6 ms·

you can get safety by just setting aside an emergency fund for 6 months of expenses. it works.

mberning 16y ago
That's what I do. I think it's also good to remind yourself of the difference between what you need to survive, and what you simply enjoy. I feel so fortunate to enjoy so many luxuries, but I also know that I can (and did) live without them.
michaelochurch 16y ago
Safety has degrees. In functioning economies, a competent person will pretty much never be involuntarily unemployed for more than 6 months, but the 2008 financial crisis almost got us into long-lasting economic dysfunction. That mess could have been a lot worse and lasted a lot longer, and because of the lax regulation and immense corruption (I know it's fashionable on HN to focus on a tiny corner of capitalism where people are decent and things actually work, but trust me that there's a lot of incompetence and malevolence out there) the next recession is likely to be worse. So, while 6 months of savings might be enough to handle sudden job loss in 2007 or 2011, I can't guarantee the same about, say, 2018. Six months of savings means you're okay as long as (1) the economy doesn't utterly tank, which it almost did in 2008 and probably will do before 2020 because of the assholes running it, and (2) you don't have any major health problems. It means that as long as the option for talented people people to reliably sell labor to the market at a fair price exists, and as long as you don't develop health problems that render you unable to make this exchange (i.e. hold down a job) then you don't need to worry about events like layoffs. Fair, I'll grant you that, but there's a great deal of difference between the single-9 security offered by being smart and prudent while having an emergency fund and the triple-9 security offered by millions of dollars and elite social connections.
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- yummyfajitas 16y ago
  In functioning economies, a competent person will pretty much never be involuntarily unemployed for more than 6 months, but the 2008 financial crisis almost got us into long-lasting economic dysfunction. By that definition, our current economy seems to be functioning quite well. There seem to be a lot of long term unemployed people, but total production/consumption/etc has pretty much recovered [1]. This strongly suggests that the people currently unemployed were not productive when they had work. Of course, I'm assuming "competent" and "productive" are roughly the same thing. I can see reasonable distinctions to be made between them under some circumstances, e.g. a competent buggy whip maker. By the way, if you develop health problems that render you unable to hold down any job, you are eligible for SS disability benefits. So your losses always have a lower bound. [1] I link to data here: http://news.ycombinator.com/item?id=2240468 http://news.ycombinator.com/item?id=2240468
  - michaelochurch 16y ago
    I think our economy has pockets of dysfunction interspersed with a few places (e.g. Silicon Valley) where it functions well. On the whole, I'd call it pretty mediocre. We've had great productivity gains since 1975, but all of the benefits have gone to 1% of the population, and only the small fraction of that 1 percent who worked directly in technology could even be argued to deserve it. Still, I'll grant you that we have a good economy; what we have as well in the U.S. is an absolutely shitty society. Far more important than whether an economy is capitalist or socialist is whether it has good people in charge, and corporatism pretty much guarantees that it won't. For whatever reason, Europeans are (now) better at making sure utterly terrible ideas (like Arizona's immigration law, private health insurance, Citizens United, Proposition 8) rarely get into implementation, and that good ones (universal healthcare, federal vacation floor, available higher education) do. I think that that's because the Europeans (and Japanese) had a front-row seat, middle of last century, for what happens when people who think like U.S. Republicans end up in power. By the way, if you develop health problems that render you unable to hold down any job, you are eligible for SS disability benefits. So your losses always have a lower bound. What if you develop health problems that render you unable to hold a decent job? (Then there is the problem of defining "decent", but I'm not even going there.) The worst jobs in the U.S. to not pay enough for a person to live on. Besides, for someone like an engineer to end up in retail would be such a waste of talent that he or she might as well not work.
jacoblyles 16y ago
My father is a physical laborer (the kind that loses body parts over the years) and he is getting quite old. If I become rich the most important benefit to me is to be able to guarantee him a comfortable life in his old age. That is the kind of security that a 6 month rainy day fund cannot provide. I've yet to meet an anti-materialist from a poor family or a third world country. Such worldviews are a luxury for the children of the rich.
- gxs 16y ago
  I 100% agree with you. I always laugh on HN when I hear people's rags to riches stories, and then find out their parents are college educated professionals. In college I was floored by how jaded people's perspectives are - my dad raised a family of 5 on 40k a year. My mom worked occasionally. Somehow, in spite of some of the things I missed out on (camp, peewee football), I feel I came out ahead.

That's what I do. I think it's also good to remind yourself of the difference between what you need to survive, and what you simply enjoy. I feel so fortunate to enjoy so many luxuries, but I also know that I can (and did) live without them.

michaelochurch 16y ago

Safety has degrees. In functioning economies, a competent person will pretty much never be involuntarily unemployed for more than 6 months, but the 2008 financial crisis almost got us into long-lasting economic dysfunction. That mess could have been a lot worse and lasted a lot longer, and because of the lax regulation and immense corruption (I know it's fashionable on HN to focus on a tiny corner of capitalism where people are decent and things actually work, but trust me that there's a lot of incompetence and malevolence out there) the next recession is likely to be worse. So, while 6 months of savings might be enough to handle sudden job loss in 2007 or 2011, I can't guarantee the same about, say, 2018. Six months of savings means you're okay as long as (1) the economy doesn't utterly tank, which it almost did in 2008 and probably will do before 2020 because of the assholes running it, and (2) you don't have any major health problems. It means that as long as the option for talented people people to reliably sell labor to the market at a fair price exists, and as long as you don't develop health problems that render you unable to make this exchange (i.e. hold down a job) then you don't need to worry about events like layoffs. Fair, I'll grant you that, but there's a great deal of difference between the single-9 security offered by being smart and prudent while having an emergency fund and the triple-9 security offered by millions of dollars and elite social connections.

deleted 16y ago
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deleted 16y ago
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yummyfajitas 16y ago
In functioning economies, a competent person will pretty much never be involuntarily unemployed for more than 6 months, but the 2008 financial crisis almost got us into long-lasting economic dysfunction. By that definition, our current economy seems to be functioning quite well. There seem to be a lot of long term unemployed people, but total production/consumption/etc has pretty much recovered [1]. This strongly suggests that the people currently unemployed were not productive when they had work. Of course, I'm assuming "competent" and "productive" are roughly the same thing. I can see reasonable distinctions to be made between them under some circumstances, e.g. a competent buggy whip maker. By the way, if you develop health problems that render you unable to hold down any job, you are eligible for SS disability benefits. So your losses always have a lower bound. [1] I link to data here: http://news.ycombinator.com/item?id=2240468 http://news.ycombinator.com/item?id=2240468
- michaelochurch 16y ago
  I think our economy has pockets of dysfunction interspersed with a few places (e.g. Silicon Valley) where it functions well. On the whole, I'd call it pretty mediocre. We've had great productivity gains since 1975, but all of the benefits have gone to 1% of the population, and only the small fraction of that 1 percent who worked directly in technology could even be argued to deserve it. Still, I'll grant you that we have a good economy; what we have as well in the U.S. is an absolutely shitty society. Far more important than whether an economy is capitalist or socialist is whether it has good people in charge, and corporatism pretty much guarantees that it won't. For whatever reason, Europeans are (now) better at making sure utterly terrible ideas (like Arizona's immigration law, private health insurance, Citizens United, Proposition 8) rarely get into implementation, and that good ones (universal healthcare, federal vacation floor, available higher education) do. I think that that's because the Europeans (and Japanese) had a front-row seat, middle of last century, for what happens when people who think like U.S. Republicans end up in power. By the way, if you develop health problems that render you unable to hold down any job, you are eligible for SS disability benefits. So your losses always have a lower bound. What if you develop health problems that render you unable to hold a decent job? (Then there is the problem of defining "decent", but I'm not even going there.) The worst jobs in the U.S. to not pay enough for a person to live on. Besides, for someone like an engineer to end up in retail would be such a waste of talent that he or she might as well not work.

jacoblyles 16y ago

My father is a physical laborer (the kind that loses body parts over the years) and he is getting quite old. If I become rich the most important benefit to me is to be able to guarantee him a comfortable life in his old age. That is the kind of security that a 6 month rainy day fund cannot provide. I've yet to meet an anti-materialist from a poor family or a third world country. Such worldviews are a luxury for the children of the rich.

gxs 16y ago
I 100% agree with you. I always laugh on HN when I hear people's rags to riches stories, and then find out their parents are college educated professionals. In college I was floored by how jaded people's perspectives are - my dad raised a family of 5 on 40k a year. My mom worked occasionally. Somehow, in spite of some of the things I missed out on (camp, peewee football), I feel I came out ahead.