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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

#31

Post by ASinclair »

gonehome wrote: post #8
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…

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 but I haven't learned anything new in years.

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

#32

Post by gonehome »

giantg2 wrote: post #25
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…

$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.

Totally - it was more of an example of the quality of the subreddits. If they’re willing to get those details right then they have the earlier steps really well established.

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

#33

Post by b112 »

giantg2 wrote: post #14
PKop wrote: post #5

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.

If the masses got rich, inflation would set a new baseline. In short, if everyone is rich, no one is ... it's just normal wealth.

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

#34

Post by MattGaiser »

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.

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

#35

Post by zrail »

Not going to claim to be an expert, but if you struggle with the nuts and bolts of personal finances (ex: bounced rent checks even though you're a highly paid software developer) you might be interested in my radically simplified and fully automated system:

https://www.petekeen.net/automatic-finances

I've been using it for about three years now and, modulo a couple tweaks, it's substantially identical to that write up and requires ~zero manual intervention.

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

#36

Post by giantg2 »

dragontamer wrote: post #17
giantg2 wrote: post #7

Earlier quoted context omitted.

Yeah, but the audience of those financial gurus are the general public. So sure, their advice might work for the top 5%, but the rest of people will never "get rich" using that advice. Even that top 5% could be better off if building passive income, businesses, etc.

But the irony is that the generic advice actually applies to the hacker news audience pretty well. People reaching 100k/year or so single income should be able to save comfortably. And a lot of programmers are on an appropriate career path to get there in a few years

I wish that were true for me.

But I think you're missing the point. The advice for most people (the target audience of the gurus) is wrong. It's just a coincidence that this article is posted on HN and it would be disingenuous to examine it from only this position/context.

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

#37

Post by MattGaiser »

myfavoritedog wrote: post #20

That blog is a false dichotomy built on top of a strawman. The strawman is that it's all about "getting rich". Ramsey (the one I've heard talk the most) is mostly about just getting people to stop digging themselves deeper and deeper into debt where they will have no hope for even the basic stability that you need to build greater wealth upon. The false dichotomy is that you either need a side hustle business or you…

Yeah, Ramsey rich is being an "everyday millionaire" by the time you retire. It isn't really rich, but it is just having a comfortable retirement and a large financial moat.

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

#38

Post by Spivak »

sokoloff wrote: post #16
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…

In the overall distribution of risk-aversion, bogleheads are more comfortable with risk than far too many savers. I’ve seen too many of my parents’ generation squander decades of investment returns because of the idea that stocks are risky.

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.

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

#39

Post by dheera »

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…

> max out 401k plan works

What are the advantages of 401k instead of say dumping it into half-VOO half-crypto and making millions one way or another?

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

#40

Post by giantg2 »

MattGaiser wrote: post #30
giantg2 wrote: post #14

Earlier quoted context omitted.

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.

I would argue that middle class today is a lot richer than 50 years ago. Larger average homes. More cars. More trips. Better healthcare. Food is cheaper as a percentage of income.

The middle class has also shrunk, right?

Those advances are adjustments in quality of living driven by efficiencies in manufacturing, etc. This would be more on the resource scarcity side and less on the rich/income side. I would exclude food as an indicator since that is heavily subsidized. Healthcare has also increased substantially as a percentage of income.

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