201–210 of 263 posts
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This may be true, but to be fair... 50 years ago, 70 years ago, an enormous series of treatments we now have, did not exist. And even disease treatment options, even knowing how some diseases worked? Nope. So medical care was less costly, because, there was literally less to be done. And people died at home more often too, as a result. So naturally medical care was less costly. And housing, the average family did not…
I see the "we got more things and they got more expensive" point brought up constantly and it still doesn't change my opinion (same as above commenter): > Fifty years ago that average person would have been able to support a family, buy a house, and not live under the constant threat of bankruptcy from a surprise medical bill. I want to circle back to this. I read your comment assuming you are arguing that now things…
No, although "old fashioned* was a very brief, 30 to 50 year period in US history.
Instead, I think that buying massive mansions (as per how people in the 50s may think of it), could be part of the problem.
Buying huge houses, means more people need mortgages. That saving for a down payment means less. That means higher monthly payments.
Outside of huge cities, a 1500 sq foot house and land just isn't that expensive. The problem is due to more than one source, it's also about trying to have a house, in some of the most expensive areas for real estate on the planet.
And other factors, cell phone, cable, internet, tablet, laptop, gaming system, monthly fees can run hundreds in some households, with hardware costs amortized, even a thousand per month for a family!
Do you think people in the 50s had all that? Even middle class families often didn't have a TV!
Do you know how many people I've seen with maxxed out credit cards, yet they have all those toys above?
How'd they get those toys?
Many people didn't even have medical insurance in the 50s. Why? I provided one possible reason prior.
But I agree, then isn't now. I don't know what to do about medical care, but I do know my grandparents couldn't believe all the things my parents were buying, when I was a kid.
I wonder what they'd say, every time I use credit to buy coffee, dinner, an electronic gizmo, or a paid service.
I wonder what they'd say, when they also saw me paying 2x, or 3x for it, after years of paying credit card compound interest?
More than anything, credit is the big problem.
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>easily retire in their 40s That's a stretch. An average of $150K/year before taxes throughout 20s and 30s is a pretty good job in the US. Say they save $50K/year--which is a lot on that salary--that's $1million saved overall which, depending on your assumptions, will give you about median US household income annually. So possible in a sense if retiring as soon as possible is your goal but certainly not to everyone's…
I think this doesn't account for investment returns. If you assume this money is invested for the duration of your 20s and 30s, you "only" need to invest $50k/yr for the first 10 years. At an average 7% growth, you can let it ride for a decade and still have just under 1.3mm by age 40. In your example, a high salary individual contributing $50k/yr for 20 years at 7% ends up with over $2mm by age 40. That's $80k/yr at…
Part of the discussion should be, can the 'masses' "Generate income not based on hours worked", "Minimize taxes", and "Leverage time and debt to become wealthy like the personal-finance gurus themselves did?"... in other words, is becoming wealthy possible? It is worth being honest about the false hope these authors are peddling about "becoming wealthy", instead of what they are really advising which is, to become ab…
I think an even deeper question is, is it possible for the masses to get rich and what would the macroeconomics look like? I would think competition and resource scarcity would prevent this.
Take a group of randomly selected non-rich people 1 to N and assume you have a "dart board" of varied strategies and their return in this iteration. Take the normal distribution over time and the outliers at the right end of the bell curve you will find that some will become rich in the proper flux.
You can't all just throw them at the same spot and get an absurd economic yield. It would in the end regress to both a standard distribution and the mean.
Competition mostly diminishes the returns in a given investment faster. The price differentials close through the generation of profit and fulfillment of demand. You are being paid to be a servant of entropy lowering things to their base state. This isn't a bad thing but one specific plan will not last forever.
Resource scarcity is weirdly peripheral to all of it and how you define rich in absolutes vs relative.
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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…
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…
That being said, the number 1 thing that helped move me out of a situation similar to yours financially (grew up in poverty, poor impulse control, etc) was listening to the Dave Ramsey podcast every day. It probably doesn't matter if you listen to Dave Ramsey or one of the others mentioned in the article, so just go with someone. Though I will say that once every episode Dave Ramsey has someone come on and do their Debt Free Scream where they tell their story of getting out of debt, and then they shout at the top of their lungs, "I'M DEBT FREE!!!" And that was incredibly motivating, and at times emotionally moving and I even cried sometimes.
Anyway, listen to it as often as you can: on your commute, in the shower, while working out, while cooking, while eating, etc. Get it in to your bones.
What this did for me was it began changing the way I think about money. As I listened to hours of Dave Ramsey tell people everyday that saving money was cool, paying off debt is cool and the best way to financial freedom, that the 7 baby steps are achievable, my thoughts around money slowly changed, and so did my behavior. At first I disagreed with Ramsey a lot, especially how he treated some callers (that has improved a fair amount over the years, thankfully). But eventually I saw the wisdom in what he was saying.
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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.
> 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…
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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 b…