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Cutting expenses also gets you closer to financial independence: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Cutting expenses also gets you closer to financial independence: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si... In fact, it's doubly effective. If you can learn to reduce your expenses by $10k and live happily, not only do you have an additional $10k to save/invest, but you need less each year to live independently.

toomuchtodo 5y ago
Some expenses you have no control over (alimony, child support, chronic healthcare costs, elder care come to mind from my circle of associates). Yes, don’t spend frivolously (luxury vehicles, eating out all of the time), but sometimes (at least in tech), you have far more control over the income side of the equation. If you can switch jobs and make $100k/more a year, that’s easier than trying to cut all of your expenses to the bone, or expenses that are non-discretionary and simply can’t be cut. Run hard, every hour you work is an hour you’ll never get back, so max the comp for each of those hours. Your future self will thank you. (Huge mmm fan btw)
- notch656a 5y ago
  Yeah the other issue is if you increase income, your imputed income for child support is now effectively permanently higher. Child support imputed incomes ratchet up with raises, generally not back down. You will never be able to 'relax' back at a slower/less lucrative job because now the judge says pay the higher rate or go to jail. Another way to view it: say you get a pay boost 90k -> 190k. The custodial parent will request the imputed income to be recalculated. You now owe an extra 20k PER YEAR. That's your new imputed income, even if you don't get a job like this again and it only lasts a year. Eventually you lose that job and can't find one like it again -- fast forward 10 years. You've paid an extra $200k, just to make an extra 50 or 60k net in one year. You lost $200k by working a higher paid job for a year. One year of raise followed by 17 years of a slightly more relaxed job at your original income means you LOSE money. In this example, falling from 190k back to your 90k income means child support went from 1/3 of your net check to 2/3 of your net check. A brutal risk to take if you don't think you'll be making the high wage for life.
  - deleted 5y ago
    [deleted]
  - jquast 5y ago
    Please don’t forget about social security, that one year would make up the largest contribution of your social security benefits, and if you worked at least 10 more years after that, the AWI-adjusted Gross Income would drastically increase your Average Indexed Monthly Earnings (AIME). Anyway I don’t see why you wouldn’t use your savings from that first year to lawyer up a case for child support modification, there is no law that promises past earnings indicate future earnings.
    - notch656a 5y ago
      >there is no law that promises past earnings indicate future earnings. Strictly no, but this is basically what imputed income does. It's saying you have the capability to earn it. If you actually HAVE earned that amount, it can be extremely difficult to convince a judge that the certainty that you HAVE earned that amount is countered by some vague uncertainty you may not be able to again. Fighting against a known factual salary history with some hand waving about not being able to do it anymore is a hell of a hill to climb. Plenty of anecdotes show people having extreme difficulties lowering child support.
- nixass 5y ago
  Not just "huge mmm" but also huge "American problems only"
  - LAC-Tech 5y ago
    The massive amounts of money available for software professionals is an American problem I hope to some day have.
    - nixass 5y ago
      Of course colleges are admission free, insurance prices are fairly reasonable, property taxes are nonexistent, public infrastructure is top notch, car dependence is cool (and to own/pay for more than one car). Non problems really
      - refurb 5y ago
        I've made the switch and yeah, the compensation easily covers those and more.
Arubis 5y ago
I mean, that’s not wrong, but TFA involves getting an offer with a total comp we can safely assume is over 500k/annum. Do that and don’t increase you expenses and you end up in a good place fast.
thwayunion 5y ago
> If you can learn to reduce your expenses by $10k 1. This is crazy to me. I could maybe cut $3K by taking a huge hit to quality of life (that would probably not be sustainable with a full time job anyways). Getting the other $7K would involve either homelessness or cutting back on eating and visiting family. How do salary earners manage to rack up $10K per year of purely unnecessary expenses? 2. That number is still way too small to be a better strategy than income maximization in tech. Of course "and" is always better, but given the choice between an extra >$100K/yr in savings or $10K less in life expenses the choice is pretty obvious.
- Spoom 5y ago
  > given the choice between an extra >$100K/yr in savings or $10K less in life expenses The first option often isn't available to folks.
  - thwayunion 5y ago
    Right but this is an article about a situation where it is available.
- ForHackernews 5y ago
  > The philosopher Diogenes was eating bread and lentils for supper. He was seen by the philosopher Aristippus, who lived comfortably by flattering the king. Said Aristippus, ‘If you would learn to be subservient to the king, you would not have to live on lentils.’ > Said Diogenes, ‘Learn to live on lentils, and you will not have to be subservient to the king.’
  - antisthenes 5y ago
    Also the businessman and fisherman story.
- Sohcahtoa82 5y ago
  Yeah...a lot of financial advice assumes you already make 6-figures when they talk about cutting expenses. 12 years ago, my food budget was $3/day, and the only reason it wasn't less than even that was because I worked at a Subway and could get 1, sometimes 2 meals a day free if I was working a long shift. Going to Taco Bell was considered splurging. I caught Mono and had to miss 3 days of work. I had to get an advance on my paycheck to pay the rent. At least my boss was cool about it.
deleted 5y ago
[deleted]
majormajor 5y ago
Increasing comp can be much more than "doubly effective." It's unlikely to triple, quadruple, ten-times, etc, your comp, but in the industry talked about here it's far from impossible and if you only ever focus on your expenses you might blind yourself entirely to those opportunities.
nostrademons 5y ago
We're not in normal economic times. I "retired" at 33 (still doing other things, but without steady cash paycheck). Lived cheaply, worked hard, saved up a ton of money. I went back to work in 2020, right after interest rates were dropped to zero and the pandemic stimulus went out, because I figured that every single retiree, no matter how old, was about to get reamed by inflation. Have been right so far, and IMHO it's only going to get worse. Living cheaply works when the basic necessities of life are cheap. The basic necessities of life are about to get very expensive, if they haven't already.
- robocat 5y ago
  Can you give a broad outline of your investment strategy in a high inflation environment? I am older than you, but one issue that I need to contend with is being in a demographic that will contain a lot of other retirees, so I believe I need to financially be better off than other retirees of my age to have a reasonable lifestyle (and I am unsure how to avoid thundering crowd effects for my generation). Reasonable = comfortable (e.g. could choose to have a small fizzboat, but not a megayacht).
  - nostrademons 5y ago
    For steady inflation that's not already priced into rates/prices/etc, the solution is pretty simple. Borrow a lot of money at low, fixed rates. Invest in hard assets like real estate. To the extent that you invest in equities, invest in businesses with a lot of pricing power and little competition. Their profits will tend to go up more than the rate of inflation, and then stock prices tend to track profits. Problem is that inflation is rarely steady. Typically you get stops and starts. Inflation will rise, and the Fed will try to contain it by raising rates. Then the raised rates create a recession, all asset prices fall, the Fed flinches and drops rates. Inflation takes off again. Repeat for a decade or more. In an environment like this, you can't lever up too heavily, and you need to actively manage. Otherwise you'll get reamed by the busts. Optimal strategy is to buy surviving high-growth stocks right as the recession gets to its peak, as everyone feels like everything's going bankrupt, and then hold them as rates drop and the economy recovers. Then sell right as the Fed signals it's going to get tough on inflation again. Optimal strategy is pretty hard to execute. Failing that, it's often best just to buy & hold profitable, low-competition businesses. The demographic time-bomb of everybody retiring at once and trying to cash out of the market at the same time is another issue. There's no real fix for this: living standards are going to have to drop, for retirees or workers or both (and more likely retirees). The way to profit from it is to look for companies that are successfully automating parts of elder care, and then invest hard in them.

toomuchtodo 5y ago

Some expenses you have no control over (alimony, child support, chronic healthcare costs, elder care come to mind from my circle of associates). Yes, don’t spend frivolously (luxury vehicles, eating out all of the time), but sometimes (at least in tech), you have far more control over the income side of the equation. If you can switch jobs and make $100k/more a year, that’s easier than trying to cut all of your expenses to the bone, or expenses that are non-discretionary and simply can’t be cut. Run hard, every hour you work is an hour you’ll never get back, so max the comp for each of those hours. Your future self will thank you. (Huge mmm fan btw)

notch656a 5y ago
Yeah the other issue is if you increase income, your imputed income for child support is now effectively permanently higher. Child support imputed incomes ratchet up with raises, generally not back down. You will never be able to 'relax' back at a slower/less lucrative job because now the judge says pay the higher rate or go to jail. Another way to view it: say you get a pay boost 90k -> 190k. The custodial parent will request the imputed income to be recalculated. You now owe an extra 20k PER YEAR. That's your new imputed income, even if you don't get a job like this again and it only lasts a year. Eventually you lose that job and can't find one like it again -- fast forward 10 years. You've paid an extra $200k, just to make an extra 50 or 60k net in one year. You lost $200k by working a higher paid job for a year. One year of raise followed by 17 years of a slightly more relaxed job at your original income means you LOSE money. In this example, falling from 190k back to your 90k income means child support went from 1/3 of your net check to 2/3 of your net check. A brutal risk to take if you don't think you'll be making the high wage for life.
- deleted 5y ago
  [deleted]
- jquast 5y ago
  Please don’t forget about social security, that one year would make up the largest contribution of your social security benefits, and if you worked at least 10 more years after that, the AWI-adjusted Gross Income would drastically increase your Average Indexed Monthly Earnings (AIME). Anyway I don’t see why you wouldn’t use your savings from that first year to lawyer up a case for child support modification, there is no law that promises past earnings indicate future earnings.
  - notch656a 5y ago
    >there is no law that promises past earnings indicate future earnings. Strictly no, but this is basically what imputed income does. It's saying you have the capability to earn it. If you actually HAVE earned that amount, it can be extremely difficult to convince a judge that the certainty that you HAVE earned that amount is countered by some vague uncertainty you may not be able to again. Fighting against a known factual salary history with some hand waving about not being able to do it anymore is a hell of a hill to climb. Plenty of anecdotes show people having extreme difficulties lowering child support.
nixass 5y ago
Not just "huge mmm" but also huge "American problems only"
- LAC-Tech 5y ago
  The massive amounts of money available for software professionals is an American problem I hope to some day have.
  - nixass 5y ago
    Of course colleges are admission free, insurance prices are fairly reasonable, property taxes are nonexistent, public infrastructure is top notch, car dependence is cool (and to own/pay for more than one car). Non problems really
    - refurb 5y ago
      I've made the switch and yeah, the compensation easily covers those and more.

Arubis 5y ago

I mean, that’s not wrong, but TFA involves getting an offer with a total comp we can safely assume is over 500k/annum. Do that and don’t increase you expenses and you end up in a good place fast.

thwayunion 5y ago

> If you can learn to reduce your expenses by $10k 1. This is crazy to me. I could maybe cut $3K by taking a huge hit to quality of life (that would probably not be sustainable with a full time job anyways). Getting the other $7K would involve either homelessness or cutting back on eating and visiting family. How do salary earners manage to rack up $10K per year of purely unnecessary expenses? 2. That number is still way too small to be a better strategy than income maximization in tech. Of course "and" is always better, but given the choice between an extra >$100K/yr in savings or $10K less in life expenses the choice is pretty obvious.

Spoom 5y ago
> given the choice between an extra >$100K/yr in savings or $10K less in life expenses The first option often isn't available to folks.
- thwayunion 5y ago
  Right but this is an article about a situation where it is available.
ForHackernews 5y ago
> The philosopher Diogenes was eating bread and lentils for supper. He was seen by the philosopher Aristippus, who lived comfortably by flattering the king. Said Aristippus, ‘If you would learn to be subservient to the king, you would not have to live on lentils.’ > Said Diogenes, ‘Learn to live on lentils, and you will not have to be subservient to the king.’
- antisthenes 5y ago
  Also the businessman and fisherman story.
Sohcahtoa82 5y ago
Yeah...a lot of financial advice assumes you already make 6-figures when they talk about cutting expenses. 12 years ago, my food budget was $3/day, and the only reason it wasn't less than even that was because I worked at a Subway and could get 1, sometimes 2 meals a day free if I was working a long shift. Going to Taco Bell was considered splurging. I caught Mono and had to miss 3 days of work. I had to get an advance on my paycheck to pay the rent. At least my boss was cool about it.

deleted 5y ago

[deleted]

majormajor 5y ago

Increasing comp can be much more than "doubly effective." It's unlikely to triple, quadruple, ten-times, etc, your comp, but in the industry talked about here it's far from impossible and if you only ever focus on your expenses you might blind yourself entirely to those opportunities.

nostrademons 5y ago

We're not in normal economic times. I "retired" at 33 (still doing other things, but without steady cash paycheck). Lived cheaply, worked hard, saved up a ton of money. I went back to work in 2020, right after interest rates were dropped to zero and the pandemic stimulus went out, because I figured that every single retiree, no matter how old, was about to get reamed by inflation. Have been right so far, and IMHO it's only going to get worse. Living cheaply works when the basic necessities of life are cheap. The basic necessities of life are about to get very expensive, if they haven't already.

robocat 5y ago
Can you give a broad outline of your investment strategy in a high inflation environment? I am older than you, but one issue that I need to contend with is being in a demographic that will contain a lot of other retirees, so I believe I need to financially be better off than other retirees of my age to have a reasonable lifestyle (and I am unsure how to avoid thundering crowd effects for my generation). Reasonable = comfortable (e.g. could choose to have a small fizzboat, but not a megayacht).
- nostrademons 5y ago
  For steady inflation that's not already priced into rates/prices/etc, the solution is pretty simple. Borrow a lot of money at low, fixed rates. Invest in hard assets like real estate. To the extent that you invest in equities, invest in businesses with a lot of pricing power and little competition. Their profits will tend to go up more than the rate of inflation, and then stock prices tend to track profits. Problem is that inflation is rarely steady. Typically you get stops and starts. Inflation will rise, and the Fed will try to contain it by raising rates. Then the raised rates create a recession, all asset prices fall, the Fed flinches and drops rates. Inflation takes off again. Repeat for a decade or more. In an environment like this, you can't lever up too heavily, and you need to actively manage. Otherwise you'll get reamed by the busts. Optimal strategy is to buy surviving high-growth stocks right as the recession gets to its peak, as everyone feels like everything's going bankrupt, and then hold them as rates drop and the economy recovers. Then sell right as the Fed signals it's going to get tough on inflation again. Optimal strategy is pretty hard to execute. Failing that, it's often best just to buy & hold profitable, low-competition businesses. The demographic time-bomb of everybody retiring at once and trying to cash out of the market at the same time is another issue. There's no real fix for this: living standards are going to have to drop, for retirees or workers or both (and more likely retirees). The way to profit from it is to look for companies that are successfully automating parts of elder care, and then invest hard in them.