[Financial] Habits of the Rich

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Starfish
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Re: [Financial] Habits of the Rich

Post by Starfish » Fri Nov 16, 2018 6:05 pm

bltn wrote:
Fri Nov 16, 2018 5:00 am
Starfish wrote:
Wed Nov 14, 2018 2:30 pm
HomerJ wrote:
Wed Nov 14, 2018 1:43 pm
"Money may not buy happiness, but I've never seen anyone look sad while riding a jetski!"

It depends what you sacrificed for that.
Because most of us have this issue: have to exchange time for money.
For example is it really worth saving (small amounts of) money when you are 25 instead of maximizing the use of wonder years?
On my thirtieth birthday, I thought to myself, “that was the best decade of my life? Will I continue to have that much energy?”
I had spent the first half of that decade learning and training for my life s work, and the last half working eighty to one hundred hours a week. My free time was mostly eating and sleeping. Shortly after this period I became vocationally secure and ten or twelve years later I became financially secure. With sixty hour work weeks after that thirtieth birthday, I still managed to sqeeze in travel and quality time with my family.
I might have enjoyed more free time, but I certainly enjoyed the free time I had. And the long hours spent working certainly contributed to my feelings of accomplishment with my life s work. That is a source of happiness now.
I don t fault people in their 20 s for thinking that more free time is a good trade off for a certain level of financial success. I just was not gifted enough to make that path work for me.

That is the American way. Focusing (wasting?) the enthusiasm and energy of youth on a job.
I fortunately did not come from this culture I moved here at 25. I know exactly what a lot of people here are missing.
However the flip side is that living in my country I could never have a NW of almost 2 million at 40. Which also translates in time, potential FIRE so on.
I have picked my poison but is good to do it in full knowledge of the facts.

Starfish
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Re: [Financial] Habits of the Rich

Post by Starfish » Fri Nov 16, 2018 6:12 pm

bltn wrote:
Fri Nov 16, 2018 4:31 am
Starfish wrote:
Wed Nov 14, 2018 2:30 pm
HomerJ wrote:
Wed Nov 14, 2018 1:43 pm
"Money may not buy happiness, but I've never seen anyone look sad while riding a jetski!"

It depends what you sacrificed for that.
Because most of us have this issue: have to exchange time for money.
For example is it really worth saving (small amounts of) money when you are 25 instead of maximizing the use of wonder years?
Without trading free time for financial success, most will never reach prosperity. Not unless they are very talented and/or extraordinarily lucky . Think lottery. Hard work, that requires a contribution of time , is a necessary ingredient for success in any endeavor, including wealth accumulation. Admittedly happiness and wealth are not the same thing. But for most on this forum there is a positive correlation between the two.
Wealth helps many enjoy their free time. Time consuming hard work makes some appreciate their free time even more. This from a person who thinks very little about being personally happy, but when asked, assumes he is!!
Oh well. Back to work.
My theory was that you have to maximize happiness integrated over a lifetime, not money at 50.
If years where equal it would be a very simple problem. Money do bring happiness, so work hard while young and enjoy money later. But if a year in your 20s is worth 10 in your 50s, the trade off is not that simple.
I travel often in Europe and I see how different is life of young people there even nowadays. Sure, most will not be rich, but who is losing overall in terms of total happiness?

fennewaldaj
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Re: [Financial] Habits of the Rich

Post by fennewaldaj » Fri Nov 16, 2018 11:44 pm

Starfish wrote:
Fri Nov 16, 2018 6:12 pm
bltn wrote:
Fri Nov 16, 2018 4:31 am
Starfish wrote:
Wed Nov 14, 2018 2:30 pm
HomerJ wrote:
Wed Nov 14, 2018 1:43 pm
"Money may not buy happiness, but I've never seen anyone look sad while riding a jetski!"

It depends what you sacrificed for that.
Because most of us have this issue: have to exchange time for money.
For example is it really worth saving (small amounts of) money when you are 25 instead of maximizing the use of wonder years?
Without trading free time for financial success, most will never reach prosperity. Not unless they are very talented and/or extraordinarily lucky . Think lottery. Hard work, that requires a contribution of time , is a necessary ingredient for success in any endeavor, including wealth accumulation. Admittedly happiness and wealth are not the same thing. But for most on this forum there is a positive correlation between the two.
Wealth helps many enjoy their free time. Time consuming hard work makes some appreciate their free time even more. This from a person who thinks very little about being personally happy, but when asked, assumes he is!!
Oh well. Back to work.
My theory was that you have to maximize happiness integrated over a lifetime, not money at 50.
If years where equal it would be a very simple problem. Money do bring happiness, so work hard while young and enjoy money later. But if a year in your 20s is worth 10 in your 50s, the trade off is not that simple.
I travel often in Europe and I see how different is life of young people there even nowadays. Sure, most will not be rich, but who is losing overall in terms of total happiness?
I seems like a sad state of affairs to think 1 year in your 20s is worth 10 in your 50s. I don't think you have to spend all the money you make in your 20s to be happy in your 20s. My best experiences in my 20s were not super expensive. Like I did the backpacking and hostel thing around Europe for a month. Not super expensive but super cool. Hanging out with friends was super fun and relatively cheap even with bar trips.
Of course this can depend on your career path as some start low and get much higher where as some are relatively level. I can see if you make say 40k in your 20s but expect to make 200k by 45 it doesn't make all that much sense to save aggressively. In my current field pharmacy many people graduate at 24-26 and make probably 3/4 of there final salary in real terms. In that situation it make sense to buckle down on the saving right away.

Starfish
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Re: [Financial] Habits of the Rich

Post by Starfish » Sat Nov 17, 2018 3:00 am

fennewaldaj wrote:
Fri Nov 16, 2018 11:44 pm
I seems like a sad state of affairs to think 1 year in your 20s is worth 10 in your 50s.
Hmmm.. are you sure is not exactly the opposite? I definitely hope 20s are not comparable with my 50s :D
Obviously the exact number for exemplification only. Maybe is 3 or 5 but the idea remains.

fennewaldaj
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Re: [Financial] Habits of the Rich

Post by fennewaldaj » Sat Nov 17, 2018 3:12 am

Starfish wrote:
Sat Nov 17, 2018 3:00 am
fennewaldaj wrote:
Fri Nov 16, 2018 11:44 pm
I seems like a sad state of affairs to think 1 year in your 20s is worth 10 in your 50s.
Hmmm.. are you sure is not exactly the opposite? I definitely hope 20s are not comparable with my 50s :D
Obviously the exact number for exemplification only. Maybe is 3 or 5 but the idea remains.
Do you know many 50 year olds? Its not like a person is usually falling apart at that age. As far as I know the data shows that people get more happy not less happy as they age. Of course this may be different from person to person.

SGM
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Re: [Financial] Habits of the Rich

Post by SGM » Sat Nov 17, 2018 4:30 am

A certain two billionaire would come to high school football games and attend the big tail gate parties given by the school. After his divorce he became a billionaire. :oops:

visualguy
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Re: [Financial] Habits of the Rich

Post by visualguy » Sat Nov 17, 2018 5:35 am

fennewaldaj wrote:
Sat Nov 17, 2018 3:12 am
Starfish wrote:
Sat Nov 17, 2018 3:00 am
fennewaldaj wrote:
Fri Nov 16, 2018 11:44 pm
I seems like a sad state of affairs to think 1 year in your 20s is worth 10 in your 50s.
Hmmm.. are you sure is not exactly the opposite? I definitely hope 20s are not comparable with my 50s :D
Obviously the exact number for exemplification only. Maybe is 3 or 5 but the idea remains.
Do you know many 50 year olds? Its not like a person is usually falling apart at that age. As far as I know the data shows that people get more happy not less happy as they age. Of course this may be different from person to person.
You don't typically fall apart in your 50s, but it is common to start developing issues which vary from person to person. Weight gain, back problems, aching joints, eye sight (presbyopia, floaters, etc.)

It's also common not to have the same level of energy, mental acuity, and concentration ability. One other thing is a reduced level of excitement, enthusiasm, interest, and pleasure from experiences and possessions. Things like travel or owning a sports car aren't as exciting. Even the perception of time changes - it feels like it passes faster as you age. I'm not drawing any conclusions from this, just saying that the 50s don't really feel like the 20s in many ways.

SQRT
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Re: [Financial] Habits of the Rich

Post by SQRT » Sat Nov 17, 2018 8:18 am

visualguy wrote:
Sat Nov 17, 2018 5:35 am
fennewaldaj wrote:
Sat Nov 17, 2018 3:12 am
Starfish wrote:
Sat Nov 17, 2018 3:00 am
fennewaldaj wrote:
Fri Nov 16, 2018 11:44 pm
I seems like a sad state of affairs to think 1 year in your 20s is worth 10 in your 50s.
Hmmm.. are you sure is not exactly the opposite? I definitely hope 20s are not comparable with my 50s :D
Obviously the exact number for exemplification only. Maybe is 3 or 5 but the idea remains.
Do you know many 50 year olds? Its not like a person is usually falling apart at that age. As far as I know the data shows that people get more happy not less happy as they age. Of course this may be different from person to person.
You don't typically fall apart in your 50s, but it is common to start developing issues which vary from person to person. Weight gain, back problems, aching joints, eye sight (presbyopia, floaters, etc.)

It's also common not to have the same level of energy, mental acuity, and concentration ability. One other thing is a reduced level of excitement, enthusiasm, interest, and pleasure from experiences and possessions. Things like travel or owning a sports car aren't as exciting. Even the perception of time changes - it feels like it passes faster as you age. I'm not drawing any conclusions from this, just saying that the 50s don't really feel like the 20s in many ways.
Not sure about this age thing. If I had the money I do now in my ‘20’s boy I’m not sure what would have happened. Might have wrapped the Ferrari around a tree. In any event I really didn’t start saving until well into my 40’s so not an issue for me.

Cruise
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Re: [Financial] Habits of the Rich

Post by Cruise » Sat Nov 17, 2018 12:23 pm

SQRT wrote:
Sat Nov 17, 2018 8:18 am
Not sure about this age thing. If I had the money I do now in my ‘20’s boy I’m not sure what would have happened. Might have wrapped the Ferrari around a tree.
LOL. In one's 20s, one can't afford a Ferrari, thereby averting wrapping it around a tree. In one's 60's, one can't bend down to get into a Ferrari, thereby averting calamity.

sschullo
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Re: [Financial] Habits of the Rich

Post by sschullo » Sat Nov 17, 2018 1:16 pm

gasdoc wrote:
Fri Nov 16, 2018 11:50 am
"Stay the course," both in career and finances.

gasdoc
and married. Choosing a mate that is on the same page financially is very important. It's tough. One young woman told me she broke off an engagement because, after the announcement, her fiance' went out and bought a new truck without telling her. That is one smart gal who saw the financial handwriting on the wall.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

NYGiantsFan
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Re: [Financial] Habits of the Rich

Post by NYGiantsFan » Sat Nov 17, 2018 2:51 pm

AlphaLess wrote:
Mon Nov 12, 2018 9:19 pm
I would have to debate calling most people here rich.

To me, rich is at the level when you are well past the FIRE stage (Financial Independence, Early Retirement).

Of course, you can eventually become rich, but most people here would not qualify.

I would say that you are rich if your assets are producing SIGNIFICANTLY more income per year than your spending needs are.

And significant does not mean 30%, bur rather, multiples, like 5 or 10x.

Now, of course, you don't want to live in the poor-house and push your 'required spend' down so much so as to qualify.

Thus, I should add one more condition: your spending is in the top 1% of your area.

So, say, you live in a high COLA region where top 1% income is 200K. And your assets are allowing for a withdrawal rate that is 3-5x income relative to 200K, or, say 800K.

At 3.1% WR, that's $26MM. That's the very BOTTOM rang of rich.
Your calculations are slight off.
Assuming house is paid off, spending 200k per year in HCOLA requires daily expense of around 550. Unless one is stupidly throwing away money, it is difficult to spend that type of money each day.

Nova1967
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Re: [Financial] Habits of the Rich

Post by Nova1967 » Sat Nov 17, 2018 3:03 pm

There are two ways a man can be rich in this world, he can have a lot of money, or he can have a lot of friends. But he cannot have both.
(Freddie Heiniken)

AlphaLess
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Re: [Financial] Habits of the Rich

Post by AlphaLess » Sat Nov 17, 2018 5:46 pm

NYGiantsFan wrote:
Sat Nov 17, 2018 2:51 pm
Your calculations are slight off.
Assuming house is paid off, spending 200k per year in HCOLA requires daily expense of around 550. Unless one is stupidly throwing away money, it is difficult to spend that type of money each day.
Well, we were talking about rich people, right?

We live in the low end of the HCOL range in US. And for our city and zip code, we spend on the lower end as well. Currently, we spend $190K a year. If our house were paid off, we would only save $25K a year.

Mortgage is *ONLY* a minority of housing expenses.
You have:
- R/E taxes,
- HOA fees,
- utilities,
- maintenance.

Also, rich people don't just pay of their house and stop at that. They routinely demolish the kitchen and build a new one. They renovate a bathroom every 2-3 years, and they have around 3-4 bathrooms, so by the time they rotate, the least recently renovated bathroom is like 12 years old.
"You can get more with a kind word and a gun than with just a kind word." George Washington

KyleAAA
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Re: [Financial] Habits of the Rich

Post by KyleAAA » Sat Nov 17, 2018 6:03 pm

AlphaLess wrote:
Sat Nov 17, 2018 5:46 pm
NYGiantsFan wrote:
Sat Nov 17, 2018 2:51 pm
Your calculations are slight off.
Assuming house is paid off, spending 200k per year in HCOLA requires daily expense of around 550. Unless one is stupidly throwing away money, it is difficult to spend that type of money each day.
Well, we were talking about rich people, right?

We live in the low end of the HCOL range in US. And for our city and zip code, we spend on the lower end as well. Currently, we spend $190K a year. If our house were paid off, we would only save $25K a year.

Mortgage is *ONLY* a minority of housing expenses.
You have:
- R/E taxes,
- HOA fees,
- utilities,
- maintenance.

Also, rich people don't just pay of their house and stop at that. They routinely demolish the kitchen and build a new one. They renovate a bathroom every 2-3 years, and they have around 3-4 bathrooms, so by the time they rotate, the least recently renovated bathroom is like 12 years old.
I don’t know any rich people who renovate bathrooms every 2-3 years, and I know a lot of rich people. My mortgage also isn’t the minority of my housing expense.

saagar_is_cool
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Re: [Financial] Habits of the Rich

Post by saagar_is_cool » Sat Nov 17, 2018 6:06 pm

Cruise wrote:
Sat Nov 17, 2018 12:23 pm
SQRT wrote:
Sat Nov 17, 2018 8:18 am
Not sure about this age thing. If I had the money I do now in my ‘20’s boy I’m not sure what would have happened. Might have wrapped the Ferrari around a tree.
LOL. In one's 20s, one can't afford a Ferrari, thereby averting wrapping it around a tree. In one's 60's, one can't bend down to get into a Ferrari, thereby averting calamity.
LOL bend down part gave me a big smile today :D

SQRT
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Re: [Financial] Habits of the Rich

Post by SQRT » Sun Nov 18, 2018 3:10 am

Cruise wrote:
Sat Nov 17, 2018 12:23 pm
SQRT wrote:
Sat Nov 17, 2018 8:18 am
Not sure about this age thing. If I had the money I do now in my ‘20’s boy I’m not sure what would have happened. Might have wrapped the Ferrari around a tree.
LOL. In one's 20s, one can't afford a Ferrari, thereby averting wrapping it around a tree. In one's 60's, one can't bend down to get into a Ferrari, thereby averting calamity.
Good point. Also, presumably the 60 year old has matured a bit concerning hedonistic type purchases. Although you could also make a case that “why not since you always wanted one”.

SQRT
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Re: [Financial] Habits of the Rich

Post by SQRT » Sun Nov 18, 2018 3:16 am

NYGiantsFan wrote:
Sat Nov 17, 2018 2:51 pm

Assuming house is paid off, spending 200k per year in HCOLA requires daily expense of around 550. Unless one is stupidly throwing away money, it is difficult to spend that type of money each day.
I respectfully disagree. I spend, on average, multiples of this amount. Isn’t difficult at all. To state that spending this amount is probably “stupidly throwing money away” is judgemental on your part. Surely you can’t be suggesting that most rich people are “stupid”. Maybe you should broaden your views?

Also, to express yearly spending as a daily amount seems a little silly . Most expenses are not incurred on a daily basis, For example travel doesn’t occur each and every day, or a new car purchase, or other large item like health care or expensive meal out? Why not break it down by the hour or minute?
Last edited by SQRT on Sun Nov 18, 2018 3:34 am, edited 2 times in total.

SQRT
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Re: [Financial] Habits of the Rich

Post by SQRT » Sun Nov 18, 2018 3:19 am

Nova1967 wrote:
Sat Nov 17, 2018 3:03 pm
There are two ways a man can be rich in this world, he can have a lot of money, or he can have a lot of friends. But he cannot have both.
(Freddie Heiniken)
He must have been referring to himself and trying to generalize for others. I dont buy it.

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TomatoTomahto
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Re: [Financial] Habits of the Rich

Post by TomatoTomahto » Sun Nov 18, 2018 8:44 am

SQRT wrote:
Sun Nov 18, 2018 3:16 am
NYGiantsFan wrote:
Sat Nov 17, 2018 2:51 pm
Assuming house is paid off, spending 200k per year in HCOLA requires daily expense of around 550. Unless one is stupidly throwing away money, it is difficult to spend that type of money each day.
I respectfully disagree. I spend, on average, multiples of this amount. Isn’t difficult at all. To state that spending this amount is probably “stupidly throwing money away” is judgemental on your part. Surely you can’t be suggesting that most rich people are “stupid”. Maybe you should broaden your views?
I guess it gets down to definitions. I think the overwhelming percentage of humans are stupid (including me), and I don't think the rich are any better. They (we?) are just better situated to indulge their stupidity.

I'll give you an example of our "stupidly throwing money away." We recently moved. The movers didn't label boxes well, and I haven't found our Anova (a Sous Vide appliance). Back in the day, before we became more financially comfortable, I would have opened every last box looking for it. That was the era when I would get out of bed, put clothes on, and drive to Blockbuster if I remembered that we had a video that should be returned that day, and I didn't want to incur the $2 late fee. Now, I just ordered another Anova from Amazon and figured that, when I eventually found the missing one, I'd have two.

I'll give you another example, one that's more defensible. We are putting in geothermal heating and cooling in our new house. It will be a six digit installation. An air-sourced installation would have cost less and had an earlier break-even, but I valued the discarding of our oil burner higher than the break-even. Stupid? Yes. Would I do it again? Yes.
Zero Net Carbon by 2019.

SQRT
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Re: [Financial] Habits of the Rich

Post by SQRT » Sun Nov 18, 2018 9:33 am

@tomato. OK. We need a robust definition of “stupid” I guess. Seems to me that you may in fact not be stupid. If it is an insignificant amount of money (in comparison to your net worth) is it “stupid” to spend it on something very expensive or frivolous? I would say not.

In my view, somebody who judges somebody else’s spending level based on their own values (and net worth presumably) might be described that way though.
Last edited by SQRT on Sun Nov 18, 2018 10:08 am, edited 1 time in total.

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HomerJ
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Re: [Financial] Habits of the Rich

Post by HomerJ » Sun Nov 18, 2018 10:08 am

SQRT wrote:
Sun Nov 18, 2018 3:19 am
Nova1967 wrote:
Sat Nov 17, 2018 3:03 pm
There are two ways a man can be rich in this world, he can have a lot of money, or he can have a lot of friends. But he cannot have both.
(Freddie Heiniken)
He must have been referring to himself and trying to generalize for others. I dont buy it.
I think the quote is referencing time. To GET rich usually takes a lot of your time, to make good real friends also takes a lot of time.

But yeah, I don't think it's that profound of a statement, either.

And besides, once you retire, you can have lots of money and lots of (new) friends (But a case could be made that the best friends are lifelong friends)
Last edited by HomerJ on Sun Nov 18, 2018 10:10 am, edited 1 time in total.
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SQRT
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Re: [Financial] Habits of the Rich

Post by SQRT » Sun Nov 18, 2018 10:09 am

HomerJ wrote:
Sun Nov 18, 2018 10:08 am
SQRT wrote:
Sun Nov 18, 2018 3:19 am
Nova1967 wrote:
Sat Nov 17, 2018 3:03 pm
There are two ways a man can be rich in this world, he can have a lot of money, or he can have a lot of friends. But he cannot have both.
(Freddie Heiniken)
He must have been referring to himself and trying to generalize for others. I dont buy it.
I think the quote is referencing time. To GET rich usually takes a lot of your time, to make good real friends also takes a lot of time.

Once you retire, you can have lots of money and lots of friends.
Ok that makes more sense. But still not one of the better “words of wisdom”.

am
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Re: [Financial] Habits of the Rich

Post by am » Sun Nov 18, 2018 10:17 am

fennewaldaj wrote:
Sat Nov 17, 2018 3:12 am
Starfish wrote:
Sat Nov 17, 2018 3:00 am
fennewaldaj wrote:
Fri Nov 16, 2018 11:44 pm
I seems like a sad state of affairs to think 1 year in your 20s is worth 10 in your 50s.
Hmmm.. are you sure is not exactly the opposite? I definitely hope 20s are not comparable with my 50s :D
Obviously the exact number for exemplification only. Maybe is 3 or 5 but the idea remains.
Do you know many 50 year olds? Its not like a person is usually falling apart at that age. As far as I know the data shows that people get more happy not less happy as they age. Of course this may be different from person to person.
Not 50 but getting closer. Much wiser and richer now. Less impulsive and dominated by primal urges. In better shape now. So not sure I’d want to be in my 20s other than having more life to live.

Wricha
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Re: [Financial] Habits of the Rich

Post by Wricha » Sun Nov 18, 2018 4:51 pm

Cycle wrote:
Fri Nov 16, 2018 3:37 pm
Wricha wrote:
Tue Nov 13, 2018 8:46 pm
Rich is a tough term to define. My definition would be $10M for every $100k you need to cover expenses. For example if your lifestyle required ($200k minimum) to cover living expenses you would need to have $20M to be considered rich (my definition). Why? I just made it up. But if you think about it with that kind of buffer (1% withdrawal rate) you would have 3 or 4 times your living expenses being generated every year to cover the fun things! So for the person that needs $200k for living expenses, they would generated at least additional $600k on their $20M for the extras. $20M is not going to be made by being frugal, investing in index funds, 60/40 allocation, rebalancing, other Boglehead rules of thumb, on a $200k/yr salary. Rich is not in the cards for this person. Well off yes. With that said:

Habits/skills
1. Take risks (willing to risk it all)
2. Real estate (leverage)
3. Business owner (few employed folks are rich many are well off)
4. Think big and set no limits
5. Parlay any truly unique skills (athletes, actor, new ideas)
6. Build scale quickly
7. Passionate about being rich
8. Marry well (no divorce) or marry rich (shortcut)
9. Be comfortable with leveraging
10. Be extremely confident
11. Be disagreeable, be willing not to be liked
If my wife and I retire at 55 and never make more than 150k/yr ea, assuming 6% real return we'll hit 20MM in todays dollars at age 70.

We just need to show up at innitech and punch the clock for 40hrs a week for another 20 years. That's simply compounding interest... No special habits beyond frugality and the requisite to show up to work.
And your living expenses are over $200k as I stated as a minimum, on $300k? I don’t think so, you would be lucky to fund a 401k. Nice try

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Cycle
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Re: [Financial] Habits of the Rich

Post by Cycle » Sun Nov 18, 2018 8:42 pm

Wricha wrote:
Sun Nov 18, 2018 4:51 pm
Cycle wrote:
Fri Nov 16, 2018 3:37 pm
Wricha wrote:
Tue Nov 13, 2018 8:46 pm
$20M is not going to be made by being frugal, investing in index funds, 60/40 allocation, rebalancing, other Boglehead rules of thumb, on a $200k/yr salary. Rich is not in the cards for this person. Well off yes. With that said:

Habits/skills
1. Take risks (willing to risk it all)
2. Real estate (leverage)
3. Business owner (few employed folks are rich many are well off)
4. Think big and set no limits
5. Parlay any truly unique skills (athletes, actor, new ideas)
6. Build scale quickly
7. Passionate about being rich
8. Marry well (no divorce) or marry rich (shortcut)
9. Be comfortable with leveraging
10. Be extremely confident
11. Be disagreeable, be willing not to be liked
If my wife and I retire at 55 and never make more than 150k/yr ea, assuming 6% real return we'll hit 20MM in todays dollars at age 70.

We just need to show up at innitech and punch the clock for 40hrs a week for another 20 years. That's simply compounding interest... No special habits beyond frugality and the requisite to show up to work.
And your living expenses are over $200k as I stated as a minimum, on $300k? I don’t think so, you would be lucky to fund a 401k. Nice try
We spend 45k a year and will amass 5MM by 45, 20MM by 70 and rich isn't in the cards for me unless I start following your 11 bulletpoints?

I was thinking I'd just keep my day job since it's low stress and interesting. Heck we get 7 months combined maternity/paternity this year.... Try doing that when you're at a startup or own your own business.

I can assure u I've felt rich ever since passing my FI target. Money is a tool, like a screwdriver. Once you have a screwdriver it's nice to have additional screwdrivers in case you lose it, but they provide no additional utility to you.

Starfish
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Re: [Financial] Habits of the Rich

Post by Starfish » Sun Nov 18, 2018 10:46 pm

fennewaldaj wrote:
Sat Nov 17, 2018 3:12 am
Starfish wrote:
Sat Nov 17, 2018 3:00 am
fennewaldaj wrote:
Fri Nov 16, 2018 11:44 pm
I seems like a sad state of affairs to think 1 year in your 20s is worth 10 in your 50s.
Hmmm.. are you sure is not exactly the opposite? I definitely hope 20s are not comparable with my 50s :D
Obviously the exact number for exemplification only. Maybe is 3 or 5 but the idea remains.
Do you know many 50 year olds? Its not like a person is usually falling apart at that age. As far as I know the data shows that people get more happy not less happy as they age. Of course this may be different from person to person.
Very few people have the potential (physically, mentally etc) to live life in the same way at 50 as in their 20s. Isn't this very obvious?

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Re: [Financial] Habits of the Rich

Post by visualguy » Sun Nov 18, 2018 10:54 pm

Starfish wrote:
Sun Nov 18, 2018 10:46 pm
Very few people have the potential (physically, mentally etc) to live life in the same way at 50 as in their 20s. Isn't this very obvious?
You are absolutely correct based on my experience, but many are in denial about that - it's a hard thing to accept. I know I was pretty shocked by how different I was (still am) in my 50s when compared to my 20s even though my health has held up well other than some relatively minor things. You deteriorate noticeably in so many ways... Age really does a job on you even when you stay mostly healthy.

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Re: [Financial] Habits of the Rich

Post by Starfish » Sun Nov 18, 2018 11:18 pm

It's even more than that, the station in life you are at in your 50s holds you from taking the same risks.
But hey, if you spend your 20s working 80 hours a week, you have no idea what they are.

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Re: [Financial] Habits of the Rich

Post by fennewaldaj » Sun Nov 18, 2018 11:32 pm

Starfish wrote:
Sun Nov 18, 2018 11:18 pm
It's even more than that, the station in life you are at in your 50s holds you from taking the same risks.
But hey, if you spend your 20s working 80 hours a week, you have no idea what they are.
Well for what its worth I have little desire to spend any of my decades working 80 hours a week. I did spend about 4 years in my 20s playing online poker 20-30 hours in addition to work but it didn't really feel like work at the time. In my 30s I went back to school for 5 years so that was like 60ish hour weeks between work and school which kinda sucked. For me 60 hours with some surges to 70 feel fine but 80+ would be horrid. I am pretty happy now because I have a job that pays well and since I work 7 on 7 off I get lots of time off. I guess I'll see how things change as I age. So far for me the only major physical or mental change is I get hangovers much easier than I did in early 20s

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Re: [Financial] Habits of the Rich

Post by visualguy » Sun Nov 18, 2018 11:40 pm

Starfish wrote:
Sun Nov 18, 2018 11:18 pm
It's even more than that, the station in life you are at in your 50s holds you from taking the same risks.
That may vary. It really depends on your specific situation. You may actually have a lot of freedom in your 50s. The issue is that you aren't the same person you were in your 20s in so many ways...

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Re: [Financial] Habits of the Rich

Post by LaurieAnnaT » Mon Nov 19, 2018 1:06 am

A lot of good advice already given, so I won't duplicate it. I'll just make two points.

There are many avenues to wealth. What works for one person might be the absolute wrong choice for you. I attended a financial meeting where one of the participants was not a big investor in stocks. His background was in commercial building, so his investments were also in commercial buildings. That's what he knew, that's what he was comfortable with, that's what worked for him. One of my husband's best friends loves fixing up houses and renting them out. That works for him, but I would absolutely hate it. The key is to find what works for you.

Someone already mentioned that wealth provides security. But that's only part of it. It also gives you options. Think about the retired folks you know. Those getting by on just social security certainly aren't flying off to Europe at the drop of a hat. They may not have enough for yearly trips to the other coast to see their grandchildren. Those with a bit more may afford those trips, but hearing aids put a strain on their careful budget. A truly wealthy person can travel pretty much whenever they want. Or afford hearing aids, or concerts, or a second home in Arizona for the winter. Personally, I like having options.

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Re: [Financial] Habits of the Rich

Post by Sandtrap » Mon Nov 19, 2018 1:38 am

HomerJ wrote:
Sun Nov 18, 2018 10:08 am
SQRT wrote:
Sun Nov 18, 2018 3:19 am
Nova1967 wrote:
Sat Nov 17, 2018 3:03 pm
There are two ways a man can be rich in this world, he can have a lot of money, or he can have a lot of friends. But he cannot have both.
(Freddie Heiniken)
He must have been referring to himself and trying to generalize for others. I dont buy it.
I think the quote is referencing time. To GET rich usually takes a lot of your time, to make good real friends also takes a lot of time.

But yeah, I don't think it's that profound of a statement, either.

And besides, once you retire, you can have lots of money and lots of (new) friends (But a case could be made that the best friends are lifelong friends)
Very True.
Yet. Hard to differentiate when and if a new friend(s) will become a lifelong friend.

Do the rich have lifelong friends, or are lifelong friends more difficult with increasing wealth?
hmmm.

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Re: [Financial] Habits of the Rich

Post by tennisplyr » Mon Nov 19, 2018 7:50 am

Sometimes life isn't about money....balance is hugely important.
Those who move forward with a happy spirit will find that things always work out.

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Re: [Financial] Habits of the Rich

Post by SQRT » Mon Nov 19, 2018 9:16 am

Sandtrap wrote:
Mon Nov 19, 2018 1:38 am
HomerJ wrote:
Sun Nov 18, 2018 10:08 am
SQRT wrote:
Sun Nov 18, 2018 3:19 am
Nova1967 wrote:
Sat Nov 17, 2018 3:03 pm
There are two ways a man can be rich in this world, he can have a lot of money, or he can have a lot of friends. But he cannot have both.
(Freddie Heiniken)
He must have been referring to himself and trying to generalize for others. I dont buy it.
I think the quote is referencing time. To GET rich usually takes a lot of your time, to make good real friends also takes a lot of time.

But yeah, I don't think it's that profound of a statement, either.

And besides, once you retire, you can have lots of money and lots of (new) friends (But a case could be made that the best friends are lifelong friends)
Very True.
Yet. Hard to differentiate when and if a new friend(s) will become a lifelong friend.

Do the rich have lifelong friends, or are lifelong friends more difficult with increasing wealth?
hmmm.
In my experience type of friends and their longevity is determined by personality, both yours and theirs and the activities you like to do. Of course, this may or may not be affected by one’s wealth level. I don’t think it is necessarily more difficult to keep lifelong friends being “rich”. I think there are many reasons why it might become increasingly difficult to keep lifelong friends. People change for many reasons.

However, if you become rich later in life, I think, you may find you end up cultivating new friends that share your “world view” and can participate in things you like to do, like travel, or snowbirding. No reason to “discard” old lifelong friends unless you find your personality has changed as compared to theirs. This may or may not be the result of “becoming “rich”.

We ended up making many new friends when we retired. Moved to the mountains and met people skiing and mountain biking. Got a snowbird place in Arizona and met new friends here. Started taking bike trips and met a wonderful new group of friends who now travel together every year biking.

Still have a few lifelong friends but not many. Too busy doing other things that we enjoy with new friends who share our interests. People change. In my experience, your “best friends” are the ones you are closest to at that particular time in your life. Sometimes they last a lifetime sometimes not.

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Re: [Financial] Habits of the Rich

Post by JackoC » Mon Nov 19, 2018 9:52 am

Starfish wrote:
Wed Nov 14, 2018 2:30 pm
For example is it really worth saving (small amounts of) money when you are 25 instead of maximizing the use of wonder years?
No I don't think it matters that much in rational economic terms whether you make that much effort to *save* when in your 20's*. Rational meaning assuming you can simply start saving the required amount later on, and when your income is high enough that it's a significant amount. IOW assuming there's no (non-rational) 'momentum' in your behavior due to an ingrained habit of not saving.

However it's more much likely to matter whether you make a lot of effort to get going in a lucrative career in your 20's. Not absolutely, some fabulously successful people just fooled around all together till in their 30's, or later. But not usually.

I think it comes back to 'habits of the rich' on the income side, or spending side. This forum tends to be tilted IME toward discussion of spending/investing, and takes income more as a given. Each person has their income, and that's that, but, how do they spend v invest it? But looking at a whole life, it's not like that. Some people have advantages ('fair', 'unfair', 'lucky', 'unlucky' it's irrelevant for this purpose) in pursuing lucrative careers but there's still a big variation based on motivation.

And that's where the most difficult trade offs are likely to come, especially in particular well known high paying fields (medicine, Wall Street, building your own business). Most people who succeeded in those things, and thus can avoid money worries later on even spending quite a lot in absolute $'s, had to work themselves silly when younger. It's not about *saving* when they were younger. It's about getting on a path to *making* a lot. And people also do that for reasons other than strict materialism, maybe mainly so. For the prestige and feeling of fulfillment of being highly paid. Whereas the focus on saving is more about paying the bills in a hypothetical retirement at as early as possible an age. Kind of different in that respect also.

*there will be a series of generalizations which of course have exceptions but I think are generally valid. Highly paid NFL players (very short average career due to injuries even compared to pro sports careers in general) in their 20's should IMO concentrate heavily on saving. For most people the distribution of income over career is such that's much less likely to be important, even with the common unrealistic IMO assumption that today's expected returns are as high as past realized returns.

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Re: [Financial] Habits of the Rich

Post by TomatoTomahto » Mon Nov 19, 2018 9:54 am

SQRT wrote:
Mon Nov 19, 2018 9:16 am
Still have a few lifelong friends but not many. Too busy doing other things that we enjoy with new friends who share our interests. People change. In my experience, your “best friends” are the ones you are closest to at that particular time in your life. Sometimes they last a lifetime sometimes not.
I had three lifelong friends. Two died much too young. One migrated to reprehensible political views. Down to zero.
Zero Net Carbon by 2019.

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Re: [Financial] Habits of the Rich

Post by SQRT » Mon Nov 19, 2018 10:01 am

TomatoTomahto wrote:
Mon Nov 19, 2018 9:54 am
SQRT wrote:
Mon Nov 19, 2018 9:16 am
Still have a few lifelong friends but not many. Too busy doing other things that we enjoy with new friends who share our interests. People change. In my experience, your “best friends” are the ones you are closest to at that particular time in your life. Sometimes they last a lifetime sometimes not.
I had three lifelong friends. Two died much too young. One migrated to reprehensible political views. Down to zero.
Too bad. I recently had an outing with a group of old high school friends. Was fun but in the end I asked myself “what did I see in these guys?” People change-especially over 50 years.

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Re: [Financial] Habits of the Rich

Post by goodenyou » Mon Nov 19, 2018 11:27 am

Read this (It was posted here several months ago)


The Psychology of Money
by Morgan Housel

One excerpt:
You can laugh. But the truth is, yes, people need to be told that. When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire. This is especially true for young people.
https://www.collaborativefund.com/blog/ ... -of-money/

The easiest way to be become rich is to start rich. Since most people don't start on third base, hard work and discipline win the day. Saving, LBYM, don't try to get rich quickly, and staying married are good ideas.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

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Re: [Financial] Habits of the Rich

Post by KlangFool » Mon Nov 19, 2018 12:12 pm

JackoC wrote:
Mon Nov 19, 2018 9:52 am
Starfish wrote:
Wed Nov 14, 2018 2:30 pm
For example is it really worth saving (small amounts of) money when you are 25 instead of maximizing the use of wonder years?
No I don't think it matters that much in rational economic terms whether you make that much effort to *save* when in your 20's*. Rational meaning assuming you can simply start saving the required amount later on, and when your income is high enough that it's a significant amount. IOW assuming there's no (non-rational) 'momentum' in your behavior due to an ingrained habit of not saving.
JackoC,

<<Rational meaning assuming you can simply start saving the required amount later on, >>

How does a person know that this assumption is correct? To be rational mean that the person know that he/she cannot predict the future. Aka, the person may not survive financially in a recession.

You have to survive in order to succeed. It is irrational to believe that everyone will be so lucky that nothing bad could ever happen to them.

We save in order to protect ourselves from an unknowable future. If we do not save enough, we may not have a future.

KlangFool

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Re: [Financial] Habits of the Rich

Post by KlangFool » Mon Nov 19, 2018 12:39 pm

Folks,

To each its own.

There are at least two different views on money/wealth/rich.

A) People that use the money to live their own lives. To this group of people, money means freedom to live their own lives without caring other's opinion. It is freedom. They may spend less on X but more on Y. It has absolutely nothing to do with what others think about how folks in his/her level of wealth/income/rich supposed to spend on.

B) People that use the money as their status symbol. Aka, to keep score. I am rich because I can spend X on a luxury lifestyle as defined by others. They want to be seen as rich by others.

To each its own. Pick your own poison. Hence, there will not be any agreement between the group (A) and group (B). Philosophically, money means a totally different thing to each group.

KlangFool

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Re: [Financial] Habits of the Rich

Post by goodenyou » Mon Nov 19, 2018 12:52 pm

KlangFool wrote:
Mon Nov 19, 2018 12:39 pm
Folks,

To each its own.

There are at least two different views on money/wealth/rich.

A) People that use the money to live their own lives. To this group of people, money means freedom to live their own lives without caring other's opinion. It is freedom. They may spend less on X but more on Y. It has absolutely nothing to do with what others think about how folks in his/her level of wealth/income/rich supposed to spend on.

B) People that use the money as their status symbol. Aka, to keep score. I am rich because I can spend X on a luxury lifestyle as defined by others. They want to be seen as rich by others.

To each its own. Pick your own poison. Hence, there will not be any agreement between the group (A) and group (B). Philosophically, money means a totally different thing to each group.

KlangFool
Count me in Group “A”, if you are keeping score.
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Re: [Financial] Habits of the Rich

Post by KlangFool » Mon Nov 19, 2018 12:59 pm

goodenyou wrote:
Mon Nov 19, 2018 12:52 pm
KlangFool wrote:
Mon Nov 19, 2018 12:39 pm
Folks,

To each its own.

There are at least two different views on money/wealth/rich.

A) People that use the money to live their own lives. To this group of people, money means freedom to live their own lives without caring other's opinion. It is freedom. They may spend less on X but more on Y. It has absolutely nothing to do with what others think about how folks in his/her level of wealth/income/rich supposed to spend on.

B) People that use the money as their status symbol. Aka, to keep score. I am rich because I can spend X on a luxury lifestyle as defined by others. They want to be seen as rich by others.

To each its own. Pick your own poison. Hence, there will not be any agreement between the group (A) and group (B). Philosophically, money means a totally different thing to each group.

KlangFool
Count me in Group “A”, if you are keeping score.
goodenyou,

In a simplistic term, Group (A) use the money to break out of the cage. Group (B) use the money to build a more beautiful cage. To each its own.

KlangFool

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Re: [Financial] Habits of the Rich

Post by VictoriaF » Mon Nov 19, 2018 1:07 pm

KlangFool wrote:
Mon Nov 19, 2018 12:59 pm
goodenyou wrote:
Mon Nov 19, 2018 12:52 pm
KlangFool wrote:
Mon Nov 19, 2018 12:39 pm
Folks,

To each its own.

There are at least two different views on money/wealth/rich.

A) People that use the money to live their own lives. To this group of people, money means freedom to live their own lives without caring other's opinion. It is freedom. They may spend less on X but more on Y. It has absolutely nothing to do with what others think about how folks in his/her level of wealth/income/rich supposed to spend on.

B) People that use the money as their status symbol. Aka, to keep score. I am rich because I can spend X on a luxury lifestyle as defined by others. They want to be seen as rich by others.

To each its own. Pick your own poison. Hence, there will not be any agreement between the group (A) and group (B). Philosophically, money means a totally different thing to each group.

KlangFool
Count me in Group “A”, if you are keeping score.
goodenyou,

In a simplistic term, Group (A) use the money to break out of the cage. Group (B) use the money to build a more beautiful cage. To each its own.

KlangFool
KlangFool,

I want to be in your cage.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: [Financial] Habits of the Rich

Post by KlangFool » Mon Nov 19, 2018 1:15 pm

VictoriaF wrote:
Mon Nov 19, 2018 1:07 pm
KlangFool wrote:
Mon Nov 19, 2018 12:59 pm
goodenyou wrote:
Mon Nov 19, 2018 12:52 pm
KlangFool wrote:
Mon Nov 19, 2018 12:39 pm
Folks,

To each its own.

There are at least two different views on money/wealth/rich.

A) People that use the money to live their own lives. To this group of people, money means freedom to live their own lives without caring other's opinion. It is freedom. They may spend less on X but more on Y. It has absolutely nothing to do with what others think about how folks in his/her level of wealth/income/rich supposed to spend on.

B) People that use the money as their status symbol. Aka, to keep score. I am rich because I can spend X on a luxury lifestyle as defined by others. They want to be seen as rich by others.

To each its own. Pick your own poison. Hence, there will not be any agreement between the group (A) and group (B). Philosophically, money means a totally different thing to each group.

KlangFool
Count me in Group “A”, if you are keeping score.
goodenyou,

In a simplistic term, Group (A) use the money to break out of the cage. Group (B) use the money to build a more beautiful cage. To each its own.

KlangFool
KlangFool,

I want to be in your cage.

Victoria
VictoriaF,

I look up to you in term of how to live a fulfilling retirement life. I am still trying to figure this out. I have a few more years to go before I can reach my FI number.

KlangFool

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Re: [Financial] Habits of the Rich

Post by JackoC » Mon Nov 19, 2018 1:21 pm

KlangFool wrote:
Mon Nov 19, 2018 12:12 pm
JackoC wrote:
Mon Nov 19, 2018 9:52 am
Starfish wrote:
Wed Nov 14, 2018 2:30 pm
For example is it really worth saving (small amounts of) money when you are 25 instead of maximizing the use of wonder years?
No I don't think it matters that much in rational economic terms whether you make that much effort to *save* when in your 20's*. Rational meaning assuming you can simply start saving the required amount later on, and when your income is high enough that it's a significant amount. IOW assuming there's no (non-rational) 'momentum' in your behavior due to an ingrained habit of not saving.
<<Rational meaning assuming you can simply start saving the required amount later on, >>

How does a person know that this assumption is correct? To be rational mean that the person know that he/she cannot predict the future. Aka, the person may not survive financially in a recession.
I'm not really buying that in general, though there's always an exception to every rule. My point is that in general, assuming rationality, what you *save* in your 20's is likely to be immaterial compared to the effort you make to *get on a high income career path* in your 20's, again especially with realistic idea of returns (significantly lower than a lot of people here seem to assume, IMO anyway). Generally if you could only save in your 20's, you'd be screwed. And the big risk of a recession in high paying fields is the very fact you get laid off, ie identified as somebody the firm can do without. Again that doesn't mean it's fair or any personal judgement by me about anyone that happened to, but your key preparation for recession is laser focus on not only getting into but 'surviving' (ie keeping your job) in a high paying field.

IMO 20's and into 30's is for laser focus on increasing income. Don't spend beyond means, but devote all mental energy to building your career. There will be time later to scrimp if you fail to reach a very high income, or to map out a comfortable standard of living loads of absolute $'s below your income if you do reach a very high income.

The thread is supposed to be 'habits of the rich', that's my two cents from personal experience. There are plenty of discussions here about eventually saving $1mil while eventually working up to a $50k job. In that case perhaps it's arguable people should hone savings skills, and accustoming themselves to extreme frugality, from the get go. And I'm not saying anyone is necessarily harmed by saving in their 20's. It's just not material compared to getting on a high income path, if that option is open, IMO.

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Re: [Financial] Habits of the Rich

Post by KlangFool » Mon Nov 19, 2018 1:36 pm

JackoC wrote:
Mon Nov 19, 2018 1:21 pm
KlangFool wrote:
Mon Nov 19, 2018 12:12 pm
JackoC wrote:
Mon Nov 19, 2018 9:52 am
Starfish wrote:
Wed Nov 14, 2018 2:30 pm
For example is it really worth saving (small amounts of) money when you are 25 instead of maximizing the use of wonder years?
No I don't think it matters that much in rational economic terms whether you make that much effort to *save* when in your 20's*. Rational meaning assuming you can simply start saving the required amount later on, and when your income is high enough that it's a significant amount. IOW assuming there's no (non-rational) 'momentum' in your behavior due to an ingrained habit of not saving.
<<Rational meaning assuming you can simply start saving the required amount later on, >>

How does a person know that this assumption is correct? To be rational mean that the person know that he/she cannot predict the future. Aka, the person may not survive financially in a recession.
I'm not really buying that in general, though there's always an exception to every rule. My point is that in general, assuming rationality, what you *save* in your 20's is likely to be immaterial compared to the effort you make to *get on a high income career path* in your 20's, again especially with realistic idea of returns (significantly lower than a lot of people here seem to assume, IMO anyway). Generally if you could only save in your 20's, you'd be screwed. And the big risk of a recession in high paying fields is the very fact you get laid off, ie identified as somebody the firm can do without. Again that doesn't mean it's fair or any personal judgement by me about anyone that happened to, but your key preparation for recession is laser focus on not only getting into but 'surviving' (ie keeping your job) in a high paying field.
JackoC,

<< And the big risk of a recession in high paying fields is the very fact you get laid off, ie identified as somebody the firm can do without. Again that doesn't mean it's fair or any personal judgement by me about anyone that happened to, but your key preparation for recession is laser focus on not only getting into but 'surviving' (ie keeping your job) in a high paying field.>>

1) In a recession, the whole company can go bankrupt. In that case, nobody can be safe in that company. In an extreme case, the whole country can go to hell.

<<your key preparation for recession is laser focus on not only getting into but 'surviving' (ie keeping your job) in a high paying field.>>

2) I disagree. Given that the whole company/industry/country can go to hell in a recession, the person can lose the job. Then, it is a question of how much money that the person has in order to survive long enough before he/she can find a new job.

3) There is less opportunity for a high paying job in general. In a recession, it is doubly so. If a person does not have enough to survive long enough, he/she will have to settle for a lower paying job. Once that person accepted a low paying job, it will take at least a few years to recover to the previous pay level if the person is lucky. If not, the person will be permanently under-employed.

I had survived Houston Oil Bust, Texas Saving & Loan Crisis, Asian Currency Crisis, Telecom Bust, and 2008/2009 recession across 30+ years. Those are my observations.

KlangFool

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Re: [Financial] Habits of the Rich

Post by JackoC » Mon Nov 19, 2018 4:03 pm

KlangFool wrote:
Mon Nov 19, 2018 1:36 pm

1) In a recession, the whole company can go bankrupt. In that case, nobody can be safe in that company. In an extreme case, the whole country can go to hell.

<<your key preparation for recession is laser focus on not only getting into but 'surviving' (ie keeping your job) in a high paying field.>>

2) I disagree. Given that the whole company/industry/country can go to hell in a recession, the person can lose the job. Then, it is a question of how much money that the person has in order to survive long enough before he/she can find a new job.

3) There is less opportunity for a high paying job in general. In a recession, it is doubly so. If a person does not have enough to survive long enough, he/she will have to settle for a lower paying job. Once that person accepted a low paying job, it will take at least a few years to recover to the previous pay level if the person is lucky. If not, the person will be permanently under-employed.

I had survived Houston Oil Bust, Texas Saving & Loan Crisis, Asian Currency Crisis, Telecom Bust, and 2008/2009 recession across 30+ years. Those are my observations.
Maybe it's your experience and anyway you can scenario-ize limitlessly, and nobody can say anything *can't* happen. But here's where IME posts on this forum are sometimes a little off, just IMO, just based on my experience. They will tell somebody for example who got a job on Wall Street they shouldn't pay so much for rent. Maybe not (crazily it would be IMO) to turn down the job because NY is so expensive (though *some* here it seems actually might!), but say 'live further from work to get that rent down to a reasonable % so you can *save*'. Bad advice, again just IME. When you get the WS job for $100k, the key is to multiply that, if you can, as soon as you can. If you spend even a little more of your limited energy on more commuting, or don't make as good a showing in the 'first into the office, last to leave' sweepstakes (as silly as that can seem), you're making a mistake IME. If you think 'but no I must save that money now in case I get laid off, even if it means I can't give quite as much to work', mistake. And the hard reality is that in some of those jobs you're tainted if you get laid off even if it was the whole firm or industry with you. You can be just SOL. Don't play it safe, but focus 100% of your being on massively ramping up income (and if that's not important to a person, they probably shouldn't be there in the first place). Then save 80 or 90% of after tax if you like, without any real frugality, once you do that. That's my advice.

Now, if the scenario plays out where there's no conflict between saving heavily from the get go and being 100% all in on the job, then save, of course. I'm not saying it's bad to save. I'm saying I've seen what I consider bad advice, or what would be if people applied some of what's said here to situations like that. Again just IME, YMMV.

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Re: [Financial] Habits of the Rich

Post by KlangFool » Mon Nov 19, 2018 4:13 pm

JackoC wrote:
Mon Nov 19, 2018 4:03 pm
KlangFool wrote:
Mon Nov 19, 2018 1:36 pm

1) In a recession, the whole company can go bankrupt. In that case, nobody can be safe in that company. In an extreme case, the whole country can go to hell.

<<your key preparation for recession is laser focus on not only getting into but 'surviving' (ie keeping your job) in a high paying field.>>

2) I disagree. Given that the whole company/industry/country can go to hell in a recession, the person can lose the job. Then, it is a question of how much money that the person has in order to survive long enough before he/she can find a new job.

3) There is less opportunity for a high paying job in general. In a recession, it is doubly so. If a person does not have enough to survive long enough, he/she will have to settle for a lower paying job. Once that person accepted a low paying job, it will take at least a few years to recover to the previous pay level if the person is lucky. If not, the person will be permanently under-employed.

I had survived Houston Oil Bust, Texas Saving & Loan Crisis, Asian Currency Crisis, Telecom Bust, and 2008/2009 recession across 30+ years. Those are my observations.
Maybe it's your experience and anyway you can scenario-ize limitlessly, and nobody can say anything *can't* happen. But here's where IME posts on this forum are sometimes a little off, just IMO, just based on my experience. They will tell somebody for example who got a job on Wall Street they shouldn't pay so much for rent. Maybe not (crazily it would be IMO) to turn down the job because NY is so expensive (though *some* here it seems actually might!), but say 'live further from work to get that rent down to a reasonable % so you can *save*'. Bad advice, again just IME. When you get the WS job for $100k, the key is to multiply that, if you can, as soon as you can. If you spend even a little more of your limited energy on more commuting, or don't make as good a showing in the 'first into the office, last to leave' sweepstakes (as silly as that can seem), you're making a mistake IME. If you think 'but no I must save that money now in case I get laid off, even if it means I can't give quite as much to work', mistake. And the hard reality is that in some of those jobs you're tainted if you get laid off even if it was the whole firm or industry with you. You can be just SOL. Don't play it safe, but focus 100% of your being on massively ramping up income (and if that's not important to a person, they probably shouldn't be there in the first place). Then save 80 or 90% of after tax if you like, without any real frugality, once you do that. That's my advice.

Now, if the scenario plays out where there's no conflict between saving heavily from the get go and being 100% all in on the job, then save, of course. I'm not saying it's bad to save. I'm saying I've seen what I consider bad advice, or what would be if people applied some of what's said here to situations like that. Again just IME, YMMV.
JackoC,

<< When you get the WS job for $100k, the key is to multiply that, if you can, as soon as you can. If you spend even a little more of your limited energy on more commuting, or don't make as good a showing in the 'first into the office, last to leave' sweepstakes (as silly as that can seem), you're making a mistake IME.>>

In order to quantify your IME, you have to state what is your IME based on. Aka, 20 to 30 years working on Wall Street? Or, something else. Then, it is up to whoever reading your post to decide how relevant it is to their context.

I stated mine.

KlangFool

JackoC
Posts: 349
Joined: Sun Aug 12, 2018 11:14 am

Re: [Financial] Habits of the Rich

Post by JackoC » Mon Nov 19, 2018 4:50 pm

KlangFool wrote:
Mon Nov 19, 2018 4:13 pm



JackoC,

<< When you get the WS job for $100k, the key is to multiply that, if you can, as soon as you can. If you spend even a little more of your limited energy on more commuting, or don't make as good a showing in the 'first into the office, last to leave' sweepstakes (as silly as that can seem), you're making a mistake IME.>>

In order to quantify your IME, you have to state what is your IME based on. Aka, 20 to 30 years working on Wall Street? Or, something else. Then, it is up to whoever reading your post to decide how relevant it is to their context.

I stated mine.
Based on doing what I just said, including not worrying about having no room for adding to my savings at first (though I had some left over from a previous career) living as close as I could possibly afford to work. It doesn't take even 20 yrs if you're lucky enough to hit it squarely. Whereas most of the people I started with got laid off right near the beginning in a wave of cutbacks. They were just screwed though, by and large. Saving a little by getting a cheaper apartment or brown bagging it or no cable or whatever: basically irrelevant. It's partly a lottery obviously, as is life in general, but that sort of work in particular. I'm just doubting whether an attitude of hedging bets is always the way to go. Same with starting a business. I don't know that as well personally (I have a small business now but it's basically investing money I made working for other people, with some labor input to help it grow). But I guess some people here would be queasy with the idea of putting every cent you have into a business, how about if things don't work out? In some cases that kind of risk aversion can cost you, I believe. Though again there's nothing wrong with saving if and where there's no conflict with going all in on increasing your income. Often there isn't. But sometimes there can be.

And in any case the plain numbers generally say if you're not a very young .com, sports or entertainment superstar, it's going to take some time to gather earnings momentum, and what you put away in your 20's is unlikely to be a significant of % of wealth down the road. You're really arguing mainly that people should have rainy day funds rather than talking about the role of savings in your 20's to eventual wealth. OK it's better to have one than not, obviously.

KlangFool
Posts: 10627
Joined: Sat Oct 11, 2008 12:35 pm

Re: [Financial] Habits of the Rich

Post by KlangFool » Mon Nov 19, 2018 4:59 pm

JackoC wrote:
Mon Nov 19, 2018 4:50 pm

And in any case the plain numbers generally say if you're not a very young .com, sports or entertainment superstar, it's going to take some time to gather earnings momentum, and what you put away in your 20's is unlikely to be a significant of % of wealth down the road. You're really arguing mainly that people should have rainy day funds rather than talking about the role of savings in your 20's to eventual wealth. OK it's better to have one than not, obviously.
JackoC,

<< And in any case the plain numbers generally say if you're not a very young .com, sports or entertainment superstar, it's going to take some time to gather earnings momentum, and what you put away in your 20's is unlikely to be a significant of % of wealth down the road. >>

In summary, you are not an engineer or commenting on someone in the engineering profession. Am I correct?

KlangFool

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