
No One Gets Rich by Shunning New Cars and Lattes - known
https://www.bloomberg.com/opinion/articles/2020-01-13/no-one-gets-rich-simply-by-cutting-personal-spending
======
CPLX
You get rich either by being in the absolute top echelon of your field
_assuming also_ that you are in a lucrative field, by ownership of the means
of production, or by inheriting or marrying into it.

Those are pretty much the choices.

~~~
onlyrealcuzzo
Edit: of course people want to complain. Read the Black Swan. It'll make you
happier. The world isn't fair.

~~~
newfeatureok
This post is so out of touch with reality I don't know where to begin. I also
work at Google, making a similar amount as you do. To suggest that all you
have to do to make $400K+ is "just know what to do, know where to be, and be
willing to put in a lot of time and effort" is just ludicrous.

I guarantee you, and anyone else reading this, that with very little
information I can predict with high accuracy how much money you make.

\- Where you were born

\- How much money your parents make

\- Your health status at birth

\- What college you went to, if applicable

\- What you majored in while in college, if applicable

\- How much your prioritize making money

I hate to say it, but the #1 predictor of your income is your parents' own
situation. So if you want to make more money, be born to better parents. They
will gift you the health, genetic advantages and socioeconomic circumstances
that will statically make you succeed.

For everyone else, understand the rules of the game and bend them as much as
possible. One thing I hate about working at Google is the sheer amount of out
of touch engineers here. Everyone is so nice and friendly, but as soon as you
talk about anything related to money you can see that some people are living,
in a matter of speaking, on another planet.

EDIT: Looks like the post was edited to be removed. Basically the OP was
saying he made 400K+ at Google and their significant other made another 200K
as a car salesperson and they are both "run of the mill" at their jobs. The OP
then goes on to say that if you try hard enough it's pretty easy to get to the
position their at.

Ironically the reaction of removing the post is exactly the same sort of
reaction I get in person in when money or money related matters is ever the
subject of a conversation with someone who is an engineer at Google. If a non-
engineer is in the conversation the engineer will just say life isn't fair and
leave.

~~~
paulpauper
IQ matters a lot too. People who make a lot of money tend to be smarter than
the general population, such as doctors or software developers. A car salesman
may make $200k but these tend to be huge outliers. The median tech workers
does better than the median car salesman. Commission work is a bitch.

~~~
claudeganon
Meanwhile, the truly wealthy pass down fortunes to their children who show no
outward signs of exceptional intelligence or skill.

I’d also imagine those with the highest IQs in American society are academics
in STEM fields, who are hardly rich by the measure of our current inequality.

------
IAmGraydon
You shouldn't shun nice things, but you should definitely shun buying those
things to prove anything to anyone. That is the disease that so many people
(at least in the US) seem to have now worse than ever. Stop using the little
money you have to prove to others that you have it. Isn't it funny how people
will bankrupt themselves to try to make people think they aren't bankrupt?

~~~
pwg
Much of the premise of the 1996 book "The Millionaire Next Door"
([https://en.wikipedia.org/wiki/The_Millionaire_Next_Door](https://en.wikipedia.org/wiki/The_Millionaire_Next_Door))

------
Thriptic
This seems like a silly article. No one is making pronouncements like "you
should never ever buy a new car regardless of your income / wealth" or "not
making small daily purchases like lattes is the cornerstone of a sound
financial plan". What they are saying is that you should be aware of how much
those purchasing habits ultimately cost you and make an informed decision. A
lot of people who are not Kawhi Leonard never consider how such purchases
impact their financial well being.

------
mikedilger
Spending scolds don't just come out and tell people to not buy new cars or
lattes. It's almost always in response to a complaint by someone that they are
having trouble making ends meet. The advice is spurned because they aren't
atually trying to solve a near-term budgeting problem, they really are just
expressing jealousy of richer people, and in particular jealousy of their
richer lifestyle. As such, any advice suggesting they adjust down their own
lifestyle (which is easier than trying to earn more, as it is more fully under
your own control) is to them offensive and is going in the wrong direction. I
take this from two data points in my personal dealings, which is a small
dataset, but considering I've never had anybody actually need and use
budgeting advice I suspect it's broadly true.

TO ADD: I'm not saying nobody has a budgeting problem, I'm saying that those
who don't take seriously the advice to curtail spending probably have more of
a jealousy problem than a budgeting problem.

~~~
zozbot234
"Having trouble making ends meet" and "being dissatisfied with one's
disposable income" are simply orthogonal issues. Fixing your budget is a way
to deal with issue 1. Living beyond your means does not _really_ address issue
2 either (your dissatisfaction and envy): it's just giving you additional
problems to deal with, that are going to stress you out and make it even
harder to earn more money. It's a really, really dumb thing to do.

------
0xff00ffee
The "don't buy a house" crowd really cracks me up. I bought my first house in
1991 for $100k outside of San Fran. I'm on my fourth house, having lived >5
years in each one. Subtracting MINOR remodeling, maintenance, and interest
(excluding mortgage interest ded.) I've cleared about $500k of tax free
profit.

Now could I start this today? It would be way harder for me to start this
today. The housing markets where the good jobs are have gone bonkers. But
pretty much everyone I know who's bought modest houses since the early 90's as
grown significant equity.

I'm excluding people that bought mcmansions or non 30-year fixed mortgages for
houses they couldn't afford. Most of them got cornholed in 2001 and 2009. I
think if you can do it, you should do it. The instances that led to fucking
were rare and predictable.

------
HarryHirsch
_No. 2. Prioritize investing for your future_

Simple, right. But how does this play out over a longer time horizon? How
about the family fortune? Is having a mortgage you can barely afford to live
in a decent school district and increase your childrens' earning power a wise
investment?

~~~
swiley
No? Even nice public schools aren’t great (there are some extreme exceptions
but most are mediocre.)

Send your kid to a good private school or homeschool co-op (essentially the
same thing) and stop doing dumb things with real-estate. Be involved in their
hobbies and try to communicate the important ideas you’ve learned, no school
can replace that and it’s one of the most powerful ways you can improve your
child’s future. (This is intuitively obvious, but I think there are also a
number of moderately recent studies to back it up.)

~~~
jcranmer
A "good private school" isn't cheap, about $20k/year on average [1]. If you
have 2 children, then spending an extra $3k/yr to get a good school district
is a _cheaper_ option than private school.

[1] Actually, I'm pulling this number from average private school prices. And
the average private school is probably only as good quality as "nice public
schools [that] aren't great." But I don't have a good comparison since the
public school district I grew up in contained several schools in the top 100
in the nation.

~~~
swiley
That’s why included the homeschool co-ops, they tend to be a lot cheaper
although they usually expect parents to do a lot of volunteer work.

There’s not just a monetary cost to moving to a nicer school district, often
that can mean a lot more driving which means absorbing a lot of risk
(accidents, maintenance) and burning more fuel and time.

------
nshepperd
> It is all about living within your means,

No, it's about _spending wisely_. Ask not "can I afford it?", but "is it
_worth_ it?" (taking into account, yes, your financial situation). This
article hasn't done much to convince me that a brand new car is worth the huge
markup.

------
jseliger
If you want a fine take on this subject, and one that is much better than the
comments so far, read _The Millionaire Next Door_.
[https://www.amazon.com/Millionaire-Next-Door-Surprising-
Amer...](https://www.amazon.com/Millionaire-Next-Door-Surprising-
Americas/dp/1589795474)

------
MisterBastahrd
I must have missed all those stories of people saving for decades to leave
fortunes behind.

Taking financial guidance as a middle class wage earner from a trust fund baby
is probably also a bad idea.

~~~
icedchai
Checkout out the financialindependence subreddit. You will find plenty of
average folks with 7 figures in savings and investments:
[https://www.reddit.com/r/financialindependence/](https://www.reddit.com/r/financialindependence/)

~~~
StavrosK
Yeah but what of it? If you're 35 and live frugally ($3k/mo) you still need
more than $1.3m to never work again, and that assumes you don't live longer
than average.

~~~
icedchai
That is definitely achievable by someone working in the software industry.
Perhaps not by 35, but certainly by 45 or 50, which is still very early
retirement.

------
CheckBlanket
Or, the subject of astonishing wealth inequality could be addressed instead of
blaming those already struggling.

~~~
planetzero
"blaming those already struggling"

Those struggling need to take some of the blame or the situation will never
change. I know many people that if you gave them a million dollars today, they
would spend a million and one.

------
esotericn
This really depends a lot on location I would think.

In the North of England an expensive car might cost as much as a house.

In London it might be two years' rent.

If you live in an area with high rents then almost everything else is
irrelevant by comparison unless you really throw money about, but that's not
true everywhere.

~~~
unsatchmo
In Silicon Valley, the down payment on a house could buy you a mansion pretty
much anywhere else in the US. In Florida, you could get a waterfront mansion
in many places.

------
grecy
The headline amuses me, because it implies the goal of life is to get rich.

~~~
enumjorge
I read it more as “Of the people who are rich, none of them got there by not
buying new cars and lattes”.

~~~
perl4ever
Some people get rich while buying new cars, but only every 15-20 years.

------
jaybeavers
The wisest man I met in my life was a 65 year old cab driver in Washington DC
who was about to retire with $3m in the bank. He saved 10% of his income from
the day he started working and didn't buy lattes or sports cars.

Yes, you most definitely _can_ get rich by not drinking lattes. This article
is a disservice.

Maybe for the author of this article, a $6 latte is "within his means". For
most of the world, it's not because they're not saving 10% of every paycheck,
so they should minimize discretionary spending until they do.

~~~
mikedilger
My friend and ex-neighbor Tim has worked in a blue collar machine operator
near-minimum-wage job his entire life. But he's frugal as hell, never buys new
things, considers coffee a waste of money. At 55 he has two houses and upwards
of a million in cash and investments. It not at all uncommon.

~~~
raydev
55 yo, you say? When did he buy his houses?

------
segmondy
But plenty of folks do save a lot by shunning new cars and lattes

------
dlhavema
I think the car rule is more often don't by a 50k car if you make 50k a year.

Also related, cars go down in value. They are cool to own but by no means an
investment. They are a utility to get you around and more specifically to your
job that actually does make you money. The biggest rule though they stated
first is huge. If you are making 300k a year, buy that 50k car or save up for
a relatively "short while" and get a 100k car.

~~~
bluedino
As someone who wasted a large amount of money on cars in his younger years...

The problem with buying a $50k (or whatever the vehicle you want) car, is that
you will probably grow bored with it and want another one in two years.

And chances are that $50k car is going to depreciate like a rock. And be
expensive to insure. And you'll also have the bad habit of spending even more
money on modifications/customizations etc.

Buying a brand new, expensive vehicle isn't the worst idea if you keep it for
ten years, drive it every day, etc. But if it's a thing you drive a few times
a month, is impractical, and you get rid of it in 1-3 years for the newest
model, it's financial suicide.

I never got $35k of 'enjoyment' out of a new car purchase. And they aren't
brand new for very long.

------
bitxbitxbitcoin
The title should be "No One Gets NBA Basketball Player Rich by Shunning New
Cars and Lattes," but that wouldn't get as many clicks.

~~~
loeg
And IMO, being able to retire and live comfortably with your savings is rich;
a good touch of frugality helps drive the very first point in the article,
which is: spend less than you earn. This doesn't require tens of millions or
more; a handful will do just fine, and not buying $40k cars is a great way to
help get there. Most of the world doesn't have this kind of retirement. A good
portion of the US doesn't have that.

------
jeremydeanlakey
When I was a student, buying lattes would have significantly hurt my freedom.
My stress level would be higher and I may have struggled to graduate before
running out of money.

After building a career, worrying about lattes was a waste of effort. But
buying a nice car would have limited my freedom. For example, I would not have
bought as much investment real estate and I would probably be >$500K poorer.

But worrying about buying new cars probably won't make sense for me soon.

Avoiding lattes and new cars was, in fact, very important for my finances (in
the past, but not now). The article acknowledges the importance of individual
circumstances:

> What should determine personal spending is the totality of the buyer’s
> financial circumstances.

But the headline risks misleading people.

------
jknoepfler
What a tone-deaf and bizarre article.

It begins with a straw-man: "as I financier I often encounter people who
equate buying lattes and new cars with financial suicide"

It then boldly introduces a distinction: there's a difference between spending
and spending beyond one's means... literally, and I quote:

> Simply saying no to consumption is lazy and thoughtless. What should
> determine personal spending is the totality of the buyer’s financial
> circumstances.

I don't think anyone lives in this simple-minded universe, torn between the
deadly sin of exuberant spending (on things!) and the austere life of
impoverished simplicity.

Money is a means. It has no intrinsic worth. We all understand this, keenly.

------
chrisgd
Teach your 18 year old to pick 5 companies they think will be around in 15
years. Stick some money into each and don’t touch it. Taking money out of
great stocks because I thought it was too expensive has been the greatest
mistake I made

~~~
ryanwaggoner
Statistically, your 18 year old would be much better off in a Vanguard broad
market index fund. The chances that they’re going to pick 5 companies that
outperform the market is pretty remote.

~~~
chrisgd
But a concentrated portfolio is actually more likely to beat an index. So
besides a 401k, do what I suggested

~~~
ryanwaggoner
Got a source on that? It contradicts most research I've seen. Obviously the
_right_ concentrated portfolio will beat an index...but that's the trick,
isn't it?

------
kyleperik
I don't think it's correct to say it's not good to buy lattes or new cars, but
I think we should be aware of what it costs you verses the alternative.

I think it's common knowledge that new cars deprecate extremely quickly, so
for most middle class individuals it's better to go with a used car to avoid
losing loads of money in the long run.

A medium latte costs at least $3. For daily drinkers that's about $90/month,
which is at least triple the value of the beans and milk it took to produce.

Frugal living alone doesn't make you rich but I think it can really help you
if you're in debt (like most Americans)

------
smallcharleston
I wonder how people become so deluded that a major news publication needs to
tell them this. Surely if it were reasonably easy to become rich by refusing
lattes, several people from your social circle would have done it already and
you could just ask them.

------
jmathai
A good size of the population should be able to get to $1m-$5m of net worth by
retirement by being disciplined with a 0-based budget, avoiding debt (mortgage
is an exception) and steadily investing in your retirement.

Keep it simple.

~~~
HarryHirsch
Yet the median balance that fiftysomethings carry in their 401(k) is 60 kUSD:
[https://www.investopedia.com/articles/personal-
finance/01061...](https://www.investopedia.com/articles/personal-
finance/010616/whats-average-401k-balance-age.asp)

That tells you that it isn't easy to save an adequate balance for retirement,
despite what Suze Orman and all the other avocado toast shunners tell you.

~~~
jandrewrogers
Net worth would be more instructive than 401(k) balance, particularly since
many people do not have access to a 401(k) for much of their career. I know
more than a few people with meager 401(k) but large taxable accounts, real
estate, business, etc portfolios.

It is a mistake to conflate retirement accounts with investments accessible in
retirement. This is no different than the "Americans have no savings" trope,
which conflates having _savings accounts_ (which are an anachronism that many
Americans have no use for) with having access to cash-like liquidity.

~~~
HarryHirsch
It doesn't look much rosier when you look at net worth:
[https://www.federalreserve.gov/publications/files/scf17.pdf](https://www.federalreserve.gov/publications/files/scf17.pdf)

Median net worth in the 55-65 age bracket: 187 kUSD. Effectively, it's much
less than that because the lion's share of these 187 kilodollars will be
owner-occupied housing. Yes, you can sell up, but you'll always need a roof
over your head.

The political system will have to deal with the retirement shortfall in the
next 10 to 20 years.

------
paulpauper
\-- It's financial suicide to own a house

\-- Don't send your kids to college

Those two are especially stupid

------
DailyHN
No, but shunning new cars and lattes can give you the focus to do something
that does get you rich.

