
Personal Finance Lessons for Technology Professionals - piecu
https://www.troyhunt.com/10-personal-finance-lessons-for-technology-professionals/
======
hoaw
I expected a better article to be honest. Some of the ideas are correct, but I
think the perspective is overall wrong. For one he is probably ten times
richer than the average tech worker.

But you don't want to be rich as much as you want to be wealthy. And that
isn't just about money. My friends in other industries didn't make as much in
their twenties, but the are relatively wealthy in their thirties. Their
career, prospects and family life is generally better than my friends in the
tech industry.

The whole article is basically all the other things you should do and manage
to try to become successful. Most of it unrelated to technology. That isn't
wealth in my book, nor is it happiness.

~~~
ck425
Out of curiosity, how do your define wealth and in what forms do your 30s non-
tech friends have it and your tech friends don't?

~~~
charlesdm
Time. You can be a hot shot lawyer making $500k a year and working 12 hours a
day, or a software developer making $200k a year with a SaaS product working a
few hours a day.

Who is really richer here?

~~~
dagw
_Time._

Also security. Imagine something happened and you got no income for the next 6
month. How big a deal would that be to you financially? is it "I would
definitely default on my mortgage and lose my house" or "It would eat up a bit
of my savings and perhaps I'll have to skip that one vacation I was planning"

------
aedron
Quite a disagreeable post, in my opinion.

> Which leads me to the "but money can't buy happiness" position so many
> people have repeated over the years. Bull. Shit. Anyone who has ever said
> that simply doesn't know where to shop.

If happiness for you is about things you buy in shops, then you are a shallow
person, and you are missing out. A lot. In fact you are poor, but in a
spiritual sense. The next statement: "money spent on physical items can bring
people a huge amount of pleasure" reinforces the impression that you have some
concepts confused.

It's great to have cool stuff, and thanks for the probably sound advice on how
to achieve that. You don't have to try to convince (yourself?) that this
equates happiness.

~~~
loeg
Eh, to each their own. If Troy enjoys expensive cars, what the hell. It's his
money. I'm not into expensive toys either but I don't judge other people for
"materialism" and feel superior about my woo-woo individuality / spirituality.

I would agree with Troy's conclusion that "money buys happiness," but take a
different tack. Money buys financial security, and financial security buys
avoiding many kinds of hardship and grief.

You can have money and be unhappy, and you can be evicted because you can't
meet rent and be happy, but it's probably easier to be happy when you aren't
worried about paying the bills.

~~~
tonyedgecombe
_Money buys financial security_

I'm not sure about that, there seems to be plenty of research that shows
people never really feel financially secure, no matter how much they have.
Clearly there is a minimum standard you need to reach but I don't think that's
what we are talking about here.

~~~
sokoloff
Having financial security and _feeling like_ you have financial security are
quite likely to be two different things.

The latter is more subject to the hedonic treadmill of "financial security
means I don't have to change anything about my current standard of living" as
opposed to "I don't have to live on the streets or worry about where our next
meal will come from".

I could stop working today and we'd eat and live for the next 50 years just
fine. It would absolutely be at a _dramatically_ reduced standard of living. I
think I have basic financial security, but many people (myself included) would
answer a survey that they don't feel totally financially secure.

------
loeg
I strongly encourage Technology professionals (and everyone else) to learn
some basic personal finance and how to effectively (1) set aside some cash for
emergencies, (2) pay off and keep off high interest debt, and (3) invest for
the long term, i.e., retirement. But this rambling post which is heavily
focused on Troy's personal experiences and anecdotes isn't a particularly
great resource for teaching anyone personal finance; nor is it especially
interesting.

~~~
chosenbreed37
You're right in the anecdotal nature of Troy's trajectory in life. In fairness
to him I think he did acknowledge several slices of luck that he enjoyed. I'd
regard him as an outlier and as some have point out there is an element of
survivorship bias with respects to his outcomes and the narrative he's built
around out. But I think you highlight the benefit of learning some basic
personal finance principles and simply just taking the time and thinking 5,
10, 20 years into the future. Generally I think the key is about taking
responsibility for my life and taking steps that might lead me to a better
future regardless of the starting point.

------
robjan
I respect his work and contributions to the field but the message of this post
has kind of been lost in the Tony Robbins style motivation fluff. Most of us,
for example, didn't/wont have the capital to buy multiple investment
properties at the age of 25.

The real takeaway: don't waste your money, don't get into too much debt,
invest your money and invest in yourself. Every motivational speaker/guru/life
coach will say the same thing.

------
ganonm
The best piece of financial advice I can give people just starting out (e.g.
early 20s), especially if they are working in startups, is this: make sure you
have enough cash savings so that you can afford to be unemployed for at least
2-3 months. Besides the obvious safety net to ensure you aren't out on the
streets in the event you leave/lose your job, the more important reason for
this is so that you can afford to be picky about where you work next.

The opportunity cost of making a sub-optimal choice when it comes to
employment is huge, both financially and in terms of your career. Taking a hit
on a few months pay is a complete no-brainer if it means you can take a job
that you find intellectually stimulating, gets you out of bed in the morning,
and offers better long term compensation.

------
jb827
Seems he would have done very well out of property as Australia hasn't been
affected by 2008 GFC. There are young people that would have invested in
property in Ireland before GFC and would have dug themselves a financial hole.
This guy doesn't like calling it luck but I don't know what you call different
outcomes for investors between the two countries. We are living in the time of
quantitative easing, cheap credit and this seems to result in speculative
asset bubbles and busts. Dow Jones is over 200% up in last 10 years. I think
outcome of central banks printing money at this scale is unknown and puts a
big question mark on long term investing and the 'time in the market' advice.

~~~
sokoloff
> Dow Jones is over 200% up in last 10 years.

DJIA-30 has risen from ~9000 in early Jan of 2009 to ~24000 now, a gain of
~167%.

That is a CAGR of only 10.3%, which is fairly inline with historical price
appreciation of the S&P-500 index (10% total return and ~8% price
appreciation). To damp out some of the short-term gyrations, taking the same
index and average close prices for all of 2018 vs all of 2008, implies a CAGR
of 10.9%.

The S&P-500 index is more representative of the overall large cap market than
the DJIA-30, IMO. _That_ index is up ~200% in 10 years, for a CAGR of 11.5%.

These returns are not stratospherically higher than historic norms.

In a printing money environment (which I am similarly concerned about), you
want to be invested in something other than money. Real estate and equities
are hedges against deflating money. (Gold bugs would argue that precious
metals are as well.)

------
humanbeinc
It's at best just another "solid" save and invest advice, buried under
bragging, overused motivational quotes and videos and a huge underestimation
of personal luck and purely being a straight white smart male in a market that
us is booming for decades...

No other takeaways for the general public here.

------
jondubois
>> just take one simple truth away from a glance at it: investments grow over
time

This statement is false. The truth is that "investments have grown over time".
It's not necessarily true that they will continue to grow over time. The
efficiency benefits of corporate growth have been reached long ago and are on
the decline. Corporate growth today relies on crooked government policies,
stock buybacks and other methods of wealth concentration without value
creation - There is no guarantee that it will stay like this; people are
already wising up to this.

~~~
sokoloff
I don't understand the ire against share buybacks. They're just a more tax
efficient and flexible form of dividends to shareholders than traditional cash
dividends.

Dividends (broadly construed) are the original reason an investor placed money
into a firm. If you outlaw all forms of dividends, you end arms-length
investing, which surely harms people more, IMO.

~~~
trepanne
> I don't understand the ire against share buybacks. They're just a more tax
> efficient and flexible form of dividends to shareholders than traditional
> cash dividends.

Not OP, and I think his ire is misplaced here... but MY ire against share
buybacks is because the flexibility is misused.

Setting aside taxes - share repurchases benefit stockholders more than
dividends when a company's shares are undervalued; the converse is also true.
However, management's incentive tends to be to maximize their comp
(particularly stock options) by juicing the stock as it rises. Companies
usually buy high, and suspend share repurchases when the stock is low.

There are exceptions; AAPL corporate finance does a great job. But as a rule,
company treasuries do a lousy job of trading in their own shares because of
poorly aligned incentives.

------
jstewartmobile
Those tweets seem more like something a rapper would do than a security guy.

 _What have we become?_

~~~
robjan
He's a "tech celebrity", or whatever the term is

~~~
SmellyGeekBoy
Influencer? Thought leader? Something along those lines.

~~~
dustinmoris
Influenza is the correct term in 2019.

------
ck425
Not the best article I've read on finance, and far too consumerist for my
liking but the basics are correct. If you are in your 20s in tech then the
advice to get a retirement plan and to aggressively save and invest now (in
said plan or not) is solid.

------
sbmthakur
Lessons Troy talks about:

1: Money Buys Choices

2: The Money You Earn Young is the Most Valuable Money You'll Ever Earn

3: Invest in Financial Literacy

4: Learn the Tax System

5: Know Good Debt from Bad Debt

6: Diversify Earning Potential and Risk

7: Prepare for Luck

8: Put a Price on Your Time - and Your Family

9: Have a Goal

10: Financial Prosperity is a Partnership

------
benj111
Not really for tech professionals exclusively. His reasoning should really be
replaced by: 0. Get a well paid job.

Theres also this "Bad debt is the likes you have on a credit card. It's almost
always accrued on a depreciating asset (for example, a new TV) and it's very
often at a high interest rate"

Why is depreciation always mentioned as a problem of bad debt? My house will
depreciate if I don't maintain it.

Surely bad debt is a combination of interest rate, and whether you actually
need, and can afford the thing you're buying on credit.

~~~
kd5bjo
Housing debt is a little special because you have an obligation to provide
yourself and your family shelter, so your best alternative is rent instead of
going without or delaying the purchase until you can save enough money to buy
it free and clear.

In general, debt is good if having it is cheaper than the alternative. The way
that often happens is if the asset you buy with the debt is worth more, in
income or appreciation, than the cost of the debt service. If the alternative
also requires you to spend time or money, though, that alone can make debt
worthwhile.

~~~
benj111
As I said, bad debt is a combination of whether you actually need, and can
afford the thing, and interest rate.

You need a house, so an affordable house would be fine, one that you cant
afford isn't.

Yes an appreciating asset shifts the balance somewhat, but doesn't inherently
make bad debt good.

I suppose its best to look at where each outlook ends up? The appreciating
asset = good view would suggest you buy the absolute most expensive house you
can get. I would suggest you look at what you need and actually can afford.

Edit: Spelling

~~~
sokoloff
An appreciating asset bought with leverage provides one of the most readily
available means to go from "I am in the bottom quartile of net worth" to "I
have at/above the national median net worth".

I did buy basically the most expensive house we could afford (slightly less
than the most expensive we could qualify for) in 2007 in a desirable city.
That decision (vs continuing to rent or buying a $500K condo in that city) has
likely added more to our net worth than our working for the last decade did.
We bought it as a place to live and raise a family, but the financial upside
(as yet still an unrealized gain) is large enough to not ignore.

~~~
benj111
That's with the benefit of hindsight though.

Were you thinking the same in 2009?

~~~
sokoloff
For us? Yes. We were still thinking that this is a good place to live and
raise a family (that we just started that year).

On the money side, I continued to believe throughout the GFC that Cambridge,
MA was going to continue to be a desirable place to live and work. I don't
think the Zillow guesstimate on our house ever fell more than 5% below our
purchase price, which was vastly better than our 401(k)s and brokerage
accounts. (I changed my personal finance tracking spreadsheet in 2013, so I
don't have records of house price estimates prior to then to confirm and
Zillow only seems to go back 10 years.)

------
ikeboy
The problem with the distinction between good and bad debt is that money is
fungible. If you have some amount of "good" debt, then every penny you spend
on "bad" depreciating assets is money that could have gone to pay down the
good debt.

Conversely, if you have bad debt, every penny that goes towards paying it back
could instead go towards the kinds of purchases he endorses using "good" debt
for.

There's no principled distinction between the two.

------
xupybd
While I’m sure this has worked for Troy his approach is way to high risk for
my comfort zone. Dave Ramsey has a great approach that is no doubt slower but
more suited to people like me that want a bit more security. Get debt free as
fast as you can, get a good emergency fund. Then start saving / investing in
low risk funds.

------
sakisv
I'm in my (very) early 30s and I found it very interesting. I don't
necessarily agree with the entire mindset, but overall is one of the "I should
have read it 7 years ago" articles.

Most of the "lessons" are not groundbreaking, they are rather things that are
obvious and most of us know about. The value for me came from having them all
written down in an organized way. It's much easier to refer to something more
tangible than your memory.

One thing that bugs me and puts me off is the financial literacy that Troy
mentions. I try to translate some terms to my mother tongue only to find that,
even then, I still don't really understand them.

Does anyone has any pointers on how you can start improving on this like
finances 101 or something?

~~~
shoo
here's some material i found useful:

* the concept of savings rate, and relationship with time until retirement. e.g. [https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...](https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)

* good books about investment. William J Bernstein has a reading list here: [http://www.efficientfrontier.com/reading.htm](http://www.efficientfrontier.com/reading.htm)

* Bernstein also has some advice for a younger US audience here: "If you can", very short book, free download: [http://efficientfrontier.com/ef/0adhoc/2books.htm](http://efficientfrontier.com/ef/0adhoc/2books.htm)

* the other useful discovery, which wasn't a book, was randomly finding out that i could double my annual revenue for doing the same or easier (but more frustrating) development work by switching to contract work for large orgs rather than being a permanent employee at a small business. this will be very location / market dependent i guess, but perhaps the general lesson might be something like "consider if you could sell your skills in a slightly different market" & being open to exploring opportunities

~~~
sakisv
Thanks for sharing!

------
RickJWagner
There is some great advice here, and it simply echoes what is available
elsewhere. Saving and investing a small portion of your income will make you
rich over time.

Especially for those working in tech, there are ways to put the odds of
becoming wealthy greatly in your favor. It's our choice to act on it or ignore
it.

------
andydavieswork
> "As we began planning [a child], we literally went to a quiet spot in a
> local restaurant with a laptop and drew up a spreadsheet of what having a
> baby would mean. We did this together and planned everything from loss of
> income due to maternity leave, government parental benefits, the taxation
> implications of both and even medical expenses and the maintenance cost of a
> child."

Money is important. But I hope I never get to the point where my mind is as
anxious and clinical as this.

------
peteretep
That Kerry Packer clip is terrible. In summary he says (and I'm trying to
neutrally paraphrase his words):

"Since I was a boy, 10,000 new laws have been passed, and the country isn't
any better. The new laws that have been passed are just for the sake of it,
and you take away someone's freedom every time you pass a new law"

This sounds a lot like the Trumpian:

"If there’s a new regulation, they have to knock out two. But it goes far
beyond that, we’re cutting regulations massively for small business and for
large business"

Yes, there exists duplicitous and over-zealous legislation, but most of it is
written to protect the rights of people. Since Mr Packer was a boy, Australia
has new rights for gay people, aboriginal people, a great deal more
environmental protection, and so on and so on.

The "rich person appeals to common sense by saying they shouldn't be
regulated" meme needs to die a death.

~~~
Aeolun
He’s correct about it though. There’s so many laws that no sane person could
possibly know and understand them all.

------
jstanley
I enjoyed the clip on taxes:
[https://www.youtube.com/watch?v=DBg7DnQjjcY](https://www.youtube.com/watch?v=DBg7DnQjjcY)

~~~
endymi0n
Yada Yada Taxes are theft... oh my.

Just gotta love how this white, Australian born cis-male was educated in a
public school, going there every day over public roads, in a town kept safe by
public police, in a house that never burned down because of public
firefighters, never fearing saying the wrong thing in a free constitutional
democracy protected by judges, politicians and a military — lecturing everyone
about that TAXES ARE THEFT, BADLY SPENT and he did it ALL BY HIMSELF.

Smart boy, bravo you combined the vulnerabilities of three dozen international
laws to get down to 1,3% combined tax rate.

I don't even have a word for people like this.

Here's my take:

youtube.com/watch?v=4K5fbQ1-zps

~~~
SmellyGeekBoy
While I enjoyed (and somewhat agreed with) the rant, I'm not sure what his
gender, race or sexuality have to do with anything?

~~~
ck425
The odds are generally stacked towards straight, white, cis-males. Or atleast
we don't have the disadvantages and discrimination most other groups do.

