7 ms·

> Spend less than you make, invest the excess in long term assets that have compounding interest rates above the inflation rate. It does work. But the cost is

by chinchilla2020 5y ago

> Spend less than you make, invest the excess in long term assets that have compounding interest rates above the inflation rate. It does work. But the cost is your life. My issue with the whole idea is that the wealth comes in the latter years of your existence. Decades of work have dulled your curiosity and desire to enjoy your wealth. You don't need much to exist and could survive off a more humble nest egg. Wheelchair wealth is considerably less valuable than wealth when you are young.

nighthawk454 5y ago
... not really. savings is a percent, you can set it wherever you want. the math works out just the same only over more/less time. you don't have to be a frugal miser, and you don't have to spend like it's burning a hole in your pocket. saving a responsible amount isn't going to dull your curiosity for decades. whether you consider it intentionally or not, when you choose how much to save you're also _directly_ setting your future wealth. the most prudent thing to do is optimize _both_. how 'well' do you want to live vs how much wealth do you want and by when. what actually costs you your life is spending unnecessarily in your youth, which implicitly sets your future wealth nearer to zero and burns the time to fix it.
throwaway18539 5y ago
Anecdotally: I makes less than 100K usd per year. I have a wife (who also makes less than 100K), a car, a kid, and hobbies. I don’t live in the valley, or even the United States. I work 8 hour days, employed by somebody else. I should be a millionaire by my mid thirties unless the stock market explodes. I don’t think I’m all that frugal, but we do try to save more than we make and live within our means. I do recognize that I’m extremely fortunate - I have not suffered any significant setbacks in my life, my health is relatively good, and I have a good family structure, all of which have been immeasurably helpful.
- ZephyrBlu 5y ago
  I was skeptical, so I ran some numbers here: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator https://www.investor.gov/financial-tools-calculators/calcula... Assuming 150k USD combined income and 20% savings rate: - Initial Investment: $30k (20% of 150k) - Monthly Contribution: $2500 (1/12 of $30k) - Length of Time in Years: 15 years - Estimated Interest Rate: 10% (Avg Stock Market return) - Interest Rate Variance Range: 0 - Compound Frequency: Annually After 15 years you have just over $1M. I'm assuming you were including your wife's income because otherwise it's nowhere near. I think the takeaway here is: get a partner. Without a partner you need to be a high earner.
  - nly 5y ago
    Two people earning $50K is better than one earning $100K by a wide margin
    - mercutio2 5y ago
      Huh? Why? In what way? If you're talking about taxes, I don't think this is true at all (Social Security taxes phase out much faster for a single earner than for two).
    - CalRobert 5y ago
      Until you have to cover childcare so you can both work.
whall6 5y ago
The question is: do you need money to live a happy life? My opinion is that you don’t. But to each their own. Maybe some people are saving because it makes them happy. In the article Nassim Taleb is quoted saying something about how it’s dumb to accumulate so much wealth but still live in a starter home (not sure if this was directed at Buffet or what). But sometimes people just feel happier having a cushion, or it Buffets case, feel happier having investments pay off.
- quantumBerry 5y ago
  I think it is possible, but not if anything goes wrong. For instance, I used to live off of ~300 / month in the US by living mostly in forest. However, after having a kid my wife demanded regular housing. I could divorce her and go without housing again, but then the state would impute my income and order child support at 20% of the income I _could_ make (which is very high) even though the actual cost of the necessities for a child is minimal (maybe 200 a month maximum). If you fail to pay you will be charged a felony and go to debtor's prison. So the answer is in many occasions you and your family could live a happy life on basically nothing, but you would have to live with the fact you will be imprisoned and lose all your professional and driver licenses and have all your land and assets seized because you don't earn at your imputed income. For this reason I abandoned a fairly happy life living off almost no money and instead slave away at a keyboard dreaming of the life that once was. Just don't make mistakes.
- bialpio 5y ago
  > The question is: do you need money to live a happy life? IMO you need a certain baseline amount. There are some necessities that you need to be able to afford (hard to be happy when you're starving). In the USA, I'd say you also need to have a cushion in case of some unforeseen medical emergency, in other places that may not be as necessary.
- ndesaulniers 5y ago
  Was it comedian Daniel Tosh that said: > They say money can't buy happiness, but do you know what money can buy? A jetski! And when have you ever seen someone not happy on a jetski. You'd be smiling as you ride that thing into the pier! (paraphrased)
deleted 5y ago
[deleted]
bittercynic 5y ago
>cost is your life. Doesn't ring true for me. Some of my favorite things to do are free or very cheap. Biking around town or on local trails, taking the dog for a walk, changing the oil in the car - yes, really. I love to travel, too, but you can go amazing places for hundreds or a couple thousand dollars. You don't have to spend much to have an amazing life and go amazing places. It frustrates me to see my peers who earn far more than me feel stressed about money and feel that they have to do very expensive things or else they're not living, but what can you say?
nly 5y ago
This is why great wealth is a generational phenomenon. You can certainly get very rich in your lifetime, and groom your kids to continue the trend, set things up nicely for them https://www.theatlantic.com/ideas/archive/2021/06/abigail-disney-rich-protect-dynastic-wealth-propublica-tax/619212/ https://www.theatlantic.com/ideas/archive/2021/06/abigail-di...
MandieD 5y ago
“But the cost is your life”: cultivate less-expensive tastes and hobbies, and live a great life while saving up for when the silly tech money stops rolling in (by your choice or not). In fact, I’ll be so bold as to say that the more mind-expanding ways to spend free time involve spending less money than their competitors. Want to fly? Join a gliding/sailplane club instead of getting a powered flight license and buying a Cessna. Love good food? Learn how to cook new dishes instead of finding exciting new restaurants. Into high-performance luxury cars? Rent a different one for a long weekend a couple times a year instead of leasing the same one to sit in traffic for your boring commute. Like to regularly update the look of your living space? Learn how to lay tile and do upholstery instead of shopping for more crap. My husband chose the first one (gliding vs. powered flight), and I’ve fallen into the second one. Both have significant financial benefits, but also health - gliding club involves a lot of scurrying around the field to help the other pilots, and just about anything I cook at home is healthier than a similar dish from a restaurant. I still have one stupid money-sink hobby, downhill skiing, but have found less expensive ways to enjoy it — day or weekend trips by train to an ok ski area instead of a week at higher-end resorts.
- chinchilla2020 5y ago
  You are absolutely correct. It sounds like we have different ideas about the amount of free time required. When retired or semi-retired (thanks to youthful wealth), you can do a lot of cheap but time consuming things like backpacking overseas, hiking the pacific coast trail, spending a summer diving in Cuba. Indulging in my hobbies one day a week in between running errands and going to the gym just feels like a watered down version.
- abdabab 5y ago
  > Learn how to cook new dishes instead of finding exciting new restaurants Even restaurants don’t cost a fortune comparing to buying a fancy car if you don’t do fine dining everyday.

nighthawk454 5y ago

... not really. savings is a percent, you can set it wherever you want. the math works out just the same only over more/less time. you don't have to be a frugal miser, and you don't have to spend like it's burning a hole in your pocket. saving a responsible amount isn't going to dull your curiosity for decades. whether you consider it intentionally or not, when you choose how much to save you're also _directly_ setting your future wealth. the most prudent thing to do is optimize _both_. how 'well' do you want to live vs how much wealth do you want and by when. what actually costs you your life is spending unnecessarily in your youth, which implicitly sets your future wealth nearer to zero and burns the time to fix it.

throwaway18539 5y ago

Anecdotally: I makes less than 100K usd per year. I have a wife (who also makes less than 100K), a car, a kid, and hobbies. I don’t live in the valley, or even the United States. I work 8 hour days, employed by somebody else. I should be a millionaire by my mid thirties unless the stock market explodes. I don’t think I’m all that frugal, but we do try to save more than we make and live within our means. I do recognize that I’m extremely fortunate - I have not suffered any significant setbacks in my life, my health is relatively good, and I have a good family structure, all of which have been immeasurably helpful.

ZephyrBlu 5y ago
I was skeptical, so I ran some numbers here: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator https://www.investor.gov/financial-tools-calculators/calcula... Assuming 150k USD combined income and 20% savings rate: - Initial Investment: $30k (20% of 150k) - Monthly Contribution: $2500 (1/12 of $30k) - Length of Time in Years: 15 years - Estimated Interest Rate: 10% (Avg Stock Market return) - Interest Rate Variance Range: 0 - Compound Frequency: Annually After 15 years you have just over $1M. I'm assuming you were including your wife's income because otherwise it's nowhere near. I think the takeaway here is: get a partner. Without a partner you need to be a high earner.
- nly 5y ago
  Two people earning $50K is better than one earning $100K by a wide margin
  - mercutio2 5y ago
    Huh? Why? In what way? If you're talking about taxes, I don't think this is true at all (Social Security taxes phase out much faster for a single earner than for two).
  - CalRobert 5y ago
    Until you have to cover childcare so you can both work.

whall6 5y ago

The question is: do you need money to live a happy life? My opinion is that you don’t. But to each their own. Maybe some people are saving because it makes them happy. In the article Nassim Taleb is quoted saying something about how it’s dumb to accumulate so much wealth but still live in a starter home (not sure if this was directed at Buffet or what). But sometimes people just feel happier having a cushion, or it Buffets case, feel happier having investments pay off.

quantumBerry 5y ago
I think it is possible, but not if anything goes wrong. For instance, I used to live off of ~300 / month in the US by living mostly in forest. However, after having a kid my wife demanded regular housing. I could divorce her and go without housing again, but then the state would impute my income and order child support at 20% of the income I _could_ make (which is very high) even though the actual cost of the necessities for a child is minimal (maybe 200 a month maximum). If you fail to pay you will be charged a felony and go to debtor's prison. So the answer is in many occasions you and your family could live a happy life on basically nothing, but you would have to live with the fact you will be imprisoned and lose all your professional and driver licenses and have all your land and assets seized because you don't earn at your imputed income. For this reason I abandoned a fairly happy life living off almost no money and instead slave away at a keyboard dreaming of the life that once was. Just don't make mistakes.
bialpio 5y ago
> The question is: do you need money to live a happy life? IMO you need a certain baseline amount. There are some necessities that you need to be able to afford (hard to be happy when you're starving). In the USA, I'd say you also need to have a cushion in case of some unforeseen medical emergency, in other places that may not be as necessary.
ndesaulniers 5y ago
Was it comedian Daniel Tosh that said: > They say money can't buy happiness, but do you know what money can buy? A jetski! And when have you ever seen someone not happy on a jetski. You'd be smiling as you ride that thing into the pier! (paraphrased)

deleted 5y ago

[deleted]

bittercynic 5y ago

>cost is your life. Doesn't ring true for me. Some of my favorite things to do are free or very cheap. Biking around town or on local trails, taking the dog for a walk, changing the oil in the car - yes, really. I love to travel, too, but you can go amazing places for hundreds or a couple thousand dollars. You don't have to spend much to have an amazing life and go amazing places. It frustrates me to see my peers who earn far more than me feel stressed about money and feel that they have to do very expensive things or else they're not living, but what can you say?

nly 5y ago

This is why great wealth is a generational phenomenon. You can certainly get very rich in your lifetime, and groom your kids to continue the trend, set things up nicely for them https://www.theatlantic.com/ideas/archive/2021/06/abigail-disney-rich-protect-dynastic-wealth-propublica-tax/619212/ https://www.theatlantic.com/ideas/archive/2021/06/abigail-di...

MandieD 5y ago

“But the cost is your life”: cultivate less-expensive tastes and hobbies, and live a great life while saving up for when the silly tech money stops rolling in (by your choice or not). In fact, I’ll be so bold as to say that the more mind-expanding ways to spend free time involve spending less money than their competitors. Want to fly? Join a gliding/sailplane club instead of getting a powered flight license and buying a Cessna. Love good food? Learn how to cook new dishes instead of finding exciting new restaurants. Into high-performance luxury cars? Rent a different one for a long weekend a couple times a year instead of leasing the same one to sit in traffic for your boring commute. Like to regularly update the look of your living space? Learn how to lay tile and do upholstery instead of shopping for more crap. My husband chose the first one (gliding vs. powered flight), and I’ve fallen into the second one. Both have significant financial benefits, but also health - gliding club involves a lot of scurrying around the field to help the other pilots, and just about anything I cook at home is healthier than a similar dish from a restaurant. I still have one stupid money-sink hobby, downhill skiing, but have found less expensive ways to enjoy it — day or weekend trips by train to an ok ski area instead of a week at higher-end resorts.

chinchilla2020 5y ago
You are absolutely correct. It sounds like we have different ideas about the amount of free time required. When retired or semi-retired (thanks to youthful wealth), you can do a lot of cheap but time consuming things like backpacking overseas, hiking the pacific coast trail, spending a summer diving in Cuba. Indulging in my hobbies one day a week in between running errands and going to the gym just feels like a watered down version.
abdabab 5y ago
> Learn how to cook new dishes instead of finding exciting new restaurants Even restaurants don’t cost a fortune comparing to buying a fancy car if you don’t do fine dining everyday.