Also, it’s an established fact that people spend a constant fraction of their income on housing no matter how much income they have in the US.
It’s an established fact that people who live in the US don’t suddenly decide to spend a year in Australia. Therefore, your plan fails, it just doesn’t happen.
Respectfully, I do not understand what your comment means. I didn’t think the author of this post thought that even 5% of the 300 million or so Americans would try to move to Australia any time time soon. But some much smaller fraction of Americans do, maybe even suddenly. The author of this post has offered facts to suggest that this could be rational for some people. For those people, how does this plan simply not happen?
Louis is contrasting his personal experience with both his personal experience and demographic averages. What Louis did is not average; and there are other outliers who are not spending 32-37% of their income on housing. In fact, when he suggests moving to the outback he is simply rephrasing a suggestion of “spend less on housing”. Moving to the outback and getting a job as he describes is one way of doing that. Living under a bridge and showering at your gym every morning might be another.
He is attempting to equate the micromanagement of optimal spending practices within a US city environment and culture with the big leap to go ahead and move to the Australian outback. Neither or these things tend to happen so he claims the right to say ‘you too’ on your ‘fail by default’ point.
Unfortunately this obscures or ignores the critical insight into human psychology that you allude to here with respect to setting up ‘succeed by default’ scenarios, particularly with respect to choosing critical culture and environmental factors.
If we are constructing advice for typical Americans, then this post presents good advice. But the target audience is stated to be the people who can follow counterintuitive pieces of reasoning, which is why insights into human psychology that oppose explicit reasoning shouldn’t be the issue (for the stated goal). From the post:
This, I think, is a special opportunity for rationalists, an illustration that we can get better life outcomes from our investment in rationality—better outcomes such as low-stress jobs that leave us with ample discretionary income and enough free time to pursue whatever else we’re interested in, obtained by being willing to break habits and think in numbers.
There nevertheless remains an enormous difference between the big, perhaps drastic but more importantly intrinsically decisive changes to environment and a commitment to try to resist cultural and environmental pressures as they are currently experienced. Both are big hurdles but their nature is very different. Once they have made the choice to make the drastic decision they will succeed by default. Once someone has made a choice to try to resist ongoing cultural pressures they could perhaps succeed by the application of ongoing injunction by the rational part of their mind.
I still don’t particularly recommend moving to the outback and working in customer service. You will ‘succeed by default’ at doing something that isn’t all that desirable anyway. :)
I had a fairly similar response. I spent $900/mo. on rent when I was making $33k, and I am now spending $600/mo. while making $92k. Obviously whether or not someone spends a constant fraction of their income on housing is an individual decision, just as whether or not someone heads to Australia is.
I’m actually really shocked that you spent more than 95% of a $100k+ income. Even on a $24k student salary I managed to save around $6k/yr., and indulging in all the luxuries I care for I spend less than 35% of my current after-tax pay. I don’t feel like I’ve ever had to “micromanage” my finances or spend more than a few extra minutes a week to do this.
Even on a $24k student salary I managed to save around $6k/yr., and indulging in all the luxuries I care for I spend less than 35% of my current after-tax pay. I don’t feel like I’ve ever had to “micromanage” my finances or spend more than a few extra minutes a week to do this.
The trouble is that students (including graduate students) have ways to live extremely cheaply while maintaining reasonably high status. For people who are beyond that stage in life, either because they’re too old or because they have families, there are no such options.
As a general rule, unless you’re living in the middle of nowhere, housing costs are very high in all places nice enough to provide a respectable middle class environment for raising kids. Even if you don’t have kids, pursuing cheap living options beyond a certain age tends to signal low class and/or disreputability.
Your point is well taken. Not only do I not have children or dependents, and not only am I still somewhat in “grad student mode”, but I plan on eventually going back to school, so I don’t really intended to leave that mode before then.
In fact, I probably have an even more extreme form of this condition. I’ve never been too bothered too much by signaling low status, but I’ve actually been pained when I signal high status. My first (and only) car bothered me because while I bought it extremely cheaply, it was still in good shape. I feel like I ought not to be driving a vehicle that has working door handles, heating and A/C. My car certainly doesn’t signal high-status, but it doesn’t signal low-status as strongly as I’d like.
All of that said, the idea of spending 95% of a $100k salary does not sound instrumentally rational at all even if status is a highly-held value.
I object a bit to
housing costs are very high in all places nice enough to provide a respectable middle class environment for raising kids
My parents together usually made less than $20k/yr. while I was growing up (usually fluctuating around the poverty line). I don’t know how much they spent on housing (probably a large fraction of that), but I went to an expensive private high school (on scholarship, of course) and didn’t mind bringing home friends that came from $250k income families. I really don’t think my housing situation was bad even to their tastes, and it certainly isn’t somewhere I’d mind raising my kids.
It’s an established fact that people who live in the US don’t suddenly decide to spend a year in Australia. Therefore, your plan fails, it just doesn’t happen.
Respectfully, I do not understand what your comment means. I didn’t think the author of this post thought that even 5% of the 300 million or so Americans would try to move to Australia any time time soon. But some much smaller fraction of Americans do, maybe even suddenly. The author of this post has offered facts to suggest that this could be rational for some people. For those people, how does this plan simply not happen?
Vladimir was being sarcastic, because Louie dismissed the possibility of optimizing one’s expenditures.
Louis is contrasting his personal experience with both his personal experience and demographic averages. What Louis did is not average; and there are other outliers who are not spending 32-37% of their income on housing. In fact, when he suggests moving to the outback he is simply rephrasing a suggestion of “spend less on housing”. Moving to the outback and getting a job as he describes is one way of doing that. Living under a bridge and showering at your gym every morning might be another.
I’m sure you didn’t mean it, but your comment strikes me as pretty harsh. Could you explain what you mean?
He is attempting to equate the micromanagement of optimal spending practices within a US city environment and culture with the big leap to go ahead and move to the Australian outback. Neither or these things tend to happen so he claims the right to say ‘you too’ on your ‘fail by default’ point.
Unfortunately this obscures or ignores the critical insight into human psychology that you allude to here with respect to setting up ‘succeed by default’ scenarios, particularly with respect to choosing critical culture and environmental factors.
If we are constructing advice for typical Americans, then this post presents good advice. But the target audience is stated to be the people who can follow counterintuitive pieces of reasoning, which is why insights into human psychology that oppose explicit reasoning shouldn’t be the issue (for the stated goal). From the post:
There nevertheless remains an enormous difference between the big, perhaps drastic but more importantly intrinsically decisive changes to environment and a commitment to try to resist cultural and environmental pressures as they are currently experienced. Both are big hurdles but their nature is very different. Once they have made the choice to make the drastic decision they will succeed by default. Once someone has made a choice to try to resist ongoing cultural pressures they could perhaps succeed by the application of ongoing injunction by the rational part of their mind.
I still don’t particularly recommend moving to the outback and working in customer service. You will ‘succeed by default’ at doing something that isn’t all that desirable anyway. :)
I had a fairly similar response. I spent $900/mo. on rent when I was making $33k, and I am now spending $600/mo. while making $92k. Obviously whether or not someone spends a constant fraction of their income on housing is an individual decision, just as whether or not someone heads to Australia is.
I’m actually really shocked that you spent more than 95% of a $100k+ income. Even on a $24k student salary I managed to save around $6k/yr., and indulging in all the luxuries I care for I spend less than 35% of my current after-tax pay. I don’t feel like I’ve ever had to “micromanage” my finances or spend more than a few extra minutes a week to do this.
datadataeverywhere:
The trouble is that students (including graduate students) have ways to live extremely cheaply while maintaining reasonably high status. For people who are beyond that stage in life, either because they’re too old or because they have families, there are no such options.
As a general rule, unless you’re living in the middle of nowhere, housing costs are very high in all places nice enough to provide a respectable middle class environment for raising kids. Even if you don’t have kids, pursuing cheap living options beyond a certain age tends to signal low class and/or disreputability.
Your point is well taken. Not only do I not have children or dependents, and not only am I still somewhat in “grad student mode”, but I plan on eventually going back to school, so I don’t really intended to leave that mode before then.
In fact, I probably have an even more extreme form of this condition. I’ve never been too bothered too much by signaling low status, but I’ve actually been pained when I signal high status. My first (and only) car bothered me because while I bought it extremely cheaply, it was still in good shape. I feel like I ought not to be driving a vehicle that has working door handles, heating and A/C. My car certainly doesn’t signal high-status, but it doesn’t signal low-status as strongly as I’d like.
All of that said, the idea of spending 95% of a $100k salary does not sound instrumentally rational at all even if status is a highly-held value.
I object a bit to
My parents together usually made less than $20k/yr. while I was growing up (usually fluctuating around the poverty line). I don’t know how much they spent on housing (probably a large fraction of that), but I went to an expensive private high school (on scholarship, of course) and didn’t mind bringing home friends that came from $250k income families. I really don’t think my housing situation was bad even to their tastes, and it certainly isn’t somewhere I’d mind raising my kids.