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It Is Not About the Money, Silly, It Is All About the Time

jacquesmattheij.com

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Re: It Is Not About the Money, Silly, It Is All About the Time

#91

Post by [deleted] »

grecy wrote: post #71
xrange wrote: post #61

One things I don't see mentioned is the use of a mortgage as kind of a forced savings plan. For a bunch of reasons, it is really hard for people to plan/save for the future. That's why there is thousands of years of parables and social convention exhorting people to save and not be in debt (i.e. if it was easy to do, everyone would do it). Buying a larger-than-strictly-necessary house with a mortgage is a way to star…

By the time you pay off the mortgage you will have paid 3-4 times the value of the property because of the interest. So on a $400k house you will have put $1.2mil - $1.6mil into the savings account, but you'll only have a ~$500k property to show for it (IF the house appreciates, which it hopefully does, fingers crossed). That's a seriously inefficient way to save.

[deleted]

Re: It Is Not About the Money, Silly, It Is All About the Time

#92

Post by GFischer »

webwright wrote: post #89
dionidium wrote: post #72

Saving is so much easier than earning, and it’s a habit that once built will pay you back for the rest of your life. There's a weird cultural meme that's convinced the middle class that the road to wealth is saving. The road to wealth is earning. This is just kind of an obvious thing, but I guess there are benefits to convincing people who will never earn enough to be wealthy that there are attainable ways to go abou…

"The road to wealth is earning." That's half the road, which is the OP's point. We all know tons of people who earn a ton of money, but they never get rich or free because they keep ratcheting up their spending. The road to wealth is spending dramatically less than you make in an ongoing way.

Reminds me of Dickens:

"Mr Micawber's famous, and oft-quoted, recipe for happiness:

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

http://www.telegraph.co.uk/finance/personalfinance/9066005/W...

Edit: didn't only remember of it myself, bradshaw1965 beat me to it:

https://news.ycombinator.com/item?id=8232898

Re: It Is Not About the Money, Silly, It Is All About the Time

#93

Post by Jtsummers »

grecy wrote: post #66
noonespecial wrote: post #48

Earlier quoted context omitted.

Health insurance for starters. Poor people will likely have a (mostly less than sufficient) government option that they pay little for, hoping that they don't get sick. Then comes the mandatory insurances of "ownerships". Mortgage insurance to cover loan default, required property insurance for that home, auto insurance (full coverage also required by your lender on a new car) etc. Fearful insurances like disability…

To give a concrete example to artmageddon - I drive a $450 car so I have the absolute minimum insurance on it required by law. Even after only one year of not paying for full comprehensive, I will save money if it gets stolen or burns to the ground and I walk away. (I do have high third party - so if I hit a Porsche, damage to it and people is covered). I pay $300/year for the car insurance I have. I currently don't…

Just a counter-point to your no health insurance view. I opted for health insurance while I was a healthy early 20s guy in grad school. $110/month, and 2 months later I needed my gallbladder removed. The surgery would've cost me $15k out of pocket. So with my premiums and copays I ended up paying a total of $2k for the surgery (effectively) and saved about $13k. At that age and employment status (stipend and free school with a research assistant position, but that wasn't much) I would've been fucked. As it was I lost nearly a month of academic progress that I had to make up because of the excruciating pain and isnomnia it induced. As a healthy 20-something male, the savings covered my insurance premiums through the rest of my 20s. And in that time I had other injuries [1] whose treatments (surgery or PT), again, dwarfed the cost of the insurance I continue to carry.

[1] I've had 2 infections since I was 14: food poisoning and an ear infection, every medical thing I've needed is the result of injury or organs gone mad. You just can't predict these things, a good immune system does not prevent you from needing medical care.

Re: It Is Not About the Money, Silly, It Is All About the Time

#94

Post by brightsize »

throwaway283719 wrote: post #47
gglitch wrote: post #25

"Maybe it is because I don’t allow any advertising at all into my life..." ...How does he manage this? Advertising and marketing have become a major, major, nearly pathological personal issue for me, to such an extent that I sometimes fantasize, on the train on the way to work, for example, about the ability to temporarily turn off my ability to read.

It's actually not that hard. I very rarely see advertising, and I didn't even make a conscious effort to do it. I don't have a TV, I don't listen to the radio, I don't read magazines or newspapers, I pay a subscription for all the streaming services I use and I use ad-blockers when browsing the internet. None of these are conscious choices to avoid advertisements - I would do all of them even if they didn't have that…

You sound much like me w/regard to advertising and not seeing any of it. This has probably saved me $100K or more over the years simply by not being enticed to buy/lease new cars. I have a 2000 truck and a 1997 Miata, both bought used and kept well-maintained, and I'm perfectly happy with them. I'm not sure if that would be the case, the happy part that is, if I was constantly exposed to new-car-porn. I see beautiful new or newish cars all around me, and not just in the "nice" areas, in a city with a below-average income profile. It's hard to fathom how people both will, and can spend so much money, on very expensive, depreciating assets, most likely using borrowed money.

Advertising and its emotional manipulations have become extremely powerful, and between TV and the internet, most people are probably exposed to more minutes of it per day than ever before. If you can't fight its power, avoiding it entirely is a sound strategy.

Re: It Is Not About the Money, Silly, It Is All About the Time

#95

Post by dionidium »

webwright wrote: post #89
dionidium wrote: post #72

Saving is so much easier than earning, and it’s a habit that once built will pay you back for the rest of your life. There's a weird cultural meme that's convinced the middle class that the road to wealth is saving. The road to wealth is earning. This is just kind of an obvious thing, but I guess there are benefits to convincing people who will never earn enough to be wealthy that there are attainable ways to go abou…

"The road to wealth is earning." That's half the road, which is the OP's point. We all know tons of people who earn a ton of money, but they never get rich or free because they keep ratcheting up their spending. The road to wealth is spending dramatically less than you make in an ongoing way.

Sure, but saving is the half of the road that applies after you start earning :)

Re: It Is Not About the Money, Silly, It Is All About the Time

#96

Post by brightsize »

ryandrake wrote: post #90
grecy wrote: post #66

Earlier quoted context omitted.

To give a concrete example to artmageddon - I drive a $450 car so I have the absolute minimum insurance on it required by law. Even after only one year of not paying for full comprehensive, I will save money if it gets stolen or burns to the ground and I walk away. (I do have high third party - so if I hit a Porsche, damage to it and people is covered). I pay $300/year for the car insurance I have. I currently don't…

You opted out of health insurance??? Obviously I would never wish a freak traumatic accident or sudden debilitating illness on anyone, but should one happen to you, please post back here about how those slightly bigger monthly paychecks worked out for you.

Anecdote: my brother, who IIRC was unemployed at the time, chose not to purchase even a catastrophic plan, under the theory that he was perfectly healthy so why should he?

Then one day, out of the blue, horribly sick, with intense abdominal pain, almost unable to walk, he had to be taken to the emergency room to have his appendix removed. The bill was something like $17K and he paid all of it out of pocket. He was in his 30s and I think a reasonable catastrophic policy would have cost a couple hundred $ a month and would have, in this case, saved him $12K or thereabouts in hospital bills.

This was just for an appendix, something more serious could have wiped him out financially. It's crazy not to have at least a catastrophic health insurance policy at any age.

Re: It Is Not About the Money, Silly, It Is All About the Time

#97

Post by Jtsummers »

grecy wrote: post #74
chrisBob wrote: post #65

Earlier quoted context omitted.

I agree except for life insurance. Most life insurance (at least a whole life policy) is a way to pass on wealth tax free, rather than a real insurance policy.

And why would you want to do that? You're assuming that passing on wealth is a good thing, implying that it will make your kids happier. In all honestly, when my parents pass, I genuinely hope they've spent every cent of what they earned in their lives and my brother, sister and I wind up with nothing more than photo albums. They worked their entire lives for that money and I want them to spend and enjoy that money.…

I would like the same for my parents. But I choose to keep my employers life insurance because it's cheap (about $100/year) and between it and my savings will more than cover both my sister's and my parents' current debt (mortgages). Should I die suddenly, they won't be happy but the cost to me is negligible and the benefit to them is great. Once alleviated of the debt and annual expense they'll all be able to retire a little bit earlier or a little more comfortably. Sure I don't get anything out of it, I'm dead, and the money won't bring me back. But it will bring them some financial peace.

Now, if it were more expensive I might have a different view on it. I certainly have no intention of buying more life insurance until I end up with actual financial responsibilities (spouse, kids) that would more obviously need the money in my absence.

EDIT: Word choice, I slept better last night than I have in months, but it's still not enough. Sleep deprivation wrecks my ability to write.

Re: It Is Not About the Money, Silly, It Is All About the Time

#98

Post by webwright »

dimva wrote: post #77
dionidium wrote: post #72

Saving is so much easier than earning, and it’s a habit that once built will pay you back for the rest of your life. There's a weird cultural meme that's convinced the middle class that the road to wealth is saving. The road to wealth is earning. This is just kind of an obvious thing, but I guess there are benefits to convincing people who will never earn enough to be wealthy that there are attainable ways to go abou…

Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years. That means you'll be a millionaire by the time you're 40 if you start doing this right after graduating college. 3% happens to be the rate that stocks have historically appreciated above inflation, so by doing th…

"Investing $4000/month (which is what I do on a salary barely over $100k while living by myself in a 1 bedroom in the East Village, NYC and going out for every meal) at 3% will get you $1 million in 17 years."

Might want to consider that inflation averages about 2.5-3% annually... So effectively you're treading water there in terms of investment (though saving is good).

Re: It Is Not About the Money, Silly, It Is All About the Time

#99

Post by jacquesm »

Jtsummers wrote: post #93
grecy wrote: post #66

Earlier quoted context omitted.

To give a concrete example to artmageddon - I drive a $450 car so I have the absolute minimum insurance on it required by law. Even after only one year of not paying for full comprehensive, I will save money if it gets stolen or burns to the ground and I walk away. (I do have high third party - so if I hit a Porsche, damage to it and people is covered). I pay $300/year for the car insurance I have. I currently don't…

Just a counter-point to your no health insurance view. I opted for health insurance while I was a healthy early 20s guy in grad school. $110/month, and 2 months later I needed my gallbladder removed. The surgery would've cost me $15k out of pocket. So with my premiums and copays I ended up paying a total of $2k for the surgery (effectively) and saved about $13k. At that age and employment status (stipend and free sch…

I paid cash to have my gall bladder removed. It as 1500 Euros. I really don't know why the same procedure would cost 10x as much where you live (assuming a simplistic conversion rate, which is not correct, so maybe 8x) compared to where I live. And nowadays that's not even an option any more because we all have mandatory health insurance with deductibles that are mostly designed to keep you paying for everything unless something major happens.

Re: It Is Not About the Money, Silly, It Is All About the Time

#100

Post by Jtsummers »

jacquesm wrote: post #99
Jtsummers wrote: post #93

Earlier quoted context omitted.

Just a counter-point to your no health insurance view. I opted for health insurance while I was a healthy early 20s guy in grad school. $110/month, and 2 months later I needed my gallbladder removed. The surgery would've cost me $15k out of pocket. So with my premiums and copays I ended up paying a total of $2k for the surgery (effectively) and saved about $13k. At that age and employment status (stipend and free sch…

I paid cash to have my gall bladder removed. It as 1500 Euros. I really don't know why the same procedure would cost 10x as much where you live (assuming a simplistic conversion rate, which is not correct, so maybe 8x) compared to where I live. And nowadays that's not even an option any more because we all have mandatory health insurance with deductibles that are mostly designed to keep you paying for everything unle…

This was in the US. It's not cheap here for medical care, and there's really nothing that we get that's an improvement to justify the costs compared to the EU or Canada or, really, most other developed countries.

Also, this was 8 years ago. The numbers stuck with me because I was trying to explain why, a couple years later, I was paying out of pocket from my (at the time) meager salary for health insurance to my coworkers. They had grecy's attitude. And then one of the idiots broke his ankle jumping down some stairs. His parents bailed him out financially for that cost, which was small in comparison, and he failed to learn the lesson: Debt for unexpected medical costs is not worth the short term savings of skippig health insurance (in the US).

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