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Way to nitpick a good monolog. It's the idea not the amount that matters.
The "nitpicking" isn't merely peeved grasping for some particular but peripheral fact. It's the core message that's problematic. And that message is, that once we reach some large but reasonable threshold, we're safe. We can rest. We can, if we wish, vituperatively ignore the world - tell it, as the piquant phrase goes, to go copulate with itself.
This message is simplistic, if not outright false. We are invariably dependent on the outside world, be it the stock market or taxing-authorities or the real estate market or the healthcare industry. Frugal living certainly means lower expenses, but there is never a threshold where suddenly we become sovereign and unassailable.
The message feels good, because so many of us struggle to even reach a modicum of financial wherewithal. As our resources rise, so do our appetites, in ceaseless chase. But then we curb our appetites, save more, spend less, and - what? Congratulate ourselves? Maybe... because it feels good. We deserve it! Right? But that feeling is transitory. It is contingent not only on our continuing good-behavior, but on good stability and cooperation by the world around us.
It's a fragile world, and we're fragile beings. Keep that in mind, when next relishing the satisfaction of telling critics and antagonists exactly how they ought to go about the process of impromptu copulation.
As the article shows from the original post, a significant number of people will find themselves out of a job and often at age 50+.
It's really simple: would you rather have a nice savngs/investment portfolio to cushion you at a time when you may not have employment, or have much less in savings and worry about paying rent/mortgage, find another job quickly, maybe have a significant car loan on top of it?
Those who say it's stupid or ridiculous to save/invest and plan ahead so there is a nest egg available in the future, please present your data on how not doing so is the better path to take.
The "nitpicking" isn't merely peeved grasping for some particular but peripheral fact. It's the core message that's problematic. And that message is, that once we reach some large but reasonable threshold, we're safe. We can rest. We can, if we wish, vituperatively ignore the world - tell it, as the piquant phrase goes, to go copulate with itself.
This message is simplistic, if not outright false. We are invariably dependent on the outside world, be it the stock market or taxing-authorities or the real estate market or the healthcare industry. Frugal living certainly means lower expenses, but there is never a threshold where suddenly we become sovereign and unassailable.
The message feels good, because so many of us struggle to even reach a modicum of financial wherewithal. As our resources rise, so do our appetites, in ceaseless chase. But then we curb our appetites, save more, spend less, and - what? Congratulate ourselves? Maybe... because it feels good. We deserve it! Right? But that feeling is transitory. It is contingent not only on our continuing good-behavior, but on good stability and cooperation by the world around us.
It's a fragile world, and we're fragile beings. Keep that in mind, when next relishing the satisfaction of telling critics and antagonists exactly how they ought to go about the process of impromptu copulation.
Your point makes absolutely no sense.
Well, yes. A new Black Death could sweep the planet. A meteor could flatten New York and disrupt the global economy. A solar flare could wipe out all data. Governments could collapse.
But let's lay the tinfoil hat aside for half a minute and avoid jeremiads about spending sprees. Any rational person would say that, independent of some Old Testament event, a person who keeps $2.5 million intact and exercises basic prudence in their lives (You know, what John Goodman terms in shorthand as having a 25-year roof and driving the Japanese sh*tbox car), is in a pretty good position. Especially if they own their house outright.
Heck, 4% of $2,500,000 is $100,000 a year without touching the principal. In most places, it's a king's ransom if you're not paying a mortgage. In some place such as California it's still good revenue. Without a monthly mortgage payment, $8,000 in interest income should be ample for just about anyone who isn't a complete spendthrift.
If you're betting it all at the track, or drinking heavily, or blowing it all on frippery, then yes you'd be right. But that's not the point of that video. It's about gaining a basic nest egg and making it absolutely sacrosanct. That gives you enough security to cope with the vast majority of what life throws at you. Sorry you were too wrapped up in your sermonizing to recognize that.
It’s neither jeremiad nor disaster-porn. Consider a Japanese investor in the 1980s. Or a European investor in the early 2000s. What happened to their nice nest-egg? Where would they be, if spending according to the much-vaunted 4% “safe withdrawal rule”?
More importantly, suppose that investments are doing great, and there are no plagues or meteors or zombies. OK, fantastic. You’re driving along one fine afternoon, and get distracted, in smug self-congratulation over your good fortune. Suddenly a bicyclist darts in front of your car…. And you hit him. Panicking, you floor the gas, and drive off… Hit-and-run. Congratulations, you’re now a convicted felon. Is that $2.5M a nice consolation?
Look, the point isn’t that saving money is useless or stupid. Rather, the point is that life doesn’t have a success-threshold, beyond which suddenly we’re good. Or to couch it in narrowly materialistic terms, it is never enough. $2.5M isn’t enough. $2.5B isn’t enough. We can’t be assured of truly being able to give the universe the middle-finger, until we’re dead – and in some creeds, even that’s not enough.
Well, yes. A new Black Death could sweep the planet. A meteor could flatten New York and disrupt the global economy. A solar flare could wipe out all data. Governments could collapse.
It doesn’t have to be that dramatic to lay waste to your best laid plans. One medical diagnosis could be all it takes.
It’s neither jeremiad nor disaster-porn. Consider a Japanese investor in the 1980s. Or a European investor in the early 2000s. What happened to their nice nest-egg? Where would they be, if spending according to the much-vaunted 4% “safe withdrawal rule”?
More importantly, suppose that investments are doing great, and there are no plagues or meteors or zombies. OK, fantastic. You’re driving along one fine afternoon, and get distracted, in smug self-congratulation over your good fortune. Suddenly a bicyclist darts in front of your car…. And you hit him. Panicking, you floor the gas, and drive off… Hit-and-run. Congratulations, you’re now a convicted felon. Is that $2.5M a nice consolation?
Look, the point isn’t that saving money is useless or stupid. Rather, the point is that life doesn’t have a success-threshold, beyond which suddenly we’re good. Or to couch it in narrowly materialistic terms, it is never enough. $2.5M isn’t enough. $2.5B isn’t enough. We can’t be assured of truly being able to give the universe the middle-finger, until we’re dead – and in some creeds, even that’s not enough.
Well, given how abstruse your original post was, it was pretty hard to derive any actual meaning.
But to your point, any kind of prudent money management doesn't mean parking that kind of money into an account and forgetting about it. A shrewd money manager adjusts his or her portfolio based on what's going on in the market. The Japanese stock market didn't lose its value overnight, so a smart money manager would have moved it. I mean, hell, the stock market caved in in 2008 but, as someone who read the headlines and knew what was coming, I had already taken all the precautions. As for the inane hit-and-run question, there's no way I'd do that. That's why I have really good insurance.
What's more, you still entirely miss the point of that monologue. I can't decide if you're being willfully obtuse, or you're just being all schoolmarmish about the language John Goodman uses. But one thing that nice little clip doesn't say is to quit your job. Notice that he has a reference to having a boss? That implies that you keep working. As he said, that $2,500,000 is your base. Not the end-all, be-all stopping point for earning money.
I disagree. What the frugal and retirement-focused attitude precludes, is "tournament" professions such as sports or music, where a small handful of superstars make excellent money, while everyone else struggles. But becoming a veterinarian or other professional, while potentially costly up-front, is entirely doable, and makes perfect sense in terms of long-range planning. The vet would have to delay saving for retirement by a decade, owing to high tuition, loss of salary while in vet-school, and large debt subsequently. But in a few years after graduation, high-salary and frugal-living reverse the debt-situation, and place the incumbent on fast trajectory for compensating for lost ground.
Say what?
Delaying saving for retirement until you're age 41 takes you completely out of the 'early retirement' game. And vets don't make a lot of $ anyway.
Quote:
Originally Posted by mysticaltyger
You make a good point. But doing anything in the creative field is by its very nature is very high risk. A few make high returns on that risk. Most make nothing or almost nothing.
Most people don't love what they do enough to give up everything else in life, no matter what it is. Saving a lot for retirement when young, then throttling back 5-10 years later gives you a lot more options to live a balanced life down the line. Of course, people don't want to save a lot when young, either. People pretty much want to have it all. It almost never works, but it doesn't stop too many from trying.
Well. There's three things here.
1) Taking risks, 2) saving for retirement, and 3) saving for EARLY retirement.
You can still take some risks to get you where you want to be and save some for retirement some or at least plan to when you are making steadier $, but saving for early retirement locks you into the career path you are in pretty much.
It's not rocket science to know that one "should" max-out their retirement savings now, to increase their retirement income later. Nor does it take a crystal ball to see that a very small percentage ultimately save more than they need (or can spend) in retirement.
However, the sad reality is that few are willing to sacrifice or even slightly cut-back spending on things they can tangibly see/touch/feel today ... in order to have more in even the near-term future (much less a 20-40-year distant future). Thus, for most, "should" remains an abstract concept that rarely approaches reality.
Well, yes. A new Black Death could sweep the planet. A meteor could flatten New York and disrupt the global economy. A solar flare could wipe out all data. Governments could collapse.
But let's lay the tinfoil hat aside for half a minute and avoid jeremiads about spending sprees. Any rational person would say that, independent of some Old Testament event, a person who keeps $2.5 million intact and exercises basic prudence in their lives (You know, what John Goodman terms in shorthand as having a 25-year roof and driving the Japanese sh*tbox car), is in a pretty good position. Especially if they own their house outright.
Heck, 4% of $2,500,000 is $100,000 a year without touching the principal. In most places, it's a king's ransom if you're not paying a mortgage. In some place such as California it's still good revenue. Without a monthly mortgage payment, $8,000 in interest income should be ample for just about anyone who isn't a complete spendthrift.
If you're betting it all at the track, or drinking heavily, or blowing it all on frippery, then yes you'd be right. But that's not the point of that video. It's about gaining a basic nest egg and making it absolutely sacrosanct. That gives you enough security to cope with the vast majority of what life throws at you. Sorry you were too wrapped up in your sermonizing to recognize that.
Uhh yeah $8K per month with no mortgage is fantastic income! Within reason you can do pretty much whatever with that. Some people are terrible at managing their money I guess, but you should be living a great life with that kind of income if you had no mortgage payment.
Delaying saving for retirement until you're age 41 takes you completely out of the 'early retirement' game. And vets don't make a lot of $ anyway.
That depends on one's definition of "early retirement". Consider this timeline:
* age 18-22: college
* age 22-26: med school
* age 26-29: specialist training
* age 29-31: residency
* age 31-34: junior medical position
By age 34, our heart-surgeon (let's use that as the trope) has $400K in debt, but is earning $400K/year. It doesn't take too many years of MMM-style living to erase the debt and to start amassing serious capital. It could probably be done in a dozen years or so. That enables early-retirement before the age of 50... which I consider to be "early".
Quote:
Originally Posted by JonathanLB
Uhh yeah $8K per month with no mortgage is fantastic income! Within reason you can do pretty much whatever with that. Some people are terrible at managing their money I guess, but you should be living a great life with that kind of income if you had no mortgage payment.
You're thinking in terms of capital generating income. Yes, that income is fantastic. But a couple of considerations obtrude.
First, that $8K/month, or nearly $100K/year, is about 4% of the $2.5M. Yes, equities can deliver 4%/year gains, but not perennially, and not guaranteed. Using the term "income", we really mean fixed-income... and that won't deliver 4% - and certainly not after taxes. A more realistic figure is cutting that 4% in half.
Second, and far more important, is the ridiculous notion of using that $2.5M as a source of income in the first place. The whole point of amassing money is to amass more money. With $2.5M, the looming goal is to reach maybe $5M, and then $10M, and so forth. Taking an income, and spending it, is the proverbial consumption of the seed-corn. It is frivolous and dissolute - and the antithesis of the sort of thinking that allowed one to attain the $2.5M in the first place.
Instead, what happens upon reaching $2.5M is that one gets hit with taxes on long-term capital-gains and dividends. To avoid withdrawing from the portfolio just to pay taxes, one needs a second job, as it were, whose sole purpose is to fund the IRS.
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