That rather assumes you can live on 25% of your income.
For me 25% of my income would be far below the poverty line and the legal minimum wage. I couldn’t live on that even if I moved back in with my parents.
Are most people here really so rich that they can follow this advice and take it in stride?
I disagree with your assumption that you need to be rich/making lots of money in order to save. It’s not necesarily about being rich, it’s also about spending less. People get very used to spending whatever it is they make. Lots of people live off $15k and manage to survive. Lots of people live of $100k and manage to wind up bankrupt. The trick is to not adjust your standard of living and expectations to be what you think you “deserve”.
After getting a divorce a couple years ago, I got very used to living off of significantly less than the poverty line. After getting a “real” job, I’ve been making a concerted effort to not raise my standard of living TOO much. Despite making less than you (50% of my income would be below the poverty line), I still manage to only live off about half of what I make. Right now, the rest is going into paying off debts and student loans, but in about a year and a half those will be taken care of, and the rest can go into savings. (I may rebudget at that time and save less, if I feel like it would be a good idea to raise my standard of living again, then. However, I wouldn’t have to.)
Here is a second resource, the successor of Jacob, creator of ERE, Mr. Money Mustache. This website has the same concept, taken to the same extremes, though he has a more colloquial style. He proclaims to live a luxurious life on 8,000 a year a person (family of three). This includes taking multiple road trips with his family, eating organic foods and other such “luxuries”.
Wow, I think that link is the most useful thing I’ve gotten from this thread; thanks. I’ve had similar ideas for a while but never knew there was this much info online about it. Their techniques look like they could be very useful for people interested in hardcore professional philanthropy.
What part of your current income do you need to live on?
[pollid:465]
Note: The idea about the last two options is that high-school and university students are not socially expected to live on their own income. So the last option is for those who are not expected to live on their own income, and the previous option is for those who are socially expected to live on their own income, but they can’t.
By “current income” let’s assume the average for a few months, not some exceptional income or a temporary loss of income that happened yesterday.
I am a PhD student, and I live on about 60% or 70% of my scholarship (though my parents do still pay for e.g. my car insurance; if I also counted all the money my parents spend on me, it’d be higher, but probably still not close to 100% unless I’m forgetting lots of stuff). I picked “about 75%”.
(EDIT: Just noticed that the poll said “need to”—well, I could in principle reduce my expenditures, but it wouldn’t be anywhere near trivially easy for me to do so by a substantial amount.)
I should note that I could save money by moving back in with my parents and not paying rent, municipal taxes, food, etc., but it’s socially expected that I won’t do this.
after tax pay of 75k a year isn’t crazy unusual for software devs living in major cities. Living on 15k in these places is very doable, though some might consider it crazy depending on their habits.
After 6 years one could then live fairly well in a relatively poor country on 15k.
I don’t mean to cut the party short, but living for years in a poor country is not as awesome as it sounds.
What seems awesome instead is to go for poor countries for 6 to 8 months per year, and live with your parents or someone who loves you a lot in the other 4 months every year. I’ve met a Slovenian programmer who did that, knew 10 languages, worked in London for 4 months per year and seemed to have pretty much nailed the “maxing out on hedons” lifestyle.
I moved out of my parent’s house as soon as I was able, finding the cost in raw hedons and effects on my disposition and behavior to be way too high to justify the money saved. And I have a fine family, not abusive or otherwise terrible—just not a place where I was ever able to be happy or productive.
I’d guess it was more likely to be emotional stuff relating to living with people who once had such control over you. I can’t stand living at my parents’ for very long either… it’s just stressful and emotionally draining.
After 6 years one could then live fairly well in a relatively poor country on 15k.
Additionally, there are ways to get people to pay for your living costs in very poor countries. If you live in the US and are looking for a fun but not too easy early retirement, spending two years in the Peace Corps is not a bad way to go—if you do want to spend a few extra thousand on living expenses it will go a lot further than it would in America, and if you just want to let your retirement funds gather a few years of additional interest you can do that. The PC does take married couples and loves people with college degrees and work experience. No kids, though.
after tax pay of 75k a year isn’t crazy unusual [...] in major cities
Less than half of that isn’t crazy unusual everywhere else. Of course, anybody can just move there, and is qualified and lucky enough to find such a job.
Still doesn’t change the OPs point, though; living on 15k/year is still a very convenient life.
75% is only an example. Adjust according to what you can actually manage to save. If you are paid $100k, as is by no means impossible for this demographic (and in fact is rather easy if you’re a two-income household)m then 75% is easily doable. At $25k, which is also by no means impossible for our demographic, then yes, the 75% savings rate becomes difficult.
For DanArmak’s statement to be true (assuming he lives in the continental U.S.), he would have to be earning less than $47,960 per year. That’s not even remotely unlikely. I earn less than that, for instance.
Relative poverty is not having enough money to maintain the standard of living that is customary in that society.
The absolute poverty line is found by finding the total cost of all the essential resources that an average human adult consumes in one year. Determined by the world bank. This is adjusted for purchasing power parity. In other words, it applies internationally. The absolute american poverty line is just the international absolute poverty. And there’s no need for a relative poverty line, it’s rather a nonsense concept.
That rather assumes you can live on 25% of your income.
For me 25% of my income would be far below the poverty line and the legal minimum wage. I couldn’t live on that even if I moved back in with my parents.
Are most people here really so rich that they can follow this advice and take it in stride?
I disagree with your assumption that you need to be rich/making lots of money in order to save. It’s not necesarily about being rich, it’s also about spending less. People get very used to spending whatever it is they make. Lots of people live off $15k and manage to survive. Lots of people live of $100k and manage to wind up bankrupt. The trick is to not adjust your standard of living and expectations to be what you think you “deserve”.
After getting a divorce a couple years ago, I got very used to living off of significantly less than the poverty line. After getting a “real” job, I’ve been making a concerted effort to not raise my standard of living TOO much. Despite making less than you (50% of my income would be below the poverty line), I still manage to only live off about half of what I make. Right now, the rest is going into paying off debts and student loans, but in about a year and a half those will be taken care of, and the rest can go into savings. (I may rebudget at that time and save less, if I feel like it would be a good idea to raise my standard of living again, then. However, I wouldn’t have to.)
It’s fascinating to read about people like http://earlyretirementextreme.com/ who choose frugality over work
Here is a second resource, the successor of Jacob, creator of ERE, Mr. Money Mustache. This website has the same concept, taken to the same extremes, though he has a more colloquial style. He proclaims to live a luxurious life on 8,000 a year a person (family of three). This includes taking multiple road trips with his family, eating organic foods and other such “luxuries”.
Wow, I think that link is the most useful thing I’ve gotten from this thread; thanks. I’ve had similar ideas for a while but never knew there was this much info online about it. Their techniques look like they could be very useful for people interested in hardcore professional philanthropy.
Thanks for posting this! Looks quite interesting.
What part of your current income do you need to live on?
[pollid:465]
Note: The idea about the last two options is that high-school and university students are not socially expected to live on their own income. So the last option is for those who are not expected to live on their own income, and the previous option is for those who are socially expected to live on their own income, but they can’t.
By “current income” let’s assume the average for a few months, not some exceptional income or a temporary loss of income that happened yesterday.
It’s worth noting that the results of this poll could be skewed by the fact that it’s much easier to for students to give an answer.
I am a PhD student, and I live on about 60% or 70% of my scholarship (though my parents do still pay for e.g. my car insurance; if I also counted all the money my parents spend on me, it’d be higher, but probably still not close to 100% unless I’m forgetting lots of stuff). I picked “about 75%”.
(EDIT: Just noticed that the poll said “need to”—well, I could in principle reduce my expenditures, but it wouldn’t be anywhere near trivially easy for me to do so by a substantial amount.)
I voted 50%, which is correct +/- 10%.
I should note that I could save money by moving back in with my parents and not paying rent, municipal taxes, food, etc., but it’s socially expected that I won’t do this.
Probably most of us could spend less or earn more, if we did some changes in our lives.
after tax pay of 75k a year isn’t crazy unusual for software devs living in major cities. Living on 15k in these places is very doable, though some might consider it crazy depending on their habits.
After 6 years one could then live fairly well in a relatively poor country on 15k.
I don’t mean to cut the party short, but living for years in a poor country is not as awesome as it sounds. What seems awesome instead is to go for poor countries for 6 to 8 months per year, and live with your parents or someone who loves you a lot in the other 4 months every year. I’ve met a Slovenian programmer who did that, knew 10 languages, worked in London for 4 months per year and seemed to have pretty much nailed the “maxing out on hedons” lifestyle.
I moved out of my parent’s house as soon as I was able, finding the cost in raw hedons and effects on my disposition and behavior to be way too high to justify the money saved. And I have a fine family, not abusive or otherwise terrible—just not a place where I was ever able to be happy or productive.
What went wrong when you were with your family?
Zl ulcbgurfvf vf gung gurer jrer gbb znal vagreehcgvbaf naq/be gbb zhpu abvfr sbe lbh gb or ng lbhe orfg.
I’d guess it was more likely to be emotional stuff relating to living with people who once had such control over you. I can’t stand living at my parents’ for very long either… it’s just stressful and emotionally draining.
Additionally, there are ways to get people to pay for your living costs in very poor countries. If you live in the US and are looking for a fun but not too easy early retirement, spending two years in the Peace Corps is not a bad way to go—if you do want to spend a few extra thousand on living expenses it will go a lot further than it would in America, and if you just want to let your retirement funds gather a few years of additional interest you can do that. The PC does take married couples and loves people with college degrees and work experience. No kids, though.
Less than half of that isn’t crazy unusual everywhere else. Of course, anybody can just move there, and is qualified and lucky enough to find such a job.
Still doesn’t change the OPs point, though; living on 15k/year is still a very convenient life.
75% is only an example. Adjust according to what you can actually manage to save. If you are paid $100k, as is by no means impossible for this demographic (and in fact is rather easy if you’re a two-income household)m then 75% is easily doable. At $25k, which is also by no means impossible for our demographic, then yes, the 75% savings rate becomes difficult.
I am not, but apparently there is at least one person who could.
The absolute poverty line is US$2/day, purchasing power parity adjusted. You don’t earn less than $8/day.
$2 a day is “extreme poverty”.
The poverty line in 2013 for a single person (one-person household) living in the continental 48 states is $11,490 per year. (Source: http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html)
For DanArmak’s statement to be true (assuming he lives in the continental U.S.), he would have to be earning less than $47,960 per year. That’s not even remotely unlikely. I earn less than that, for instance.
That’s about the world GDP (PPP) per capita!
Relative poverty is not having enough money to maintain the standard of living that is customary in that society.
The absolute poverty line is found by finding the total cost of all the essential resources that an average human adult consumes in one year. Determined by the world bank. This is adjusted for purchasing power parity. In other words, it applies internationally. The absolute american poverty line is just the international absolute poverty. And there’s no need for a relative poverty line, it’s rather a nonsense concept.
According to his profile, he lives in Kfar Saba, Israel.