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It Is Not About the Money, Silly, It Is All About the Time

jacquesmattheij.com

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Re: It Is Not About the Money, Silly, It Is All About the Time

#101

Post by webwright »

dionidium wrote: post #95
webwright wrote: post #89

Earlier quoted context omitted.

"The road to wealth is earning." That's half the road, which is the OP's point. We all know tons of people who earn a ton of money, but they never get rich or free because they keep ratcheting up their spending. The road to wealth is spending dramatically less than you make in an ongoing way.

Sure, but saving is the half of the road that applies after you start earning :)

Virtually everyone I know is earning. Almost no one I know is spending considerably less than they earn... So I focus on the harder part!

Re: It Is Not About the Money, Silly, It Is All About the Time

#102

Post by dimva »

pyronite wrote: post #88
dimva wrote: post #77

Earlier quoted context omitted.

Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years. That means you'll be a millionaire by the time you're 40 if you start doing this right after graduating college. 3% happens to be the rate that stocks have historically appreciated above inflation, so by doing th…

$48,000 a year in investment is $18,000 more than the median total income for an individual in the United States. What you are able to do is exactly what the vast majority of Americans are unable to do.

Sure, but the article specifically mentions couples making $211k/year combined ($160k euros) spending it all. People making $30k/year obviously can't save as much as me, but they could save something. I saved money even when I was in college, working only in the summers and paying for food/housing myself. I think I made like $10k/summer. Of course, my lifestyle was much less extravagant than it is now - I never ate out and lived with many roommates.

Re: It Is Not About the Money, Silly, It Is All About the Time

#103

Post by djokkataja »

dimva wrote: post #77
dionidium wrote: post #72

Saving is so much easier than earning, and it’s a habit that once built will pay you back for the rest of your life. There's a weird cultural meme that's convinced the middle class that the road to wealth is saving. The road to wealth is earning. This is just kind of an obvious thing, but I guess there are benefits to convincing people who will never earn enough to be wealthy that there are attainable ways to go abou…

Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years. That means you'll be a millionaire by the time you're 40 if you start doing this right after graduating college. 3% happens to be the rate that stocks have historically appreciated above inflation, so by doing th…

"They slept outside the 7/11 where they worked at first (didn't have to spend any money on rent), and ended up owning a large portion of their town by the time they were in their 50s."

I'm assuming that they weren't still working at 7/11 in their 50s.

Median income in the United States is ~$50k/yr pretax[1], so saving $4000/month is unrealistic for the majority of people in this country (since they would have to be saving every cent they earn without paying taxes, housing expenses, food expenses, healthcare, etc).

[1] https://en.wikipedia.org/wiki/Household_income_in_the_United...

Re: It Is Not About the Money, Silly, It Is All About the Time

#104

Post by jacquesm »

Jtsummers wrote: post #100
jacquesm wrote: post #99

Earlier quoted context omitted.

I paid cash to have my gall bladder removed. It as 1500 Euros. I really don't know why the same procedure would cost 10x as much where you live (assuming a simplistic conversion rate, which is not correct, so maybe 8x) compared to where I live. And nowadays that's not even an option any more because we all have mandatory health insurance with deductibles that are mostly designed to keep you paying for everything unle…

This was in the US. It's not cheap here for medical care, and there's really nothing that we get that's an improvement to justify the costs compared to the EU or Canada or, really, most other developed countries. Also, this was 8 years ago. The numbers stuck with me because I was trying to explain why, a couple years later, I was paying out of pocket from my (at the time) meager salary for health insurance to my cowo…

The reason I paid cash was very simple: because of a nasty little slip-up during my immigration into Canada I ended up un-insured (you have three months to apply for OHIP but being in the heat of a launching start-up I totally missed out of it). Many years later, on a short trip to NL I got hit with the gall bladder issue and I was rather pleasantly surprised that it was as cheap as it was.

Re: It Is Not About the Money, Silly, It Is All About the Time

#105

Post by Jtsummers »

jacquesm wrote: post #104
Jtsummers wrote: post #100

Earlier quoted context omitted.

This was in the US. It's not cheap here for medical care, and there's really nothing that we get that's an improvement to justify the costs compared to the EU or Canada or, really, most other developed countries. Also, this was 8 years ago. The numbers stuck with me because I was trying to explain why, a couple years later, I was paying out of pocket from my (at the time) meager salary for health insurance to my cowo…

The reason I paid cash was very simple: because of a nasty little slip-up during my immigration into Canada I ended up un-insured (you have three months to apply for OHIP but being in the heat of a launching start-up I totally missed out of it). Many years later, on a short trip to NL I got hit with the gall bladder issue and I was rather pleasantly surprised that it was as cheap as it was.

An infographic [1] comparing the cost across states. Those high cost ones seem absurd to me. But I've read my EOBs on every surgery I've had. One hospital charged something like $200-300 for the stitches (maybe 20 stitches used) . Not stitching, the stitches. The personnel costs were listed separately. US medical costs are broken.

[1] http://www.bernardhealth.com/woofstreetjournal/bid/197140/Ga...

Re: It Is Not About the Money, Silly, It Is All About the Time

#106

Post by markc »

mmmbeer wrote: post #5

If you pay off mortgage you need some plan for the extra money every month. If you save and invest it that is one thing, but if you just spend more freely (waste it), you are not better off. Economically, the best way is to not buy too much house, and invest all extra money into equities (index funds) over 20-30 years. If there is no extra money to invest, then you have bought too much house.

This is the best advice I've seen in this thread. A great thing about having a mortgage for many people is the forced savings of paying down the principal, but you want to maximize that virtue of home ownership by not over-buying - which brings with it proportionally higher taxes, utility costs, maintenance costs. Buy the smallest cheapest house that doesn't suck, and make sure you have auto-invest transfers to a brokerage account set up to get that excess out of your grubby paws. Mostly you'll just spend it on crap. If you do want something important (e.g. a car), you can buy it cash, but it's painful to pull a big chunk money out. That's what you want.

Re: It Is Not About the Money, Silly, It Is All About the Time

#107

Post by markc »

jacquesm wrote: post #42
conjecTech wrote: post #31

Earlier quoted context omitted.

Taking the mortgage was the thing that leveraged you to begin with. Investing in the market rather than paying it off at an advanced rate merely serves to not further reduce your leverage.

You have to consider the rent-vs-buy situation of that particular market in order to really evaluate the decision of whether or not taking a mortgage is the right thing to do.

Bingo. For my recent move I made a spreadsheet to calculate the financial impact of rent vs. buy. I had to guess at a lot of factors, but in the end it was a no brainer. Do the calculation!

Cost to Buy: estimated lost investment returns on down payment (after taxes), estimated lost returns on monthly payment (cumulative), financing costs after tax deduction, real-estate taxes after deduction, insurance, HOA fees, utilities, maintenance, estimated increase in value, cost to sell. Compare this against rent and utilities over the same time span, factoring in likely increases in both rent and utilities.

Re: It Is Not About the Money, Silly, It Is All About the Time

#108

Post by contravert »

jacquesm wrote: post #30
gglitch wrote: post #25

"Maybe it is because I don’t allow any advertising at all into my life..." ...How does he manage this? Advertising and marketing have become a major, major, nearly pathological personal issue for me, to such an extent that I sometimes fantasize, on the train on the way to work, for example, about the ability to temporarily turn off my ability to read.

No TV, no radio, a pretty heavy assortment of ad blockers for my browsers and I refuse to visit people that won't switch off their TV when they have guests or I leave if they don't. Yes, that's rude. No, I don't care. If TV is more interesting than real life people then the real life people have the option to go elsewhere.

Out of curiosity, do you not watch TV series or movies (on a monitor), or is it just cable TV that you don't watch? What about popular music, news, video games and other cultural expressions that all subtly promote materialism?

Re: It Is Not About the Money, Silly, It Is All About the Time

#109

Post by Domenic_S »

grecy wrote: post #71
xrange wrote: post #61

One things I don't see mentioned is the use of a mortgage as kind of a forced savings plan. For a bunch of reasons, it is really hard for people to plan/save for the future. That's why there is thousands of years of parables and social convention exhorting people to save and not be in debt (i.e. if it was easy to do, everyone would do it). Buying a larger-than-strictly-necessary house with a mortgage is a way to star…

By the time you pay off the mortgage you will have paid 3-4 times the value of the property because of the interest. So on a $400k house you will have put $1.2mil - $1.6mil into the savings account, but you'll only have a ~$500k property to show for it (IF the house appreciates, which it hopefully does, fingers crossed). That's a seriously inefficient way to save.

FUD. The number is less than 2x, not 3-4x.

Loan amount: $500,000

Interest rate: 4.5%

Total paid: $912,033.56

http://www.bankrate.com/calculators/managing-debt/annual-per...

You're forgetting two other things:

1.) A portion of interest paid is tax-deductible (rent is not).

2.) $1 today is not worth $1 30 years from now - your payment stays constant for 30 years, but your dollars gain more buying power.

Re: It Is Not About the Money, Silly, It Is All About the Time

#110

Post by Domenic_S »

moron4hire wrote: post #43

For all the people who are saying "there is good debt and bad debt" and stuff about not paying off your mortgage early: what you say makes mathematical sense, but there is also something to be said for achieving a certain level of simplicity in ones arrangements. For example, I paid off my student loans before my car and my credit cards, way back when I had my own brush with debt servitude. The student loans were the…

> A mile marker, an "easy win".

It's often called the snowball method, and it works very well for some people.

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