Question for the Bogleheads Millionaires

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
mur44
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Re: Question for the Bogleheads Millionaires

Post by mur44 »

How about inheriting a large sum to kick start
your longer term retirement (following
Boglehead principles).

This is easy way of becoming a millionaire
with certainty.
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celia
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Re: Question for the Bogleheads Millionaires

Post by celia »

Put something in savings starting with your first job! It might only be $25 a week for starts. Not only will the money be enough to invest after a few years but, more importantly, it is building a savings habit. Whenever you get a raise, increase your savings to include half of the raise. Then continue to save.

Your very first savings is for an emergency fund to cover 3-6 months of living expenses. Everyone has "emergencies" in life and they happen at different times for each of us. Instead of being surprised when you get sick, or the car breaks down, or you lose your job, you will be better prepared for the emergency than someone who spent all of his paycheck every week. For the non-saver, an emergency means putting the expense on a credit card or taking out a loan. But if you couldn't cover this cost at the time it happened, what makes one think they can continue with their usual spending PLUS this new cc or loan payment? So an Emergency Fund prevents this "going into debt" because of things you know will happen (but you just don't know when).

We had a thread here recently on what you had to spend your Emergency Fund on. See:
viewtopic.php?f=2&t=158613

The majority of us said we never spent it or we don't have "emergencies". Rather we plan for the unexpected so when it happens, it is not really unexpected. For example, for several months I noticed our refrigerator temperature wasn't holding steady. Food near the outer edges was always freezing even after we adjusted the temperature controls. So when there was a recent sale on refrigerators, I bought a new one. Why wait for an inconvenient time (for me) to be scrambling to call a repairman or buy a new refrigerator at full price and lose thawed food in the process, when I can take care of it now? So I did.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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celia
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Re: Question for the Bogleheads Millionaires

Post by celia »

bradshaw1965 wrote:The self reported net worth surveys of Bogleheads, if accurate, probably indicate that Bogleheads in general are very high earners saving a very high percentage of their earnings. The cool thing is you can be in the bottom decile of Bogleheads, adopt the principles and practices and still be a millionaire in a reasonable amount of time. The techniques work as directed.
Several years ago I was in a used bookstore and I picked up a book written for teens or 20-somethings titled something like: How to Become A Millionaire. I only had it in my hands for 5 to 10 minutes but was struck by something I had never thought about. It asked, of all the older people you know or read about, who would you most like to be? (Surveys say the common answers are business owners, teachers, doctors, etc.) Then the next step is to figure out what that person does differently than others and try to emulate it. For example, in the evenings, do they read newspapers or professional journals, learn a new skill, network with others in the same or related field or do they watch TV, play video games, read fashion magazines, and eat pizza? Which set of activities will help you get closer to the goal of being like them? To be like them, you need to do the kinds of things they did to get where they are.

I had never thought of that before, but I realized it was true.

There are many "role models" on this forum. They represent a lot of different career paths and people who have met their goals as well as some who are starting out, who are making good choices. I think just reading the various postings from those who "have made it", especially when they talk about their journey, can show the younger ones how things can be done and why.

I'll bet just reading this forum in one's spare time instead of following the latest fad websites or texting friends all day can bring the needed information to those who don't have good financial role models in their life. It is up to them to take the next steps to read the recommended books to round out their financial knowledge and to act on that advice.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
MKP
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Re: Question for the Bogleheads Millionaires

Post by MKP »

I didnt see this response so I will say it.

Get a plan.

I worked at my first job out of college for 2 years until I realized I hated it more than anything I had ever done before. At that point, I created a monthly budget which would allow me to have a 1 year emergency fund and quit my terrible job.

Well, I stuck to my plan and quit my job one year later. On that same day I got a new job and have been working there since. The key is obviously to live way below your means, and I can't say I always do that. Living in South Florida is every expensive (if you have a kid and want to live somewhere where you don't have to pay for private school). I kept on making/sticking to my budget and it has been 5 years now and I have consistently exceeded my top line growth estimates while coming in shy of my expenses which has enabled me to become 1/3 Millionaire by 30.

As a percentage of gross income: housing for me is 20%. I am a car guy and have to drive something nice/fast, so between that and the SUV for the wife/kid, the cars are 11% of gross income. Monthly expenses (Cell/TV/Medical/Car Insurance/Trips/Gas/Misc) is 22% and then taxes (fica/federal) are 13%. I save the remaining 34% I max out both roths, HSA, 401k, have prepaid college for the kid and put about $2K a year into a 529 and get a 5% company match which brings my savings rate to around 40%.

I could cut the car (M3) and go on fewer cruises, but wouldn't be happy today, and if 40% isn't good enough for tomorrow, I have bigger problems.

My plan is run out into the future for 5 years, and I should be about 2/3 of the way there by then.
Last edited by MKP on Sat Sep 05, 2015 5:41 am, edited 1 time in total.
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HomerJ
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Re: Question for the Bogleheads Millionaires

Post by HomerJ »

Buy a cheap (but dependable) car, a cheaper house than you can "afford", advance your career, save half of your raises.

Marry someone who has a job and the same values, and you will get there faster

Seriously that's it...

You can have phone and cable and vacations and eat out now and then. Get the house and car purchases right, and that 80% of the battle of "living below your means"

Saving half your raises is the other part of the equation. If you are making $30k a year, and you change jobs and get a raise to $35k, then save $2.5k a year... It's painless... You still increase your spending 2.5k a year... So there's still some fun, but your savings are going up too... Way too many people get a $5k raise, and immediately start spending $5k more a year.
ks289
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Re: Question for the Bogleheads Millionaires

Post by ks289 »

The question of whether to emphasize higher earnings or higher savings rate or both boils down to your personal circumstances, talents, and opportunities. Many people are/were not in a position to excel in school, and their employment choices may not include lucrative positions. Savings must be the focus (cutting back on luxuries, moving to a lower cost of living area, multigenerational households, etc).
For those with more opportunities, the focus can be on earning more (putting in extra hours, developing new skills, obtaining more education/credentials, moving to an area where you may be more in demand).
Rexindex
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Re: Question for the Bogleheads Millionaires

Post by Rexindex »

Live below your means
When young, have a roommate and save for a few years. Because a mortgage calculator tells you it's possible to buy a house, don't do it for a while.
Eat in the majority of the week
After you save all you tax deferred(401k) have a slice of your check go directly to more savings
Drive a used car for a while, no newer than 2 years old, no older than 7
Build credit wisely and pay off monthly
Pay cash and avoide any debt
Look for a spouse that shares your financial attitude


Voila, you will be rich in time.
“Attention is the rarest and purest form of generosity.” | — Simone Weil
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stickman731
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Re: Question for the Bogleheads Millionaires

Post by stickman731 »

jcar wrote: . Don't loan money to any individual.
I fully agree that even includes family including children.
S&L1940
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Re: Question for the Bogleheads Millionaires

Post by S&L1940 »

market timer wrote:High income was the key for me. It's straightforward in the US to get a $150K+/year job with the right education. That's a typical starting salary for someone from a good JD or MBA program or any med school. You don't need to be particularly creative or even a very productive employee to earn that kind of salary. To become a millionaire, all you have to do is work for about 10 years and save half your income, even if you are a mediocre employee.
oh, now you tell me :oops:
Don't it always seem to go * That you don't know what you've got * Till it's gone
gwrvmd
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Re: Question for the Bogleheads Millionaires

Post by gwrvmd »

I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
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Toons
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Re: Question for the Bogleheads Millionaires

Post by Toons »

gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
+3 Excellent Observation :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
bargainhuntingking
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Re: Question for the Bogleheads Millionaires

Post by bargainhuntingking »

Easy:

Avoid that daily fancy Starbucks drink and take $5 every day and save it in a Roth IRA starting at age 20.

That's $1825 saved annually.

Put it in a total stock market fund, which historically has averaged ~ 10% annually.

Continue to do this for 50 years.

When you are 70, that $5 saved each day will be $ 2.34 million dollars.

You are now a multi-millionaire on $5 a day. Enjoy!

EDIT: Don't want to work until you are 70? Then stop at age 62 and you will have accrued $1,079,306.26

Yes it's that simple.
Last edited by bargainhuntingking on Sun Sep 06, 2015 1:00 am, edited 2 times in total.
MKP
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Re: Question for the Bogleheads Millionaires

Post by MKP »

bargainhuntingking wrote:Easy:

Avoid that daily fancy Starbucks drink and take $5 every day and save it in a Roth IRA starting at age 20.

That's $1825 saved annually.

Put it in a total stock market fund, which historically has averaged ~ 10% annually.

Continue to do this for 50 years.

When you are 70, that $5 saved each day will be $ 2.34 million dollars.

You are now a multi-millionaire on $5 a day. Enjoy!
But then I won't be enjoying 300 calories a day along with 60 grams of sugar that will give me diabetes and make me fat. :oops:
MKP
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Re: Question for the Bogleheads Millionaires

Post by MKP »

gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
At .9% interest for 5 years, I will happily finance my cars. If interest was 8-10% that would be a harder sell.
tibbitts
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Re: Question for the Bogleheads Millionaires

Post by tibbitts »

gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
I agree with the conclusion but not that debt alone is the underlying issue. A lot of debt has been driven by the costs of necessities or near-necessities rising, and incomes and investments not keeping up. If we get 30 years of zero real salary growth and zero real investment growth, that's the problem, not leasing vs. buying a car.
Grt2bOutdoors
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Re: Question for the Bogleheads Millionaires

Post by Grt2bOutdoors »

Sacrifice. Yes, a good education, being married to the same spouse, living beneath your means helps, but the key word is sacrifice. You have a choice, spend every thing you make and then some, or save/invest some large percentage of your total earnings on a consistent basis and do not deviate from your plan, no matter what. Read, always be learning, knowledge is power, do not focus on career only.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: Question for the Bogleheads Millionaires

Post by Grt2bOutdoors »

gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
Ye of little faith. Never underestimate the drive and willingness to overcome adversity, especially in the United States of America. I started out in "the hole" after grad school, negative net worth, first goal was to knock off that loan, after that, the target was $5K in savings/investments, after that the targets became progressively larger. It can be done, but it will take sacrifice, not driving the latest car, not wearing the latest designer duds, not flying to Paris on your credit card, not eating at restaurants every Friday night, etc. It can be done, people are doing it every day, you just don't see them on here because they are out there working, working and working.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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VictoriaF
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Re: Question for the Bogleheads Millionaires

Post by VictoriaF »

The main contributors to my financial success were:
  • 1. Lifelong pursuit of education and professional credentials.
    2. Love of reading.
    3. Independent, frequently contrarian, decision making.
1. The education and credentials have provided me with well paid jobs. My jobs were not always stable, but my career security compensated for job security.

2. Reading has provided me with enormous benefits including the following:
  • a. understanding of the job market
    b. understanding of investments (my first book was Eric Tyson's "Personal Finance for Dummies")
    c. inexpensive way to be intellectually engaged (books are far cheaper than most other discretionary pursuits)
    d. development of independent thinking.
3. Many of my decisions were contrary to the conventional wisdom but ultimately contributed to my well being, financial and otherwise:
  • a. being an immigrant
    b. divorce (without any financial or other support from my ex-husbands)
    c. being a single parent
    d. never owning my home
    e. suspending employment to get a graduate degree
    f. leaving employment when I had enough.
Victoria
Inventor of the Bogleheads Secret Handshake | Winner of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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Goldfinger
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Re: Question for the Bogleheads Millionaires

Post by Goldfinger »

Rule #1, for us, has always been "pay yourself first." For every $1 that was invested around 1988-89 (when we started), that same dollar is worth roughly $14-$15 on a compounded basis. What I would give to have been able to tuck away additional $$ during those years.

Rule #2: Marry wisely. Having worked in finance/credit back in the late 80s/early 90s, I saw too many cases of financial mismanagement/irresponsibility tear families apart.

Rule #3: Stay the course. No matter what.

While I don't advocate going needlessly into debt, I don't think it's necessary by design to live on 20% of one's income. If one can save 20-25% every year, that should be more than sufficient. Look at consumption smoothing and make it fit your lifestyle.

There are a few on this site who go into full body pucker mode at the thought of paying .01 in credit card interest. I think a healthy, realistic perspective is in order.

Something else that has helped us has been "thinking big." For as long as I can remember, we've maxed out our tax deferred 401k/403b and continued Roth IRA & taxable contributions. The end goal was never to just "save what we can", but to set specific incremental goals that were very challenging, yet not to the point of feeling financially suffocated. Motivation to accumulate capital seems to be one of the more underemphasized characteristics mentioned on this forum.

Establishing (and meeting!) lofty goals has been our main focus now for 26-27 years. When considering our ultimate retirement "number", we don't have one particular number in mind. We have a high, medium, and low range. Based on where we are now, we are 60-65% there (based on medium number) with 8-9 years of labor income remaining for me. For the type A wife, I can't imagine her retiring with me as she's such a busy body - might take a few more years.

--Goldfinger
"At cocktail parties lovely ladies would corner me and ask my opinion of the market, but alas, when they learned I was a bond man, they would quietly drift away." -- Sidney Homer/Salomon Bros
bh7
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Re: Question for the Bogleheads Millionaires

Post by bh7 »

I am not a millionaire (yet), quite the opposite. But in the past 14 months I have severely altered my trajectory so that instead of taking 40 years to become a millionaire, I should get there in 10. The major change I made was closely examining my monthly cash flows and deliberating optimizing them. Before the transformation, I just contributed 8% to my 401k and let money flow in and out of my checking account, and my idea of monitoring was just answering the question "do I have enough money right now to buy this thing I want?" or worse, "will I be able to pay off my credit card balance in full with my next paycheck the day before my balance is due?" Now I have a spreadsheet that tracks every single inflow and outflow and aggregates it into categories by month. Once I saw where money was going I realized just how much of it was pure waste. I cut spending drastically, and when I got raises at work, I kept spending constant, so that my savings rate would increase. Now saving 50% of my net income up from 10%. I set 30% as the minimum goal and if I fail to meet it one month I will overshoot it next month. Essentially I treat my investment contributions as fixed bills and if I miss a bill I still have to pay it next month, it doesn't go away. I don't charge myself interest -- though I could and probably should.
Last edited by bh7 on Sat Sep 05, 2015 12:27 pm, edited 1 time in total.
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Tycoon
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Re: Question for the Bogleheads Millionaires

Post by Tycoon »

gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
This is immensely true. People who can ill afford to be in debt are perpetually in debt. Ignorance is bliss!
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. Getting rich off of "smart people's" behavioral mistakes.
investor
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Re: Question for the Bogleheads Millionaires

Post by investor »

Not only live below your means. Have an investment every pay period on Autopilot going into an investment.
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prudent
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Re: Question for the Bogleheads Millionaires

Post by prudent »

MKP wrote:
gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
At .9% interest for 5 years, I will happily finance my cars. If interest was 8-10% that would be a harder sell.
Yes, well, I suspect you would come to that decision based on evaluating whether to finance at 0.9% or pay cash. gwrvmd is referring to the people who don't have that option, and probably fall for the lure of the attractive finance rate to buy a more expensive car than they should (indicated by a 6-year loan). They don't know they're going to be upside-down on that car for a long time. They sometimes roll over one car loan into the next, digging an even deeper hole. What they do know is that they are going to love showing off that car, and that they can afford the monthly payment... as long as their health and employment circumstances don't change. And if something does happen and they have a big expense or job loss they can't absorb, it's blamed on "bad luck." Debt is so routine, they don't even relate to the total cost of things - just the monthly payment.
Grogs
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Re: Question for the Bogleheads Millionaires

Post by Grogs »

Grt2bOutdoors wrote:
gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
Ye of little faith. Never underestimate the drive and willingness to overcome adversity, especially in the United States of America. I started out in "the hole" after grad school, negative net worth, first goal was to knock off that loan, after that, the target was $5K in savings/investments, after that the targets became progressively larger. It can be done, but it will take sacrifice, not driving the latest car, not wearing the latest designer duds, not flying to Paris on your credit card, not eating at restaurants every Friday night, etc. It can be done, people are doing it every day, you just don't see them on here because they are out there working, working and working.
There's an ancient Sumerian tablet that talks about how worthless the current generation is, and how it's surely a sign that the end of the world is near. 4,000+ years later, not much has changed. Every generation has different challenges, but I think fundamentally people have always been about the same.
cheapedy
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Re: Question for the Bogleheads Millionaires

Post by cheapedy »

My parents are retired millionaires (net worth). Here is how they did it. First of all they both worked, father as a cook for min wage ($10hr was his max) and mother as a factory supervisor. She was wise enough to take advantage of every benefit offered to her by her employer. We grew up incredibly thrifty, had no luxuries whatsoever, never went anywhere, but we were never in need of anything. My father drove his 1973 Ford Maverick until 2004! They scrimped and saved and bought their house in the late 80's. In the late 90's, they took advantage of the downturn in housing/their excellent credit and purchased a townhouse which they rented to relatives. Both of those houses were eventually paid off completely. They're now enjoying their retirement, travelling frequently and my father finally bought a new car at the age of 67 and jokes that , "This might possibly be the last car I ever own".
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VictoriaF
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Re: Question for the Bogleheads Millionaires

Post by VictoriaF »

Grogs wrote:
Grt2bOutdoors wrote:
gwrvmd wrote:I don't think the younger generations are going to make it
I grew up in the 50s and 60s. Debt was a disease. If anyone had other than mortgage debt, they were
embarrassed and never mentioned it

Today having educational debt, consumer debt, car debt and mortgage debt is the new social norm
We used to say "I bought a new car", today they say "I got a new car......and I got 1.9% for 6 years!"
They're quite proud to announce they are in debt for another 6 years. A few thousand in consumer debt and a few thousand in car debt is the new norm.
Going from one car lease to another is the new indentured servitude
"I just can't seem to get ahead"......Well, you seem to be doing ok helping the credit card companies and the banks get ahead.

To me it appears that everything that should be going into 401(k) plans is going to pay interest on consumer debt......and everybody seems to be ok with that, it is the new social "norm"......Gordon
Ye of little faith. Never underestimate the drive and willingness to overcome adversity, especially in the United States of America. I started out in "the hole" after grad school, negative net worth, first goal was to knock off that loan, after that, the target was $5K in savings/investments, after that the targets became progressively larger. It can be done, but it will take sacrifice, not driving the latest car, not wearing the latest designer duds, not flying to Paris on your credit card, not eating at restaurants every Friday night, etc. It can be done, people are doing it every day, you just don't see them on here because they are out there working, working and working.
There's an ancient Sumerian tablet that talks about how worthless the current generation is, and how it's surely a sign that the end of the world is near. 4,000+ years later, not much has changed. Every generation has different challenges, but I think fundamentally people have always been about the same.
Every generation had its Bogleheads and non-Bogleheads. It seems that being a non-Boglehead becomes increasingly more risky, and the risk is exponential, representable as a hockey-stick graph. The economies are more globalized and the competition for jobs is broader than ever before. The distractions and seductions of the porn, games, social networks, and other electronic conveniences can destruct people's willpower and ability to function. The increasing complexity of the financial instruments means that investing heuristics that worked before are now less certain.

Victoria
Inventor of the Bogleheads Secret Handshake | Winner of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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White Coat Investor
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Re: Question for the Bogleheads Millionaires

Post by White Coat Investor »

Offense and defense. Couple a high income with a high savings rate and sound investment plan and you can go a long way.

In my opinion, the "average American" settles for far too low of an income. I think most people can boost income significantly. They might not like the sacrifice that entails, but who said being rich was easy?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
bondsr4me
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Re: Question for the Bogleheads Millionaires

Post by bondsr4me »

Certainly no millionaire here, but far from having to roll pennies (like I did way back when).

My advice to younger people:

get as much education as your possibly can....
work hard and smart...
don't be afraid to try something you really believe in (look at Steve Jobs; Bill Gates, Warren B. and countless others)....
save save save....
underspend your income....
never forget where you can from....

and Good Luck!!
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tfb
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Re: Question for the Bogleheads Millionaires

Post by tfb »

ajacobs6 wrote:Many people are underpaid, and living paycheck to paycheck. What was your story for breaking out of this cycle?

In most cases, is the solution really just a higher salary and higher savings rate?
Yes. All else being equal, if your salary is half as high, you will have half the assets. All else being equal, if your savings rate is half as high, you will have half the assets. The other factors are investment returns and time. All else being equal, if you are investing in good times you will have more. All else being equal, if you invest for more years you will have more (assuming positive returns). As someone already said, it's all math.
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Simple Simon
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Re: Question for the Bogleheads Millionaires

Post by Simple Simon »

Many people are underpaid = don't be one of those people

and living paycheck to paycheck = never spend more than 75% of your paycheck. In 4 months time, you won't be.

What was your story for breaking out of this cycle? = never enter the cycle, see above.

In most cases, is the solution really just a higher salary and higher savings rate? = that's a good solution in most cases

Or is there something else that people should consider? = yes, consider every possibility too

Other forms of income maybe = can't hurt

I may never have millions of dollars in my lifetime = a half empty glass

and it's hard to imagine how it is even possible with the average American career = see above

Thanks = you're welcome
25% stock, 25% bonds, 25% cash, 25% stuff
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Re: Question for the Bogleheads Millionaires

Post by noyopacific »

ajacobs6 wrote:Many people are underpaid, and living paycheck to paycheck.
The first thing I'd recommend would be to figure out how to get beyond the notion that "many people are underpaid."
I subscribe to the idea that markets are mostly pretty efficient at setting prices. I believe that this applies when setting prices for securities as well as for labor.

I think you would do better if you can accept idea that your labor might be worth whatever an employer is willing to pay for it. This could enable you to:
Look for a better job
Start a side business
Work more hours
Work more efficiently
Get training & experience that will make your time more valuable.
The information contained herein, while not guaranteed by us, has been obtained from from sources which have not in the past proved particularly reliable.
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VictoriaF
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Re: Question for the Bogleheads Millionaires

Post by VictoriaF »

Simple Simon wrote:Other forms of income maybe = can't hurt
It can hurt. For example, actively pursuing career in one's primary job usually provides a better financial outcome than a combination of slacking and moonlighting.

Victoria
Inventor of the Bogleheads Secret Handshake | Winner of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
Simple Simon
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Re: Question for the Bogleheads Millionaires

Post by Simple Simon »

Let's compromise

Other forms of income = maybe can't hurt
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heyyou
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Re: Question for the Bogleheads Millionaires

Post by heyyou »

by jcar » Fri Sep 04, 2015 5:13 pm
Not to be repetitive but always live below your means. Learn the difference between a want and a need. Have no debt except real estate and eliminate that quickly. Work hard, enjoy your life, and learn to invest. Don't loan money to any individual.
Succinct and well said.
This is the long, wordy version.

I have a barely two comma portfolio of mutual funds, but I didn't ever finish college. I worked a blue collar, entry level job at a megacorp and didn't ever top $67K in annual income. Here is a list of some of situations that made a difference:
Raised by Depression era parents, who modeled frugality but were happy with what they had.
Married late to someone who is more frugal than I am, and neither of us wanted to have kids.
I had to learn to look someone in the eye and say "I can't afford that."
Chose to live near work (within 15-20 minutes) including when I transferred to different communities, so I drove the same reliable (good enough) vehicle to work for twenty years.
Paid off mortgage early and did not boost housing costs when transferring to new places.
Lived below my means in order to always max out all retirement accounts which was easier in my Low Cost of Living (LCOL) area.
Stayed with the same job for thirty years to get the pension, retiring at age 55.
The 401k offered index funds and I considered the pension credits as my bond allocation.
Nearing retirement, we luckily sold a house a few years before the RE crash, after paying cash to build a retirement sized house.
Reading and backpacking were inexpensive hobbies in my Southwestern state.
Spent less time watching TV than most, so less exposure to advertising.
Was a slow adopter of new technology.

Among your coworkers, some will have the big house, some the new car, someone else the nice vacation, and you will have more in your retirement accounts. How long you have to work to pay for your spending is up to you.
I was always wanting to buy something, but whether I bought it or not, soon I would want to buy something else, so why give in to buying what I wanted? You can live well with an attitude of gratefulness about what you do have, instead of a focus on what you don't have.
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1210sda
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Re: Question for the Bogleheads Millionaires

Post by 1210sda »

What a wonderful compilation of personal histories. (at least most of the posts)

It should be required reading for all young folks (and maybe some no so young)

I hope the Moderators are going to include this in the Wiki !!

1210
Dimitri
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Re: Question for the Bogleheads Millionaires

Post by Dimitri »

A lot of good advice in this thread. I'm just going to toss this out here because I don't think it has been mentioned yet - if you read Marie Kando's book The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing (and adopt it) you will be well on your way. You will buy less.

Nice article about Kandoing - http://www.businessinsider.com/picture- ... ndo-2015-7

Personally my wife and I have two spoons, two sets of chopsticks, etc. Our house is mostly empty. From a feng shui perspective we have a lot of room for good things to enter. Extreme? Maybe. But why have things you don't need (and love).

Living below your means (which you likely will do if you Kando) is the other answer. Buy less house than you can afford and pay it off early. Same thing goes with cars. Yes, you may get a better return in the market but there is some satisfaction in not owing anything to anyone. And you can dedicate your funds to joining the two comma club.
Let's never come here again because it would never be as much fun.
staythecourse
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Re: Question for the Bogleheads Millionaires

Post by staythecourse »

noyopacific wrote:
ajacobs6 wrote:Many people are underpaid, and living paycheck to paycheck.
The first thing I'd recommend would be to figure out how to get beyond the notion that "many people are underpaid."
I subscribe to the idea that markets are mostly pretty efficient at setting prices. I believe that this applies when setting prices for securities as well as for labor.

I think you would do better if you can accept idea that your labor might be worth whatever an employer is willing to pay for it. This could enable you to:
Look for a better job
Start a side business
Work more hours
Work more efficiently
Get training & experience that will make your time more valuable.
Agreed 100%.

The fact is if someone is not offering you more for your services then you are adequately paid. Just think about it. Have you EVER met anyone who did not think they were underpaid, overworked, and underappreciated? It is human working behavior. Just because one think so doesn't make it so.

I would actually offer to say MANY are overpaid for their skill sets. There are many jobs that could be done automated, done in foreign countries with cheaper labor, with less man power, or with younger and cheaper workers. This is the problem going forward in the 21 century for employers balancing bottom lime balance sheets and loyalty to keeping workers one who may end up costing them more then the cheaper alternatives.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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vitaflo
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Re: Question for the Bogleheads Millionaires

Post by vitaflo »

EmergDoc wrote: In my opinion, the "average American" settles for far too low of an income. I think most people can boost income significantly. They might not like the sacrifice that entails, but who said being rich was easy?
I do agree with this, but with caveats. For some people it will be harder than for others based on choice, chance or circumstance. There are Bogleheads that happened to hit the nail on all three early, others got the shaft on all of them. The later group will have a harder go at it and need to sacrifice more to get there, but it is attainable.

But I would I disagree that "most" people can boost their income, because there is only so much demand for work overall. The reason working hard to boost income does work is because so many people aren't willing to make the sacrifices to do so. You simply have to do better than your peers, and this, while difficult, is not insurmountable.
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3wood
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Re: Question for the Bogleheads Millionaires

Post by 3wood »

Figure out how to earn more.
Choose a career that will allow you to do this.
Own a business if you are able to.
Max tax advantaged space for you and spouse asap.
Do not avoid debt. Owning a business and house in a desired area have been very good decisions for me. Both involved debt.
Do not live below your means. Tomorrow is promised to no man so if there is something you want, do it. Just save first and spend what is left over.
There are so many LBYM people who are so extreme. Their lives seem to be out of balance. I sometimes think the act of LBYM IS what gives them joy. Not me. I enjoy spending on stuff and experiences.
Save AND spend.
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Re: Question for the Bogleheads Millionaires

Post by SamB »

I started growing up in the lower class, not the middle. Some people would consider where I was raised to be a tenement house. I would say your attitude is the most important. I have been running scared since the age of ten or whatever age it was I figured out my predicament. If you don't have fear about falling back into the hole from which you came, then it is doubtful, no matter what you do, that you will avoid falling back into that same hole.

There are an infinite number of ways to succeed financially, but you have to want to every day you get out of bed, and you never let up. If I were born wealthy, I can't imagine how I would develop the ability to maintain that wealth. Of course there are exceptions, but spending someone else's wealth is quite different from making it yourself. You will not have a fear of being poor, and that is a definite drawback.

My only child is quite accustomed to her circumstances, doing things I never dreamed of when I was her age. Whether or not she maintains the financial position that she was born into throughout her life is a coin flip. You just can't teach this stuff. You are either born with a sense of urgency or fear about your predicament or you are not, and that is what makes the difference.
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zaboomafoozarg
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Re: Question for the Bogleheads Millionaires

Post by zaboomafoozarg »

Get a job that makes $100k. Save half, spend half. Repeat for a decade or two.
MKP
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Re: Question for the Bogleheads Millionaires

Post by MKP »

I still think having a plan is best.

Kids these days want everything now, and unless you can show them what they may have later, they will just go get the new iPhone that is fundamentally the same as the 5 before it, and so forth. Thus, they will spend all of their money and never save a dime, and they will become used to seeing a balance in their bank account that is close to zero. It is all conditioning.
Dimitri
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Re: Question for the Bogleheads Millionaires

Post by Dimitri »

MKP wrote:I still think having a plan is best. ...
+1 Most people don't plan to fail - they fail to plan.
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Re: Question for the Bogleheads Millionaires

Post by TimeRunner »

You also have to live long enough to make the two-comma club. For us regular Joes and Janes, that means "Take care of your body, that corporality that houses your brain, as best you can."

Plenty of advice available on this - no need to regurgitate it here. But you know what I mean...no point in saving for "retirement" or the two-comma club, if your goal is to enjoy spending the assets while you are still alive, if you don't live long enough to do that.

Someone needs to say it, and that someone is me. Now get off the computer and go for a run, big fella. :mrgreen:
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
john94549
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Re: Question for the Bogleheads Millionaires

Post by john94549 »

This is an excellent question. My rule #1 would be, if at all possible, don't start life with debt. Rule #2, maximize every possible tax-deferred savings vehicle from the very first day you start to draw a paycheck. Rule #3, if you do incur debt down the road, make it smart debt (such as for a home) and not dumb debt (such as for a car). Rule #4, have "balanced" investments; don't go overboard into one asset class or another. Rule #5, don't be afraid to "take some off the table" after a nice run and plop it in cash. IRA CD ladders are slick.

Remember always the wise counsel of Wm. Bernstein, "once you've won the game, why keep playing?" These days, I "play" only in my trading aka "fun money" account. The first 15 years of our retirement (age 70 - 85) will be funded by our dull-and-boring IRA CDs, along with other sources. Our 60/40 "balanced funds" will be there later.
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Re: Question for the Bogleheads Millionaires

Post by bubbadog »

Financial goals such as becoming a millionaire are certainly good goals to have. Reaching that point for me was an anticlimactic experience. Remember to have fun along the way!
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Re: Question for the Bogleheads Millionaires

Post by garlandwhizzer »

Saving and investing rather than consuming if a form of delayed gratification, give up pleasure in the present for pleasure and security in the future. But I think it's helpful to start delayed gratification very early in life in terms of education. Study hard in high school to get into a good college, then make good grades in college, allowing yourself the option to go to professional schools in high paying areas: medicine, law, business, engineering, computer programming, etc.. You don't have to choose them but it's nice to have the option to do so and you don't get that option without a lot of work. The problem is that many of us don't get serious about planning our futures, financial and otherwise, until late 20s early 30s or even later, when our options to increase income are much more limited. It's a lot easier to be secure in retirement if you have a good paycheck from which to draw investment dollars in addition to having good saving and investing habits. However there is no amount of annual income that cannot be squandered away by profligate spending.

The most important thing is to start investing early, invest some amount each month, as much as you can handle, in TSM or similar fund. In 20 or 30 or 40 years the magic of compound returns will amaze you with its results but you have to start early, be consistent, and don't sell into weakness. It's a long time to wait and a lot of instant gratification to give up, but it sure helps in retirement.

Garland Whizzer
sambb
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Re: Question for the Bogleheads Millionaires

Post by sambb »

If you earn 25,000 you are in the top 10% of the world in income. If you earn 50,000 you are in the top 1% of world's income.
The key is expenses and perhaps splitting expenses with a significant other who has an income also.
Increasing income helps also. That can be easy or tricky.
edge
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Re: Question for the Bogleheads Millionaires

Post by edge »

High compensation and savings rate. Several large equity payouts. We never stretched our budget for any kind of vanity purchase - ever. Even now my wife buys economy+ tickets for international travel.
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ClevrChico
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Re: Question for the Bogleheads Millionaires

Post by ClevrChico »

Realizing that purchasing X was going to require Y hours of work has been key. Also, I've owned one new car, one house, and no exes.
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