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

#11

Post by casion » Sat, Jun 06, 2015, 12:55 PM UTC

salmonet wrote: post #7

Sometimes I wonder if people do things like darn their own socks just to show off how frugal they are. I have a hard time believing that a multi millionaire values his time low enough to darn socks to save sock money.

Maybe he enjoys doing it? Perhaps it's something from childhood or early adulthood with fond memories, or just simply a task he enjoys the process of?

I'm sure most people here can understand the idea that sometimes fixing your own stuff can be fun, even if it's cheaper to replace it.

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

#12

Post by beachstartup » Sat, Jun 06, 2015, 12:55 PM UTC

the people in this article have multiple or large houses, take expensive vacations, buy luxury goods... they don't sound overly frugal to me. wtf? am i taking crazy pills?

my parents (in their 60s) have 2 lifetimes worth of savings and investments yet still do their own laundry, have a vegetable garden, mend their clothes.... but they drive nice cars, take expensive vacations, and buy tons of gadgets. they have a massive OLED TV that they watch stereotypical old-person shows on, yet still re-use their ziploc bags. this is not an either/or proposition. people are complex creatures, especially when it comes to money.

in other words they're just normal people, not overly or underly frugal. this entire article is confused. older people with $millions today have a huge diversity of backgrounds, philosophies, and lifestyles. it's impossible to capture some kind of over-arching rule. spending habits are usually a mix of contemporary attitudes and early life values.

if nobody spent any of their money our economy wouldn't work. the important thing is to be careful with your savings and investments - the goal isn't to be a complete cheapskate and die with every penny you ever earned. i can't think of a worse way to live.

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

#13

Post by cpkscpks » Sat, Jun 06, 2015, 12:59 PM UTC

whiddershins wrote: post #6

Nrsolis wrote: post #5

Earlier quoted context omitted.

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.

This is absolutely true. Then again do you ever schedule a day or two off before or after a business trip? Mini-vacation with free airfare!

I did this before I had a family. Now, it's the first flight out. Sometimes I'll fly in a day early to get over jet lag, but that's usually working in a hotel room.

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

#14

Post by baldfat » Sat, Jun 06, 2015, 1:00 PM UTC

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…

I have a friend who is a school teacher. He is the most frugal person I know. He paid for his first home by the time he was 29 and than sold that and bought a awesome home that was paid off in 7 years.

Most generous person I know. He would give the shirt off his back if need be. Drives his wife nuts :)

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

#15

Post by jasode » Sat, Jun 06, 2015, 1:00 PM UTC

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 because of total net assets and not the liquid cash in a bank account. E.g. a $500k house + $500k IRA/401k + $25k car is a "millionaire".

But let's say you have a multi-millionaire (e.g. 2 million dollars). That might be $1 million in cash in the bank. That's still not much money because:

- it's not enough to park $1 million of principal into risk-free US T-Bills and live off the current interest rates of - if your child gets an expensive health problem like leukemia or spouse gets cancer, your medical bills could blow past the lifetime cap of the health insurance policy and therefore, you have to drain your savings to pay for expensive treatments.

- non-Ivy League schools can cost $50k per year. If you have 2 children and you want to give them the gift of college education without being burdened with student debt, that's at least $400k. And to stay at $400k, it would require the parents to be "cheapskates" and not fund any extracurricular trips like ski vacations and Spring Break parties down in Mexico.

The millionaires that have less than $10 million definitely have to be "frugal" and watch their money. Consider than NBA star Allen Iverson earned $200 million and blew it all away.

At $100+ million, one can start getting frivolous and maybe buy a Ferrari. However, $2 million is not enough cushion to live off interest income and be 100% worry-free from unexpected life events. One would still have to work somewhere to keep adding to the nest egg.

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

#16

Post by crimsonalucard » Sat, Jun 06, 2015, 1:03 PM UTC

Please note that although we respect frugality over lavishness. Frugality among rich people is one of the primary reasons behind wealth inequality. Sitting on top of an perverse amount of wealth and not doing anything with it is bad for the economy.

Wealth needs to be redeployed back into the economy and it must be done in following a method that doesn't grow the wealth in an unnatural compounding way.

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

#17

Post by SlipperySlope » Sat, Jun 06, 2015, 1:04 PM UTC

beachstartup wrote: post #12

the people in this article have multiple or large houses, take expensive vacations, buy luxury goods... they don't sound overly frugal to me. wtf? am i taking crazy pills? my parents (in their 60s) have 2 lifetimes worth of savings and investments yet still do their own laundry, have a vegetable garden, mend their clothes.... but they drive nice cars, take expensive vacations, and buy tons of gadgets. they have a mas…

Its clear to me that the article's family are still living well below their means. Multiple homes make sense for those who are frugal enough to restrict vacations mostly to the second home, which if well-located can appreciate in value faster than inflation. Frugal families often have such assets that appreciate, rather than expenses or possessions that depreciate.

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

#18

Post by [deleted] » Sat, Jun 06, 2015, 1:10 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…

[deleted]

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

#19

Post by salmonet » Sat, Jun 06, 2015, 1:12 PM UTC

casion wrote: post #11

salmonet wrote: post #7

Sometimes I wonder if people do things like darn their own socks just to show off how frugal they are. I have a hard time believing that a multi millionaire values his time low enough to darn socks to save sock money.

Maybe he enjoys doing it? Perhaps it's something from childhood or early adulthood with fond memories, or just simply a task he enjoys the process of? I'm sure most people here can understand the idea that sometimes fixing your own stuff can be fun, even if it's cheaper to replace it.

I get that it can be fun to fix things instead of replace them even if replacing them is cheaper. I just don't think it is frugal.

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

#20

Post by phlyingpenguin » Sat, Jun 06, 2015, 1:15 PM UTC

UK-AL wrote: post #4

Is this a surprise? People who have lots of money, are good with spending money? and knowing the value of things? I don't think they're cheapskates, they just know what ACUTALLY brings value to their life's. They probably wouldn't mind spending, if they get more or equal value from the thing they are purchasing. Fancy Cars in general are terrible value, for the enjoyment they bring you. Unless say its your hobby.

Fancy Cars in general are terrible value, for the enjoyment they bring you. Unless say its your hobby.

Buying a brand new fancy car is a terrible investment for the enjoyment, but that doesn't need stop you from having one. The article makes the point that there are plenty of ways to have "nice" things without breaking the bank, even if you don't have $$Texas.