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This article is basically just asking people to live responsibly, which is something everyone should understand intuitively. This person appears to be spending

by kick 7y ago

This article is basically just asking people to live responsibly, which is something everyone should understand intuitively. This person appears to be spending half of their income on charitable donations every year, though, which is admirable but not a smart financial decision. (They've spent one million dollars on it! A million! With a standard savings rate, just throwing that into a bank account would ensure that you could just live off of the interest from that for the rest of your life in some countries.) I'm not saying that you should be a scrooge with your dollars, but there's a reasonable amount to give and there's an amount that (while great!) means you should expect consequences from it. Even if you're making far below FAANG rates, just by living within your means you'll be able to have a year or two's worth of padding saved up (especially if you're willing to move to a less expensive area while the theoretical crash happens) in no time at all. To post an anecdote from a Hacker News comment: Saw this happen in Houston in 2014. Engineers that had started their careers just after the housing crisis bounced back were sitting cozy on their 150k/year (in Houston that's gobs) roles, not really putting much into savings because "there's always Wells to drill." When prices dropped from 90$ to 44$ a barrel, I saw candidates do some pretty stupid shit. Nuked the [remainder] of their savings on a new f150 was a classic drama played out over 2 weeks that my whole team was involved trying to talk him down in. Others had to move in with their parents, take roles in deer Park that were something like 2.5hr commutes one way, drop everything for a Saudi role and move out there... Their freedom of choice was essentially yanked away. The only one that seemed to be handling it well was a fresh 3 years in engineer. No girlfriend, kids, house, and buckets of savings. He moved to Vietnam and weathered the storm on a beach, taking tiny sips of his savings. https://news.ycombinator.com/item?id=19281509 https://news.ycombinator.com/item?id=19281509 If you're living within your means, you have nothing at all to worry about. It's really not that hard, and it'll save you a lot of stress when push comes to shove. Edit: Changed a word because it came off too hostile. The line I changed is quoted by 'saagarjha below, if you're curious about what it originally said.

saagarjha 7y ago
> This person appears to be blowing half of their income on charitable donations every year, though, which is admirable but not a smart financial decision. Well, duh. Giving money away is always a dumb financial decision. Presumably they don’t particularly care and can survive without it.
- kick 7y ago
  It wouldn't be worth pointing out if: A. It wasn't so much. B. They weren't trying to police the habits of others. This post is bizarre in the context of that: it's telling people to do the opposite of what the author does. Giving money isn't even exclusively a bad financial decision. In a lot of cases, it makes sense. I don't think it does here.
  - saagarjha 7y ago
    You’ll notice they stopped donating when they couldn’t afford to. The author can clearly handle giving away half their income here.
  - cldellow 7y ago
    I don't think the author is trying to police the habits of others. He's stating his prediction about how factors may change, and what one should do if they agree. Others can agree or not. As to telling people to do the opposite of what the author does, do you have evidence that the author doesn't live on a fraction of what he takes home? By definition, he does. He lives on no more than 50%, since he donates the other half. Per a recent post, he doesn't own a car, and has 19 lbs of butter, purchased on sale, in the freezer. Even if he's living on a meagre $200k/yr after his donations, he's probably still able to save aggressively. And lead a fulfilling life with his wife, children, and hobbies.
dehrmann 7y ago
> drop everything for a Saudi role and move out there... Their freedom of choice was essentially yanked away. That's not the only freedom you don't have in Saudi Arabia.
jefftk 7y ago
> This person appears to be spending half of their income on charitable donations every year, though, which is admirable but not a smart financial decision. The number of people in the world without sufficient food, clean water, basic medical care, and other human necessities is far too high. As someone lucky enough to be paid as well as I am, if I didn't try to do something about this I don't think I could live with myself. Donating 50% is clearly not the financial choice that will leave us with the most money, but that's not my main goal. Here's what our spending looks like: https://www.jefftk.com/p/spending-update-2018 https://www.jefftk.com/p/spending-update-2018
- yowlingcat 7y ago
  I would find it challenging to make the same decisions you made. To place 10x the amount you spend on childcare in charitable donations is certainly your prerogative, but will your children feel similarly? How much have you saved to make sure they can go to college without debt? Perhaps start a business someday? How much of your charitable donation goes to direct aid of the end recipient, and how much is skimmed off the top in administrative overhead? Is the end organization subsidizing a wealthy individual minimizing tax exposure?
  - jefftk 7y ago
    > will your children feel similarly? I don't think we're neglecting our children at all. They have good childcare, plenty of time with their parents, and everything they need. I don't expect they will resent our choices here. > How much have you saved to make sure they can go to college without debt? Saving for college doesn't make much sense: the good schools have a price discrimination policy where the amount they charge is the amount you can pay. If you're not rich enough to pay the sticker price, each dollar you save is a dollar more you'll need to pay to the school. > Perhaps start a business someday? If they have good ideas they'll be able to convince people to fund them. Capital is far more accessible than it ever has been. I'm not worried. > How much of your charitable donation goes to direct aid of the end recipient, and how much is skimmed off the top in administrative overhead? It sounds like what you're getting at is, what are the actual effects of our donations? The majority of our donations have been to GiveWell's top charities (https://www.givewell.org/ https://www.givewell.org/) and their recommendations are extremely well researched, and the money goes a long way (ex: https://www.givewell.org/charities/amf https://www.givewell.org/charities/amf). As an aside, the fraction of the donations that go to overhead vs directly to the recipient isn't a good way to measure the effectiveness of a charity. For example, imagine two charities: A) Spends 95% of your money building wells, and 5% on administration. B) Spends 80% of your money building wells, and 20% on administration. Sounds like A is better, right? Except if B is using that administration spending on making sure they build wells out of materials that will stand up to heavy use over years, in places where the wells are most needed, and on checking up on past wells to make sure they're still in working order, a donation to B could easily result in far more benefit than a donation to A. > Is the end organization subsidizing a wealthy individual minimizing tax exposure? I'm not sure why you would think this, or what sort of mechanism you're imagining. The charity we've donated the most to, the Against Malaria Foundation, distributes long-lasting insecticide-treated bednets in areas with high levels of malaria.

by kick 7y ago

saagarjha 7y ago

> This person appears to be blowing half of their income on charitable donations every year, though, which is admirable but not a smart financial decision. Well, duh. Giving money away is always a dumb financial decision. Presumably they don’t particularly care and can survive without it.

kick 7y ago
It wouldn't be worth pointing out if: A. It wasn't so much. B. They weren't trying to police the habits of others. This post is bizarre in the context of that: it's telling people to do the opposite of what the author does. Giving money isn't even exclusively a bad financial decision. In a lot of cases, it makes sense. I don't think it does here.
- saagarjha 7y ago
  You’ll notice they stopped donating when they couldn’t afford to. The author can clearly handle giving away half their income here.
- cldellow 7y ago
  I don't think the author is trying to police the habits of others. He's stating his prediction about how factors may change, and what one should do if they agree. Others can agree or not. As to telling people to do the opposite of what the author does, do you have evidence that the author doesn't live on a fraction of what he takes home? By definition, he does. He lives on no more than 50%, since he donates the other half. Per a recent post, he doesn't own a car, and has 19 lbs of butter, purchased on sale, in the freezer. Even if he's living on a meagre $200k/yr after his donations, he's probably still able to save aggressively. And lead a fulfilling life with his wife, children, and hobbies.

dehrmann 7y ago

> drop everything for a Saudi role and move out there... Their freedom of choice was essentially yanked away. That's not the only freedom you don't have in Saudi Arabia.

jefftk 7y ago

> This person appears to be spending half of their income on charitable donations every year, though, which is admirable but not a smart financial decision. The number of people in the world without sufficient food, clean water, basic medical care, and other human necessities is far too high. As someone lucky enough to be paid as well as I am, if I didn't try to do something about this I don't think I could live with myself. Donating 50% is clearly not the financial choice that will leave us with the most money, but that's not my main goal. Here's what our spending looks like: https://www.jefftk.com/p/spending-update-2018 https://www.jefftk.com/p/spending-update-2018

yowlingcat 7y ago
I would find it challenging to make the same decisions you made. To place 10x the amount you spend on childcare in charitable donations is certainly your prerogative, but will your children feel similarly? How much have you saved to make sure they can go to college without debt? Perhaps start a business someday? How much of your charitable donation goes to direct aid of the end recipient, and how much is skimmed off the top in administrative overhead? Is the end organization subsidizing a wealthy individual minimizing tax exposure?
- jefftk 7y ago
  > will your children feel similarly? I don't think we're neglecting our children at all. They have good childcare, plenty of time with their parents, and everything they need. I don't expect they will resent our choices here. > How much have you saved to make sure they can go to college without debt? Saving for college doesn't make much sense: the good schools have a price discrimination policy where the amount they charge is the amount you can pay. If you're not rich enough to pay the sticker price, each dollar you save is a dollar more you'll need to pay to the school. > Perhaps start a business someday? If they have good ideas they'll be able to convince people to fund them. Capital is far more accessible than it ever has been. I'm not worried. > How much of your charitable donation goes to direct aid of the end recipient, and how much is skimmed off the top in administrative overhead? It sounds like what you're getting at is, what are the actual effects of our donations? The majority of our donations have been to GiveWell's top charities (https://www.givewell.org/ https://www.givewell.org/) and their recommendations are extremely well researched, and the money goes a long way (ex: https://www.givewell.org/charities/amf https://www.givewell.org/charities/amf). As an aside, the fraction of the donations that go to overhead vs directly to the recipient isn't a good way to measure the effectiveness of a charity. For example, imagine two charities: A) Spends 95% of your money building wells, and 5% on administration. B) Spends 80% of your money building wells, and 20% on administration. Sounds like A is better, right? Except if B is using that administration spending on making sure they build wells out of materials that will stand up to heavy use over years, in places where the wells are most needed, and on checking up on past wells to make sure they're still in working order, a donation to B could easily result in far more benefit than a donation to A. > Is the end organization subsidizing a wealthy individual minimizing tax exposure? I'm not sure why you would think this, or what sort of mechanism you're imagining. The charity we've donated the most to, the Against Malaria Foundation, distributes long-lasting insecticide-treated bednets in areas with high levels of malaria.