Question for the Bogleheads Millionaires

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LadyGeek
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Re: Question for the Bogleheads Millionaires

Post by LadyGeek » Sat Apr 23, 2016 7:27 am

White Coat Investor wrote:
market timer wrote:
White Coat Investor wrote:MT- It's good to see you back. How about an update on you the last few years? I don't remember hearing anything since you got back to even. If I had to guess, you now have a job that pays $750K a year and are a multimillionaire. My only question is how leveraged you are now....

Not very leveraged, actually close to 50% cash since we're planning to buy a bigger house this year. Like people from the Depression era, I've become rather debt averse and don't even want a mortgage.

In terms of financial progress, your estimates are way too optimistic. However, I'm enjoying my career and family life, and don't really feel concerned about finances any more.


Enjoy the new house and your family. You deserve it. That's an awesome feeling to be able to not worry about finances.

For those who don't know the background on market timer, see this 29 page thread from 2007: A different approach to asset allocation

market timer - feel free to update your status in that thread.
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Re: Question for the Bogleheads Millionaires

Post by Jim85 » Sat Apr 23, 2016 8:20 am

Factors/habits that I believe got us there (and non of this was due to high paying jobs or sophisticated investing skills).
• Bought a home within first year of marriage, doubled-up principal payments on mortgage, paid off early and never moved. I can’t even remember having mortgage payments.
• Paid cash for cars as soon as we were able to. Always put 100K+miles on cars but never got crazy about this (200-300K mileage).
• Always employed, worked hard and never was a problem child. Been thru downsizing etc. but was always confident in remaining employed due to attitude and work ethic. Maybe just lucky.
• Maxed out 401ks/IRAs since our late 20s.
• Pay off credit cards in full each month.
• Don’t spend any money on fancy labels, big toys, etc. Wife buys all clothes (if she needs any, which is rare) at off price places and usually on the clearance rack there. Has very little expensive jewelry. We’re very practical with what we buy.
• Don’t spend on services we can do ourselves (lawn service, dry cleaning, minor home maintenance, etc.)
• Not the least bit influenced by others habits – do not keep up with the Joneses.
I am constantly amazed at how people blow huge amounts of money and get little value in return. Won’t get into all the examples as I could insult even people on BH. And I do not consider us extremely frugal just practical. We have a very nice home, cable TV, cell phones, newish cars, travel more than most, go to sporting events, concerts, out to dinner, etc. Put 3 kids thru private schools and colleges. Although sometimes looking back I wonder about the practicality of the private colleges. Kinda like getting that $75 Polo brand polo vs a $15 polo that is the same quality but without the horsey, which I would never do.

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Re: Question for the Bogleheads Millionaires

Post by JoeJohnson » Sat Apr 23, 2016 9:39 am

tfb wrote:Yes. All else being equal, if your salary is half as high, you will have half the assets. All else being equal, if your savings rate is half as high, you will have half the assets. The other factors are investment returns and time. All else being equal, if you are investing in good times you will have more. All else being equal, if you invest for more years you will have more (assuming positive returns). As someone already said, it's all math.


Being a consumer is way more expensive than a saver. Consumers have to pay taxes now at their marginal rates. Savers defer taxes to their lower earning years aka retirement. Consumer = taxes now, likely at a higher rate, and no growth on the deferral. It's a huge whammy.

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Re: Question for the Bogleheads Millionaires

Post by Ybsybs » Sat Apr 23, 2016 9:40 am

.....
Last edited by Ybsybs on Mon Apr 25, 2016 5:32 pm, edited 1 time in total.

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Re: Question for the Bogleheads Millionaires

Post by 10YearPlan » Sat Apr 23, 2016 11:16 am

Great question and one I have often thought to ask myself.

One might call the title of my story "Late Bloomer". Here's the gist:

Took out credit cards in college to pay for tuition when parental help and loans were not available. Compounded that debt by buying lots of new clothes, even though I had no money. Spend a lot of money going out as well. Graduated college in debt and took a relatively low-paying job, as many college grads do. Continued to accrue debt.

At 25, began to think about future. Company did not have a 401(k) plan so opened up a little bitty IRA at Vanguard. Still had debt but managed to tuck away about $100 a month or so. At 26 finally began to make some money. Also spent a lot of it, so still had a little debt. Around 28-29 and stone cold single, I decided I wanted to save for a house and began aggressive pay debt off while saving for a house strategy. It worked. By 30 and change, I had enough for a down payment and no cc debt--hooray! Bought a condo, met my now husband and as a couple, we decided we would max both of our 401(k)s no matter what, sold the condo that he had moved into and made a nice chunk on the sale and bought our current house. Been maxing ever since-14 years or so.

What I did do right all along was work really, really hard. When you don't have a pedigree, a work ethic and sticktuitiveness counts for a lot. I've been working non-stop since age 15, and before that I had a few intermittent jobs (paper route, babysitting, etc.). It's not exactly rags to riches, but I hope it gives some hope to the people who weren't born with a silver spoon and/or a boglehead-like discipline at a young age.

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Re: Question for the Bogleheads Millionaires

Post by hoops777 » Sat Apr 23, 2016 11:30 am

Start a small business that becomes successful and turns into the American Dream.Yes it is still there,the dream,regardless of all the negativity in the media.
At age 42,I had a net worth of about 5000,renting a tiny apartment.I Borrowed 25,000 from my brother out of his 401k.So actually now a net worth of minus 20,000 :D
Paid him back with interest in 3 years and today,at 64, I am actually a millionaire,and have a house with no mortgage and no debt on top of that.Still pinch myself almost everyday.Believe me,if I can do it ,anyone with the drive and maybe a little luck can do it.
I might also add that I made some horrible investing mistakes earlier,so very little if any has come from the market.It is soooo much easier if you invest wisely :annoyed

I think the most important thing is keeping your overhead as low as possible,in your personal life and in your business.You do not need the fancy car,expensive clothes.You do not need to hire people to do things you can do yourself, as long as you make the best use of your time.People often have a difficult time figuring out the difference between wants and needs.Wants are expensive.
K.I.S.S........so easy to say so difficult to do.

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Re: Question for the Bogleheads Millionaires

Post by volkl7 » Sat Apr 23, 2016 2:26 pm

Well, being a millionaire living in the San Francisco Bay Area, I feel rather "poor" on most days. According to a recent Charles Schwab study, one needs a net worth of at least $6 million to feel "wealthy" in this area. No, I can't move.

Education has really paid dividends for my family. We have a substantial annual income because of it. I would still prioritize education regardless of the potential income it may or may not bring.

However, I do wish that we practiced living below our means years ago. This actually does not stem from a concern with regards to our wealth accumulation and time to retirement, although that is obviously a goal. More importantly, I'm concerned about how wealth and the associated lifestyle will affect my kids. I guess we'll have to rely on education again.

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Re: Question for the Bogleheads Millionaires

Post by TheTimeLord » Sat Apr 23, 2016 4:04 pm

volkl7 wrote:Well, being a millionaire living in the San Francisco Bay Area, I feel rather "poor" on most days. According to a recent Charles Schwab study, one needs a net worth of at least $6 million to feel "wealthy" in this area.



Repeating the posting of my favorite chart to show how intriguing Schwab's Study's view is. So according to the Schwab Study you basically have to be in the top 1 or 2 percent nationally to feel wealthy in the Bay Area.

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Re: Question for the Bogleheads Millionaires

Post by menlo » Sat Apr 23, 2016 4:31 pm

TheTimeLord wrote:
volkl7 wrote:Well, being a millionaire living in the San Francisco Bay Area, I feel rather "poor" on most days. According to a recent Charles Schwab study, one needs a net worth of at least $6 million to feel "wealthy" in this area.



Repeating the posting of my favorite chart to show how intriguing Schwab's Study's view is. So according to the Schwab Study you basically have to be in the top 1 or 2 percent nationally to feel wealthy in the Bay Area.


That Schwab study is not taken from a cross-section of Bay Area residents. It's a self-selected group of respondents that likely skews high income and tech heavy (look at the survey statistics about percentage of compensation received in the form of equity among those polled). If you surveyed a true cross section of all Bay Area residents the numbers would probably be a lot lower.

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Re: Question for the Bogleheads Millionaires

Post by BahamaMan » Sat Apr 23, 2016 4:34 pm

menlo wrote:
TheTimeLord wrote:
volkl7 wrote:Well, being a millionaire living in the San Francisco Bay Area, I feel rather "poor" on most days. According to a recent Charles Schwab study, one needs a net worth of at least $6 million to feel "wealthy" in this area.



Repeating the posting of my favorite chart to show how intriguing Schwab's Study's view is. So according to the Schwab Study you basically have to be in the top 1 or 2 percent nationally to feel wealthy in the Bay Area.


That Schwab study is not taken from a cross-section of Bay Area residents. It's a self-selected group of respondents that likely skews high income and tech heavy (look at the survey statistics about percentage of compensation received in the form of equity among those polled). If you surveyed a true cross section of all Bay Area residents the numbers would probably be a lot lower.


+1 --- You've got that right !

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Re: Question for the Bogleheads Millionaires

Post by TheTimeLord » Sat Apr 23, 2016 4:53 pm

menlo wrote:
TheTimeLord wrote:
volkl7 wrote:Well, being a millionaire living in the San Francisco Bay Area, I feel rather "poor" on most days. According to a recent Charles Schwab study, one needs a net worth of at least $6 million to feel "wealthy" in this area.



Repeating the posting of my favorite chart to show how intriguing Schwab's Study's view is. So according to the Schwab Study you basically have to be in the top 1 or 2 percent nationally to feel wealthy in the Bay Area.


That Schwab study is not taken from a cross-section of Bay Area residents. It's a self-selected group of respondents that likely skews high income and tech heavy (look at the survey statistics about percentage of compensation received in the form of equity among those polled). If you surveyed a true cross section of all Bay Area residents the numbers would probably be a lot lower.


I would also guess they are counting home equity in their net worth. Considering housing prices in the Bay Area that could be a substantial percentage of the $6 million. And while it contributes to a nicer lifestyle, illiquid assets don't seem to give people the same feeling of wealth their liquid assets do.
Run, You Clever Boy!

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Re: Question for the Bogleheads Millionaires

Post by FoolStreet » Sat Apr 23, 2016 5:06 pm

menlo wrote:
TheTimeLord wrote:
volkl7 wrote:Well, being a millionaire living in the San Francisco Bay Area, I feel rather "poor" on most days. According to a recent Charles Schwab study, one needs a net worth of at least $6 million to feel "wealthy" in this area.



Repeating the posting of my favorite chart to show how intriguing Schwab's Study's view is. So according to the Schwab Study you basically have to be in the top 1 or 2 percent nationally to feel wealthy in the Bay Area.


That Schwab study is not taken from a cross-section of Bay Area residents. It's a self-selected group of respondents that likely skews high income and tech heavy (look at the survey statistics about percentage of compensation received in the form of equity among those polled). If you surveyed a true cross section of all Bay Area residents the numbers would probably be a lot lower.


Maybe so, but then again, Menlo, how wealthy do you have to be to fit in in "Menlo" Park?

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Re: Question for the Bogleheads Millionaires

Post by hoops777 » Sat Apr 23, 2016 5:25 pm

Feeling wealthy is a personal thing.To say you need 6 mill in the Bay Area is ridiculous.If one has only 4 million with no debt and a simple lifestyle are they not wealthy?How about 2 million and SS covers all or most of their living expenses?
Ask that question to a retired couple living on their SS month to month or to a couple in their 40's with 3 kids living paycheck to paycheck.I guarantee they will feel you are wealthy if you have 6,7,8000 a month of safe investment income every month that you do not need.
K.I.S.S........so easy to say so difficult to do.

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Re: Question for the Bogleheads Millionaires

Post by abuss368 » Sat Apr 23, 2016 6:30 pm

If I lived in the Bay Area, I would rent a cell from Alcatraz to keep costs down.
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Re: Question for the Bogleheads Millionaires

Post by hoops777 » Sat Apr 23, 2016 7:13 pm

Abuss....a cell at Alcatraz?On the water with awesome views?Way too expensive :D
K.I.S.S........so easy to say so difficult to do.

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Re: Question for the Bogleheads Millionaires

Post by ebeard » Sat Apr 23, 2016 7:21 pm

Jim85 wrote:Factors/habits that I believe got us there (and non of this was due to high paying jobs or sophisticated investing skills).
• Bought a home within first year of marriage, doubled-up principal payments on mortgage, paid off early and never moved. I can’t even remember having mortgage payments.
• Paid cash for cars as soon as we were able to. Always put 100K+miles on cars but never got crazy about this (200-300K mileage).
• Always employed, worked hard and never was a problem child. Been thru downsizing etc. but was always confident in remaining employed due to attitude and work ethic. Maybe just lucky.
• Maxed out 401ks/IRAs since our late 20s.
• Pay off credit cards in full each month.
• Don’t spend any money on fancy labels, big toys, etc. Wife buys all clothes (if she needs any, which is rare) at off price places and usually on the clearance rack there. Has very little expensive jewelry. We’re very practical with what we buy.
• Don’t spend on services we can do ourselves (lawn service, dry cleaning, minor home maintenance, etc.)
• Not the least bit influenced by others habits – do not keep up with the Joneses.
I am constantly amazed at how people blow huge amounts of money and get little value in return. Won’t get into all the examples as I could insult even people on BH. And I do not consider us extremely frugal just practical. We have a very nice home, cable TV, cell phones, newish cars, travel more than most, go to sporting events, concerts, out to dinner, etc. Put 3 kids thru private schools and colleges. Although sometimes looking back I wonder about the practicality of the private colleges. Kinda like getting that $75 Polo brand polo vs a $15 polo that is the same quality but without the horsey, which I would never do.


We have moved a few times but I think this is a great summary.
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Re: Question for the Bogleheads Millionaires

Post by abuss368 » Sat Apr 23, 2016 7:53 pm

hoops777 wrote:Abuss....a cell at Alcatraz?On the water with awesome views?Way too expensive :D


Ha ha! That was good!
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Re: Question for the Bogleheads Millionaires

Post by hoops777 » Sat Apr 23, 2016 8:58 pm

Jim85...But you can get that $75 polo for about $20 give or take if you go to the outlet,use your 40 pct off coupon on the ones on clearance :happy
K.I.S.S........so easy to say so difficult to do.

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Re: Question for the Bogleheads Millionaires

Post by fareastwarriors » Sat Apr 23, 2016 10:23 pm

It was never a question of if. It was always a question of when. By early college, I was basically following the tenets of Boglehead philosophy even without knowing about BH. I knew I was eventually going to get to a million even back then. Maybe growing in the Bay Area jaded me because even back in college years, I knew I wasn't going be satisfied with just a million. Fast forward 5 years, I'm not at a million yet but a few more years I will get there. And I'm just getting started.

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Re: Question for the Bogleheads Millionaires

Post by Jim85 » Sun Apr 24, 2016 4:51 am

Hoops...you sound like my wife! But maybe then we get the other polo for $5. :D Wish there were coupons for colleges, some scholarship money was helpful but whoa that was a lot of money spent. Excellent results for the kids but I always wonder if they wouldn't have done just as well at State U.

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Re: Question for the Bogleheads Millionaires

Post by SGM » Sun Apr 24, 2016 5:17 am

abuss368 wrote:If I lived in the Bay Area, I would rent a cell from Alcatraz to keep costs down.

San Quentin is a bit more crowded but has terrific views of San Francisco Bay. Access by car is better than Alcatraz, fewer tourists and less fog.

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Re: Question for the Bogleheads Millionaires

Post by joebh » Sun Apr 24, 2016 6:26 am

ajacobs6 wrote:Many people are underpaid, and living paycheck to paycheck. What was your story for breaking out of this cycle?

In most cases, is the solution really just a higher salary and higher savings rate?

Or is there something else that people should consider? Other forms of income maybe. I may never have millions of dollars in my lifetime, and it's hard to imagine how it is even possible with the average American career.


Have never lived paycheck to paycheck.

For me:
- Come from a family with no money.
- Always be a saver as a child.
- Get part-time jobs as early as you can.
- Pay for your own car.
- Save for your own education.
- Go to college, work as you study, pay for your education out of your savings and your earnings. Graduate with no debt.
- Get a good job in a good field.
- Work really hard, change jobs a few times, always for a better job, never underpaid.
- Marry someone with similar financial outlook. Enter marriage with no debt.
- Purchase a modest house, refinancing as rates drop
- Purchase modest cars, keep them until they die
- Always live below your means.
- Never have debt beyond mortgage.
- Save, save, save.
- Invest (sometimes) wisely, but always long-term.
- Make mistakes, but not too many
- Once major expenses (house, college for kids, etc) are behind you, ramp up savings rate.
- Don't look at your numbers very often.
- Get lucky, such that no major personal financial catastrophes occur during your lifetime
- Wake up one day, look at your numbers and realize you have been past $1M for a while.
Last edited by joebh on Sun Apr 24, 2016 6:50 am, edited 1 time in total.

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Re: Question for the Bogleheads Millionaires

Post by Toons » Sun Apr 24, 2016 6:28 am

joebh wrote:
ajacobs6 wrote:Many people are underpaid, and living paycheck to paycheck. What was your story for breaking out of this cycle?

In most cases, is the solution really just a higher salary and higher savings rate?

Or is there something else that people should consider? Other forms of income maybe. I may never have millions of dollars in my lifetime, and it's hard to imagine how it is even possible with the average American career.


Have never lived paycheck to paycheck.

For me:
- Come from a family with no money.
- Always be a saver as a child.
- Get part-time jobs as early as you can.
- Pay for your own car.
- Save for your own education.
- Go to college, work as you study, pay for your education out of your savings and your earnings. Graduate with no debt.
- Get a good job in a good field.
- Work really hard, change jobs a few times, always for a better job, never underpaid.
- Marry someone with similar financial outlook. Enter marriage with no debt.
- Purchase a modest house, refinancing as rates drop
- Purchase modest cars, keep them until they die
- Always live below your means.
- Never have debt beyond mortgage.
- Save, save, save.
- Invest (sometimes) wisely, but always long-term.
- Make mistakes, but not too many
- Once major expenses (house, college for kids, etc) are behind you, ramp up savings rate.
- Don't look at your numbers very often.
- Wake up one day, look at your numbers and realize you have been past $1M for a while.



+1
Perfect 8-)
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Question for the Bogleheads Millionaires

Post by abuss368 » Sun Apr 24, 2016 7:28 am

SGM wrote:
abuss368 wrote:If I lived in the Bay Area, I would rent a cell from Alcatraz to keep costs down.

San Quentin is a bit more crowded but has terrific views of San Francisco Bay. Access by car is better than Alcatraz, fewer tourists and less fog.


Priceless!
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Re: Question for the Bogleheads Millionaires

Post by Rajsx » Sun Apr 24, 2016 8:37 am

A good teaching/helping each other thread. ........In our case it was Education, Frugality, Investments & a little bit of luck.

We are immigrants, came with suitcases in hand to this great country, but I was a doctor in my country.

Passed all the Licensing exams to be a MD in USA while we were dirt poor, got into Residency Training & then Fellowship Training & started practicing.

We bought a average first house, not a Doctors mansion, although we could have pulled it off as I was in practice by then, paid it off in 2 years. After 8 yrs in that modest house paid cash for a mansion house. Wife helped at my office part time & drove kids to school & their after school activities.

I was reading anything I could find on being frugal, investing & managing money. I was lucky to find Fidelity, Vanguard & bogleheads forum. I used automatic monthly investments from our bank, which was easy & effort less to save. we kept debt at bay.
I kept away from & did not pay any Financial Advisors & did my own simple investing with age based asset allocation methods & did average well through index mutual funds, no single stocks. No jackpots here.

We put 2 kids through local private schools, and one through private College & Medical school, thanks to 529 plans. I knew without good education & stable careers, financial peace of mind & building wealth is possible, just difficult. This worked with one kid, not the second one.

By the above chart, we are in around between 5% to 1% range wealth millionaires, retired last year at age 59, downsizing now to a 1 level smaller house bought in cash.

To sum it up, for us it was 1)EDUCATION, 2)WELL PAID LINE OF WORK 3)FRUGALITY, DISCIPLINED SAVING & INVESTMENTS 4) FRUGAL SPOUSE 5)KEEP AWAY FROM OVERNIGHT RICHES SCHEMES.


GOOD LUCK
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Re: Question for the Bogleheads Millionaires

Post by The Wizard » Sun Apr 24, 2016 9:43 am

Late to the thread. My goal early on wasn't really a dollar amount, but a continued lifestyle in retirement.
I accomplished this by getting an employable degree (engineering) and maintaining steady employment for forty years.
Starting at age 23 I had around 14% of my gross income going into tax deferred 403(b) investments.
I ramped this percentage up to just over 30% in my final years of employment.

I had the impression that these pay me first contributions would be sufficient to fund retirement, so I made no special effort to be frugal with the remaining income.
This allowed me to indulge my interest in travel 4-6 weeks a year, mostly domestic, with some Caribbean and a smattering of Europe.

My plan appears to have worked, retiring three years ago at age 63. Even with delaying my SS until closer to age 70, my AGI and taxable income has been a bit higher the past three years than it ever was in my full-time working years...
Attempted new signature...

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Re: Question for the Bogleheads Millionaires

Post by hoops777 » Sun Apr 24, 2016 12:05 pm

This has been very interesting.
I wonder though when reading some of the posts,how many people overdue it.Maybe get caught up so much in saving,that they do not enjoy their lives as much as they could have.You wake up one day and you are 72 and have an abundance of money but never took the vacations with your kids,or went to Paris for a couple weeks,etc.Hopefully we can all find middle ground.Money is money but we all have one life and are young and really healthy for only part of it,generally speaking>
K.I.S.S........so easy to say so difficult to do.

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Re: Question for the Bogleheads Millionaires

Post by joebh » Sun Apr 24, 2016 5:23 pm

hoops777 wrote:I wonder though when reading some of the posts,how many people overdue it.Maybe get caught up so much in saving,that they do not enjoy their lives as much as they could have.You wake up one day and you are 72 and have an abundance of money but never took the vacations with your kids,or went to Paris for a couple weeks,etc.Hopefully we can all find middle ground.Money is money but we all have one life and are young and really healthy for only part of it,generally speaking>


I think you are setting up a false dilemma here.

I'm not sure saving for the future and enjoying life are mutually exclusive for most people. (Which seems to be what you are implying.)
That certainly wasn't the case for us. We've had a wonderful life (still do)! And we are now financially independent.

Wonderful vacations, cruises, family activities, a pool, first cars for the kids, paid for their college educations, purchased a 2nd/weekend/vacation home, etc, etc. I wouldn't change a thing, and I venture to say that my wife and kids would concur.

You can still do wonderful things and live below your means if you try.

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Re: Question for the Bogleheads Millionaires

Post by BahamaMan » Sun Apr 24, 2016 6:13 pm

joebh wrote:I think you are setting up a false dilemma here.

I'm not sure saving for the future and enjoying life are mutually exclusive for most people. (Which seems to be what you are implying.)
That certainly wasn't the case for us. We've had a wonderful life (still do)! And we are now financially independent.

Wonderful vacations, cruises, family activities, a pool, first cars for the kids, paid for their college educations, purchased a 2nd/weekend/vacation home, etc, etc. I wouldn't change a thing, and I venture to say that my wife and kids would concur.

You can still do wonderful things and live below your means if you try.


Not at all ! ..... He does not say All. But some, go overboard you have to admit. There are some that enjoy seeing the Pile get bigger, even after they retire. ......

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Re: Question for the Bogleheads Millionaires

Post by Sandi_k » Sun Apr 24, 2016 7:51 pm

ajacobs6 wrote:Many people are underpaid, and living paycheck to paycheck. What was your story for breaking out of this cycle?

In most cases, is the solution really just a higher salary and higher savings rate?

Or is there something else that people should consider? Other forms of income maybe. I may never have millions of dollars in my lifetime, and it's hard to imagine how it is even possible with the average American career.


You've answered your own question - if you're an average American, with average household income and average savings, you will never meet that goal.

If your question instead is "Does a higher salary and higher savings rate mean you can break out of this cycle?" I think you've had many anecdotal stories that say yes. But I would add that these are not average people nor average plans.

My plan:

- Get a first class education, but don't be over-educated. So I got a 4 year degree.

- Graduate with minimal debt. I worked 30+ hours a week all through college, and graduated with $3k in loans. Which were paid off within a year.

- Work hard, and pursue promotions. I joke that every time I've been ready to leave a job, they kept me by giving me more money. I have left jobs anyway, but my bosses have always been sad to see me go. Staying in one job for more than 3-4 years probably means that you're underpaid for your market. And if you don't leave, they will never be motivated to assess your salary, and pay you equitably.

- Marry someone who works hard, too. My DH also has a 4 year degree, and has been employed since he was 17.

- Be willing to buy a house, and stay in it, for at least 10 years. RE transaction costs are a drag on your ability to save, as is a huge mortgage. Get a mortgage that is not more than 2.5x your annual household income.

- Be willing to learn how to DIY on home and auto maintenance. We've saved tens of thousands of dollars over 30 years by being willing to DIY. Taking care of what you own can save lots of emergencies through the years.

- Stay married.

- Automate your savings. Aim for 15% of gross income to retirement, and another 5% to liquid savings. Invest via low-cost Index funds, and minimize churn, turnover, taxes, and commissions.

- Drive your cars at least 8 years each, preferably for 10 or more.

- Budget for fun. It helps you stay married. :D We've had some pretty amazing vacations - 4 weeks in Europe on a shoestring, 2 weeks in the Caribbean for our 25th anniversary, house boating on Lake Powell...You can totally splurge on these things if you've already taken care of the basics.

Kennerboy
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Re: Question for the Bogleheads Millionaires

Post by Kennerboy » Sun Apr 24, 2016 9:43 pm

live below your means
pay yourself first
one house
one wife
save, save, save

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MossySF
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Re: Question for the Bogleheads Millionaires

Post by MossySF » Sun Apr 24, 2016 11:51 pm

It all goes into the soup. You lay down your plan and you do need some amount luck for right time, right place, right economy.

Obviously, it's much harder to do if you don't plan at all. All the attributes/plans mentioned in this thread are the costs of buying a raffle ticket. There's no guarantee of success but you probably won't win if you don't play at all.

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Re: Question for the Bogleheads Millionaires

Post by TonyDAntonio » Mon Apr 25, 2016 1:11 am

I have about 2 million invested and my SS and my wife's SS plus a small pension will eventually cover most of our day-to-day costs. I live in a lower-middle class area of the Bay Area in a 25 year old house that is paid off. I do not feel wealthy but that doesn't bother me one bit. I'm more concerned with making our money last for our entire lifetimes. My wife's family lives a long time (eg. a 101 year old grandma that she visits every Tuesday). That's 40 years to go for my wife. How do you feel wealthy when your money has to last 40 years?
I do feel lucky though, and grateful. And I think these are better feelings than wealthy.

hoops777 wrote:Feeling wealthy is a personal thing.To say you need 6 mill in the Bay Area is ridiculous.If one has only 4 million with no debt and a simple lifestyle are they not wealthy?How about 2 million and SS covers all or most of their living expenses?
Ask that question to a retired couple living on their SS month to month or to a couple in their 40's with 3 kids living paycheck to paycheck.I guarantee they will feel you are wealthy if you have 6,7,8000 a month of safe investment income every month that you do not need.

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Re: Question for the Bogleheads Millionaires

Post by SQRT » Mon Apr 25, 2016 5:42 am

BahamaMan wrote:
Not at all ! ..... He does not say All. But some, go overboard you have to admit. There are some that enjoy seeing the Pile get bigger, even after they retire. ......


Yes, this is the part that I don't understand. LBYM while working makes perfect sense and is required to reach FI and fund a decent retirement. But once retired why LBYM (except to provide a buffer against investment declines of course)? Systematically increasing your net worth because of LBYM in retirement seems less than optimal unless you want to leave a larger legacy. Maybe should have retired sooner?

I suspect some people just get used to a frugal lifestyle and keep growing the "stash" throughout their lives. Too old to change and can't think of anything they wan to spend the money on. My in laws are like this. Happy heirs.
Last edited by SQRT on Mon Apr 25, 2016 9:52 am, edited 1 time in total.

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prudent
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Re: Question for the Bogleheads Millionaires

Post by prudent » Mon Apr 25, 2016 8:18 am

Some off-topic snarky posts were removed. Please keep replies on topic so the thread can remain open.

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Re: Question for the Bogleheads Millionaires

Post by KlangFool » Mon Apr 25, 2016 8:27 am

Single wage earner, spouse = homemaker, 2 kids. One in college. Another going college this year. Funding college education via "cash flow".

25% marginal tax bracket when employed.

1) Max up Trad. 401K when employed and use the tax savings to invest in 2 x Roth IRAs and taxable account.

2) 30+% gross income saver.

3) Do not be "House Poor". This kills most of my peers financially even with dual income.

4) A) Only buy a house when my asset is 2 to 3 times the house price.

B) Buy a house when the mortgage plus other housing expense is cheaper than renting.

C) Buy as little house as possible.

5) High saving rate overcame multiple unemployments lasting more than 1 year.

KlangFool

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Re: Question for the Bogleheads Millionaires

Post by michaeljc70 » Mon Apr 25, 2016 9:51 am

noyopacific wrote:
ajacobs6 wrote:Many people are underpaid, and living paycheck to paycheck.


The first thing I'd recommend would be to figure out how to get beyond the notion that "many people are underpaid."
I subscribe to the idea that markets are mostly pretty efficient at setting prices. I believe that this applies when setting prices for securities as well as for labor.

I think you would do better if you can accept idea that your labor might be worth whatever an employer is willing to pay for it. This could enable you to:
Look for a better job
Start a side business
Work more hours
Work more efficiently
Get training & experience that will make your time more valuable.


I don't know if I agree with the notion that most people are underpaid. However, and I have seen this many times, people that stay in the same company a long time are much more likely to be underpaid. They are trading (perceived) stability for pay and don't know what they are worth because they are basing what they are worth on a 2%-5% raise over what they made last year (which in the big picture, is meaningless if they were being paid below market before).

I'd recommend, even if you don't want to switch companies, be aware of the market for someone with your skills in similar jobs. You can do that through people you know, trade groups, the internet (to some degree), keeping in contact with recruiters, etc.

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Re: Question for the Bogleheads Millionaires

Post by TonyDAntonio » Mon Apr 25, 2016 10:51 am

You tell me exactly what me and my wife will need in the way of money over the next 40 years and I'll stop living below my means and (hopefully) growing my retirement money. There are little things like unknown medical expenses in all our futures that make living below our means pretty sensible. Unless of course you want the rest of us to pay for you.

SQRT wrote:
BahamaMan wrote:
Not at all ! ..... He does not say All. But some, go overboard you have to admit. There are some that enjoy seeing the Pile get bigger, even after they retire. ......


Yes, this is the part that I don't understand. LBYM while working makes perfect sense and is required to reach FI and fund a decent retirement. But once retired why LBYM (except to provide a buffer against investment declines of course)? Systematically increasing your net worth because of LBYM in retirement seems less than optimal unless you want to leave a larger legacy. Maybe should have retired sooner?

I suspect some people just get used to a frugal lifestyle and keep growing the "stash" throughout their lives. Too old to change and can't think of anything they wan to spend the money on. My in laws are like this. Happy heirs.

BahamaMan
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Re: Question for the Bogleheads Millionaires

Post by BahamaMan » Mon Apr 25, 2016 10:58 am

TonyDAntonio wrote:You tell me exactly what me and my wife will need in the way of money over the next 40 years and I'll stop living below my means and (hopefully) growing my retirement money. There are little things like unknown medical expenses in all our futures that make living below our means pretty sensible. Unless of course you want the rest of us to pay for you.


There is a Huge Difference between Living below your means and being a miser.

If someone is afraid of the future (Because it is always unknown), and they live like a miser. They are dooming their one and only life, to live to the fullest. It is a balance, like all things in life...

BTW - If anyone in your family comes down with a catastrophic disease, that takes millions of dollars of treatment, the rest of us will have to pay for you. That is the way society works. It's called insurance.

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Re: Question for the Bogleheads Millionaires

Post by scotthew » Mon Apr 25, 2016 11:11 am

One minor thing to add...if you can get a job that has you on the road frequently, this can help. Even if if you are being sent to "undesirable" parts of the country/world staying in dreary hotels (in my case being out at sea at times), you are still seeing parts of the world on somebody else's dime. You will also get paid meals and earn frequent traveler rewards that you can use to cover your own vacations.

You can be even more Boglehead, and bring your own food on your work travels. You eat healthier and can potentially pocket your companies per diem meal allowance.

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Re: Question for the Bogleheads Millionaires

Post by joebh » Mon Apr 25, 2016 11:29 am

BahamaMan wrote:
joebh wrote:I think you are setting up a false dilemma here.

I'm not sure saving for the future and enjoying life are mutually exclusive for most people. (Which seems to be what you are implying.)
That certainly wasn't the case for us. We've had a wonderful life (still do)! And we are now financially independent.

Wonderful vacations, cruises, family activities, a pool, first cars for the kids, paid for their college educations, purchased a 2nd/weekend/vacation home, etc, etc. I wouldn't change a thing, and I venture to say that my wife and kids would concur.

You can still do wonderful things and live below your means if you try.


Not at all ! ..... He does not say All. But some, go overboard you have to admit. There are some that enjoy seeing the Pile get bigger, even after they retire. ......


You can note that I never said "All" either.

The quote is "I wonder though when reading some of the posts,how many people overdue it" and I responded "I'm not sure saving for the future and enjoying life are mutually exclusive for most people."

In my opinion, there are few Bogleheads who don't enjoy life.

Perhaps your experience is different.

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Re: Question for the Bogleheads Millionaires

Post by SQRT » Mon Apr 25, 2016 11:43 am

TonyDAntonio wrote:Unless of course you want the rest of us to pay for you.

SQRT wrote:
BahamaMan wrote:
Not at all ! ..... He does not say All. But some, go overboard you have to admit. There are some that enjoy seeing the Pile get bigger, even after they retire. ......


Yes, this is the part that I don't understand. LBYM while working makes perfect sense and is required to reach FI and fund a decent retirement. But once retired why LBYM (except to provide a buffer against investment declines of course)? Systematically increasing your net worth because of LBYM in retirement seems less than optimal unless you want to leave a larger legacy. Maybe should have retired sooner?

I suspect some people just get used to a frugal lifestyle and keep growing the "stash" throughout their lives. Too old to change and can't think of anything they wan to spend the money on. My in laws are like this. Happy heirs.

No wouldn't expect you to pay for us. We are very able to do that thanks. Being Canadian the issue of late life health care expenses is not as big. I said that spending a little less to cover unexpected investment returns makes sense and I suppose health care as well for Americans, but other than that why be "frugal".

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Re: Question for the Bogleheads Millionaires

Post by lthenderson » Mon Apr 25, 2016 12:04 pm

KlangFool wrote:3) Do not be "House Poor". This kills most of my peers financially even with dual income.

4) A) Only buy a house when my asset is 2 to 3 times the house price.

B) Buy a house when the mortgage plus other housing expense is cheaper than renting.

C) Buy as little house as possible.


Love these little nuggets of wisdom. So many of my non-millionaire peers get caught up in being "House Poor".

looking
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Re: Question for the Bogleheads Millionaires

Post by looking » Mon Apr 25, 2016 12:08 pm

there is no rules just work hard and saave and invest index

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Re: Question for the Bogleheads Millionaires

Post by remomnyc » Mon Apr 25, 2016 12:13 pm

livesoft wrote:Education and a spouse with education and a good job.


+1

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Re: Question for the Bogleheads Millionaires

Post by NYGiantsFan » Mon Apr 25, 2016 5:12 pm

in_reality wrote:My wife saves money by wearing the clothes her 14 year old has out grown. She's been doing it a couple of years now.

I don't understand why she does that. It confusing to me when I see a cute lady and feel attracted but then I recognize the clothes and suddenly assume it's my son and it's really just too absolutely weird for me for a second or two. She gives me no sympathy and says the clothes are practically new....

We've always just saved money where we could ...


Same here with our 16 year old son who is still in his growth spurt and outgrows (or outfashions ) his polo/t-shirts. He has unique color sense for cloth (while I don't have any :beer ) .
I have stopped purchasing new Polo/T-Shirts for last 2 years.

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Re: Question for the Bogleheads Millionaires

Post by bbees » Mon Apr 25, 2016 11:09 pm

I am not a millionaire--yet. My family was poor but we didn't know it. Worked for $0.50/hr hoeing beans, moved up to $0.75/hr paying for tuition at a Catholic high school--worked summers and at chow hall during the school year to pay most of college expenses. Saved as much as I could, lived frugally, did my own laundry at college, bought used cars until I had a good job. Bought my fiancee a 0.5 carat diamond with most of my savings and it is now worth 10 times the amount I paid for it and she is fiscally conservative like myself and we have made it last for 40 years.

So work hard, save often, live conservatively, marry wisely and read this forum and follow Bogleheads' recommendations and you will be close to reaching your goals.

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Re: Question for the Bogleheads Millionaires

Post by Ari » Mon Apr 25, 2016 11:57 pm

SQRT wrote:No wouldn't expect you to pay for us. We are very able to do that thanks. Being Canadian the issue of late life health care expenses is not as big. I said that spending a little less to cover unexpected investment returns makes sense and I suppose health care as well for Americans, but other than that why be "frugal".

Doesn't Canada have state-sponsored health care? That explicitly means that other people are paying for your health care costs (and you are paying for others). It's a great system (if it's like the one we have in Sweden), but it very much involves other people's money.
All in, all the time.

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Re: Question for the Bogleheads Millionaires

Post by Ari » Tue Apr 26, 2016 12:01 am

Another advantage of LBYM in retirement is that your M keeps growing. If you're living at your means, you're at a nice but static level. If you're continuously increasing your net worth, you can also continuously increase your expenses while still living below your means. I strongly believe that while an absolute level of wealth does little for your happiness, a steady increase does wonders. Just like people who have terrible accidents are not less happy than others, but people with steadily worsening chronic diseases are generally unhappy.
All in, all the time.

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Re: Question for the Bogleheads Millionaires

Post by SQRT » Tue Apr 26, 2016 5:29 am

Ari wrote:
SQRT wrote:No wouldn't expect you to pay for us. We are very able to do that thanks. Being Canadian the issue of late life health care expenses is not as big. I said that spending a little less to cover unexpected investment returns makes sense and I suppose health care as well for Americans, but other than that why be "frugal".

Doesn't Canada have state-sponsored health care? That explicitly means that other people are paying for your health care costs (and you are paying for others). It's a great system (if it's like the one we have in Sweden), but it very much involves other people's money.


Yes, we have socialized health care in Canada. Most basic services are covered and paid for out of tax revenues. Not sure what your point is? Being at the upper end of the income distribution, our taxes are much higher than any possible health care costs could be for us. In that regard we subsidize others. That's what taxes do. The rich subsidize the poor. It would be erroneous to say the poor are paying for my health care, even a small part of it.

Incidentally, most Canadians very much support their health care system despite some issues. I would be much better off under a "pay your own'" system but still think a socialized plan is better for most people and support if accordingly.

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