Author Topic: Is it really possible?  (Read 10239 times)

Eddy

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Is it really possible?
« on: May 09, 2014, 01:10:18 PM »
Hello guys,

I just talked to my economics teacher in high school, she's old and almost retiring. She's a very person and she is extremely smart; because of that, I asked her about her retirerement and her investments, she told me that she obtained yearly something like 6% average from her investments, but she also told me that she was really conservative with that. Well, I told her that I would like to save half of my household income and work until I was able to stop working so that I would ensure a life where I wouldn't need to work my whole life.

She said that in order to be that frugal I would live really poorly, that I wouldn't be able to save any money if I wanted to have a nice life, that if I wanted to save a lot I should be rich first. She wasn't discouraging me, but she tried to give me her opinion. She asked me when I wanted to reach financial independence, and I was going to say 40 when she said first 50 y/o, and I said yes (even though I don't want that, that's why I'm planning things now.)

However, she also said that she went to the movies every week and that monthly she would spend $120 on her nails. That she wanted to enjoy her life and because of that she had traveled half the world. She also told me that she had friends that were really frugal and that unlucky things happened to them (related to health) and that their savings had to go to health care and stuff like that.

She also told me that perhaps in the future there won't be pensions or social securities and that my generation would need to work forever, until the day we die. Of course I don't want that, I want to be free and enjoy my life frugally, without depending on money.

I felt really sad when she told me that because I really expected a different answer. I know the mustachian ways and I've read many people who has achieved financial independence at a young age in this forum, without earning big salaries. Also, I live in Miami and she said that like New York, Miami was one of the most expensive cities on the US.

She didn't change my opinion, and I still want to be financial independent. I don't think that spending money would make me happy, and this year has been a great example, where I almost didn't go out and where I went I didn't spend almost any money. For example, I love classical music and I got the chance to meet Eduardo Marturet (a Venezuelan conductor that lives in Miami, I admire him) and take a picture with him, and I didn't need to spend any money. Still, I'm a teenager and I don't like going out nor eating out.

However, is there any truth in what she said? What do you guys think about that? Thank you!

catccc

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Re: Is it really possible?
« Reply #1 on: May 09, 2014, 01:16:55 PM »
Don't listen to her if you want to be financially independent.  $120 on nails?!  She's a sukka:

http://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/

You decide for yourself what you value. 

jba302

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Re: Is it really possible?
« Reply #2 on: May 09, 2014, 01:18:02 PM »
She sounds like a really depressing person to be around. My dad is like that, nothing will ever work out and at some point the government is going to take your house, your car, a robot will take over your job, then at some point you'll have to get a job letting rich people hit you because the middle class is going to be gone soon. Only some of that is hyperbole.

I recommend handling her the way I handle him - blank stare, nod, walk away.

schimt

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Re: Is it really possible?
« Reply #3 on: May 09, 2014, 01:37:11 PM »
First off, congrats on exploring a path like this in your Teen years! You are light years ahead of most people your age. You have no idea how much fast you will propel yourself toward financial independence by starting younger, even if it is just staying out of debt, many of us had to dig ourselves out before starting on this path.

An "expensive location" is only relative to the type of life style. Do you need a big house by yourself or can you live with roommates, or preferably as home for a while, during the initial stages of building your stache! Also i believe florida is relatively good for in the taxes aspect, hence the reason many people retire in Florida, along with the weather.

Asking an economics teacher about financial independence is not necessarily the best source. I know doctors and nurses who eat poorly and smoke cigarettes, car mechanics who don't take care of their vehicles, ect. 

Good luck and always listen to peoples advice, but form your own opinion about things! Keep reading and learning as much as possible

mxt0133

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Re: Is it really possible?
« Reply #4 on: May 09, 2014, 03:02:04 PM »
I had a similar experience in grad school where my economics professor, which I really looked up to and was by far the best instructor I have ever had, went on about his neighbor that would was their car every weekend.  He basically said that his neighbor should have worked so that he could pay someone else to wash his car.  That the opportunity cost of washing his car was to high.  He never considered if his neighbor really liked washing his car or that if he even had the ability to work additional hours to pay for a car wash instead.  Forget about the taxes taken out of his earnings and actually calculating his real 'hourly rate'.  As an economist he is mostly concerned about growth and opportunity costs. 

It was kind of sad, with that mentality you would basically be working till you drop dead so that you can be productive and grow the economy without regard to personal and environmental health.

So like others mentioned on already, do not let others dictate your values not even those that you have the at most respect for.  Only you should decide what is right for you and if they align with your values.

DoubleDown

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Re: Is it really possible?
« Reply #5 on: May 09, 2014, 03:09:02 PM »
Yes, it's definitely possible, many on this forum or other similar sites like Extreme Early Retirement have retired early. But it's also still considered outside the mainstream, so it's not unusual at all for so-called "professional" financial people to tell you it's not possible, or at least not a good idea. They just aren't familiar with the concept, it's outside their usual training.

As just one example, I met with a Certified Financial Planner (CFP) a couple of years ago, who told me I better plan on having at least $5-10 Million to retire comfortably. Even under the most conservative 3% "Safe Withdrawal Rate (SWR)", that would provide an annual income of $150,000 - $300,000. The more typical 4% SWR would give $200,000 -$400,000 every year. Why she would think I need that much money every year is beyond me, especially since she had no idea what I actually spend.

totoro

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Re: Is it really possible?
« Reply #6 on: May 09, 2014, 03:11:39 PM »
She's just plain wrong.  The math does not lie. 

Sounds like she did not take the time to do the math and preferred sweeping generalizations and opinions based on her choices.   I find statements like hers so irritating, and even more so when she is teaching economics and handing out advice that is flawed to high school students. 

You are a teenager and you have already started to think about retirement and read the forums.  That will give you better quality information than she has, or than paid advisors will most of the time.

Just learn, set goals and be prepared to do what it takes to have what you really want.  I have no doubt you will reach FI if you follow the advice here, probably well before 40 if you wish.

anisotropy

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Re: Is it really possible?
« Reply #7 on: May 09, 2014, 03:15:34 PM »
Yes, it's definitely possible, many on this forum or other similar sites like Extreme Early Retirement have retired early. But it's also still considered outside the mainstream, so it's not unusual at all for so-called "professional" financial people to tell you it's not possible, or at least not a good idea. They just aren't familiar with the concept, it's outside their usual training.

As just one example, I met with a Certified Financial Planner (CFP) a couple of years ago, who told me I better plan on having at least $5-10 Million to retire comfortably. Even under the most conservative 3% "Safe Withdrawal Rate (SWR)", that would provide an annual income of $150,000 - $300,000. The more typical 4% SWR would give $200,000 -$400,000 every year. Why she would think I need that much money every year is beyond me, especially since she had no idea what I actually spend.


but but but spending 300k a year would be awesome , you could have so much stuff !!!

former player

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Re: Is it really possible?
« Reply #8 on: May 09, 2014, 04:16:24 PM »
Your teacher took your question seriously and spent time answering you.   No one has a crystal ball to look into the future with certainty.   I think she gave you her personal view about the future - which was presumably what you asked her for - and you need to factor her views into all the information you are gathering so that you can then make up your own mind.

Teaching isn't particularly highly paid, but it does generally allow more time for holidays than most jobs, which is probably what allowed your teacher to "travel half the world".  I've travelled quite a bit (mostly pretty cheaply, a fair amount of it for work) and don't regret a single day or penny of that travelling, although I could probably have retired a year or two earlier if I hadn't done it.  But travelling while young is different from travelling when older (you stay in different places, meet different people, do different things) and I'm glad I did it when I was younger rather than saving all of it up for middle age.   So if your teacher decided to follow a profession which wasn't the most highly paid, and then spent her money travelling, and retired later because of it, she made a valid choice.  I'm not so on board with the nails, but everyone's different, right?

One other thing I would mention about people looking into the future.  We are all stuck with the date of our birth, and we try to make the best of it.  Because it is something we have no choice over, "making the best of it" can mean thinking,

not necessarily terribly consciously, that we are grateful to have been born when we were rather than earlier (when people tended to be poorer) or later (when a lot more of the future is uncertain).  So your about-to-retire teacher is probably thinking that she has had a pretty good life being born at the time she was, and that she can see a lot of disadvantages to being born later, such as Miami becoming more expensive, and concerns over social security.  She's not seeing the advantages to being born later that you do, because they aren't available to her.

The fact that you are already thinking about some pretty big questions, gathering information from different sources and thinking critically about the answers tells me that you've got a good future ahead, however the economics work out for you.  Good luck!



SDREMNGR

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Re: Is it really possible?
« Reply #9 on: May 09, 2014, 04:21:44 PM »
I will speak for the other side, just so you can get another opinion.  There are things in this life that only large sums of money will buy.  Flying in your own private jet would be one.  Owning an NFL team would be another.  Are these things pretty cool things to do?  Yes.  Are they the only way to be happy?  No.  I flew in a friend's private jet once and went to a handful of baseball games in corporate boxes with big buffets.  It's pretty cool the first few times.  It gets old.  It's more fun near the dugout and the noise.  Also private jets are bouncy in bad weather.  So while the outlier experiences are pretty cool, they are not 100x cooler, maybe 1.5x cooler.

Most of the people on this forum are very focused on expense savings, which is a good thing.  Even in weight loss, experts will tell you that it's 70% diet, 30% exercise (diet being being frugal and exercise being making more money in my analogy).  But there are other people in this life that want to achieve certain things that are important to them.  Olympic Gold would be a pretty cool one.  Travelling the world is also good.  Being a millionaire is another good one, being a billionaire is a bit harder.  These are goals that are really hard to reach and take dedication and perseverance.  I would say that becoming "exceedingly rich" would be one of those things.  It allows a certain lifestyle that you can't have otherwise.

Of course, having said that, it's not my personal goal and many people who are / have been that rich will also tell you that it wasn't worth it for them.  But most people who are filthy rich, tend to want to stay that way and more or less like it.  People aren't giving their millions away by the dozens as you probably noticed.  It's an anomaly when people donate big chunks of their wealth before death.

Most people here will tell you that it's easier to save your way to FI than to earn your way to FI.  But you don't have to accept that you MUST spend less than $30k in retirement and only save until 25x $30k to retire.  You are welcome to want to spend $50k a year, or $100k a year or $1 mil / year, if your earnings match your expenditure wishes and you also don't mind working your job to earn it.

Earning $50k a year and living on lentil soup (sorry Jacob) isn't the only way to FI.  You can work hard and work yourself to a job that pays $250k and live on $50k and still reach FI faster than most.  Or you can keep at it until you save $5 mil because that's about where YOU feel like you need to be.  There are many people here who are Fascist about how much is an acceptable amount of expenditure and what is not.  Make your own choices.  Don't let people here tell you otherwise if you want to make $10 mil or do something else that you think is worthwhile.  You should listen to all advice but only take the ones that you believe has merit.  Much of what people here say do have lots of merit, which is why I like reading the stuff here, but not all that glitters is gold.

« Last Edit: May 09, 2014, 04:26:01 PM by SDREMNGR »

iamlindoro

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Re: Is it really possible?
« Reply #10 on: May 09, 2014, 04:27:39 PM »
Traveling half the world can be done on a shoestring budget-- and I daresay for those of us who have done it with both big and small budgets, many would answer that the low budget, slow travel, non-regimented way was by far the most satisfying.

Personally, I save over 50% of my income.  I take at least one major world trip every two years, and the only reason I don't do it every year is because I alternate between traveling to race triathlon one year, traveling for leisure only the other.

I have friends who live spendy lives and friends who are frugal.  None of us care about how much the others spend.  Our shared tastes are things like exercise, being outside, community service, and other stuff that's fun but doesn't have to be expensive.

Eric

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Re: Is it really possible?
« Reply #11 on: May 09, 2014, 05:27:20 PM »
Most people, even economics teachers, believe that spending more money will make you happier.  But of course, we know better than that.  And it sounds like you do too.

She didn't change my opinion, and I still want to be financial independent. I don't think that spending money would make me happy, and this year has been a great example, where I almost didn't go out and where I went I didn't spend almost any money. For example, I love classical music and I got the chance to meet Eduardo Marturet (a Venezuelan conductor that lives in Miami, I admire him) and take a picture with him, and I didn't need to spend any money. Still, I'm a teenager and I don't like going out nor eating out.

That's awesome!  And of course you will spend money over the course of your life, but it's how you spend it that counts.  Getting value for every dollar you spend and not wasting it on stuff that you don't truly value.

warfreak2

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Re: Is it really possible?
« Reply #12 on: May 09, 2014, 06:32:48 PM »
When I was much younger, I had the brilliant idea of somehow acquiring a million pounds, and leaving it in a savings account (earning 6% interest at the time), spending 60k/year (~90k/year in 2014 money. Turns out I was only wrong by a factor of 10...). I was told it wouldn't work because savings accounts wouldn't pay 6% forever, also inflation. I wasn't told that those problems are surmountable by putting your money somewhere other than a savings account, and withdrawing less than 6%.

CarDude

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Re: Is it really possible?
« Reply #13 on: May 09, 2014, 06:36:44 PM »
Most people, even economics teachers, believe that spending more money will make you happier.  But of course, we know better than that.  And it sounds like you do too.


What he said.

bobmarley9993

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Re: Is it really possible?
« Reply #14 on: May 09, 2014, 07:35:55 PM »
It is definitely possible.  My wife and I could probably ER tomorrow if we hadn't had kids (don't get me wrong they are 100% worth it) and we are only 35.  When I look around at what others my age have done I don't feel I have really missed anything.   Honestly, so I haven't had a new luxury vehicle or a designer kitchen or constant stream of electronics.   That doesn't seem like a superior quality of life to me.   I think I have also traveled more than most of my peers, in spite of having a high savings rate.  That is the one area where we splurge a bit and to me that does give you a better quality of life when you look at things holistically.

From your econ teachers perspective, what are the chances that her exact salary is just the perfect amount for a person to be happy?   Like if she had made 75% of what she does would she have considered herself happy?   If she made double what she does she would probably be giving you the same advice as well.  I think it's the other way where we people have pre-conceived notions that you won't be happy without spending the majority of your take-home.  Doesn't matter what the take-home is, they don't double-check the assumption.   I think the trick is to start with near nothing and slowly experiment buying things / experiences and see which really add to your quality of life.   As you figure that out, then try to optimize the cost on those things that really make you happy. 

So yes, I think it is definitely possible.
« Last Edit: May 09, 2014, 07:37:42 PM by bobmarley9993 »

Cpa Cat

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Re: Is it really possible?
« Reply #15 on: May 09, 2014, 07:56:37 PM »
I say this as someone with a degree in Economics:

Stop talking to Economics professors and start talking to Finance and Accounting profs.

Econ professors tend to get obsessed with opportunity cost and maximizing utility, which can easily lead to a consumption mentality. Plus, the economy is good only if you consume! Just look at what saving too much did to Japan!

Accounting professors, on the other hand, become fixated with present value computations. This is like a gateway drug to early retirement. You start by spending an evening playing with the present/future value functions on your calculator and the next thing you know, you're retired by 35.

Finance professors love the magic of the stock market. They love it more than anything. Their eyes glitter when they look at youthful 20 year olds and imagine how much they could make by investing while they're young. They rue the lost years where they themselves didn't invest, or brag about how rich they are because they did.

totoro

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Re: Is it really possible?
« Reply #16 on: May 09, 2014, 09:22:50 PM »
I say this as someone with a degree in Economics:

Stop talking to Economics professors and start talking to Finance and Accounting profs.

Econ professors tend to get obsessed with opportunity cost and maximizing utility, which can easily lead to a consumption mentality. Plus, the economy is good only if you consume! Just look at what saving too much did to Japan!

Accounting professors, on the other hand, become fixated with present value computations. This is like a gateway drug to early retirement. You start by spending an evening playing with the present/future value functions on your calculator and the next thing you know, you're retired by 35.

Finance professors love the magic of the stock market. They love it more than anything. Their eyes glitter when they look at youthful 20 year olds and imagine how much they could make by investing while they're young. They rue the lost years where they themselves didn't invest, or brag about how rich they are because they did.

Like.

iris lily

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Re: Is it really possible?
« Reply #17 on: May 09, 2014, 10:09:06 PM »
I will speak for the other side, just so you can get another opinion.  There are things in this life that only large sums of money will buy.  Flying in your own private jet would be one.  Owning an NFL team would be another.  Are these things pretty cool things to do?  Yes.  Are they the only way to be happy?  No.  I flew in a friend's private jet once and went to a handful of baseball games in corporate boxes with big buffets.  It's pretty cool the first few times.  It gets old.  It's more fun near the dugout and the noise.  Also private jets are bouncy in bad weather.  So while the outlier experiences are pretty cool, they are not 100x cooler, maybe 1.5x cooler.

Most of the people on this forum are very focused on expense savings, which is a good thing.  Even in weight loss, experts will tell you that it's 70% diet, 30% exercise (diet being being frugal and exercise being making more money in my analogy).  But there are other people in this life that want to achieve certain things that are important to them.  Olympic Gold would be a pretty cool one.  Travelling the world is also good.  Being a millionaire is another good one, being a billionaire is a bit harder.  These are goals that are really hard to reach and take dedication and perseverance.  I would say that becoming "exceedingly rich" would be one of those things.  It allows a certain lifestyle that you can't have otherwise.

Of course, having said that, it's not my personal goal and many people who are / have been that rich will also tell you that it wasn't worth it for them.  But most people who are filthy rich, tend to want to stay that way and more or less like it.  People aren't giving their millions away by the dozens as you probably noticed.  It's an anomaly when people donate big chunks of their wealth before death.

Most people here will tell you that it's easier to save your way to FI than to earn your way to FI.  But you don't have to accept that you MUST spend less than $30k in retirement and only save until 25x $30k to retire.  You are welcome to want to spend $50k a year, or $100k a year or $1 mil / year, if your earnings match your expenditure wishes and you also don't mind working your job to earn it.

Earning $50k a year and living on lentil soup (sorry Jacob) isn't the only way to FI.  You can work hard and work yourself to a job that pays $250k and live on $50k and still reach FI faster than most.  Or you can keep at it until you save $5 mil because that's about where YOU feel like you need to be.  There are many people here who are Fascist about how much is an acceptable amount of expenditure and what is not.  Make your own choices.  Don't let people here tell you otherwise if you want to make $10 mil or do something else that you think is worthwhile.  You should listen to all advice but only take the ones that you believe has merit.  Much of what people here say do have lots of merit, which is why I like reading the stuff here, but not all that glitters is gold.

This is really a great post! I like several things about it including the way you quantify rich man's events: 1.5 cooler not 100% cooler. So true with many things.

The post by CPA cat is pretty damn funny and interesting, too. What an inspiring thread! Hope some of it lights your fire, OP.

deborah

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Re: Is it really possible?
« Reply #18 on: May 09, 2014, 10:23:37 PM »
I told her that I would like to save half of my household income and work until I was able to stop working so that I would ensure a life where I wouldn't need to work my whole life.

She said that in order to be that frugal I would live really poorly, that I wouldn't be able to save any money if I wanted to have a nice life, that if I wanted to save a lot I should be rich first. She wasn't discouraging me, but she tried to give me her opinion. She asked me when I wanted to reach financial independence, and I was going to say 40 when she said first 50 y/o, and I said yes (even though I don't want that, that's why I'm planning things now.)
Remember that anyone living where you live is considered exceptionally rich by most people in the world.

What is a nice life? Everyone has different versions of "a nice life". Some versions involve a lot of expensive material possessions. Others involve a much simpler, more frugal life. It depends upon what you want. For the last 10 years I worked, I saved at least 2/3 of my income - but that didn't mean I was going without. I just spent everything I wanted to spend - and 2/3 was left. I never had a budget. I retired much later than I could have done, because I didn't realize I had enough to retire.

Although I retired early, it was not as early as many people here do. Of course it is really possible - just look at the people here who have done it! It depends completely on you and what your definition of "a nice life" is.

Kaminoge

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Re: Is it really possible?
« Reply #19 on: May 10, 2014, 01:13:40 AM »
Accounting professors, on the other hand, become fixated with present value computations. This is like a gateway drug to early retirement.

Accountancy as a gateway drug - I love it!

OP you know the answer to your question already. Of course it's possible - and if you start young you have an amazing advantage. Your teacher may have all sorts of reasons for her answers. She sounds kind of depressed actually and lets face it, a lifetime of teaching can have that effect. I'm also a teacher (maths and not economics) and I've traveled extensively, had all sorts of adventures and done it all without going into any debt or without living any kind of deprived lifestyle. Will I retire later because of it? Sure, but I'm happy with my choices. I wouldn't be happy putting off retirement so that I could have my nails done but maybe for her that was worth it.

If a student asked me the same question you asked your teacher I'd have made them get out their calculator (if you've got a graphics calculator the tvm solver is all sorts of fun) and plug in a few numbers. They'd see pretty quickly that it was definitely possible. Whether it's the path for them is of course not up to me.

nereo

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Re: Is it really possible?
« Reply #20 on: May 10, 2014, 06:03:39 AM »
Quote
She also told me that perhaps in the future there won't be pensions or social securities and that my generation would need to work forever, until the day we die. Of course I don't want that, I want to be free and enjoy my life frugally, without depending on money.

Lots of good responses here, but I wanted to attack the above sentiment because it seems to be such a pervasive belief that many people don't realize just how wrong it is.  Note:  this pertains only to the US (sorry international MMMers)
Regarding pensions, there is this myth that decades ago almost every working class male retired on his pension at 60+.  But the reality is that there has *never* been a time when the majority of the work force retired with any pension income.  In 1975 only a quarter of retirees 65+ had pension income.  This reflects people who were working in the 1950s and 60s, the very decades that people associate with working-with-a-pension jobs.  Pensions income actually peaked in the 1990s at around 40% (largely reflecting jobs held in the 1970s/80s) and has slowly dropped back down to about 26% of retirees. Ironically, the percentage of retiree's income that has come from pensions has acutally gone UP since the 1970s.

In short: pensions have never been a source of income for the majority of retirees in the USA over the last 100 years.

Regarding social security - There's a lot of emotion and politics heaped onto SS, but the idea that the system won't be able to provide any benefits to people who are currently in their 30s, 20s or even teens is a bit ridiculous.   SS does have a looming shortfall, but even if no adjustments are made it will be able to pay out full benefits until sometime around 2033. Even after then, it's still predicted to be able to pay out about 75% of 'promised' benefits 75 years into the future.*  That's a loooong way from "not existing".    Fixing SS is probably the simplest economic problem from a mathematical standpoint, but difficult from a political standpoint. Some relatively minor and gradual changes could eliminate this projected shortfall entirely.  The math is simple but the politics are not.

In short: unless congress "zeros out" SS it will continue to provide benefits for retirees as far into the future as we can predict.**   

Of course, as a MMM-style FIRE individual you likely won't need SS or a pension to provide for you.

* SS is Congressionally required to predict solvency 75 years into the future.  A bit ridiculous when you consider that many of those future payees haven't been born yet, and virtually all of them are too young to be in college yet.  see: http://www.ssa.gov/oact/trsum/

** There's always the possibility that global war, comet impacts, pandemics or aliens might change that, but then we're all in the proverbial hand-basket anyway.  And it's worth noting that SS has already survived WWII (first checks were payed out in 1940), about a dozen recessions and as many presidents, the cold war, etc etc)

ArbitraryGuy

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Re: Is it really possible?
« Reply #21 on: May 10, 2014, 08:29:02 AM »
I say this as someone with a degree in Economics:

Stop talking to Economics professors and start talking to Finance and Accounting profs.

Econ professors tend to get obsessed with opportunity cost and maximizing utility, which can easily lead to a consumption mentality. Plus, the economy is good only if you consume! Just look at what saving too much did to Japan!

<snip>

As an economics professor, I wholeheartedly agree!  Aside from financial economists, very few economics professors have much training (if any) in finance or accounting.  Most of the work done in economics is abstract theoretical and statistical modelling, providing very little value or insight for real people and their concerns.

MustacheMike

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Re: Is it really possible?
« Reply #22 on: May 10, 2014, 09:46:40 AM »


Asking an economics teacher about financial independence is not necessarily the best source. I know doctors and nurses who eat poorly and smoke cigarettes, car mechanics who don't take care of their vehicles, ect. 


I came here to say this. Economists are not magic gurus -- they are social scientists with philosophies about how the world works.

Would you trust your political science professor to tell you who to vote for?

zataks

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Re: Is it really possible?
« Reply #23 on: May 10, 2014, 10:05:06 AM »
Would you trust your political science professor to tell you who to vote for?

No, dummy, that's what cable news is for.  Sheesh.

I'll be one of those 26% of Muricans on a pension.  GF calls it "the P-word." =p  As in, "yea but you have a P-word!"  Now that I write that out though, it sounds like we could have some fun with this one.

Sonorous Epithet

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Re: Is it really possible?
« Reply #24 on: May 10, 2014, 10:19:57 AM »
I'm thinking about it from the perspective of the teacher. If I was getting ready to retire in the 60s, having spent time doing things I "enjoy" like a $120/mo nail habit along the way, and one of my students came up and told me he had a retirement plan because he didn't want to be a consumerist sukka like me, I don't think I'd be the most receptive person in the world.

I have an accounting professor who is retiring this year, and she seems to have some senioritis -- she seems not to want to really get emotionally invested in the success of her students because she's about to get out of dodge.

Also, you should watch the video in this thread. http://forum.mrmoneymustache.com/welcome-to-the-forum/revolution-of-values-video/. I think it will be enlightening, especially if you go into it thinking about your changing mindset versus the mindset of your teacher's personal/professional life for the past 30 years. Especially the part about how just thinking about money (like I would imagine an econ professor does on an hourly basis) tends to make people more consumerist.

kite

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Re: Is it really possible?
« Reply #25 on: May 10, 2014, 07:46:35 PM »
I don't think the teacher is the least bit unreasonable.   She's seen students come and go, she's lived through more than a few boom and bust cycles,  the wage price spiral in the 70s, the erosion of manufacturing sector jobs, market swings, interest rates that have steadily dropped over the years, the impact of immigration on jobs and wages, NAFTA, outsourcing and more.   I'm going to give her the benefit of the doubt here.  It's absolutely true that if you want financial independence by age 40 and you expect to save half your income to do it, your lifestyle will be very poor relative to your peers.  I do it,  and mine is.  To do it, you need a job that pays 2x a living wage and last I checked,  those don't get handed out just because you want one.  If a young person told me they aren't interested in being a consumer,  I'd say "Congratulations.  You've figured out the secret to happiness."  But if their focus is on not having to work, I'd shake my head and murmur something about "kids today" without any real idea where to begin.   
Lots of us were born on third but go around believing we hit a triple.   The really old teacher has been watching the whole game. 

CarDude

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Re: Is it really possible?
« Reply #26 on: May 10, 2014, 07:52:58 PM »
I'm thinking about it from the perspective of the teacher. If I was getting ready to retire in the 60s, having spent time doing things I "enjoy" like a $120/mo nail habit along the way, and one of my students came up and told me he had a retirement plan because he didn't want to be a consumerist sukka like me, I don't think I'd be the most receptive person in the world.

Also a point worth repeating. People get defensive when they think their identities are under attack.

totoro

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Re: Is it really possible?
« Reply #27 on: May 10, 2014, 08:56:55 PM »
I don't think the teacher is the least bit unreasonable.   She's seen students come and go, she's lived through more than a few boom and bust cycles,  the wage price spiral in the 70s, the erosion of manufacturing sector jobs, market swings, interest rates that have steadily dropped over the years, the impact of immigration on jobs and wages, NAFTA, outsourcing and more.   I'm going to give her the benefit of the doubt here.  It's absolutely true that if you want financial independence by age 40 and you expect to save half your income to do it, your lifestyle will be very poor relative to your peers.  I do it,  and mine is.  To do it, you need a job that pays 2x a living wage and last I checked,  those don't get handed out just because you want one.  If a young person told me they aren't interested in being a consumer,  I'd say "Congratulations.  You've figured out the secret to happiness."  But if their focus is on not having to work, I'd shake my head and murmur something about "kids today" without any real idea where to begin.   
Lots of us were born on third but go around believing we hit a triple.   The really old teacher has been watching the whole game.

I don't see it the same way.  She told him she was getting six percent on her investment and that was conservative...

He told the teacher that he would like to save half of his household income and work until he was able to stop working so that he would not need to work his whole life.

From this point, it is a math question with a lot of variables that need to be figured out.  What is a reasonable budget, what do you need to earn to get it, where can you economize without compromising quality of life?  It is a SWOT analysis - an educational exercise and not a passing on of ingrained barriers.

A better response would have been to get him to figure out the variables imo.  Sites like this help you figure out what things cost: http://livingwage.mit.edu/places/1703154820 set out a living wage. 

Then you need to think about taxation and how to best plan for this.

Then there are all the other variables like inheritance or lack of it, dis/abilities, kids, student debt, pension or lack of it...

If your primary goal is to reach FI and you know early you can get a good grasp on the variables and apply the math.  Having a big headstart is a big plus.

The teacher basically failed to set out the logic and equated a "poor lifestyle" and poverty with retiring early.  This is not true for lots of people.  They either find a middle way or they just enjoy their life a lot while not consuming as much as their peers or they are long-term thinkers that get more of a kick from accomplishing a big goal than anything else.

Jamesqf

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Re: Is it really possible?
« Reply #28 on: May 10, 2014, 09:29:01 PM »
However, she also said that she went to the movies every week and that monthly she would spend $120 on her nails.

Hummm...  Unless I'm using this calculator wrong, if every month you put $120 in an account at 6% interest, in 30 years you'd have a bit over $120,000.

So is getting your nails done every month a really important part of your life?  Admittedly I'm a guy, but I've managed just fine so far by spending the occasional couple of bucks on a set of nail clippers.