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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

#171

Post by leetcrew »

hogFeast wrote: post #49
BeetleB wrote: post #23

If you give "start a business" advice to people, the majority will end up poorer than the advice he is complaining about. Sure, you may have more options to invest and pay less taxes, but that's only if your business is making money, which most don't.

I agree with the thrust of the article. Most personal finance experts are...a bit weird (I have no idea why Tony Robins is an expert...he knows literally nothing, isn't he a motivational speaker...only in America could this be a job). But there is a reason why spend less is the best advice for most people: they can't start a business, they have limited scope to increase their earnings significantly, and you can actua…

> To say this another way, most people do not understand the long-term value of a $1 saved today. Obviously, exactly how you calculate this is a little complicated but if people realised that $1 now was worth $4 or $6 or $8 in 30 years then they would consider what they do today more carefully (and even then, some people are just weird...they will say: I am going to die before then, or I don't care...then they will get to retirement and everything is fucked).

I think for most people the idea that $1 will grow a lot in thirty years just isn't very motivating. I hear that as saying I could either have chipotle today or a fancy dinner in thirty years. okay, but thirty years is a long time and chipotle is still pretty tasty.

personally, I find it much more motivating to frame it explicitly in terms of passive income. every time I spend $20, I am forfeiting $1/year in perpetuity. every time I don't spend $20, I've added $1 to my yearly budget in retirement. instead of delaying material gratification, I am eliminating my need to work.

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

#172

Post by wincy »

phantom784 wrote: post #93
tormeh wrote: post #57

Earlier quoted context omitted.

> I wish I could put money into an account that would then only disburse small amounts of it over the year, and I couldn’t override that. I think this is called a trust: https://en.m.wikipedia.org/wiki/Trust_law Also, if you are so inclined, check if you can replace your habit of trawling Amazon for stuff to buy with trawling Amazon looking for stuff to buy in the future . Personally, looking forward to buying the th…

I'd say at least, if you think you want to buy something, at least wait 24 hours and see if you still want it.

I nickel and dime myself into poverty. My wife and I just end up with a lot of fast food charges for $30-40, a family of 4 eating fast food is crazy expensive. I know it’s not good, but it’s addictive in convenience especially with a kid who is disabled.

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

#173

Post by fartingflamingo »

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…

Therapy.

Also, one short term hack I haven't seen explicitly mentioned yet. Try to enjoy a healthier kind of buying: buy your house piece by piece. In other words, pay off your mortgage early. If you can direct some of your impulse buying towards early mortgage repayment like that, that would be a win!

Try to experience the process of increasing your ownership as close to your senses as possible:

- Can you make the repayments cash transactions instead of online?

- Make these early repayments as frequent as possible. If the bank allows monthly, quarterly or annually only, arrange for a trusted friend to collect weekly or even daily.

- Visualise your progress:

  - Make a drawing/real life 3d model/photo/lego model of your house.

  - Colour the bits of the drawing you now own.

  - Move the lego bits over from "the bank" to "mine/ours".

  - Mark individual stones or pieces of siding as your own versus the bank's.

  - ...
Just don't forget about finding a good therapist!

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

#174

Post by dionidium »

zhdc1 wrote: post #138
rossdavidh wrote: post #129

From his own article: "I’m not suggesting the advice the gurus are giving is outright wrong. Their recommendations will make you modestly successful. You’ll more than likely live an OK life and have an above-average net worth." In fact, Suze Orman and the like are talking exactly to this audience, and their advice is in many cases a lot better than what they are doing now. Also, being married to a small business owne…

> there's a "dirty little secret" that this article doesn't mention: most of them never get paid a dime by their own business. They are spending their way through a business loan, or they have family money, or some other source Over fifty percent of generic small businesses survive for more than five years, so it's unlikely that a majority of them are completely subsisting on government loans, investors, or family mo…

> However, depending on the country, tax laws can be fairly advantageous for small business owners

My wife is a loan officer at a mortgage company. It's a running joke that it's a pain in the ass to qualify small-business owners, because so many of them claim so little actual income on their tax returns, even when they're quite obviously wealthy.

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

#175

Post by spekcular »

sokoloff wrote: post #105
Spivak wrote: post #38

Earlier quoted context omitted.

I mean once you reach a certain age you really can’t afford to just hold on to your investments for a few decades because of a financial downturn. That retirement money is also most people’s emergency medical fund which can and does hit people in their 40s.

I’m not saying to put 100% of every liquid dollar you have into the market, but in your 40s, I think it should be the majority of your investment funds. Boglehead advice agrees, with an explicit principle of “Never bear too much or too little risk”, suggesting 30-40% bonds in your 40s and the rest in stocks. I think more people underperform from being too risk-averse than under-perform from having too much equity exp…

The book "Lifecycle Investing," by Yale professors Nalebuff and Ayres, argues that a young person ought to invest 100% or even more (via leverage) in stocks. (More specifically, a young person with high future earning potential, which probably includes many people here with a career in tech.)

I'm fairly risk averse and don't totally believe their leverage calculations. But it did convince me that any non-negligible bond allocation is probably suboptimal.

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

#176

Post by meowkit »

JamesBarney wrote: post #117
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.

Work to live. Doesn’t matter if you make 10x, 100x, or even a 1000x more over a lifetime if you’re miserable doing that job.

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

#177

Post by zetsurin »

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 never had your problem, so this might not work well for you, but maybe it will:

Write everything you spend money on down in a single place before you buy it. If you buy a book and pen to do this they can be your first entry.

Creating an awareness of what you spend money on gives you a chance to ask if you will value the thing as much as your impulses are telling you.

This goes generally, lots of self help people suggest keeping a diary, and reviewing it.

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

#179

Post by sokoloff »

mgkimsal wrote: post #139
peterangular wrote: post #62

Earlier quoted context omitted.

> Is the average business owner any better off? Obviously anecdotal, but not really IMO. I've bounced back and forth between being in business for myself and working for the man. Between healthcare, saving for retirement, etc. things are really optimized against someone "pulling themselves up by the bootstraps" in this way. I've listened to the politicians in the US scream how important small business only to vote ag…

"small business" to national politicians typically means you employee under 500 people. Almost no one considers "self-employed" or "1-3 people" as "small business" when crafting tax legislation. I certainly consider "self-employed" and "I have a couple folks on payroll" to be "small business", but it's just not in the same league as the local brewery employing 85 people, for example. Perhaps we need the term "micro b…

I think micro-business as a term exists (and depending on the exact definition is typically 0-4 full-time employees, including the owner).

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

#180

Post by ericmcer »

meowkit wrote: post #176
JamesBarney wrote: post #117

Earlier quoted context omitted.

> 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.

Work to live. Doesn’t matter if you make 10x, 100x, or even a 1000x more over a lifetime if you’re miserable doing that job.

Everyone I know who has chose a career based on passion has grown to view it as work eventually, they still enjoy parts of it but monetizing something you love and doing it 40+ hours a week turns it into work. I have friends who loved animation/art but actually working for a gaming company ended up being miserable. And 1000x would mean I could work for 1 month and make ~85 years of income so… I would be fine with that lol.
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