6 ms·

It disappoints me, but I have to agree with you (at least in part, I wouldn't call his story garbage). I say it's disappointing because his blog really inspire

It disappoints me, but I have to agree with you (at least in part, I wouldn't call his story garbage). I say it's disappointing because his blog really inspired me to make some changes and I agree with the overall thrust of what he's saying. But the problem I have is figuring out how he accumulated his wealth. Of course, being a former physicist you'd think spelling that out in a simple spreadsheet would be a trivial problem for him. I haven't seen that though. From what I have put together I think he got very lucky in the stock market, which quite honestly takes a bit of the wind out of his sails. Based on what he was earning, saving and investing, it seems that only outsized rates of return could explain his nest egg. Nonetheless, his overarching theme is spot on.

rorrr 15y ago
It's not that hard to accumulate $100K if you're in IT. Just working for $100-150K a year and investing $20-30K annually should do it very quickly. Now accumulating $1M in a span of 5-10 years is much more challenging. I'm yet to solve that problem.
- erejacob 15y ago
  As does working for $40k a year and investing 30k annually which is what I did. There's no stock market magic required.
  - rorrr 15y ago
    I think that's just impossible. On 40K you will pay $580 medicare $1,680 FICA $3,410 federal $1,824 state (NY), and maybe some local, depending on where you live. If you can invest $30K after that, you're some motherfucking frugal genius.
    - sliverstorm 15y ago
      Under the table ftw?
  - erejacob 15y ago
    @rorr - Uhm, yes, your point? I did say I was living on 5-7k/year.
    - rdouble 15y ago
      After those taxes and $30K invested you'd only have $2506.
      - erejacob 15y ago
        Okay, that's nitpicking. Make that 26k invested then. Also, you can reduce the taxes by diverting into an IRA. Also, after the first year, you can begin to add investment income on top of your regular income. This investment income will increase by about $1000 each year.
        rdouble 15y ago
        With those numbers $4K isn't nitpicking it's 10% of your net.
        erejacob 15y ago
        But 2-3% of my assets. I wouldn't get too hung up on the details. I didn't earn 40k every year. Some years were less. And some were more (see FAQ). I didn't live in New York. Everybody can run their own spreasheets for their personal income and tax situation presuming an expense level of 6k/year. Figure an investment return of 3%+inflation (so 6% or so total). See what you get.
        tryitnow 15y ago
        For some reason I initially assumed $300,000 plus was your retirement target. I am now assuming $175,000 in savings is what you define as "financially independent" That makes sense given your $7,000 per year expenses. ($7,000 divided by 0.04). 1) Starting from zero (because where else would we start for this analysis?) 2) We save $26,000 per year (2,166.7 per month). 3) Assume 6% return. 4) It takes about 5 to 6 years to get to $175,000. Makes sense, a retirement fund that covers 7,000 per year in living expenses (i.e. about $175,000), takes only about 5 years of saving $26,000 per year (and conservative investing). Quick and easy math here: http://www.math.com/students/calculators/source/compound.htm http://www.math.com/students/calculators/source/compound.htm
blrgeek 15y ago
Of all the blogs, this one does a great job of explaining how they built up their wealth! Where's the magic? Save 80% of your net for 5 years. At a 3% return you will match what you spend now. That's EASIER than a spreadheet.
- gnosis 15y ago
  The math does not work out for that. Let's say you make $100,000 per year. Saving 80% would mean saving $80,000 per year, and living on $20,000 per year. After 5 years you would have saved $400,000. 3% of $400,000 is $12,000, which is only about half of what you need to equal what you'd lived on for the past 5 years. You'd need a 5% return in order to make $20,000 per year from $400,000. And this doesn't even take taxes in to account. Good luck saving 80% of your net when taxes alone eat away more than 20% of your net. You're also going to wind up paying taxes on the 5% return, effectively requiring maybe a 6% return (or probably significantly more, considering how much you lost in income taxes in the first place).
  - erejacob 15y ago
    Try something slightly higher, like 83%. Maybe 5.4 years. You did get pretty close there. You're in the ball park. Tax laws differ by income. If you make less, taxes go down. The capital gains tax goes away. Dividends become qualified.
    - gnosis 15y ago
      The amount people pay in taxes do vary, which is why this "approximately 80%" savings for "approximately 5 years" system is probably only going to work for people who don't pay much if anything in taxes (ie. people with a pretty low income). Depending on your income, your tax rate, any unforeseen expenses, and your desired standard of living, you might need to work considerably longer.
sliverstorm 15y ago
He is a former physicist? Good god, the waste... He attended a public school for free. I wonder if he has factored in the price his government paid for only 10 years of physiking out of him... Companies allegedly don't recoup the cost of hiring you for at least a year. Public schools are offered because it is seen as a worthwhile investment in the future, and graduates help pay for the next generation's schooling. In other words, there was a lot of good-faith investment in him. He essentially took the money and ran. I mean, I'm not saying he is scum or that he is contractually obligated to his country, but this is much less impressive when you realize part of what he did was offload much of the burden. It seems unlikely he'd have been able to amass the seed funding for the investments he lives on by age 33 without the tens of thousands invested in him by others.
- erejacob 15y ago
  Fun fact: One third of scientists (on a global basis) do not live in the country they were born in. (See http://www.fasebj.org/content/18/9/936.full http://www.fasebj.org/content/18/9/936.full) This comes from a lack of opportunities. For example, there are no groups working on what I was trained for in myCountry other than the one I was in. I would essentially have to replace my supervisor by competing with the other students he graduated with only one winner. This is what happens when each professor trains 10 people to replace him and proceed to determine the winner by whoever can work the hardest. This is not good faith investment. That's a callous winner-takes-all system with a built in oversupply to lower prices---like those competitions where you get webdesigners to work for free to make a logo. I don't feel any moral obligation to participate in that Ponzi scheme. Ever noticed how people hawking university degrees aren't exactly upfront about placement ratios and things like that and how students usually have to learn about what's really going after they're already committed? Since the salary for an academic scientist is rather low, I could have made the money MUCH faster as a long haul trucker. At $17.5/hr a framing carpenter apprentice is paid substantially better than a grad student. At $37/hour a journeyman level carpenter (after 4 years as an apprentice) would make nearly twice as much as a postdoc. A watchmaker (2 year education) makes 40k. Yes, skilled tradesmen make that much. I never knew. Had I known back then what I know now, I would never ever have gotten the degrees I did. It was and is one of the most inefficient means of making money I can imagine. Other than being a sign spinner or a dancing pizza (which still pays more than being a research assistant with a MSc, no kidding). I would have way more resentment towards the system if it wasn't for the fact that I enjoyed my work at the time. This enjoyment probably saved me from wasting my money on stuff to compensate for my lack of happiness working.

rorrr 15y ago

It's not that hard to accumulate $100K if you're in IT. Just working for $100-150K a year and investing $20-30K annually should do it very quickly. Now accumulating $1M in a span of 5-10 years is much more challenging. I'm yet to solve that problem.

erejacob 15y ago
As does working for $40k a year and investing 30k annually which is what I did. There's no stock market magic required.
- rorrr 15y ago
  I think that's just impossible. On 40K you will pay $580 medicare $1,680 FICA $3,410 federal $1,824 state (NY), and maybe some local, depending on where you live. If you can invest $30K after that, you're some motherfucking frugal genius.
  - sliverstorm 15y ago
    Under the table ftw?
- erejacob 15y ago
  @rorr - Uhm, yes, your point? I did say I was living on 5-7k/year.
  - rdouble 15y ago
    After those taxes and $30K invested you'd only have $2506.
    - erejacob 15y ago
      Okay, that's nitpicking. Make that 26k invested then. Also, you can reduce the taxes by diverting into an IRA. Also, after the first year, you can begin to add investment income on top of your regular income. This investment income will increase by about $1000 each year.
      - rdouble 15y ago
        With those numbers $4K isn't nitpicking it's 10% of your net.
        erejacob 15y ago
        But 2-3% of my assets. I wouldn't get too hung up on the details. I didn't earn 40k every year. Some years were less. And some were more (see FAQ). I didn't live in New York. Everybody can run their own spreasheets for their personal income and tax situation presuming an expense level of 6k/year. Figure an investment return of 3%+inflation (so 6% or so total). See what you get.
        tryitnow 15y ago
        For some reason I initially assumed $300,000 plus was your retirement target. I am now assuming $175,000 in savings is what you define as "financially independent" That makes sense given your $7,000 per year expenses. ($7,000 divided by 0.04). 1) Starting from zero (because where else would we start for this analysis?) 2) We save $26,000 per year (2,166.7 per month). 3) Assume 6% return. 4) It takes about 5 to 6 years to get to $175,000. Makes sense, a retirement fund that covers 7,000 per year in living expenses (i.e. about $175,000), takes only about 5 years of saving $26,000 per year (and conservative investing). Quick and easy math here: http://www.math.com/students/calculators/source/compound.htm http://www.math.com/students/calculators/source/compound.htm

blrgeek 15y ago

Of all the blogs, this one does a great job of explaining how they built up their wealth! Where's the magic? Save 80% of your net for 5 years. At a 3% return you will match what you spend now. That's EASIER than a spreadheet.

gnosis 15y ago
The math does not work out for that. Let's say you make $100,000 per year. Saving 80% would mean saving $80,000 per year, and living on $20,000 per year. After 5 years you would have saved $400,000. 3% of $400,000 is $12,000, which is only about half of what you need to equal what you'd lived on for the past 5 years. You'd need a 5% return in order to make $20,000 per year from $400,000. And this doesn't even take taxes in to account. Good luck saving 80% of your net when taxes alone eat away more than 20% of your net. You're also going to wind up paying taxes on the 5% return, effectively requiring maybe a 6% return (or probably significantly more, considering how much you lost in income taxes in the first place).
- erejacob 15y ago
  Try something slightly higher, like 83%. Maybe 5.4 years. You did get pretty close there. You're in the ball park. Tax laws differ by income. If you make less, taxes go down. The capital gains tax goes away. Dividends become qualified.
  - gnosis 15y ago
    The amount people pay in taxes do vary, which is why this "approximately 80%" savings for "approximately 5 years" system is probably only going to work for people who don't pay much if anything in taxes (ie. people with a pretty low income). Depending on your income, your tax rate, any unforeseen expenses, and your desired standard of living, you might need to work considerably longer.

sliverstorm 15y ago

He is a former physicist? Good god, the waste... He attended a public school for free. I wonder if he has factored in the price his government paid for only 10 years of physiking out of him... Companies allegedly don't recoup the cost of hiring you for at least a year. Public schools are offered because it is seen as a worthwhile investment in the future, and graduates help pay for the next generation's schooling. In other words, there was a lot of good-faith investment in him. He essentially took the money and ran. I mean, I'm not saying he is scum or that he is contractually obligated to his country, but this is much less impressive when you realize part of what he did was offload much of the burden. It seems unlikely he'd have been able to amass the seed funding for the investments he lives on by age 33 without the tens of thousands invested in him by others.

erejacob 15y ago
Fun fact: One third of scientists (on a global basis) do not live in the country they were born in. (See http://www.fasebj.org/content/18/9/936.full http://www.fasebj.org/content/18/9/936.full) This comes from a lack of opportunities. For example, there are no groups working on what I was trained for in myCountry other than the one I was in. I would essentially have to replace my supervisor by competing with the other students he graduated with only one winner. This is what happens when each professor trains 10 people to replace him and proceed to determine the winner by whoever can work the hardest. This is not good faith investment. That's a callous winner-takes-all system with a built in oversupply to lower prices---like those competitions where you get webdesigners to work for free to make a logo. I don't feel any moral obligation to participate in that Ponzi scheme. Ever noticed how people hawking university degrees aren't exactly upfront about placement ratios and things like that and how students usually have to learn about what's really going after they're already committed? Since the salary for an academic scientist is rather low, I could have made the money MUCH faster as a long haul trucker. At $17.5/hr a framing carpenter apprentice is paid substantially better than a grad student. At $37/hour a journeyman level carpenter (after 4 years as an apprentice) would make nearly twice as much as a postdoc. A watchmaker (2 year education) makes 40k. Yes, skilled tradesmen make that much. I never knew. Had I known back then what I know now, I would never ever have gotten the degrees I did. It was and is one of the most inefficient means of making money I can imagine. Other than being a sign spinner or a dancing pizza (which still pays more than being a research assistant with a MSc, no kidding). I would have way more resentment towards the system if it wasn't for the fact that I enjoyed my work at the time. This enjoyment probably saved me from wasting my money on stuff to compensate for my lack of happiness working.