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The Millionaire Next Door concepts are still as relevant as ever, albeit the specifics are a bit dated. Millionaire status is reasonably achievable for someone

The Millionaire Next Door concepts are still as relevant as ever, albeit the specifics are a bit dated. Millionaire status is reasonably achievable for someone whose income and cost of basics allow for modest discretionary income. This is certainly the case for the majority of software developers https://en.wikipedia.org/wiki/The_Millionaire_Next_Door https://en.wikipedia.org/wiki/The_Millionaire_Next_Door

giantg2 5y ago
Over what time horizon? How do we factor in retirement needs and inflation? The point is that the vast majority of people are not going to be financially independent by 30, or even 40.
- PragmaticPulp 5y ago
  > How do we factor in retirement needs and inflation? Use inflation-adjusted calculators. Any good savings and retirement calculator will have an option for this. Inflation is commonly misunderstood in long-term financial planning. It’s important to consider inflation for expenses and future savings amount, but many people don’t realize that inflation will also life their investments to some degree. For example, if a common house costs $5,000,000 on your future retirement date and you’ve been saving your money in cash this whole time, you’re in a bad spot. However, if you buy a house in your 30s that meets your needs, the value of your house will also rise with inflation. Inflation is also loosely coupled to rising stock prices (except for hyper-inflation or other economic catastrophes) and asset prices. Just don’t keep your money all in cash, because that’s the only guaranteed way to lose out to inflation.
  - giantg2 5y ago
    And then your tax bill on that house has inflated too. There are a lot of variables (I work in finance). This is really getting off topic. Do you really think using Gates as an example is legitimate to talk about hard work for normal people? That was the main point.
    - cloverich 5y ago
      Yes, because despite being _insanely_ intelligent he was _also_ insanely hard working. Its questionable whether aiming to be an outlier is reasonable, but it was a revelation to me that most of the wildly successful outliers I knew of growing up were also harder working than anyone I'd ever met. Yet no one ever talked about that, only how lucky it would be to be "born with" X. From there I realized that most people have this fallacy where they discount what they can achieve because they don't see how hard others work to get to whatever level they are at. Aiming for Bill Gates would be foolish, but understanding the recipe is not.
      - giantg2 5y ago
        So why not showcase the data that supports the point rather than pick an outlier and have people question if the recipe really works? The successful people I know mostly got there by luck. Sure hard work and intelligence played a role, but I know people who were smarter and worked harder and didn't get half as far.
        cloverich 5y ago
        > Sure hard work and intelligence played a role, but I know people who were smarter and worked harder and didn't get half as far. Are you arguing that people shouldn't work hard or work to improve their knowledge or networks because its not important and won't impact their lives?
        giantg2 5y ago
        I'm arguing that working hard is not the main goal. PG completely misses how you need to be in a position to benefit from that hard work. Without that positioning it will be pointless/useless.
    - sjg007 5y ago
      Gates was also extremely lucky and in the right place at the right time born to the right parents. Gladwell covers this in one of his books. As a 13 year old he got access to a time share computer. His school even bought hours on one and the school was only able to do that via the PTO which was wealthy and run by his mother etc... Yes he was interested and worked hard but there's a lot more to it.
- sidlls 5y ago
  It’s so hard to get $1MM that only about 19% of people age 65 or over ever reach it. Is software overrepresented in that group? Probably. But not to the extent that it’s reasonable to make the claim that it’s common for software developers to reach it in their 20s and 30s.
  - cloverich 5y ago
    Not that they _do_ reach it, but that they can. I think the general argument is that most people are not sufficiently financially literate to appreciate that the path to a million dollars is paved with consistent savings and reasonable budgets.
    - sidlls 5y ago
      It's a bad argument, though. Financial literacy isn't even necessary, though it may help. Life happens, things occur that make sustained savings impractical or impossible, and so on.
  - sanderjd 5y ago
    I think you misread the comment. Or at least read it differently than I did. I read that most software engineers who work hard in their 20s and 30s can become millionaires at some point. You seem to have read it that they will become millionaires in their 20s or 30s, which I don't think is what it says. My reading is more that putting hard work in early in the career sets you on a path to pay off debts and start saving and also have the experience to get good jobs later, which allow you to save more. This meshes with my experience of the industry.
  - maximus-decimus 5y ago
    Do you include house and pension's worth in those numbers?
- sanderjd 5y ago
  Is "financially independent by 30, or even 40" the definition of "being a millionaire"? Or does it count if you save up a million dollars by some point in time? I'm honestly asking what we're discussing here, because they seem like very different things.
  - giantg2 5y ago
    The whole point of this comment thread is that it wasn't appropriate to use a statistical outlier like Gates to represent that hard work for normal people leads to his level of success (financially independent, multimillionaire in his 30s).
darksaints 5y ago
The Millionaire Next Door is about as misleading as it gets, at least for today. Let's not forget that $1M in the mid 1990's is about the same as $2M today, at least in terms of terms of CPI. Even then, that is after 20+ years of housing prices outpacing inflation by 2x or more. In the mid 1990's, the top 20% could get to $1M with some good financial discipline and hard work. Today? Maybe the top 1% could save $1M, and unless you inherited the family home, you're still living a lifestyle that is somewhat median in 1995 terms. The fact that $1M is still some kind of mental benchmark that we hold up for being "rich" tells us everything we need to know about today's economic conditions. So the principles of the book may still apply, but the outcomes are worlds away from reality.
- ericmay 5y ago
  I can't speak to the book, but I would say that you should examine your thinking regarding the top 1% saving $1mm. While it might be that only the top 1% can save an actual million dollars in cash, saving about $10,000/year with somewhat conservative estimates will get somebody to around $900,000 over 30 years. Granted, that's still not most people, but it's a much larger group than the top 1%. I made a separate comment here with the same OP if you'd like to run some numbers yourself. Compound interest is crazy. > The fact that $1M is still some kind of mental benchmark that we hold up for being "rich" tells us everything we need to know about today's economic conditions. This is a very interesting comment. I wonder why the mentality of this benchmark amount hasn't changed. Economic conditions certainly have, $1mm isn't the same now as it would have been in 1970. Maybe it's a financial independence thing? At $1mm you really are independently wealthy in most cases.
  - dhd415 5y ago
    Using the standard definition of "independently wealthy" as "no longer needs to work to cover living expenses", I would say that $1MM is nowhere enough to do that in almost any place in the US, especially if you have kids. I'd say at least $3MM in cash and as much as $5-6MM in higher cost-of-living areas would be required to maintain an upper middle class standard of living.

giantg2 5y ago

Over what time horizon? How do we factor in retirement needs and inflation? The point is that the vast majority of people are not going to be financially independent by 30, or even 40.

PragmaticPulp 5y ago
> How do we factor in retirement needs and inflation? Use inflation-adjusted calculators. Any good savings and retirement calculator will have an option for this. Inflation is commonly misunderstood in long-term financial planning. It’s important to consider inflation for expenses and future savings amount, but many people don’t realize that inflation will also life their investments to some degree. For example, if a common house costs $5,000,000 on your future retirement date and you’ve been saving your money in cash this whole time, you’re in a bad spot. However, if you buy a house in your 30s that meets your needs, the value of your house will also rise with inflation. Inflation is also loosely coupled to rising stock prices (except for hyper-inflation or other economic catastrophes) and asset prices. Just don’t keep your money all in cash, because that’s the only guaranteed way to lose out to inflation.
- giantg2 5y ago
  And then your tax bill on that house has inflated too. There are a lot of variables (I work in finance). This is really getting off topic. Do you really think using Gates as an example is legitimate to talk about hard work for normal people? That was the main point.
  - cloverich 5y ago
    Yes, because despite being _insanely_ intelligent he was _also_ insanely hard working. Its questionable whether aiming to be an outlier is reasonable, but it was a revelation to me that most of the wildly successful outliers I knew of growing up were also harder working than anyone I'd ever met. Yet no one ever talked about that, only how lucky it would be to be "born with" X. From there I realized that most people have this fallacy where they discount what they can achieve because they don't see how hard others work to get to whatever level they are at. Aiming for Bill Gates would be foolish, but understanding the recipe is not.
    - giantg2 5y ago
      So why not showcase the data that supports the point rather than pick an outlier and have people question if the recipe really works? The successful people I know mostly got there by luck. Sure hard work and intelligence played a role, but I know people who were smarter and worked harder and didn't get half as far.
      - cloverich 5y ago
        > Sure hard work and intelligence played a role, but I know people who were smarter and worked harder and didn't get half as far. Are you arguing that people shouldn't work hard or work to improve their knowledge or networks because its not important and won't impact their lives?
        giantg2 5y ago
        I'm arguing that working hard is not the main goal. PG completely misses how you need to be in a position to benefit from that hard work. Without that positioning it will be pointless/useless.
  - sjg007 5y ago
    Gates was also extremely lucky and in the right place at the right time born to the right parents. Gladwell covers this in one of his books. As a 13 year old he got access to a time share computer. His school even bought hours on one and the school was only able to do that via the PTO which was wealthy and run by his mother etc... Yes he was interested and worked hard but there's a lot more to it.
sidlls 5y ago
It’s so hard to get $1MM that only about 19% of people age 65 or over ever reach it. Is software overrepresented in that group? Probably. But not to the extent that it’s reasonable to make the claim that it’s common for software developers to reach it in their 20s and 30s.
- cloverich 5y ago
  Not that they _do_ reach it, but that they can. I think the general argument is that most people are not sufficiently financially literate to appreciate that the path to a million dollars is paved with consistent savings and reasonable budgets.
  - sidlls 5y ago
    It's a bad argument, though. Financial literacy isn't even necessary, though it may help. Life happens, things occur that make sustained savings impractical or impossible, and so on.
- sanderjd 5y ago
  I think you misread the comment. Or at least read it differently than I did. I read that most software engineers who work hard in their 20s and 30s can become millionaires at some point. You seem to have read it that they will become millionaires in their 20s or 30s, which I don't think is what it says. My reading is more that putting hard work in early in the career sets you on a path to pay off debts and start saving and also have the experience to get good jobs later, which allow you to save more. This meshes with my experience of the industry.
- maximus-decimus 5y ago
  Do you include house and pension's worth in those numbers?
sanderjd 5y ago
Is "financially independent by 30, or even 40" the definition of "being a millionaire"? Or does it count if you save up a million dollars by some point in time? I'm honestly asking what we're discussing here, because they seem like very different things.
- giantg2 5y ago
  The whole point of this comment thread is that it wasn't appropriate to use a statistical outlier like Gates to represent that hard work for normal people leads to his level of success (financially independent, multimillionaire in his 30s).

darksaints 5y ago

The Millionaire Next Door is about as misleading as it gets, at least for today. Let's not forget that $1M in the mid 1990's is about the same as $2M today, at least in terms of terms of CPI. Even then, that is after 20+ years of housing prices outpacing inflation by 2x or more. In the mid 1990's, the top 20% could get to $1M with some good financial discipline and hard work. Today? Maybe the top 1% could save $1M, and unless you inherited the family home, you're still living a lifestyle that is somewhat median in 1995 terms. The fact that $1M is still some kind of mental benchmark that we hold up for being "rich" tells us everything we need to know about today's economic conditions. So the principles of the book may still apply, but the outcomes are worlds away from reality.

ericmay 5y ago
I can't speak to the book, but I would say that you should examine your thinking regarding the top 1% saving $1mm. While it might be that only the top 1% can save an actual million dollars in cash, saving about $10,000/year with somewhat conservative estimates will get somebody to around $900,000 over 30 years. Granted, that's still not most people, but it's a much larger group than the top 1%. I made a separate comment here with the same OP if you'd like to run some numbers yourself. Compound interest is crazy. > The fact that $1M is still some kind of mental benchmark that we hold up for being "rich" tells us everything we need to know about today's economic conditions. This is a very interesting comment. I wonder why the mentality of this benchmark amount hasn't changed. Economic conditions certainly have, $1mm isn't the same now as it would have been in 1970. Maybe it's a financial independence thing? At $1mm you really are independently wealthy in most cases.
- dhd415 5y ago
  Using the standard definition of "independently wealthy" as "no longer needs to work to cover living expenses", I would say that $1MM is nowhere enough to do that in almost any place in the US, especially if you have kids. I'd say at least $3MM in cash and as much as $5-6MM in higher cost-of-living areas would be required to maintain an upper middle class standard of living.