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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

#81

Post by magneticnorth »

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…

So first suggestion is that it sounds like you could benefit from talking to a therapist. You're self-sabotaging, and it sounds like you know that, and this is a super, super common, normal behavior that a therapist will likely be able to help you talk through.

As for money advice: Can you automate some saving, and have that happen before your money hits your bank account? E.g. if your workplace offers a 401k, you should definitely be maxing that out, and that means your employer will save that money before you have access to it, and doing that for long enough will set you up for retirement even if you mis-manage the rest of your pay.

If you can set up more systems like that, you should! You may be able to set up an after-tax account at fidelity or vanguard or similar that automatically gets a portion of your paycheck deposited in, and you can set it up to automatically buy stocks/bonds/reits on a regular schedule. That money would still be accessible, but you'd have to sell your investments and wait a few days to transfer into a checking account, which might be enough friction to help keep it saved.

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

#82

Post by brandmeyer »

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…

I agree entirely, but would phrase it differently. The baseline advice isn't about how to get rich, its about how to live a financially comfortable middle-class life.

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

#83

Post by gonehome »

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".

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.

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

#84

Post by topkai22 »

giantg2 wrote: post #60
gonehome wrote: post #32

Earlier quoted context omitted.

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.

It's definitely high quality. I guess I'm just jaded about being a loser.

You are contributing to a 401k and have a family. The two data points you’ve revealed contra-indicate loser status.

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

#85

Post by jeremysalwen »

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…

Ironically, I think the advice of "Personal Finance experts" (which are derided in this article) is probably perfect for you. Maybe someone else will have a specific suggestion of who to check out, but I think they are mainly trying to help people with the psychological problem of spending too much money.

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

#86

Post by ball_of_lint »

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…

There's already a bunch of great advice here. I have just one thing to add:

> the me of right now acts as if future me will just blow all my savings irresponsibly anyway.

I know this horrible feeling, but it isn't really true. It's a self fulfilling prophecy. It may take some work and time to change yourself and your habits, but it is possible. Even just commiting to yourself that you're going to work on this can go a long way to easing your feelings about it and breaking the cycle.

And if you can't do it alone, don't! Therapy is an option. Consider it splurging on your retirement.

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

#87

Post by anonuser123456 »

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 have a friend like this. She is successful, has an Ivy League degree in engineering and has very high income. But she grew up poor and makes terrible financial decisions. They largely seem outside of her control.

I speculate that growing up in poverty is not the cause of behavior; rather it's the reverse. Her family behaves in particular ways that make them poor and she has inherited those traits, either biologically or environmentally. From talking with her about how her family operates, this seems to be true. They have very low income but buy a new 4K HD TV every year along with trading up their vehicles to new models. They manage everything by an ever expanding debt load collateralized on their house/credit cards. I don't think these behaviors are 'breakable' because they aren't habits. It's almost like they are built into the default mode network.

In situations like this, when you can observe your behavior as something beyond your control, the best bet is to influence your environment rather than your behavior. Put your money beyond your easy reach (401k, IRA, pay down mortgage early etc.)

I personally struggle with eating behavior that is beyond my control. The only way I've been able to successfully control it is to put a lock on my kitchen cabinet that I don't have the combo to. This acts as a big moderator that gets me through the self destructive impulse periods.

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

#88

Post by sokoloff »

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…

Your biggest enemy is your present self. It’s also your biggest ally for recognizing your risk of self-defeat and asking for help.

In addition to the advice to use accounts with penalties for early withdrawals, I’d consider if setting a fun money budget would give you a metered amount of “yeah, no one’s perfect” escape valve but then have other accounts that are harder to readily access.

Consider splitting your direct deposit (after 401k deferral) into multiple accounts, some of which you don’t have ready access to. Put $100/check into an emergency fund account, $150/check into a travel or big fun account, $400/check into a house/car repairs account, $X/check to an after-tax Vanguard account, and the rest into your daily usage account.

You’ll have setbacks over the years, just as your grandparents did. But over the long run, there’s never been a 15-year run of negative nominal returns on the broad based US stock averages. Bet with that trend to continue, including there being some 5-year losing periods ahead.

You can do this, it won’t be easy but setting in place a few mechanisms to support, not letting the wheels come off the bus entirely if you skip up a little, and just committing to being better every year than the last probably has positive correlation with an ok outcome.

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

#89

Post by oramit »

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…

This is a really honest comment and my thought reading through it is that there isn't going to be "one quick trick" to help. Your troubles seem multifaceted and not completely about money. Have you considered talking to a therapist?

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

#90

Post by peterangular »

b112 wrote: post #59
hesdeadjim wrote: post #28

Tldr, you’ll only get rich by starting a business. Great advice for the tiny population of people who have the skills, the means, the discipline, and the time. That person he describes with $50k annual income, little or no savings, and significant credit card debt sure as hell isn’t starting a successful business, especially since they most likely have children and are working hard hours. He’s dismissive of being “le…

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 are "more" (cost++) this ideal is now less obtainable or unobtainable.

Do you think that the average person (median wage earner) should be able to support themselves in this way? Should we let go of this ideal as "old fashioned"?

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