Make more than you spend is indeed very good advice. But the bullshit stories that the wealthy tell themselves about themselves never cease to amaze me.
What is going on there?
People will say “that doesn’t happen!” Happens all the time. Or they’ll say “but COBRA!” Sure. And without a job, you’ll be making those large premium payments.... how?
This bit is impressively tone deaf:
Once I had $12,000 I could quit my job and become a full-time musician. I knew I could get a few gigs per month to pay my cost of living. So I was free.
I bet loads of musicians knew that in January 2020 too! (also what freelance musician can get good US health insurance?)
And when generally interesting people say some incredibly boring things, people treat them as still interesting in some weird afterglow of the other things.
So this post is entirely halofied by his other stuff. This is self help guru shit. Which is fine, right? He's writing the blog perhaps for himself and we may not be the intended audience. But that's what it is.
I said no, that didn’t make a big difference in my life. That was just more money in the bank. The difference happened when I was 22.
Yeah I think I get what Derek is saying. However if I was his friend, I would also be unsatisfied by this answer. It feels like Derek should know what he's asking and is being obtuse.
> It’s not how much you have. It’s the difference between what you have and what you spend.
is in a real sense very true, but it's also vacuous. The more you have, the less effort is required to have a big difference between what you have and what you spend.
In my opinion Derek's friend was probably framing this question in the sense, "How did you end up with so much?" and not, "How did you end up with such a great burn rate?"
There's a time and a place for Enlightened perspectives, but if my friend answered me the way Derek did I would find it kind of patronizing, personally.
How do I know, because he isn't worried. You see when you are poor, or have been poor, you have this persistent worry that something bad is on the horizon, that the good times are going to come to an end.
It take real privilege to not have worry when you are just barely scraping by.
Boom! Great find. Amazing how behind so many Bootstrappy, Self Made Millionaire stories lurks the entrepreneur's wealthy family either 1. directly contributing money, 2. loaning and investing or at least 3. providing a roof and food to fall back on during rough times.
Not staying in dorms and instead commuting from home can shave off thousands of dollars in rent.
Working part time is enough to pay for the rest, unless it's a private college with enormous tuition.
Ah, no. Berklee.
I absolutely accept that learning to live frugally and no longer make the same old mistakes with money is a huge advantage. It's amazing how that can compound and no longer having to worry about money is very freeing.
But then there's the whole 'and never had a job again' bit and the implication that his further success was either immaterial or just an inevitable consequence of having saved some money or maintaining a surplus - obviously not the case for very many.
It's very well written and pithy but, like much of PG's writing, leaves you feeling like hands have been waved like windmills.
Also: certain monetary events in life do not automatically make you happy, as your foundation for that wealth has to be fundamentally sound. If you can't handle $1000 of disposable income correctly, then you can't handle a million.
The amount of money you have plays a role in your happiness. Of course, the marginal value of a dollar will change immensely depending on how many dollars you already have and your stage of life, but it is a factor. It also really matters how much you have to sacrifice to make that extra dollar.
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."
Amazing that this status quo is so widely accepted. And that pursuit of art for happiness and income is frowned upon (or deemed too risky). Meanwhile people are willing to waste their youth in unhappy menial jobs in order to have health insurance.
Why shouldn’t people be able to pursue art as work and have a doctor?
Now we both need to hope that there are plenty of progressives out there who will go do real work so they can pay for our doctors, comrade. And not get mad at us wreckers who spend all day pursuing art.
Insurance would be, "I work at a job and a pay a premium each month to a company that will cover my costs if I get sick".
The situation being described is, "I quit my day job to pursue art and can't afford the premium, but I still want someone to cover my costs if I get sick".
That's not how insurance works.
With that in mind, how does widening the insurance group to include all (taxed) Americans make the situation worse for the average household?
AFAICT the only folks who benefit from the “I don’t want to pay my neighbors Dr. bill” argument are the insurance companies.
Having more money than you spend for a year is not enough is not enough to be 'rich'. You want assets where you will always be able to generate more money than you need spend for every year that you live.
I think people read Siver's blog because he got to this tweaked definition of rich. This article does not seem to acknowledge that reality.
Its good to have goals. Its good to make plans to achieve your goals. What that means is different to everyone.
There's another story on HN's frontpage today, that is highly related and correlated to this one: https://www.outsideonline.com/2401643/life-lessons-97-year-o...
He's sharing a three bedroom apartment with two roommates. There isn't some beautiful moral to be taken here. what about when you have a family? What about when you have children? What about when you have a medical expense come up? Insurance is very expensive.
I hate these anecdotes that imply that you can just live simply in the United States and be happy. So much is left unsaid. Maybe this guy wants to live an ascetic life, but most people don't.
I understand that the idea of spending less can apply on varying scales, but this implication that you can just give up the material world and be a musician making minimum wage and be happy is silly.
Stupid in that it's incredibly reductive.
It is blissfully unaware of the explosive costs of items needed for life and its continuation (AKA children) like healthcare, housing, and education (the last last two especially explode in cost together in unison).
Yeah I get it. Frugality is useful. When coupled with creativity it even sometimes results in amazing workarounds that sometimes turn into novel solutions that more people benefit from.
But people who aren't rich don't need to be lectured on frugality by someone who is rich. For every disparaging anecdote you hear about a non-rich person with a 65" TV, there are multiple families working 3 jobs to feed, house and educate their members. They also lend their spare time/effort to their neighbors, and there are entire communities that keep going on such efforts, sharing childcare and other essential needs. It takes a village after all.
Those people are engaged in a kind of community frugality the author can likely not comprehend with his peanut-butter sandwich anecdote. They don't write guru-style blog posts about these things, though, because it's so blindingly obvious to them that they need to watch their spending very carefully.
> It’s the difference between what you have and what you spend
I think I hear a lot of people rewriting that as
> It’s the difference between what you CAN MAKE and what you NEED
Depending on the 'YOU' in question, the 'CAN MAKE' and 'NEED' vary dramatically. So many debates on both a personal and societal level are trying to fit everyone into a single 'YOU', and telling everyone else that their calculations must be wrong.
that was before he made a company and then sold it for $22m.
Let’s say I have 2 million dollars, but my three kids are born with genetic heart defects requiring 1.5 million in surgery each. Well, since I have the money, I will eventually be forced to spend it as insurance is limited, and government assistance prioritizes those with less resources.
Being rich won’t save you from disaster leading to poverty, it only makes things easier in normal life.
It's a matter of degree. This advice forces you to treat potentially minor unplanned hardships on the order of thousands of dollars the same way as 1.5 million dollar wipeout problems. My point is, if you have a great safety net and nobody else is depending on you, sure, fixate on your burn rate. But if not, this advice seems bad.
The vast majority of normal circumstances are covered by having a job with medical insurance. And those normal circumstances can ruin people without insurance (e.g. a diabetic without insulin.)
It’s only an out of scope disaster that brings suffering.
Forgive me on the insurance bit, I was speaking from the context of a country which provides some healthcare to its citizens, regardless of income. Not many people, millionaires included think to have insurance that would pay out millions for rare circumstances.
I’m sorry you feel this way. The outlook above seems perhaps jaded though.
I can easily imagine being extremely happy focusing on what I love while taking on the minimal set of responsibilities necessary to pay the bills, especially at age 22. Hard to do for sure once you have a family etc.
At a different stage of life with more responsibilities and a family, you need more to be happy but it's still within reach of a household income in the low six figures if you're smart about where you live and not upgrading your lifestyle beyond what's easily sustainable. The moral of the story is don't live beyond your means. That takes a little discipline, but it's worth it.
Interesting political undertone to your comment. I always get the feeling Americans don't know how much most of the rest of the world struggles to live.
> but this implication that you can just give up the material world and be a musician making minimum wage and be happy is silly.
Equally naive implication that somehow living a complex life in a jetski or having a comfortable suburban existence will make you "happy" either
Much to learn young grasshoppah
The good news is that the public school is very instructive - my kids are 'rebeling' against the seven deadly sins they are seeing there.
I was not implying that a complex life in a jet ski or comfortable suburban existence would make you happy, I was implying that giving up your education or watching your children die for lack of medicine would make you unhappy.
Read between the lines old grasshoppah
I think he is really talking about a mindset here. Also a lot of monks and nuns give up things and are happy.
You are correct. The vast majority of people cannot pursue their dream life because they cannot give up their iPhone and other material things; we are a consumeristic society.
This isn't about giving up your iPhone. It's about giving up your insulin, giving up your car that you need to get to your job, giving up birth control, giving up the daycare that takes care of your children so that you can go to your job, giving up dentistry, giving up repairing the hole in your roof that causes a leak into your bathroom, giving up your college classes, or giving up your children's college classes.
Think twice. Just because you have it easy doesn't mean everyone does.
I am not the one making ignorant comment or logical fallacies.
Still, if everyone engaged with the economy the way I do, the economy as we know it would collapse. I feel that my luck is simply in being different rather than anything else.
Today's economy not only is based on people buying thing they don't need, with money they don't have, to impress people they don't like; but also it is rooted to the core of the ID and Ego, it's a quasi-spiritual experience, and, like all belief-system, when challenged, it would bring out its ugly side.
Did you read the book: The Millionaire Next Door? You'd enjoy that. I bet your local library has it.
Or want a family or just have kids then the lower end of independent finances is much higher.