely withdraw 4%, e.g. $40K/year and still grow your principal "most years." You couldn't last year, though. I earned somewhere around $55K last year without lifting a finger except to judiciously manage the accounts (which takes around 1hr a day), file taxes (10-20hrs once a year), and manage few other things like the odd 401K rollover and what not. It takes the edge off of my main career, but I'm not ready to depend on just that side yet. Inflation is a cruel bitch, always moving the goalposts further away. My main "plan" is to ditch the coding job if I can find some $40-50K role someplace not in tech, but that would probably still have to be a 40hr/FTE deal so that doesn't give me any additional free time although it probably would be a hell of a lot less stressful. I'm weary of the stress and outsized corporate nonsense, but I still love tech. I'm open to any ideas.
  - jedberg 7y ago
    Instead of ditching programming, why not find a remote coding job that pays less but only requires you to work 20 hours a week to get everything done?

war1025 7y ago

Having kids is the wrench in the gears for many people I'd guess. There's a reason for the term DINK (Dual income, no kids). Edit: Also to clarify, I absolutely agree with the living frugally thing, and think most people would be in general better off if they focused less on spending every penny they make.

lotsofpulp 7y ago
The second you have dependents, the equation changes. Now you're optimizing not just for your remaining years of life, but for your children and possibly their children. Which, in most cases, means living in higher cost of living areas to get them in better schools and access to wealthier networks. Also, any adverse health events can sink your whole family, so you need to keep on the treadmill until you have sufficient passive income to keep any health issues from causing financial insecurity. I have noticed that my friends and family that grew up in higher cost of living, higher income areas and went into the standard higher paying careers (doctor/lawyer/finance/engineering) are more financially secure than those who weren't as fortunate or focused on the rat race. At what mental/other cost though, I can't say. Edit: The most financially secure are those who invested in commercial real estate and development.
- _bxg1 7y ago
  Yeah, the author curiously neglected to factor dependents into all his numbers, which makes a massive difference. I think lots of people have kids as a "default option" in their life roadmap, without considering how big of a sacrifice it will be in terms of time and money (and the fact that it's optional!). It's important to put things in perspective before making that kind of decision; making kids may be free, but raising them is anything but.
Spooky23 7y ago
The costs of having children are dramatically over-costed on internet forums. People going the DINK route are mostly prioritizing careers over life. It's a vicious cycle for many, who end up changing their mind and spending alot of money and opportunity cost trying to make up for it.
- lotsofpulp 7y ago
  It's not the cost of birthing/feeding/clothing/daycaring. It's the cost of having a house in the best school district you can afford, sending your kids on ski trips or international vacations with their friends who also have higher income parents, and various other activities that are involved with being in the "up and coming" social group.
  - stevekemp2 7y ago
    I think that's an America-centric view. In a lot of places in Europe it wouldn't matter what neighborhood you lived in - the schools available would be equally good.
    - gowld 7y ago
      That covers one segment of the conversation, but "move to Europe" isn't a solution for most people not in Europe.
    - war1025 7y ago
      It's not event an America-centric view, it's an urban America view. Live in a district that has only one school for each grade level, and suddenly the rich kids and the poor kids get the same education opportunities. I personally believe that's one of the reasons the upper midwest consistently has the best overall ranked schools in America.
  - mac01021 7y ago
    It is the cost of daycare and regular living stuff. At least for me with my 2 year old. - Daycare is 18k per year. - Extra seat on airplanes, depending on your travel habits could be 2k - Food, diapers, increased medical premiums might all total around 1500 That's like a 30% pay cut for a lot of people.

jedberg 7y ago

That just means you can live on a budget of $40K a year, which is totally reasonable for a single person who isn't in a big city. And that's great! If that's what you want to do, then by all means. But that life isn't for everyone. And if you plan to have kids and go on vacations, then purchasing power is important. I have a friend who did exactly that. We worked together in tech for 10 years, he lived super frugally here in the Bay Area, and then when he had saved $1M, he retired back to his native Kansas, bought a house for under $100K, and just kicks back enjoying his time.

turk73 7y ago
Except it's not that realistic. I have more than that generating passive income and I still can't yet quit my job even though I live in moderate cost of living state. That COL is rising, especially insurance and upcoming education costs. I've been trying to work it out, but mostly I just need to add to the pile until the passive numbers work out better an do so reliably in good and bad years. $40K on $1M means you have to be 100% in risk assets (stocks). Technically, if you had your whole million in say, an S&P 500 index fund, you could probably safely withdraw 4%, e.g. $40K/year and still grow your principal "most years." You couldn't last year, though. I earned somewhere around $55K last year without lifting a finger except to judiciously manage the accounts (which takes around 1hr a day), file taxes (10-20hrs once a year), and manage few other things like the odd 401K rollover and what not. It takes the edge off of my main career, but I'm not ready to depend on just that side yet. Inflation is a cruel bitch, always moving the goalposts further away. My main "plan" is to ditch the coding job if I can find some $40-50K role someplace not in tech, but that would probably still have to be a 40hr/FTE deal so that doesn't give me any additional free time although it probably would be a hell of a lot less stressful. I'm weary of the stress and outsized corporate nonsense, but I still love tech. I'm open to any ideas.
- jedberg 7y ago
  Instead of ditching programming, why not find a remote coding job that pays less but only requires you to work 20 hours a week to get everything done?