7 ms·

I just wanted to reflect on the point that $25,000 in the bank is "no personal savings". To me thats 6 months at my current rate and a year being frugal. I'm a

I just wanted to reflect on the point that $25,000 in the bank is "no personal savings". To me thats 6 months at my current rate and a year being frugal. I'm aware its totally different economics than myself, but it just kinda made me laugh.

sliverstorm 15y ago
Just wait until you climb the ladder a bit more, and begin to believe that you cannot possibly survive on less than $200,000 in the bank. Expenses add up, and you make your way down the slippery slope of labeling things as "necessities".
- TamDenholm 15y ago
  Perhaps. I do like to consider myself one of those people who think i wouldnt be like that, but obviously i'll never truly know until it happens. I remember when i had my first job, i thought my £650 a month wage was loads, now thats just my rent.
- dangravell 15y ago
  This does happen, and it's probably the default. But it is possible to notice it's happening, and reverse the process: http://www.getrichslowly.org/blog/2006/12/27/how-to-protect-yourself-from-lifestyle-inflation/ http://www.getrichslowly.org/blog/2006/12/27/how-to-protect-... This is pretty much what I did when starting up, realising I wanted as much runway as possible. Have to say I also guffawed at $25k being "no personal savings".
deleted 15y ago
[deleted]
Lukeas14 15y ago
I'm pretty sure most American's could live frugally on 25K for 6 months. However, it's still considered foolish if you have the means to save more because that 6 months is based on your "normal rate of expenditures". A surprise medical emergency could easily wipe that out leaving Rand in a position where he might have to take VC money at much worse terms because of his financial situation.
- TamDenholm 15y ago
  I keep forgetting that Americans have to think like that, its nice that any surprise medical emergencies here cost nothing. I assume that surprise medical bills are one of the biggest fears for Americans. It would certainly be something i'd be afraid of.
  - loumf 15y ago
    He probably has insurance, and since he controls his company's insurance, he probably picked something reasonable. You also need to do that to be competitive at hiring in this space. It won't literally cost nothing to have a medical emergency, but if you have decent insurance, it's manageable.
    - digikata 15y ago
      The thing about medical insurance in the US is that you really don't know if the policy you have is reasonable for major medical events. Everyday stuff yes, but until that rare major event happens, and you actually try to exercise what you hope you purchased - it's a giant unknown. e.g. The insurance regulators in CA are having trouble trying to stamp out issues where a major medical claim triggers a company review of your initial insurance application to see if there's any way to deny that you even have a valid policy - even if you've been carrying the insurance for years.
  - roel_v 15y ago
    I don't know where you're from or what your healthcare system is like, but I'm in Western Europe and six months in the hospital with your company without a leader will ruin you if you have only 25k in the bank. I don't know why my fellow European are so self-righteous about 'our' healthcare system - don't believe the bullshit you're being told about how great our socialism is, I'm going through a 'light' version of it right now and it ain't all roses and sunshine. And I'm in one of the richest countries of the world that is consistently ranked at the top in healthcare - snicker. (yes I realize that in the US health care is more expensive and that a broken leg will set you back there more than over here, but if you think that you're shielded from the financial effects of health issues over here you're deluding yourself)
kosei 15y ago
It's all relative, Tam. When I was 20 in college, $1000 in the bank was huge. Ballmer and Gates pull out at least $100,000,000 every 6 months from Microsoft. I wouldn't call $25,000 nothing personally, but it's all about perspective, I suppose. MSFT: http://finance.yahoo.com/q/it?s=MSFT+Insider+Transactions http://finance.yahoo.com/q/it?s=MSFT+Insider+Transactions
- kosei 15y ago
  PS, Gates has taken out over a billion so far this year. Must be nice.
lars512 15y ago
It's relative to your current level of business "success". When your time becomes worth enough at your business, it becomes false economy to be too frugal. This is what the article is all about.

sliverstorm 15y ago

Just wait until you climb the ladder a bit more, and begin to believe that you cannot possibly survive on less than $200,000 in the bank. Expenses add up, and you make your way down the slippery slope of labeling things as "necessities".

TamDenholm 15y ago
Perhaps. I do like to consider myself one of those people who think i wouldnt be like that, but obviously i'll never truly know until it happens. I remember when i had my first job, i thought my £650 a month wage was loads, now thats just my rent.
dangravell 15y ago
This does happen, and it's probably the default. But it is possible to notice it's happening, and reverse the process: http://www.getrichslowly.org/blog/2006/12/27/how-to-protect-yourself-from-lifestyle-inflation/ http://www.getrichslowly.org/blog/2006/12/27/how-to-protect-... This is pretty much what I did when starting up, realising I wanted as much runway as possible. Have to say I also guffawed at $25k being "no personal savings".

deleted 15y ago

[deleted]

Lukeas14 15y ago

I'm pretty sure most American's could live frugally on 25K for 6 months. However, it's still considered foolish if you have the means to save more because that 6 months is based on your "normal rate of expenditures". A surprise medical emergency could easily wipe that out leaving Rand in a position where he might have to take VC money at much worse terms because of his financial situation.

TamDenholm 15y ago
I keep forgetting that Americans have to think like that, its nice that any surprise medical emergencies here cost nothing. I assume that surprise medical bills are one of the biggest fears for Americans. It would certainly be something i'd be afraid of.
- loumf 15y ago
  He probably has insurance, and since he controls his company's insurance, he probably picked something reasonable. You also need to do that to be competitive at hiring in this space. It won't literally cost nothing to have a medical emergency, but if you have decent insurance, it's manageable.
  - digikata 15y ago
    The thing about medical insurance in the US is that you really don't know if the policy you have is reasonable for major medical events. Everyday stuff yes, but until that rare major event happens, and you actually try to exercise what you hope you purchased - it's a giant unknown. e.g. The insurance regulators in CA are having trouble trying to stamp out issues where a major medical claim triggers a company review of your initial insurance application to see if there's any way to deny that you even have a valid policy - even if you've been carrying the insurance for years.
- roel_v 15y ago
  I don't know where you're from or what your healthcare system is like, but I'm in Western Europe and six months in the hospital with your company without a leader will ruin you if you have only 25k in the bank. I don't know why my fellow European are so self-righteous about 'our' healthcare system - don't believe the bullshit you're being told about how great our socialism is, I'm going through a 'light' version of it right now and it ain't all roses and sunshine. And I'm in one of the richest countries of the world that is consistently ranked at the top in healthcare - snicker. (yes I realize that in the US health care is more expensive and that a broken leg will set you back there more than over here, but if you think that you're shielded from the financial effects of health issues over here you're deluding yourself)

kosei 15y ago

It's all relative, Tam. When I was 20 in college, $1000 in the bank was huge. Ballmer and Gates pull out at least $100,000,000 every 6 months from Microsoft. I wouldn't call $25,000 nothing personally, but it's all about perspective, I suppose. MSFT: http://finance.yahoo.com/q/it?s=MSFT+Insider+Transactions http://finance.yahoo.com/q/it?s=MSFT+Insider+Transactions

kosei 15y ago
PS, Gates has taken out over a billion so far this year. Must be nice.

lars512 15y ago

It's relative to your current level of business "success". When your time becomes worth enough at your business, it becomes false economy to be too frugal. This is what the article is all about.