To give an example; the article mentions Dave Ramsey talking down to his callers and giving generic advice such as cutting up your credit cards. I don't follow Ramsey too closely and can't read his mind, but I'd bet he's optimizing his advice for the least common denominator within a mass audience of financially troubled people. A small percentage of financially desperate people would hear great advice about credit cards (only use cards to buy stuff you have 100% of the cash for, and pay them back instantly to get some cash and rewards back) and not internalize that as something like (it's okay to keep using my card because I'm getting money back as long as I try and pay my bill every month). For a mass audience, the safest advice on credit cards that might make an impact is to just tell everybody with a financial problem to stop using them. On an individual level, a financial expert can probably give better advice that's more suitable.

If I had to give 1 bit of general financial advice though: develop your talent stack. It doesn't matter if it's learning a new programming language, wood-working, learning to fix cars or toilets, taking a foreign language class, learning how to paint, or growing a great garden. If you have multiple skills you have more opportunities to make money as well as combining those skills in unique ways to create new business ideas and concepts. And baring some health issue, nobody can ever take a skill away from you.

This is crucial, but having a relatively high savings / investing rate is as important.

> And baring some health issue, nobody can ever take a skill away from you.

Time absolutely can. Even someone in a sedentary job in a field where their expertise won't necessarily become outdated will eventually have to hang up their cleats for one reason or another.

Balancing that with risk and liquidity is a challenging barrier. What’s your take?

I think its 100% matters which talent you pick. Some will on average pay out 1000x over others.

But sadly, you're right. My 40 hr/week engineering job in big tech is miserable.

I still code for fun/passion in my free time. But I cry on the inside every time I think about how much of my time and mental energy gets wasted at my day job.

I hope that either (A) I am able to retire young, or (B) I find the mythical coding job that I can actually enjoy.

Sadly, neither (A) nor (B) seems likely to happen.

I tend to agree - big tech (and the work economy in general) is somehow managing to squander vast amounts of human potential, and leaving billions of dollars on the table in the process.

Pigeonholing - where people are expected to perform the same task every day, in the same domain, for years on end - is certainly part of it. Humans are not robots. Rather, they thrive on growth, variety, and learning to do new things. But growth is considered a cost center at most companies, and variety is typically forbidden.

Tying people to projects - and punishing them for switching projects autonomously - often results in work being done slowly, poorly, and even resentfully.

Usually the reward for completing one's tasks efficiently is simply to be given more work to do. Presenteeism trumps actual productivity.

I wonder if Valve is still - or was ever - operating with a "work on whatever you want" system, and I wonder how well it could work in practice.

Surely there is some necessary and unpleasant "grunt work" that nobody will want to do, but presumably if it's important then some agreement could be reached to get it done anyway, rather than simply ordering a low-status person to do it as usually happens at a traditional company.

Seconded. When you are wasting time you might as well develop your skills. Fortunes are to be found on the intersection of almost any two skills, if you can add more to the pile you are adding more chances for capturing that value.

Do you have some anecdotes to share regarding this?

[1] https://jacquesmattheij.com/sorting-two-metric-tons-of-lego/

But there's another way forward, combining good skills that are greater together. Here's an example of a hypothetical set of skills that can lead to a life-changing amount of fame and financial success.

* Maybe you're not among the best cinematographers in the world, but you know your way around a camera, lighting, and video editing software enough to create a reasonably polished video. Your videos are not Hollywood good, but your ability to create a good looking video is in the top 10% of the population.

* Maybe you're not the absolute funniest, best-looking, and most charismatic person in the world, but you've worked on yourself a bit and are noticeably more appealing than an average person, maybe in the top 15-20% of the population.

* Maybe you're not the absolute smartest person when it comes to computers, but you've built a few gaming PCs, took some Computer Science courses in college, read some blogs and forums, and spend some of your free time following the industry. You might be in the top 10% of the general population when it comes to general computer knowledge.

By itself, none of those skills are remarkable in the slightest. You're never going to get a job setting up special effects shots for Michael Bay, no agent is going to notice you at Starbucks and give you a contract as a model or actor, and Tim Cook isn't going to ever call you at 2 AM begging for your help with emergency fixes to some web service. But you put those 3 things together in the right way, and you can be a successful Technology YouTuber that has a mass following and influences the computer industry to some extent.

I'd think Kanye is a good example of somebody well-known to look at in terms of a list of talents that are good, but not anywhere close to the best. I'd argue that by music and fashion industry standards, he's nowhere close to the best singer, lyricist, dancer, businessman, or designer in the world. But he has a lot of skills that are all above average when compared to the general population. That's enough to be incredibly successful when combined with his self-promotional ability, risk-taking, desire to increase his knowledge, stubbornness, self-confidence, and charisma.

And, there is nothing wrong with not using credit cards. Especially if you don't have a job that pays $200,000+ per year so you can afford to buy a house. But for someone making $35,000, of what use is credit?

I suppose that buying groceries and gasoline and getting cash back is fine, and worth it. And making sure you can return items if there's a problem. But the way a lot of people talk about credit cards, is that they are some kind of holy grail.

But for people who are halfway intelligent, I don't think that financial expert is really that necessary. Just read a lot of great books on the subject, watch a lot of videos, and manage it yourself. It's not that difficult. Why even pay someone. But, this does not apply to someone who has super high worth, like $250 million plus, but it's kind of dumb to talk about them, because they're going to know what to do anyways, or at least 99.9% of them.

Also, try to develop a talent stack that actually is valuable, if that's what you're going to do. Nothing wrong with learning how to grow roses, for example. That is a hobby, not a skill or talent, in my opinion. Sure, maybe one out of 100 million will somehow write a book on rose growing, but that is the exceptionally rare exception. However, learning to landscape and taking classes at your local college and getting certifications is a different issue. But even then, you have to be able to actually DO it if needed, for money - so you have to be able to life heavy stuff, work in the sun all day, etc. If you can't, what's the point. Same with your example of painting - that's a pretty useless thing to learn. And again, this is in terms of money, which you stated in the first part: "1 bit of general financial advice though: develop your talent stack"

Learn computer programming. Learn plumbing. Learn auto repair. Stuff you can make money at.

And again, nothing wrong with doing stuff as a hobby because you enjoy them, but that is a different topic.

> Yet you almost never hear the financial experts recommending that you start a business.

Is the average business owner any better off? I know that there are plenty of successful business owners, but we tend to completely ignore the many that filed bankruptcy after taking cash advances on credit cards to live one more month.

> Nor do these guys tend to mention the importance of understanding how taxes work.

Only really matters if you make a lot of money. My Dad is a tax accountant. We optimize the heck out of our personal taxes. But at our 100Kish incomes, it doesn't make a big difference beyond what the personal finance people say.

Obviously anecdotal, but not really IMO. I've bounced back and forth between being in business for myself and working for the man.

Between healthcare, saving for retirement, etc. things are really optimized against someone "pulling themselves up by the bootstraps" in this way. I've listened to the politicians in the US scream how important small business only to vote against that very interest (tax cuts for rich + corporate tax breaks).

I can't get good healthcare unless it's tied to my employment here. The healthcare I get independently is of lower quality for much, much more money out of pocket... Lord help you if you do something stupid and show a profit on your books... etc etc... The first 2-3 rungs of the "small business owner" ladder are missing by design.

If I had a family I would likely never consider being a business owner again due to the health implications, financial risk, and time commitment.

100% the average working Joe is better off.

Perhaps we need the term "micro business" to gain more traction? I suspect that's where more work is heading.

It can be used as a good tax harvesting vehicle but again this requires so much knowledge and ultimately I think running a business (even at a strategic loss) requires more depth of knowledge than the average saving/investing tips.

Would definitely agree that starting a business is a path to becoming RICH, but definitely not a path to being financial stable/above average

I am 35 and still spend like in a teenager. I grew up really poor where if the money didn’t get spent right away it would just sort of disappear, into drugs or beer or whatever my mom and stepdad were spending it on. My only real asset is my house which has appreciate significantly in value, but all it would take is one job loss to get me behind on that. I take Adderall because it makes me an effective engineer and I’ve really struggled for multi year periods where I’ve tried to stop it, but my life gets measurably worse. I cashed out my $5,000 at one point and blew it on I don’t even know what, but it was something stupid I’m sure.

I guess the real enemy is future me. I don’t feel like I can consistently trust myself to make good financial decisions so the me of right now acts as if future me will just blow all my savings irresponsibly anyway. It’s depressing just writing it out.

I wish I could put money into an account that would then only disburse small amounts of it over the year, and I couldn’t override that.

I’m really ashamed of it but end up paying the mortgage with one biweekly paycheck, paying all my bills with the next biweekly paycheck, and despite making a very good salary for where I live, I’m living paycheck to paycheck.

I don’t really know how to develop impulse control, I spend hours and hours scrolling Amazon and websites trying to think of things to buy.

I know the answer is “just act like an adult” but I guess spending has become a coping mechanism because I’ve got a disabled kid, I don’t really know how to enjoy things that aren’t going to Costco or buying a new 3D printer or a shiny new computer.

Is there anyone here who has gone from being extremely irresponsible with money to having savings? How do I get over the trauma of my grandparents losing millions of dollars in the 2008 financial collapse, which happened right as I came of age? How do I stop “shopscrolling” Amazon until 2 in the morning?

I know it’s pathetic, and I feel like this is a place I might get an answer that’s actionable.

You know what you're doing is unhealthy but you can't stop. A good mental health professional can help you deal with the pain you're trying to cover up with buying junk.

Also, one short term hack I haven't seen explicitly mentioned yet. Try to enjoy a healthier kind of buying: buy your house piece by piece. In other words, pay off your mortgage early. If you can direct some of your impulse buying towards early mortgage repayment like that, that would be a win!

Try to experience the process of increasing your ownership as close to your senses as possible:

- Can you make the repayments cash transactions instead of online?

- Make these early repayments as frequent as possible. If the bank allows monthly, quarterly or annually only, arrange for a trusted friend to collect weekly or even daily.

- Visualise your progress:

  - Make a drawing/real life 3d model/photo/lego model of your house.

  - Colour the bits of the drawing you now own.

  - Move the lego bits over from "the bank" to "mine/ours".

  - Mark individual stones or pieces of siding as your own versus the bank's.

  - ...

That's kinda what I've started doing after getting a child: every time I look at a new shiny thing, I think how many ETF shares I can get for that money. A younger me would just buy the thing, a parent me buys the shares. A nice number of money invested, that I can instantly check out in the app, is just as good feeling as having a shiny thing.

I speculate that growing up in poverty is not the cause of behavior; rather it's the reverse. Her family behaves in particular ways that make them poor and she has inherited those traits, either biologically or environmentally. From talking with her about how her family operates, this seems to be true. They have very low income but buy a new 4K HD TV every year along with trading up their vehicles to new models. They manage everything by an ever expanding debt load collateralized on their house/credit cards. I don't think these behaviors are 'breakable' because they aren't habits. It's almost like they are built into the default mode network.

In situations like this, when you can observe your behavior as something beyond your control, the best bet is to influence your environment rather than your behavior. Put your money beyond your easy reach (401k, IRA, pay down mortgage early etc.)

I personally struggle with eating behavior that is beyond my control. The only way I've been able to successfully control it is to put a lock on my kitchen cabinet that I don't have the combo to. This acts as a big moderator that gets me through the self destructive impulse periods.

1. I set up a goal to only have one meal eating out per week and I did it by keeping track of whether I go to a restaurant that day. I used uHabit, an open source ads free android app to help me do this.

2. I also keep a spreadsheet for a certain aspect of my life: electronics and crafting. Each time I buy something craft related, I entered the expense. I have an expense goal that I try to keep it under per month.

These two strategies has allowed me to save me a lot of money and sometime I would go on for months without spending much money at all.

Also, it is likely that your spending habit is an emotional problem, not a discipline issue. I think it may be prudent to talk to a mental health professional.

As for money advice: Can you automate some saving, and have that happen before your money hits your bank account? E.g. if your workplace offers a 401k, you should definitely be maxing that out, and that means your employer will save that money before you have access to it, and doing that for long enough will set you up for retirement even if you mis-manage the rest of your pay.

If you can set up more systems like that, you should! You may be able to set up an after-tax account at fidelity or vanguard or similar that automatically gets a portion of your paycheck deposited in, and you can set it up to automatically buy stocks/bonds/reits on a regular schedule. That money would still be accessible, but you'd have to sell your investments and wait a few days to transfer into a checking account, which might be enough friction to help keep it saved.

> the me of right now acts as if future me will just blow all my savings irresponsibly anyway.

I know this horrible feeling, but it isn't really true. It's a self fulfilling prophecy. It may take some work and time to change yourself and your habits, but it is possible. Even just commiting to yourself that you're going to work on this can go a long way to easing your feelings about it and breaking the cycle.

And if you can't do it alone, don't! Therapy is an option. Consider it splurging on your retirement.

That being said, the number 1 thing that helped move me out of a situation similar to yours financially (grew up in poverty, poor impulse control, etc) was listening to the Dave Ramsey podcast every day. It probably doesn't matter if you listen to Dave Ramsey or one of the others mentioned in the article, so just go with someone. Though I will say that once every episode Dave Ramsey has someone come on and do their Debt Free Scream where they tell their story of getting out of debt, and then they shout at the top of their lungs, "I'M DEBT FREE!!!" And that was incredibly motivating, and at times emotionally moving and I even cried sometimes.

Anyway, listen to it as often as you can: on your commute, in the shower, while working out, while cooking, while eating, etc. Get it in to your bones.

What this did for me was it began changing the way I think about money. As I listened to hours of Dave Ramsey tell people everyday that saving money was cool, paying off debt is cool and the best way to financial freedom, that the 7 baby steps are achievable, my thoughts around money slowly changed, and so did my behavior. At first I disagreed with Ramsey a lot, especially how he treated some callers (that has improved a fair amount over the years, thankfully). But eventually I saw the wisdom in what he was saying.

In addition to the advice to use accounts with penalties for early withdrawals, I’d consider if setting a fun money budget would give you a metered amount of “yeah, no one’s perfect” escape valve but then have other accounts that are harder to readily access.

Consider splitting your direct deposit (after 401k deferral) into multiple accounts, some of which you don’t have ready access to. Put $100/check into an emergency fund account, $150/check into a travel or big fun account, $400/check into a house/car repairs account, $X/check to an after-tax Vanguard account, and the rest into your daily usage account.

You’ll have setbacks over the years, just as your grandparents did. But over the long run, there’s never been a 15-year run of negative nominal returns on the broad based US stock averages. Bet with that trend to continue, including there being some 5-year losing periods ahead.

You can do this, it won’t be easy but setting in place a few mechanisms to support, not letting the wheels come off the bus entirely if you skip up a little, and just committing to being better every year than the last probably has positive correlation with an ok outcome.

Even though HN is full of smart, data-orientated people, it's rare to see this level of self-awareness, vulnerability and curiosity demonstrated in a single comment. We could all benefit from more of this set of skills. Most of us dole out advice far more willingly than we ask for it. Through revealing your own frailty, you've opened the door for others who are less courageous to hear some good advice.

There's nothing pathetic here at all -- it's how we learn and grow. I hope this doesn't come across as condescending: I genuinely wanted to say, "thank you".

Work for a company with stock trading blackout periods. Setup a 10b5-1 plan to periodically sell your company stock, then when the blackouts are lifted invest the money you want to save into your company stock.

This has the drawback of being undiversified, but undiversified savings may be preferable to no savings at all.

1. Before opening the laptop I decide how much time I want to spend, and what I will do immediately after.

2. Set a timer that I'll have to get up to turn off.

3. Do the thing I had decided to do. It can be a little thing, like washing 1 dish, taking out the trash...

I tried many strategies before finding one that works, and will still try to develop more so I'm not completely sunk if/when this one stops working.

Regarding your shopping habits, it sounds like you're acquiring more tools but not making good use of what you have. Switch to buying used things,a nd spend more time sweating over the things you bought figuring out how to use them effectively. This will probably be an emotionally painful and initially unsatisfying process. Make something with your 3d printer. Be disappointed. Make something marginally better, continue being disappointed. Repeat until one day you unexpectedly feel pleased with the results.

It takes about 3 months to shift behavior patterns, even with the help of something like Adderall, which is totally fine to use.

On the emotional management / discipline front, I’d suggest also exploiting the similarities between personal finances and healthy living. If money is particularly painful for you, try forming simple habits like going on a 10 minute walk each morning, or eating healthy 1 day a week.

Small actions like that will help you prove to yourself that you can make changes, and you can ride that proof emotionally to make bigger changes incrementally over time.

An example would be 1 day a week of not eating out, which becomes a $10 per week saving habit, then moving to 2 days and $20.

Maybe thinking about it the same way is key, thanks.

That's ok. Change comes slowly. Last year, and maybe this year, was about fitness. Make next year about your personal finances, and the year after that about something else (self growth, discipline, etc).

I think this is called a trust: https://en.m.wikipedia.org/wiki/Trust_law

Also, if you are so inclined, check if you can replace your habit of trawling Amazon for stuff to buy with trawling Amazon looking for stuff to buy in the future. Personally, looking forward to buying the thing is at least 60% of the enjoyment.

Anyway, try seeing a psychotherapist. Someone serious with a degree. Your money problems seem to be at least partially learned, so they can be unlearned.

Partner with someone who is disciplined, such as a potential spouse/partner, a friend, or even a support group of people in the same situation.

I know that recommendations are frowned upon here, but also take a look at Brian Johnson/Optimize. Discipline is one of the things they touch on a lot, and unlike other places, they have advice that actually seems to work.

Her and I have been talking today and I think having her approve purchases could help. I’m nervous about giving up control like that though, and thinking about it more I definitely get pleasure in buying new gadgets. But I need to trust her that she has my best interests in mind (which she does, but it’s hard to convince some part of me deep down of that).

Consider doing this:

1.) Every month, schedule two hours with your wife to go over your finances.

1.a.) The first time you sit down, look for, select, and integrate your bank account(s) and credit cards to an online budget app. YNAB is a good recommendation, but there are others.

1.b.) Either the first or the second time you sit down, categorize all of your expenses in your online budget app, and use that to get a strong understanding of your monthly expenses.

1.c.) Every time you meet going forward, categorize all of your new expenses.

2.) Once you have your monthly expenses in order, look for a savings - spending ratio to budget towards. We've had success with the 50/30/20 plan, but there are others.

3.) Then, with your savings target in mind, at your next monthly review meeting, create a realistic budget in your online budget app.

Remember that your savings rate includes your 401K (Pillar 2) and IRA & Roth IRAs (Pillar 3) retirement accounts.

I also recommend listening to several online sources for advice and inspiration. These include the Money Guys and Dave Ramsey, both of whom can be found on YouTube. Also read the Bogleheads forum and Personal Finance and Financial Independence subreddits.

No it isn't. But that is revealing the issue: you tend toward the irrational. In fact,

> How do I stop

By realizing that there is no need for that, rationally. You want to buy new X, but you do not need them: _see the fact_ - they are per se useless and replaceable for their improper purpose of emotional release: to have X is just petty if you want to fix your finance. You can replace the feeling of that X with something free. If there is one stroke of luck of living in these times, is that access to stimula has probably never been so rich in options and free in cost.

> trying to think of things to buy

Think instead of things to enjoy. They are really, mostly free nowadays (even our presence here at Dan's is). Be faster than the other habitual pattern and replace it - if you think of something to buy, realize you are doing it and think of something to enjoy. Replace the thought. You are used to collect items: collect experiences instead. Realize that you can replace items with experiences. For that, one laptop is enough, a basic car etc.

That thought habit is a mental pattern to replace, to replace with something that makes sense - the other does not, as you have to realize and in fact realize.

(And about Amzn, if other people were unable to read this, I would add: Bzos is bald. And you do not seem to have stopped to consider that. If you want to buy from him - who am I to convince you otherwise. But he is bald (you should see that - it should be a thought stopper, a doubt inducer). And possibly the last person in the world who needs your money. With your money you vote: is that what you want to promote? The very fact that you shop there raises the question: how long have you thought about your actions? The single ones, the generic ones. Some people think you are supposed to evaluate your actions before doing them. You take a step back, look at what you do, and what you have done and what you would do, and judge them as good ideas or bad ideas, for what they are. I am sure you know mathematics sufficiently. If I shop from somebody with those traits, I have deliberately deliberated it, it is a conscious choice. Read these paragraph carefully, and understand them. If you want clarifications, we are here.)

I was ordering from amazon 3-5x a week and when they locked us down in mid 2020 I was so disgusted by amazon getting filthy rich while my friends and neighbors were locked at home that I haven't ordered from them since.

You can do this with a trust or annuity. Have you looked into them?

You need to have money removed from your account and into investment accounts automatically before you have a chance to spend it. Money in checking or saving will get spent.

It should not really be needed, as I would get money from the government (enough to live on) if lost my job, and we have universal health-care where I live. But it gives me peace of mind.

Write everything you spend money on down in a single place before you buy it. If you buy a book and pen to do this they can be your first entry.

Creating an awareness of what you spend money on gives you a chance to ask if you will value the thing as much as your impulses are telling you.

This goes generally, lots of self help people suggest keeping a diary, and reviewing it.

It works much better for me than trying to save at the end of the month for me anyways.

Have you tried therapy?

I could try giving you financial advice, but the problem is that you would not follow it, and we both know it. So instead, I will recommend a few tricks I use to make myself believe that I have less money than I actually have (which reduces the impulse to spend too much).

First, realize that "the money you have" is just a fiction anyway. Suppose you have a $100,000 mortgage, and $10,000 in your bank account. Does it mean you have $10,000 that you are free to spend? No, it actually means you have $90,000 debt. The number $10,000 is so misleading that the less you think about it, the better for you. (You have an option to reduce the fiction by making an advance payment to the mortgage. Perhaps you should do it when the feeling "I have too much money" becomes too strong.)

Perhaps you should get a second bank account, move some money from the first account there, and then forget that the second account exists. Even better, if possible, make it so that only your wife (or both of you together) can move money from the second account. Again, when the feeling "I have too much money" gets too strong, move some money from the first account to the second account, and then forget that you did this. (There should be no card associated with the second bank account.)

I am not American, so I don't know whether this would be a practical advice or a huge inconvenience for you, but don't use cards, always pay cash. With cards, paying is too easy, and the money is too virtual. Do you NOT want to simplify things you want to do less of! Keep between $100 and $500 in your purse, pay cash, and whenever you get below $100, take $400 more from an ATM. If you notice yourself visiting the ATM twice during the same week, you know you are spending too much. More importantly, this way your brain will learn to interpret "how much money do I have" as the amount in your purse, not the amount in your bank account (and definitely not the amount in your second bank account.)

Generally, the best way to get rid of a habit is to replace it with an alternative. "When you feel tempted to do X, do Y instead" is easier than "simply stop doing X". What could be a replacement for your Amazon scrolling? (Alternatively, could you somehow subvert the process, so that you e.g. scroll for awesome things, then you bookmark them in the browser, but you never actually buy them?) Could you read a book or watch a movie instead? Play a computer game (some ancient game, without loot boxes and stuff)? Learn to cook, or build furniture? (If it must be buying, could you add some artificial constraint, such as "I am going to find the most awesome thing below $5, and then I will buy it"?) Or maybe you could spend some time with people who have much less than you... and perhaps buy something genuinely useful for them. (As a side effect, thinking about other people's problems makes you think less about yourself. Think how many homeless people you could feed for that $5,000.)

In fact, Suze Orman and the like are talking exactly to this audience, and their advice is in many cases a lot better than what they are doing now.

Also, being married to a small business owner who knows a lot of other small business owners, there's a "dirty little secret" that this article doesn't mention: most of them never get paid a dime by their own business. They are spending their way through a business loan, or they have family money, or some other source. Yes, there are people who get rich from starting a business, but if popular finance experts told everyone to start their own business, that would be a lot worse advice than what they are saying.

Over fifty percent of generic small businesses survive for more than five years, so it's unlikely that a majority of them are completely subsisting on government loans, investors, or family money.

The most common outcome (for the small businesses that last) is to turn into something that creates just enough revenue to support the owner and a handful of employees. The owner takes a small salary and uses the rest of the cash flow for float or reinvests it into the business.

However, depending on the country, tax laws can be fairly advantageous for small business owners (e.g., higher limits on tax-deferred retirement accounts). There's also the benefit of building net worth in the business, which isn't something that employees benefit from. So, while the owner may not be getting paid all that much, they still benefit in a bunch of other ways.

My wife is a loan officer at a mortgage company. It's a running joke that it's a pain in the ass to qualify small-business owners, because so many of them claim so little actual income on their tax returns, even when they're quite obviously wealthy.

Revenue and profit are conflated but are not the same thing.

Financial advice in general sucks. But when we get into the specifics... such as any say $150k/year programmer or higher, the generic financial advice of 6 months saving + max out 401k plan works.

-------

The plan for people at average, 50k/year combined income is closer to the go to college and get some skills that will launch your career.

What I do find amusing is our collective inability to talk about things that matter. Ex: the paycheck is the elephant in the room. And even though it is brought up in this post, the paycheck differences between families can lead to grossly different experiences.

They’re mostly bogleheads so are a little risk averse, but for most that’s probably the right move anyway.

The great thing is you can read the subreddits casually for ~3 months and learn everything you need to know to autopilot your financial plan for decades if you go the boglehead route. After that you mostly need to pay attention to major changes in tax law and entitlements.

I still read them all the time but I haven't learned anything new in years.

There's much better advice on /r/fatfire in terms of more advanced investing and tax stuff, but you have to sift through a lot of not-so-humblebragging posts. There is so much to learn outside of the "make a 100k-200k income and put everything into three securities" even if you don't use it. Real estate investing, entrepreneurship, angel investing, trusts, different corp-types, estate planning, etc.

And little things like that can help in the long run.

Boglehead advice agrees, with an explicit principle of “Never bear too much or too little risk”, suggesting 30-40% bonds in your 40s and the rest in stocks.

I think more people underperform from being too risk-averse than under-perform from having too much equity exposure and having an unfortunate overlap of a large expense and a downturn in the market.

I'm fairly risk averse and don't totally believe their leverage calculations. But it did convince me that any non-negligible bond allocation is probably suboptimal.

You talk about maxing out your 401k, but have looked into you maximizing your income to the be able to save more?

(Of course money is not the only important thing in your life)

People reaching 100k/year or so single income should be able to save comfortably. And a lot of programmers are on an appropriate career path to get there in a few years

But I think you're missing the point. The advice for most people (the target audience of the gurus) is wrong. It's just a coincidence that this article is posted on HN and it would be disingenuous to examine it from only this position/context.

The median household income in the United States is $79.9K. Assuming that a family of four can live on $50K (including taxes) in - most - locations, which is twice the poverty limit, they can theoretically save $30K a year in a mix of 401K, IRA, and general investment accounts.

This amount, if invested over thirty years with a 7.5% annual return (which is lower than what the S&P has historically returned by a fair amount), would give them a nest-egg of $3M. If they only manage to save half of that amount, they would still have $1.5M by retirement.

Now, this is a very feasible scenario for families in their twenties to late thirties, which is why many of the names mentioned in the article harp on the importance of investing early. It doesn't work nearly as well once you reach that point.

However, the opposite - not saving or investing, and having a large amount of consumer debt - leads to significantly worse outcomes.

No, its not, that's the median family income, which only counts groups of two or more people related by birth, marriage, or adoption living in the same home, whereas median family income includes single-member households and those whose members have no family relation, and thus is significantly lower, about $65K.

I think the main problem here lies in assumption of the distribution over the various locations. $50k+ in Appalachia is good money and you might be able to save $30k out of $80k. One would not be saving and investing in many of the large cities and their suburbs (where more people live).

One thing to note is that the $1.5M-3M is not inflation adjusted and would be worth much less than it is today. It will result in better outcomes, but it won't make people rich, like many claim. $1.5M is just enough to keep a couple out of poverty who will be retiring at 65 years old, 35 years from now. This is especially true if people live longer and the cost of healthcare continues to increase much faster than inflation.

"(which is lower than what the S&P has historically returned by a fair amount)"

The next decade is supposed to be much lower. (Past performance is not an indicator of future returns).

A 50K expense target is comfortably doable in most locations (that is, outside of San Francisco, New York City, and VHCOL suburbs). Keep your housing and car expenses reasonable, and cook at home.

> It will result in better outcomes, but it won't make people rich, like many claim.

$3M in investments allows for a ~$150K annual withdraw at retirement in near perpetuity. Add in social security, and the average take home for a dual income family will be at or over $200K a year. With this and assuming no other changes to their expenses, every year, they can 1.) go on 4-5 overseas vacations flying business class, 2.) eat out every night, 3.) purchase a new Mercedes E or S class. This isn't a bad way to live.

> One thing to note is that the $1.5M-3M is not inflation adjusted and would be worth much less than it is today.

$3M today will be worth ~$1.5M thirty years from now, assuming a 2.5% inflation rate. Even if they have only invested $1.5M, the $30K thrown off every year by $750k when, added with social security, still makes for a comfortable retirement.

"they can 1.) go on 4-5 overseas vacations flying business class, 2.) eat out every night, 3.) purchase a new Mercedes E or S class. This isn't a bad way to live."

I find it hard to believe that people making $85k or $58k today can do these things. I think it will be even tougher with healthcare costs associated with aging.

"still makes for a comfortable retirement."

Yes, I think it would be a comfortable retirement. Where is the claim that it would make one rich? Otherwise where is the argument...

"It will result in better outcomes, but it won't make people rich, like many claim."

You also haven't addressed the $1.5M side of it properly. That $30k you're talking about is only worth $12k. If the income is $100k per year (half the $3M number), that's the equivalent of about $42K per year at retirement and only $29K after the first 15 years. I'm pretty sure money would be tight in any suburb or city on that amount. They certainly aren't rich.

Buying VOO buys a share of the profits of the work of many millions of people. It also speculates that other people will continue to want to buy those profits.

Buying a token only speculates that more people will want to buy that particular token. It's much harder to project that people will continue to want it.

It is worth being honest about the false hope these authors are peddling about "becoming wealthy", instead of what they are really advising which is, to become above average / not poor. It is ultimately good advice for most while the crux of the issue is pretending everyone in America is a millionaire waiting to happen.

I would add that much of the sensible advice provided by these types of authors is not taught in public schools as a basic necessity of general education.

Saving $100 per week should be possible for most households today. $100 per week over 40 years with an 8% return is $1.3m.

If you think the market will be slower in the future, or higher inflation, or whatever, use the absurdly conservative 6% and it’ll take 50 years instead of 40.

Add in the possibility of home ownership giving an additional asset to add to the net worth over the investing lifetime, giving an extra few hundred thousand… and in forty years from now, we’re well over $1m in assets, easy.

Getting $100/week might seem daunting, but that’s less than 10% of the median household income — totally within reach of a majority of people with some small changes.

Throw in that extra $15-20k per year from SS and you’re living a pretty wealthy life (especially if you’ve managed to pay off a house during your life, so no mortgage. Otherwise just put $300k of the 1.3 to pay cash for a house. Having no mortgage makes your money go even further, and you’ll be rolling in money.)

A 8% annualized above-inflation return over the next 40 years is a big ask in today's low-growth world.

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-...

I do understand and agree with the part about increased productivity (decreased scarcity and cost) raising quality of life. I just don't see that applying to everyone equally (companies will keep some of that cost decrease as profit and return some to investors but not everyone can afford to be investors). I think there are a lot of finer points the article glosses over, especially around inefficiencies. And of course this is far from a settled topic as there are many economists debating this sort of thing.

Those advances are adjustments in quality of living driven by efficiencies in manufacturing, etc. This would be more on the resource scarcity side and less on the rich/income side. I would exclude food as an indicator since that is heavily subsidized. Healthcare has also increased substantially as a percentage of income.

Take a group of randomly selected non-rich people 1 to N and assume you have a "dart board" of varied strategies and their return in this iteration. Take the normal distribution over time and the outliers at the right end of the bell curve you will find that some will become rich in the proper flux.

You can't all just throw them at the same spot and get an absurd economic yield. It would in the end regress to both a standard distribution and the mean.

Competition mostly diminishes the returns in a given investment faster. The price differentials close through the generation of profit and fulfillment of demand. You are being paid to be a servant of entropy lowering things to their base state. This isn't a bad thing but one specific plan will not last forever.

Resource scarcity is weirdly peripheral to all of it and how you define rich in absolutes vs relative.

But there is a reason why spend less is the best advice for most people: they can't start a business, they have limited scope to increase their earnings significantly, and you can actually become relatively rich if you just spend less.

Personal financial advice really isn't about attempting to become rich, it is about stopping people doing things that make no sense. We aren't talking about becoming Jeff Bezos...that isn't the goal for most people, the aim is to help people retire with dignity. Telling everyone to start their own business is terribly unhelpful because it won't improve anything as most people will fail (this is why personal finance experts exist...because most people think in these unreasonable ways i.e. the only way I can become rich is by taking huge risks...rather than just not buying stupid shit I don't need, ppl reason in very weird ways).

To say this another way, most people do not understand the long-term value of a $1 saved today. Obviously, exactly how you calculate this is a little complicated but if people realised that $1 now was worth $4 or $6 or $8 in 30 years then they would consider what they do today more carefully (and even then, some people are just weird...they will say: I am going to die before then, or I don't care...then they will get to retirement and everything is fucked).

Btw, I used to work in this industry, I have seen people who didn't consider any of this. We had a client who worked all his life in a decent paying job but had little savings, took to drink, wife divorced him, lost his job in his late 60s, got drunk one day, fell down the stairs when he was on his own in his rented house (he lost his house a few months before), died. This all happened within a few months. It will happen. You will get old. You can't control everything in life but something that is relatively easy to control is your spending. I try not to give people specific advice but the number one thing that everyone can do is: control your spending, think about what you need, you can't avoid some expenses but the peace of mind later down the road from small changes is huge.

This kind of thing is unfashionable as hell though because it does put that pressure back onto the individual. Lots of young people today have this attitude of: everything is rigged, telling me to change anything when X person is so wealthy makes you an oppressor, etc. Unsurprisingly, this attitude tends to be linked with taking decisions that are unwise, and abrogating all responsibility for the consequences.

I think for most people the idea that $1 will grow a lot in thirty years just isn't very motivating. I hear that as saying I could either have chipotle today or a fancy dinner in thirty years. okay, but thirty years is a long time and chipotle is still pretty tasty.

personally, I find it much more motivating to frame it explicitly in terms of passive income. every time I spend $20, I am forfeiting $1/year in perpetuity. every time I don't spend $20, I've added $1 to my yearly budget in retirement. instead of delaying material gratification, I am eliminating my need to work.

Those kinds of people can budget to some version of wealth (especially when you consider the median net worth of their peers is most likely only barely a positive number).

To get into "real" money (5+ million dollars in savings?), then you can't budget yourself to riches if you simply do not have the gross income, and time horizon for some amount of compounding interest. The financial advisors in this bracket are usually not telling you what to save vs. spend, but instead more commonly discussing investment diversification strategies, ways to (legally) avoid or defer taxes, etc.

Yeah except the merchants probably marked up their prices 4% to cover card processing fees so really we are just paying more for goods than we otherwise would have with cash and the card company is giving us a tiny kickback.

Let's not pretend credit card kickbacks are free money... The card companies are glutting themselves on merchant fees and we are all paying the price in the form of costlier goods in exchange for a small kickback.

Lastly have you tried paying with cash online? While Bitcoin is a neat idea we are far from yet mass acceptance of any digital currency yet.

Budgeting will let you realize there are essentially infinite ways to spend your money. You have to decide the best way to do that. If you're trying to make money, buying yourself a latte is not the best way to do it. If you're trying to enjoy the money you earned, buying a latte may be the best way (but probably not).

Budgeting helps you better understand the balance between spending and earning. When you start considering the best investment for the dollar you have earned, it makes a difference.

People can spend their money and time however they want of course, but I'm always astounded by the lines at Starbucks whether people standing in line or the drive-through.

I certainly use such places when traveling (though I try to go to local shops) but I've never especially understood the 8am stand in line for 20 minutes ritual.

Seriously, since when did HN decide to sponsor this kind of self-interested clickbait?

The question is, are more of them rich from salary, from capital ownership, or from inherited wealth?

In the US, the broad “rich”—about the top 1% by income—overwhelmingly make their income from salaries and wages (https://www.cnbc.com/2015/04/09/where-the-rich-make-their-in...). However, the ultrarich—say, the top 0.1%—tend to make it from capital and inheritance.

Assuming financial gurus are trying to give feasible advice for how to become comfortably rich, the safest bet with the highest expected value is probably something like “get an elite professional education and find a spot in the elite managerial/professional class.” I.e., banker, MBA, corporate lawyer, or (for all the HN readers) FAANG engineer.

The underlying gist of “You’ll NEVER get rich by working for someone else” is that you should look for opportunities to build wealth that’s not tied to hour-by-hour labor. You can do this by owning your own business, or by looking for ways to own equity in valuable assets beyond your regular job.

I mean, enterprise software sales folks can get rich being paid on commission, "influencers" can get rich being paid by affiliate links, and none of them have any ownership in the business.

Apple's employees are managed by him, but both him and the other employees are working for the apple's shareholders.

I'm not singling Cook out here, he seems like a nice person. But i think you understand that there's a big difference between being a regular worker bee and CEO of a large corporation.

That's a stretch. An average of $150K/year before taxes throughout 20s and 30s is a pretty good job in the US. Say they save $50K/year--which is a lot on that salary--that's $1million saved overall which, depending on your assumptions, will give you about median US household income annually. So possible in a sense if retiring as soon as possible is your goal but certainly not to everyone's tastes.

In your example, a high salary individual contributing $50k/yr for 20 years at 7% ends up with over $2mm by age 40. That's $80k/yr at a %4 withdrawal rate for the rest of your life.

More reasonably, a $25k/yr contribution for 20 years at %7, would pass $1mm by 40. If you let that sit for the next decade and retire just before you turn 50, that will roughly double over the decade to $2mm.

I agree that this isn't attainable for everyone, but contributing the $19.5k/yr max to a 401k pre-tax, and $5.5k/yr into a Roth IRA over your 20s and 30s, will likely make you a millionaire by 40 and a 2-millionaire by 50.

Owning a small business is a chance at increasing rate of return. That's playing personal finance on hard mode for the average person. If you are risk averse, you'll be much better served focusing on increasing your savings rate and income.

Most personal financial advice is not focused on getting rich, it’s how to improve your financial health.

I'm most familiar with Ramit's work but he's also pretty clear that there's only so far you can go through savings but no upper bound on earnings.

It seems to me a bit like a strawman argument he's making when in fact some (or all) of the other gurus do talk about entrepreneurship and earning more.

1) Most of the personal finance experts he lists aren’t telling you how to get rich. They’re telling you how not to be poor.

2) Most people do need a coach or a mom or whatever to tell them they can’t afford something. Most people don’t even know how to balance a checkbook or calculate the real interest rate of a credit card.

3) Most people don’t know how compounding interest works.

4) There’s no definition of “rich”

5) I know plenty of people making mid-6 to low-7 figure incomes while “working for someone else” and some retired in their late-40s, early 50s

6) Most businesses fail

Plenty to satisfy what? Why would you bring anecdotes to a gun fight?

It doesn't mean that, it means "very very few people get rich working for someone else".

If we go by the numbers and the odds rather than pithy-but-misleading slogans, the easiest, safest path to a higher income is probably acquiring skills that are more rewarded in the labor market.

Which is still far from easy, but there is no easy way to make a lot of money. That much I agree with the article writer on.

1. stay in school

2. don't do drugs

3. don't commit crimes

4. learn a skilled trade or go to college. remember to google starting salaries for your major before committing.

Additionally, the article does point out that you may need to reevaluate your career and/or create a side hustle.

It is unclear weather it is "easier" for everyone to do so, or possible. And if not, whether they are better off not trying, and instead saving and budgeting.

Counterpoint: I know many people who have done just that. If you want to define "rich" as hundreds of millions of dollars, sure - start your own business. Otherwise, a few million and retiring before age 50 is a pretty good outcome and I have seen multiple software engineers do that, even before the most recent explosion in compensation.

Also, despite what the article says, I’ve made a ton more money working for the man than I ever made working for myself. I’d probably be considered rich by most Americans’ standards. So it absolutely can happen, though there’s a lot of luck involved. I used to own a business, and while I manages to keep it alive for 5 years, it didn’t make much money. I sold it to a competitor and went to work for the man (not the company I sold it to). I kept getting royalties for a couple years, and by the time that ran out, my stock units were starting to vest, and that’s when things took off. The business helped make the transition smoother and faster, but I’d have made money on my stocks and higher salary either way.

And... many times when I do hear people recommend "start a business", it's "for the tax write-offs". Or at least that's the one bite-size thing some folks internalize. Have seen friends and neighbors get in to "business" - like various MLMs - and talk about "write offs". Naive at best, and dangerous at worst, I'm not surprised more people aren't specifically pointing out "start a business" to mass audiences - I'm not sure most people can do that responsibly. But most people can enroll in a company 401k and save a bit of money for later. The biggest damage they may do is lock up some money until they're 59. "Start a business" without much thought can lead to a lot more problems for folks.

> The title is as relevant today as it was back then. There are few industries that pay themselves so much for doing so little as financial services.

https://www.fool.com/investing/general/2014/02/21/where-are-...

I really don’t think anyone believes they’re going to get rich after reading a personal finance book. The hash reality if even if your expenses were $0 your total salary times x years still wouldn’t make you rich is unavoidable and known to basically everyone. These books are for people who need to get a handle on their spending, pay down their debt, and start gradually accumulating positive net worth.

That person he describes with $50k annual income, little or no savings, and significant credit card debt sure as hell isn’t starting a successful business, especially since they most likely have children and are working hard hours.

He’s dismissive of being “less poor”, but for anyone who has actually been in or witnessed this average scenario, less poor is way the hell closer to rich than not.

The real problem on display here is the capitalist dystopia we live in. Fifty years ago that average person would have been able to support a family, buy a house, and not live under the constant threat of bankruptcy from a surprise medical bill.

But yea, start a business!

50 years ago, 70 years ago, an enormous series of treatments we now have, did not exist.

And even disease treatment options, even knowing how some diseases worked? Nope.

So medical care was less costly, because, there was literally less to be done. And people died at home more often too, as a result.

So naturally medical care was less costly.

And housing, the average family did not have a ginormous, 6000sq foot house. Try 1000 sq foot, 1500 sq foot as a norm.

So sure, less cost.

Same with all these fancy dodads.

Yes, 100% housing is more expensive due to low rate mortgages, and other reasons.

But in non-crazy priced locations, you can still build a small 150k, 250k house with land all in.

Some of it is indeed changing wages vs costs, but some is "more" vs wage.

> Fifty years ago that average person would have been able to support a family, buy a house, and not live under the constant threat of bankruptcy from a surprise medical bill.

I want to circle back to this. I read your comment assuming you are arguing that now things are "more" (cost++) this ideal is now less obtainable or unobtainable.

Do you think that the average person (median wage earner) should be able to support themselves in this way? Should we let go of this ideal as "old fashioned"?

No, although "old fashioned* was a very brief, 30 to 50 year period in US history.

Instead, I think that buying massive mansions (as per how people in the 50s may think of it), could be part of the problem.

Buying huge houses, means more people need mortgages. That saving for a down payment means less. That means higher monthly payments.

Outside of huge cities, a 1500 sq foot house and land just isn't that expensive. The problem is due to more than one source, it's also about trying to have a house, in some of the most expensive areas for real estate on the planet.

And other factors, cell phone, cable, internet, tablet, laptop, gaming system, monthly fees can run hundreds in some households, with hardware costs amortized, even a thousand per month for a family!

Do you think people in the 50s had all that? Even middle class families often didn't have a TV!

Do you know how many people I've seen with maxxed out credit cards, yet they have all those toys above?

How'd they get those toys?

Many people didn't even have medical insurance in the 50s. Why? I provided one possible reason prior.

But I agree, then isn't now. I don't know what to do about medical care, but I do know my grandparents couldn't believe all the things my parents were buying, when I was a kid.

I wonder what they'd say, every time I use credit to buy coffee, dinner, an electronic gizmo, or a paid service.

I wonder what they'd say, when they also saw me paying 2x, or 3x for it, after years of paying credit card compound interest?

More than anything, credit is the big problem.

> Instead, I think that buying massive mansions (as per how people in the 50s may think of it), could be part of the problem.

You draw this comparison of what people in the 50's would think of our world today when in all reality the cost of everything has skyrocketed since the 50's. The dual-earner expectation is a new thing since then, the post-WW2 credit boom happened, the expectations of higher education to enter careers is different, housing markets are night and day, etc... Anyone who's looking at this modern world through the lens of the 50's ideals must realize that this is an incredibly skewed/distorted way to think about today. Or at least I would hope they realize this.

> And other factors, cell phone, cable, internet, tablet, laptop, gaming system, monthly fees can run hundreds in some households, with hardware costs amortized, even a thousand per month for a family!

> How'd they get those toys?

Much of that isn't a toy in this day in age... I would argue that cell phone and internet are utilities NOT toys. I would argue that a laptop/tablet/phone is a requirement to stay relevant in even entry level positions... and sure - I can understand not subsidizing TV and video games as they're pure entertainment. But, I would very much argue that folks who are worried about improving conditions for wage earners are not advocating for everyone to get a free Xbox and 42" LCD.

> But I agree, then isn't now.

I'm at odds with this too - when you spend so much time drawing comparisons between the 50's and today I am left to wonder, "where does this person draw the line of 'then' and 'now'? Do they believe in 50's ideals being exercised today? And if so, which ones?"

All of these comparisons you've drawn make me feel like I'm suppose to feel guilt for having purchased things with credit as well... admittedly things like TV's, etc. I've never paid "2-3x" for something as I've never fell for that trap... but I have purchased expensive things like computers and used my credit to spread that hurt out over a year...

And... oh god... if I get a house how do I live with myself knowing it's a mansion or not...? I guess I should stay within the arbitrary <= 1499 sqft limit and move away from any population centers or I may accidentally end up with a mansion in the eyes of someone from the 50's!

> I wonder what they'd say [...]

My grandparents and parents are not involved in my finances. They're all dead now, but they lived a life so very different than mine that I really don't care what they'd say... my answer to that is "So what?"

> More than anything, credit is the big problem.

Credit/debt is the basis of any capitalistic society - it's literally in the blueprints. If you truly believe this I would argue you have a fundamental issue with capitalism as well.

Also, hard disagree which is why I asked you the original question. Wage stagnation and commodification of everything we need to live is the "more than anything" problem.

I do not disagree that credit is a problem. But it is not the "more than anything" problem. Actual livable wages for everyone willing to work is the "more than anything" problem.

There are multiple metrics here, but many people talk about the price of home ownership, as in a house.

And in that context, yes -- people are buying mansions. Even at 3000sq foot house is 'large' by 50s or 60s standards. Only high-end middle class would ever contemplate such a monster, in the 50s. The average middle class buyer would opt for a "normal" sized house, 1500sq.

Yet many people today buy massive houses.

Look here:

https://www.aei.org/carpe-diem/todays-new-homes-are-1000-squ...

Notice this trend is from 1973 onward. It didn't start there, meaning, houses were even smaller in the 50s.

This does matter, for it does indeed effect price. Build costs, outside of Seattle, New York, San Francisco, LA, are what costs typically, not land price. A bigger house means more maintenance costs, too.

What has enabled this? Massive, low interest mortgages for anyone, qualified or not.

And what has that done to housing pricing? Pushed it up. Low cost mortgages cause an increase in housing costs, because people can suddenly afford more. An example (approx)?

330k mortgage @ 3%, approx 10% down? Monthly payment = 1500/month.

330k mortgage @ 10%, approx 10% down? Monthly payment = 2900/month.

Look at it this way:

600k mortgage @ 3%, approx 10% down? Monthly payment = 2950/month.

So a person today can literally afford a house twice the price, just by the interest rate changing from 10% to 3%.

Why is it important?

Well, bidding wars happen all the time for housing. If people can afford more, they'll bid more. Now, change doesn't happen overnight, but it certainly does! And that means that over time, pricing increases faster than inflation, for, people can afford more for the same payment.

In a seller's market, which happens every few years, up the price goes!

https://tradingeconomics.com/united-states/interest-rate

Click on 'MAX'.

Now look at 1980. Holy! Yes, 20%. And I assure you, it was actually a little higher in some locales.

330k mortgage @ 20%, approx 10% down? Monthly payment = 5200/month.

My point in all of this is how dramatically interest rates change affordability of housing. And how it has allowed "McMansions" to appear, massive houses dramatically larger than things 50, 70 years ago.

Back to this:

As-if the majority of folks today having troubles finding an affordable place are looking for mansions".........?

The problem is, even 'smaller' houses are 'large' by prior standards. This is why I have been discussing 1500sq ft homes, and how they are very affordable outside of massive, high density cities.

People don't have issues with housing/rental costs in rural Kansas, or in smaller cities. Not like the Valley, or Seattle, which is what the majority of people here are complaining about.

OK.. on to the next point.

You draw this comparison of what people in the 50's would think of our world today when in all reality the cost of everything has skyrocketed since the 50's. The dual-earner expectation is a new thing since then, the post-WW2 credit boom happened, the expectations of higher education to enter careers is different, housing markets are night and day, etc... Anyone who's looking at this modern world through the lens of the 50's ideals must realize that this is an incredibly skewed/distorted way to think about today. Or at least I would hope they realize this.

The cost of many things has skyrocketed, but other things has plummeted.

With respect to dual income earners, that one is simple. Over time (and 70 years is a long time), inflation and wage pressures match expectations. For example, double everyone's salary, and within a decade (theory states) that pricing will adjust to available buying power. Just as with my housing example, low interest rates enable higher housing prices.

And more available cash in everyone's hands enables an increase in commodity and pricing of goods.

(BTW, virtually every article you read on housing pricing plus low cost mortgages backs up my logic, with articles also discussing what would happen to the housing market if interest rates even just doubled -- yes, a crash. This logic holds with all pricing.)

My point?

Create two income earners in households and slowly over time? That extra cash just becomes normal, and pricing of things reflects that.

But back to pricing skyrocketing?

Not gas prices:

https://inflationdata.com/articles/inflation-adjusted-prices...

Or electricity:

https://www.in2013dollars.com/Electricity/price-inflation/50... (Between 1950 and 2021: Electricity experienced an average inflation rate of 2.99% per year. This rate of change indicates significant inflation. In other words, electricity costing $100 in the year 1950 would cost $810.18 in 2021 for an equivalent purchase. Compared to the overall inflation rate of 3.45% during this same period, inflation for electricity was lower.)

It doesn't end there. Food pricing is lower. Household incomes are higher.

All of these comparisons you've drawn make me feel like I'm suppose to feel guilt for having purchased things with credit as well... admittedly things like TV's, etc. I've never paid "2-3x" for something as I've never fell for that trap... but I have purchased expensive things like computers and used my credit to spread that hurt out over a year...

This isn't about guilt, just reality. And maybe you're not in that trap, but endless consumers are, and they are paying 2x or 3x the cost of everything they own, as a result!

Credit/debt is the basis of any capitalistic society - it's literally in the blueprints. If you truly believe this I would argue you have a fundamental issue with capitalism as well.

No, heh, no it is not, at least not in the context we're discussing. Capitalism didn't start in the last 20 years.

For example, getting a mortgage used to be highly regulated, with stringent checks on ability to pay. If the housing crisis taught us anything, that's not true now, and even after 2010? Things are incredibly lax compared to the 50s.

Look at credit card approvals? Most people didn't even have credit cards in the 50s. Or revolving lines of credit.

Credit has nothing to do with capitalism. Nothing. Capitalism is about a lot of things, but not that.

Or, did capitalism not exist in the 50s?!

What's changed is that credit is freely available now, far more than ever before. And this causes "false wage increase" syndrome, for lack of a better term.

Back to this:

I do not disagree that credit is a problem. But it is not the "more than anything" problem. Actual livable wages for veryone willing to work is the "more than anything" problem.

and from your original (for context):

> Fifty years ago that average person would have been able to support a family, buy a house, and not live under the constant threat of bankruptcy from a surprise medical bill.

Thing is, that's not true for everyone. If we're talking about "people who would buy homes in the 70s, or 50s", then what I'm talking about is valid for that income earning class of wage earners.

And wages for that income class, are up! The problem for "middle class" america is "too much credit" and "paying absurd amounts for that credit".

Not sure we're going to agree here though.

> No, heh, no it is not, at least not in the context we're discussing. Capitalism didn't start in the last 20 years.

I did not make the claim that Capitalism started in the last 20 years - I made the claim that debt/credit is at the basis of a capitalistic society which is econ 101.

> Not sure we're going to agree here though.

We very much will not, and I don't appreciate how you literally were putting words in my mouth to back your claim. Good day.

My point was, not that you said "the last 20 years", but instead, I am saying that credit as a basis of US style capitalism, has existed for 20 years.

And I go on above, to explain why.

Sure, some mass-market dude with a radio show (I don't know anything Dave Ramsey or Suze Orman beyond their wikipedia pages) is going to have advice that "technically" doesn't make sense or that doesn't apply to some people. A very large number of people are deeply in consumer debt, have secured vehicle debt for more expensive cars than they should really have, and may well have taken the advice to get the biggest mortgage they could for a house in a place that requires that they maintain the whole shebang or go bust.

Telling those people "cut up your credit cards" and "if you don't have the cash, don't buy it" is actually good advice. The "snowball" thing that Ramsey is into is innumerate but may be just the thing for someone struggling to see their way through all their debts. I would no more tell someone with serious struggles with consumer debt that clever use of credit cards could increase their income overall than suggest a killer wine pairing to a recovering alcoholic.

I also don't think that it's a very fair categorisation of Sethi. He's never made any secret of the fact that these days most of his wealth has come from his writing and despite the name of his book, the advice he gives is more "I will teach you to be a financially prudent member of the upper middle class (if you are a well paid professional)" they just couldn't get that on the cover.

The big thing you have to know about Dave Ramsey is he has a biblical approach to debt, not practical. God says debt is bad so it should be avoided.

This leads to some odd advice.

Dave advocates working as much as possible during college to avoid student loans but neglects that, in the aggregate, the more hours a student works the poorer their grades and the less likely they will graduate.

He also advocates stopping 401k contributions until you're out of debt (because he believes debt is evil). That's almost never a great move financially if your employer has a decent 401k match. A better idea is to drop anything above the match until high interest debt is paid off.

His advice is very one sized fits all and he does have a point that many people can't control themselves with debt.

I'm really not a fan of the way he talks to his callers calling them stupid either, especially when he doesn't realize he doesn't really understand his caller's situation. He got super belligerent with a woman who didn't know exactly her husband's pay (who was a servicemember) and basically said she needed a marriage counselor because she didn't have an exact figure. (She said "around $xyz") But it seems he doesn't understand a significant portion comes in the form of several different allowances that are tax free and change based on their current orders, POC, and rank, so it's totally normal to have a non-precise figure off the ttopof your head.

He mostly talks to people that don’t realize the stranglehold debt has on them.

The first step is to acknowledge the problem

I just don't know that people really understand that his view of finance is biblical based rather than empirical based and advice is extremely one sized fits all.

At the same time it is the kick in the ass that already well-to-do-people with too many Lexusus who are deep in debt probably need. People who don't have much income? Not sure what they are going to get from Ramsey other than shame. These people have a cash flow problem, they don't need to called a moron. Like TFA says, this advice is more about maintaining wealth, not creating it.

(Of course, TFA ignores the risks of starting a business, but that's another topic)

For me, the best thing I ever did in my life was take out loans to live while in college so that I could devote 100% of my time to my studies. It's the only way I would be able to graduate, and I'm glad I didn't worship the altar of Dave Ramsey at the time (or even know who he was) because I really didn't need extra stress or guilt, I put enough on myself. Dave just thinks people like me don't exist - people who take out debt reluctantly after cost-benefit analysis, pay it back ASAP, and who are better off for it.

Of course, God says debt is bad, so Ramsey doesn't care if I exist.

I still just refinanced into a 30 year mortgage and didn’t pay off the house YMMV

Ramsey's get-out-of-debt advice is top notch because it creates a roadmap that average people can understand enough to follow. His core audience is the people out there who have demonstrated an inability to use debt responsibly. A lot of these people have no understanding of interest rates, budgeting, or any other type of financial planning or analysis beyond "can I afford the payments?". And so they end up saddled with ruinous levels of stupid debt like cars they want but can't afford. Any boglehead will tell you his advice is often far from optimal mathematically, but distilling down into some idiot-proof heuristics that everyone can understand without math (e.g. pay extra on the smallest one) helps more people than it hurts start taking steps in a positive direction.

His stay-out-of-debt advice is meh. You're right he has a stated biblical position against debt, but I think also that's just a nice cover for a convenient simplification in his message. The fact he says mortgage debt is okay shows his anti-debt stance is not a firm biblical line in the sand which it would be if it were truly a spiritual question. He's a wealthy man and has a background in real estate so I'm sure he's aware of the ways that debt can be a wealth creation tool. But unpacking all the details of every "it depends" situation on the air to see whether using debt in that scenario is responsible or not could easily get complicated, and also could confuse the simplistic people who joined his audience for get-out-of-debt advice. So I understand why he wouldn't want to go there, officially, with people who most-of-the-time are looking for someone to help justify taking a debt they know is a bad idea. Furthermore, when a huge percent of young people today are going deep into debt for degrees that won't help them thrive financially, I don't have a problem with him telling people to explore every opportunity to avoid or minimize that debt. Much of his audience is debt-addicted, and he doesn't want to undermine the messages that getting and staying out-of-debt should be a top priority.

Ramsey's investing advice is trash. He's always talking about some amazing unnamed 10%+ annual return mutual funds that you can't learn about in detail without getting in touch with one of his affiliated "Smartvestor Pros". I have no idea if the advice they give out is any good, but that stuff always sets off my snakeoil alarm. Could easily be a lambs to the slaughter situation.

One thing I appreciate about him that I think other gurus underemphasize is the importance of healthy relationships and communication in long term financial health. Tons of his callers have bigger relationship problems than financial problems and I appreciate that he addresses that directly.

> Of course, God says debt is bad, so Ramsey doesn't care if I exist.

I wouldn't take it personally. A person like you who can do a cost-benefit to use debt as a tool is just not his audience.

You 100% can become a multi millionare as an employee. You can go the SV route and make $300k+ as an engineer or go the traditional route and make $100k working as an engineer remotely in a low cost of living location.

https://www.petekeen.net/automatic-finances

I've been using it for about three years now and, modulo a couple tweaks, it's substantially identical to that write up and requires ~zero manual intervention.

I’ve gotten lucky; the company I work for has done really well. If it hadn’t, sure, I’d have a fraction of my overall wealth.

But I did follow the advice, and it did work for me.

https://ukpersonal.finance/

The mods tend to update it regularly in line with changing economic conditions and laws etc.

I read Mr. Money Mustache's blog frequently when I was young; he has an important addition to what many of the mainstream personal finance books address. Being rich is more about freedom and personal happiness than it is having a lot of money. For many people, adjusting to slightly less nice but more affordable things is significantly easier than increasing their income by that same amount. Furthermore, every dollar you adjust to not needing is better than adding income - it compounds even faster because it goes into retirement with you and reduces your target savings amount.

But, going back to the post there are a _lot_ of people in the US and around the world that don't have the income required to have any sort of savings, even after adjusting down their lifestyle. This is a systemic but tractable problem. The solution isn't "get a side hustle" it's "the full time minimum wage should support a reasonable life".

Ugh I saw you getting close and then miss it

Why would you think the solution to the savings problem is minimum wage?

When is the minimum ever good enough? Frustrating how not enough people talk about increasing income way beyond the minimum

Then you get to retire at like 40 with a much higher probability of success.

Especially finance advice given to low-income people is just horrible. Like starting a savings account is a great way to lose all your money to fees when you need to withdraw everything in an emergency.

As I expected from this audience, some of the comments are funny and completely miss the mark of my article. But such is life.

Your conclusion in the article (under "What would I recommend you do?") turns out to be the same thing Ramit Sethi recommends you do (among other points in the article which are in agreement with his writings).

So, you are not calling out Ramit Sethi as much as you think you are.

It also conflates the fundamentals (not having credit card debt, investing in a tax-advantaged retirement fund) with the next step of not trading money for time.

How is someone who can't manage their (small) amount of money going to manage the large amount of money earned from a successful business? They can't.

As a further thought to consider, what are the chances they would be able to start a successful business to begin with?

In other words, "you learn to crawl before you walk".

You can be "rich" by having the freedom to spend your time on what you want, and appreciating the cornucopia of luxuries that make up a typical American middle class life.

You can get there by living (happily!) on a lot less than 100% of what you make, and saving the rest. With some simplifying assumptions about investment returns, the actual dollar amount a person makes doesn't matter; it's just the fraction of their net income that they need to maintain their lifestyle that informs how long until retirement. E.g. if you can save 50% of your income, you can retire in 17 years. https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...