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How to Afford Anything

kenrockwell.com

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Re: How to Afford Anything

#61

Post by billybob »

henrikschroder wrote: post #14
charleso wrote: post #7

I was more-or-less with him up until the "Don't Rent" advice. By his own admission, purchasing a condo and riding it up to the very top of the largest real estate bubble in history netted him only a 1% return. Any other market at any other time would likely have netted him a loss on that purchase. In a non-bubble market, I wonder how much more he would have gained by renting that very same condo and investing the dif…

Agree, I would much rather rent my apartment if I could, but the way the market looks here it's not an option. Renting is just like insurance, you pay a premium so that others take the greater financial risk: You're not tied down, you can move anytime, and you don't have to care about the housing market or interest rates. For some people this is worth it, for some it's not. Your mileage may wary. The only other probl…

Agreed. Better advice would be "stay behind the curve." Right now, if you want a Wii, it's expensive. If you're happy playing Playstation 2, it's cheap. A Wii will be cheap 5 years from now when something cooler is out. Same kind of thing applies to computers.

Re: How to Afford Anything

#62

Post by billybob »

afterburner wrote: post #58

"When one group did a survey a few years ago, they discovered that the most popular car owned by millionaires was a Ford. Why? Simple: the people who still had and grew their money didn't waste it on luxuries to show off. All showing off does is make others spend more effort trying to scam you. " I suspect a large part of the reason is that these millionaires are, for political reasons, whether in politics or not, sh…

I dunno. Sam Walton (founder of Wal-mart) famously drove an old truck long after he was rich. He said he liked it and didn't care about driving something fancier.

Probably this attitude had helped him get where he was.

Re: How to Afford Anything

#63

Post by brg »

dagw wrote: post #29
sailormoon wrote: post #23

All this pain to drop $2.5k per year on a Nikon camera? Dude, seriously, just take a few months and learn some skills at something, then get a decent job using them. You'll be able to buy a new camera every freaking month . I mean I'm all for living within your means and planning and frugality but seriously, don't eat out except for the cheapest fast food around? That's the wrong way to go about it. Upgrade your cash…

If you read the whole article you'll see that he doesn't want to have a normal full time job. I don't know what his background is but he claims he used to be making 6 figures, so he probably has some viable skills. He has intentionally chosen to prioritize free time and freedom over cash-flow. While I probably wouldn't make the same choice myself, I can't really argue that he has made the wrong choice.

He has intentionally chosen to prioritize free time and freedom over cash-flow.

My read is completely opposite, he is sacrificing free time and freedom in order to obtain cash-flow. Specifically he is constraining himself to living within 10 miles of employement, and spend 2x as much time commuting to bicycle to work than take a car. He suggests spending time shopping, cooking, and cleaning to eating out (perhaps 2x the time of eating out, 10x time of fast food).

As with you I really can't argue that this is a wrong choice, but I will argue that this is not an honest argument. The cost of his frugality, in terms of time, is something never mentioned throughout the article.

Re: How to Afford Anything

#64

Post by Xurinos »

afterburner wrote: post #58

"When one group did a survey a few years ago, they discovered that the most popular car owned by millionaires was a Ford. Why? Simple: the people who still had and grew their money didn't waste it on luxuries to show off. All showing off does is make others spend more effort trying to scam you. " I suspect a large part of the reason is that these millionaires are, for political reasons, whether in politics or not, sh…

I read the same articles. It was not that it was a Ford but that it was a cheap car. Author probably said "Ford" expecting to imply "cheap". There are luxury trucks, too.

Re: How to Afford Anything

#65

Post by billybob »

JohnFritzen wrote: post #54

What he mentioned about riding a bicycle instead of using a car is a huge win. The money saved is incredible and you cannot put a price on the health benefits.

It sounds great, but like anything, there are tradeoffs. "What's the best-paying job I can find" vs "what's the best-paying job I can find within biking distance" are very different questions. The difference in income may far outweight the commuting costs.

Then again, they may not. But it should be considered. One strategy would be to find the job, then move to within a few miles of it. But again, do the real estate costs of living there outweigh the gains? It's complicated.

The health benefits are probably the only really clear part. :) And no, you can't put a price on that. (Unless a gym membership would be equivilent...)

Re: How to Afford Anything

#66

Post by mortehu »

imp wrote: post #41

I can't tell if he's joking or not. He has a section titled "Don't Have Kids," yet he has two himself: http://www.kenrockwell.com/about.htm So he obviously isn't taking his own advice. Maybe he could have posted tips on how to raise children cheaply instead of discouraging having them at all.

On the other hand, he wouldn't be in a good position to make that advise if he didn't have kids himself.

Re: How to Afford Anything

#67

Post by billybob »

DanielStraight wrote: post #50

There's some good tips in there as well as some bad ones, but none of that is the point. The point is simple: spend money on things you care about; spend nothing on things you don't care about. The author doesn't care about eating out, but that doesn't mean no one else should. People are different. Any financial advice that doesn't take that into account is missing the point.

There's also the interesting idea of "don't disturb your contentment," to paraphrase. Drive a modest car and be happy; don't rent a fancy one or you'll start wanting it.

Each person has to decide which things are worth splurging on. But the answer can't be "everything." Keeping your expectations low in some areas is a good idea - and if those areas are expensive ones, like car and house, all the better.

Re: How to Afford Anything

#68

Post by afterburner »

ahoyhere wrote: post #59
afterburner wrote: post #56

Earlier quoted context omitted.

US taxes are low.

No, they're not. You start as a self-employed person with the basis of 30% - because employees are subsidized by their employers, you have to pay both shares. That 30% is Federal, FICA, and SS, doesn't include practically any services you can use or that will protect you as a young person. Then there's state tax. And oh yes, if you move overseas, you have to be very careful in arranging your affairs if you no longer…

So what I'm getting from this is that US taxes are lower than Austrian taxes (you say it right there). Which doesn't exactly disprove my statement that US taxes are low. It doesn't matter that you claim Americans are getting a bad deal on their taxes.

Re: How to Afford Anything

#69

Post by billybob »

jemfinch wrote: post #32
muhammadatt wrote: post #26

Earlier quoted context omitted.

Even if he suffered a loss (i.e. if the appreciation in the home value was not enough to offset his accumulated outflow of principal and interest) it probably would not be as much as he would have lost by renting. Your scenario assumes that (1) he could rent the same or an equivalent property for much less of cash outflow than buying and (2) he could have invested the difference in some other asset that had a much hi…

> Your scenario assumes that (1) he could rent the same or an equivalent property for much less of cash outflow than buying Of course he could. If your rent is paying your landlord's mortgage, you're overpaying. > and (2) he could have invested the difference in some other asset that had a much higher return than appreciation of the condo. Finding an asset with a better than 1% return is not difficult. > If the amoun…

I'm renting and probably paying the landlord's mortgage. But I know that I will live here a specific period of time and then move. So by renting, I'm buying peace of mind: I don't have to sell a house or worry about getting stuck with it, and I don't have to add a mortgage to my other debt.

When I'm going to be somewhere long-term, or at least have a flexible schedule for moving away, I'll want to buy.

Re: How to Afford Anything

#70

Post by billybob »

afterburner wrote: post #55
edw519 wrote: post #9

...women don't give a crap what kind of car you have... How strange. OP advises being able to afford anything by being "frugal" and then claims to know what women care about. He must not be married. I agree with much of OP's advice. Just be aware that the quickest way to stop following it isn't loss of discipline but falling in love with someone who doesn't want to live that way.

"women don't give a crap what kind of car you have" Not when you're married, no... but when you're single? It's taken as an indicator of your wealth and status (whether consciously or not).

Personally, I think women who are concerned about your wealth and status (beyond "he's not a bum") are too shallow to worry about, anyway.
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