Author Topic: Informed that I know nothing..  (Read 10042 times)

MgoSam

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Informed that I know nothing..
« on: October 06, 2014, 03:16:06 PM »
This was essentially a response given to me by a cousin when told of me looking to "retire" within 8 years. His comment continued with him indicating that, "Unless you have 2 or 3 million set aside, you shouldn't even consider it."

Provided that he owns a house in Long Island, has 3 kids, and is someone that works as a M+A analyst on wall street, my immediate reaction is that he really don't know anything about how most of the world lives.

He didn't seem to buy that I am investing about 60% of my take-home pay, or that once I have 25x annual expenses, I can live off a 4% withdrawal rate (he didn't doubt this last part, but namely that I will ever reach 25x). Part of this last reasoning was that he said that my expenses will skyrocket in the next decade, but was incredibly vague as to why.

Anyone have any thoughts? I didn't feel the need to rebut him on any particular points, though I did try to explain some of my reasoning only to have him reject it out of line, but would like to see if anything he said had any merit. He did agree that investing as much as I can right now is an incredibly wise thing to do, as it gives it more time to add up.

gimp

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Re: Informed that I know nothing..
« Reply #1 on: October 06, 2014, 03:22:40 PM »
NYC lifestyle is very much: more money -> more status. The kind of status you pay for, not the kind of status you have from just having money. So he figures your expenses will go up because of that.

Or, you know, he figures you're gonna get married, buy a house, and support three kids, which would indeed cost some cash. As long as you don't buy two $70k SUVs to ferry the kids around, you'll probably be okay.

Spork

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Re: Informed that I know nothing..
« Reply #2 on: October 06, 2014, 03:31:17 PM »

So you're right... he likely doesn't understand how you live or what your expenses are.  Not only is he living a high lifestyle... but (I'm guessing here) I'd wildly bet he has a net-zero (or very low for his income) net worth.

I would also guess that he's just parroting what he's learned.  And what he's learned is probably "mostly right" for "most of the people."  .... but that doesn't mean it is right for someone that saves 60% of their take home.

In the end: one of you is right.  You're not likely to convince him.  Unless you've got good reason, I wouldn't really try to convince him he's right.  But when you're 76 and exchanging stories at a family reunion one day -- you might just wink and ask him how those extra 30 years on the job were.

deborah

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Re: Informed that I know nothing..
« Reply #3 on: October 06, 2014, 03:35:36 PM »
Ask him what he thinks he would need to retire (in terms of percentage of the amount he spends per year and percentage of income used), and discuss from there

4alpacas

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Re: Informed that I know nothing..
« Reply #4 on: October 06, 2014, 03:37:25 PM »
Maybe your cousin assumes you need $80k-$120k/year.  If so, you're speaking the same language.  He just doesn't realize there's a way to spend less.

ketchup

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Re: Informed that I know nothing..
« Reply #5 on: October 06, 2014, 03:54:25 PM »
The best revenge is living well.  Just show him in 8 years what you've accomplished.  It'll speak for itself.

RichMoose

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Re: Informed that I know nothing..
« Reply #6 on: October 06, 2014, 04:03:45 PM »
FI/RE is very difficult for most people to comprehend, as is living off 50% of your income. I don't talk about it with other people because the few times I've delved into the subject even a little bit people get upset, think I'm nuts, or believe my family is giving me money.

Prove him wrong!

flyfig

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Re: Informed that I know nothing..
« Reply #7 on: October 06, 2014, 04:12:34 PM »
The best revenge is living well.  Just show him in 8 years what you've accomplished.  It'll speak for itself.

+1

perigee

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Re: Informed that I know nothing..
« Reply #8 on: October 06, 2014, 04:13:18 PM »
Before discovering MMM and posting my case study I would of agreed with your cousin, and this coming from someone who has always lived a pretty frugal lifestyle, but I've read that you needed at least a million if you retired at 65, so figured you must need a lot more if you wanted to FIRE.   

Side note, during my first visit to the forum and reading all these posts about FIRE, I was thinking, A) I hope everyone has insurance and B) ummm did I wonder into an arsonist site?

Thanks to everyone on this forum, I've discovered my family is doing pretty good and my goal is lot closer then I thought. Guess the trick is to not let your spending grow with your increasing income, if you can do that (I've found I've become even more spend conscious as I've grown older), then you're pretty set, but like gimp said, it's harder for some people to do that, especially in a place like NYC, glad I've moved out to the country.

surfhb

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Re: Informed that I know nothing..
« Reply #9 on: October 06, 2014, 04:29:22 PM »
I hope to God you throw a party for yourself on the Saturday after you quit your job.    The whole family will be there.....including your cousin. ;)

beltim

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Re: Informed that I know nothing..
« Reply #10 on: October 06, 2014, 04:59:50 PM »
Or, you know, he figures you're gonna get married, buy a house, and support three kids, which would indeed cost some cash. As long as you don't buy two $70k SUVs to ferry the kids around, you'll probably be okay.

Assuming you're single, I'd bet this is the source of the disconnect. 

Alternatively, if you live somewhere else, he might not realize how much lower the cost of living is.

Alternatively, it might help to point out that if you're saving 60% of your salary, you're probably 1/4 - 1/2 of the way there already. Showing that you have already saved, say, 5x annual expenses may help him believe your ability.

sheepstache

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Re: Informed that I know nothing..
« Reply #11 on: October 06, 2014, 05:10:22 PM »
Ask him what he thinks he would need to retire (in terms of percentage of the amount he spends per year and percentage of income used), and discuss from there

+1

Also, never listen to people from Long Island. It only encourages them.

Spartana

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Re: Informed that I know nothing..
« Reply #12 on: October 06, 2014, 05:28:21 PM »
Other then fighting the urge to post many Jon Snow Meme's (must...fight...urge...argh....) I don't really think you can convince anyone that you can retire early. Unless they can understand and grasp that you don't "need" as much money as they do (or as society at large tells you you need) it's pretty futile. I've been ER'd since I was 42 for more then 10 years now, have a nice house, have a nice car, do lots of stuff and don't appear to live in any kind of poverty-like way. Yet people STILL tell me I can't do it. I have given up trying to convince people it's doable (done in my case) on a small passive income so just let those comments slide. Let your actions be stronger then your words and just show them what's possible. 

NCGal

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Re: Informed that I know nothing..
« Reply #13 on: October 06, 2014, 06:01:36 PM »
Should you ever feel inclined to engage him, ask him what he pays for property tax, followed by electricity and cost of gas. And then just laugh. We know someone who pays $37K for property taxes in a good LI neighborhood (not exclusive or gated). His house is maybe 2600sf on an acre. Our relatives pay about $18K for a crappier house in an OK neighborhood on a busy street where you can`t let your kids out to play in the front yard (or what passes for one) for fear of cars jumping the curb.

Terrestrial

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Re: Informed that I know nothing..
« Reply #14 on: October 06, 2014, 07:25:50 PM »
It's probably equal parts of:

-Jealousy that you may be done working so soon while he may be stuck for years on the consumerist treadmill, even if he does earn a nice living.

-Not understanding that there are ways to live on less.

I used to think pretty similarly to your cousin, and assumed that I would need 4-5M before I could think of retiring and that I would work into my 60's.  And I was a relatively frugal person already!  I think the big shift comes from thinking about replacing your SPENDING versus your INCOME.  It would take me forever to save enough to replace my income...but if I am only spending half of it, why bother?  Thinking about it that way is what made the light come on for me.  Of course, the income replacement idea probably comes from the fact that most conventional retirement advice seems to be built on replacing income, which inherently assumes (probably rightfully so for most of America) that you spend a sizable portion of what you make. 

Goldielocks

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Re: Informed that I know nothing..
« Reply #15 on: October 06, 2014, 07:40:30 PM »
Married people always think that singletons will one day be a couple, often with children.  Singletons may know that children are not part of their long term plan for happiness.

Marriage and / or children definitely change ones expenses and priorities.  Heck even people with teenagers think that other have no idea of the cost increase..

retired?

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Re: Informed that I know nothing..
« Reply #16 on: October 06, 2014, 07:58:09 PM »
May also be going on the myth that people need 70-80% of their pre-retirement income once in retirement.  100k income pre means 80k post, using 4% rule gets you to 2M.  Ignores you are no longer saving for retirement (already there), likely have housing covered, kids gone, etc.

If you feel the need to explain, you could give him an example of costs in your locale at your spending level. 

Not only jealousy, but perhaps fully sold into the idea that one has to work forever or have spending that matches income.

Spork

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Re: Informed that I know nothing..
« Reply #17 on: October 07, 2014, 11:03:16 AM »
Other then fighting the urge to post many Jon Snow Meme's (must...fight...urge...argh....) I

I had this same urge.  (Whenever my wife even remotely disagrees with me she looks me right in the eye and says "you know nothing, Jon Snow".)

MgoSam

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Re: Informed that I know nothing..
« Reply #18 on: October 07, 2014, 11:06:34 AM »
Thanks everyone for your advice. What got on my case was

a. I live in MN, NOT NYC- completely different expense cycle
b. I am single, and though I would like to get married, I am childfree and do not want children, which he stated that he understood, but then disregarded (saying that kids will cost money)
c. Ignored that I am investing 60% of my income, and also failed to ask how much I had saved (it is already at 13x my annual expenses, which puts me at about halfway there, and the second half is easier as my 13x savings will increase over time.
d. My lifestyle doesn't revolve around many of the things that he did when he was my age, he stated that he would be going out multiple times a week, whereas I will go out for drinks maybe once every few weeks, most weekend events involving hanging out with friends at their place. If we do go out for dinner, I usually don't order any alcohol.


TreeTired

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Re: Informed that I know nothing..
« Reply #19 on: October 07, 2014, 11:11:06 AM »
On Wall Street there was the notion of  "fuck you money",   meaning how much would you need to accumulate to just quit and live the rest of your life without working.   In a way similar to to MMM  FIRE philosophy but a much higher bar.   People would ask,  "What's your number?"  as a way of asking how much FU money would you need to just say "Eff it" and leave.   As I recall (and these are 1990 ish dollars)  for many this was around $5mm,  and most could be satisfied for a mere $10mm.    You would  think it would be easy to accumulate $10mm if you were receiving annual bonuses of $2mm or $3mm... or $5mm or $10mm... or in some cases $100mm,  but it is amazing how quickly and easily people can run up the expense side to match or exceed virtually any income stream,  so for some poor slob working as an M&A analyst and pulling in a mere $750k per year it can be really hard to accumulate that FU money. 

Jon_Snow

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Re: Informed that I know nothing..
« Reply #20 on: October 07, 2014, 11:14:16 AM »
I hate it when people tell me that I know nothing. Happens a lot on this forum for some reason.

retired?

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Re: Informed that I know nothing..
« Reply #21 on: October 07, 2014, 11:17:50 AM »
OK, so now my advice would be to avoid the subject with him.  He is trying to dampen your spirit about the goal since he knows it is unattainable for him.  He has a prop yourself up by putting others down sort of mentality.

Gone Fishing

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Re: Informed that I know nothing..
« Reply #22 on: October 07, 2014, 11:28:16 AM »
Nothing gets me motivated like someone telling me I can't do something when I know I can.  Don't waste another ounce of energy tying to convince him though, just do what you need to do and let the results speak.   

MgoSam

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Re: Informed that I know nothing..
« Reply #23 on: October 07, 2014, 11:32:28 AM »
OK, so now my advice would be to avoid the subject with him.  He is trying to dampen your spirit about the goal since he knows it is unattainable for him.  He has a prop yourself up by putting others down sort of mentality.

I agree with the first part of your advice, but I don't think he was at all trying to put a dampen on me. I suspect that he was trying to be helpful, but in a patronizing way.

Either way, I do think that the best action would be to prove people wrong by just continuing to do what I am doing. There's a line from the show West Wing, "if they're shooting at you - you know you're doing something right."

waltworks

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Re: Informed that I know nothing..
« Reply #24 on: October 07, 2014, 11:36:19 AM »
To be fair, 8 years is a long time. You very well might change your mind about kids, or meet someone so awesome that they change your mind for you, or <insert random crazy life/health change here>. Maybe that was his general idea. Maybe.

It's also possible he's just a big spender moron who doesn't comprehend that you could ride a bike around and still be happy.

It would be interesting to do a longitudinal study of posters here to see how many follow through on FIRE/general life plans. If I had to guess, I'd say 75%+ of my college buddies would have told you they'd never have kids when they were in their early 20s. Guess how many have kids now? Yeah, all of 'em (including me).

-W

MandyM

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Re: Informed that I know nothing..
« Reply #25 on: October 07, 2014, 11:48:34 AM »
... $37K for property taxes in a good LI neighborhood (not exclusive or gated). His house is maybe 2600sf on an acre.

I nearly choked on this. What they pay per month is about twice of my yearly escrow (insurance and taxes).

Zikoris

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Re: Informed that I know nothing..
« Reply #26 on: October 07, 2014, 12:45:38 PM »
Quote
It would be interesting to do a longitudinal study of posters here to see how many follow through on FIRE/general life plans. If I had to guess, I'd say 75%+ of my college buddies would have told you they'd never have kids when they were in their early 20s. Guess how many have kids now? Yeah, all of 'em (including me).

I imagine it would be a pretty high amount, since Mustachians are pretty much by definition more self-aware than the general population.

Personally, I've followed by "life plan" from when I was 13 pretty much to the letter, down to what neighbourhood of what city I wanted to live in, what hobbies I wanted to take up, what sort of people I wanted to date, and what countries I wanted to travel to. I had no solid career goals, so nothing to compare to on that front. I never wanted kids, so I got my tubes tied seven years ago.

I guess it always surprises me when people DON'T know for sure what they want in life. It's always seemed obvious to me.

catccc

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Re: Informed that I know nothing..
« Reply #27 on: October 07, 2014, 01:25:43 PM »
The best revenge is living well.  Just show him in 8 years what you've accomplished.  It'll speak for itself.

This is what I was going to say.  But it sounds like even when you get to this point, he (and other naysayers) will go on that you are being ignorant and don't know how your money is going to run out and then you'll be screwed.  So just be prepared to ignore these kinds of comments if you are aiming for FIRE.

Timmmy

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Re: Informed that I know nothing..
« Reply #28 on: October 07, 2014, 01:27:25 PM »
... $37K for property taxes in a good LI neighborhood (not exclusive or gated). His house is maybe 2600sf on an acre.

I nearly choked on this. What they pay per month is about twice of my yearly escrow (insurance and taxes).

That's how much I paid for my house... 

Spork

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Re: Informed that I know nothing..
« Reply #29 on: October 07, 2014, 01:44:35 PM »
I hate it when people tell me that I know nothing. Happens a lot on this forum for some reason.

I have almost done it quite a few times... but assumed it wouldn't be too original if I did.

BaldingStoic

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Re: Informed that I know nothing..
« Reply #30 on: October 07, 2014, 02:02:18 PM »
Regarding prices skyrocketing...I think the risk is minimal with the exception of housing.

First, the stock market tends to rise with inflation, albeit after a lag, so you have a natural hedge.  Second, technology is reducing costs by boosting efficiency.  Output for many things is increasing (due to large scale technology-driven production) faster then demand, so prices fall or we get more for the same cost.       

ketchup

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Re: Informed that I know nothing..
« Reply #31 on: October 07, 2014, 02:06:58 PM »
... $37K for property taxes in a good LI neighborhood (not exclusive or gated). His house is maybe 2600sf on an acre.

I nearly choked on this. What they pay per month is about twice of my yearly escrow (insurance and taxes).

That's how much I paid for my house...
That would pay for my house, plus property taxes for at least 8 years...

NCGal

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Re: Informed that I know nothing..
« Reply #32 on: October 07, 2014, 03:45:22 PM »
... $37K for property taxes in a good LI neighborhood (not exclusive or gated). His house is maybe 2600sf on an acre.

I nearly choked on this. What they pay per month is about twice of my yearly escrow (insurance and taxes).

That's how much I paid for my house...
That would pay for my house, plus property taxes for at least 8 years...
We nearly choked too. And it would be difficult to tell anyone we know who is still on LI our plans to FIRE in 2 years. They would either not understand or be envious. And we`re not that young. I think it`s easier to just stay under the radar.

Spartana

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Re: Informed that I know nothing..
« Reply #33 on: October 07, 2014, 04:29:17 PM »
I hate it when people tell me that I know nothing. Happens a lot on this forum for some reason.

I have almost done it quite a few times... but assumed it wouldn't be too original if I did.
Well he really does know at least one thing. He knows the winter is coming :-)!