Golden Rules for Making Money (1880)
fourmilab.ch
fourmilab.ch
> The real comforts of life cost but a small portion of what most of us can earn. Dr. Franklin says “it is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself I should not care for fine clothes or furniture.”
In reading a few of the chapters, it was really interesting to see the dollar amounts written. They seemed rather high for 1880.
> She has a nice one thousand dollar camel's hair shawl, and she will make Smith get her an imitation one, and she will sit in a pew right next to her neighbor in church, in order to prove that she is her equal.
Inflation calculators put that camel shawl at nearly $25,000 (2019 dollars).
$1,000 is roughly two to five years average income (depending on the state) in 1880 so if the average family income right now is ~50k and a family of professionals makes 250k, it's not that far fetched. Especially when you consider that church was the important social outing for a majority of the population.
In Barnum's parlance, a "humbug" was a practical joke played on his audience. A less charitable interpretation is that of some of Barnum's humbugs are downright fraudulent. It's a fun story.
Episode 1 of 3 is here: https://ourfakehistory.com/index.php/season-2/episode-32-who...
Where to find the balance? We have yet to see.
The reason for providing links like that is simply that people find previous discussions interesting.
Well, that put student debt in perspective no ?
> Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. <snip>
> This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided.
Or if you ever got laid off.
Or if you ever got injured or severely sick and found yourself with shocking hospital bills.
When life hits you with something like that, suddenly that monthly payment, and the risk of foreclosure, bankruptcy, and severely damaged credit, all looms large over your head like the Sword of Damocles.
Yes a mortgage is real debt.
Do you own that much? Let's put some real numbers on this. You buy a $350k house, and put down $70k (20%). That leaves you with a $280k mortgage at 4%. This gives you a monthly mortgage payment of $1,337.
If you pay that monthly, you would own 51% of the house ($175k of equity) some time in the 16th year of your mortgage. After making 188 mortgage payments. Note, this doesn't include housing value appreciation.
COST
20% down - $70k
mortgage payments ($1,337 * 188) - $251,356
https://www.investopedia.com/articles/pf/12/good-debt-bad-de...
That being said, it's a general statement, specific cases of those can be "bad debts" if they are taken out recklessly and/or without forethought and planning and budgeting.
You also pay interest, which could be a huge amount (depending on how quickly, if ever, you pay off your principal).
Never forget though, you are paying quite a bit for the use of that money (i.e. the banks). This is mitigated in a rising market, but lots of houses (well land, really) don't appreciate fast enough to counter this.
Not to mention the additional costs. It might be more accurate to think of your house as a depreciating asset (the house) bundled with a (hopefully) appreciated asset (the land it is on)
While this makes sense for capex intensive businesses. It's an irrational choice for a tech startup that may need to pivot, partner or be acquired. For those choices you need a source of capital with similar incentives as the founders.
wha? selling debt you are committing yourself to a financial obligation, selling equity you are committing yourself to a strategy in the hope that that strategy will be successful.. yes, it is not binding fiscally and so the strategy can be renegotiated without penalty, but that doesn't by proxy imply the converse that debt inherently requires a fixed strategy..
this is why you can get cash flow/line of credit loans based simply on historical accounting data, etc..
that said getting loans under false pretenses is also fraud. YMMV
Did you really just not read the article at all? He is clearly referring to things like consumer debt rather than investments.
"Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. “If a young man,” he says, “will only get in debt for some land and then get married, these two things will keep him straight, or nothing will.” This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided"
In some ways, student debt is similar to land in that it can provide a return on investment that allows for paying off the debt over time. The main difference being that land is tangible and can be sold to pay off the debt completely.
Borrowing for food, clothing, and other items that tend to be used up or worn out before they're paid off does seem like a terrible idea.
In my case the choice was use student loan money to pay for living expenses (which were extremely meager) while in college or not go to college at all. It was part of my educational investment.
It was totally worth it, the loans are long paid off, and the investment has paid untold dividends in the form of a salary I wouldn't have the chance at if I didn't go to school.
He went to a several month long intensive coding bootcamp, with tuition fees for the entire course is between $10-15k
For comparison, I am paid $58/hr with benefits, my co worker is paid $50.
Higher education is vastly overcharged and overrated.
Comparing student debt to buying land is funny.
At least with land you are guaranteed to be the owner of an asset. Something physical, a location, that other folks might at some point pay a price for (regardless of what you paid).
Student loans don't guarantee anything. :)
No, not even a pass.
Some great quotes in there.
In some countries you can route large payments like insurance premium payments through the credit card. Sometimes insurance companies even have investment products which they claim are "insurance policies", that can be bought with credit cards too.
One of the best google talks I have seen.
Then, USPS realised what was happening, and blocked them for purchase on credit cards.
The “manufactured spend” community (who cycle money through cards to get cashback/points without really spending money) then started buying prepaid debit cards & gift cards on credit, then buying money orders on gift cards, then depositing the money back in their bank.
That came to an end a couple of years ago when prepaid cards were also blocked: https://www.reddit.com/r/churning/comments/7ac5t9/doc_link_n...
https://www.nytimes.com/2012/07/14/business/mastercard-and-v...
More details here, but some states ban surcharges while allowing cash discounts:
https://www.cardfellow.com/blog/cash-discount-eliminate-proc...
That is to say, in the merchant agreement required to accept credit cards, merchants promised to the credit card companies that they would not charge users of credit cards more than cash payers.
As another poster points out, this anti-competitive bullshit was made illegal by law circa 2012.
These kinds of coercive/collusive agreements among a cartel of providers of a particular type of service worry me deeply, especially when a previously-luxury service (e.g., credit cards) becomes semi-necessary infrastructure for operating in the modern world. For more on this type of problem, I encourage you to read about the unbanked [0] and the challenges they face.
Despite how much better they make my life, I also look at the success of Uber, Lyft, AirBnB, and other platforms with worry, precisely because they are in many cases creating semi-necessary infrastructure in the private domain. Individuals can already be banned from Uber [1] and Lyft (and Google [1], etc.) without any legal recourse, which also means by mistake because you are treated as guilty until you can prove your innocence, and innocence is usually impossible to prove.
Here's one (hypothetical and admittedly unlikely) future I worry about: autonomous cars rule the world, 99% owned by four companies (Uber, Lyft, Waymo, ???) that provide Uber-style transportation services. There's no public transport anymore (all outsourced to those four, it's much cheaper than dealing with public transit unions!) and so to get around more than walking distance requires being in the good graces of at least one of those four companies.
Poor John takes a ride in an Uber, gets sick from something he ate in earlier that day, and makes a mess in the car. Uber bans him for this infraction, and shares his name on a ban list (e.g., credit reports) so now John is banned from transportation, and has no recourse (e.g., Google's Gmail bans) -- for the simple mistake of eating undercooked scallops, John is now royally fucked because our infrastructure is outsourced and our society has no say.
I don't expect this future to come about. I expect heavy regulation of these semi-necessary infrastructure companies, and I expect it will come soon. GDPR is one example of this pushback, perhaps not the best example. But I welcome more.
[0]: https://en.wikipedia.org/wiki/Unbanked
[1]: https://www.elliott.org/problem-solved/i-am-banned-by-uber-c...
[2]: http://www.jonasblog.com/my-gmail-account-got-deleted (among many)
Colo. Rev. Stat. §5-2-212
“(1) Except as otherwise provided in §§24-19.5-103
(3) and 29-11.5-103 (3), C.R.S., no seller or lessor
in any sales or lease transaction or any company
issuing credit or charge cards may impose a surcharge
on a holder who elects to use a credit or charge card
in lieu of payment by cash, check, or similar means. A
surcharge is any additional amount imposed at the time
of the sales or lease transaction by the merchant,
seller, or lessor that increases the charge to the buyer
or lessee for the privilege of using a credit or charge
card. For purposes of this section, charge card includes
those cards pursuant to which unpaid balances are
payable on demand.”https://www.ftc.gov/tips-advice/business-center/guidance/new...
>A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously.
The driver was probably trying to cover the transaction fee, it's not like most taxi drivers are raking in the big bucks.
Not sure about US, but I think in NZ all credit cards with cashback have fees. And I remember there was a research or something concluding that you had to spend at least ~$3000 (don't remember exactly) per month using cashback credit card to break even.
Also, credit cards are not accepted everywhere. And often there is a minimum transaction amount as well.
/s
For example, ASB (bank) asks ~$150 per year for a cashback credit card. How much do you get from cashback on average?
Still not great, but it's only $6000 spend to break even on the lower-tier card. Buying groceries each week will be close to covering it.
----
Edit: Oops, it's more complicated as it's not always 1% cash back:
<$5000: 0% cash back.
<$10,000: 0.5% cash back.
$10,000+: 1% cash back.
First, you are selling a little bit of your privacy, the bank you know all your purchase patterns and even though this seems not to be abused it creates a precedent that I do not like.
Secondly, every time that you buy things with your credit card the bank change the business a small fee, so in a way you are making the 'rich' more richer and the 'poor' more poorer.
I believe that these two thing will make me use cash forever.
- In the EU, interchange rates are limited to 0.3% [1] for credit card transactions at physical terminals ("card present transactions"). That's not free, but it's an order of magnitude below US levels. Caps for other payment methods (card not present transactions and transactions made with debit cards) range from 0.2 to 1.5%.
- Some banks, or groups of banks, operate their own schemes (i.e. payment processing networks competing with Visa and Mastercard), and generally achieve lower fees. See [2] for one example where the price per transaction starts at $0.23 and goes down for transactions below $10, and for customers processing more than 10k transactions per year.
[1] http://europa.eu/rapid/press-release_IP-18-6655_en.htm
[2] https://www.postfinance.ch/en/business/products/accounts-rec...
But you can always offer a discount for cash. So some places do this to get around that rule.
If you're buying in cash you can try ask for a discount. If you're not asking you will get charged the same price they can't offer it out of the blue.
I used to work for a small "mom n pop" style computer store, and did the cash drops most days. My understanding was that the cash handling fees were roughly the same as the card fees. Arguably card processing was cheaper for us,and less error prone (card machine hooked up directly to the till means I won't accidentally give the wrong change when I'm hungover, for example. )
Most of the time you see steep charges for paying by card (e.g. taxis) theyre related to tax avoidance - if you pay cash thryll just pocket it and not log it as a trip, whereas if there's a card payment there's a paper trail.
Use credit card today, and you save some negligible money today, while prices go up since the fee is now a sure requirement for all vendors.
Avoid credit card like the plague, and operators will have a harder time justifying 3-12% fee from vendors, lowering prices for everyone in the long run.
I have stopped using credit cards for more than a decade.
In the UK I bank with RBS and when I have fallen victim to a fraud (e.g. my card been cloned or an online service stupidly saving more data than they should) I always gotten my money back.
I understand collecting points, but a debt is a debt and a credit card is a gateway to debt. Cash is king!
Edit: by 'cash' I mean debit card, not carrying £1000 on me :)
In most other countries, the general idea is that you should be saving money and a credit is the opposite of that. As a result, you are not likely to be offered more than "no fees" for your credit.
Note that in many countries, debit cards are called "credit cards" and US-style credit cards don't exist.
This is such a great tip.
Maybe it's just my country (USA), but savings accounts are easily the worst place I have ever kept significant sums of money. They yield basically nothing for the depositor.
You can easily beat savings accounts just by trading a single tech stock with minimal exposure. Dumb strategies like riding the climb in the day or two approaching an anticipated earnings call and selling before the actual call to avoid risk will already net you a few percent per call. If you did that once per quarter, you can achieve +10% in a year without having any special skills or knowledge while barely even exposing yourself to the market, leaving your money as liquid cash in the brokerage account the rest of the time will still destroy any savings account I've seen.
Savings accounts are useful for isolating your funds from your checking account as a self-control measure. Once you're beyond struggling to save money at all and fully grown up, the utility is basically nil.
They're obsolete in a world with services like E-Trade offering a checking account w/debit card that refunds ATM fees and a linked brokerage account serving as both isolation from your checking account with the ability to trade online using those funds.
Depending on how susceptible you are to such psychological tricks (and cashback is also a trick to make you spend more or hook you to the brand -- it is only offered because it is EV profitable to the bank), your advice may be neutralized or net negative for a large part of the population that lacks your strong self-discipline. One late fee and you wipe out all your profits (and your credit score).
Smart and risk-free to only spend what you've got ("pay as you go"), besides you help avoid a national credit crunch.
> Debt robs a man of his self-respect, and makes him almost despise himself. Grunting and groaning and working for what he has eaten up or worn out, and now when he is called upon to pay up, he has nothing to show for his money; this is properly termed “working for a dead horse.”
> It is all very well to say, “I have got trusted for sixty days, and if I don't have the money the creditor will think nothing about it.” There is no class of people in the world, who have such good memories as creditors. When the sixty days run out, you will have to pay. If you do not pay, you will break your promise, and probably resort to a falsehood. You may make some excuse or get in debt elsewhere to pay it, but that only involves you the deeper.
> Some men have a foolish habit of telling their business secrets. If they make money they like to tell their neighbors how it was done. Nothing is gained by this, and ofttimes much is lost. Say nothing about your profits, your hopes, your expectations, your intentions. And this should apply to letters as well as to conversation. Goethe makes Mephistophiles say: “Never write a letter nor destroy one.” Business men must write letters, but they should be careful what they put in them. If you are losing money, be specially cautious and not tell of it, or you will lose your reputation.
In 2019, it seems openness and transparency (eg Buffer) can form the foundations of a profitable strategy
As an exception, not as a rule. Business espionage anyone?
Its a great book and well worth the read, despite it's size.
The ONLY things I can say with certainty in life, as far as productive activities go is something like "workout, eat right, sleep enough, drink enough water." That's literally it.
Uhh... get a job?
https://www.mrmoneymustache.com/category/mmm-classics/
It is very similar to "workout, eat right, sleep enough, drink enough water", as they are things that "everyone" knows they should do, but few have the will power and self discipline to actually do them.
Budget. Get your expenses under your income. Set aside an emergency fund. Pay off your debts as quickly as possible. Then start investing for retirement, house, kids college, etc. While avoiding new debt.
That's pretty much it. Dave Ramsey and many other advisers say roughly the same thing, including the introduction to Barnum's book:
http://www.fourmilab.ch/etexts/www/barnum/moneygetting/money...
Ramsey pretty much says this stuff is simple in his course, and spends most of his time on the emotional and motivational aspects of putting the advice into practice. For example, he advocates paying off your smallest debt first, not the one with the highest interest rate. This is solely for the motivational impact, because seeing a debt disappear completely will inspire you to keep going and attack the next one, even if it's sub-optimal from an economic perspective.
I'm not trying to pick on anyone here, I'm actually describing a good friend of mine.
That being said, I don't know what will, so I don't have any suggestions.
"Budget. Get your expenses under your income. Set aside an emergency fund. Pay off your debts as quickly as possible. Then start investing for retirement, house, kids college, etc. While avoiding new debt."
This is mostly common sense. But I guess so is the workout / sleep / drink enough water comment I made earlier.
True. The primary purpose of open source is sharing, whether that is code or information. Open source is not opposed to making money, however making money is not the primary motivation for open source. It makes sense that best practices for how to make money can be different than the standard practices for open source.
Here's what he said:
> Say nothing about your profits, your hopes, your expectations, your intentions.
So it doesn't appear that he's talking about sharing tutorials. Instead, he seems to be giving practical advice on not talking about money and business-tactics.
If you so desire, huge portions of land in the country “flyover” USA are yours to be had for very cheap.
Of course it’s difficult to get internet there, so how will the millennials make it?
Man those were the days...
Costs $89.99 and I can use my router anywhere in the US if I want to. I've even taken it on a roadtrip and plugged it into my car's AC adapter, continued to work like a charm.
I completely agree. It's funny that I didn't care at all about SpaceX and Oneweb before I bought this property, but they can't launch soon enough for me now.
So, I rent an office in the nearest town. I have a quiet space to work and 5x better internet there. It's close enough to bike in when the weather is nice, and a pleasantly short commute the rest of the time.
It really is the best of both worlds.
I have no doubt that that pattern repeats into history. What one group uses as a slur, another uses as identity.
But not so much for the Greats, the Silents, and Generation X. My theory is that the Greats, the Silents, and Gen X were all wartime generations. The Silents and Gen X were also relatively small generations, there really aren't that many of them. Add to that the fact that all of those generations had some level of dispossession coupled with an even more impressive level of productive wealth creation, and you can kind of see why no one really picked on them as much as what we see today. The Greats were, well, the Greatest Generation. 'Nuff said there. The Silents were a wartime generation, born in the depths of the depression, who never really whined about their lot and because there really weren't many of them, they were, person for person, likely the most productive generation in our history. Generation X was given the name because they were the black spot. They were the first generation that would grow up to have less than their parents. They kind of just ran with it, and despite having war after war to deal with, ushered in one of the most transformative eras of wealth creation in mankind's history.
All that said, actual leadership of the country seems to skip over those kinds of generations. (With the exception of the Greats.) Not many leaders from the Silents or Gen X, but a large number of well known leaders from the Baby Boomers and even the Millennials. From Mayor Pete to AOC, the Millennials seem to outshine Gen X as far as leaders are concerned, for better or worse. In the same way, the Baby Boomers outshone the Silents to the point where the Silents are almost forgotten to history. Generation X might have been forgotten were it not for their technological innovations and achievements.
Anyway, that's my theory. So Millennials shouldn't take all the ribbing too hard, because if history is any indication, in the end, you'll likely be the ones in charge. Again, for better or worse.
Also, not entirely sure why there's a generation called "the Greatest Generation". We can say they were all war heroes and suffered etc., but there were also jerks in that generation who started those wars. We are all products of our time. It kind of sucks to just lump everyone based on their birth date and stereotype them.
Prior to boomers it was just "kids these days"...
If you want to go to the ISS, become an astronaut is straightforward, but it's not exactly helpful.
Spoken like someone who's never had to rely on a well in marginal country.
My advice: Drill your well carefully, put in a cistern, and buy a truck which can haul lots and lots of water.
Difficult to get medical care and water out there, so how will the Boomers make it?
It has been a fair exchange in fact.
https://snowbrains.com/map-nobody-lives-usa-47-usa-uninhabit...
https://artplusmarketing.com/nobody-lives-here-united-kingdo...
Edit: I suspect the grid squares being used are of different sizes, but even so - the crowded bits of the UK are even more crowded than the overall population density would suggest.
US: "the United States consists of 11,078,300 Census Blocks." The USA area is 9.834 million km², according to a well-known search engine.
So about .9 km² in average, roughly in line with "Of them, 4,871,270 blocks totaling 4.61 million square kilometers were reported to have no population living inside them".
https://memory-beta.fandom.com/wiki/Ferengi_Rules_of_Acquisi...
I've heard and seen this time and time again and yet there's no advice on how to find that purpose. It's always easy to say, "do what you love" but how do you find what you love?
Do what brings the most value to others, that you have the talents to accomplish, and that you also enjoy doing. I think the intersection of those sets is the most likely place to find one's "purpose".
There are plenty of things you might "love" to do, that will leave you destitute and unfulfilled if you devote your life to doing them.
There should be some element of mastery, you need to be challenged in your work but not completely out of your depth.
You also need a degree of autonomy, this is what makes most corporate life so miserable, they have so many rules you can't decide anything.
Money doesn't matter so much, most people adjust their lifestyle to their income and get used to it.
1. What kind of role should I play? Should I be a doctor or a lawyer, a salesman or a programmer? This is the question that the chapter addressed, and I think this question is easier. It should be obvious whether you would rather be a salesman or a programmer. It can get harder as you try to discern between two similar jobs: sales or management, mathematician or professor.
I believe personality is partly biological, and you should try to go with your natural grain. The Myers Briggs theory helped me, although at first it was hard to grasp. The best way may be to do a web search for each of the 16 personalities, read a few descriptions, and decide what you are based on that, instead of taking the tests. The theory may be pseudoscience, but it seems close to the truth.
2. Where should I work? Should I work at a website for finding restaurants or in healthcare? Should I work at Uber or Lyft? Or a nonprofit? Should I found my own start-up? If so, what should its product be? I think this question is harder for most people, and I don't have a sure theory for how best to tackle it.
What I'm coming around to believing though is that you get no meaning out of serving yourself. Sure, you need to take care of your needs, but if you try to find a job to fulfill yourself, you wind up empty. Instead I begin to sense fulfillment when I focus on helping other people. So, maybe ask questions like (A) What am I good at, or what do I have to offer (this is question #1, above). (B) What needs are out there, and (C) What are the opportunities within reach to mix A with B? Maybe start with small steps.
https://www.brookings.edu/research/economic-mobility-of-fami...
https://www.worldbank.org/en/topic/poverty/publication/fair-...
PT Barnum, on the other hand, makes a great case for living within one's means, which is always valuable advice.
#learntocode
When you are good at something, it’s fun to keep doing it so you feel better than other people. When you like to do something, you often get good at it.