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

larryludwig.com

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

#191

Post by mortenlarsen »

ghaff wrote: post #118
etempleton wrote: post #65

Earlier quoted context omitted.

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.

I can sell and have the money in my account in 2-4 days. It would off cause be a bit sad to sell at a loss right after a "crash" or correction of the market. But in an emergency, I could. I also keep 2 years worth of spending in the bank (we spend very little, so it is not as extreme as it sounds).

It should not really be needed, as I would get money from the government (enough to live on) if lost my job, and we have universal health-care where I live. But it gives me peace of mind.

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

#192

Post by pbourke »

> You’ll NEVER get rich by working for someone else

Counterpoint: I know many people who have done just that. If you want to define "rich" as hundreds of millions of dollars, sure - start your own business. Otherwise, a few million and retiring before age 50 is a pretty good outcome and I have seen multiple software engineers do that, even before the most recent explosion in compensation.

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

#193

Post by kook_throwaway »

mdp2021 wrote: post #135
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…

> it’s pathetic No it isn't. But that is revealing the issue: you tend toward the irrational. In fact, > How do I stop By realizing that there is no need for that, rationally. You want to buy new X, but you do not need them: _see the fact_ - they are per se useless and replaceable for their improper purpose of emotional release: to have X is just petty if you want to fix your finance. You can replace the feeling of t…

>With your money you vote: is that what you want to promote?

I was ordering from amazon 3-5x a week and when they locked us down in mid 2020 I was so disgusted by amazon getting filthy rich while my friends and neighbors were locked at home that I haven't ordered from them since.

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

#194

Post by jacquesm »

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…

> If I had to give 1 bit of general financial advice though: develop your talent stack. It doesn't matter if it's learning a new programming language, wood-working, learning to fix cars or toilets, taking a foreign language class, learning how to paint, or growing a great garden. If you have multiple skills you have more opportunities to make money as well as combining those skills in unique ways to create new business ideas and concepts.

Seconded. When you are wasting time you might as well develop your skills. Fortunes are to be found on the intersection of almost any two skills, if you can add more to the pile you are adding more chances for capturing that value.

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

#195

Post by jacquesm »

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.

In the long run, you should just keep adding talents. So yes, you may end up adding a couple of 'duds', but you'd surprised how many of these initial duds turn out to have substantial value in the long run.

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

#196

Post by imtringued »

thewebcount wrote: post #183

It’s funny because there was an article here a few weeks ago slamming “The Millionaire Next Door.” Yet, that is one of the financial advice books that does tell you to start a business. Or at least it points out the same things as this article, namely that that’s how most rich people got there. Also, despite what the article says, I’ve made a ton more money working for the man than I ever made working for myself. I’d…

Yeah I find it a bit ironic that people complain that "rich" people aren't trying to sell their own story and instead think about how to help a non rich mortal. Of course it is a bit hypocritical because they may not know much about the middle class or below but the point is that they are trying instead of assuming that you just walk down the golden path you were born into.

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

#198

Post by Nasrudith »

jstummbillig wrote: post #137
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…

Are you alleging that most small business efforts fail before they make any profit -- as in +50%? That seems rather unlikely but if anyone has strong numbers on that I'd be very interested.

That strikes me as eminently unsurprising personally. By definition if you fail then you weren't making enough revenue to sustain it. There are two nasty pitfalls which I have heard often snaring them - either paying for tools and other assets when they lack demand or failing when demand saturated due to being unable to scale up correctly.

Revenue and profit are conflated but are not the same thing.

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

#199

Post by pbourke »

waynesonfire wrote: post #128
giantg2 wrote: post #25

Earlier quoted context omitted.

$61.5k in yearly contributions is out of reach for most people. I can't even max out my 401k due to high cost of living (with a family) and mediocre income.

i agree, mega backdoor seems to be a perk for staff / VP level employees.

No, those are called deferred comp plans and they’re a whole separate ballgame. MBDR is much more accessible to your average six-figure earning employee.

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

#200

Post by Nasrudith »

pushrax wrote: post #24
dragontamer wrote: post #2

I dunno who his target audience is, but I assume that the majority around here are computer programmers with anywhere from $70k/year single income to maybe $500k/year dual income ? Financial advice in general sucks. But when we get into the specifics... such as any say $150k/year programmer or higher, the generic financial advice of 6 months saving + max out 401k plan works. ------- The plan for people at average, 50…

Owning a small slice of a business where you're employed can also help make you rich if it grows a lot. In the tech world there are probably more financially independent employees than founders, because of the growth of some massive companies over the last few decades and high salaries. Probably a different story in the UHNW category though, very few employees can get to that level.

The obvious pitfall is that it is putting both your income sources in the same basket. Unless you have sufficient liquidatable savings that is a bit of a "flying jump kick" - if it lands it works great, if it doesn't you are left committed to a train wreck and pain will follow.
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