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Money can buy happiness, but not unconditionally

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Re: Money can buy happiness, but not unconditionally

#71

Post by esotericn »

hnmonkey wrote: post #64
esotericn wrote: post #3

I don't think anyone contests the fact that money increases happiness _up to a point_. Once you have full financial security though, it becomes quite nonlinear. Outside of bonkers areas, 1 million NW gets you retirement. 10 million NW gets you that plus... toys. It's a major reason why taxation should focus on the rich (as opposed to the 'well off' e.g. high incomes). They really will not notice it aside from ideolog…

What's your definition of 'bonkers areas?' Can you show how 1 million net worth gets someone retirement? It seems to me that if you're retiring on 1 million dollars you're going to run out of money pretty easily unless you're living off rice and beans. And in many places with just $40k a year (assuming a 4% withdrawal of the 1 million) you might not be able to even cover your mortgage/rent/property taxes/bills not ev…

1 million is obviously intended to convey an order of magnitude, but I'll bite, because it works anyway, I live something like it.

I'll use GBP to begin with and convert back to USD at the end, because I'm in the UK.

10K GBP a year is more than I currently spend on life. This excludes rent. I'll get to that.

300K at a 3.33% withdrawal gets you that.

Another 300K to buy a home outright. Sod the mortgage, you have 1M net worth, do that if you think you can beat HPI with investments. This is doable in most of the UK. In many areas you'd get something really rather nice for that.

That's 600K GBP or 768K USD, in total. That actually gets you a better standard of living than my current one, forever (I don't own a home).

A bit left over. So we'll spend another 5 grand a year 'cos we can. 166K GBP required at 3.33% withdrawal, 766K in total. Still not 1M USD.

In London (I live here) you'd probably want 750K for the house (you can do cheaper but if you have this money to begin with you probably wouldn't). That would bring it to very roughly 1.5-2M total. I think it's fair to consider London a "bonkers area".

When I say retirement I mean early retirement, sorry, I'm lazy.

It's kind of odd to me to explain this over and over because it seems like most people just don't do the math. If you have annual minimum wage x 25 in the bank then you are in a position to work fairly infrequently. If you have annual minimum wage x 50 you can probably sustain a basic existence indefinitely. Above that you're looking at More Toys.

Re: Money can buy happiness, but not unconditionally

#72

Post by Rainymood »

amoitnga wrote: post #15

I think it's a well-established fact that going from poor to middle class makes a huge difference, from middle to top makes difference too, but not as big. 5 years ago I was a carpenter in New York making some 30k a year, I was miserable. I wanted a different job, but not only because of a better paycheck, but also a kind of work I'd do, the way I'd spend my days. Now I'm a web developer and having that background re…

I kinda think its funny how the emphasis on money is being made here. While true, money intrinsically fails to have any real value besides what others think it is worth (its a fiat currency).

Money represents value, and with value we can buy other stuff that makes us happy. I would argue that money is not part of the equation here at all, but rather the stuff that money can buy. If we take your equation of M+T+Q=H then the M would be weighed differently in Nepal than in San Fransisco with its higher CoL. I, personally, would be able to live very comfortably without any money, given my physical needs are satisfied. What will probably happen in this moneyless society is that another value store would be created to transfer value in and across time, something like money but with shells or oddly shaped stones maybe.

The point I was trying to make was that money does not bring happiness, but rather the stuff that money allows us to buy. Then I followed this argument and came to the conclusion that we end up with money anyway.

Are there any advanced societies without a value-store like money? I wonder.

Re: Money can buy happiness, but not unconditionally

#73

Post by hnmonkey »

esotericn wrote: post #71
hnmonkey wrote: post #64

Earlier quoted context omitted.

What's your definition of 'bonkers areas?' Can you show how 1 million net worth gets someone retirement? It seems to me that if you're retiring on 1 million dollars you're going to run out of money pretty easily unless you're living off rice and beans. And in many places with just $40k a year (assuming a 4% withdrawal of the 1 million) you might not be able to even cover your mortgage/rent/property taxes/bills not ev…

1 million is obviously intended to convey an order of magnitude, but I'll bite, because it works anyway, I live something like it. I'll use GBP to begin with and convert back to USD at the end, because I'm in the UK. 10K GBP a year is more than I currently spend on life. This excludes rent. I'll get to that. 300K at a 3.33% withdrawal gets you that. Another 300K to buy a home outright. Sod the mortgage, you have 1M n…

I would have to argue that your situation is a complete outlier and extremely unusual, especially in London which is one of the most expensive places on earth. You're also saying that you've excluded rent to get to your 10K a year number in London but that's a huge part of what you pay I'd imagine so why would you exclude that?

Do you not need to pay taxes on anything, including on the house you've purchased? Do you not need to pay for utilities? What if you are talking about a couple? What if you're talking about a family with kids? Do you not have a cell phone or internet service?

I think you have to explain this over and over because your numbers don't make sense for an actual person and maybe only make sense in a very unusual situation (yours). Blaming it on people not doing the math is pretty hand-wavy. And, more than likely I would say if these numbers do work for anyone they're probably on the youngish side and haven't built up a large amount of things they have to pay for yet.

Let's say you're in the US in an average-ish city and not even one of the most expensive ones. And, let's give you the benefit of the doubt that you've paid off your $300k house. Congrats, you now have to pay homeowners insurance at let's say $600 (on the cheap side) a year. You have to pay taxes on your house as well at let's say $8,000 a year. You've retired early so you don't get medicare or medicaid yet so you need health insurance at let's say on the cheap side $400 a month for $4800 a year. You need food too but let's say you don't eat a ton and only spend $50 a week (That's $7 a day which would be impressive). That's another $2600 a year. I imagine you like having electricity in your house and running water. Probably another $200 a month for that and $30 for gas. That's another $2760 a year. Let's say you've got a cheap phone and cheap internet and combined that's only $100 a month. That's another $1200 a year. This doesn't factor in any form of entertainment/leisure, gas for your car, car insurance, car maintenance, home maintenance, or anything frivolous and I've certainly forgotten many things.

Grand total of $19,960 a year assuming you've paid off the house, which most people haven't if they haven't gotten close to retirement age. And that's just for 1 person. If you're talking a couple then the number grows a lot. If you have kids you support then the number grows massively. And if you've invested your 1 million and get interest on that you're paying tax on that as well, which would cut into your savings.

I'm not saying it's not possible of course, but your claim that 1 million net worth gets you retirement is not really super credible for most people. And at the end you say that if you have annual minimum wage x 25 in the bank you can work fairly infrequently but your original argument was that you could retire. Retiring means you don't have to work for the rest of your life, not that you have a nice buffer and cushion.

Re: Money can buy happiness, but not unconditionally

#74

Post by masonic »

ohyes wrote: post #27
Kaveren wrote: post #7

Earlier quoted context omitted.

Taxes already do focus on the wealthy with progressive taxes (in many countries), though. From an American perspective, the top federal income tax bracket is 37%. The top state income tax rate can be anywhere from 0% to 12.3% (California), so in total you can pay up to 49.3% of a potion of your income in taxes. In America, the top 1% paid 45.7% of total income tax in 2015 [1] (earning 17% of "expanded cash income"),…

There’s no way for taxation to not focus on the wealthy, they have all of the disposable income. You could try raising taxes on the bottom 80% who live their entire lives in debt, but you can’t squeeze water from an stone, and it’s better for wealthy people to not have a French Revolution situation on their hands.

   the wealthy
Income taxation and wealth taxation are not the same thing

Re: Money can buy happiness, but not unconditionally

#75

Post by [deleted] »

hnmonkey wrote: post #73
esotericn wrote: post #71

Earlier quoted context omitted.

1 million is obviously intended to convey an order of magnitude, but I'll bite, because it works anyway, I live something like it. I'll use GBP to begin with and convert back to USD at the end, because I'm in the UK. 10K GBP a year is more than I currently spend on life. This excludes rent. I'll get to that. 300K at a 3.33% withdrawal gets you that. Another 300K to buy a home outright. Sod the mortgage, you have 1M n…

I would have to argue that your situation is a complete outlier and extremely unusual, especially in London which is one of the most expensive places on earth. You're also saying that you've excluded rent to get to your 10K a year number in London but that's a huge part of what you pay I'd imagine so why would you exclude that? Do you not need to pay taxes on anything, including on the house you've purchased? Do you…

[deleted]

Re: Money can buy happiness, but not unconditionally

#76

Post by coldtea »

rifung wrote: post #23
coldtea wrote: post #18

Earlier quoted context omitted.

> I've still not reached the point where more money hasn't increased my happiness Depends on the persons age and maturity level too. At some point shiny new cars and other trinkets are not really what makes you happy... Besides, if you're making a wage (whether way above average or not) you might not still be quite that independent that more money makes no difference (or draw your happiness from competing in the race…

> Depends on the persons age and maturity level too. At some point shiny new cars and other trinkets are not really what makes you happy... I don't know if I agree with that. Just because those things don't make you happy doesn't mean there aren't other things you can do with money that make you happy. Or maybe I just haven't matured enough yet? At least I think I am at the point I don't care too much about having a…

>Still, the thing that I have found to increase my happiness the most is giving it to someone else and seeing someone be really grateful. If I had more money I could do the same thing but to more people probably.

Well, that's not money then, that's helping others. One can help other people with no or little money too.

Re: Money can buy happiness, but not unconditionally

#77

Post by [deleted] »

hnmonkey wrote: post #73
esotericn wrote: post #71

Earlier quoted context omitted.

1 million is obviously intended to convey an order of magnitude, but I'll bite, because it works anyway, I live something like it. I'll use GBP to begin with and convert back to USD at the end, because I'm in the UK. 10K GBP a year is more than I currently spend on life. This excludes rent. I'll get to that. 300K at a 3.33% withdrawal gets you that. Another 300K to buy a home outright. Sod the mortgage, you have 1M n…

I would have to argue that your situation is a complete outlier and extremely unusual, especially in London which is one of the most expensive places on earth. You're also saying that you've excluded rent to get to your 10K a year number in London but that's a huge part of what you pay I'd imagine so why would you exclude that? Do you not need to pay taxes on anything, including on the house you've purchased? Do you…

[deleted]

Re: Money can buy happiness, but not unconditionally

#78

Post by coldtea »

nightski wrote: post #22
coldtea wrote: post #16

Earlier quoted context omitted.

> Taxes already do focus on the wealthy with progressive taxes (in many countries), though. The tax system provides tons of ways the wealthy can skip taxes, progressive or not.

This is why I truly believe in a consumption/sales tax instead of income tax (aka FairTax). You can build as much wealth as you'd like, but it doesn't do you any good until you spend it. At that point there is no avoiding the tax and it's much easier for the IRS to track. Even if a black market developed, at some point that money flows back into the economy and is taxed whereas today it does not (aka tax havens and m…

>This is why I truly believe in a consumption/sales tax instead of income tax (aka FairTax). You can build as much wealth as you'd like, but it doesn't do you any good until you spend it. At that point there is no avoiding the tax and it's much easier for the IRS to track.

That would be even less fair. For a rich person, spending (even with luxuries in) is a small percentage of their income.

For a poor person rent for a small apartment, plus food, plus basic clothing for the kids basic healthcare, etc eats most of their income (or all in most cases).

Rich people also don't need to spend as much. For most of their fortune, they can accumulate and wait. For the rest, they can arrange all kinds of schemes (e.g. their car is leased by their company, not them personally, and so on) to appear not to spend themselves.

Plus, a lot of what they do is buying influence, which you can do with political donations, "charity", and other such things, that are low or not taxed (and in some cases, are even tax deductible).

Re: Money can buy happiness, but not unconditionally

#79

Post by dharma1 »

Rainymood wrote: post #72
amoitnga wrote: post #15

I think it's a well-established fact that going from poor to middle class makes a huge difference, from middle to top makes difference too, but not as big. 5 years ago I was a carpenter in New York making some 30k a year, I was miserable. I wanted a different job, but not only because of a better paycheck, but also a kind of work I'd do, the way I'd spend my days. Now I'm a web developer and having that background re…

I kinda think its funny how the emphasis on money is being made here. While true, money intrinsically fails to have any real value besides what others think it is worth (its a fiat currency). Money represents value, and with value we can buy other stuff that makes us happy. I would argue that money is not part of the equation here at all, but rather the stuff that money can buy. If we take your equation of M+T+Q=H th…

I also wonder if AGI (if we get that far) will use money

Re: Money can buy happiness, but not unconditionally

#80

Post by jemfinch »

dorchadas wrote: post #58
jemfinch wrote: post #32

Earlier quoted context omitted.

The top 1% of income earners, perhaps, but not the top 1% of wealth, which largely pays only a 15% long-term capital gains tax.

> which largely pays only a 15% long-term capital gains tax Before or after it was gutted earlier this year?

Oh, it's 20% now for gross income over $425,801? I guess that brings it almost to the rate paid on regular income by earners who make $38,701 per year.
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