Climbing the Wealth Ladder • Hacker News Board

Re: Climbing the Wealth Ladder

#131

Post by tonyedgecombe » Tue, Dec 17, 2019, 5:06 PM UTC

anewguy9000 wrote: post #59

disintegore wrote: post #47

Earlier quoted context omitted.

Saving 10% on a median income adds up to roughly three thousand dollars saved, a year. Depending on the amount of risk you're willing to accept, you may find yourself making between ~2 to 10 grand over a 10 year period from interests alone. I think those numbers are reasonable (and that saving in general is absolutely worth it), but I don't think they're significant enough to grant you upwards mobility. Even furnishi…

2-10 grand over 10 years wont even cover inflation. so you're actually poorer.

You would expect equities to outstrip inflation in most environments.

Re: Climbing the Wealth Ladder

#132

Post by icedchai » Tue, Dec 17, 2019, 5:06 PM UTC

SketchySeaBeast wrote: post #98

philwelch wrote: post #69

Earlier quoted context omitted.

Here's the thing: if instead of spending your money, you invest it, guess what you end up doing with that money? Owning the means of production. Period.

A bit confused by this - you're now not actually buying anything that produces anything. I guess you could argue it produces more money, but you have no control over those things - you can only choose what you invest in, but have no control over how those things perform. Otherwise then savings is owning the means of production, given that you're still making money with it.

You own companies (stock) that produce things. It is true you have no active involvement or control over the business itself (unless you reach activist investor levels), but this is often a positive thing.

Re: Climbing the Wealth Ladder

#133

Post by martokus » Tue, Dec 17, 2019, 5:07 PM UTC

namdnay wrote: post #66

maire wrote: post #56

So the funny thing is this article is the exact opposite of the two most influential financial books in my life: "The Millionaire Next Door" and "Rich Dad Poor Dad". The true wealthy don't ever think of spending money as if it isn't important. Instead they distinguish between spending on income generation vs spending on luxury. They only spend on luxury intentionally but will spend on income generation freely. In oth…

I would steer clear of the bullshit peddled by Kiyosaki... https://www.johntreed.com/blogs/john-t-reed-s-real-estate-in... It's exactly this kind of get-rich-quick crap (that always seems to revolve around heavily leveraged real estate) that was one of the causes of 2008

+1. When I was young and naive I used to praise Kiyosaki. Later experience taught me he's just a charlatan getting rich by teaching others how to get rich.

Re: Climbing the Wealth Ladder

#134

Post by sangnoir » Tue, Dec 17, 2019, 5:07 PM UTC

lazyguy2 wrote: post #86

Pfhreak wrote: post #27

I'm really not a fan of this breakdown because it seems to put each order of magnitude increase in liquid net worth as equal space on the graph. What percentage of people fall into each level. Maybe 50-60% of American adults fall into level 1? Surely, most folks will never reach Level 3 on this chart. While this is an interesting way for someone who has made significant increases in their income over the years, I don…

It's entirely possible for a wage earner to become a millionaire in the USA. Anybody with a middle class income can do it. It's not even complicated or hard to figure out. The problem is that it requires discipline and living under your means. The first step is to eliminate debt and don't make stupid purchases. Debt includes credit card, personal loans, car loans, and mortgages. Stupid purchases are things like expen…

While you're at it, here are other things to avoid if you're middle class and want to get wealthy: having kids, and getting medical attention.

I'm all for saving and spending responsibly, but I don't there's a thin line between doing that and being miserly. Everyone needs to have a goal for themselves for how much "enough" is, work towards it while still living their lives (even if the goal is asymptotic)

Re: Climbing the Wealth Ladder

#135

Post by archagon » Tue, Dec 17, 2019, 5:08 PM UTC

rolltiide wrote: post #112

bronco21016 wrote: post #63

Earlier quoted context omitted.

It bothers me when people use the phrase living paycheck to paycheck to describe both someone who literally doesn’t make enough money to cover the essential bills of living as well as someone making $200k+. These people are not in the same boat whatsoever. The doctor, or any professional making that much, simply needs to turn in the lease on the luxury car, or downsize their house, or cancel their vacation to materia…

These are bad assumptions and it shouldn't bother you that much. There are lots of people making $200k+ living paycheck to paycheck. If the most basic discussion about cost of living is going to blow your mind then just exit this discussion. If you wanted month-to-month rent in my building in San Francisco (as opposed to a more typical yearly lease), it is $11,000 per month, with yearly leases being about half that.…

I work and live in the Bay Area. It is a cruel joke to say that any FANG engineer (or other $200k+ earner) working here is living "paycheck to paycheck". Even in your reply, you provide a solution (just one of many) to this hypothetical renter's problem: switch to a yearly lease and save $66,000 a year. People who are actually living paycheck to paycheck don't have the luxury of making these kinds of financial decisions.

Meanwhile, I know a number of Bay Area grad students who still get by on a salary of $30,000, and even they wouldn't say that they're living "paycheck to paycheck" for the most part.

Re: Climbing the Wealth Ladder

#136

Post by AlexanderNull » Tue, Dec 17, 2019, 5:10 PM UTC

hultner wrote: post #60

disintegore wrote: post #8

I understand this isn't the point of the article, but it seems like a roundabout way of saying "don't overspend". This part in particular bothers me : > More importantly though, the best way to climb the wealth ladder is to spend money according to your level. As far as I (a non-economist) can personally tell, any notion of climbing up some abstract wealth ladder is synonym with a salary increase for the vast majorit…

I wouldn't fully agree with this, I'd say income that non-linear to amount time spent it the highest driving factor. Let's take an example. I'm going to use Swedish living conditions and salaries as an example as that's where I live but they are close to most European/western countries. We have a frugal grocery store cashier who makes $2000 USD/month after taxes. We have a high level executive in a medium-sized compa…

No family? Also if we were talking about the US (which the article was) then you have to factor in healthcare, average of $200 a month for the insurance IF it's sponsored (mostly covered) by their employer. If the grocery worker is living in any major city then rent is bare minimum of $600 a month for the privilege of living with at least 2 other flatmates or around $1000 for a pretty small apartment. So this person's already out half their monthly income. Let's say transportation costs are low and that this person only takes the bus to get everywhere, that's an extra $100 a month (assuming lack of adequate transportation doesn't also ending up costing them their job due to frequent late starts). Now this person also has to pay at least some utilities depending on where they're living so a rough estimate would be around $120 a month for that. Now we look at food, average grocery costs per person in the US is $220 a month. This person also needs clothing obviously, if they go on the super low side they could get by on ~$100 a month over all. If this is it for their spartan life style, meaning no cell phone, no internet, no eating out, no leisure activities that cost money, no hobbies, no children, no trips to the doctor (where medical deductibles kick in), no car, no netflix etc. This person has potentially $460 a month to save.

That's 100% best case scenario living a lifestyle that basically consists of going to work, going home, eating food, sleeping on the floor of their apartment (we didn't budget for furnishings but w/e it's better for the back) using the public library and walks around the park for sole avenues of entertainment. ALSO: THERE'S NO KIDS IN THIS SCENARIO. Some of those estimates I lowballed also (like food as that's average cost of groceries for people who also get calories from eating out at restaurants) so this is really not a realistic estimate here.

In reality though there's plenty of hidden costs that this person will incur and even assuming they do manage to stay kidsless they'll be lucky to put away $100 a month giving them a best case scenario of $250k in savings by 55. Not terrible for them, but not enough to retire on in the US when you think of medical expenses incurred later on in life.

Re: Climbing the Wealth Ladder

#137

Post by teekert » Tue, Dec 17, 2019, 5:12 PM UTC

leetcrew wrote: post #107

hultner wrote: post #60

Earlier quoted context omitted.

I wouldn't fully agree with this, I'd say income that non-linear to amount time spent it the highest driving factor. Let's take an example. I'm going to use Swedish living conditions and salaries as an example as that's where I live but they are close to most European/western countries. We have a frugal grocery store cashier who makes $2000 USD/month after taxes. We have a high level executive in a medium-sized compa…

does a swedish exec really make just $5000/month post tax? that's not much more than I net at my first software gig out of college (and not in SF or NYC).

Where I live (the Netherlands) that means bout 10.000 pre-tax. And that is quite a lot, it is like a group manager (i.e. 50 people to manage) in a medium to large size company. Executive level is probably more. But not a lot.

Re: Climbing the Wealth Ladder

#138

Post by yboris » Tue, Dec 17, 2019, 5:13 PM UTC

beamatronic wrote: post #74

So...a couple of these posts are about climbing the income ladder. If you want to climb the wealth ladder here’s my advice. Buy a single-family home, in an area with good schools, that you can afford with a 30 year fixed mortgage. You will need 20% down, so you won’t be able to reach the “food freedom” or “travel freedom” levels as described here until your home purchase is completed. This is almost foolproof over th…

Or consider buying a mobile home in a good community. My house was $50,000 and my rent is $600/month (I live in NJ and don't pay land taxes). The savings from not paying a mortgage or buying an expensive house means there's that much more you can put into investing for retirement (and in my case give more to cost effective charities).

Re: Climbing the Wealth Ladder

#139

Post by AlexanderNull » Tue, Dec 17, 2019, 5:13 PM UTC

kevinqiu1 wrote: post #92

hultner wrote: post #60

Earlier quoted context omitted.

I wouldn't fully agree with this, I'd say income that non-linear to amount time spent it the highest driving factor. Let's take an example. I'm going to use Swedish living conditions and salaries as an example as that's where I live but they are close to most European/western countries. We have a frugal grocery store cashier who makes $2000 USD/month after taxes. We have a high level executive in a medium-sized compa…

I think the problem is in America the frugal clerk makes 3000/month, a white collar professional makes 8000/month and a high level executive makes 14000/month after taxes. And I wonder if I'm being too stingy with our executive here...

Way too stingy. Engineers here make $14,000 - $33,000 / month, average is closer to the bottom of that though. Those engineers have executives too.

Re: Climbing the Wealth Ladder

#140

Post by kangnkodos » Tue, Dec 17, 2019, 5:14 PM UTC

hultner wrote: post #60

disintegore wrote: post #8

I understand this isn't the point of the article, but it seems like a roundabout way of saying "don't overspend". This part in particular bothers me : > More importantly though, the best way to climb the wealth ladder is to spend money according to your level. As far as I (a non-economist) can personally tell, any notion of climbing up some abstract wealth ladder is synonym with a salary increase for the vast majorit…

I wouldn't fully agree with this, I'd say income that non-linear to amount time spent it the highest driving factor. Let's take an example. I'm going to use Swedish living conditions and salaries as an example as that's where I live but they are close to most European/western countries. We have a frugal grocery store cashier who makes $2000 USD/month after taxes. We have a high level executive in a medium-sized compa…

My guess is that it would be almost impossible to save 1K/month if your take home pay is only $2K/month. There are minimum requirements for food, shelter, transportation, etc.

A pre-tax yearly salary living wage to cover the minimum in the US would be $45K - $68K depending on location. Let's look at a low end, low cost of living state. $45K pre-tax translates to about $3K per month take home pay. Which means that if you had $3K per month take home, you would just be covering the basics for a family. If you are trying to get by on $2K per month, you're already making some difficult trade-offs to survive.

So, I don't think it's realistic to say someone with $2K per month take home pay can save $1K per month.