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Excellent advice! Pretty much what I've done since age 12. By 52, I was out of debt, & semi-retired.
I never made huge money either....or invested better than most. I always got the employer 401k match, maxed out IRA's (until I made too much), HCA's, 529, & lived beneath my means. Paid cash for cars, pd off credit cards each month, put at least 20% down on homes. Millionaire Next Door stuff mostly.
Over 40 years, it worked, as did the miracle of compound interest, & self-discipline...most don't have it.
Amazing huh! Simple stuff and consistency are your friend!
I worked as a financial advisor in Boca Raton as a first job out of college. I was stunned at how many broke people walked into my office despite huge incomes!
Cardiologist made 400K a year W2 income, yet didn't own a house/leased everything and and zero discretionary income. He had 180K in mutual funds though, never contributed to them but when I asked where did they come from, he inherited them from his mother! Why was he in our office: he wanted to gamble the mutual fund money with some dot com type stuff so he could have a bigger down payment for a house!
Another lady showed up and wanted to take 500K in CD's and invest for "at least" a 15-20% return. She was a signer on her elderly fathers accounts and wanted to take his 500K, get a bigger return and she would give him the 5% or whatever the CD paid at the time then live off the rest so she didn't have to work!
WTF are you people scheming to live the big Boca lifestyle!
Save as much as possible and don't have a "bleeding heart."
Every person I have known who has ended up getting pushed into bankruptcy ended up there due to getting overextended because they made poor financial decisions based on emotion.
Cash is king is the old saying. Now we can say that being a long-term thinker can save you from peril.
Just telling someone live below your means is like saying only invest in stocks that go up or telling someone get a good job
It really is not actionable in any meaningful way and lacks exact definition of what that really means as well as how much to actually spend and save in this case
But it is actionable and a major first step for anyone who has credit card and other debts.
Not really , because it specifies no savings component or money to pay off debt , nor how much should go towards that . Nor does it even elude to what should be saved as a minimum if anything .
One can simply have all their discretionary and non discretionary spending take up the whole budget as long as it is a few bucks less than the current income .
It is just a blind mantra pretty much .
Like I said , it’s like telling someone get a good job.
Or make good investments,
Sure we all know what that means , but what does it mean in actionable terms.
In fact it reminds me of the rich man poor man author who writes all these books and never tells you exactly what it is you are supposed to do to use his general non descriptive advice
Depends. If your income is below average, you may need to spend 70%+ of your income on necessities. Especially with food, car and rent prices skyrocketing.
If your income is above average, you could get by with spending 1/3 on necessities.
Everyone who passed Econ 101 knows there is no such thing as a "necessity." Economics is about the optimal allocation of scare resources in a world of infinite wants and desires. What some people mistakenly label as a necessity is merely a want or desire.
Not in the U.S. Most cities aren't walkable. Between walking to and from busstops, to waiting at the bus stop, to being on a bus that makes many stops, it'll take you 90 minutes for a trip that would be 20 minutes to drive.
There are a few cities like Seattle and NYC that are, but the rent in those places is very high, and any money you save on auto costs, you pay in rent.
Not having a car also limits your search radius for jobs. Someone may not be able to get to the $20+/hr job that's 10 miles away from where you live, so they have to accept the $14/hr job that's 2 miles away instead.
Is there a point buried somewhere in this word salad?
Everyone who passed Econ 101 knows there is no such thing as a "necessity." Economics is about the optimal allocation of scare resources in a world of infinite wants and desires. What some people mistakenly label as a necessity is merely a want or desire.
Exactly … we all can live cheaper than we do even if it involves moving .
We just have our lines in the sand where we prefer not to .
Golden girling it , roommates,etc are all potential ways of living cheaper
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