The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: bmjohnson35 on August 11, 2019, 01:42:19 PM
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I have read the stories of many FIRE success stories and I notice a trend that many if not most had $200k household incomes that accelerated their path to ER. I'm not criticizing, it's just an observation. We will likely start ER next year, but I can assure you that we never had a combined income of more than $125k. Our income didn't even hit 6 figures until around 10 yrs or so. I wonder how much earlier we could have reached ER if we had higher incomes over our careers. Of course, we have also made our share of financial mistakes over the years as well. We do live in a lower income and lower cost of living area of the country, so that has to be considered as well. It also seems that many ER success stories come from IT professionals, maybe it seems this way because they are more likely to create online sites/Blogs? Anyway, has there been a study covering the demographics of FIRE success stories?
BJ
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Not sure about a study, nor whether I'm eligible for "success"...but FIREd in late 40s after slack career that averaged maybe $19/hr gross earnings in today's dollars, top after-tax income about 45k (today's 50k) for a year.
One person, not a family. Had several sabbatical years along the way but also substantial real estate appreciation. The majority of savings were mine, but did inherit a fraction at the end after leaving job and caring for an ailing parent.
For a while we had a poster who was FI, single parent, on significantly smaller stash than that IIRC. She wrote a book on going from homeless or the brink of it to FI on low and intermittent income, including situations where for medical reasons the person(s) does not work. One of the points of her book was that many people experience some sort of windfall during their lifetime, but people only gain advantage from it if they know how. Anyway, I guess definition of success varies. IIRC, she put serious energy into finding pleasant suitable housing, but generally had a thriving life and was being a very good mom.
There are lots of techies and other prosperous professionals here (lawyers, accountants, doctors) but $200k incomes are not needed for FIRE. To stretch a little, consider reading the FIRE stories on the ERE forums, where $15k retirement incomes are more common!
http://earlyretirementextreme.com/
https://forum.earlyretirementextreme.com/viewforum.php?f=9&sid=9e615233f99c8a42c2cf40d17a5a6dfb
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Thanks for the links BicycleB, I will definitely look at those links.
Keep in mind, there is no question in my mind that anyone single or married can achieve FIRE, especially if they start at an early age. I am just surprised how many stories where I read $200k+ incomes from people, many in their 20's. It may be perception or simply the sample of articles/blogs I'm reading.
BJ
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There's also a lot of self-selection going on, probably. It's a lot easier to talk (brag) about a $200k income than a 20k one.
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I don't find my own FIRE story particularly interesting, but a lot of people seem to because of how "out there" it is - summarized, we're a receptionist/freelance editor couple, live in a major city, generally make around 80K, save 65%, travel to five or six countries a year, and have some... unusual hobbies and habits, to say the least. Current projections have us retiring around 35, and possibly building a remote island homestead. We have a blog and I have a MMM journal as well.
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The super fast $200k income and race to FIRE stories are attention grabbers.
Regular stories aren't as exciting, but likely far more common. I think of the $200k people as the gold medalists in a marathon, the rest of us also finish the marathon but no one celebrates except ourselves. If I finished a marathon in 100th place, I'd still be proud but the newspapers wouldn't mention my name, nor would you find a blog about me.
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FIRE is more a result of high savings rates rather than high income. Although it is easier to have a higher savings rate if one has a high income, since the bare necessities of life cost something.
You might be interested in the following article:
https://retireearlyhomepage.com/mbti.html
It turns out that the personality types of people who tend to FIRE also make those people well suited to be engineers. Since engineers also often get paid well (and probably have more blogging capabilities and interest than the typical person), it's not surprising that a lot of the FIRE blog people are engineers.
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I have a relatively high income, but I think if my income was 200k+ I would have a harder time FIREing. If you are FI and you can keep working and make $20/hr for your time or $100/hr for your time - the $100/hr seems more tempting. So I think the medium-high salary range is going to have the most FIREees. High enough to make reaching FI easy, but low enough to not make wasting more of your time worth it.
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Yeah, this is pretty accurate. Enough income to sock a good portion away, but incredible habits to actually save it.
When my wife and I morph from the current situation to the next, I estimate it'll be with combined incomes of about $250k and we'll cut it back to make $150k, like $150k of total income ($100k earned) will be our chilled out time.
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It just takes longer with a lower income.
It all depends on what percentage of your income you are able to save. Lower income means a lower percentage available to save, assuming that there is a level at which expenses can get no lower.
You don't hear about it because it takes longer. The same principles apply, because the math is the same, but it's still possible.
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It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes. As income increases, the drag of taxes increases at a much faster rate. A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.
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It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes. As income increases, the drag of taxes increases at a much faster rate. A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.
THIS!!!!!!!!!!!!!.....
I got a nice pay bump this year and combined with my annual bonus and small stock incentive, I've been bumped into the top tax bracket. In some ways I have OMY syndrome, that's a big fire-hose, and in others, it's fuck this - the government is getting more than half of my last dollar earned - that is not an incentive to keep working.
But I will be the first to admit that it is easier to save 65-70% of our net income when that is well over 6 figures.....if you exclude taxes, we live on 45-50K a year. I'm just happy that we built our rough budget when we were making half our current income, and we've just floated along. I've never been impressed by folks who can be impressed by 'things'. As Groucho Marx said, “I don't want to belong to any club that will accept me as a member.”
I'm always impressed with folks that are making an 'average' income and are socking it away. They're the true masters. What I do is easy.
I just want to say bravo to the folks that have hit FIRE or are approaching FIRE on a modest income - you're rock stars in my book!
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I think it's obvious that one should strive to make as much money as possible, consistent with other goals. Deciding to pursue a lower-paying career, drop out of the workforce, have multiple kids or multiple pets, is obviously going to hold you back. Yet, if you consciously make those sacrifices because they are consistent with your values, I can't judge you too hard.
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I think it's obvious that one should strive to make as much money as possible, consistent with other goals. Deciding to pursue a lower-paying career, drop out of the workforce, have multiple kids or multiple pets, is obviously going to hold you back. Yet, if you consciously make those sacrifices because they are consistent with your values, I can't judge you too hard.
very true....we all live in our own world, with our own values. If you're living true to your values and happy with your place in the world, none of us should judge another. It's the people 'living their best lives', and then complaining about being broke (think 'influencers' looking for money to fund some trip), or looking for hand-outs because they have 10 kids, they're the jerks.
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I certainly don't intend to take away or diminish those with higher income who have achieved FIRE. Those who say that their story is boring because they had lower or more average income, I find this to be the opposite for me. These are the true inspirational stories that I can relate to. Yes, it may take longer, but I find these stories more inspirational.
My parents were my early inspiration. My father called it the get rich slow plan. They always watched their spending closely, was careful about their use of credit and always tried to save what they could. He retired at 55, largely because of a good pension plan and his employer offering free healthcare in retirement. Unfortunately, he invested much of his investments into company stock early on and when he took a beating for a few years, he moved his money into "conservative" and "safe" choices. He still did well and my mother is still comfortable after his recent passing, but if he had understood market fundamentals, they could have been even better off.
BJ
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The important thing to know is that mathematically reducing your spending has more impact than increasing your income. The high wage earner was only able to FIRE by reducing their spending, not just saving but reducing the amount they need to save in order to FIRE.
This reminds me of the joke:
How do you make a million dollars with real estate?...
Start with two million.
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BJ, your $125k income is far above "lower" or "average".
It's ~2X the median US household income, which makes you upper middle/ bordering upper class. Then you mention you live in a LCOL area, which likely amplifies the effect vs. your geographical peers. You also cracked $100k a decade ago! Those dollars adjusted for inflation were worth even more than today, significantly.
Don't compare yourself to the $200k+ earners, or the $50k earners. Your journey is your own, but you have a very healthy income within the US, and that's one of the richest countries in the world, just to put things in further perspective.
This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
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BJ, your $125k income is far above "lower" or "average".
Agreed. It was not my intention to focus on my personal situation so much. I was simply pointing out what I now realize others perceive, that FIRE info on the web is often tilted toward those with higher incomes.
BJ
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
This made me LOL, literally. I'm in the circle..
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
This made me LOL, literally. I'm in the circle..
2Birds1Stone bringing the truth.
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The super fast $200k income and race to FIRE stories are attention grabbers.
Regular stories aren't as exciting, but likely far more common. I think of the $200k people as the gold medalists in a marathon, the rest of us also finish the marathon but no one celebrates except ourselves. If I finished a marathon in 100th place, I'd still be proud but the newspapers wouldn't mention my name, nor would you find a blog about me.
I think of the low and medium income folks who FIRE to be the real heroes. It's much harder for them.
Those of us at the higher incomes? Hell, we've got a chauffeured limo stuffed with cash getting us close to the FIRE finish line. There's nothing to brag about at all.
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I'm in the high income, not much sacrifice camp. I've got a nice NW. Anyone want to circle jerk later?
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I'm in the high income, not much sacrifice camp. I've got a nice NW. Anyone want to circle jerk later?
As long as you bring the biscuit.
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I think it's obvious that one should strive to make as much money as possible, consistent with other goals. Deciding to pursue a lower-paying career, drop out of the workforce, have multiple kids or multiple pets, is obviously going to hold you back. Yet, if you consciously make those sacrifices because they are consistent with your values, I can't judge you too hard.
Why would you judge me at all?
(For reference, husband and I both have STEM degrees. Our household gross income is $75–80K depending on how much work I take on and whether husband gets overtime. Could we make more? Sure. It would mean giving up too many things we love about our life together.)
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I expect you wanted some actual dollar amounts.
So I'll give you mine, I hope they don't discourage you! :-)
We started our journey when we married in 1982.
We had $1M at the end of 2011. Our combined average income for those 30 years was $41,243.
Some of those years were low income, 11 years were under $25,000 a year.
We continued working 7 more years, and, with 2012 to 2018 being such a great time to be in the market,
we more than doubled our net worth 2012 to 2018.
Our average income for the full 37 years was $47,522.
Clearly it can be done on a lower income, it just takes longer, (numbers are like that).
We were frugal, but not absolute MMMer's.
Now retired, we can spend more than we ever did while working. Probably won't though!
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BJ, your $125k income is far above "lower" or "average".
It's ~2X the median US household income, which makes you upper middle/ bordering upper class. Then you mention you live in a LCOL area, which likely amplifies the effect vs. your geographical peers. You also cracked $100k a decade ago! Those dollars adjusted for inflation were worth even more than today, significantly.
Don't compare yourself to the $200k+ earners, or the $50k earners. Your journey is your own, but you have a very healthy income within the US, and that's one of the richest countries in the world, just to put things in further perspective.
This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Just curious, for perspective, where do you view the cutoffs?
I’m all for not comparing to others, except to get tips and strategies.
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I applaud everyone that ultimately achieves FIRE.
However, the FIRE stories that resonate the most with me, is from members like this...
I don't find my own FIRE story particularly interesting, but a lot of people seem to because of how "out there" it is - summarized, we're a receptionist/freelance editor couple, live in a major city, generally make around 80K, save 65%, travel to five or six countries a year....
My story is boring as well. Just a lower income blue collar worker who lived below my means, never got into debt other than a short term mortgage, and had a high savings rate and low expenses....
No, your stories aren't boring at all. They are inspiring!
Your modest income level fits a narrative that a larger portion of the working population can relate to. You have proven that....
Even with a modest income, yes, FIRE is attainable.
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
Truth hurts sometimes. That one's gonna leave a mark. LOL.
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
Unnecessarily snarky, in my view. There are different types of sacrifice - some sacrifice is required to save lots of money, but often some sacrifice is also required to earn lots of money. Unless you're tremendously lucky or tremendously naturally gifted, a high-earning career doesn't fall from the sky.
I think it is enough to say that there are different ways of achieving FIRE and each person can forge his or her own path. Comparison is the thief of joy.
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...There are different types of sacrifice - some sacrifice is required to save lots of money, but often some sacrifice is also required to earn lots of money. Unless you're tremendously lucky or tremendously naturally gifted, a high-earning career doesn't fall from the sky.
I think it is enough to say that there are different ways of achieving FIRE and each person can forge his or her own path. Comparison is the thief of joy.
Amen.
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Dad (57)has been fire for last 4 years before I even came across the FIRE movement, Mum has died at 56.
Life income never exceeded £30k between them and for large parts they lived on much less with 3 kids to support.
If you can save on your current income then the maths works. He has grown net worth in the 4 years of FIRE so far and doesn't look remotely close to failing.
Granted we live in UK so free health care and he has social security pension to be paid in next 10 years.
Lots of high income people here but he is living very comfortably without needing to work.
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
Bullshit! I sacrificed a lot for my high income and worked my ass of to get it and keep working my ass off to keep it. Ever since discovering FIRE I’ve made saving and increasing my income priorities so I can FIRE as quickly as possible and make up for the years when I didn’t have the income and/or didn’t have strategies or a plan to save and invest. I don’t feel guilty about shit. It’s all a journey and no one, unless they win the lottery, has an easy path. If you get there, you earned it.
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Interesting.
My family is FIREd (April 1st 2019) live in a lowish/medium cost of living area and have always had below 200k income. If you cut out the college jobs where I made a few thousand a year (horribly skewing the averages), our family income averaged just shy of 89k per year (pretax) looking from 2006 (when I graduated, got married, and got a job) to 2018. In 2013 we actually hit the 100k mark, exciting times. Our lowest year was bring in 36K, our second year of marriage.
There were a lot of factors in our success, but the largest was having a consistent income high enough to live below our means. Even at our lowest of 36k we were paying off student loans, paying for private health insurance, and had no access to 401ks. Once you start getting into the median income ranges the process can accelerate and you know how to live on the lower income side.
Loren
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
Truth hurts sometimes. That one's gonna leave a mark. LOL.
Frugalwoods
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FWIW: Mr. Google tells me median household income is about $61,000 and average household income is about $86,000. https://dqydj.com/united-states-household-income-brackets-percentiles/
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So what if this forum is filled with high income earners who are saving and retiring early? Does that make a less good crowd than if it were low income earners aspiring to retire early? Dont lower income earners want want to get advice about getting higher incomes from people with high incomes?
High income earners consuming less is a worthy aspiration!!!
I dont agree with this statement: "If you get there, you earned it." A few have earned it, most had it spoon fed to them.
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Exactly. I don't begrudge anyone their success, but this community (not the forum specifically) is full of people trying to sell you the secret to success when it's so obvious that steps 1 and 2 of their own story were: be a top 10% talent; marry another top 10% talent. Everyone is on their own journey.
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I dont agree with this statement: "If you get there, you earned it." A few have earned it, most had it spoon fed to them.
You have that backwards. A few had it spoon-fed, and most have earned it. Studies of millionaires show that the vast majority are self-made.
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So what if this forum is filled with high income earners who are saving and retiring early? Does that make a less good crowd than if it were low income earners aspiring to retire early?
Nothing is wrong with it. I'm one of those people. The median household income is about $60K. My household makes more than double that and we're 15 years away from what is typically considered to be "peak earnings age". We're doing very well to save over half of our income, but the fact is that we spend between $50K and $60K a year. We lead a life that's more luxurious than most. I have no secrets to offer someone making a median income. Lots of people in my situation pretend they do though. And they sell themselves as gurus. That reads as obnoxious.
Dont lower income earners want want to get advice about getting higher incomes from people with high incomes?
My advice for a higher income is to be like me. That is, be born with a high aptitude for math.
For real, I can and do give advice to high school and college students. But for your average adult in the workforce, I'm not sure what value can come from advice from the software engineer kids.
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I know that what I'm doing is nothing special. Attorney, live in LCOL area, with a comfortable middle class suburban lifestyle. Done. All I have to do is not spend like the other attorneys!
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1) Know how to use office/productivity software. Inside and out. Be competent with presentations/powerpoint, wordprocessing/word, shreadsheets/excel.
2) Learn how to code in order to automate repetitive tasks. Know at least python, macros in a spreadsheet application, and potentially javascript.
3) Be an effective communicator. Be able to clearly speak and write, in order to convey thoughts effectively.
IMO, those three things are the most important things for "Getting a good job"
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Sounds like selection bias on the part of other posters and availability heuristic on your part: high income earners are more likely to post about their income, and you are remembering those cases more.
I know personally we are not average. When we got our first house our household income was about $62k and now it's about $160k. Most couples that are intentional about their careers can make similar progress, and neither of us are very ambitious IMO. Our greatest ambition is early retirement.
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Its all relative. Some people choose to work hard at earning a high income. Some choose to work hard at spending very little. A few slightly insane do both. None of it is easy or else everyone would do it. Also average and median incomes mean nothing. They include people in places where $40k a year is a lot of money and places where $100k is nothing. It also includes meth heads and warren buffet.
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1) Know how to use office/productivity software. Inside and out. Be competent with presentations/powerpoint, wordprocessing/word, shreadsheets/excel.
2) Learn how to code in order to automate repetitive tasks. Know at least python, macros in a spreadsheet application, and potentially javascript.
3) Be an effective communicator. Be able to clearly speak and write, in order to convey thoughts effectively.
IMO, those three things are the most important things for "Getting a good job"
"Getting a good job" - not quite. Your list will help some advance in some jobs but wont necessarily get you in the door.
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
Bullshit! I sacrificed a lot for my high income and worked my ass of to get it and keep working my ass off to keep it. Ever since discovering FIRE I’ve made saving and increasing my income priorities so I can FIRE as quickly as possible and make up for the years when I didn’t have the income and/or didn’t have strategies or a plan to save and invest. I don’t feel guilty about shit. It’s all a journey and no one, unless they win the lottery, has an easy path. If you get there, you earned it.
I don't think he meant that you haven't made sacrifices to get to a place with a high income. I think he meant that most here with high incomes don't have to make sacrifices in terms of lifestyle to get to FIRE. Most don't live in a tiny shared studio apt or with several roommate, they don't have to decide between fixing the roof or investing, or have to go without a car,.cable tv, nice vacations, new clothes, and a Vitamix blender so that they can save for FI. Most high income earners can live a regular middle class life style AND still save for FIRE. Most of us lower income types could FIRE in a few years just by living like we do/did but had the high salary instead of it taking 20 years and having to go without all those little luxuries.
Well, I want to say most, but I’ll speak for myself here, I may not have to sacrifice some things lifestyle-wise but to have the high income, I’m definitely sacrificing some of my life for work and I would imagine that many high income people are doing the same. I don’t know too many high income people who aren’t working their asses off for that salary. And not that lower or middle income people don’t work their asses of as well. I just know I carry a lot more responsibility than my receptionist. Work doesn’t creep into his home life. I want to FIRE so badly and quickly so I can get a full life back without feeling like I’m carrying the weight of the world on my shoulders and work dominating my life. You know what people say when I talk about this, well, that’s why you get paid the big bucks. There’s no sympathies for us. So yeah, there is sacrifice, just from a different angle.
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Accumulated wealth really starts to shoot upwards once income exceeds the 75th percentile for your age range -
(https://escapevelocity2020.files.wordpress.com/2018/07/income-and-wealth.png)
https://www.nytimes.com/interactive/2019/08/12/upshot/are-you-rich-where-does-your-net-worth-rank-wealth.html
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Its all relative. Some people choose to work hard at earning a high income. Some choose to work hard at spending very little. A few slightly insane do both. None of it is easy or else everyone would do it.
I generally disagree about the relationship between hard work and earnings. Hard work certainly helps, but the bulk of earnings is determined by other factors like aptitude.
Also average and median incomes mean nothing. They include people in places where $40k a year is a lot of money and places where $100k is nothing. It also includes meth heads and warren buffet.
I'm compelled to disagree again. For most of the USA's most populus metros, the median incomes are within the same $10K range.
San Francisco and DC are major outliers for obvious reasons, but if $100K is "nothing" there, than more than half of people there have nothing. Higher COL areas are often seen as more desirable. If you're paying to live in LA, you have great weather and beach access. If you're paying to live in NYC, you have world class museums and entertainment.
(https://www.census.gov/content/census/en/library/visualizations/2017/comm/income-dot/jcr:content/map.detailitem.950.high.jpg/1505334177590.jpg)
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I dont agree with this statement: "If you get there, you earned it." A few have earned it, most had it spoon fed to them.
You have that backwards. A few had it spoon-fed, and most have earned it. Studies of millionaires show that the vast majority are self-made.
I see a spectrum with two ends being “self made” and the other “not deserving it”. We work hard and are blessed with brains and good instincts, but as a top 10% married to another top 10%, I don’t believe we “deserve” what we earn even though we have worked hard to get here.
What I mean is that while I am incredibly grateful for what we have, don’t get me wrong, I really don’t feel like we are 4x smarter/harder working/more valuable than other people I see in other industries who are also smart and educated and work hard. Our society chooses to monetarily value some professions over others. That isn’t necessarily a reflection of how much good those jobs bring to society.
I have had this tickle in the back of my mind for a little while but doing our tax returns for 2018 really brought the feeling home. It was a high water mark for our household income, but still I felt it was silly high. Oh well. Be grateful and sock away as much of it as we can!
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
Bullshit! I sacrificed a lot for my high income and worked my ass of to get it and keep working my ass off to keep it. Ever since discovering FIRE I’ve made saving and increasing my income priorities so I can FIRE as quickly as possible and make up for the years when I didn’t have the income and/or didn’t have strategies or a plan to save and invest. I don’t feel guilty about shit. It’s all a journey and no one, unless they win the lottery, has an easy path. If you get there, you earned it.
I don't think he meant that you haven't made sacrifices to get to a place with a high income. I think he meant that most here with high incomes don't have to make sacrifices in terms of lifestyle to get to FIRE. Most don't live in a tiny shared studio apt or with several roommate, they don't have to decide between fixing the roof or investing, or have to go without a car,.cable tv, nice vacations, new clothes, and a Vitamix blender so that they can save for FI. Most high income earners can live a regular middle class life style AND still save for FIRE. Most of us lower income types could FIRE in a few years just by living like we do/did but had the high salary instead of it taking 20 years and having to go without all those little luxuries.
Well, I want to say most, but I’ll speak for myself here, I may not have to sacrifice some things lifestyle-wise but to have the high income, I’m definitely sacrificing some of my life for work and I would imagine that many high income people are doing the same. I don’t know too many high income people who aren’t working their asses off for that salary. And not that lower or middle income people don’t work their asses of as well. I just know I carry a lot more responsibility than my receptionist. Work doesn’t creep into his home life. I want to FIRE so badly and quickly so I can get a full life back without feeling like I’m carrying the weight of the world on my shoulders and work dominating my life. You know what people say when I talk about this, well, that’s why you get paid the big bucks. There’s no sympathies for us. So yeah, there is sacrifice, just from a different angle.
But you do have the option to retire much earlier than say the enlisted Grunt making $1500/month who's working 24/7 in a dangerous part of the world with no nights, weekends, and holidays off who hasn't seen they're family for months. Or the electrician who is repairing a high wire in a 20 below zero blizzard at midnight on Christmas. Or the first responder who's out rescuing a capsized yacht in a hurricane. Etc. Lots of low income people work a ton and have a different kind of weight on their shoulder. Not being snarky just trying to flow some perspective.
In any case you do have the ability to FIRE much much sooner then a lower income person and lift that weight from your shoulder. There's no trick just live like a low income person regardless.of your income for a few years and save the rest. If a lower income person earns an after tax income of $50k and saves 1/2 that and can manage on $25k a year for living expenses than surely a person making $200k a year can save $175k each year and live the same lifestyle as the $ 25k per year person does. Sure it'll require trade offs (I prefer the word trade offs to sacrifices) but its doable unless you have extenuating circumstances. If you don't like your high income but soul and life sucking job then live like us "poor" a couple of years and free yourself from the.grind.
He has the option to spend less. They have the option to earn more. Most people have choices (not everyone).
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I see a spectrum with two ends being “self made” and the other “not deserving it”. We work hard and are blessed with brains and good instincts, but as a top 10% married to another top 10%, I don’t believe we “deserve” what we earn even though we have worked hard to get here.
What I mean is that while I am incredibly grateful for what we have, don’t get me wrong, I really don’t feel like we are 4x smarter/harder working/more valuable than other people I see in other industries who are also smart and educated and work hard. Our society chooses to monetarily value some professions over others. That isn’t necessarily a reflection of how much good those jobs bring to society.
I have had this tickle in the back of my mind for a little while but doing our tax returns for 2018 really brought the feeling home. It was a high water mark for our household income, but still I felt it was silly high. Oh well. Be grateful and sock away as much of it as we can!
Agree with pretty much all of this.
Within certain cohorts, I think hard work and pay probably have a positive correlation. Like, a colleague who stays until 7:00 PM or later every night may make more money due to working harder. If you look at the entire country (hell, probably the entire world) as a whole though, hard work and pay are probably inversely correlated.
If I were born in 1500s Europe, my scientific brain may have had me branded a heretic against the church. If I were born 100 years from now, my skills may be useless next to my machine-brain counterpart. Since I was born in the late 20th century in America though, I had the opportunity to make a lot of money.
Great reasons to count my blessings, count my dollars, and keep my head down. Not a great reason to fancy myself a guru or a titan of puritan work-ethic.
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This forum is very heavily skewed to rich people who consider themselves middle class, and many of the FIRE stories are uninspiring because it can be a giant circle jerk of people living above average lifestyles with tremendous incomes to compensate for lack of any real sacrifice.
Ouch
Bullshit! I sacrificed a lot for my high income and worked my ass of to get it and keep working my ass off to keep it. Ever since discovering FIRE I’ve made saving and increasing my income priorities so I can FIRE as quickly as possible and make up for the years when I didn’t have the income and/or didn’t have strategies or a plan to save and invest. I don’t feel guilty about shit. It’s all a journey and no one, unless they win the lottery, has an easy path. If you get there, you earned it.
I don't think he meant that you haven't made sacrifices to get to a place with a high income. I think he meant that most here with high incomes don't have to make sacrifices in terms of lifestyle to get to FIRE. Most don't live in a tiny shared studio apt or with several roommate, they don't have to decide between fixing the roof or investing, or have to go without a car,.cable tv, nice vacations, new clothes, and a Vitamix blender so that they can save for FI. Most high income earners can live a regular middle class life style AND still save for FIRE. Most of us lower income types could FIRE in a few years just by living like we do/did but had the high salary instead of it taking 20 years and having to go without all those little luxuries.
Well, I want to say most, but I’ll speak for myself here, I may not have to sacrifice some things lifestyle-wise but to have the high income, I’m definitely sacrificing some of my life for work and I would imagine that many high income people are doing the same. I don’t know too many high income people who aren’t working their asses off for that salary. And not that lower or middle income people don’t work their asses of as well. I just know I carry a lot more responsibility than my receptionist. Work doesn’t creep into his home life. I want to FIRE so badly and quickly so I can get a full life back without feeling like I’m carrying the weight of the world on my shoulders and work dominating my life. You know what people say when I talk about this, well, that’s why you get paid the big bucks. There’s no sympathies for us. So yeah, there is sacrifice, just from a different angle.
But you do have the option to retire much earlier than say the enlisted Grunt making $1500/month who's working 24/7 in a dangerous part of the world with no nights, weekends, and holidays off who hasn't seen they're family for months. Or the electrician who is repairing a high wire in a 20 below zero blizzard at midnight on Christmas. Or the first responder who's out rescuing a capsized yacht in a hurricane. Etc. Lots of low income people work a ton and have a different kind of weight on their shoulder. Not being snarky just trying to flow some perspective.
In any case you do have the ability to FIRE much much sooner then a lower income person and lift that weight from your shoulder. There's no trick just live like a low income person regardless.of your income for a few years and save the rest. If a lower income person earns an after tax income of $50k and saves 1/2 that and can manage on $25k a year for living expenses than surely a person making $200k a year can save $175k each year and live the same lifestyle as the $ 25k per year person does. Sure it'll require trade offs (I prefer the word trade offs to sacrifices) but its doable unless you have extenuating circumstances. If you don't like your high income but soul and life sucking job then live like us "poor" a couple of years and free yourself from the.grind.
You’re right in many of these points and actually I do live way below my income now, except for housing. I’m definitely not going to live an hour from work and share a space with multiple people to pay the lowest amount possible. But look at MMM, income wise he’s making half mil a year but lives off of $25k. Clearly the difference is peace of mind. I can live off less but know that I can always splurge if I want or get out of jams and never have that, I can’t afford this feeling of the paycheck to paycheck feeling.
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I didn't expect so much controversy over this posting. I was simply pointing out an observation.
I started out making just above minimum wage around 30 yrs ago, went back to school part-time while working full time (on my employer's dime), accepted more responsibility and progressed up to where I am today. I certainly don't feel ashamed about where I am or how I got here, but I do understand that my present salary is higher than average.
BJ
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I didn't expect so much controversy over this posting. I was simply pointing out an observation.
I started out making just above minimum wage around 30 yrs ago, went back to school part-time while working full time (on my employer's dime), accepted more responsibility and progressed up to where I am today. I certainly don't feel ashamed about where I am or how I got here, but I do understand that my present salary is higher than average.
BJ
I'm not sure where the suggestion that anyone should be ashamed came from. But it seems to come up a lot. As in, "I'm not going to apologize for/be ashamed of my success."
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...I started out making just above minimum wage around 30 yrs ago, went back to school part-time while working full time (on my employer's dime), accepted more responsibility and progressed up to where I am today....
BJ
I'd buy you a beer. I respect this so much.
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If your income is 6 figures and you're surprised at how disproportionately many people are on here with $200k incomes, think how outnumbered those of us with <$30k incomes feel, lol!
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It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes. As income increases, the drag of taxes increases at a much faster rate. A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.
This is really naive.
If you spend $40k a year, and make:
who retires faster?
The "income tax is a drag" only matters if your spending stays proportional to your income. Which the overwhelming majority of people do. It's also how most people think about spending. Even on here it's always "savings rate [percentage]" not "spending rate [absolute]."
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Accumulated wealth really starts to shoot upwards once income exceeds the 75th percentile for your age range -
(https://escapevelocity2020.files.wordpress.com/2018/07/income-and-wealth.png)
https://www.nytimes.com/interactive/2019/08/12/upshot/are-you-rich-where-does-your-net-worth-rank-wealth.html
@EscapeVelocity2020, thanks for posting this. This is exactly the graph I've been wishing to see for a long time.
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My DH and I made fairly average salaries for most of our lives and I was able to retire at 39.
< 28: DH earned $60k and I stayed home. Decided DH should not seek promotions while the kids were young.
28-30: Earned $25-35k/yr as I started my career. DH kept earning about $60k
30-36: I got a new job and earned $55-60k/year. DH stayed at $60-70k (with raises)
36-39: DH got a big promotion and started earning $90k. I stayed at $60k.
Retired last November at 39.
So we really didn't earn a ton of money until the very end. We were focused and saved a ton throughout our lives together and only inflated our lifestyles a tiny bit when our income started going up.
Sent from my VCE-AL00 using Tapatalk
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It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes. As income increases, the drag of taxes increases at a much faster rate. A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.
This is really naive.
If you spend $40k a year, and make:
who retires faster?
The "income tax is a drag" only matters if your spending stays proportional to your income. Which the overwhelming majority of people do. It's also how most people think about spending. Even on here it's always "savings rate [percentage]" not "spending rate [absolute]."
Where I live, the more land you hold, the higher rate you pay on land tax (ie it is a progressive scale); so just by having more in investment, you necessarily end up with a higher tax bill proportional to your income and assets. So there is no way for your spending rate to be absolute, because as your assets go up, your spending does passively.
Even a linear, non-progressive tax, like council rates, will cause you to have higher spending as your assets go up, independent of your income.
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FIRE literally only means saving more to retire earlier.
That's it. That's all.
Retiring early also isn't some fundamentally virtuous thing where the path there needs to be dissected with respect to worthiness.
Everything in life is a trade off. Everything.
The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.
One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
What's admirable and yes, virtuous, is having the wisdom, self knowledge, and discipline to know and do what's right in order to live your best life.
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My DH and I made fairly average salaries for most of our lives and I was able to retire at 39.
< 28: DH earned $60k and I stayed home. Decided DH should not seek promotions while the kids were young.
28-30: Earned $25-35k/yr as I started my career. DH kept earning about $60k
30-36: I got a new job and earned $55-60k/year. DH stayed at $60-70k (with raises)
36-39: DH got a big promotion and started earning $90k. I stayed at $60k.
Retired last November at 39.
So we really didn't earn a ton of money until the very end. We were focused and saved a ton throughout our lives together and only inflated our lifestyles a tiny bit when our income started going up.
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I'm not trying to single you out, but I think it is important to note that if these were American dollars (I see that you are Canadian) and you lived in America, your household income for the entire time frame that you laid out was above average. I guess this goes back to the NYT article/calculator that recently came out which shows how most people's feelings about their income are not inline with reality.
https://www.thebalance.com/what-is-average-income-in-usa-family-household-history-3306189
Thank you for sharing your numbers. It is really interesting to see how different people get it done.
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FIRE literally only means saving more to retire earlier.
That's it. That's all.
Retiring early also isn't some fundamentally virtuous thing where the path there needs to be dissected with respect to worthiness.
Everything in life is a trade off. Everything.
The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.
One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
What's admirable and yes, virtuous, is having the wisdom, self knowledge, and discipline to know and do what's right in order to live your best life.
Pretty much sums it up.
I would just add, this trade-off of the "living on $X and saving Y% of their $Z income" changes throughout your life and the quality of life it gives is influenced by circumstances (like if you want to be near family/work/hobbies in a HCOL area, if you want to homestead, if you want kids, if you want to travel, if you want pets, if your health situation changes...).
So yeah, everyone is going to have a trade-off vs. quality of life that is different, but hopefully you get the tools here to make the best of what you've got and make wise choices. In general terms though, saving and investing early gives you more options vs. trying to do more saving later in life.
So as the OP points out, the most efficient way to FIRE is to make a lot of money as early as possible. Ironically, that's also one of the easier times to have a high saving rate (no kids, no lifestyle inflation, geographic flexibility, etc.). Then you can hit FI in 10 years and start a blog in your 30's telling everyone how great ER is.
(https://www.mrmoneymustache.com/wp-content/uploads/2012/01/years_to_retirement.png)
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I started out really late in life and didn't make much money at all until recently.
This is my income according to my social security statement.
1990- $4991
1991- $9038
1992- $7682
1993- $6290
1994- $6286
1995- $5218
1996- $1252
1997- $6392
1998- $6228
1999- $8503
2000- $7891
2001- $11,411
2002- $25,340
2003- $43,xxx
2004- $30,xxx
2005- $32,xxx
2006- $40,xxx
2007- $25,xxx
2008- $56,xxx
2009- $50,xxx
2010- $43,xxx
2011- $49,xxx
2012- $65,xxx
2013- $73,xxx
2014- $111,xxx
2015- $121,xxx
2016- $134,xxx
2017- $131,xxx
2018- $126,xxx
2019- $70,xxx and Wife got a full time job.
I didn't have a full time job until 2002. Even after that the salary was average. Nothing special, just a lot of savings.
I have been raking it in since 2014 though.
I got married in 2011 and had to support my wife going through school and such until this year and she got a $48k job. Going forward, I will probably just hit $100k + wife $48k for $150k/per.
I'm 45 now and our NW just hit $900k. We could easily retire now and move to our home country, Vietnam and live very comfortably. We decided to see where we are at in 5 yrs and decide then. We will probably call it quit if we reach $1.5 mil in 5 yrs.
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My DH and I made fairly average salaries for most of our lives and I was able to retire at 39.
< 28: DH earned $60k and I stayed home. Decided DH should not seek promotions while the kids were young.
28-30: Earned $25-35k/yr as I started my career. DH kept earning about $60k
30-36: I got a new job and earned $55-60k/year. DH stayed at $60-70k (with raises)
36-39: DH got a big promotion and started earning $90k. I stayed at $60k.
Retired last November at 39.
So we really didn't earn a ton of money until the very end. We were focused and saved a ton throughout our lives together and only inflated our lifestyles a tiny bit when our income started going up.
Sent from my VCE-AL00 using Tapatalk
I'm not trying to single you out, but I think it is important to note that if these were American dollars (I see that you are Canadian) and you lived in America, your household income for the entire time frame that you laid out was above average. I guess this goes back to the NYT article/calculator that recently came out which shows how most people's feelings about their income are not inline with reality.
https://www.thebalance.com/what-is-average-income-in-usa-family-household-history-3306189
Thank you for sharing your numbers. It is really interesting to see how different people get it done.
So true and yes, I definitely realize we have made above median salaries for our working lives. It just feels very average when compared to the highly paid engineers and megacorp folks on this site sometimes. Still, we have always felt we live luxurious lifestyles. Although it does feel simple as my parents were highly paid professionals with the fancy house and fancy cars to match.
Still, not super highly paid and it didn't take us all that long even without massive sacrifices or a life of constant denial. We lived very comfortable lives then and continue with the same lifestyle today.
Sent from my VCE-AL00 using Tapatalk
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Elaine, that’s impressive on your incomes. Curious what you spend every year and how many people? If too personal ignore me:))
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The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.
One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
Correct. What I would like to see more of is people making deliberate decisions - that is, decisions they deliberated on, thought about, weighed the pros and cons. Another finance guy The Barefoot Investor advises a monthly Financial Date Night where the couple (or the single and a friend) sit down and discuss finances and what they want to achieve.
Many people simply drift. For some, that might mean drifting from your impoverished life into corner drug-dealing, unplanned pregnancies and early death. For others, that might mean drifting from a prestigious private school into a law degree to practice when it bores them, and a very high-spending high-debt high-stress lifestyle with marriage breakup. Nobody should drift, we should take the helm and steer the boat of our lives in the direction we have deliberated and decided on. Some will encounter more storms than others, but everyone who takes the helm will get closer to where they want than those who just drift.
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The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.
One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
Correct. What I would like to see more of is people making deliberate decisions - that is, decisions they deliberated on, thought about, weighed the pros and cons. Another finance guy The Barefoot Investor advises a monthly Financial Date Night where the couple (or the single and a friend) sit down and discuss finances and what they want to achieve.
Many people simply drift. For some, that might mean drifting from your impoverished life into corner drug-dealing, unplanned pregnancies and early death. For others, that might mean drifting from a prestigious private school into a law degree to practice when it bores them, and a very high-spending high-debt high-stress lifestyle with marriage breakup. Nobody should drift, we should take the helm and steer the boat of our lives in the direction we have deliberated and decided on. Some will encounter more storms than others, but everyone who takes the helm will get closer to where they want than those who just drift.
I mean...sure...but it's a hell of a lot more nuanced than that.
I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
I also went to high school with a lot of those elite kids who never felt like they had any choice but to become doctors and lawyers, and saw what it did to them psychologically (and the subsequent suicides, addictions, etc) and I long ago learned not to make assumptions.
People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.
I get paid to talk to people about finance and even the most seemingly mindless-spendy ones tend to think a lot about their spending, it's not that they're mindless, it's that the reasons behind their spending aren't mentally healthy, so they're not thinking about it in a productive way.
They tend to casually talk about it as if it's mindless, but if you drill down into it, it's a form of self soothing that they actively psychologically quarantine off from rational thought.
It's not passive, it's actually pretty complicated mental gymnastics. Which is typical of pretty much all self-destructive behaviours.
Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.
I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.
If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
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Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.
I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.
If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
thank you for the reminder to not be too judgey. I think it's too easy and common to try and rank ourselves against others, just to feel better.
And you're very correct, I see posts on this form that suggest an unhealthy relationship with money. Folks agonizing over spending for something they want and can afford, but think they need a face-punch for it.
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Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.
I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.
If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
thank you for the reminder to not be too judgey. I think it's too easy and common to try and rank ourselves against others, just to feel better.
And you're very correct, I see posts on this form that suggest an unhealthy relationship with money. Folks agonizing over spending for something they want and can afford, but think they need a face-punch for it.
Unhealthy relationships with things that trigger dopamine responses are pretty normal.
Most people have a degree of unhealthy relationship with something out there that tickles their brain receptors, whether it's an instinct to overindulge, or a reaction to be overly-restrictive.
Balance is not an easy thing to find or maintain, and it is very easy to judge others whose struggles with balance are significantly different from our own. It can seem absurd if it's nothing like our own particular version of the balancing act.
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It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes. As income increases, the drag of taxes increases at a much faster rate. A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.
This is really naive.
If you spend $40k a year, and make:
who retires faster?
The "income tax is a drag" only matters if your spending stays proportional to your income.
Disagree 100%. It is not naive; it is factual.
Consider spending $40k/year. Single. Only standard deduction. No state income tax for ease of comparisons.
Scenario 1: Make $100K/yr gross.
Net after taxes: Salary(100K) - FICA&Medicare(7650) - FedTax(15,246) = 77,104
Spending: 40,000
Savings: 37,104
Savings Rate of Gross: 37,104 / 100K = 37.1%
Scenario 2: Make $200K/yr gross
Net after taxes: Salary(200K) - FICA&Mediare(11,139) - FedTax(41,411) = 147,450
Spending: 40,000
Savings: 107,450
Savings Rate of Gross: 107,450 / 200K = 53.7%
Even through the gross income in scenario 2 is 100% higher than that in scenario 1, and spending was held constant-dollar-wise, the savings rate between the scenarios was only increased by: (53.7 - 37.1) / 37.1 = 44.7%
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It's important to emphasize that "The Shockingly Simple Math...." concept is applicable to NET INCOME after taxes. As income increases, the drag of taxes increases at a much faster rate. A higher gross income (relative to expenses) is not directly proportional to a faster path to FIRE, as those with lower gross incomes.
This is really naive.
If you spend $40k a year, and make:
who retires faster?
The "income tax is a drag" only matters if your spending stays proportional to your income.
Disagree 100%. It is not naive; it is factual.
Consider spending $40k/year. Single. Only standard deduction. No state income tax for ease of comparisons.
Scenario 1: Make $100K/yr gross.
Net after taxes: Salary(100K) - FICA&Medicare(7650) - FedTax(15,246) = 77,104
Spending: 40,000
Savings: 37,104
Savings Rate of Gross: 37,104 / 100K = 37.1%
Scenario 2: Make $200K/yr gross
Net after taxes: Salary(200K) - FICA&Mediare(11,139) - FedTax(41,411) = 147,450
Spending: 40,000
Savings: 107,450
Savings Rate of Gross: 107,450 / 200K = 53.7%
Even through the gross income in scenario 2 is 100% higher than that in scenario 1, and spending was held constant-dollar-wise, the savings rate between the scenarios was only increased by: (53.7 - 37.1) / 37.1 = 44.7%
You are definitely correct that net income is what matters for the shockingly simple math. I also think that the end result of tax drag is less than it seems with the above numbers.
In Scenario 1, the savings rate on net income is around 50%, resulting in about 17 years to FI.
In Scenario 2, the savings rate on net income is around 72%, resulting in about 8.5 years to FI.
A 100% increase in income cuts time to FI in half. When looked at that way the drag doesn't seem as crazy.
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Disagree 100%. It is not naive; it is factual.
Consider spending $40k/year. Single. Only standard deduction. No state income tax for ease of comparisons.
Scenario 1: Make $100K/yr gross.
Net after taxes: Salary(100K) - FICA&Medicare(7650) - FedTax(15,246) = 77,104
Spending: 40,000
Savings: 37,104
Savings Rate of Gross: 37,104 / 100K = 37.1%
Scenario 2: Make $200K/yr gross
Net after taxes: Salary(200K) - FICA&Mediare(11,139) - FedTax(41,411) = 147,450
Spending: 40,000
Savings: 107,450
Savings Rate of Gross: 107,450 / 200K = 53.7%
Even through the gross income in scenario 2 is 100% higher than that in scenario 1, and spending was held constant-dollar-wise, the savings rate between the scenarios was only increased by: (53.7 - 37.1) / 37.1 = 44.7%
It looks bad if your metric is % of gross income saved. And I do understand why you picked that. You're making a point about gross vs. net, and your point is well taken. Income tax does drag on your savings / gross as you make more money.
But in the same sense that savings / gross takes a hit because of income tax, savings takes a hit on the lower end due to the immutable cost of surviving in the modern world. You could call it an immutable cost to survive tax. If each pays $6K a year for a modest apartment, $100K guy pays a 6% "house tax" while $200K guy pays 3%.
I'd rather be the guy complaining about higher income taxes.
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I have a relatively high income, but I think if my income was 200k+ I would have a harder time FIREing. If you are FI and you can keep working and make $20/hr for your time or $100/hr for your time - the $100/hr seems more tempting. So I think the medium-high salary range is going to have the most FIREees. High enough to make reaching FI easy, but low enough to not make wasting more of your time worth it.
Golden handcuffs. Story of my life.
(I'll be joining the circle jerk later)
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Accumulated wealth really starts to shoot upwards once income exceeds the 75th percentile for your age range -
(https://escapevelocity2020.files.wordpress.com/2018/07/income-and-wealth.png)
https://www.nytimes.com/interactive/2019/08/12/upshot/are-you-rich-where-does-your-net-worth-rank-wealth.html
Where's the 35 to 55 bracket? lol
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The personal, financial decisions that people make are personal to them. One person living on $X and saving Y% of their $Z income might be making the best and smartest trade offs for their happiness and well being, another might have the exact same figures and be fucking miserable.
One person's wise and admirable decisions is another's self-destructive and utterly unwise folly.
Correct. What I would like to see more of is people making deliberate decisions - that is, decisions they deliberated on, thought about, weighed the pros and cons. Another finance guy The Barefoot Investor advises a monthly Financial Date Night where the couple (or the single and a friend) sit down and discuss finances and what they want to achieve.
Many people simply drift. For some, that might mean drifting from your impoverished life into corner drug-dealing, unplanned pregnancies and early death. For others, that might mean drifting from a prestigious private school into a law degree to practice when it bores them, and a very high-spending high-debt high-stress lifestyle with marriage breakup. Nobody should drift, we should take the helm and steer the boat of our lives in the direction we have deliberated and decided on. Some will encounter more storms than others, but everyone who takes the helm will get closer to where they want than those who just drift.
I mean...sure...but it's a hell of a lot more nuanced than that.
I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
I also went to high school with a lot of those elite kids who never felt like they had any choice but to become doctors and lawyers, and saw what it did to them psychologically (and the subsequent suicides, addictions, etc) and I long ago learned not to make assumptions.
People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.
I get paid to talk to people about finance and even the most seemingly mindless-spendy ones tend to think a lot about their spending, it's not that they're mindless, it's that the reasons behind their spending aren't mentally healthy, so they're not thinking about it in a productive way.
They tend to casually talk about it as if it's mindless, but if you drill down into it, it's a form of self soothing that they actively psychologically quarantine off from rational thought.
It's not passive, it's actually pretty complicated mental gymnastics. Which is typical of pretty much all self-destructive behaviours.
Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.
I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.
If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
POTD!
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I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
I also went to high school with a lot of those elite kids who never felt like they had any choice but to become doctors and lawyers, and saw what it did to them psychologically (and the subsequent suicides, addictions, etc) and I long ago learned not to make assumptions.
People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.
I get paid to talk to people about finance and even the most seemingly mindless-spendy ones tend to think a lot about their spending, it's not that they're mindless, it's that the reasons behind their spending aren't mentally healthy, so they're not thinking about it in a productive way.
They tend to casually talk about it as if it's mindless, but if you drill down into it, it's a form of self soothing that they actively psychologically quarantine off from rational thought.
It's not passive, it's actually pretty complicated mental gymnastics. Which is typical of pretty much all self-destructive behaviours.
Those of us who spend mindfully aren't above anyone, we're not superior or wiser, we just have a much, much more productive relationship with spending.
I *was* going to say that we have a healthier relationship with money, but then I remembered that A LOT of people here post really troubling accounts of relationships with money based on fear and anxiety, and I decided to rephrase it.
If you see someone "drifting", there's a reason for it. It may not be a sane reason, but there's a reason and it's probably not a simple one to resolve with just "manning up" or "taking the helm".
Very insightful! As in, opened my mind in the sense of helping me understand things I had nooot recognized before. Thx.
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Very insightful! As in, opened my mind in the sense of helping me understand things I had nooot recognized before. Thx.
Neat-o, thanks for the feedback.
I'm having a bit of a day today, reflecting pretty deeply on self destructive behaviour. Gonna go drink cheap wine with my dad in the woods now instead of dumping my existential angst onto the forums ;)
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I'd rather be the guy complaining about higher income taxes.
Agreed. That's a good "problem" to have :)
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I don't see FIRE skewed toward all high earners. What I see it skewed toward are high earners who also spent relatively little on credentials to earn a high income. I think those who spent $200k+ on professional credentialing usually make a fair amount, but aren't in any great hurry to leave their jobs generally.
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One thing of note, as an observer from the UK on this mostly American forum is that US pay rates always seem much, much higher than the UK. It seems to me its not uncommon for people to earn >$50k in the USA. Office workers, teachers, police officers, nurses etc etc.
All these jobs in the UK would be lucky to pull $30k a year working 40 hr weeks.
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I don't see FIRE skewed toward all high earners. What I see it skewed toward are high earners who also spent relatively little on credentials to earn a high income. I think those who spent $200k+ on professional credentialing usually make a fair amount, but aren't in any great hurry to leave their jobs generally.
I have a friend who just finished dental school. He is going to outpace me in earnings right out of the starting date; however, he has a butt ton of student loans to repay and he has to take out more loans to buy all the equipment.
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One thing of note, as an observer from the UK on this mostly American forum is that US pay rates always seem much, much higher than the UK. It seems to me its not uncommon for people to earn >$50k in the USA. Office workers, teachers, police officers, nurses etc etc.
All these jobs in the UK would be lucky to pull $30k a year working 40 hr weeks.
On the flip side, Australians earn much more than Americans it seems.
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https://www.google.com/search?q=2018+median+household+income+us
Per "household" (which is larger than per "individual") median was $61,372 last year.
https://wallethacks.com/average-median-income-in-america/
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NYC has beaches too
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I've volunteered at enough homeless shelters to know that surviving isn't easy or in any way passive.
And I've been homeless, and you're right.
People don't tend to "drift" out of passivity, what you perceive as drifting is more like succumbing to enormous pressures that you might not be able to relate to or empathize with.
Spoken like someone who's never been sailing or seen a tidal wave. When you drift, you are subject to enormous forces in the flow of the sea. And it takes a lot of work to overcome that. That you are "drifting" does not mean the forces are not great; indeed, if there were no forces acting on you, you wouldn't drift, you'd just sit still.
I acknowledged: it ain't easy. But most don't try. They're too busy being overwhelmed by the trivial shit of day-to-day to change their direction. I don't blame them. But I would like to see more people give it a go.
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Everyone has their own sacrifice to make in their own journey. I just don't buy the argument that high-earners get spoon fed. This country is full of opportunities. Working hard on math and getting an advanced degree on STEM almost guarantees a high income. Sure, I don't need scarify my life style to save every penny for retirement. What I scarify my life style for is continue learning, working hard and making sure my kids have the discipline working hard for their future. When I look around, majority of my colleagues came from average hard working middle class families, can hardly be qualified as spoon fed.
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You have that backwards. A few had it spoon-fed, and most have earned it. Studies of millionaires show that the vast majority are self-made.
Exactly this. Earning a ton of money is a skillset and should be admired. Increasing income is the fastest way to FI, too much focus is placed on reducing spending in this community. If your really want to move the needle fast, learn how to earn more.
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I personally thought high pay was less a function of hard work/longer hours/ demands of the job then replaceability. If your airplane mechanic spent 2 years to become a journey level mechanic but the pilot spent 10 to get all their training - even of they worked the same amount of hours - he will be harder to replace so will be paid much higher. Regardless of the fact that both could equally kill a plane full of people if they were negligent.
Good point. Where I live, anyone who has a security clearance is unlikely to take a job that won't hold the clearance, simply because having that clearance makes you much harder to replace, so there's some measure of job security with it. I just had a former colleague ask me if I wanted to work at their company and her first disclaimer was "you'd lose your clearance. Are you willing to give that up?"
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I don't find my own FIRE story particularly interesting, but a lot of people seem to because of how "out there" it is - summarized, we're a receptionist/freelance editor couple, live in a major city, generally make around 80K, save 65%, travel to five or six countries a year, and have some... unusual hobbies and habits, to say the least. Current projections have us retiring around 35, and possibly building a remote island homestead. We have a blog and I have a MMM journal as well.
I hate you, but I also I love you and I am off to read your entire journal.
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Accumulated wealth really starts to shoot upwards once income exceeds the 75th percentile for your age range -
(https://escapevelocity2020.files.wordpress.com/2018/07/income-and-wealth.png)
https://www.nytimes.com/interactive/2019/08/12/upshot/are-you-rich-where-does-your-net-worth-rank-wealth.html
Thanks for the link! Very interesting.
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@BicycleB @Greenback Reproduction Specialist - Very welcome! I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks
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Here in Canada we only made it to the national median household income late in my career. Never caught up with the local median—in an oil town, forget about it.
But no matter. The logic of continuous spending reduction, ever greater savings percentage, investment and maybe real estate income, plus time . . . will get you there.
We started when I was 45ish, no debt though. Done by 57. And like I said, median income at best.
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@BicycleB @Greenback Reproduction Specialist - Very welcome! I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks
You bet!
24hrs later..... I still cant wrap my head around where the article suggests we are in relation to our age group, sure doesnt feel that way most days. Its really just a grind and makes me wonder if it will ever feel any different. I imagine when we FIRE it might, that could be a real game changer.
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If I were born in 1500s Europe, my scientific brain may have had me branded a heretic against the church. If I were born 100 years from now, my skills may be useless next to my machine-brain counterpart. Since I was born in the late 20th century in America though, I had the opportunity to make a lot of money.
Great reasons to count my blessings, count my dollars, and keep my head down. Not a great reason to fancy myself a guru or a titan of puritan work-ethic.
This is a pretty great perspective-check. Even without turning to history, it's worth noting that today opportunities are still largely geographically limited, and where we all start in life is pure chance.
There are tens of thousands of people on the southern border of the United States right now who understand that geography matters for opportunity, and they're doing everything they possibly can to change their geography. Odds are, lots of them are way more talented than me.
So why do I see radically different rewards in my life for my efforts? Well, I was born on the other side of the border, to college-educated parents. It's only from that accident that all the other good stuff flows.
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@BicycleB @Greenback Reproduction Specialist - Very welcome! I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks
You bet!
24hrs later..... I still cant wrap my head around where the article suggests we are in relation to our age group, sure doesnt feel that way most days. Its really just a grind and makes me wonder if it will ever feel any different. I imagine when we FIRE it might, that could be a real game changer.
That's because the goal posts get moved drastically by trying to retire early.
Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.
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This is a pretty great perspective-check. Even without turning to history, it's worth noting that today opportunities are still largely geographically limited, and where we all start in life is pure chance.
There are tens of thousands of people on the southern border of the United States right now who understand that geography matters for opportunity, and they're doing everything they possibly can to change their geography. Odds are, lots of them are way more talented than me.
So why do I see radically different rewards in my life for my efforts? Well, I was born on the other side of the border, to college-educated parents. It's only from that accident that all the other good stuff flows.
I think about this a lot. Certainly some are more talented than I, though I have the benefit of better education. But I'm 100% positive that most of them are much harder working than I am. We focus on hard work because it's the input that we can (maybe) control. And that's great. But I fear that leads many of us to mistakenly think that hard work is more important than it actually is in the grand scheme of things. If hard work mattered, I'd probably be a median global citizen, and those folks at the border would have my job and my life.
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This is a pretty great perspective-check. Even without turning to history, it's worth noting that today opportunities are still largely geographically limited, and where we all start in life is pure chance.
There are tens of thousands of people on the southern border of the United States right now who understand that geography matters for opportunity, and they're doing everything they possibly can to change their geography. Odds are, lots of them are way more talented than me.
So why do I see radically different rewards in my life for my efforts? Well, I was born on the other side of the border, to college-educated parents. It's only from that accident that all the other good stuff flows.
I think about this a lot. Certainly some are more talented than I, though I have the benefit of better education. But I'm 100% positive that most of them are much harder working than I am. We focus on hard work because it's the input that we can (maybe) control. And that's great. But I fear that leads many of us to mistakenly think that hard work is more important than it actually is in the grand scheme of things. If hard work mattered, I'd probably be a median global citizen, and those folks at the border would have my job and my life.
My staff work infinitely harder than I do, as do my colleagues, and yet I produce more than they do and make more than they do.
Hard work is far more productive compared to not working hard, sure, but knowing where to put your efforts is far more productive and efficient in terms of outcomes.
My resistance to hard work is actually what makes me so efficient. If it's not easy, enjoyable, and likely to produce an excellent outcome, then why bother doing it.
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That's because the goal posts get moved drastically by trying to retire early.
Makes sense : )
Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.
It is RIDICULOUS what a very high savings rate AND compound interest will do over 30yrs.... Its mind blowing!
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Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.
I think about this sometimes too. I could create generational wealth if I wanted to. Though I currently have no heirs.
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Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.
I think about this sometimes too. I could create generational wealth if I wanted to. Though I currently have no heirs.
Me too, it's the main reason I said "fuck this" and quit my job that was killing me. I don't need 7 figures of net worth.
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@BicycleB @Greenback Reproduction Specialist - Very welcome! I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks
You bet!
24hrs later..... I still cant wrap my head around where the article suggests we are in relation to our age group, sure doesnt feel that way most days. Its really just a grind and makes me wonder if it will ever feel any different. I imagine when we FIRE it might, that could be a real game changer.
That's because the goal posts get moved drastically by trying to retire early.
Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.
Yep, comparing ourselves to the general population is like playing a video game on the easiest difficulty setting. You feel good, but are you really winning?
Granted, I'm still pretty surprised at what it takes to be in the top 10% for some of those age groups. I could hit my FI number and still not even be in the top 10% if I were 55+. I plan to hit the number around a decade earlier, but it's still interesting.
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Another anecdote. I've hit 90k twice. Didn't hit 20k until 2012, as I was a perpetual student before that. Net worth reached 0 in early 2014. Now I'm about 80% to FI in a MCOL city. I'm a saver by nature, so focusing on expanding my savings rate has been important to me. It hit 80% of net last year, my best. I live comfortably. Small apt, no roommates. I don't own any real estate. Didn't get lucky with equities...my asset allocation is very tame compared to most here. Had setbacks along the way...thousands in auto repair/maintenance in 2012. Dropped $5,600 on a new car in 2016, after the tranny in my old one decided to die on the interstate. The math works. Stay disciplined. Value conscious. Flexible.
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@BicycleB @Greenback Reproduction Specialist - Very welcome! I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks
You bet!
24hrs later..... I still cant wrap my head around where the article suggests we are in relation to our age group, sure doesnt feel that way most days. Its really just a grind and makes me wonder if it will ever feel any different. I imagine when we FIRE it might, that could be a real game changer.
That's because the goal posts get moved drastically by trying to retire early.
Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.
Yep, comparing ourselves to the general population is like playing a video game on the easiest difficulty setting. You feel good, but are you really winning?
Granted, I'm still pretty surprised at what it takes to be in the top 10% for some of those age groups. I could hit my FI number and still not even be in the top 10% if I were 55+. I plan to hit the number around a decade earlier, but it's still interesting.
It's not very helpful to compare yourself to population norms unless you also want to be about 40 pounds overweight and have an IQ of 100.
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@BicycleB @Greenback Reproduction Specialist - Very welcome! I know I didn't need to reply, but it is nice when folks on the forum take the time to say thanks
You bet!
24hrs later..... I still cant wrap my head around where the article suggests we are in relation to our age group, sure doesnt feel that way most days. Its really just a grind and makes me wonder if it will ever feel any different. I imagine when we FIRE it might, that could be a real game changer.
That's because the goal posts get moved drastically by trying to retire early.
Project your savings rate results if you were to work until 65 and then you will see how rich you are compared to Gen Pop.
Yep, comparing ourselves to the general population is like playing a video game on the easiest difficulty setting. You feel good, but are you really winning?
Granted, I'm still pretty surprised at what it takes to be in the top 10% for some of those age groups. I could hit my FI number and still not even be in the top 10% if I were 55+. I plan to hit the number around a decade earlier, but it's still interesting.
It's not very helpful to compare yourself to population norms unless you also want to be about 40 pounds overweight and have an IQ of 100.
So True. I would rather compare myself to my past self in order to become a better future self.
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If FIRE people shouldn't compare themselves to the average fat troglodyte, then don't we have our answer to the thread's question? By and large, this works much better for exceptional people.
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If FIRE people shouldn't compare themselves to the average fat troglodyte, then don't we have our answer to the thread's question? By and large, this works much better for exceptional people.
Ironically, one of the reasons I'm finding not to ER after FI is so that I still get to hang out with PhD's and exceptional people where I work! If I'm going to choose to gather around a "private water cooler" or "public watering hole" (metaphorically), then a vast majority of the time, I'm finding the private water cooler to be more substantive. There's always online interaction as a filler, but face to face should be at least half of real life, and the more the better.