The Best Financial Advice I Ever Got | Hacker News Reader

The Best Financial Advice I Ever Got

wsj.com

58 pointsRickJWagner64 comments

> "Never open one of your 401(k) statements from the day you start work to the day you retire, 40 or 50 years later."

Metaphorically, yes. But you absolutely should open them periodically. If there has been theft or an error, you want to report it immediately, not 50 years later.

And you may have several pensions (401k)s running at the same time so you do need to make sure you are happy with the allocations'

I have three pensions plus my SIPP (self invested) running at the moment.

Whenever you leave a company, you should roll your 401k over to a Traditional (or Roth, if you had a Roth 401k) IRA, as the fund expense ratios are usually cheaper (I recommend Vanguard).

Um I mentioned Pensions - I just added the 404 the usa's poor relation to even a DC scheme for context for US readers.

We don't have IRA's we do have ISA's which are awesome in comparison (basically remove £20k pa into a tax efficient account)

I think my main DC pension is about .5 and I will be moving my small NEST (government scheme) over to my self run pension shortly.

Mine would be, "Don't be pennywise and pound foolish".

Sometimes it's worth it to spend the extra money. The example that's burned into my brain is hiring movers.

> The example that's burned into my brain is hiring movers.

Or a nice coat. A nice coat doesn’t come cheap but it’ll last years.

(Actually I think this applies to clothing generally. I don’t buy many clothes because I rarely buy cheap clothes.)

You subscribe to the Sam Vimes "Boot Theory" of economics: https://en.m.wikipedia.org/wiki/Sam_Vimes (sorry for general link due to mobile / bad internet). I do too.

I always buy cheap clothes because the rare times I decided to buy something expensive it lasted about the same time as the cheap ones give or take.

You need to care for them as expensive.

"This shirt's dry clean only, which means it's dirty" -Mitch

No. You aren't always an expert about things you buy. You should not then start to rely on the price as a proof of quality. If something is expensive it is either good quality or you have a greedy seller. To catch the greedy seller you need to understand what you buy. This is not always possible. Therefore: always buy the cheapest you can get if you aren't an expert or just don't buy.

Oh wow, this is such a misguided advice.

Assume it is the same advice government takes when procuring public projects...

The government has the task to know what it procures and also should have the resources for the task. However a single person doesn't always. Even for the government it is difficult. We all know stories about government being fleeced by providers.

You also have to know how to take care of them. Which requires work or paying folks. Even then the people who maintain it for you will give you instructions so it's still more work than t-shirt of the week

Grandma used to say "we can't afford cheap clothing"

That's "Don't sweat the small stuff", right?

* Stop paying so much taxes.

* Use money to make money.

* Never get sick.

* Never get divorced.

* Never have children.

* Never get caught.

Hahaha when you don't live in Europe, it's actually doable.

A lot of this advice is unrealistic.

How many people are going to be able to live on one spouse's income alone? Of those who can, how many will want that second income vs time with the kids?

About not getting into debt, how many people are can go to college ("invest in yourself") without?

IMO the only good piece of advice is "be smart about probabilities", which if you follow it to its logical conclusion basically just means be informed about the facts, a general piece of life advice that makes a lot of sense.

> About not getting into debt, how many people are can go to college ("invest in yourself") without?

Like 95% of the rest of the developed world ;)

I only know a single "developed" country in which you have to indebt yourself to go to college, and that's the US.

Are there any others?

Even in Northern Europe where tuition is free, students often take out loans to support themselves during uni.

Source: I grew up in one of those places, plenty of people will borrow from the government on top of what they are given.

Well in Poland university is free as it is in most post-communist EU, Scandinavia, and some other EU countries.

Yeah you still have to have the money for food and place to live, but you'd need that anyway, and it's not that expansive. Most people get these money from their parents without loaning any money from banks.

Just want to point out that the nature of these loans (at least in Sweden) differs greatly from student loans in the US. Interest rates and downpayments are low, and if you can’t afford to pay off your loans for a period (due to no or low income), you can get a temporary reduction of the amount you have to pay off every month. I maxed out my loans when I studied, at about $26k, and the maximum I have to pay monthly is ~$55 a month

> Even in Northern Europe where tuition is free, students often take out loans to support themselves during uni.

FWIW I wasn't suggesting that students in other countries don't take any loans, I was pointing out that they don't necessarily have to.

In Germany, for example, there is a government loan system for studying, where you get enough per month, and only have to pay back ~20 months of it (which is a fraction of the time in college), and can pay it back under quite good conditions. In Spain, it is common for students to live with their families, work, or for their families to help them a bit.

Many students don't take a loan, and ether work ~15h/week, or get money from parents, or both. Even poor families are able to push 2 children through college without accumulating debt.

If tuition here were to cost, e.g, 3000 EUR/year, many families and students wouldn't be able to do that. If tuition were to cost 20k EUR or more / year, most families would need to indebt themselves.

The UK, £9000 per year plus living costs is the current floor.

However it is more like a graduate tax than loan, if you don't earn much you don't pay it back and it gets written off after 25 years.

The £9,250 annual tuition fee is for England only. Tuition fees imposed by the votes of Scottish MPs overriding the votes of English (& Welsh) MPs. But they knew their own kids would unaffected because tuition fees in Scotland are zero if you are Scottish (or an EU resident). There's a special fee applied if you are English though.

It's 25 years for the £3k fees, 30 years for £9k

I don’t think it’s unrealistic at all. My wife and I have always lived on one income. Before we had kids, we used the other to pay off our college debt very quickly and build as much savings/retirement as possible. It also taught us to narrow the set of physical goods we valued in life. We are now living very comfortably on one (modest) income with 3 kids.

As far as never going into debt, I think you should interpret that a bit more loosely. Obviously, going to college has huge payoffs in a few short years. That is more of an investment as long as one chose and affordable college. Taking out a loan on a new BMW or Tesla is debt.

> I don’t think it’s unrealistic at all. My wife and I...

Come on now. It's about what is generally achievable. Imagine living in London on £25K, which is roughly the median. If you find another median salary, are you gonna save it all? Unlikely.

So you mention "generally achievable" and then bring up London in the same sentence? Really? Vast majority of British people don't live in London. It's like saying that home ownership is UK is unachievable because no one in London can afford to buy anymore. Which is true, but it has nothing to do with the rest of the country.

Well unless you talk about city states, the vast majority of the population of any country is not living in any particular city in that state.

Salaries in the rest of the country are lower, so you'd be making a similar comparison with let's say $20K in eg Sheffield.

Obviously there's people living on that budget, but the point of the advice was to not break that budget, even if twice the amount were available.

Which even if you're very frugal you are unlikely to do. You're gonna think of something to spend that extra 20K on, and it's not dumb to spend at least some of it.

To me the advice sounds like "if you and your wife are partners in law firms, save half the money".

So don't live in London.

I'm moving out because it's an inheritance society. You need an income of more than 150-200K to buy a family home that isn't crap by the standards of anyone outside of the bubble.

It really is that simple. London is closed to newcomers. Go and have your fun as a youngster - but setting up there is daft unless you're an entrepreneur and will actually make big money.

Can you clarify modest income? The last time I read an article about living on one income the spouse was a high paid lawyer. The person in the article who talked about living on one income was a CEO.

I make about £40k a year which is neither low nor very high by British standards and we could survive on my salary alone. Take home per month is about £2300, the mortgage is £700 a month which leaves plenty of money for bills and food and other expenses.

That seems fairly high for the UK. “The median annual income in the UK, according to the most recent Annual Survey of Hours and Earnings, is £28,677 for full-time employees.” 1.4x the median income is comparable to many dual income families in the UK.

https://en.m.wikipedia.org/wiki/File:Number_of_Individuals_i...

That seems to me to fit with the characterization "neither low nor very high".

Not so high. Also, that includes younger people than a person with 3 kids, and people who chose not to attend higher education. Presumably the median for his age group and education level is higher.

If you carefully run the numbers a model 3 will pencil out quite a bit better than F-150 unless the truck is for work.

A few years ago I did the same with a Prius and surprisingly, if you drive a lot, a Prius was the cheapest car you could buy.

I would say it's unusual but not unrealistic.

Quoting myself, an old Italian proverb:

https://news.ycombinator.com/item?id=14594858

>In Italy there is (was, as it is not much used anymore) proverb: "Fare i conti spesso, moderar le voglie, spender men di quel che si raccoglie".

>It cannot be translated easily, but more or less it amounts to:

>Do the (financial) math often, limit your cravings, spend less than you can gather.

Do not get married!

Having kids is bad for your financial health as well but not all rewards in life are financial.

One can have kids without a marriage.

To be fair to the OP, they didn't mention (having or not having) kids at all.

> financial health

financial health is not a goal, but a means to an end.

Getting good financial health is a means to having kids (ie, you will give your kids the best advantage they could if you're more financially capable).

Even financially. If they help you at all when you’re old, it’s worth the investment. The cost of in home care, independent living, etc is insane

At least in the west, many of us don’t want to be a burden to our kids like that.

I get what you mean. I’m American. Grandparents have extended their independence in their home by 20 years, on land an hour outside of city, because their kids go over every 1-2 weeks to count out their meds, meal prep, and help out with a few other household things. They have done a few periods of livein care while they recovered from surgeries or falls. They’re in their mid90s and it’s getting pretty hard now because there’s some dementia and other issues setting in. They’d have much more help if my stubborn grandfather moved to the city near other family members (we could casually drop off groceries while we’re doing our own errands, etc).

Every case is different, but I don’t think you have to be under one roof to significantly help some people keep their independence and avoid spending money on caregivers that are very expensive especially

Why do you say this? Married couples have much higher net worth than unmarried couples do on average. Married people have a joint interest in increasing their wealth. Each member of an unmarried couple has an incentive to spend the other person's money.

Not only incentives but it just makes sense logically as long as we can assume that both partners are financial savvy, have the same objectives and "contribute" to the relationship equally in some fashion (e.g. money, time, chores, etc.).

Two working couples:

- Two incomes

- Shared health plan (more expensive but less than 2x single?)

- Shared apartment (more expensive to support two occupants but less than 2x single?)

- Opportunities to reduce duplicated expenses when possible: e.g. single set of furniture, single car, joint loans (e.g. mortgage + closing costs), repairs, etc.

If one of the partners is not working I believe there are still advantages but they might be harder to quantify. Even if it means cutting out one of the incomes, having a time-available partner can be advantageous in other ways. Time to cook vs. eat out (more cost effective), organize bills, find discounts and deals (e.g. credit card churning for saving ~1k-2k a year on flights), organizing activities to maintain health, arrange doctor visits for preventative care, etc.

Obviously, this equation changes when one is a dependent but if both are independent and work together I feel that the math would favor couples.

I think OP refers to unjust divorce laws. With over 50% marriages ending in divorce, headlines like [0] make marriage sound like a really bad deal.

[0] https://www.theguardian.com/law/2015/mar/11/woman-wins-right...

Sadly (for justice), she received a mid-6 figure award eventually: https://www.telegraph.co.uk/news/2016/06/10/millionaire-tyco...

The also escape the cost of high cost signalling.

Getting married was the best thing I ever did.

- double income

- motivation and accountability

- kids

- delegation of responsibilities. You don't have to do everything yourself.

50% chance of being totally destroyed financially. But it surely doesn't hit you because you are special.

Elaborate.

The divorce rate hasn’t been 50% for all marriages in a long time, and that was always inflated by second, third, Nth marriages.

The current divorce rate for first marriages where both partners have a bachelors is around 10%.

I suspect it has little to do with education. It’s more about not doing the “traditional“ marrying a high school crush to get laid/because you got knocked up, taking time to learn who you are, and dating around to find the right partner.

The thing I don’t think these statistics always reflect is the societal changes over the decades. Why people marry, when they marry, ease of divorce, the effects of widespread divorce on upcoming generations, it’s all changed enormously over time.

I agree with all of this and had similar marital benefits. It’s still a risky proposition. I dated for 7 years before proposing and we had lived together for a few years and I was in my thirties by then. Not saying this is the best recipe. But I think it’s just not something that should be rushed. When I hear about people meeting and being engaged a year later I just can’t fathom that working (I know it can and does, but I think it introduces a ton of risk).

and tax discount for families as well

This advice is 50% wrong. You should marry very rich or never get a divorce. For many people marriage works very well as they will tell you proudly.

On the other hand this advice is 50% right if you ever do get a divorce. Those things are so expensive and leave a huge hole behind. If you were the primary money earner you are likely to pay for years.

If i could go back the best financial advice i would give to my self is:

Earn more spend less.

LOL the best investing advice everyone in this generation ever got is "buy bitcoin" ... and not one of these clowns said it (before OR after the fact!)

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