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The article completely ignores the last and most important level of wealth, which is being financial independent. Being able to pay for rent, food, healthcare

by clktmr 7y ago

The article completely ignores the last and most important level of wealth, which is being financial independent. Being able to pay for rent, food, healthcare etc. for the rest of your life without the need of a day job will probably have the biggest impact on your life.

Kirby64 7y ago
That's completely tangential to this article though. It depends on what your definition of that is, and some people handle it better than others. You see those people retiring on 500k (for a couple) and living in a van or something at one extreme. Then there's folks making 500k+/yr and somehow manage to spend most of it without saving any of it. Independence is a state of mind, not a dollar amount.
- clktmr 7y ago
  > Independence is a state of mind, not a dollar amount. This is only true if you have no debt. Even in your low-end example you need a net worth of 250k, which is a non trivial amount of money for most people. And I would still call it naive, it's just not enough. Financial independence to me is, having other assets than your time which will pay for your most basic needs. Living in a van probably means doing a lot of stuff by yourself, which requires a lot of time.
  - Kirby64 7y ago
    Sure, there's a dollar amount where you literally could not live. There's even more nutso people who talk about living on $100k by retiring to some foreign country where cost of living is absurdly low, though. I don't think those people (or the 250k van people) are realistic, since obviously there's longer term problems (i.e. vans aren't going to be great for someone who is old). I would disagree with your financial independence definition though. Basic needs threshold is much lower than 'comfortable' living. The traditional definition of financial independence is not having to work if you don't want to. What that looks like (the sacrifices you make) depends on the person. Maybe to be financially independent you are cool with a $500/mo apartment and Ramen... or maybe that means a mansion and a bunch of supercars. Either way, if you're dependent on a job or someone else, you aren't financially independent.
- marvin 7y ago
  It’s not entirely a state of mind. There is a qualitative difference between having an investment income approximately equivalent to a middle-class salary, and not having it. Certainly you can find people who would feel miserable with that amount of money, and people who could thrive on a small fraction, but it would give most people a freedom that very few ever get.
- LUmBULtERA 7y ago
  Yes, I agree with your take. One can be "financially independent" somewhere between level 3 and 5. Most folks who say they have met FI in the FIRE movement likely have NOT made it to Level 5 ("Home Price Matters Less"/$10mm+). FI people can generally say they can cover their housing costs, but they still need to make sacrifices with regard to location, quality, and size (housing costs matter).
jeppz 7y ago
It really isn't that simple, most people will start spending more if you bump them up this ladder which means that "for the rest of your life" probably wont be true for long.
nugget 7y ago
One of the best definitions of “rich” that I’ve come across is a top 1% income based on a perpetual withdrawal rate of dividends alone (about 3%). This puts the wealth threshold around $15m for most US states and around $25m for the Bay Area.

by clktmr 7y ago

Kirby64 7y ago

That's completely tangential to this article though. It depends on what your definition of that is, and some people handle it better than others. You see those people retiring on 500k (for a couple) and living in a van or something at one extreme. Then there's folks making 500k+/yr and somehow manage to spend most of it without saving any of it. Independence is a state of mind, not a dollar amount.

clktmr 7y ago
> Independence is a state of mind, not a dollar amount. This is only true if you have no debt. Even in your low-end example you need a net worth of 250k, which is a non trivial amount of money for most people. And I would still call it naive, it's just not enough. Financial independence to me is, having other assets than your time which will pay for your most basic needs. Living in a van probably means doing a lot of stuff by yourself, which requires a lot of time.
- Kirby64 7y ago
  Sure, there's a dollar amount where you literally could not live. There's even more nutso people who talk about living on $100k by retiring to some foreign country where cost of living is absurdly low, though. I don't think those people (or the 250k van people) are realistic, since obviously there's longer term problems (i.e. vans aren't going to be great for someone who is old). I would disagree with your financial independence definition though. Basic needs threshold is much lower than 'comfortable' living. The traditional definition of financial independence is not having to work if you don't want to. What that looks like (the sacrifices you make) depends on the person. Maybe to be financially independent you are cool with a $500/mo apartment and Ramen... or maybe that means a mansion and a bunch of supercars. Either way, if you're dependent on a job or someone else, you aren't financially independent.
marvin 7y ago
It’s not entirely a state of mind. There is a qualitative difference between having an investment income approximately equivalent to a middle-class salary, and not having it. Certainly you can find people who would feel miserable with that amount of money, and people who could thrive on a small fraction, but it would give most people a freedom that very few ever get.
LUmBULtERA 7y ago
Yes, I agree with your take. One can be "financially independent" somewhere between level 3 and 5. Most folks who say they have met FI in the FIRE movement likely have NOT made it to Level 5 ("Home Price Matters Less"/$10mm+). FI people can generally say they can cover their housing costs, but they still need to make sacrifices with regard to location, quality, and size (housing costs matter).

jeppz 7y ago

It really isn't that simple, most people will start spending more if you bump them up this ladder which means that "for the rest of your life" probably wont be true for long.

nugget 7y ago

One of the best definitions of “rich” that I’ve come across is a top 1% income based on a perpetual withdrawal rate of dividends alone (about 3%). This puts the wealth threshold around $15m for most US states and around $25m for the Bay Area.