Millionaires Who Are Frugal When They Don't Have to Be • Hacker News Board

Re: Millionaires Who Are Frugal When They Don't Have to Be

#71

Post by cushychicken » Sat, Jun 06, 2015, 3:00 PM UTC

hobo_mark wrote: post #21

jasode wrote: post #15

The millionaires at $1m to $10m absolutely DO have to be "frugal" if we use define "frugal" to be about "smart spending" as opposed to fishing pennies out of public fountains. The word "million" is deceptive because it is an amount beyond what 99% have. It makes it seem like some mind boggling amount of money but mathematically, it really isn't that much. A person classified as "millionaire" could be tagged that beca…

Agreed on everything but this line > it would require the parents to be "cheapskates" and not fund any extracurricular trips like ski vacations and Spring Break parties down in Mexico One would assume a 'frugal' household knows better than that and would want to pass their value system on to the next generation too. Want to get wasted in Mexico? Find a way to make it happen yourself.

I would perceive myself as having done something slightly amiss in raising my kid if they asked me to fund their spring break trip to Mexico. My folks only ever funded my spring break stuff if I was doing something with them. Not the worst thing, since it basically made it so I had to spend spring break with my family, or camping. (Had some great spring break camping trips as a result, though.)

Re: Millionaires Who Are Frugal When They Don't Have to Be

#72

Post by mmrasheed » Sat, Jun 06, 2015, 3:04 PM UTC

When I read this article few minutes ago I found the following phrases and quotes defining the characters of these people and justifying their acts-

...“It’s (money) an important tool. They don’t neglect it, but they also don’t worship it.”...

...“Part of this pressure to keep going is less about greed and more about insecurity that might be self-imposed,” ...

...“It’s about paying attention to what makes you happy and not just doing what our society tells us to do,” ...

... he and his wife simply didn’t care that much about material possessions...

... “We like to travel, and we’ll spend the money for that because it’s worth it having a real experience together.” ...

And when I went through the comments here, I found none so far discussing on any of the points above.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#73

Post by sehugg » Sat, Jun 06, 2015, 3:16 PM UTC

Note also that in several states, the average full-career government employee receives a pension worth over $1 million. It's just that we don't commonly use the term "millionaire" when the payment is in the form of an annuity.

http://www.wsj.com/articles/SB100014240527023043607045794151...

Re: Millionaires Who Are Frugal When They Don't Have to Be

#74

Post by cushychicken » Sat, Jun 06, 2015, 3:18 PM UTC

Nrsolis wrote: post #5

comrade1 wrote: post #3

The farther you are in life in your job, personal life, friends, the easier it is to live enjoyably with spending less money through work trips to fabulous cities, automobile perqs, subsidized meals, work home-buying perqs, etc. I'm not sure how much these people are struggling with their low spending.

As a person who travels regularly for work I can say you have quite a romantic view of business travel. The reality is that I usually see (in this order) an airport, a taxi, a conference room, a hotel dining room and/or bar, a hotel room, a taxi, an airport. The idea that there is much downtime on a business trip is a fantasy of those who don't travel for work.

I have a coworker who has a saying for this: "You can travel to all the exotic locales for work that you want, but it doesn't change the fact that every hotel room looks the same inside."

Re: Millionaires Who Are Frugal When They Don't Have to Be

#75

Post by greedo » Sat, Jun 06, 2015, 3:21 PM UTC

jasode wrote: post #37

gizmo wrote: post #27

Earlier quoted context omitted.

It's laughable to suggest splurging on a 300k Ferrari is irresponsible at $10M < assets < $100M.

Everyone's appetite for risk is different. If I had $10,000,001.00 in the bank, I personally would not feel secure enough to spend $300k on a car (and also pay all the expensive maintenance that it entails.) Since the car is 3% of my available funds, I'd be constantly hyper paranoid about a stray rock being kicked up by the truck in front of me. If I had $100 million, the $300k car would feel a little more "disposabl…

Correspondingly, would you feel insecure if you had 1,000,001 in the bank and spent $30k on a car? The ratios are the same, and most people spend a far higher ratio on their cars.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#76

Post by vasco » Sat, Jun 06, 2015, 3:40 PM UTC

briandear wrote: post #38

SlipperySlope wrote: post #10

Its important to have a spouse who has a similar desire for sensible frugality. The level of income is less important than simply living below your means for your whole life. With prudent financial planning, compound interest and the passage of time achieves the level of wealth described in the article. Indeed car purchases are a good indicator. An omission of the article is that often frugal persons are generous to…

Compound interest? Where? The interest rates are such that inflation would destroy whatever gain you have. Nearly all savings accounts are paying an annual yield of less than 1%! That means WITH compounding, you're looking at a 1% or lower gain. Inflation is typically between 1-4%, with 2% being the benchmark in terms of financial planning, though admittedly in April, we had slightly negative inflation, but that tren…

You're delusional if you think 12%/year returns are feasible for a period of time of 30 years for the average (hell, even for very good ones) investor. On the other hand you're also delusional if you think it is that hard to save more than 20% on a $100k salary.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#77

Post by 7Figures2Commas » Sat, Jun 06, 2015, 3:43 PM UTC

jasode wrote: post #15

The millionaires at $1m to $10m absolutely DO have to be "frugal" if we use define "frugal" to be about "smart spending" as opposed to fishing pennies out of public fountains. The word "million" is deceptive because it is an amount beyond what 99% have. It makes it seem like some mind boggling amount of money but mathematically, it really isn't that much. A person classified as "millionaire" could be tagged that beca…

You can comfortably purchase a Ferrari with far less than $100 million. In fact, there are circumstances under which you could comfortably purchase a Ferrari with well under $1 million.

What most folks don't recognize is that you can get significant leverage on savings, a solid income and a good credit score. In the case of a used exotic car, if you purchase the right make, model and year and negotiate a good deal, you can often drive the car for not much more than the total cost of, say, leasing a Mercedes. In some cases, you can even drive the car for a while for next to nothing.

They key is that you buy used, identify a good deal, put down as little cash up front as is possible (i.e. 10%) and extend the loan term out as far as you can (specialty lenders will do 72 to 120 month loans on exotic cars). If you hit the depreciation curve at the right time, you really can't lose.

You'd be surprised how many people who could pay cash for a $250,000 Ferrari still have a car note. There's really no good reason to pay cash outright in many cases.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#78

Post by reagency » Sat, Jun 06, 2015, 3:45 PM UTC

adventured wrote: post #66

siscia wrote: post #35

Earlier quoted context omitted.

Cannot read the article, however, we should be careful about the definition of "millionaires". If we define "millionaires" as the individual with 1M of worth asset you are definitely right. If we define "millionaires" as High-Net-Worth individual (HNWi), the people who have at least 1M in investable finance without counting the primary residence it start to get more interesting. However, if we define "millionaires" a…

The last group does have to be frugal most likely. It's a very, very small number of high earners that manage to yield more than $1m in income - much less net that after taxes - and then do it multiple times. There is a very high rotation on high income earners. They tend to ride temporary booms in whatever their specialty is (eg the real estate bubble days), and also peak out at a certain age bracket (their earning…

Mortgage? The disposable income from the non-peak years can easily pay off the mortgage.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#79

Post by reagency » Sat, Jun 06, 2015, 3:47 PM UTC

aptwebapps wrote: post #46

siscia wrote: post #35

Earlier quoted context omitted.

Cannot read the article, however, we should be careful about the definition of "millionaires". If we define "millionaires" as the individual with 1M of worth asset you are definitely right. If we define "millionaires" as High-Net-Worth individual (HNWi), the people who have at least 1M in investable finance without counting the primary residence it start to get more interesting. However, if we define "millionaires" a…

I believe your first option is the conventional one so while the others might be interesting they aren't what the article is talking about.

And what does "convention" say about inflation adjustments?

Re: Millionaires Who Are Frugal When They Don't Have to Be

#80

Post by reagency » Sat, Jun 06, 2015, 3:50 PM UTC

massysett wrote: post #33

"And while they own three homes — condominiums in Naples and Boca Raton, Fla., and a house in Lebanon, Pa., where they grew up, none of them are huge. One splurge is an annual trip to Italy." Frugal? Is this a joke?

Those three properties together cost less than a starter house in Silicon Valley.