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Personal finance experts don’t get wealthy by following their own advice

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Re: Personal finance experts don’t get wealthy by following their own advice

#111

Post by bittercynic »

wincy wrote: post #43

This seems like a good place to be vulnerable and ask for advice. I am 35 and still spend like in a teenager. I grew up really poor where if the money didn’t get spent right away it would just sort of disappear, into drugs or beer or whatever my mom and stepdad were spending it on. My only real asset is my house which has appreciate significantly in value, but all it would take is one job loss to get me behind on tha…

For the scrolling till 2am thing I have been using this strategy:

1. Before opening the laptop I decide how much time I want to spend, and what I will do immediately after.

2. Set a timer that I'll have to get up to turn off.

3. Do the thing I had decided to do. It can be a little thing, like washing 1 dish, taking out the trash...

I tried many strategies before finding one that works, and will still try to develop more so I'm not completely sunk if/when this one stops working.

Re: Personal finance experts don’t get wealthy by following their own advice

#112

Post by opportune »

ASinclair wrote: post #31
gonehome wrote: post #8

Earlier quoted context omitted.

The r/personalfinance and r/financialindependence subreddits are quite good and even cover more exotic details like the “mega back door roth” otherwise known as “after tax 401k contribution in plan conversions to roth” (which can let you add an additional 36k to a Roth IRA over the 6k limit each year in addition to the normal 19.5k for a traditional 401k). They’re mostly bogleheads so are a little risk averse, but fo…

> The r/personalfinance and r/financialindependence subreddits are quite good and even cover more exotic details The great thing is you can read the subreddits casually for ~3 months and learn everything you need to know to autopilot your financial plan for decades if you go the boglehead route. After that you mostly need to pay attention to major changes in tax law and entitlements. I still read them all the time bu…

That also makes them less useful than they could be because they don't cover many advanced financial topics, like managing taxes, investments besides "VTSAX and chill". Everything is geared towards newbies.

There's much better advice on /r/fatfire in terms of more advanced investing and tax stuff, but you have to sift through a lot of not-so-humblebragging posts. There is so much to learn outside of the "make a 100k-200k income and put everything into three securities" even if you don't use it. Real estate investing, entrepreneurship, angel investing, trusts, different corp-types, estate planning, etc.

Re: Personal finance experts don’t get wealthy by following their own advice

#113

Post by hn_throwaway_99 »

divbzero wrote: post #99
gonehome wrote: post #83

Earlier quoted context omitted.

It’s totally false even ignoring extreme outliers like Tim Cook. The reason there are so many angel investors in the Bay Area is because of the feedback loop of ipos giving regular employees 1-5M pretty often (and 5-50M+ less often). It’s also part of the reason a pretty unremarkable and small home on the peninsula costs $3M.

If you get rich from incentive stock options you have technically been working for yourself. The underlying gist of “You’ll NEVER get rich by working for someone else” is that you should look for opportunities to build wealth that’s not tied to hour-by-hour labor. You can do this by owning your own business, or by looking for ways to own equity in valuable assets beyond your regular job.

I agree with your main point that you want a job where your compensation is not directly correlated to hours worked. I'd still argue that that's a very different argument than "you can't work for someone else and get rich" or that getting paid in stock options, as an employee with a boss, is really "working for yourself".

I mean, enterprise software sales folks can get rich being paid on commission, "influencers" can get rich being paid by affiliate links, and none of them have any ownership in the business.

Re: Personal finance experts don’t get wealthy by following their own advice

#114

Post by darkwizard42 »

MattGaiser wrote: post #26

The goal of most personal finance experts is not to teach you to be mega rich, but rather to be average and while still being pretty average in terms of income, hours worked, and capability, remarkably comfortable to peers. > Yet you almost never hear the financial experts recommending that you start a business. Is the average business owner any better off? I know that there are plenty of successful business owners,…

Starting a business is complicated, requires discipline, and then requires a decent amount of luck to even keep it afloat...

It can be used as a good tax harvesting vehicle but again this requires so much knowledge and ultimately I think running a business (even at a strategic loss) requires more depth of knowledge than the average saving/investing tips.

Would definitely agree that starting a business is a path to becoming RICH, but definitely not a path to being financial stable/above average

Re: Personal finance experts don’t get wealthy by following their own advice

#115

Post by hn_throwaway_99 »

zffr wrote: post #80
hn_throwaway_99 wrote: post #44

I'd just like to point out the irony of the bolded, all caps statement in this article, "You’ll NEVER get rich by working for someone else", the recent HN frontpage article about how Tim Cook got a $750 million payout working for Apple, and that the title of this post is "All Personal Finance Experts Are Liars".

Yes and several members of professional sports leagues like the NBA/NFL are also very rich too. While it is possible to become very rich working for someone else, I think the author's point is that it is extremely unlikely.

As others have pointed out, though, while I used an extreme example, you can take your average, middle-of-the-road yet high-quality software engineer, and if they make the right decisions (select jobs that pay well, live well below their means, invest with a standard diversified portfolio), they could easily retire in their 40s. I'm not saying this route is available to everyone, but certainly available to plenty of folks to not be considered a rare outlier.

Re: Personal finance experts don’t get wealthy by following their own advice

#117

Post by JamesBarney »

logicalmonster wrote: post #55

I think this is a pretty good article, though I'd think that most financial gurus aren't trying to lie, they're just trying to give advice that's feasible for a mass audience to try and learn. To give an example; the article mentions Dave Ramsey talking down to his callers and giving generic advice such as cutting up your credit cards. I don't follow Ramsey too closely and can't read his mind, but I'd bet he's optimi…

> develop your talent stack. It doesn't matter if...

I think its 100% matters which talent you pick. Some will on average pay out 1000x over others.

Re: Personal finance experts don’t get wealthy by following their own advice

#118

Post by ghaff »

etempleton wrote: post #65
wincy wrote: post #43

This seems like a good place to be vulnerable and ask for advice. I am 35 and still spend like in a teenager. I grew up really poor where if the money didn’t get spent right away it would just sort of disappear, into drugs or beer or whatever my mom and stepdad were spending it on. My only real asset is my house which has appreciate significantly in value, but all it would take is one job loss to get me behind on tha…

I would put money in a 401K or IRA that has a real penalty of withdrawing and takes time to withdraw as to deincentivize yourself from spending. Remove yourself from your financial equation. If you have a significant other and they are better with money have them manage both of your finances. You need to have money removed from your account and into investment accounts automatically before you have a chance to spend…

My one caveat is that you really want some savings that you have reasonably ready access to. As someone else mentioned it may be possible to setup a direct deduction to a brokerage firm to put it in some sort of index fund or funds. That's at least somewhat higher friction than they money being right in a checking account.

Re: Personal finance experts don’t get wealthy by following their own advice

#119

Post by fallingknife »

> The average person: Has a salary of $49k Doesn’t have enough in emergency savings —19% of Americans have $0 and 31% have less than $500 saved Spends 56% on their food budget Has over $5,700 in credit card debt with a 17.89% interest rate Has only $150k in savings by retirement Relies on Social Security to fund most of their retirement

Even in a high tax state, a single taxpayer with a 49K salary takes home about $40K. So you're telling me that this taxpayer spends $22.4K on food? That's $61 / day! Also, the median net worth in the US is about $120K, but this guy is telling us that 50% of Americans only have $500 in savings? What a load of bullshit!

Re: Personal finance experts don’t get wealthy by following their own advice

#120

Post by ghaff »

MattGaiser wrote: post #34
umvi wrote: post #19

> Except we used our cards to make $3,624 in spendable cash last year, all while paying zero in interest — because we paid the cards off in full each month. Yeah except the merchants probably marked up their prices 4% to cover card processing fees so really we are just paying more for goods than we otherwise would have with cash and the card company is giving us a tiny kickback. Let's not pretend credit card kickback…

If everyone used cash, maybe, but since that isn't happening, those who don't use credit cards are paying for those who do.

However, handling cash is not free. Now, most places still have to handle cash but it's a whole lot less than they would have to otherwise.
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