Guest Post by LLPOH
I had lunch with my accountant one time when I was around 38. I had young kids in private school, a business that I was growing, a home that I had recently built but was paid for, no debts, my wife and I drove old cars, certainly didn’t feel very wealthy. A Mercedes S class pulled up, and a guy got out, was one of my accountants clients.
I told my account that I aspired one day to be as wealthy as that guy. He snorted, laughed, and said “ I shouldn’t be telling you this, but you are far wealthier than him, and you are in fact already wealthy. He will never have as much wealth as you do now, as he blows it all, and you invest everything and live modestly. In fact, you are ahead of almost all my clients, because almost all of them spend every cent and live beyond their means.”
The guy in the story was exhibit A of what most people do – lease cars, have multiple mortgages, have a spouse that doesn’t take care of money, allows their kids to blow money and live an entitled life. I spent money on my kids’ education, and travel, but other than that I was pretty frugal. When they got to college they borrowed the money to go from me, in official terms. If they kept grades up and did the right thing, I said I would write it off when they finished. They did, and I did. They are both very successful today, and will likely be far better off financially than I ever have been. They are frugal, hard working, and wise in choosing partners.
This stuff is not rocket science. I know a lot of folks that worked middle class jobs and ended up wealthy. They were frugal and invested. Some are worth millions.
Work hard, educate and skill yourself, be frugal and invest, chose your partner wisely, and teach your kids to do the same. It radically increases your chances of success.
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Nothing like a good Ole family shitfest
The old saying “Opinions are like assholes and everyone has one” is the reason people come to these blogs and comment in the first place. I have rarely seen anyone truly swayed on their opinion by the counter argument, it happens but not often. If you are a commenter on blog like this, you will inevitably run across an Amin type informed, succinct and ready to call out the perceived miss guided opinion of any given commenter. Know in advance, that by virtue of the fact that you are voicing your opinion on an open forum like TBP you had better be ready to defend you point of view with facts and fortitude or don’t comment and your feelings will remain intact. Otherwise, comment at your own risk. It is often that when I read comments on the TBP, I mostly or completely agree with the commenter, not always but mostly. I come here because it is a rare thing to find a blog that is a true open forum with a solid format and articles that for the most part are spot on like this one from LLPOH, IMHO. Again, get as nasty as you want, but buyer beware, you may and probably will get your ass kicked sooner or later.
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Like a dysfunctional family where, Dad drinks to drawn out moms bitching, one daughter is a queer and the other a religious zealot, One son a hardcore lefty and the other a die in the wool republican, family gatherings can become one hell of a shit show really fast.
I prefer to leave my opinion then run away and watch everyone else argue. It’s like watching animals at the zoo when you throw a McDonald’s hamburger over the fence.
Never understood the point of living like you were poor. You better spend it while you’ve got it because it can be gone in a flash. No one can steal your memories. Enjoy life!
Great way to never have it. Delayed gratification is obviously a concept you do not understand – don’t eat the candy today so you can have two candies tomorrow.
Just don’t live like an old person. One day you will be old and that money won’t change that. Set aside 50% to save, 40% to pay bills and 10% for fun. Better yet, get some rich friends you can sponge off.
I didn’t get the part about living like your poor. I took from it as living well within your means and being frugal and not racking up debt for shit you can’t afford as the key to independent wealth. Finance sober and wisely for your needs not for wants. Seems like solid advice to me, if I read it right.
Pretty much it. I drove an old car for a very long time, but kept it well maintained. When my kids were young, I think my wife and I went out for a restaurant meal once in the first ten years. Still had steak, just didn’t buy it at a restaurant. Still travelled a bit, but not pointy end. We could have had nicer cars, travelled more and better, etc, but not like we have been able to do the last 20 years, not by far. We delayed gratification, but weren’t poor, just frugal.
While raising my kids we did the same. We had no credit card debt and stretched out what we had for as long as possible. We ate well, family was well dressed with nice clean clothes, kid’s played many sports, education came from mom and dad at home and we were all pretty happy.
Sounds like your wife would not complain about a can of Vienna sausage out on the trail.😊
Go to any NYC restaurant pretend to be a food critic and you’ll eat like a king for free.
you – “no one can steal your memories”
Me – ” allow me to introduce you to your neighbor…dementia.”
I tried to join this discussion Friday afternoon, but after seeing the discussion turned to a slugfest and then struggling with less than adequate cell coverage to hotspot with, I decided to pass. It’s amazing that the comment volume exceeds the article volume by a hundredfold or more – and that all the Sopranos came out!
There is no doubt that the depression kids had it better than the boomers who had it better than the busters who had it better than the Gen Xers who had it better than the millenials, etc, etc….each generation and their government leveraged the next one. And so it goes.
But IMHO, LLPOH’s advice is 100% correct, its sage advice and its timeless and its indisputable. It is common wisdom, but it’s just not commonly applied by the masses.
If I were to look back at my own path, despite all the setbacks and market downturns, despite having a lower real earnings vs. my parent’s generation, and despite never being anything more than a humble wage slave, it was by following exactly this kind of advice that allowed me to become better off than 95% of my peer group; whether measured in tangible material wealth or measured in less tangible ways like zero debt and a plethora of skill sets.
Whether I would be considered wealthy or not is a relative question; it depends on – in comparison with whom. But I feel like more importantly, I’m in a good position for these trying times. Although I sacrificed a lot; I don’t feel like I missed out on too much by following this advice for the extent of my adult life.
When there is a will, there is a way. So if I wanted to own a nice suburban house like the one I grew up in, despite the relative cost being 2-3x greater, I found a way. Further, if I wanted to be debt-free, including never taking on any mortgage debt whatsoever, I found a way. If I still wanted to enjoy outings and have fun, including attending hundreds of events and concerts for free, I found a way. If I wanted to embellish my residence with ultra-low-cost renovations, I found a way. If I wanted to grow a 7 figure portfolio that hopefully would be of sufficient size to sustain me in old age, I found a way.
I’m nowhere near done, not by a longshot. I will still follow this advice to my grave. I will still find ways.
I hope you are still checking the comments here, LLPOH. I want to thank you for posting your brief but salient article and for bringing about all the discussion. This topic is the most important one in these times when the collective is serving to diminish the individual. We must all find our way.
This should help the next time Stephanie’s and Abby’s hormones get the best of them…
quote from video for next time Stephanie goes off the reserve with the Chief aboot credit and debt.
“It would be an honour for me to pay your credit card bill this month and all your other clothes you have in your overflowing closet obviously wouldn’t work to keep wearing because of erosion and the general instability of solid state matter. Furthermore I’m sure all the high wasted jeans you bought will not make you look like Steve Urkel.”
Baby, you might be funny, but neither of us will ever marry you.
Yeah, I guess, but in my defense, I was never very good at fixing Daddy issues.
Late to the party, but it has been fascinating to read through some of the comments.
I guess let’s start here:
“Sometimes the first duty of intelligent men is the restatement of the obvious.” -George Orwell.
We have obviously reached such times, as evidenced with all the woke nonsense floating about. And I would say that certainly that’s all LLPOH’s original statement was. “Spend less than you earn and save the difference” is and should be engrained in literally everyone in a healthy society.
Yet, as always there is nuance. First, the surface nuance and then we’ll dive a bit deeper.
At the first level, Steph is also correct. Generationally, Xer’s and millennials have been greatly fucked over by the whole society from stem to stern. Not only by the debt-based fiat financial and monetary systems. I can still racall just getting started in the workplace and maybe beginning to save, only to get laid off during the tech bubble implosion. Gut punch. And that was followed rather abruptly by the kick-to-the-gonads that was the GFC.
And maybe, one could argue that we should get better educated about such things, but it is taught almost literally nowhere, except online in podcasts which didn’t exist when it would be most useful for me to learn it.Hell, I was lucky, because my Dad was more or less aware of these things and would talk about the national debt and when we went off the gold standard. But he didn’t DO anything about it, and for a very simple reason….saving and investing in dollars worked for him. It worked well for boomers in general (my Dad isn’t technically a boomer, however, he is 92).
It will not work moving forward from here, but that is point I will come back around to.
Now, the first big point is that, yes, the system is designed to fuck almost everyone and the degree of that fucking is about to get a lot more serious. On the other hand, that is a basic truth of all of human civilization, with only the tiniest outliers here and there (where most people are still getting relatively fucked, but to a much lesser degree in real terms). That one of those tiny outliers happens to be the US of A during the second half of the twentieth century is–while true–completely meaningless.
Personal responsibility is always gonna get you further than bitching about the world into which you were born. That’s a harsh lesson and something most people will fight NOT to learn, but there is maybe nothing more true.
Also, we’re a goal driven species. I bet you a hundred to one, LLPOH was driven more by meaningful work than just money. From what I can tell, he thrived on having a long line of deadlines to meet, challenges to overcome and asses to kick than anything.
Anyway, I am rambling. The deeper point, I wanted to make, is that while “delayed gratification” sounds good and has a tremendous amount of truth to it, that truth is not total. Delayed until when? Just tomorrow. 10 years? 20? The day you die?
There’s a line from a Red Hot Chili Pepper’s song that always kinda stuck with me:
Know no love until you’re wed
Live not life until you’re dead
OK. Now we get to the other side of the coin. There is truth in the live for the moment notion as well. In a way, NOW is the only time that really exists. It is the only time in which we can act, or feel, or think, or experience. So, then party like its 1999 or what? Of course not. I think most of us tried that at some point. It makes for some fun, but continued past a certain point it becomes massively destructive and ultimately pathetic.
So what the hell to do? I know I’ve posted this before, but it was profound when the answer hit me all at once a few years ago. IT may not be all the deep a thought, until you do a little self evaluation and recognize how often you are doing it backwards.
Pay Attention to the moment. Serve your Future.
How often can you find yourself daydreaming (paying attention to the future) while sitting on your ass and stuffing your face with something tasty (serving your present).
Anyway. I’ve gone on for too long already, but I also had a thought recently about how to navigate these financial times. Just a borrowed analogy, really, but some may find it useful. Some podcast guest or other was speaking in soccer terms, but I hate soccer, so I will use hockey.
The most important player is your Goalie. That is physical gold and silver in your possesion. Plus food and water, guns and ammo, energy, shelter, etc.
Next layer up is defenseman. These are multiple income streams, maybe some folding cash, some savings, some value stokcs perhaps–Buffet loves Coke, but maybe some oil, energy, utilities.
And that’s where most advice in our space would end. But, perhaps, its a good time to have some offense too. Personally, I have some asymmetric bets (little to lose, lots to gain) in some super risky mining calls and housing puts. They’re long dated (Oct-Jan mostly) and they are wildly erratic. Basically leverage on leverage without borrowing a dime. That’s just one way to get some offense, I’m sure there are many others.
And I suppose I should say that this does not constitute financial advise. So don’t be a moran and do something some dude on a blogpost said and then come crying and suing when it falls apart. Plus all people and places everywhere are entirely coincidental…except maybe they aren’t. So there.
PS – If anyone feels like bitching about the hand they’ve been dealt…watch some Josh Blue comedy and get back to me:
@DRUD: Nice words. I was thinking nearly the exact same thing.
Thanks Tim
brilliant
Last
Boy, LLPOH, your life and way of handling finances is exactly what we did. We even spent money on the same things– education and travel. Before I married my husband, I was a spend-thrift with not much to show from my salary, but he convinced me that we’d have so much more flexibility and less stress if we lived frugally. So, that’s what we’ve done and we haven’t regretted it. Thanks for sharing your story!