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Golden Rules for Making Money (1880) (fourmilab.ch)
359 points by perceptronas 9 months ago | hide | past | web | favorite | 191 comments



One modern trick to earn a tiny bit of extra money: Use credit cards for buying/paying anything at all, never use debit cards or cash: Credit cards usually pay a small reward point for spends which can often be redeemed as a cash discount later, and also since the expenses go to the credit card, the cash in the savings account stay untouched till the day you make the credit card bill payment, which will keep earning interest for the additional days it remains in your account(Which may be a significant amount over long term, in a high interest rate country).

In some countries you can route large payments like insurance premium payments through the credit card. Sometimes insurance companies even have investment products which they claim are "insurance policies", that can be bought with credit cards too.


There is a psychological effect when spending money with credit cards. Spending physical cash hurts one the most, then debit cards, and credit cards cause the least hurt. It is very easy to overspend with credit cards, and leave the tab for future you to worry about.

Depending on how susceptible you are to such psychological tricks (and cashback is also a trick to make you spend more or hook you to the brand -- it is only offered because it is EV profitable to the bank), your advice may be neutralized or net negative for a large part of the population that lacks your strong self-discipline. One late fee and you wipe out all your profits (and your credit score).

Smart and risk-free to only spend what you've got ("pay as you go"), besides you help avoid a national credit crunch.

> Debt robs a man of his self-respect, and makes him almost despise himself. Grunting and groaning and working for what he has eaten up or worn out, and now when he is called upon to pay up, he has nothing to show for his money; this is properly termed “working for a dead horse.”

> It is all very well to say, “I have got trusted for sixty days, and if I don't have the money the creditor will think nothing about it.” There is no class of people in the world, who have such good memories as creditors. When the sixty days run out, you will have to pay. If you do not pay, you will break your promise, and probably resort to a falsehood. You may make some excuse or get in debt elsewhere to pay it, but that only involves you the deeper.


You have a point, but pay them off every month and you have a good credit rating for a (strictly defined) emergency.


In the Netherlands, credit cards aren't widely accepted because the local debit card system has no transaction fee. Without 3% card fees, the consumer prices are lower, so the whole country saves extra money.


In north america, I think they mostly (still?) aren't allowed to offer differential pricing - by law - which helped the rise of credit cards. There has been a lot of back and forth on this in law so YMMV depending where you are.


It's not about differential pricing. If a vendor has to pay x% on a majority of purchases, he will just increase the price for all purchases. So without CC everyone pays less, while with a majority CC customers, everyone pays more. While CC payers get some of that additional cost back as reward points. Overall everyone would be better of without CC though.


Not true since 2012.

https://www.nytimes.com/2012/07/14/business/mastercard-and-v...

More details here, but some states ban surcharges while allowing cash discounts:

https://www.cardfellow.com/blog/cash-discount-eliminate-proc...


Been to a gas station? Cash vs Credit pricing. My local beer store does the same thing.


I'm not pointing this out to be pedantic, but because I think it's interesting: it was actually not by law that merchants were not allowed to offer different prices for cash vs. credit card purchase, it was by contract.

That is to say, in the merchant agreement required to accept credit cards, merchants promised to the credit card companies that they would not charge users of credit cards more than cash payers.

As another poster points out, this anti-competitive bullshit was made illegal by law circa 2012.

These kinds of coercive/collusive agreements among a cartel of providers of a particular type of service worry me deeply, especially when a previously-luxury service (e.g., credit cards) becomes semi-necessary infrastructure for operating in the modern world. For more on this type of problem, I encourage you to read about the unbanked [0] and the challenges they face.

Despite how much better they make my life, I also look at the success of Uber, Lyft, AirBnB, and other platforms with worry, precisely because they are in many cases creating semi-necessary infrastructure in the private domain. Individuals can already be banned from Uber [1] and Lyft (and Google [1], etc.) without any legal recourse, which also means by mistake because you are treated as guilty until you can prove your innocence, and innocence is usually impossible to prove.

Here's one (hypothetical and admittedly unlikely) future I worry about: autonomous cars rule the world, 99% owned by four companies (Uber, Lyft, Waymo, ???) that provide Uber-style transportation services. There's no public transport anymore (all outsourced to those four, it's much cheaper than dealing with public transit unions!) and so to get around more than walking distance requires being in the good graces of at least one of those four companies.

Poor John takes a ride in an Uber, gets sick from something he ate in earlier that day, and makes a mess in the car. Uber bans him for this infraction, and shares his name on a ban list (e.g., credit reports) so now John is banned from transportation, and has no recourse (e.g., Google's Gmail bans) -- for the simple mistake of eating undercooked scallops, John is now royally fucked because our infrastructure is outsourced and our society has no say.

I don't expect this future to come about. I expect heavy regulation of these semi-necessary infrastructure companies, and I expect it will come soon. GDPR is one example of this pushback, perhaps not the best example. But I welcome more.

[0]: https://en.wikipedia.org/wiki/Unbanked

[1]: https://www.elliott.org/problem-solved/i-am-banned-by-uber-c...

[2]: http://www.jonasblog.com/my-gmail-account-got-deleted (among many)


There are still laws at the state level in the US that make it illegal for a merchant to charge more for credit cards. I lived in Colorado when the law passed there. It was impressive marketing by the credit card companies under the guise of consumer protection. Sucks because most people fell for the propoganda and now it's law.

  Colo. Rev. Stat. §5-2-212 
  “(1) Except as otherwise provided in §§24-19.5-103 
  (3) and 29-11.5-103 (3), C.R.S., no seller or lessor 
  in any sales or lease transaction or any company 
  issuing credit or charge cards may impose a surcharge 
  on a holder who elects to use a credit or charge card 
  in lieu of payment by cash, check, or similar means. A 
  surcharge is any additional amount imposed at the time 
  of the sales or lease transaction by the merchant, 
  seller, or lessor that increases the charge to the buyer
  or lessee for the privilege of using a credit or charge
  card. For purposes of this section, charge card includes
  those cards pursuant to which unpaid balances are 
  payable on demand.”


I also live in Colorado. It is still legal for vendors to offer discounts if you do not use a credit card. Some gas stations have lower prices for gas with cash versus card. If you are buying something you bargain for (e.g., furniture), you may be able to negotiate a lower price with cash versus card as well.


FTC clearly states merchants can offer discounts for cash other payment methods:

https://www.ftc.gov/tips-advice/business-center/guidance/new...

>A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously.


I was in NL a few days ago. The taxi driver asked me to change me €5 extra for a €10 ride. Of course I declined and paid what was in the meter. Stealing is not ethical. If they don't want to use cards then they should remove their VISA/MC stickers and we will use other ride services (or a tram!)


€5 seems high, but it's fairly common in eg Australia for smaller merchants (corner shops etc) to charge a card processing fee if your transaction is below a minimum threshold, usually $10.

The driver was probably trying to cover the transaction fee, it's not like most taxi drivers are raking in the big bucks.


This advice is specific to the US and maybe a few other countries.

In most other countries, the general idea is that you should be saving money and a credit is the opposite of that. As a result, you are not likely to be offered more than "no fees" for your credit.

Note that in many countries, debit cards are called "credit cards" and US-style credit cards don't exist.


Note, though, that debit and credit cards are named so from the position of the lender, not the cardholder.


I'm against this practice because of two things:

First, you are selling a little bit of your privacy, the bank you know all your purchase patterns and even though this seems not to be abused it creates a precedent that I do not like.

Secondly, every time that you buy things with your credit card the bank change the business a small fee, so in a way you are making the 'rich' more richer and the 'poor' more poorer.

I believe that these two thing will make me use cash forever.


> every time that you buy things with your credit card the bank change the business a small fee, so in a way you are making the 'rich' more richer and the 'poor' more poorer.

I used to work for a small "mom n pop" style computer store, and did the cash drops most days. My understanding was that the cash handling fees were roughly the same as the card fees. Arguably card processing was cheaper for us,and less error prone (card machine hooked up directly to the till means I won't accidentally give the wrong change when I'm hungover, for example. )

Most of the time you see steep charges for paying by card (e.g. taxis) theyre related to tax avoidance - if you pay cash thryll just pocket it and not log it as a trip, whereas if there's a card payment there's a paper trail.


That's technically tax evasion, not avoidance. The former is illegal.


Apologies you're right. I'm unable to edit my previous messagr to fix it unfortunately


Cash comes with a fee; armored trucks, safes, money-handling mistakes, etc.


Don't have a source on hand, but I remember when I looked into this that that extra spending on cash that you mention is dwarfed by the ~2% charged by e-payment processing.


In some countries there are no additional fees if you pay with credit card.


Really? How would that even work? Somebody has to pay the transaction costs...


I'm not aware of any countries where no fees at all would be levied, but to provide two examples from Europe:

- In the EU, interchange rates are limited to 0.3% [1] for credit card transactions at physical terminals ("card present transactions"). That's not free, but it's an order of magnitude below US levels. Caps for other payment methods (card not present transactions and transactions made with debit cards) range from 0.2 to 1.5%.

- Some banks, or groups of banks, operate their own schemes (i.e. payment processing networks competing with Visa and Mastercard), and generally achieve lower fees. See [2] for one example where the price per transaction starts at $0.23 and goes down for transactions below $10, and for customers processing more than 10k transactions per year.

[1] http://europa.eu/rapid/press-release_IP-18-6655_en.htm

[2] https://www.postfinance.ch/en/business/products/accounts-rec...


May be the merchant absorbs them, may be the bank does not charge them..


No additional fees, but they get around that by offering discount for cash.


What I see in some countries is same price for cash or card.


Visa/Mastercard have a rule that you can't charge extra for using a credit card. If you find a business doing so you can report them and they will get the credit card facilities yanked.

But you can always offer a discount for cash. So some places do this to get around that rule.

If you're buying in cash you can try ask for a discount. If you're not asking you will get charged the same price they can't offer it out of the blue.


The only (imho) benefit for a credit card is the safeguard and the ability to get your money back.

I have stopped using credit cards for more than a decade.

In the UK I bank with RBS and when I have fallen victim to a fraud (e.g. my card been cloned or an online service stupidly saving more data than they should) I always gotten my money back.

I understand collecting points, but a debt is a debt and a credit card is a gateway to debt. Cash is king!

Edit: by 'cash' I mean debit card, not carrying £1000 on me :)


Offtopic, Frank Abnegale ( Catch me if you can fame ) also says the same thing in his [1] lecture at Google. The whole lecture is also pretty interesting.

One of the best google talks I have seen.

[1]: https://www.youtube.com/watch?v=vsMydMDi3rI&t=3264s


Didn't people abuse this one time to by buying $1 coins from the US Government with credit cards and then immediately re-depositing them into their bank accounts? They were essentially pocketing a fraction of the merchant fees the govt had to pay in order for people to buy the coins with credit cards.


Yes, and (in the US) money orders too, at USPS.

Then, USPS realised what was happening, and blocked them for purchase on credit cards.

The “manufactured spend” community (who cycle money through cards to get cashback/points without really spending money) then started buying prepaid debit cards & gift cards on credit, then buying money orders on gift cards, then depositing the money back in their bank.

That came to an end a couple of years ago when prepaid cards were also blocked: https://www.reddit.com/r/churning/comments/7ac5t9/doc_link_n...


What about fees?

Not sure about US, but I think in NZ all credit cards with cashback have fees. And I remember there was a research or something concluding that you had to spend at least ~$3000 (don't remember exactly) per month using cashback credit card to break even.

Also, credit cards are not accepted everywhere. And often there is a minimum transaction amount as well.


In the US we have a much better system. The overwhelming majority of buyers spend ~3% more on every purchase and then wealthy cardholders who can attain the requisite credit ratings for rewards cards are given a cut of this 3%. The rest of it goes to the card companies bottom line. A truly magnificent system.

/s


You don't have to be wealthy to have a good credit score and/or a rewards card. It's pretty easy for anyone to get a decent rewards card nowadays. In fact I'd say the system is more perverse in that it rewards good credit to those who are slaves to credit, not those who are fiscally responsible.


The Capital One Venture Rewards card gives me 2% back on all purchases (I'm in the US). It comes with a $60 per year fee. So, if I spend more than $3,000 on the card over the course of the year it's a net positive. Now, they have access to all of my purchase data but I get around $700 every year to spend on travel. I've weighed the costs/benefits and it's worth it to me.


Why not get the citi double cash, or fidelity 2% back with no annual fee?


to get $700 in rewards, you have to charge $35,000 on it, that's almost $3,000 monthly. I guess that would be doable if including rent and utilities (I doubt you can pay a mortgage with credit), but yes, more than the annual fee is definitely easy. Especially the first year in which you get the 50,000 bonus plus no fee.


The fee for the ANZ Cashback card is around $200, so you need to spend around $20k/annum to break even.


It's $60 with a cashback cap of $300/yr (i.e. only the first $30,000 spend is counted), or $125 for unlimited cash back.

Still not great, but it's only $6000 spend to break even on the lower-tier card. Buying groceries each week will be close to covering it.

----

Edit: Oops, it's more complicated as it's not always 1% cash back:

  <$5000: 0% cash back.
  <$10,000: 0.5% cash back.
  $10,000+: 1% cash back.
It's not a marginal rate like taxes, so break even point is at exactly $10,000 when your payout jumps from $50 to $100.

https://www.anz.co.nz/personal/credit-cards/cashback-visa/


Even without cash back, the interest earnings could be something, a 1000$ deferred payment made through credit card may give 4$ to 5$ interest payment(assuming an interest savings interest rate of 5%, some countries have much higher interest rates), while that cash is sitting in the savings account, waiting for the credit card billing cycle to complete.


I think in India, there is no extra charges if you pay via credit card at most merchants, i.e you pay the same amount as what you would pay with cash.


Same in NZ, but credit cards with cashback have monthly/annual fees.

For example, ASB (bank) asks ~$150 per year for a cashback credit card. How much do you get from cashback on average?


I have a card with Barclays I discovered through uber. I only use it for uber rides and at restaurants. I have enough rewards points to get a $25 Amazon gift card at least once a month. Last month it was $50.

This is such a great tip.


Yes, but this comes with a caveat: keep an eye on your credit card spend and make sure that you never consistently spend more than 2/3 of your credit line, otherwise your credit score will be negatively impacted. In the US market they push you to use credit cards as much as possible, so for instance if you have a credit line of 5000$ you would expect to be able to spend up to that amount with no problem (as long as you pay it back) but I then found out about the 2/3 magic spend threshold oO


These cards typically have annual fees. The rewards are worth it if the volume of purchases is sufficient to yield benefits in excess if that fee, e.g. $100 a year.


If you have good credit you can easily get 1-2% cash back with no annual fees.


And it's much easier to get your money back from a fraudulent credit card use than debit card use.


that's a prisioner dilemma, actually.

Use credit card today, and you save some negligible money today, while prices go up since the fee is now a sure requirement for all vendors.

Avoid credit card like the plague, and operators will have a harder time justifying 3-12% fee from vendors, lowering prices for everyone in the long run.


The moment someone starts telling me to optimize for keeping my money in a savings account a little longer for the interest as financial advice I stop listening.

Maybe it's just my country (USA), but savings accounts are easily the worst place I have ever kept significant sums of money. They yield basically nothing for the depositor.

You can easily beat savings accounts just by trading a single tech stock with minimal exposure. Dumb strategies like riding the climb in the day or two approaching an anticipated earnings call and selling before the actual call to avoid risk will already net you a few percent per call. If you did that once per quarter, you can achieve +10% in a year without having any special skills or knowledge while barely even exposing yourself to the market, leaving your money as liquid cash in the brokerage account the rest of the time will still destroy any savings account I've seen.

Savings accounts are useful for isolating your funds from your checking account as a self-control measure. Once you're beyond struggling to save money at all and fully grown up, the utility is basically nil.

They're obsolete in a world with services like E-Trade offering a checking account w/debit card that refunds ATM fees and a linked brokerage account serving as both isolation from your checking account with the ability to trade online using those funds.


Interesting snippet of wisdom from the article:

> The real comforts of life cost but a small portion of what most of us can earn. Dr. Franklin says “it is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself I should not care for fine clothes or furniture.”

In reading a few of the chapters, it was really interesting to see the dollar amounts written. They seemed rather high for 1880.

> She has a nice one thousand dollar camel's hair shawl, and she will make Smith get her an imitation one, and she will sit in a pew right next to her neighbor in church, in order to prove that she is her equal.

Inflation calculators put that camel shawl at nearly $25,000 (2019 dollars).


There used to be a lot fewer luxury goods and they were a lot more expensive because most came from "exotic" far away places (and many were valued solely because of it). Camel's hair, especially, likely wasn't an automated textile like cotton and it's a rather expensive material to begin with (a good shawl would likely run into four figures even now).

$1,000 is roughly two to five years average income (depending on the state) in 1880 so if the average family income right now is ~50k and a family of professionals makes 250k, it's not that far fetched. Especially when you consider that church was the important social outing for a majority of the population.


The world we live in is an astonishing exception compared to pretty much any point in human history and one of the outcomes of this is that our instinct for price has been greatly skewed by the cheapness of things because of mass-manufacturing. Though certainly true in some cases, it's not that good, quality items of sturdy construction have gotten more expensive, it's that everything else we use normally -- all the cheap plastic shit from China -- is so cheap to manufacture, that the quality stuff seems so expensive.


Our Fake History podcast has an excellent series on PT Barnum. He was something of a genius promoter (and self-promoter). Today he's best remember for his circus act, but that was just one of a long line of productions he put on.

In Barnum's parlance, a "humbug" was a practical joke played on his audience. A less charitable interpretation is that of some of Barnum's humbugs are downright fraudulent. It's a fun story.

Episode 1 of 3 is here: https://ourfakehistory.com/index.php/season-2/episode-32-who...


Shameless plug, free nicely formatted epub of The Art of Money Getting for your ereader of choice at Standard Ebooks: https://standardebooks.org/ebooks/p-t-barnum/the-art-of-mone...



Isn't that interesting, makes me want to post a link to "How to Win Friends and Influence People" I wonder how great P.T. Barnum would be at creating click bait today as after almost 150 years his writings keep getting posted over and over again! He definitely had a gift for capturing people's attention by exploiting their base desires.


This is an interesting point you may have raised regarding re-post. At one end, repeated information will lead some to think it is counter-productive, think it is a karma-hungry person or lead to backlash. On the other end, there are many individuals that can benefit from older articles that they have yet to see.

Where to find the balance? We have yet to see.


Reposts are ok after a year or so. This in in the FAQ: https://news.ycombinator.com/newsfaq.html.

The reason for providing links like that is simply that people find previous discussions interesting.


> Young men starting in life should avoid running into debt. There is scarcely anything that drags a person down like debt. It is a slavish position to get in...

Well, that put student debt in perspective no ?


He clarified this point it a bit in the second paragraph:

"Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. “If a young man,” he says, “will only get in debt for some land and then get married, these two things will keep him straight, or nothing will.” This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided"

In some ways, student debt is similar to land in that it can provide a return on investment that allows for paying off the debt over time. The main difference being that land is tangible and can be sold to pay off the debt completely.

Borrowing for food, clothing, and other items that tend to be used up or worn out before they're paid off does seem like a terrible idea.


Buying the wrong land, or overpaying for it, will still get you into trouble. You might be able to sell it, but not for as much as you paid for it. Student debt has the same problem: get the wrong degree, or overpay for the degree you've gotten, and you'll lose in the long run.


> In some ways, student debt is similar to land in that it can provide a return on investment that allows for paying off the debt over time.

Comparing student debt to buying land is funny.

At least with land you are guaranteed to be the owner of an asset. Something physical, a location, that other folks might at some point pay a price for (regardless of what you paid).

Student loans don't guarantee anything. :)


>Student loans don't guarantee anything. :)

No, not even a pass.


Many full-time students use their loan funds to pay for food and clothing, in addition to tuition and housing.


So?

In my case the choice was use student loan money to pay for living expenses (which were extremely meager) while in college or not go to college at all. It was part of my educational investment.

It was totally worth it, the loans are long paid off, and the investment has paid untold dividends in the form of a salary I wouldn't have the chance at if I didn't go to school.


I recently discovered a co-worker of mine who did not attend university for programming is paid nearly the same wage as myself, with $40,000 in debt due to higher education.

He went to a several month long intensive coding bootcamp, with tuition fees for the entire course is between $10-15k

For comparison, I am paid $58/hr with benefits, my co worker is paid $50.

Higher education is vastly overcharged and overrated.


You can lose access to grants if you work enough to support yourself.


Barnum himself spent much of his life in and out of debt. He was a great showman and many of the performances he arranged were extreme financial successes, but he was a profligate spender and he was always one disaster away from going deep into dept.


Sounds familiar to my modern ears. I wonder who Barnum would be today?


"Do as I say, not as I do!"


More charitably, perhaps he is relaying advice he learned the hard way.


Is this a good reason to go into debt?


Strange inference of yours, but regardless, the answer is "no", and I'm sure Barnum could provide the anecdata were he still able to communicate.


It is weird to see this mindset on a site that is basically founded on the idea that taking on debt can be valuable. What would the startup scene be like if everyone avoided debt at all costs?


Selling equity in a startup is very different from taking on debt, with debt your committing the business to a strategy, if it doesn't work the business will probably fold.

While this makes sense for capex intensive businesses. It's an irrational choice for a tech startup that may need to pivot, partner or be acquired. For those choices you need a source of capital with similar incentives as the founders.


> Selling equity in a startup is very different from taking on debt, with debt your committing the business to a strategy

wha? selling debt you are committing yourself to a financial obligation, selling equity you are committing yourself to a strategy in the hope that that strategy will be successful.. yes, it is not binding fiscally and so the strategy can be renegotiated without penalty, but that doesn't by proxy imply the converse that debt inherently requires a fixed strategy..

this is why you can get cash flow/line of credit loans based simply on historical accounting data, etc..

that said getting loans under false pretenses is also fraud. YMMV


If the equity sold has preferred returns or liquidity preferences, then the impact of the compounding cost to common shareholders is not too dissimilar from the impact of debt.


From a business perspective equity is just debt with less defined terms. That gives the business more flexibility and might allow it to pivot, but the obligation to pay back funds in some way is the same.


A company taking on debt and yourself as a person are wildly different things.


Even though many startups use convertible notes... it's not real debt that will haunt you for years to come and compound. It's selling equity.


Debt and investment are two very different things.


Dave Ramsey says the same things.


There is nothing new under the sun.


Also mortgages.


the very next paragraph:

> Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. <snip>

> This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided.


Secured debt and unsecured debt are different animals entirely.


Are mortgages really debt though? Because even though you owe, you also own as much as you owe (except during a market downturn of course). Whereas debt for a depreciating asset (like a car, or most things that go on a credit card) are what I would consider "real" debt. In other words, keep your net debt low or non existent (when looking at a balance sheet).


If you owned a house in 2008, I assure you, you'd feel that your mortgage was real debt.

Or if you ever got laid off.

Or if you ever got injured or severely sick and found yourself with shocking hospital bills.

When life hits you with something like that, suddenly that monthly payment, and the risk of foreclosure, bankruptcy, and severely damaged credit, all looms large over your head like the Sword of Damocles.

Yes a mortgage is real debt.


Sure, but most people who do take on mortgages do just fine. There will be exceptions but on the average, taking on mortgage to purchase a home in the US is generally a safe bet.


The majority of what you said is true of renting also.


Yes, they certainly are a debt, but they are, in general, considered a "good debt." Educational debt and business startup debt are also, in general, considered "good debt."

https://www.investopedia.com/articles/pf/12/good-debt-bad-de...

That being said, it's a general statement, specific cases of those can be "bad debts" if they are taken out recklessly and/or without forethought and planning and budgeting.


"Are mortgages really debt though? Because even though you owe, you also own as much as you owe (except during a market downturn of course)."

You also pay interest, which could be a huge amount (depending on how quickly, if ever, you pay off your principal).


The interest though isn't debt -- as soon as you sell the property, you only owe at that time the remaining balance, not the total amount of interest you would pay. In other words, interest is what you pay to rent the money used to buy the house.


==Because even though you owe, you also own as much as you owe (except during a market downturn of course).==

Do you own that much? Let's put some real numbers on this. You buy a $350k house, and put down $70k (20%). That leaves you with a $280k mortgage at 4%. This gives you a monthly mortgage payment of $1,337.

If you pay that monthly, you would own 51% of the house ($175k of equity) some time in the 16th year of your mortgage. After making 188 mortgage payments. Note, this doesn't include housing value appreciation.

COST

20% down - $70k

mortgage payments ($1,337 * 188) - $251,356


I suspect the parent is talking about leverage; and, your view of cumulative mortgage payments ignored the time value of money.


Of course it's debt. But it is secured debt, which is a bit of different risk profile.

Never forget though, you are paying quite a bit for the use of that money (i.e. the banks). This is mitigated in a rising market, but lots of houses (well land, really) don't appreciate fast enough to counter this.

Not to mention the additional costs. It might be more accurate to think of your house as a depreciating asset (the house) bundled with a (hopefully) appreciated asset (the land it is on)


Sure, you pay interest on the loan. By the time the loan is paid off you have generally paid well in excess of the original loan amount back to the lender. Borrow 100k at 4% for 30 years and at the end you have paid $171,870. Maybe the home appreciates at the same rate, maybe not. You are right in that it is better than credit card debt my a mile though.

epr 9 months ago [flagged]

> I do not speak of merchants buying and selling on credit, or of those who buy on credit in order to turn the purchase to a profit.

Did you really just not read the article at all? He is clearly referring to things like consumer debt rather than investments.


Could you please follow the site guidelines when posting here? Your comment would be fine with just the last sentence.

https://news.ycombinator.com/newsguidelines.html


All praise be unto this fourmilab.ch website. This is the old internet. The internet that I first fell in love with. Its purely about the information, just an honest straight provider of information. Its a truly loyal ode to the term "information highway". These types of websites are so rare now.


> Money is in some respects like fire; it is a very excellent servant but a terrible master.

Some great quotes in there.


Funny how some of it seems like good common sense and then you get

> Some men have a foolish habit of telling their business secrets. If they make money they like to tell their neighbors how it was done. Nothing is gained by this, and ofttimes much is lost. Say nothing about your profits, your hopes, your expectations, your intentions. And this should apply to letters as well as to conversation. Goethe makes Mephistophiles say: “Never write a letter nor destroy one.” Business men must write letters, but they should be careful what they put in them. If you are losing money, be specially cautious and not tell of it, or you will lose your reputation.

In 2019, it seems openness and transparency (eg Buffer) can form the foundations of a profitable strategy


In The Count of Monte Cristo, the Count ruins Danglers' fortune via bond market manipulation per his revenge plans. One of the ways he keeps track of how the ruination progress is via Danglers' own words. At first, Danglers boasts loudly in parties about how much he has lost, but eventually he is cowed and no longer talks about money or his fortune. The Count keep track of his boisterousness as a barometer of his revenge and it's progress.

Its a great book and well worth the read, despite it's size.


The Count of Monte Cristo, is such a rollicking story from beginning to end, almost the entire 1300+ pages.


It is really a superheros story, just subtler and more dramatic.


In this case Buffer is also a result of selection bias, since you do not have data on more private companies. I'm also skeptical of the attribution of Buffer's success to their openness; Buffer is successful first and foremost because it's a good product that works and was released at an opportune time. The fact that they are an "open company" is likely, at best, a small marketing advantage.


"Those who know dont tell and those that tell dont know" - something an uncle used to tell me as a little kid.



>In 2019, it seems openness and transparency (eg Buffer) can form the foundations of a profitable strategy

As an exception, not as a rule. Business espionage anyone?


I am yet to hear one concrete piece of useful advice on "how to make money."

The ONLY things I can say with certainty in life, as far as productive activities go is something like "workout, eat right, sleep enough, drink enough water." That's literally it.


This guy has plenty of concrete advice:

https://www.mrmoneymustache.com/category/mmm-classics/

It is very similar to "workout, eat right, sleep enough, drink enough water", as they are things that "everyone" knows they should do, but few have the will power and self discipline to actually do them.

Budget. Get your expenses under your income. Set aside an emergency fund. Pay off your debts as quickly as possible. Then start investing for retirement, house, kids college, etc. While avoiding new debt.

That's pretty much it. Dave Ramsey and many other advisers say roughly the same thing, including the introduction to Barnum's book:

http://www.fourmilab.ch/etexts/www/barnum/moneygetting/money...

Ramsey pretty much says this stuff is simple in his course, and spends most of his time on the emotional and motivational aspects of putting the advice into practice. For example, he advocates paying off your smallest debt first, not the one with the highest interest rate. This is solely for the motivational impact, because seeing a debt disappear completely will inspire you to keep going and attack the next one, even if it's sub-optimal from an economic perspective.


The advise Dave Ramsey and Mr. Money Mustache give are really only applicable once you already did the hard part and built a steady career. Their advice isn't going to help someone who works at McDonalds with several kids with several deadbeat baby daddies and no family support get out of poverty, nevermind build wealth. The fact that most of Mr. Money Mustache's readers (who answer surveys) are engineers really reinforces that.

I'm not trying to pick on anyone here, I'm actually describing a good friend of mine.

That being said, I don't know what will, so I don't have any suggestions.



I am talking about real money, not upper middle class money.

"Budget. Get your expenses under your income. Set aside an emergency fund. Pay off your debts as quickly as possible. Then start investing for retirement, house, kids college, etc. While avoiding new debt."

This is mostly common sense. But I guess so is the workout / sleep / drink enough water comment I made earlier.


> I am yet to hear one concrete piece of useful advice on "how to make money."

Uhh... get a job?


Too many jobs, don't know which to pick.


A good way to make money is to sell a book about how to make money.


Reminds me of that dude who made a rather impressive amount of money posting classified ads on how to make money where the "secret methodology" being sold turned out to be a set of guidelines which simply instructed the buyer to follow suit.


Sounds like an urban legend, but I hope it's true.


Most of the MLM industry is based on this exact principle.


"Unless a man enters upon the vocation intended for him by nature, and best suited to his peculiar genius, he cannot succeed. I am glad to believe that the majority of persons do find their right vocation. Yet we see many who have mistaken their calling, from the blacksmith up (or down) to the clergyman. You will see, for instance, that extraordinary linguist the “learned blacksmith,” who ought to have been a teacher of languages; and you may have seen lawyers, doctors and clergymen who were better fitted by nature for the anvil or the lapstone."

#learntocode


Don't Blab >>> This chapter/paragraph goes against everything I believe in, the entire opensource community is based on sharing. I am an aspiring farmer with a tech addiction and if it wasn't for people sharing their successes through YouTube and a lesser extent farmers that write books, this "City Boy" wouldn't have survived my first year on the farm. I also agree Internet sucks in the country, but it's still better than encyclopedias!!


>> the entire opensource community is based on sharing

True. The primary purpose of open source is sharing, whether that is code or information. Open source is not opposed to making money, however making money is not the primary motivation for open source. It makes sense that best practices for how to make money can be different than the standard practices for open source.


And yet Barnum chose to publish "The Art of Money Getting" in the first place, breaking his own rule!

Here's what he said:

> Say nothing about your profits, your hopes, your expectations, your intentions.

So it doesn't appear that he's talking about sharing tutorials. Instead, he seems to be giving practical advice on not talking about money and business-tactics.


Good point, not sure why you deleted your comment. I will read the article when I get a chance. I did browse over it and found the line "there’s too many things that are important, even needed, or that fulfill us more than any profitable item, and yet are economically unsustainable." To be a sad but true statement. Sometimes I forget that I didn't get into farming to get rich, it is much more of a soul healing endeavour rather than a wealth accumulation exercise.


Hey sigmaprimus I'd love to hear more about your transition from "City Boy" to farmer! I'm thinking of taking the leap in a few years after saving "enough" capital. I can put my contact info in my bio if you have time to private message.


I am still in transition to be honest, I have finally got to the point that I am living full time on the farm now but have not managed to make a profit yet. Farming is a great lifestyle but the farming lifestyle is not a great business, not yet at least. I am planning on publishing a blog/vlog this year and will definitely share it with HN. If you are looking for some inspiration though, look into Joel Salatin,John Suscovich and Curtis Stone on YouTube.


Thanks for the link, it's a nice discovery. fourmilab.ch is a real website for hackers, lots of interesting things. Also, I didn't know its author, John Walker, creator of AutoDesk AutoCAD was living in Switzerland and still so interested in topics such as astronomy, C64, science fiction, Kerbal Space Program and more nerdy things.


I like how it begins with... "In the United States, where we have more land than people..."


Only people living in big cities think this isn’t still true.

If you so desire, huge portions of land in the country “flyover” USA are yours to be had for very cheap.

Of course it’s difficult to get internet there, so how will the millennials make it?


> Of course it’s difficult to get internet there, so how will the millennials make it?

Difficult to get medical care and water out there, so how will the Boomers make it?


Medical care isn't usually that far. You would have to be very much in the middle of nowhere to be very far from a decent hospital with a medivac helipad. Rural water coops are very common and you can always just dig a well.


Can you get a medivac to your appointment with the specialist?


If it wasn't for the urban dwellers flyover usa's subsidizing water, electricity, mail delivery, telephone, etc they would have a very different about the free market.


The obvious counter to that is: without flyover country, the cities would all starve to death (rapidly) and would not have had the energy necessary to have been built in the first place. To say nothing of that the population foundations of most US cities were seeded thanks to people moving from more rural, agricultural-heavy regions. Labor imported from the more rural areas directly helped to build the cities over time (and that process of rural to urban continues today, albeit slower).

It has been a fair exchange in fact.


Can you rephrase this comment? I couldn't follow it at all.


I think the argument is something like: It is not profitable to provide the current level of service to rural areas. Because of the high productivity of urban areas, we can redistribute resources and improve rural public infrastructure.


Beyond that, it required interference of the free market by the federal government

https://en.wikipedia.org/wiki/Rural_Electrification_Act


I sometimes think we should give the free market zealots what they want, as a punishment.


Some millennials are in their mid 30's. Isn't it time to pick on a new generation?


I mean, they're not wrong. I'm a millennial in my early thirties who actually owns several acres of rural land. I would love to make it my full-time residence, but can't because I can't get decent internet out there. I'm a software engineer whose company lets me work remotely, but only if I can actually do my job. Until I can get good enough internet/phone service to call in to meetings and reliably access various remote servers, I'm stuck in civilization.


This will hopefully change in a few years, esp. with low-latency GEO satellite internet coverage (SpaceX, and other competitors).


(I think you meant LEO, not GEO.)

I completely agree. It's funny that I didn't care at all about SpaceX and Oneweb before I bought this property, but they can't launch soon enough for me now.


Yes, I meant LEO (weird, can't figure out how I made that typo) -- or VLEO is the new term for what SpaceX is trying to do.


I was just talking about this in a different thread; I'm a similar age to you and my house is in a rural area that has mediocre DSL as the only internet option.

So, I rent an office in the nearest town. I have a quiet space to work and 5x better internet there. It's close enough to bike in when the weather is nice, and a pleasantly short commute the rest of the time.

It really is the best of both worlds.


Does that generation make enough money to be considered a market? Also conflating some to all, most millennials just turned 30 its the older ones mid 30s.


Millenial here. Did this happen with other generations? Where the term was just used as a derogatory way to refer to young people?


It happened for Millennials and Baby Boomers.

But not so much for the Greats, the Silents, and Generation X. My theory is that the Greats, the Silents, and Gen X were all wartime generations. The Silents and Gen X were also relatively small generations, there really aren't that many of them. Add to that the fact that all of those generations had some level of dispossession coupled with an even more impressive level of productive wealth creation, and you can kind of see why no one really picked on them as much as what we see today. The Greats were, well, the Greatest Generation. 'Nuff said there. The Silents were a wartime generation, born in the depths of the depression, who never really whined about their lot and because there really weren't many of them, they were, person for person, likely the most productive generation in our history. Generation X was given the name because they were the black spot. They were the first generation that would grow up to have less than their parents. They kind of just ran with it, and despite having war after war to deal with, ushered in one of the most transformative eras of wealth creation in mankind's history.

All that said, actual leadership of the country seems to skip over those kinds of generations. (With the exception of the Greats.) Not many leaders from the Silents or Gen X, but a large number of well known leaders from the Baby Boomers and even the Millennials. From Mayor Pete to AOC, the Millennials seem to outshine Gen X as far as leaders are concerned, for better or worse. In the same way, the Baby Boomers outshone the Silents to the point where the Silents are almost forgotten to history. Generation X might have been forgotten were it not for their technological innovations and achievements.

Anyway, that's my theory. So Millennials shouldn't take all the ribbing too hard, because if history is any indication, in the end, you'll likely be the ones in charge. Again, for better or worse.


Depending on who's definitions of birth date ranges you use, Obama might be considered a Gen X president.

Also, not entirely sure why there's a generation called "the Greatest Generation". We can say they were all war heroes and suffered etc., but there were also jerks in that generation who started those wars. We are all products of our time. It kind of sucks to just lump everyone based on their birth date and stereotype them.


It started with Baby Boomers. Generations prior to that didn't pay nearly as much attention to generational cohorts. The whole idea of generational cohorts feels like a marketing construct, and its adoption into the normal lexicon coincides with increases in middle-class wealth and expansion in the advertising industry.

Prior to boomers it was just "kids these days"...


I'm fairly sure that boomers were picked on in their formative years.


Boomers were very critical of GenXers, and vice versa.

I have no doubt that that pattern repeats into history. What one group uses as a slur, another uses as identity.


You can get satellite internet in the middle of nowhere. It's much harder to get water, power, waste management, medical services, and grocery stores.


I own several acres of rural land. Internet is by far my biggest hurdle to making it my full-time residence. Satellite internet is high latency, low data caps, and very sensitive to any kind of weather, all for more money than I spend on cable for my apartment in civilization. It's completely and utterly unsuitable for remote work.


Not to mention culture, night life and other non-home-bound entertainment, a variety of good restaurants, and perhaps real-life friends who share your outlook, experience, and interests.


If you have power then water is straightforward. Just dig. We’ve been doing that for hundreds of years.


I mean, that's a pretty big "if" qualifier there. Getting water might be easier than getting the power once you have the power, but that also means its harder than getting power because it requires an extra step. Also, it's straightforward, but that doesn't make it easy or cheap.

If you want to go to the ISS, become an astronaut is straightforward, but it's not exactly helpful.


> If you have power then water is straightforward. Just dig. We’ve been doing that for hundreds of years.

Spoken like someone who's never had to rely on a well in marginal country.

My advice: Drill your well carefully, put in a cistern, and buy a truck which can haul lots and lots of water.


It depends on where this land is. Many wells in the south never have problems running dry.


4G coverage is actually pretty good these days.


Can you rely on that as your only internet coverage though? Most of the "unlimited" plans start to degrade the service once you go over 20 GB/month. Of course, depending on what you are using it for it could work (such as ssh over vpn tunnel, which is low bandwidth usage, however OS updates can blow away your monthly data allowance in a short period).


I'm currently using Ubifi[0] and the experience has been pretty great so far. I'm a few miles away from the nearest cell tower and I consistently get real world download speeds of up to 10Mb/s, with usage in the 100s of GB per month. To be fair, I did need to buy a Yagi antenna to get those speeds to be consistent, but that is a distance issue, not an ISP issue.

Costs $89.99 and I can use my router anywhere in the US if I want to. I've even taken it on a roadtrip and plugged it into my car's AC adapter, continued to work like a charm.

0: https://www.ubifi.net


That’s good to hear. I went to a small college in Massachusetts that only had dial-up in 2008 and no cell service. The entire school shared a custom symmetric 10 mbit/s split over 500 people.

Man those were the days...


Couldn't you just get internet over satellite link? Of course there'll be lag, and perhaps lower bandwidth, so you might not be able to play multiplayer action games or download 4k videos, but you should be able to get the news, send email, and surf the web without too much of a problem.


For scale, you could just about give everyone in the US an Acre in Alaska and not even touch the lower 48.


Or an inch, and throw it in a cereal box: https://en.wikipedia.org/wiki/Klondike_Big_Inch_Land_Promoti...


Of course it's difficult to get jobs there, so how will you buy the cheap land?



Even the densely populated UK has significant proportions where nobody lives:

https://artplusmarketing.com/nobody-lives-here-united-kingdo...

Edit: I suspect the grid squares being used are of different sizes, but even so - the crowded bits of the UK are even more crowded than the overall population density would suggest.


They're about the same size: the UK map blocks are 1 km x 1 km

US: "the United States consists of 11,078,300 Census Blocks." The USA area is 9.834 million km², according to a well-known search engine.

So about .9 km² in average, roughly in line with "Of them, 4,871,270 blocks totaling 4.61 million square kilometers were reported to have no population living inside them".


Just a small observation but I feel important: This article has two titles, "Golden Rules for Making Money" and "Art Of Money Getting". You can "Get Money" without being productive, to "Make Money" is inherently productive.


"Once you have their money, never give it back."

https://memory-beta.fandom.com/wiki/Ferengi_Rules_of_Acquisi...


> We are all, no doubt, born for a wise purpose.

I've heard and seen this time and time again and yet there's no advice on how to find that purpose. It's always easy to say, "do what you love" but how do you find what you love?


I sense two questions.

1. What kind of role should I play? Should I be a doctor or a lawyer, a salesman or a programmer? This is the question that the chapter addressed, and I think this question is easier. It should be obvious whether you would rather be a salesman or a programmer. It can get harder as you try to discern between two similar jobs: sales or management, mathematician or professor.

I believe personality is partly biological, and you should try to go with your natural grain. The Myers Briggs theory helped me, although at first it was hard to grasp. The best way may be to do a web search for each of the 16 personalities, read a few descriptions, and decide what you are based on that, instead of taking the tests. The theory may be pseudoscience, but it seems close to the truth.

2. Where should I work? Should I work at a website for finding restaurants or in healthcare? Should I work at Uber or Lyft? Or a nonprofit? Should I found my own start-up? If so, what should its product be? I think this question is harder for most people, and I don't have a sure theory for how best to tackle it.

What I'm coming around to believing though is that you get no meaning out of serving yourself. Sure, you need to take care of your needs, but if you try to find a job to fulfill yourself, you wind up empty. Instead I begin to sense fulfillment when I focus on helping other people. So, maybe ask questions like (A) What am I good at, or what do I have to offer (this is question #1, above). (B) What needs are out there, and (C) What are the opportunities within reach to mix A with B? Maybe start with small steps.


I think it's terrible advice.

Do what brings the most value to others, that you have the talents to accomplish, and that you also enjoy doing. I think the intersection of those sets is the most likely place to find one's "purpose".

There are plenty of things you might "love" to do, that will leave you destitute and unfulfilled if you devote your life to doing them.


It has to align with your values, there is no point going to work on missile software if you are a pacifist at heart. The work needs to be meaningful.

There should be some element of mastery, you need to be challenged in your work but not completely out of your depth.

You also need a degree of autonomy, this is what makes most corporate life so miserable, they have so many rules you can't decide anything.

Money doesn't matter so much, most people adjust their lifestyle to their income and get used to it.


I am trying to get through the book "What is your WHAT?" by Steve Olser. It may be his way of making money, not sure what it will do for me. I also looked at the Goodreads website to see what other people who read this book recommended. Hope this helps.



Do lots of varied things, gravitate towards the ones you enjoy the most.


It simple your daily income must be superior to your outcome thats it


The first few paragraphs remind me of a book called "Your Money or Your Life", which provides a simple way of expense tracking that can help build up savings. I recommend it for anybody who likes money.


My favourite quote on wealth (not in this book) is "The best way to make a small fortune on the internet is start with a large fortune".


That is frequently quoted with regards to the restaurant business.


Personally I like Benj. Franklin's maxims better. Much the same content, but pithier.


I found this to be insightful and helpful. Thank you for sharing.


1- Be born rich 2- ? Whatever 3- Profit


Sadly, this is to a large extent, the correct answer. Opportunities depend on income level when born. Citation:

https://www.brookings.edu/research/economic-mobility-of-fami...

https://www.worldbank.org/en/topic/poverty/publication/fair-...

PT Barnum, on the other hand, makes a great case for living within one's means, which is always valuable advice.


Life tells you what you should do in two ways: what you like to do and what you are good at. Of course liking something and being good at it often go hand in hand.

When you are good at something, it’s fun to keep doing it so you feel better than other people. When you like to do something, you often get good at it.


I would add to those two "and brings value to others". There are plenty of things you might love doing and are good at, that will leave you destitute and unfulfilled if you devote your life to them.




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