Financial Critical Mass

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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Toons
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Financial Critical Mass

Post by Toons » Wed Oct 25, 2017 2:39 pm

I recall listening to Bob Brinker many many years ago and remembered him speaking about the "Land Of Critical Mass" when it comes to finances.So true.
The exact quote
Critical Mass:
"A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets."

:thumbsup :thumbsup
"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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Sandtrap
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Re: Financial Critical Mass

Post by Sandtrap » Wed Oct 25, 2017 6:48 pm

Outstanding. Thanks.
I wonder how many that dwell in "Bogleheadville" also spend time in the "Land of Critical Mass"?
I suspect a great proportion.

More Please
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Re: Financial Critical Mass

Post by More Please » Wed Oct 25, 2017 8:12 pm

I love living in the Land of Critical Mass, most of the folks that live there seem to be happy too.

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jmndu99
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Re: Financial Critical Mass

Post by jmndu99 » Wed Oct 25, 2017 8:17 pm

I still listen to Bob. I'm driving to the "Land Of Critical Mass".

He also calls it "The land with no alarm clocks"

Miriam2
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Re: Financial Critical Mass

Post by Miriam2 » Wed Oct 25, 2017 9:14 pm

Toons wrote: I recall listening to Bob Brinker many many years ago and remembered him speaking about the "Land Of Critical Mass" when it comes to finances.So true.
The exact quote
Critical Mass:
"A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets."
:thumbsup :thumbsup
Wonderful quote Toons! Thank you for posting!
I guess the existential question is how to move from earned income to assets, how to turn that earned income into assets - although I think we all have the best answers to that question :happy

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Sandtrap
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Re: Financial Critical Mass

Post by Sandtrap » Wed Oct 25, 2017 9:58 pm

Miriam2 wrote:
Wed Oct 25, 2017 9:14 pm
Toons wrote: I recall listening to Bob Brinker many many years ago and remembered him speaking about the "Land Of Critical Mass" when it comes to finances.So true.
The exact quote
Critical Mass:
"A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets."
:thumbsup :thumbsup
Wonderful quote Toons! Thank you for posting!
I guess the existential question is how to move from earned income to assets, how to turn that earned income into assets - although I think we all have the best answers to that question :happy
"Mirium", you have confused me. . . (easy to do) :shock: .
As a retired businessman I immediately think, "how to move from earned income to assets. . . " R/E. . . . income property.. . as a conditioned response.
But perhaps that is not as common a path in "Bogleheadville" as is assets in the form of a fund portfolio -- the dependable road to Critical MassVille.
True?

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TinkerPDX
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Re: Financial Critical Mass

Post by TinkerPDX » Wed Oct 25, 2017 10:05 pm

Thanks for the quote. Encouraging words for those of us a decade or three out...

Miriam2
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Re: Financial Critical Mass

Post by Miriam2 » Wed Oct 25, 2017 10:48 pm

Sandtrap wrote:
Miriam2 wrote:
Toons wrote: I recall listening to Bob Brinker many many years ago and remembered him speaking about the "Land Of Critical Mass" when it comes to finances.So true.
The exact quote
Critical Mass:
"A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets."
:thumbsup :thumbsup
Wonderful quote Toons! Thank you for posting!
I guess the existential question is how to move from earned income to assets, how to turn that earned income into assets - although I think we all have the best answers to that question :happy
"Miriam", you have confused me. . . (easy to do) :shock: .
As a retired businessman I immediately think, "how to move from earned income to assets. . . " R/E. . . . income property.. . as a conditioned response.
But perhaps that is not as common a path in "Bogleheadville" as is assets in the form of a fund portfolio -- the dependable road to Critical MassVille.
True?
The way I read Toons' Bob Brinker quote was that earned income and assets are not the same thing, although the terms are sometimes used to mean the same thing.

Earned income is what we earn, from a paycheck or from a personal business. It is the income coming in from our job. But earned income does not always result in assets. Assets are the accumulated earned income that we have retained as our net worth, and when our net worth is high enough, it is what Brinker calls our Critical Mass, the tangible remains of our earned income that we can use to live on without working for more earned income, ie. we are financially independent.

Brinker says earned income does not produce assets/critical mass - I took this to mean we only have assets/critical mass IF we retain or save a certain portion of our earned income. If we use up or spend all our earned income, we are left with no assets, no Critical Mass. The existential question is how to do this, how to turn our earned income into assets - assets that we save and invest - rather than spending our earned income down to the last earned penny, leaving us with no assets, no Critical Mass.

The Boglehead answer to that question is living below one's means [LBYM], saving a certain percentage of one's earned income consistently, investing that savings wisely using Boglehead principles, and tending to one's savings, which are now our assets, as one would - to quote Toons - tend to a cactus plant 8-)

Sort of a variation on "The Millionaire Next Door" by Thomas Stanley & William Danko. Sandtrap, have you read the book? :happy

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Sandtrap
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Re: Financial Critical Mass

Post by Sandtrap » Wed Oct 25, 2017 11:04 pm

Miriam2 wrote:
Wed Oct 25, 2017 10:48 pm
Sandtrap wrote:
Miriam2 wrote:
Toons wrote: I recall listening to Bob Brinker many many years ago and remembered him speaking about the "Land Of Critical Mass" when it comes to finances.So true.
The exact quote
Critical Mass:
"A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets."
:thumbsup :thumbsup
Wonderful quote Toons! Thank you for posting!
I guess the existential question is how to move from earned income to assets, how to turn that earned income into assets - although I think we all have the best answers to that question :happy
"Miriam", you have confused me. . . (easy to do) :shock: .
As a retired businessman I immediately think, "how to move from earned income to assets. . . " R/E. . . . income property.. . as a conditioned response.
But perhaps that is not as common a path in "Bogleheadville" as is assets in the form of a fund portfolio -- the dependable road to Critical MassVille.
True?
The way I read Toons' Bob Brinker quote was that earned income and assets are not the same thing, although the terms are sometimes used to mean the same thing.

Earned income is what we earn, from a paycheck or from a personal business. It is the income coming in from our job. But earned income does not always result in assets. Assets are the accumulated earned income that we have retained as our net worth, and when our net worth is high enough, it is what Brinker calls our Critical Mass, the tangible remains of our earned income that we can use to live on without working for more earned income, ie. we are financially independent.

Brinker says earned income does not produce assets/critical mass - I took this to mean we only have assets/critical mass IF we retain or save a certain portion of our earned income. If we use up or spend all our earned income, we are left with no assets, no Critical Mass. The existential question is how to do this, how to turn our earned income into assets - assets that we save and invest - rather than spending our earned income down to the last earned penny, leaving us with no assets, no Critical Mass.

The Boglehead answer to that question is living below one's means [LBYM], saving a certain percentage of one's earned income consistently, investing that savings wisely using Boglehead principles, and tending to one's savings, which are now our assets, as one would - to quote Toons - tend to a cactus plant 8-)

Sort of a variation on "The Millionaire Next Door" by Thomas Stanley & William Danko. Sandtrap, have you read the book? :happy
Yes. Enjoyed the book. Have grown up and worked with a lot of those folks. Hope it rubbed off. Think it rubbed off. :D
mahalo,
j :D

Miriam2
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Re: Financial Critical Mass

Post by Miriam2 » Wed Oct 25, 2017 11:17 pm

Sandtrap wrote:
Miriam2 wrote: Sort of a variation on "The Millionaire Next Door" by Thomas Stanley & William Danko. Sandtrap, have you read the book? :happy
Yes. Enjoyed the book. Have grown up and worked with a lot of those folks. Hope it rubbed off. Think it rubbed off. :D
mahalo,
j :D
Na'u ka hau'oli!
I'll bet it rubbed off to your advantage! Many of his stories involve real estate as part of net worth.

I just read the book last month - sitting in the dark with my flashlight during Hurricane Irma :annoyed Couldn't put the book down, so interesting. I had heard of it for years but never read it. Wish I read it earlier :mrgreen:

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tennisplyr
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Re: Financial Critical Mass

Post by tennisplyr » Thu Oct 26, 2017 6:14 am

Ah yes, the ability to "live life on your own terms"
Those who move forward with a happy spirit will find that things always work out.

MikeG62
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Re: Financial Critical Mass

Post by MikeG62 » Thu Oct 26, 2017 6:45 am

jmndu99 wrote:
Wed Oct 25, 2017 8:17 pm
...He also calls it "The land with no alarm clocks"
When people ask me about what it is like to be retired, this is one of the first benefits I mention (on a very long list).

tibbitts
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Re: Financial Critical Mass

Post by tibbitts » Thu Oct 26, 2017 7:20 am

Sorry to be a contrarian, but if I recall Brinker's phrase came to be popular toward the end of an era when equities had done almost nothing but go up for twenty years. I think it was based on a certain predictability of returns that, especially coupled with today's low interest rates, "why not 100% equities" philosophy, and generally blah economic conditions, is a lot more difficult to achieve now than it was then.

lostdog
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Re: Financial Critical Mass

Post by lostdog » Thu Oct 26, 2017 7:57 am

Toons wrote:
Wed Oct 25, 2017 2:39 pm
I recall listening to Bob Brinker many many years ago and remembered him speaking about the "Land Of Critical Mass" when it comes to finances.So true.
The exact quote
Critical Mass:
"A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets."

:thumbsup :thumbsup
Another term is Financial Independence. :sharebeer

You're no longer a slave to debt and employers.
"Time in the market is better than timing the market" -Toons | 60/40 US/International -Vanguard Recommendation

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