I admire OP's financial project and appreciate his sharing it. I imagine quite a few people may benefit from it.
But make no mistake about it, the #1 reason for any "How I did <anything regarding money>" is really, "I am cheap."
We only get one chance at this life, and the thing that bothers me the most is, "What are you missing that you're too frugal to consider?"
Some of the greatest pleasures of my life came as a result of a discretionary purchase. Incredible people, experiences, even business opportunities came my way because I bought a product, went to an event, or took a trip that most frugal people I know wouldn't have.
Once you decide to be frugal, you'll probably be stuck that way for life because you'll rarely be in position to take advantage of those opportunities that would break the cycle.
If that works for you, fine. But not for me. I may not be extravagant, but I don't want to miss any wonderful opportunity because I was too worried about my bank balance. In the grand scheme of things, how sad that would be.
</sipsLatte>
[EDIT: Yes there is a difference between "cheap" and "frugal". Every time I mention "frugal" above, I really meant "cheap", but I was trying to be nice. I will leave it that way to make the thread below make sense. Also, I failed to mention that there's a big difference between being cheap because you have to and being cheap because you choose to.]
Story of my life, Ed. I am your poster boy who lives "cheap" and not "frugal" by choice. I clip coupons and browse slickdeals before committing to a purchase. I never buy anything at MSRP. I monitor airfare prices for weeks before booking a ticket.
This is a difficult problem to escape because it's one that I behaved myself into, and that it's self-reinforcing for a variety of reasons:
- When you're already on a fixed salary, the opportunity cost of spending time on being cheap is not obvious. You're not taking time away from that $500/hr side consulting gig that you don't have. Instead, you're at a situation where the marginal rate of return on clipping coupons (say, $10/hr) is significantly better than spending the next hour working on that iPhone app that is months from release and has no interested buyers (how long is it going to take to recoup the Apple developer fee?).
- Some people get a rush out of saving money, a feeling of "Ha! I beat the system." To them, saving money is a form of entertainment [1], and there's certainly far worse hobbies to have from a well-being perspective. Unfortunately, there are people who take this too far and end up as total misers or compulsive hoarders. I'm not a pathological case, but I've done things that would make some people cringe.
- Seeing people successfully live frugally can be a motivator to follow in their path. My parents are immigrants who worked hard and saved for 20 years before they were finally able to afford a house in an expensive neighborhood (and nearly paid for it all in cash). They drive Toyotas, shop at Costco, and cook at home. They are basically the epitome of the "millionaire next door" [2].
- There's also a moral justification for this. "Why do I have to keep up with my spendthrift neighbors? So what if I don't drive a Maserati or carry a Hermès bag? No thanks, I shall be comfortable in my own skin, since envy and greed are evil." This is now an identity statement [3], and while it's a good position to take from a financial perspective, it can be crippling in the way it makes some people closed-minded. Of course, this doesn't necessarily stop them from pontificating about retirement at 30.
I do still think that my years of being cheap are starting to pay off, mostly because I'm finally getting comfortable with the sort of "discretionary" expenses you mentioned in your post. The difference is that it probably took a much larger bank balance for me to consider them "affordable." I just flew across the continent purely on a whim to visit some friends that I hadn't seen in years, I no longer cringe at expensive bar tabs if they were time well spent with buddies, I can afford to make an impulse electronics purchase just to see what it's like, and I'm preparing for that self-funded sabbatical [4] to reboot my life.
Was it worth it? Well, it was really, really hard to re-orient myself this way, and it took much more sacrifice than necessary, but the good news is that aside from lost time, most of the rest hopefully can be recovered.
"the #1 reason for any "How I did <anything regarding money>" is really, "I am cheap.""
I read it as "what happens when you invest intelligently in a booming real estate and stock market" (especially the former). I don't think this path is open today.
I've found it's not that hard to balance frugality with, well, spending money. They can actually work quite well together. So while most of my wardrobe is still acquired from thrift-shops, I also bought my most recent car without taking out a loan. I liked not having car payments, but needed a new car for a road trip we're taking next year, so I tuned my budget and saved cash to buy a car outright.
Just because you're frugal doesn't mean you can't have nice things. My wife just bought me a $600 leather jacket (that I've admittedly been too frugal to pull the trigger on) -- for $450, new, via eBay. My 10 year old set of Sennheisers were showing their age, so I bought HD595s. MRSP $329, Craigslist price? $100, new in the box. My other car's radiator was shot - and if I can develop loan disbursement software and ecommerce stuff, surely I can handle changing the radiator in my car, and did, saving myself hundreds of dollars. And these are just things I buy, not even going into the stuff I do.
On that last one though, there is definitely a balance you have to find between doing stuff yourself and better spending your time. My father would always wash his own car, but I can drive two blocks and spend $20 to have 8 guys and a giant machine wash it more quickly, and I'll pay someone else to change the oil.
In short, I think that your idea that "you'll probably be stuck that way for life" is absurd, and you're mistakenly mixing up the terms frugal and cheap.
> the #1 reason for any "How I did <...>" is really, "I am cheap."
I couldn't disagree with this more. In fact, I find the opposite true. Living lightly and investing well on average creates much greater opportunity and enjoyment than indiscriminate spending.
Sure, some wealth comes with being cheap/frugal. But real wealth comes from investing your time & money well and spending intelligently. Notice I said "time & money". Discretionary items are just as much a time sink as they are a money sink.
Forget the self-help articles that harp on about minimalism and the latest lifestyle design fads. Try to live lightly and gauge the results for yourself. You won't miss anything, you'll have more time, you'll think clearer, and of course you'll have more money.
Then you'll decide to launch a startup and lose your mind :)
I am sorry, but I think I disagree with your viewpoint. My idol in being frugal (but not cheap) is Mr. Warren Buffett. I don't think he lost an opportunity by being frugal or has any regrets. Obviously it is a very personal choice. Some people do get pleasure by discretionary purchases, and some (like me) by knowing that there is money in the bank.
I live, by most comparisons to people within the same bracket, very cheaply. The thing is, I'm not watching every penny, I'm not buying the cheapest thing there is. I just refuse to pay more than what I value something at (and dollars, not intrinsic value of the time). There's some things that are significantly under what I would value them at dollar wise and have no trouble paying for, but there's a large number of things that are priced over what I would value them at and just don't buy them. Additionally, the immediate price isn't the only thing to consider in the cost, there's the lifetime value of the item as well. So, I would disagree that the sole response is being cheap, I'm completely confident the same things are capable of being accomplished by having an understanding of the total cost and total value of things you're spending money on and being smart about purchases and use of money rather than buying expensive things because they're "nice".
How much can you save per month by being frugal? Top several thousands dollars per month.
I prefer to focus my efforts on maximizing my income, which is theoretically unlimited, instead of minimizing my personal expenses, which are limited to $2K/month.
What you're saying is that you spend money and it increases your luck surface area; but there are plenty of free ways to do this. You don't need to go on vacation, make extravagant purchases or even go to the coffee shop to meet new people, make contacts, etc.
It sounds like you need money to get outside of your social comfort zone. If that works for you, fine. But it's not necessary.
Also, don't confuse using money to increase your luck surface area with blatant consumerism. Flying to a conference in Finland is much different than buying a new TV.
The thing that "cheap" and "frugal" characterizations miss is one that I think is significant (and is noted in other comments in this thread, e.g., ebay) is "resourceful".
This is not about being cheap. This guy won't cheap out on food and drinks on a night out, because he doesn't do it very often. He will buy better shoes and clothes than you, because they have to last longer. He will have a nicer house than you, because he has put time into it, and the end, can afford better stuff than you do. Spending wisely and being cheap are very, very different things.
"How is being self employed retired? Is this a new meaning of the word retired that I have not heard of?"
Raises an interesting question about whether working in a hobby business is "retirement".
If the author works solely in the hobby business for his own pleasure and could live indefinitely if he shut up shop tomorrow then he is arguably retired. Plenty of retired people still do some measure of work for the sole reason of having something enjoyable to do with their time.
Also, LOL at the advice essentially being "Participate in the hottest job and stock market in history and get out at the right time". Living cheap and making investments is sound advice, but anyone who made their fortune in the late 90s was more lucky timing than prescience.
"How is being self employed retired? Is this a new meaning of the word retired that I have not heard of?"
It is the meaning that describes a person who'd saved enough so he doesn't have to work for the rest of their life. What he does for fun is irrelevant. Even if it happens to be "work".
- He made a great home investment, apparently bought cheap and later was able to rent it for a lot of money. This is good for him, but somewhat lucky (or, alternative, a spark of insight into real-estate)
- He made nice returns on stocks
Both are fine, but not a part of "corporate programmer salary"
My thoughts exactly. He used the rent from 1 house to cover the mortgages on both his rental and his own house.
A typical mortgage around here is about 1/3rd of your income. So being able to basically have other people pay 2 mortgages for you is _huge_.
He also mentions he bough a bunch of Cisco stock for 7$ which he later got to sell for 30$. That's more than a 300% return, so depending on how much he invested, that can easily amount to a hefty chunk of cash as well.
Exactly...a bit misleading. It's more about making smart investments and having a lot of luck with the timing. Like my parents, who had successful careers (dad was a dentist, mom was in real estate), but in the end selling the house they bought in 1975 for $87,500 (and paid off) for $950,000 in 2004 was what put them in the best shape for retirement.
True, but his investment capital came from his IT salary (at least initially).
I thought this article counter-balances some of the many startup success stories we read about here. All great success seems to involve exceptional circumstances, hard work and good luck.
I guess the point is that startups aren't the ONLY way for programmers to get lucky.
Let me get this straight, he thinks 900k is going to be enough to retire on, send a kid to college, and lay for his future medical bills!? That home building business started during the home building boom better be earning more than 50k.
The safe withdrawal rate -- that is, the rate at which you can withdraw from retirement accounts without too much risk of running out of money eventually -- is generally considered to be around 4%. With $900,000 saved up, that means the OP can spend about $36,000 / year from his nest egg without too much risk. The article states that they live as if they made $35,000 - $40,000 / year. So the income from their retirement combined with their side business should be enough to at least sustain their current lifestyle. I have no idea if their $35,000 - $40,000 estimate covers health insurance, so it's hard to say whether they are at risk of being wiped out by medical expenses.
He's letting that 900K appreciate, so it should be enough soon for a lifestyle as frugal as theirs.
And I expect that his income will remain good. There's something about being able to say 'no' that puts you in a position to snap up the really juicy work.
Retirement is the point where a person stops employment completely
Obviously not what the author of this article did. It seems that the author's goal was to get out of the IT industry. Why? Was he unhappy? Whatever the case, he seems much happier building houses. That's great!
Personally I love software development, and don't really want to do anything else. Sometimes, when the stress gets to me, I find myself imagining doing something else, but it's usually just a phase.
If you want to change your line of work, then by all means do it, but it's not retirement.
Sorry, but his stock trading seems bit hard to believe.
He's saying that he made money on stocks during the dot com boom and during the bust as well? I don't think that's possible, unless he was psychic enough to short at the top.
Anyone who made money on stocks during the bust got their heads handed to them during the bust. No one believed that the bust was going to happen. One of my coworkers turned 50k in 1999 into 250k by 2000, and then 6 months after the bust started, he was down to 20k. EVERYONE during that time thought they were stock picking geniuses, so when stocks went down, they thought it was a buying opportunity. I can't imagine there were any stocks you could have bought during the bust where he could have made money, let alone increase in value by 50%!!! During those years he went for 67k to 150k to 250k!
Unless he was shorting stocks, there really wasn't any stocks that survived the bust very well, especially if he was investing in the likes of Cisco, etc.
The same goes for 2008/2009. Unless this guy is some sort of stock trading guru, he would have lost 50% of his stock portfolio yet he made $35k. It just doesn't sound right.
I think this is completely feasible starting with a $0 net worth and having a college education. I am not remotely surprised he got to a $100k salary working full time plus nights and weekends. You'd be surprised how many people you can pass up in the work force just by showing up on time and working more than them.
Frugality is also huge. If you can save 15-25% on products you knew you were going to buy anyway by clipping coupons or buying in bulk or searching for deals, that's far better than making 15-25% in the stock market because there's no risk.
The real estate thing, too, isn't as hard as you think. Multi-unit dwellings can often be purchased at the price of a normal house and rented for 2-3x what a normal house would go for. If you can find a three or four unit building for $100-$150k and live in one of the units while you pay down the equity and fix up the other two to increase they're rental value, then getting $500-$600 per unit becomes very possible. That's $1500-$2400 a month to go towards mortgages, which would easily support two $100-$150k houses.
With regards to the idea of having a cap on savings returns, this is very true. But savings are also different from investments in that whatever you were going to do with your discretionary investments, you now have more capital to work with because of your savings.
Example: You make $3000 a month and your monthly expenses are $2000. That leaves you with $1000 a month to invest. If you haggle on rent, clip coupons, and use second-hand stores and flee markets to get your monthly expenses down to $1500 a month with no reduction in lifestyle, then you have $1500 a month to invest.
The 50% increase in your investments means a very large gain on returns. With compounding interest at 8%, you can accrue $180k+ over ten years on $1000 into savings every month. When you change the savings to $1500, then you only need 1% return to save the same amount of money OR you'll have $276k at the original 8% rate. You're either massively reducing your risk or massively increasing your return.
In any event, saving money on expenses should be the number one priority of any investment strategy.
There's always an outlier who attributes his success to skill (and he's usually writing a book about it so we can all follow his three step process to riches).
Before the crash, virtually all real estate deals were firecrackers, so no luck was involved there. The luck involved was in mostly cashing out before the crash. He doesn't say whether 2011 is year 11 or year 15...
Seems to me that stories like this are much more useful to the masses than stories about the Steve Jobs and Bill Gates of this world and everyone seems to eat those success stories up. I guess it is about perspective and what your ideal lifestyle goal is.
My landlord used to vacation in a nice coastal area. For a number of years, he went to the same town, same rental. At one point, the cottage came up for sale. $200k. He dismissed it as too much of a risk for his financial situation at the time. Less than five years later, the boom and bubble in coastal properties had exploded the market value to $600k. For a humble cottage. That regret (he could have bought the cottage and rented to cover) - missing that opportunity is why he purchased multiple properties in an up and coming area before it became the young professional magnet that it is today. He had done quite well for himself, a liberal arts major who has minored quite successfully in real estate.
The timing of the housing market and stock market couldn't have been better for this guy.
I'm not saying he didn't have anything to do with this for being frugal (I'm doing the same thing), but stock and housing gains seem to account for a large portion of his wealth.
Here in Australia, the commonwealth bank provided a guideline on how much super you needed to retire on to main various life styles, and what struck me as scary was how much you needed at retirement age 65, to survive for 20 years, if you wanted such first world pleasures as running a dishwasher, going out to dinner once a week, and so on. 800k was not anywhere near the amount needed.
I'm not calling this guy out, but you would be living a minimalist lifestyle in order to make 800k last you 40 years..
If you had it all in a 6% long-term savings account, you're barely making 50k pa before tax, for two people to live on. Sure, you have no mortgage, but you still have all the other costs of life involved. They'd be able to do it, but they certainly wouldn't be living the high life.
Step 0: no debt. You could attribute that to luck or smart early decision making, but that's definitely a large step ahead of everyone else.
Personally, I have measured it will take me approximately three years of post-college work experience to get out of debt (with my current income, budget, amount of debt, etc.). I haven't heard of any startup founders that go into a startup with debt already in their wallet so I feel that the amount of student loan debt universally shrinks the space of potential new entrepreneurs.
You can, if you want to live like this guy. I don't. I would rather work and spend the way I want to on my off time than spend every waking hour managing my budget without a job. If always going to the library rather than grabbing a book on Amazon or always bringing stuff from home rather than eating out or getting a coffee is key to living like this, then count me out. If $5 is unacceptable discretionary spending, then a coffee or meal out once in a while is the least of what you're giving up.
Frankly, I also think the guy is a little delusional about the future. You've got everyone on board now, something tells me that might change once you have a kid. Or multiple kids. Perhaps you already "agreed" to only have one kid, but then you are truly being naive in assuming that will stay the case. It may, but I wouldn't bet on it like this.
It's worth pointing out that this man is exceptionally frugal. It's a great strategy if you can be happy with a modest spend throughout your life.
This is why the guy who owns the laundromat down the street is a millionaire -- great stable income, but he and Mr. Money Mustache are far from having a lavish lifestyle.
The key thing for me was that he was able to clinch such big pay-rises. Not complaining or anything, but I wonder how universifiable the abilities/opportunities are which made that possible. He just mentions them almost in passing.
I'm convinced money grew on trees in the 90's... Too bad I missed out. Maybe it's just beacuse OP highlights what went right, I'd be much more interested in hearing what went wrong w/ his plans.
Wait till the family arrives... That's when the fun begins - more rewarding than anything - and the fastest way out of retirement u will ever find. Not into kids(?) - time will tell.
[+] [-] edw519|14 years ago|reply
But make no mistake about it, the #1 reason for any "How I did <anything regarding money>" is really, "I am cheap."
We only get one chance at this life, and the thing that bothers me the most is, "What are you missing that you're too frugal to consider?"
Some of the greatest pleasures of my life came as a result of a discretionary purchase. Incredible people, experiences, even business opportunities came my way because I bought a product, went to an event, or took a trip that most frugal people I know wouldn't have.
Once you decide to be frugal, you'll probably be stuck that way for life because you'll rarely be in position to take advantage of those opportunities that would break the cycle.
If that works for you, fine. But not for me. I may not be extravagant, but I don't want to miss any wonderful opportunity because I was too worried about my bank balance. In the grand scheme of things, how sad that would be.
</sipsLatte>
[EDIT: Yes there is a difference between "cheap" and "frugal". Every time I mention "frugal" above, I really meant "cheap", but I was trying to be nice. I will leave it that way to make the thread below make sense. Also, I failed to mention that there's a big difference between being cheap because you have to and being cheap because you choose to.]
[+] [-] CoreDumpling|14 years ago|reply
This is a difficult problem to escape because it's one that I behaved myself into, and that it's self-reinforcing for a variety of reasons:
- When you're already on a fixed salary, the opportunity cost of spending time on being cheap is not obvious. You're not taking time away from that $500/hr side consulting gig that you don't have. Instead, you're at a situation where the marginal rate of return on clipping coupons (say, $10/hr) is significantly better than spending the next hour working on that iPhone app that is months from release and has no interested buyers (how long is it going to take to recoup the Apple developer fee?).
- Some people get a rush out of saving money, a feeling of "Ha! I beat the system." To them, saving money is a form of entertainment [1], and there's certainly far worse hobbies to have from a well-being perspective. Unfortunately, there are people who take this too far and end up as total misers or compulsive hoarders. I'm not a pathological case, but I've done things that would make some people cringe.
- Seeing people successfully live frugally can be a motivator to follow in their path. My parents are immigrants who worked hard and saved for 20 years before they were finally able to afford a house in an expensive neighborhood (and nearly paid for it all in cash). They drive Toyotas, shop at Costco, and cook at home. They are basically the epitome of the "millionaire next door" [2].
- There's also a moral justification for this. "Why do I have to keep up with my spendthrift neighbors? So what if I don't drive a Maserati or carry a Hermès bag? No thanks, I shall be comfortable in my own skin, since envy and greed are evil." This is now an identity statement [3], and while it's a good position to take from a financial perspective, it can be crippling in the way it makes some people closed-minded. Of course, this doesn't necessarily stop them from pontificating about retirement at 30.
I do still think that my years of being cheap are starting to pay off, mostly because I'm finally getting comfortable with the sort of "discretionary" expenses you mentioned in your post. The difference is that it probably took a much larger bank balance for me to consider them "affordable." I just flew across the continent purely on a whim to visit some friends that I hadn't seen in years, I no longer cringe at expensive bar tabs if they were time well spent with buddies, I can afford to make an impulse electronics purchase just to see what it's like, and I'm preparing for that self-funded sabbatical [4] to reboot my life.
Was it worth it? Well, it was really, really hard to re-orient myself this way, and it took much more sacrifice than necessary, but the good news is that aside from lost time, most of the rest hopefully can be recovered.
[1] http://www.budgetsaresexy.com/2009/08/saving-money-trumps-se...
[2] http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/d...
[3] http://www.paulgraham.com/identity.html
[4] http://www.joelonsoftware.com/articles/fog0000000076.html
[+] [-] webwright|14 years ago|reply
I read it as "what happens when you invest intelligently in a booming real estate and stock market" (especially the former). I don't think this path is open today.
[+] [-] leviathant|14 years ago|reply
Just because you're frugal doesn't mean you can't have nice things. My wife just bought me a $600 leather jacket (that I've admittedly been too frugal to pull the trigger on) -- for $450, new, via eBay. My 10 year old set of Sennheisers were showing their age, so I bought HD595s. MRSP $329, Craigslist price? $100, new in the box. My other car's radiator was shot - and if I can develop loan disbursement software and ecommerce stuff, surely I can handle changing the radiator in my car, and did, saving myself hundreds of dollars. And these are just things I buy, not even going into the stuff I do.
On that last one though, there is definitely a balance you have to find between doing stuff yourself and better spending your time. My father would always wash his own car, but I can drive two blocks and spend $20 to have 8 guys and a giant machine wash it more quickly, and I'll pay someone else to change the oil.
In short, I think that your idea that "you'll probably be stuck that way for life" is absurd, and you're mistakenly mixing up the terms frugal and cheap.
[+] [-] todsul|14 years ago|reply
Sure, some wealth comes with being cheap/frugal. But real wealth comes from investing your time & money well and spending intelligently. Notice I said "time & money". Discretionary items are just as much a time sink as they are a money sink.
Forget the self-help articles that harp on about minimalism and the latest lifestyle design fads. Try to live lightly and gauge the results for yourself. You won't miss anything, you'll have more time, you'll think clearer, and of course you'll have more money.
Then you'll decide to launch a startup and lose your mind :)
[+] [-] mailanay|14 years ago|reply
[+] [-] ismarc|14 years ago|reply
[+] [-] nivertech|14 years ago|reply
I prefer to focus my efforts on maximizing my income, which is theoretically unlimited, instead of minimizing my personal expenses, which are limited to $2K/month.
[+] [-] colanderman|14 years ago|reply
And I ask instead, "What are you missing because you have to spend so much time working?"
[+] [-] Androsynth|14 years ago|reply
It sounds like you need money to get outside of your social comfort zone. If that works for you, fine. But it's not necessary.
Also, don't confuse using money to increase your luck surface area with blatant consumerism. Flying to a conference in Finland is much different than buying a new TV.
[+] [-] wglb|14 years ago|reply
[+] [-] ricardobeat|14 years ago|reply
[+] [-] mattmanser|14 years ago|reply
He notes on his 'start' page that a mere 1 in 9 Americans are self employed like him. Only a few 10s of millions of people then?
I think your office of national statistics would disagree with you buddy, you're a handyman, your wife's a realtor. You're not retired.
What a plonker.
[+] [-] garethsprice|14 years ago|reply
Raises an interesting question about whether working in a hobby business is "retirement".
If the author works solely in the hobby business for his own pleasure and could live indefinitely if he shut up shop tomorrow then he is arguably retired. Plenty of retired people still do some measure of work for the sole reason of having something enjoyable to do with their time.
Also, LOL at the advice essentially being "Participate in the hottest job and stock market in history and get out at the right time". Living cheap and making investments is sound advice, but anyone who made their fortune in the late 90s was more lucky timing than prescience.
[+] [-] AJ007|14 years ago|reply
HN needs some sort of false title penalty.
[+] [-] jpdoctor|14 years ago|reply
I'd also add: Landlords earn every penny that they collect.
[+] [-] blago|14 years ago|reply
It is the meaning that describes a person who'd saved enough so he doesn't have to work for the rest of their life. What he does for fun is irrelevant. Even if it happens to be "work".
[+] [-] alnayyir|14 years ago|reply
[deleted]
[+] [-] eliben|14 years ago|reply
- He made a great home investment, apparently bought cheap and later was able to rent it for a lot of money. This is good for him, but somewhat lucky (or, alternative, a spark of insight into real-estate)
- He made nice returns on stocks
Both are fine, but not a part of "corporate programmer salary"
[+] [-] div|14 years ago|reply
A typical mortgage around here is about 1/3rd of your income. So being able to basically have other people pay 2 mortgages for you is _huge_.
He also mentions he bough a bunch of Cisco stock for 7$ which he later got to sell for 30$. That's more than a 300% return, so depending on how much he invested, that can easily amount to a hefty chunk of cash as well.
[+] [-] stevenwei|14 years ago|reply
But the HN posting title seems to have been adjusted from the original title (which doesn't mention corporate programmer salary).
[+] [-] brown9-2|14 years ago|reply
[+] [-] byoung2|14 years ago|reply
[+] [-] usedtolurk|14 years ago|reply
I thought this article counter-balances some of the many startup success stories we read about here. All great success seems to involve exceptional circumstances, hard work and good luck.
I guess the point is that startups aren't the ONLY way for programmers to get lucky.
[+] [-] wheaties|14 years ago|reply
[+] [-] kpanghmc|14 years ago|reply
[+] [-] bryanlarsen|14 years ago|reply
And I expect that his income will remain good. There's something about being able to say 'no' that puts you in a position to snap up the really juicy work.
[+] [-] nazgulnarsil|14 years ago|reply
I'm going to refrain from writing something offensive. Suffice to say I find your attitude distasteful.
[+] [-] vetler|14 years ago|reply
Personally I love software development, and don't really want to do anything else. Sometimes, when the stress gets to me, I find myself imagining doing something else, but it's usually just a phase.
If you want to change your line of work, then by all means do it, but it's not retirement.
[+] [-] steve8918|14 years ago|reply
He's saying that he made money on stocks during the dot com boom and during the bust as well? I don't think that's possible, unless he was psychic enough to short at the top.
Anyone who made money on stocks during the bust got their heads handed to them during the bust. No one believed that the bust was going to happen. One of my coworkers turned 50k in 1999 into 250k by 2000, and then 6 months after the bust started, he was down to 20k. EVERYONE during that time thought they were stock picking geniuses, so when stocks went down, they thought it was a buying opportunity. I can't imagine there were any stocks you could have bought during the bust where he could have made money, let alone increase in value by 50%!!! During those years he went for 67k to 150k to 250k!
Unless he was shorting stocks, there really wasn't any stocks that survived the bust very well, especially if he was investing in the likes of Cisco, etc.
The same goes for 2008/2009. Unless this guy is some sort of stock trading guru, he would have lost 50% of his stock portfolio yet he made $35k. It just doesn't sound right.
[+] [-] padobson|14 years ago|reply
Frugality is also huge. If you can save 15-25% on products you knew you were going to buy anyway by clipping coupons or buying in bulk or searching for deals, that's far better than making 15-25% in the stock market because there's no risk.
The real estate thing, too, isn't as hard as you think. Multi-unit dwellings can often be purchased at the price of a normal house and rented for 2-3x what a normal house would go for. If you can find a three or four unit building for $100-$150k and live in one of the units while you pay down the equity and fix up the other two to increase they're rental value, then getting $500-$600 per unit becomes very possible. That's $1500-$2400 a month to go towards mortgages, which would easily support two $100-$150k houses.
[+] [-] padobson|14 years ago|reply
Example: You make $3000 a month and your monthly expenses are $2000. That leaves you with $1000 a month to invest. If you haggle on rent, clip coupons, and use second-hand stores and flee markets to get your monthly expenses down to $1500 a month with no reduction in lifestyle, then you have $1500 a month to invest.
The 50% increase in your investments means a very large gain on returns. With compounding interest at 8%, you can accrue $180k+ over ten years on $1000 into savings every month. When you change the savings to $1500, then you only need 1% return to save the same amount of money OR you'll have $276k at the original 8% rate. You're either massively reducing your risk or massively increasing your return.
In any event, saving money on expenses should be the number one priority of any investment strategy.
Note: I used this financial calculator for this comment - http://www.thecalculatorsite.com/finance/calculators/compoun...
[+] [-] rick888|14 years ago|reply
Not really, because clipping coupons won't ever make you enough to retire.
[+] [-] JoeAltmaier|14 years ago|reply
So pretty much, have a high-earning wife and buy a firecracker realestate deal that pays 2 mortgages. Doesn't sound so much brilliant as lucky?
[+] [-] brador|14 years ago|reply
[+] [-] salvadors|14 years ago|reply
[+] [-] bryanlarsen|14 years ago|reply
[+] [-] tl|14 years ago|reply
1. You and your girlfriend were making more money individually than the 2009 median household income [1], and you had been doing so since 1999.
2. You ended up on the good side of a stock market that robs as many people as it enriches.
3. You cut expenses whenever possible.
And your end result is a nest egg that might be enough if you stay frugal and work part-time? How is this useful financial advice?
[1] http://quickfacts.census.gov/qfd/states/00000.html
[+] [-] smallegan|14 years ago|reply
[+] [-] skrebbel|14 years ago|reply
[+] [-] wallflower|14 years ago|reply
[+] [-] pragmatic|14 years ago|reply
I'm not saying he didn't have anything to do with this for being frugal (I'm doing the same thing), but stock and housing gains seem to account for a large portion of his wealth.
[+] [-] malbs|14 years ago|reply
I'm not calling this guy out, but you would be living a minimalist lifestyle in order to make 800k last you 40 years..
If you had it all in a 6% long-term savings account, you're barely making 50k pa before tax, for two people to live on. Sure, you have no mortgage, but you still have all the other costs of life involved. They'd be able to do it, but they certainly wouldn't be living the high life.
[+] [-] apieceofpi|14 years ago|reply
Personally, I have measured it will take me approximately three years of post-college work experience to get out of debt (with my current income, budget, amount of debt, etc.). I haven't heard of any startup founders that go into a startup with debt already in their wallet so I feel that the amount of student loan debt universally shrinks the space of potential new entrepreneurs.
[+] [-] huhtenberg|14 years ago|reply
[+] [-] shinratdr|14 years ago|reply
Frankly, I also think the guy is a little delusional about the future. You've got everyone on board now, something tells me that might change once you have a kid. Or multiple kids. Perhaps you already "agreed" to only have one kid, but then you are truly being naive in assuming that will stay the case. It may, but I wouldn't bet on it like this.
[+] [-] davidu|14 years ago|reply
This is why the guy who owns the laundromat down the street is a millionaire -- great stable income, but he and Mr. Money Mustache are far from having a lavish lifestyle.
[+] [-] Tycho|14 years ago|reply
[+] [-] Sindrome|14 years ago|reply
[+] [-] 1point2|14 years ago|reply