Young people: Only thing that matters now is maintaining income

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fatFIRE
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Young people: Only thing that matters now is maintaining income

Post by fatFIRE »

Lots of headless chickens flocking around these days. So many posts on people pulling out. Why?

This is my 2nd crash. During the 1st crash (in 2008), I was a poor student without money, but I had a little. I went all in back in 2008-2010. And I have seen how the market has bounced back from 2010-2020, it's ridiculously good. International not so, but it did still go back up.

For those who are young and far from retirement, you shouldn't even be bothered with your paper losses. I'm not joking. I'm 90/10, and my stock portion is down 30-40% collectively, and I couldn't care less. I'm losing zero sleep over this. No joke. My biggest worry is my career and maintaining income during this tough times. If I can do that, I can keep investing/contribution all the way to the bottom. And decades later, the jackpot will come.
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rule low
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Re: Young people: Only thing that matters now is maintaining income

Post by rule low »

Maintaining income and maintaining health! :beer
SevenBridgesRoad
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Re: Young people: Only thing that matters now is maintaining income

Post by SevenBridgesRoad »

fatFIRE wrote: Sun Mar 22, 2020 11:56 pm ...maintaining income during this tough times...
To this I would add: live well-below your means and minimize (or eliminate debt). You'll be bulletproof no matter what the world throws at you.
Thesaints
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Re: Young people: Only thing that matters now is maintaining income

Post by Thesaints »

Having to live well below your means is a failure by itself.
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Re: Young people: Only thing that matters now is maintaining income

Post by SevenBridgesRoad »

Thesaints wrote: Mon Mar 23, 2020 12:22 am Having to live well below your means is a failure by itself.
OK, I'll bite. Please explain.

Bogleheads Investment Philosophy wiki: "There is no substitute for spending less than you earn. Live below your means."
Thesaints
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Re: Young people: Only thing that matters now is maintaining income

Post by Thesaints »

SevenBridgesRoad wrote: Mon Mar 23, 2020 12:37 am
Thesaints wrote: Mon Mar 23, 2020 12:22 am Having to live well below your means is a failure by itself.
OK, I'll bite. Please explain.

Bogleheads Investment Philosophy wiki: "There is no substitute for spending less than you earn. Live below your means."
[OT comment removed by admin LadyGeek] If you always live below your means, you end up wasting resources.
A more sound philosophy would be "live at the limit of your means and, if you can, above them"
SevenBridgesRoad
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Re: Young people: Only thing that matters now is maintaining income

Post by SevenBridgesRoad »

Thesaints wrote: Mon Mar 23, 2020 12:40 am
SevenBridgesRoad wrote: Mon Mar 23, 2020 12:37 am
Thesaints wrote: Mon Mar 23, 2020 12:22 am Having to live well below your means is a failure by itself.
OK, I'll bite. Please explain.

Bogleheads Investment Philosophy wiki: "There is no substitute for spending less than you earn. Live below your means."
[OT comment removed by admin LadyGeek] If you always live below your means, you end up wasting resources.
A more sound philosophy would be "live at the limit of your means and, if you can, above them"
Interesting take, but please explain further. You seem to have a concept which I am not grasping, and is not consistent with the wiki.
smectym
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Re: Young people: Only thing that matters now is maintaining income

Post by smectym »

SevenBridgesRoad wrote: Mon Mar 23, 2020 1:06 am
Thesaints wrote: Mon Mar 23, 2020 12:40 am
SevenBridgesRoad wrote: Mon Mar 23, 2020 12:37 am
Thesaints wrote: Mon Mar 23, 2020 12:22 am Having to live well below your means is a failure by itself.
OK, I'll bite. Please explain.

Bogleheads Investment Philosophy wiki: "There is no substitute for spending less than you earn. Live below your means."
[OT comment removed by admin LadyGeek] If you always live below your means, you end up wasting resources.
A more sound philosophy would be "live at the limit of your means and, if you can, above them"
Interesting take, but please explain further. You seem to have a concept which I am not grasping, and is not consistent with the wiki.
Seven, while Saints does make good points, I don’t think he’s really contradicting you if you’re strategically living below your means. Not telling you not to do that. But Saints can explain
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Re: Young people: Only thing that matters now is maintaining income

Post by smectym »

fatFIRE wrote: Sun Mar 22, 2020 11:56 pm Lots of headless chickens flocking around these days. So many posts on people pulling out. Why?

This is my 2nd crash. During the 1st crash (in 2008), I was a poor student without money, but I had a little. I went all in back in 2008-2010. And I have seen how the market has bounced back from 2010-2020, it's ridiculously good. International not so, but it did still go back up.

For those who are young and far from retirement, you shouldn't even be bothered with your paper losses. I'm not joking. I'm 90/10, and my stock portion is down 30-40% collectively, and I couldn't care less. I'm losing zero sleep over this. No joke. My biggest worry is my career and maintaining income during this tough times. If I can do that, I can keep investing/contribution all the way to the bottom. And decades later, the jackpot will come.
fatFIRE, you make solid points. However, I don’t think you can really make a valid distinction between a “paper loss“ and an out right LOSS. If the paper statement says you lost money, you lost it. You can’t put that money up as collateral anymore, whereas before, when you had it, you could. You can’t withdraw that money and spend it now, whereas before, you could. That money is lost, whether or not you have sold the underlying investment. A loss is a loss, and attempting to distinguish between paper losses and realized losses is a mistake. It’s a mistake because it tends to provide false comfort (“only a PAPER loss”) and throws sand in the eyes of the investor as to what the investor’s true situation really is
jjface
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Re: Young people: Only thing that matters now is maintaining income

Post by jjface »

Thesaints wrote: Mon Mar 23, 2020 12:40 am
SevenBridgesRoad wrote: Mon Mar 23, 2020 12:37 am
Thesaints wrote: Mon Mar 23, 2020 12:22 am Having to live well below your means is a failure by itself.
OK, I'll bite. Please explain.

Bogleheads Investment Philosophy wiki: "There is no substitute for spending less than you earn. Live below your means."
[OT comment removed by admin LadyGeek] If you always live below your means, you end up wasting resources.
A more sound philosophy would be "live at the limit of your means and, if you can, above them"
The point is to save the rest not waste resources. Many people do not save and live paycheck to paycheck. That won't secure your future financially.
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ofcmetz
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Re: Young people: Only thing that matters now is maintaining income

Post by ofcmetz »

OP I agree. If you maintain your job and your health then no reason to change your plan. Just keep saving and plugging along. We will have more crashes between now and when we need to sell and live off this money in our hopefully older age.

If you don't have fixed income or an emergency fund and may lose your job, then that would be a reason to sell enough to set up a nice emergency fund. Hopefully that isn't the case for most bogleheads, even though a lot of young workers may be in that situation soon.
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runner3081
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Re: Young people: Only thing that matters now is maintaining income

Post by runner3081 »

I completely agree OP. My wife and I were laughing that this new world order, staying out of restaurants, living well below our means and recent measures are pretty how much we live anyways!

Late 30's for my wife and I and I haven't thought much about the massive losses we have seen on our accounts. I work in healthcare and the losses our company is facing due to this are staggering. However, if I can keep employment and family health, we will keep plowing funds into the market and hope for the best. Not sure there is much to worry about or else to do at the moment.
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Re: Young people: Only thing that matters now is maintaining income

Post by Shallowpockets »

fatFIRE wrote: Sun Mar 22, 2020 11:56 pm Lots of headless chickens flocking around these days. So many posts on people pulling out. Why?

This is my 2nd crash. During the 1st crash (in 2008), I was a poor student without money, but I had a little. I went all in back in 2008-2010. And I have seen how the market has bounced back from 2010-2020, it's ridiculously good. International not so, but it did still go back up.

For those who are young and far from retirement, you shouldn't even be bothered with your paper losses. I'm not joking. I'm 90/10, and my stock portion is down 30-40% collectively, and I couldn't care less. I'm losing zero sleep over this. No joke. My biggest worry is my career and maintaining income during this tough times. If I can do that, I can keep investing/contribution all the way to the bottom. And decades later, the jackpot will come.
OP. Let us know how your carefree attitude works after you loss your job. Tell us how you sleep at night then.
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Re: Young people: Only thing that matters now is maintaining income

Post by Sandtrap »

Young people should focus on earning power, maximizing and protecting income streams all the time regardless of what is happening in the world.

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Ramjet
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Re: Young people: Only thing that matters now is maintaining income

Post by Ramjet »

I agree with you that maintaining income and continually investing is the best thing a young person can do right now
frugalmama
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Re: Young people: Only thing that matters now is maintaining income

Post by frugalmama »

Shallowpockets wrote: Mon Mar 23, 2020 9:54 am
fatFIRE wrote: Sun Mar 22, 2020 11:56 pm Lots of headless chickens flocking around these days. So many posts on people pulling out. Why?

This is my 2nd crash. During the 1st crash (in 2008), I was a poor student without money, but I had a little. I went all in back in 2008-2010. And I have seen how the market has bounced back from 2010-2020, it's ridiculously good. International not so, but it did still go back up.

For those who are young and far from retirement, you shouldn't even be bothered with your paper losses. I'm not joking. I'm 90/10, and my stock portion is down 30-40% collectively, and I couldn't care less. I'm losing zero sleep over this. No joke. My biggest worry is my career and maintaining income during this tough times. If I can do that, I can keep investing/contribution all the way to the bottom. And decades later, the jackpot will come.
OP. Let us know how your carefree attitude works after you loss your job. Tell us how you sleep at night then.
I feel the same way as fatfire, but it is because we live below our means. I have lost most of my income, despite it being very diversified (multiple sources and industries). My husband has lost some, but has a very secure job that we can get by on for a while because we live below our means. We are 100% stocks and I have no plans on selling. I redid our budget to make sure we will be fine through the end of the year. I am also continuing to save because I may need to live on my emergency fund after this year. Those savings payments are like expenses to me. I have problems sleeping at night but it is not about the economics, but rather about making sure we don't get the virus, how food is going to work, etc. as we have to have a lot of food to feed everyone and stores are having large shortages right now and the limits hurt me. I could care less about my portfolio...I'm down several hundred thousand dollars although I haven't actually added it all up. It is noise and distracts me from my long term plan. If we didn't have any income, didn't have a adequate emergency fund, etc. I'd be more concerned. However, it is really about how much you spend these days as that is what you can control. When the great Recession hit, we specifically switched industries so that one of us had a more secure job. I feel like we are now seeing the plan being carried out like we envisioned it and so I"m not stressed. I am a planner, so I'm now planning for the rest of the year, etc. so I don't feel caught off guard. I'm also planning how I'm going to get #2 through college if this economic downturn doesn't improve even though that is several years off.
Last edited by frugalmama on Mon Mar 23, 2020 10:09 am, edited 1 time in total.
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8foot7
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Re: Young people: Only thing that matters now is maintaining income

Post by 8foot7 »

If we should put little concern into paper losses, then we should have an equal amount of ambivalence about paper gains, too, then, no?
Scooter57
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Re: Young people: Only thing that matters now is maintaining income

Post by Scooter57 »

Live beyond your means all you want, and then when you lose your job you were convinced was utterly safe, and your home gets foreclosed, and your car towed away by the repo man, and your children get sick and you are afraid to go to the doctor because you can't afford the deductibles, you will finally figure out what people here are talking about.

A friend of mine who was an attorney in a very wealthy Connecticut community told me that many of her clients who lived in great splendor were only a month or two of unemployment away from financial ruin because everything they owned was heavily financed. In 2008 a lot of those people lost everything.

But yeah. That won't apply to you. Because you're special. right?

Older people try to pass on what life has taught them, but younger people don't listen. This is a truth that has been noted since the days of the Sumerians. People are mostly doomed to learn from their own mistakes.
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Raymond
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Re: Young people: Only thing that matters now is maintaining income

Post by Raymond »

Shallowpockets wrote: Mon Mar 23, 2020 9:54 am
fatFIRE wrote: Sun Mar 22, 2020 11:56 pm Lots of headless chickens flocking around these days. So many posts on people pulling out. Why?

This is my 2nd crash. During the 1st crash (in 2008), I was a poor student without money, but I had a little. I went all in back in 2008-2010. And I have seen how the market has bounced back from 2010-2020, it's ridiculously good. International not so, but it did still go back up.

For those who are young and far from retirement, you shouldn't even be bothered with your paper losses. I'm not joking. I'm 90/10, and my stock portion is down 30-40% collectively, and I couldn't care less. I'm losing zero sleep over this. No joke. My biggest worry is my career and maintaining income during this tough times. If I can do that, I can keep investing/contribution all the way to the bottom. And decades later, the jackpot will come.
OP. Let us know how your carefree attitude works after you loss your job. Tell us how you sleep at night then.
OP did say: "...My biggest worry is my career and maintaining income during this tough times. If I can do that, I can keep investing/contribution all the way to the bottom..."
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Re: Young people: Only thing that matters now is maintaining income

Post by AnalogKid22 »

It can't be stated enough: It takes a bear market to realize your risk tolerance.

So many posts over the years, during an historic bull market, about long-term investing horizons, not being afraid of any corrections or down-turns, how badly people wanted "stocks to be on sale", and how bored people had become with staying the course. Now people want to get out? :shock:
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Re: Young people: Only thing that matters now is maintaining income

Post by DonIce »

Scooter57 wrote: Mon Mar 23, 2020 10:26 am A friend of mine who was an attorney in a very wealthy Connecticut community told me that many of her clients who lived in great splendor were only a month or two of unemployment away from financial ruin because everything they owned was heavily financed. In 2008 a lot of those people lost everything.

But yeah. That won't apply to you. Because you're special. right?

Older people try to pass on what life has taught them, but younger people don't listen. This is a truth that has been noted since the days of the Sumerians. People are mostly doomed to learn from their own mistakes.
Not sure where all these kinds of replies are coming from. The OP literally said keeping your job/income is the most important thing for young people. I.e. avoiding the scenario described.
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Re: Young people: Only thing that matters now is maintaining income

Post by LiterallyIronic »

smectym wrote: Mon Mar 23, 2020 1:30 am It’s a mistake because it tends to provide false comfort (“only a PAPER loss”) and throws sand in the eyes of the investor as to what the investor’s true situation really is
That's a feature, not a bug. Much easier to leave one's accounts alone if one thinks of it all as "fake money." The balance in my checking account concerns me far more than my retirement balance, because my checking account is "real money" and my retirement accounts aren't.
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Re: Young people: Only thing that matters now is maintaining income

Post by alfaspider »

Scooter57 wrote: Mon Mar 23, 2020 10:26 am Live beyond your means all you want, and then when you lose your job you were convinced was utterly safe, and your home gets foreclosed, and your car towed away by the repo man, and your children get sick and you are afraid to go to the doctor because you can't afford the deductibles, you will finally figure out what people here are talking about.

A friend of mine who was an attorney in a very wealthy Connecticut community told me that many of her clients who lived in great splendor were only a month or two of unemployment away from financial ruin because everything they owned was heavily financed. In 2008 a lot of those people lost everything.

But yeah. That won't apply to you. Because you're special. right?

Older people try to pass on what life has taught them, but younger people don't listen. This is a truth that has been noted since the days of the Sumerians. People are mostly doomed to learn from their own mistakes.
This reply is a bit contradictory. You say that you can live below your means and still end up in trouble, then give as an example people who are clearly not living below their means. If you are a month or two of unemployment from losing everything, you are not following the LBYM advice at all.

The problem with "doing everything to maintain your income" as advice is that everyone is trying to that. But some won't due to bad luck. It's a double whammy when you lose income in an event like this because you can't continue to buy through the bottom.

Personally, I have ~1 yr living expenses in cash (perhaps 18 months if we really batten down the hatches on spending). But I still worry that could not be enough if things get really bad. My only consolation is that if it gets so bad that people in my position can't pay their mortgage, there will almost certainly be government interventions to prevent mass foreclosures.
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Re: Young people: Only thing that matters now is maintaining income

Post by Keenobserver »

fatFIRE wrote: Sun Mar 22, 2020 11:56 pm Lots of headless chickens flocking around these days. So many posts on people pulling out. Why?

This is my 2nd crash. During the 1st crash (in 2008), I was a poor student without money, but I had a little. I went all in back in 2008-2010. And I have seen how the market has bounced back from 2010-2020, it's ridiculously good. International not so, but it did still go back up.

For those who are young and far from retirement, you shouldn't even be bothered with your paper losses. I'm not joking. I'm 90/10, and my stock portion is down 30-40% collectively, and I couldn't care less. I'm losing zero sleep over this. No joke. My biggest worry is my career and maintaining income during this tough times. If I can do that, I can keep investing/contribution all the way to the bottom. And decades later, the jackpot will come.
Well said. Invest and forget. Focus on daily life. More to life than investments. Dont let life.pass tou by.watching your money. Life is a wonderful gift, and money albeit important, is a small part of it.
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Re: Young people: Only thing that matters now is maintaining income

Post by tea_pirate »

Scooter57 wrote: Mon Mar 23, 2020 10:26 am A friend of mine who was an attorney in a very wealthy Connecticut community told me that many of her clients who lived in great splendor were only a month or two of unemployment away from financial ruin because everything they owned was heavily financed. In 2008 a lot of those people lost everything.
As a fellow New Englander - YAY! People roleplaying as upper middle class by using debt to live far beyond their means are an epidemic here. They've spent the last decade living a fake life, acting like snobs to those in positions they view as below them, and generally consuming. Now the chickens are coming home to roost.

FWIW I generally feel empathy for those working class people genuinely struggling to get by and I'll help them however I can.
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Re: Young people: Only thing that matters now is maintaining income

Post by BW1985 »

tea_pirate wrote: Mon Mar 23, 2020 11:08 am
Scooter57 wrote: Mon Mar 23, 2020 10:26 am A friend of mine who was an attorney in a very wealthy Connecticut community told me that many of her clients who lived in great splendor were only a month or two of unemployment away from financial ruin because everything they owned was heavily financed. In 2008 a lot of those people lost everything.
As a fellow New Englander - YAY! People roleplaying as upper middle class by using debt to live far beyond their means are an epidemic here. They've spent the last decade living a fake life, acting like snobs to those in positions they view as below them, and generally consuming. Now the chickens are coming home to roost.

FWIW I generally feel empathy for those working class people genuinely struggling to get by and I'll help them however I can.
+1. I lived in Fairfield County for 8 years, there were undoubtedly a lot of wealthy people. There were also people pretending to be wealthy.
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Re: Young people: Only thing that matters now is maintaining income

Post by Scooter57 »

DonIce wrote: Mon Mar 23, 2020 10:40 am
Scooter57 wrote: Mon Mar 23, 2020 10:26 am A friend of mine who was an attorney in a very wealthy Connecticut community told me that many of her clients who lived in great splendor were only a month or two of unemployment away from financial ruin because everything they owned was heavily financed. In 2008 a lot of those people lost everything.

But yeah. That won't apply to you. Because you're special. right?

Older people try to pass on what life has taught them, but younger people don't listen. This is a truth that has been noted since the days of the Sumerians. People are mostly doomed to learn from their own mistakes.
Not sure where all these kinds of replies are coming from. The OP literally said keeping your job/income is the most important thing for young people. I.e. avoiding the scenario described.
I was replying to the person up-thread who insisted that people should live beyond their means or what was the point?
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Re: Young people: Only thing that matters now is maintaining income

Post by BW1985 »

Scooter57 wrote: Mon Mar 23, 2020 11:32 am
DonIce wrote: Mon Mar 23, 2020 10:40 am
Scooter57 wrote: Mon Mar 23, 2020 10:26 am A friend of mine who was an attorney in a very wealthy Connecticut community told me that many of her clients who lived in great splendor were only a month or two of unemployment away from financial ruin because everything they owned was heavily financed. In 2008 a lot of those people lost everything.

But yeah. That won't apply to you. Because you're special. right?

Older people try to pass on what life has taught them, but younger people don't listen. This is a truth that has been noted since the days of the Sumerians. People are mostly doomed to learn from their own mistakes.
Not sure where all these kinds of replies are coming from. The OP literally said keeping your job/income is the most important thing for young people. I.e. avoiding the scenario described.
I was replying to the person up-thread who insisted that people should live beyond their means or what was the point?
Yeah that was a weird post, I still don't get it.
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Re: Young people: Only thing that matters now is maintaining income

Post by watchnerd »

AnalogKid22 wrote: Mon Mar 23, 2020 10:39 am It can't be stated enough: It takes a bear market to realize your risk tolerance.

So many posts over the years, during an historic bull market, about long-term investing horizons, not being afraid of any corrections or down-turns, how badly people wanted "stocks to be on sale", and how bored people had become with staying the course. Now people want to get out? :shock:
+1

I'm going to add to this:

Risk tolerance isn't just portfolio losses.

Risk tolerance is assessing the fragility of your entire financial situation.
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Re: Young people: Only thing that matters now is maintaining income

Post by SevenBridgesRoad »

smectym wrote: Mon Mar 23, 2020 1:23 am
SevenBridgesRoad wrote: Mon Mar 23, 2020 1:06 am
Thesaints wrote: Mon Mar 23, 2020 12:40 am
SevenBridgesRoad wrote: Mon Mar 23, 2020 12:37 am
Thesaints wrote: Mon Mar 23, 2020 12:22 am Having to live well below your means is a failure by itself.
OK, I'll bite. Please explain.

Bogleheads Investment Philosophy wiki: "There is no substitute for spending less than you earn. Live below your means."
[OT comment removed by admin LadyGeek] If you always live below your means, you end up wasting resources.
A more sound philosophy would be "live at the limit of your means and, if you can, above them"
Interesting take, but please explain further. You seem to have a concept which I am not grasping, and is not consistent with the wiki.
Seven, while Saints does make good points, I don’t think he’s really contradicting you if you’re strategically living below your means. Not telling you not to do that. But Saints can explain
Or not.
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Re: Young people: Only thing that matters now is maintaining income

Post by frugalmama »

watchnerd wrote: Mon Mar 23, 2020 11:40 am
AnalogKid22 wrote: Mon Mar 23, 2020 10:39 am It can't be stated enough: It takes a bear market to realize your risk tolerance.

So many posts over the years, during an historic bull market, about long-term investing horizons, not being afraid of any corrections or down-turns, how badly people wanted "stocks to be on sale", and how bored people had become with staying the course. Now people want to get out? :shock:
+1

I'm going to add to this:

Risk tolerance isn't just portfolio losses.

Risk tolerance is assessing the fragility of your entire financial situation.
That is a very good point. Many people don't have a plan A,B,C,and D and so on. When things don't go as they expect, they realize they took more risk than they could afford. If you have a multi-tiered plan in place, when things don't go as originally expected, they can still follow a plan which brings its own form of comfort.
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