cross-posted from: https://lemmy.world/post/33704049
Wanted to add, “Fuck Cars!!”
Car payments for decades of one’s life are not the way to go.
cross-posted from: https://lemmy.world/post/33704049
Wanted to add, “Fuck Cars!!”
Car payments for decades of one’s life are not the way to go.
I know this is going to go against the “everything is terrible” narrative. But unpopular opinion - these people are just dumb. If you are making 150k per year and struggling to pay your bills, then that is your own fault. Live somewhere cheaper. Buy a cheaper car and learn to do your own repairs and maintenance. Cook your own food. Dont rack up credit card debt. And dont have kids if you can’t afford them.
I’m sure some people in the comments will all be like “no, no, you dont understand - it’s impossible to save money even at $150k incomes!” Bullshit! There are people who manage to get by on minimum wage. Or on $50k per year. Or hell, on $100k per year. I managed to retire at 31 and never broke the six figure mark. Now, I’m a cheap bastard and basically dedicated my life for 8 years to giving my cubical the middle finger - but if it is possible for me to do that, then yes, it is completely possible for people making $150k to not go deep into debt. It is absurd that I have to not only say this, but defend it against delusional doomers who just want to say that literally everything is hopeless and no one can ever get ahead.
Yeah, no. You know all the brand spanking new lifted pavement-princess pickups you see everywhere? Those were bought on credit. You know how DoorDash and McDonalds continue being profitable despite being absurdly expensive these days? They can do that because people keep paying them! Or the shopping malls that continue churning out shit fast fashion clothing that will disintegrate in 6 hours? Lots of them are packed on the weekends!
Straight up: outside of some very unusual circumstances, if you are bringing in $150k and still can’t keep up with your bills, You. Are. A. Dumbass.
I agree except the reason they are making $150k is because they aren’t living someplace cheaper. Move to cheap rural and there’s no job. Companies are forcing back to office even when it makes no sense.
Our housing shortage is a serious issue, and we should work on resolving it.
But at the same time, this is still not a real reason. After all, many people live in these same places with lower wages and still don’t go into debt.
Again, there are certainly people out there for whom it truly is not their fault. Like, they’re underwater on a house they bought in SF when prices were at their highest and have to stay there to take care of their ailing mother who can only see one specific doctor in the whole country - or whatever. And while these cases are tragic, they are not the majority.
The majority of these cases are going to be people who made a conscious choice to live beyond their means, who are unwilling to tighten their belts and give up their luxurious lifestyles. Yes, there are outliers. But most of these people are, like, suburban moms working as project managers in Omaha who are driving their new Buicks to Starbucks every morning. Sorry, but I don’t have sympathy for these people. Buy a used Toyota and brew your own coffee, it’s not that hard!
@blarghly @miss_demeanour This kind of animosity within the working classes (including the relatively privileged middle class) is exactly what the oligarchs want. If you’re busy casting aspersions at couples earning $75k each in New York City who probably don’t own a car much less a pavement princess and are struggling to
keep up with the bills their parents were easily able to afford, you’re looking away from how a handful of billionaires are dismantling the country and trashing the planet.
I don’t think @blarghly@lemmy.world is expressing animosity so much as frustration. These people’s lack of financial resiliency is why they can’t afford to have class solidarity. If everyone was a FIRE sort of person like blarghly (full disclosure: and me), then things like general strikes would become much more feasible.
@blarghly @miss_demeanour Certainly there are many examples of middle class people who are living beyond their means and the planet’s at the same time, but their overconsumption is child’s play in the grand scheme of things. We can encourage people to consume less (I certainly share your disgust with car/monster truck culture, fast fashion and fast food) without insisting anyone struggling in this shit society is a dumbass.
I don’t think the oligarchs even think about us that much.
Anyway, you are doing the thing where you make up a sympathetic scenario to excuse people for being terrible at personal finance. I’m not saying outliers don’t exist. And I’m not saying that increased income inequality and the diminishment of the middle class isn’t a problem. I’m just saying, jesus fucking christ, admit when people could improve their circumstances by just making better choices.
You say you spent 8 years sub six figures to retire at 31. Can you list your savings rate and what you live on now? Did you just directly build a large nest egg or did you get lucky with investments?
Id like to give your advice its due, but if you were able to randomly retire because you gambled and bought $1k of bitcoin in 2012 and held it till 2020, it may not be that correlated to most peoples lived experience.
How does the math om that look like
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
TL;DR: have a very high savings rate. For example, if you can cut your spending to 1/3 of your income, you can retire in about 10 years.
Interesting. If the chart there is right (big assumption, interest/inflation will impact it a lot!) I could retire in around 30 years, but that is about the same time my mortgage is paid off which is by far my largest expense and is more than everything else combined. So presumably earlier retirement should be possible as less money is actually going to be needed at that point.
Also expecting my mortgage rate to drop soon, but tempting to reduce the number of years to pay it off instead and keep paying as much as I am now.
It’s based on an analysis of historical stock market returns and already takes that stuff into account.
Basically, in order for the assumption to not hold, the market has to be so fucked that the correct investment strategy would’ve been ammo and freeze-dried food instead of stocks to begin with. You’re really talking about weird stuff like “sovereign risks,” like maybe the US becoming a fascist pariah state and destabilizing completely, or fucking with the Fed and causing Zimbabwe-style hyperinflation, or something like that. The risk is never zero, but it’s incredibly unlikely (…right? 😬)
Having a mortgage or not doesn’t matter as much as you think it does, once you consider things like opportunity cost and time value of money. You could pay off your mortgage at the cost of investing less and then have smaller withdrawals from that smaller account balance in retirement, or you could invest more instead of paying extra on the mortgage and make larger withdrawals from a larger account balance in retirement. Six of one; half a dozen of the other.
Basically, it cancels out if mortgage interest rates and investment rates of return are equal, give or take risk tolerance.
If your mortgage is at today’s rates (close enough to the 7% expected return of the stock market) then I guess you might as well pay it down for simplicity’s sake, but if you’re like me and have a 3% mortgage from a decade ago you’re better off keeping it and enjoying the 4% arbitrage.
Yeah… 6.99% on the mortgage. I am hoping we will be able to get it a fair bit lower soon.
Now tell me how a guy making under 100k per year 2015-2025 accumulates enough calital to retire
🤷 I don’t know anything about that guy’s circumstances (what country he’s in, what he’s invested in, etc.) beyond what he wrote in the thread. All I know is that his claims aren’t as implausible as you’re trying to imply they are.
(I could take a guess that his monthly spending is probably $2k, give or take a few hundred, if that gives you some idea of how it’s done.)
Right and I am assuming that it is impossible…
Assume 90k US mid cost of living city. 63k net, let’s say he can make it work on 40k.
That’s 23kx10=230k
Let’s say he is investment guru. That’s noe 350k
Now tell me where in us you are “retiring” on this cash
I think the maths there is that 63k income then you spend 21k on living expenses and you can save the rest. Then you retire in a decade.
But I think mortgages might complicate this, in a good way. If you are paying a mortgage that is a repayment you can expect to stop paying at some point, so your living costs will drop when that happens.
You’re not paying $27k in taxes when you’re maxing out your 401k, IRA, and HSA and thus lowering your AGI by $34,800. In fact, between that and the other deductions and credits, the taxable income would be closer to $40k and total tax owed would be more like $5k.
“Mak[ing] it work on $40k” means he has roughly $45k/year ($3750/month) to invest.
Absolutely not. Dipshits who think they’re “gurus” lose their shirts. Let’s assume the guy put it in SPY (an S&P 500 index ETF).
According to https://www.stoculator.com/ (which kinda sucks, but was the first calculator I found that could both do periodic investments and use actual historical stock market returns instead of assuming a fixed rate of return), $1 initial + $3750/month invested into SPY starting 10 years ago would be worth $971,047.99 today. That’s within a rounding error of $1M, which is how much you need for that $40k annual spending at a 4% safe withdrawal rate (SWR).
To the same place he was “mak[ing] it work on $40k.” His spending in retirement doesn’t have to change, and thus neither do his living circumstances.
But even if we assume he got 1m you are talking about all locked up in tax sheltered accounts:
How is he living on this money between age 30-65? Taking penalties on withdrawal?
Also, even if he got 1million in cash, 43k is the rate on tbills, but that will be taxed so it closer to 35k cash to spend.
Where in the US can person live a decent quality of life on 35k with out owning a home outright?
Note that while you are living on 35k your million nest egg is being eaten by Inflation. How is that supposed to last 30 years before retirement?
The math does not work.
First of all, you forgot about the IRA (and got the numbers of the other two wrong). 401k ($23,500) + IRA ($7,000) + HSA ($4,300) = $34,800. Being able to contribute ~$8k to an HSA would imply that you’re talking about a whole family instead of a single person, which might in turn imply access to even more tax-sheltered investment space in the form of the spouse’s IRA had maybe even 401k, if both partners work.
Second, HSAs aren’t just a retirement account, they’re the best kind because you can pay your medical bills out of pocket, save up your receipts, and then cash them in for tax-free withdrawals after you retire (even before age 65, because you’re just getting reimbursed for your previous medical expenses, not taking a distribution).
There are several strategies to access retirement funds “early”, including a Roth conversion ladder or 72(t) Substantially Equal Periodic Payments.
Also, you’re right that not all the money fits in the tax-sheltered accounts; specifically; $45k - $34,800 = $10,200/year would get invested in a taxable account. That adds up to plenty of non-early-withdrawal-penalized assets to tide a person over in the first few years of retirement, before their Roth pipeline has a chance to kick in.
What do “cash” or “tbills” have to do with anything? We’re talking about investing in the stock market – specifically the S&P 500 in this hypothetical example – and that doesn’t change in retirement. You stay invested in stocks! The notion of the stock market having a 10% average stock market returns (and inflation averaging 3%, causing net returns of 7%) is already built in to the concept of a “Safe Withdrawal Rate.”
Figuring that out was a prerequisite for being able to save all the money up to begin with. You yourself assumed it as a given: “let’s say he can make it work on 40k.” If we can assume he can figure it out in year 1, we can also assume he can continue to figure it out (in inflation-adjusted terms) in year 10 and beyond.
Also, who says this doesn’t include home ownership? My ‘FIRE journey’ involved buying a house in a decent part of a decent city in year 1, which happened to be during the Great Recession, so my mortgage + taxes + insurance are still <$1000/month to this day. Granted, that circumstance no longer exists, but that doesn’t mean there aren’t other ways to make ownership (or otherwise hedging against rent inflation) happen, such as “house hacking” or living on a boat.
By the way, owning a home “outright” is generally mathematically inferior to carrying a mortgage and using the money you would’ve spent paying off the loan early to buy more stocks instead.
Again, accounting for inflation is already built into the concept of the 4% SWR. In all but the worst-case scenarios, your investment returns are not only likely to outpace inflation, they’re likely to outpace your $40k annual withdrawal and your net worth is likely to continue to go up in retirement, not down.
Long ago, there were two brothers who grew up side by side in a small villiage, wishing for something more. The elder brother left home first, recieved good schooling, and became a high-ranking bureaucrat for the king. He wore the finest robes, lived in a great house, and had many men to do his bidding, though his brow was furrowed with worry and frustration. Many years after he’d left home, now fat and with the first streaks of grey in his hair, the elder brother happened upon a monk sitting beneath a tree on the outskirts of the city. The monk sat next to his bedroll, his clothes in tatters - but the bureaucrat was shocked when he saw the monk was his own brother, who seemed to have barely aged over the many years since they’d last met. “Brother!” the aged bureaucrat exclaimed, “oh how many years since I’ve seen you! And to find you in such a wreched state! How have you come to be here?” The younger brother replied, smiling - “why, brother, I walked here. I carry my bed roll and my rice, and where ever I find myself where the sun sets, that is my home.” The elder started, confused, and said “My brother, truly you must turn your life around and rise above this terrible existence you have found yourself in. Why, just follow my example - if you learned to serve the king, you would not need to live on mere rice!” The younger replied with a cheerful smile, “Ah, but brother, if you learned to live on mere rice, you would not need to serve the king.”
I recommend the book Early Retirement Extreme, and the Mr Money Mustache blog.
real life is not an adventure game, bro. i see what your koan implies but you’re just being an asshole by responding like this.
Eh, I read the little parable when I was a teenager or something, and that is essentially what led me down the path I followed. Figured it might be helpful to others.
the problem with using buddhist koans in the current year is that the main users of them today are andrew tate and his cadre.
Well… fuck those guys. I’m gonna keep using my parable. There are nazi punks. I’m not gonna stop listening to punk music just because some nazis like it.
Also, that wasnt a koan, btw. Koans are paradoxical riddles.
while i do appreciate the “why should i change, he’s the one who sucks”, you gotta think about the optics at least some of the time. if you have to explain it every time, how many people do you think left before you had the chance because of first impressions? people who have had enough bad experiences to not want to take the risk?
koans can also be fables, ending on a vagueness designed to be meditated upon in order to learn a lesson.
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