Author Topic: I will teach you to be rich  (Read 11848 times)

life_as_a_duck

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I will teach you to be rich
« on: September 07, 2015, 12:21:55 AM »
Hi,

I am interested to know what you guys think about this:
http://www.iwillteachyoutoberich.com/ultimate-guide-to-making-money/

"And it all started when I freed myself from the shackles of frugality"



AlexK

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Re: I will teach you to be rich
« Reply #1 on: September 07, 2015, 01:06:42 AM »
The idea that making more money is superior to spending less money is solid. There is infinite upside to making more money but savings from frugality is quite limited by your current spending. The thing I didn't like about negotiating raises and earning more is it means I would have to work my ass off and out compete others in order to justify it. The whole point of the FI thing for me is to work less, not more.

On the other hand if I could find something I was so passionate about that it didn't seem like work, and I was raking it in doing that, yes I would work my ass off and take Ramit's advice to supercharge that career.

cerebus

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Re: I will teach you to be rich
« Reply #2 on: September 07, 2015, 01:39:22 AM »
I get Ramit's newsletter, I do respect his advice. I don't agree with his view that it's more powerful to earn more than to learn how to live below your means, because of a few reasons.

1) It might not be that easy to negotiate a $10,000 raise if you're already paid your market value. But it's very easy to not have a $10k annual car payment, and the effect is the same.
2) He isn't at all concerned about early retirement. If you want to plan to be FIRE in a certain amount of time, you need to have a solid control over your spending habits, and the lower you can get your expenses the shorter amount of time you'll need to work, regardless if your income goes up.
3) It's a completely different philosophy from MMM. If you align towards consumerism and not having to cut down on your ridiculous lifestyle, and believe that you can't be happy without luxuries, then you're going to be attracted by a 'no sacrifices' approach to wealth building. I'm just not like that.

libertarian4321

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Re: I will teach you to be rich
« Reply #3 on: September 07, 2015, 02:30:36 AM »
Sounds like he's pandering to those who want to get rich without actually doing the hard work.

His appeal is basically the same as any "Get Rich" scheme you find on the internet, TV, etc.

The only one likely to get rich is the clown selling the "get rich" books, tapes, and seminars.

Jeremy E.

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Re: I will teach you to be rich
« Reply #4 on: September 07, 2015, 04:48:17 AM »
Reducing your spending helps in more than one way, not only are you saving more now, but you don't need to save as much.
Lets try an example,
Person A gets only $40,000/year, but he only spends $20,000/year and saves the other $20,000
Person B gets $100,000/year, spends $80,000/year, and saves the same $20,000/year
Person A saves up enough money to live off of after 17 years of work, since he only needs $20,000/year
Person B saves up enough money to live off of after 37 years of work, since he needs $80,000/year

I would much rather only have to work 17 years.

Ideally, you can combine the 2, make $100,000 and only spend $20,000, then you can retire after a mere 5.5 years.


BlueMR2

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Re: I will teach you to be rich
« Reply #6 on: September 07, 2015, 04:53:07 AM »
The success rate on people trying to earn more is very low.  The few ones that are lucky enough to be able to do so generally think it's really easy, but that's just an artifact of their circumstances.  OTOH, almost anyone in the civilized world can reduce spending a good bit...

slugline

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Re: I will teach you to be rich
« Reply #7 on: September 07, 2015, 07:59:35 AM »
Obligatory MMM blog link:
http://www.mrmoneymustache.com/2011/11/06/book-review-will-this-guy-really-teach-you-to-be-rich/

I think it would be brilliant to get these two guys having a discussion on the same stage.

Ramit is right that frugality can only take you so far -- but ignoring it in pursuit of "big wins" leaves one open to the classic trap of lifestyle inflation. Left unchecked, mindless spending can devour any income gains.

lbmustache

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Re: I will teach you to be rich
« Reply #8 on: September 07, 2015, 09:03:08 AM »

Ramit is right that frugality can only take you so far -- but ignoring it in pursuit of "big wins" leaves one open to the classic trap of lifestyle inflation. Left unchecked, mindless spending can devour any income gains.

Agree with this.

But in Ramit's defense, pushing more money fits in to the average American's "aspirations," which is to have a big home, nice car, fancy vacations, meals out all the time, etc. Sometimes I think he is smarter than the ideas he is pushing but he knows what sells and pays HIS bills.
« Last Edit: September 07, 2015, 09:04:53 AM by lbmustache »

protostache

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Re: I will teach you to be rich
« Reply #9 on: September 07, 2015, 10:17:57 AM »

Ramit is right that frugality can only take you so far -- but ignoring it in pursuit of "big wins" leaves one open to the classic trap of lifestyle inflation. Left unchecked, mindless spending can devour any income gains.

Agree with this.

But in Ramit's defense, pushing more money fits in to the average American's "aspirations," which is to have a big home, nice car, fancy vacations, meals out all the time, etc. Sometimes I think he is smarter than the ideas he is pushing but he knows what sells and pays HIS bills.

I know several people who follow Ramit and buy his things, not necessarily to make more money, but to learn about his amazing marketing and product development systems. He is fantastically good at figuring out what people will buy and how to make it attractive to them.

lhamo

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Re: I will teach you to be rich
« Reply #10 on: September 07, 2015, 10:28:10 AM »
I'm also a Ramit fan, though I don't agree with some of his philosophy.  He is a marketing genius, and works VERY hard.  He also clearly loves what he does.  I doubt I'll ever go into business myself -- my FI projection sheet shows it is highly unnecessary -- but if I did I would definitely consider buying his programs.  I've actually signed up for the free mini-version of ZTL that he's doing this week because, why not?  Yes, I know there is going to be tons of upselling incorporated.  I'm used to that already. 
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NykkiC

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Re: I will teach you to be rich
« Reply #11 on: September 07, 2015, 06:04:53 PM »
1) It might not be that easy to negotiate a $10,000 raise if you're already paid your market value. But it's very easy to not have a $10k car

Actually, its not the same because the pay rise is gross and the forgone 10k car is net. So the actual saving is higher with the car, despite the same numerical value, which is actually a nice way to trick yourself into saving more if you're ever given the choice between an expenses cut or a pay rise of the same value.

(I swear I wasn't a numbers geek before MMM)

wordnerd

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Re: I will teach you to be rich
« Reply #12 on: September 07, 2015, 06:34:46 PM »
I didn't read the post, but is there any reason that frugality and maximizing earning potential are mutually exclusive?

Also, frugality provides extra security. If those big paychecks ever stop coming--by choice or not--you know how to live on a lot less.

regulator

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Re: I will teach you to be rich
« Reply #13 on: September 07, 2015, 06:46:59 PM »
Its not obvious to me why boosting your earnings and being frugal are mutually exclusive.  Of course, it is a much easier sale to tell people they can piss more money away.

sol

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Re: I will teach you to be rich
« Reply #14 on: September 07, 2015, 07:00:54 PM »
I didn't read the post, but is there any reason that frugality and maximizing earning potential are mutually exclusive?

They shouldn't be, but in this case they are.  The push to earn more is about maximizing your consumption, about tying your happiness to your possessions, about fulfilling every wanton desire.  The push to spend less is about maximizing your happiness, and about tying your consumption to your needs instead of your wanton desires.   

Theoretically, one person should be able to both earn more and spend less, but these two bloggers are pushing very different philosophies to support their advice.  They see different paths to happiness.

There is infinite upside to making more money but savings from frugality is quite limited by your current spending.

I think this is exactly backwards.  There is always infinite capacity to spend any level of income, if you cannot be frugal.  Increasing your income tenfold doesn't help you get ahead at all if you increase your spending twenty fold at the same time.  You NEED frugality to get rich, regardless of your income level.

wordnerd

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Re: I will teach you to be rich
« Reply #15 on: September 07, 2015, 07:24:05 PM »
I didn't read the post, but is there any reason that frugality and maximizing earning potential are mutually exclusive?

They shouldn't be, but in this case they are.  The push to earn more is about maximizing your consumption, about tying your happiness to your possessions, about fulfilling every wanton desire.  The push to spend less is about maximizing your happiness, and about tying your consumption to your needs instead of your wanton desires.   

Theoretically, one person should be able to both earn more and spend less, but these two bloggers are pushing very different philosophies to support their advice.  They see different paths to happiness.


I agree that they are presenting very different paths. I just don't understand why Sethi is setting up some false dichotomy between skipping lattes and negotiating for the raise you "deserve" (I've skimmed the post now). I don't think MMM would argue against negotiating for a raise if the increased income weren't being applied toward lifestyle inflation.

But, this guy is selling something, so of course, he's telling people what they want to hear. You should buy everything you want...because you deserve it.

sol

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Re: I will teach you to be rich
« Reply #16 on: September 07, 2015, 08:26:32 PM »
I just don't understand why Sethi is setting up some false dichotomy between skipping lattes and negotiating for the raise... But, this guy is selling something, so of course, he's telling people what they want to hear.

I think you've answered your own question.  Like Dave Ramsey, he offers people a positive vision of the future full of wealth and prosperity so that they are more willing to part with some of that wealth to buy what he is selling.  It's harder for a blogger to get rich with a message of anti-consumerism, because people are less likely to open their wallets to hear the advice "stop opening your wallet." 

johnny847

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Re: I will teach you to be rich
« Reply #17 on: September 07, 2015, 08:31:45 PM »
Reducing your spending helps in more than one way, not only are you saving more now, but you don't need to save as much.
Lets try an example,
Person A gets only $40,000/year, but he only spends $20,000/year and saves the other $20,000
Person B gets $100,000/year, spends $80,000/year, and saves the same $20,000/year
Person A saves up enough money to live off of after 17 years of work, since he only needs $20,000/year
Person B saves up enough money to live off of after 37 years of work, since he needs $80,000/year

I would much rather only have to work 17 years.

Ideally, you can combine the 2, make $100,000 and only spend $20,000, then you can retire after a mere 5.5 years.

Exactly this.

Dollar for dollar, a dollar saved is worth more than a dollar earned because of
Taxes (let's not forget there's an extra FICA tax on wages)
A lower amount required to FIRE

As someone else said there is clearly a floor on living expenses, and there are different amounts of effort involved in saving vs earning more.

But for most Americans there's much more low hanging fruit on the savings side than the income side

cerebus

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Re: I will teach you to be rich
« Reply #18 on: September 07, 2015, 10:13:45 PM »

Its not obvious to me why boosting your earnings and being frugal are mutually exclusive.  Of course, it is a much easier sale to tell people they can piss more money away.

I don't think anyone here believes they're mutually exclusive, but that's how Ramit Sethi makes it out to seem.


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FatCat

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Re: I will teach you to be rich
« Reply #19 on: September 08, 2015, 10:46:09 AM »
Ramit reads a lot of marketing and psychology books. He tests his products and his messages and tweaks them until he finds what gets the best response.

He used to sell products promoting frugality. He said that the customer base that was drawn by the frugality message was less likely to spend money so he wasn't able to sell as much.  That makes a lot of sense.

After he switched to the more prosperity-oriented message (make more so you can buy what you want) he got more spendy customers. His new customer base wants to make more money so they can spend more money. These people are more likely to spend money because they are not frugality minded, and therefore they are more likely to buy whatever he's selling.

If you're trying to make money, which audience would you want to attract? Frugal or spendy customers?


I think Ramit makes "save more vs spend less" seem mutually exclusive because of the type of customer he's trying to attract. He's wanting big spenders and people who want to be big spenders. A few of his recent postings are just describing how he spent a bunch of money on luxury goods and services and how it's totally worth it. A lot of lifestyle coaches are doing this too lately.  It must get a good response from the target audience.

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Re: I will teach you to be rich
« Reply #20 on: September 08, 2015, 11:18:04 AM »
The idea that making more money is superior to spending less money is solid. There is infinite upside to making more money but savings from frugality is quite limited by your current spending. The thing I didn't like about negotiating raises and earning more is it means I would have to work my ass off and out compete others in order to justify it. The whole point of the FI thing for me is to work less, not more.

On the other hand if I could find something I was so passionate about that it didn't seem like work, and I was raking it in doing that, yes I would work my ass off and take Ramit's advice to supercharge that career.
Infinite upside to income? Hardly. And mathematically, the fact that spending cuts are limited by the amount of current spending does not inherently give greater potential for FI on the income side. It is a matter of proportions, not absolute dollar amounts.
It would be virtually impossible for me and DW to double our wages with our current skills, regardless of our work ethic, performance, positioning, and all other variables. We'd actually have to get new degrees or new skills to even have a chance at that - and then we'd dramatically increase our tax burden in the process, leaving us with maybe 70% of the gains in hand. But I did actually halve my spending (and am happier) without much effort - just patience and a gradual series of careful choices. And I have much farther to go - I think I can easily get my mid-50s SR up to 75% next year. With today's wage structures, a few people might quadruple their income, but it is mathematically impossible for a meaningful percentage of us to do so. (and even if it were possible, everyone getting paid more would just increase the cost of goods, since no additional resources would be added to the equation)

In practice, anyone who wants to get rich (retiring early or not) is going to look for a happy medium between both of these things. Pick all the low-hanging fruit off the spending tree while *also* seeking raises that don't ruin quality of life.

(tldr: almost anyone could live on less; top-tier wages can only be achieved by a few)
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Avidconsumer

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Re: I will teach you to be rich
« Reply #21 on: September 08, 2015, 11:32:18 AM »
Increasing income is definitely the best way get rich. A $10,000 pay rise isn't a one off pay rise unless its on the last year before retirement. Inflation adjusted over 20 years, you're looking at 250k+. MMM didn't retire early just because he lived below his means...

cerebus

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Re: I will teach you to be rich
« Reply #22 on: September 08, 2015, 12:00:41 PM »

Increasing income is definitely the best way get rich. A $10,000 pay rise isn't a one off pay rise unless its on the last year before retirement. Inflation adjusted over 20 years, you're looking at 250k+. MMM didn't retire early just because he lived below his means...

It might be the best way to get rich but as everyone's saying here, it isn't the best way to retire early. That extra 10k can easily disappear every year if you get used to a revolving car loan.


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ender

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Re: I will teach you to be rich
« Reply #23 on: September 08, 2015, 12:13:04 PM »
If your goal is to work until you are in your 60s it's a heck of a lot easier to have an increased consumption lifestyle by making considerably more than by being frugal.

sheepstache

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Re: I will teach you to be rich
« Reply #24 on: September 08, 2015, 12:19:33 PM »
Its not obvious to me why boosting your earnings and being frugal are mutually exclusive.  Of course, it is a much easier sale to tell people they can piss more money away.
I didn't read the post, but is there any reason that frugality and maximizing earning potential are mutually exclusive?

Also, frugality provides extra security. If those big paychecks ever stop coming--by choice or not--you know how to live on a lot less.

Right. If you want to get rich, both are important. Throwing all your money at depreciating assets isn't the way to wealth. Be frugal, buy investments, get rich. How could anybody trying to get rich argue against passive income / multiple income streams?

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Re: I will teach you to be rich
« Reply #25 on: September 08, 2015, 12:47:27 PM »
Ramit reads a lot of marketing and psychology books. He tests his products and his messages and tweaks them until he finds what gets the best response.

He used to sell products promoting frugality. He said that the customer base that was drawn by the frugality message was less likely to spend money so he wasn't able to sell as much.  That makes a lot of sense.

After he switched to the more prosperity-oriented message (make more so you can buy what you want) he got more spendy customers. His new customer base wants to make more money so they can spend more money. These people are more likely to spend money because they are not frugality minded, and therefore they are more likely to buy whatever he's selling.

If you're trying to make money, which audience would you want to attract? Frugal or spendy customers?


I think Ramit makes "save more vs spend less" seem mutually exclusive because of the type of customer he's trying to attract. He's wanting big spenders and people who want to be big spenders. A few of his recent postings are just describing how he spent a bunch of money on luxury goods and services and how it's totally worth it. A lot of lifestyle coaches are doing this too lately.  It must get a good response from the target audience.

We have a winner. I think it's pretty obvious why he touts this particular message. Sethi is in it for the money, MMM is not.
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Avidconsumer

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Re: I will teach you to be rich
« Reply #26 on: September 08, 2015, 01:22:01 PM »

Increasing income is definitely the best way get rich. A $10,000 pay rise isn't a one off pay rise unless its on the last year before retirement. Inflation adjusted over 20 years, you're looking at 250k+. MMM didn't retire early just because he lived below his means...

It might be the best way to get rich but as everyone's saying here, it isn't the best way to retire early. That extra 10k can easily disappear every year if you get used to a revolving car loan.


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Yea exactly. The article doesn't say you will fire this time next year. It's about getting rich. Being able to fire has nothing to do with it, so why is anyone bringing it up? Some people want to be rich, spend and work the rest of their lives. I have nothing against that. I don't believe there is a right or wrong way

Mr. Malicious

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Re: I will teach you to be rich
« Reply #27 on: September 08, 2015, 03:50:41 PM »
I hope i'm just reading this wrong but it comes across that some of you are criticizing him for the wrong reasons.

Fist of all he is not promoting FIRE or FI so don't compare it with that.
Second a lot of his material is FREE! And if you take a second to look in to his free material you can see that this is not a get rich quick website.

As FatCat pointed out, he did promote frugality but almost no one would buy it.
That's just adapting to what the market is telling you.

When you do read his stuff you can see that he does focus on cutting back, the "big wins" is what he calls it.
He did a excellent primer on cutting back on costs for beginners just a few months ago. Sure its nothing new for the MMM crowd but it even has word for word script on what to say to get a better deal. Check out: http://www.iwillteachyoutoberich.com/challenges/save-1000/challenge-day-2/

And don't be hating the guy because he makes money on the material he created... i really don't get why some people think everything should be free on the internet.

MrsWhipple

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Re: I will teach you to be rich
« Reply #28 on: September 08, 2015, 05:43:28 PM »
I bought a couple of his courses when I was younger, but grew to dislike his consumption mindset. Also, I got kicked out of one of his groups for a complaint I made about a sexist FB moderator; he continued to use my photo on his site for a year after I asked him to remove it. I plain don't like the guy and I don't want to end up like him, no matter how wealthy he is.

MrsWhipple

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Re: I will teach you to be rich
« Reply #29 on: September 08, 2015, 05:48:49 PM »
As FatCat pointed out, he did promote frugality but almost no one would buy it.
That's just adapting to what the market is telling you.
To me, that's a person with no integrity in what they believe.

MgoSam

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Re: I will teach you to be rich
« Reply #30 on: September 08, 2015, 07:39:18 PM »
As FatCat pointed out, he did promote frugality but almost no one would buy it.
That's just adapting to what the market is telling you.
To me, that's a person with no integrity in what they believe.

Yeah, I agree. One thing I like about contrarians is that they don't care if they are popular, they still speak their minds and live their lives.

cerebus

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Re: I will teach you to be rich
« Reply #31 on: September 09, 2015, 06:46:40 AM »
As FatCat pointed out, he did promote frugality but almost no one would buy it.
That's just adapting to what the market is telling you.

'Adapting to what the market is telling you' is otherwise known as flip-flopping. It's not a virtue.

Dicey

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Re: I will teach you to be rich
« Reply #32 on: September 10, 2015, 11:05:58 AM »
In my pre-FIRE days, I read The Simple Dollar, Wise Bread, Man vs. Debt, and  Get Rich Slowly. Then came Ramit and MMM. Eventually, those other sites lost their appeal, primarily as they lost their original voices and became mostly advertising vehicles. MMM stuck, FIRE happened and I no longer have any need or interest in Ramit's method of making himself rich.

Side note - Two blogs I love and have since I discovered the World o' Blogs are The Frugal Girl and The Non Consumer Advocate. Both of these strong, clear voices help me keep my spending in check and my gratitude levels high, even now that FIRE has been achieved.
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Re: I will teach you to be rich
« Reply #33 on: September 10, 2015, 03:28:57 PM »
Yes but once you have cut your spending to the level you are comfortable with the next option you have is to make more money. I never stop looking for ways to make more money. I make close to 100k a year at my current job. And I still scalp high margin tickets and play dfs. Little effort side hustles for maximum gain.
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Re: I will teach you to be rich
« Reply #34 on: September 10, 2015, 04:45:10 PM »
In my pre-FIRE days, I read The Simple Dollar, Wise Bread, Man vs. Debt, and  Get Rich Slowly. Then came Ramit and MMM. Eventually, those other sites lost their appeal, primarily as they lost their original voices and became mostly advertising vehicles. MMM stuck, FIRE happened and I no longer have any need or interest in Ramit's method of making himself rich.

Side note - Two blogs I love and have since I discovered the World o' Blogs are The Frugal Girl and The Non Consumer Advocate. Both of these strong, clear voices help me keep my spending in check and my gratitude levels high, even now that FIRE has been achieved.

Thanks for the blog recommendations! I had seen the Non Consumer Advocate before, but not the frugal girl.
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cerebus

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Re: I will teach you to be rich
« Reply #35 on: September 12, 2015, 11:12:46 PM »
I got quite turned off by his latest round of newsletters on luxury goods. Seems he's taking potshots at frugalists. I unsubscribed.


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Re: I will teach you to be rich
« Reply #36 on: September 14, 2015, 09:16:59 AM »
I got quite turned off by his latest round of newsletters on luxury goods. Seems he's taking potshots at frugalists. I unsubscribed.

I really do find it odd he wants to make fun of frugal people. His old posts were aimed at frugal people. Now he's aimed at spendy people. But he's also dissing frugal people.

It's like he's throwing his old audience under the bus for the sake of the new spendy audience.

If you read his old advice it was stuff like calling the cable company and threatening to cancel so they'll lower your bill. And he rants about people paying extra for 1 hour photo service when it's cheaper to just wait for the photos. Now most of his stuff is about how much he's spent on frivolous luxuries like buying first class tickets just whenever he decides he wants to go somewhere. No waiting around for good travel deals. That's for suckers. One post I remember in particular made it sound like he bought expensive candles because he felt like the sales lady was snobby and so buying it made him feel good because he sure showed her he's no cheapskate. (It made me wonder if they actually employ snobby sales people in expensive stores for this reason. I've known several people who said they bought something because the sales clerk acted like it was too expensive for them.)

So....

1. Pretend you can't afford things so you can get better discounts. Call the cable company and threaten to cancel to get them to lower the bill. You do this by claiming you can't afford it.
2. Buy expensive things to show that you're well off. It feels good to buy expensive things when sales people are snobby and think you're poor/cheap so it's fun to prove them wrong.

So in the 1st example you are pretending to have money trouble to get a discount.
And in the 2nd example you are spending more just to prove (or pretend) you don't have money trouble.

MrsPete

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Re: I will teach you to be rich
« Reply #37 on: September 22, 2015, 06:27:26 PM »
Reducing your spending helps in more than one way, not only are you saving more now, but you don't need to save as much.
Lets try an example,
Person A gets only $40,000/year, but he only spends $20,000/year and saves the other $20,000
Person B gets $100,000/year, spends $80,000/year, and saves the same $20,000/year
Person A saves up enough money to live off of after 17 years of work, since he only needs $20,000/year
Person B saves up enough money to live off of after 37 years of work, since he needs $80,000/year

I would much rather only have to work 17 years.

Ideally, you can combine the 2, make $100,000 and only spend $20,000, then you can retire after a mere 5.5 years.
I get your point, of course and am on board with that concept, but to be argumentative, I'll point this out:  If Person B wakes up and realizes he could make different choices -- and that's something he could do at any point in those 37 years -- he could always clean up his spending and begin outsaving Person A.  This would probably be easier than Person B obtaining a raise that'd allot him 2.5Xs his current salary. 

zephyr911

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Re: I will teach you to be rich
« Reply #38 on: September 22, 2015, 08:13:06 PM »
Reducing your spending helps in more than one way, not only are you saving more now, but you don't need to save as much.
Lets try an example,
Person A gets only $40,000/year, but he only spends $20,000/year and saves the other $20,000
Person B gets $100,000/year, spends $80,000/year, and saves the same $20,000/year
Person A saves up enough money to live off of after 17 years of work, since he only needs $20,000/year
Person B saves up enough money to live off of after 37 years of work, since he needs $80,000/year

I would much rather only have to work 17 years.

Ideally, you can combine the 2, make $100,000 and only spend $20,000, then you can retire after a mere 5.5 years.
I get your point, of course and am on board with that concept, but to be argumentative, I'll point this out:  If Person B wakes up and realizes he could make different choices -- and that's something he could do at any point in those 37 years -- he could always clean up his spending and begin outsaving Person A.  This would probably be easier than Person B obtaining a raise that'd allot him 2.5Xs his current salary.
Porque no los dos, amirite? I make close to 100 and I'm working to push my spending down to 25 or less. In the process, I'll kill the last of my debt and quit my full-time job (78k) and live off my current side work, pushing the current 20k annual up to 25 or 30 or whatever I need to live on, maybe more so I can invest more.
In this case, cutting costs to the bone is key - because I need my baseline costs below my lowest income point - but the invested funds from the high-income period are also key, because one of my side jobs has a sunset in my mid/late 40s and I might need to dip in until pensions hit at 60. So I want a big pile compounding for those 7-10 years.
Semi-FIREd December 2017, part-time entrepreneur, lover of puppies and saltwater.

Jeremy E.

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Re: I will teach you to be rich
« Reply #39 on: September 22, 2015, 09:35:07 PM »
Reducing your spending helps in more than one way, not only are you saving more now, but you don't need to save as much.
Lets try an example,
Person A gets only $40,000/year, but he only spends $20,000/year and saves the other $20,000
Person B gets $100,000/year, spends $80,000/year, and saves the same $20,000/year
Person A saves up enough money to live off of after 17 years of work, since he only needs $20,000/year
Person B saves up enough money to live off of after 37 years of work, since he needs $80,000/year

I would much rather only have to work 17 years.

Ideally, you can combine the 2, make $100,000 and only spend $20,000, then you can retire after a mere 5.5 years.
I get your point, of course and am on board with that concept, but to be argumentative, I'll point this out:  If Person B wakes up and realizes he could make different choices -- and that's something he could do at any point in those 37 years -- he could always clean up his spending and begin outsaving Person A.  This would probably be easier than Person B obtaining a raise that'd allot him 2.5Xs his current salary.
But sadly, person B is a consumerist sucka, and after years of consumerism he thinks that it would make his life worse if he gave anything up.
But person A and person B are just imaginary people to help me make my point that reducing your annual spending is much more important than earning more, and you are saying reducing your annual spending is easier as well, so there you go. You should still do both, but if you want to pick which one is more important for some reason, reducing spending is clearly the winner.

obstinate

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Re: I will teach you to be rich
« Reply #40 on: September 22, 2015, 11:04:39 PM »
I get your point, of course and am on board with that concept, but to be argumentative, I'll point this out:  If Person B wakes up and realizes he could make different choices -- and that's something he could do at any point in those 37 years -- he could always clean up his spending and begin outsaving Person A.  This would probably be easier than Person B obtaining a raise that'd allot him 2.5Xs his current salary.
Can't get back those 20 extra years they worked though.

Anyway, y'all, I wouldn't idolize this guy too much. Sure, he's a worker. But tons of people are who never get ahead. He cashed in on the Wiki craze in the mid 2000s and then made a book about some questionable extrapolations from his anecdotal experiences. AKA most self-help authors ever.

Nine out of ten people who try to follow his advice, work exactly as hard, and are exactly as smart, will end up with pretty ordinary income. The guy is a walking paragon of survivorship bias.

MrsPete

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Re: I will teach you to be rich
« Reply #41 on: September 23, 2015, 05:43:33 PM »
But sadly, person B is a consumerist sucka, and after years of consumerism he thinks that it would make his life worse if he gave anything up.
How many people on this board used to be big spenders, but now they've turned themselves around and are dedicated to saving?  Do they think their lives are worse now?  The point is that IF this guy decides to change his ways, he has the potential to save more than the person earning less. 

Of course, hypothetical people are easy to discuss.  It's us real folks who are more complicated. 
Can't get back those 20 extra years they worked though.
True, so hopefully he will "wake up" earlier in his career. 

Jeremy E.

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Re: I will teach you to be rich
« Reply #42 on: September 23, 2015, 05:59:51 PM »
But sadly, person B is a consumerist sucka, and after years of consumerism he thinks that it would make his life worse if he gave anything up.
How many people on this board used to be big spenders, but now they've turned themselves around and are dedicated to saving?  Do they think their lives are worse now?  The point is that IF this guy decides to change his ways, he has the potential to save more than the person earning less. 

Of course, hypothetical people are easy to discuss.  It's us real folks who are more complicated. 
Can't get back those 20 extra years they worked though.
True, so hopefully he will "wake up" earlier in his career.
did you even read my comment? I don't understand why you quoted me again :/ do you always have to get the last word in? because I do.

MrsPete

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Re: I will teach you to be rich
« Reply #43 on: September 24, 2015, 08:07:03 AM »
But sadly, person B is a consumerist sucka, and after years of consumerism he thinks that it would make his life worse if he gave anything up.
How many people on this board used to be big spenders, but now they've turned themselves around and are dedicated to saving?  Do they think their lives are worse now?  The point is that IF this guy decides to change his ways, he has the potential to save more than the person earning less. 

Of course, hypothetical people are easy to discuss.  It's us real folks who are more complicated. 
Can't get back those 20 extra years they worked though.
True, so hopefully he will "wake up" earlier in his career.
did you even read my comment? I don't understand why you quoted me again :/ do you always have to get the last word in? because I do.
Yeah, I read it.  I thought it was a friendly hypothetical discussion, and I thought I'd share another thought on the topic.  If you took it more seriously, fine.  Your business.