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Comment by CPLX | Hacker News Reader

Yup. I see this kind of logic in personal finance discussions all the time but it's bullshit. There simply aren't any spending decisions you can make that will change you from not wealthy to really wealthy. Those things can just move you from poor to middle class at best, or to a better level of middle class.

Outside of real outlier status where you're paid really, really large amounts of money for your services (like notable entertainer or cardiac surgeon) the way to wealth is to own the means of production. Period.

Same as it ever was.

View on HN

It can give you the breathing room to actually _do_ something that can change your status and allow you to have a decent shot at "own the means of production", though.

I've probably had hundreds of conversations with people who will say "well, not everyone can afford to move town" or "not everyone can afford to take a week off work" or whatever else.

That's an enormous handicap - you're basically a slave to your current job, and if it tires you out enough that you can't train/learn/do other productive work outside of it, then you're stuck.

Personally I grew up with essentially zero, and pretty much self-enforced level 1 upon myself until this chart would have me at level 4.

People talk a lot about how certain startup founders aren't really risking anything because they start out with a safety net. You can create that safety net for yourself, with a little luck along the way, provided that you're sensible.

"not everyone can afford to take a week off work"

even if you can, financially, it's often hard to do so mentally/emotionally. if you're taking time away from work, that means no income - whether you desperately need it or not may be immaterial to the mental state you've built for yourself.

I think that's the point of the article.

If you have 4 weeks' worth of spending saved then it's difficult.

If you have 40, then it's fairly easy.

If you have 400, it's trivial.

well.. I was getting at, it still can be mentally difficult to pry yourself away from it, even if you financially can 'afford' it.

Tell me about it. I have over 25 years worth of living expenses and still haven't gotten the nerve to just get out.

that's sort of what I'm getting at. what's holding you back? I'd like to think if I had 25 years... yeah, I'd just stop and do .. well, I'd probably do what I do now, but less of it, and be more picky, and travel more.

as it stands, I've got perhaps... ~5 years of living expenses saved up. Certainly enough to not worry about a few days of non-income, but it's.. certainly not FU money. 25 years of expenses lined up seems like it might give you more breathing room, but, I suspect your comfort level and goal posts move.

when I was in big debt, I thought "man, just having $1k in the bank will make all the difference, and I'll be fine". and when I got there, I was 'fine' for about 10 minutes. Then the goal was $2k. Then 5. Then 10. Then 30. And so on. For me, there's a realization that it's moderately hard to earn and keep that money, and that it can be reduced rather quickly, so.... keeping earning income is still top of mind, at least for another few years.

5 years is certainly FU money to me.

You really think you couldn't walk out of a job and find another one in a few months? Will you even notice that drop in savings aside from as a theoretical number on a spreadsheet?

It sounds to me like you have a complex about this rather than it being in any sense rational. (I don't mean that as an insult at all.)

5 years is less than the amount of time it took for me to go from a skint teenager in a dead end town, to a graduate with a full time job.

in my case, much of it is tied to equities (retirement account is a portion, taxable account is other). straight cash - probably ~12-14 months. Having lived through a couple of crashes, the idea that 30% of that could be gone (for a long time) still looms.

And yes, it's sort of a complex. I have to remind myself that yes, I can pay the extra 50c and get cheese on the burger if I feel like it. I'd lived 30+ years without being able to do that (meaning that adding cheese a few times would be noticeable at the end of a week), it's a hard mental state to break from. Not 'working' means ... a day where savings isn't going up, etc.

Replenishing the spent money is simultaneously both easier (larger savings tends to grow in larger chunks) and harder (takes longer to earn new money vs the compounding of earlier money, and takes more of the remaining time I have left, which is always depleting).

I'm not claiming it's entirely rational, by any means, and that's why I was saying earlier that it's hard to break out of.

EDIT: I've always taken FU money to mean... you never have to engage in any sort of 'work' ever again, not just for a short time. In some ways, I've been able to use this cushion to say "no" to some situations/jobs/projects that I would have agreed to before, but it's not the same as saying FU to people. :)

Fair enough. This is definitely a personal thing though.

I was like that for a while and went all in on FIRE type stuff.

The thing is that eventually, after I did take off that N months, I realised that it's unrealistic to assume I'd have no/almost no income for multiple decades.

I would go insane without having productive work, even if that were working for a non profit for a significant pay cut.

> Not 'working' means ... a day where savings isn't going up, etc.

This is true regardless of how much money you have. You're always going to be able to add some more income by performing labour, even if your investments outperform your labour after a point.

It's worth loosening the straps at some point, even if you just give someone else the money to spend (e.g. charity).

> "not everyone can afford to take a week off work"

Being in a country where vacation time is paid by the company (currently 7 weeks / year, even if I usually don't use up all of it), the idea that taking a day off work means less money at the end of the month is mind boggling.

I'm talking about taking a week _off_ off.

For example leaving one job and having a gap before another one, or getting sacked and having a few weeks without work, or moving town before you have something lined up, etc.

Basically, being able to function without income for a nonzero period.

I wouldn't want to use my holiday weeks looking for work more than a few times in my life even if I have quite a generous allowance (well, generous by 'normal people' standards, I find the idea of working >80% of the year quite odd)

Being in a country where I can negotiate with my employer as to vacation time in respect to my salary, the idea that someone has to have accept minimum of 7 weeks regardless of circumstances is mind boggling.

It's because, absent that protection, workers on the weaker end tend to get squeezed down to very low PTO whether they want that or not.

[EDIT] weaker end in terms of ability to negotiate—so, the vast majority of workers.

Unfortunately what often happens is that this law applies only to full time workers at some cutoff (e.g. 30+ hours a week). If the cost of full time is too high (e.g. 7 weeks paid vacation for a low skilled job), the employer would be more likely to hire more part time workers. And you would see people working multiple part time jobs rather that a full time job. Some of those workers would likely be willing to forgo a generous benefit like 7 week vacation for the opportunity to work one job.

There must be a lot more people who think the law's helping them than harming them, or it'd be changed. Might take time, but those sorts of laws have been common all over Europe for quite a while and I don't see any especially strong movements to repeal them, or even reduce the days off per year, despite incentives for businesses to attempt to drum up or encourage (at least, surely, not to oppose) such a movement, if possible, which one would expect to make such movements significantly easier to start and grow, if they had much popular support at all.

I agree that it's not a popular opinion, but with these sorts of things the unintended consequences are not very visible. The people working part time may not realize it may be due to this affect.

It's also interesting to look at percentage of workers that work part time by country. US is relatively low at 22% while countries with a more generous welfare state are higher (France 39%, Norway 48%)

But there are a million other things going on as well so I'm not sure if it's related to that or something else

https://data.worldbank.org/indicator/SL.TLF.PART.ZS?most_rec...

Well, the legal minimum is 5 weeks (congés payés), but I got also 2 more weeks, called RTT because the maximum number of weekly worked hours is 35h and it's expected that I work more than the 35h maximum per week, so the additional days off are to compensate for this (and since we're not paid by the hour, we can't just get overtime).

What has this offered to your country? Why doesn't it have it's Amazon or SpaceX? Why is the Linux Foundation here? Why are the salaries in the most unregulated or frontier markets the best in the US and not in Europe?

Mandating a week off for everyone doesn't seem to give the space needed for poorer people to become as wealthy as they might deserve. What can be done?

Agglomeration dynamics, a great higher education system, 300M+ people who share the same language, and a common market go a long way. Cheap finance and government support (defense spending) also help.

If you want to attribute America's economic advantage to hours worked or labor regulations (and yes, they do matter to an extent), you have to be ready to explain why Russia, Mexico, Greece, and Chile aren't also economic powerhouses.

Source: https://data.oecd.org/emp/hours-worked.htm

It's not obvious what can be done. Efforts to distribute the wealth (post WW2 style) will most likely lead to capital flight, and you guys have a gargantuan mass media machine devoted to making sure this kind of thing does not happen to begin with. America is experiencing advanced regulatory capture and the solutions were needed decades ago.

My personal conjecture is that you're in for a long period of degradation followed by something violent. Fascism most likely.

Sad, but likely true. It would appear as an observer that facist ideals are on the rise even in the youngest genrrations, but that may be simply me noticing it more.

Yes, unfortunately. It doesn't help that Americans are culturally unable to process the idea that we are not "the best" even in the face of overwhelming evidence to the contrary.

Those are ridiculous claims. Do you have any evidence do back up your claims that having no minimum number of legal days off is related in any way to prosperity? Proof from almost every other OECD country says no.

Even if you don't need it, you really probably do. A lot of people talking about entrepreneurship and whatnot have some kind of blindness to the idea that one can fail at these things, and once you've eaten up your savings you're back at square 0 and back to the soul-crushing reality of job. Objectively it is wiser to simply keep the job in the first place.

Or they're just talking about different ratios of saving/spending.

As I posted below - the situation in which you have 40 weeks of spending set aside is radically different to that of having 4.

From my perspective, and I recognise things are probably very different in the USA with your health insurance catastrophe, taking a few months off work to unwind, or check out the job market, or whatever else every now and then is a completely normal thing to do.

My first software job came about because I left a job and bounced around for a bit. I had enough mental space and time to physically visit interviews without the sort of typical "pretend to your boss you're ill" stuff. Without that time I'd be somewhere completely different now.

50% of small businesses fail. 20% fail in their first year.

The real cost of failure isn't just loss of savings. It's potential homelessness, bankruptcy or death through less of health cover, or bankrupcty through student loan payments.

In a functional culture the cost of entry for small businesses is much lower, as is the Total Cost of Failure.

For a country that claims to be business friendly, the US makes it unbelievably dangerous to start a small business without the backing of a significant financial safety net.

This is something I think about a lot as an American in Canada. I can afford to stick my neck out in a lot of ways because, worst case, I still have healthcare even if I'm out of a job for 4+ weeks.

>Outside of real outlier status where you're paid really, really large amounts of money for your services (like notable entertainer or cardiac surgeon) the way to wealth is to own the means of production. Period.

This is a lazy view, or a really privileged one at least. I know a couple of people in their fifties who have retired from putting as much money into the market as possible (post-tax and pre-tax) while living modestly through their younger years. Having enough money to retire early is having wealth.

Views like the one you espouse are insidious because they give people a justification to stop trying and spend everything they make. Why not get the $1500/mo apartment instead of the $900/mo one? If you can't build wealth, what's the point in trying to accumulate it at all?

Having enough money to retire early is having wealth.

Sort of. There's two pieces to FIRE. Saving aggressively, yes. But also by learning to live modestly, you need less wealth to retire. So half of FIRE is accumulating wealth, but the other half is needing less wealth.

Exactly. At some point the decrease in annual spending converges with the increase in annual income, and that's FIRE.

It's not like people have to retire at that point either. The general idea is that they can do what they want and aren't tied to a specific field, career, job, and so on...

Right, I didn't imply that they had to retire. It's just that even having that option means you are wealthy. People who can live a middle-class lifestyle in the US without working are super fucking wealthy on a global perspective.

Are you aware of the fact that your anecdotal evidence from the fifties may no longer be pertinent?

Have you seen what happened to wages since then? To the cost of living? To the cost of homes?

"People in their fifties" not "People from the fifties"

FIRE is still a thing even today; for example Mr. Money Mustache talks about this all the time:

https://www.mrmoneymustache.com

Your point about wages stands, but even in the 50s there was no way the lower strata would have been able to retire early -- let alone retire at all -- or accumulate great wealth.

> To the cost of living? To the cost of homes?

COL and housing prices are not uniform. FIRE is going to be hard in San Fran even as a full-time Dev, but if you're making $85k in Des Moines it might be well within reason.

In their fifties, so born in the 1960s and probably started their retirement fund in the '80s or so.

(Not that things also haven't changed since then, but it is a pretty big difference.)

Big tunnel vision moment on my part.

Born 1968, never made more than $80k/yr until 2011, resigned 2014 (came back very part time because there's something wrong with me, 2017). Started saving and investing 1990.

Wow, learn to read.

>I know a couple of people in their fifties

You two are talking past each other.

There wealth as a token of who is winning some game: he who has the most $$$ wins (what I don't know - this is a religion question). You need to own means of production to win this game. If you are reading this, you probably have no chance of getting here, but is fun to dream about.

There is also wealth as in you don't have to hold a job to maintain your lifestyle. When you are young this is impossible (except for a few who inherit money or win the lottery), but if you live below your earnings and invest the rest well you can get to the point where you no longer need to work. (Some people choose to work anyway, others will retire)

> Views like the one you espouse are insidious because they give people a justification to stop trying and spend everything they make.

Nah. I think it's views like the one you're espousing that are insidious, because they present the illusion that the difference between normal people and the genuinely wealthy is just a matter of some personal self sacrifice, rather than a set of fundamental policy failures that have lead to a collapse of social order and rising inequality.

Of course it's better, for them, if the masses are focused on index funds instead of the abusive effects of concentrated financial power on the middle class.

> between normal people and the genuinely wealthy

Ah, the convenient goal post shift to imply that people who retire early don't have wealth. Wealth is now redefined to mean "an amount of assets large enough to make a convenient political out-group".

You are completely discounting the power of compounding. Saving every penny won't make you rich in a year or even in 10 years. But think about 20 years in the future. Think about retirement. Every extra dollar that you put into your 401K will make a meaningful difference on how you retire in 20-40 years. Here's one real example for you: 96-Year-Old Secretary Quietly Amasses Fortune, Then Donates $8.2 Million - https://www.nytimes.com/2018/05/06/nyregion/secretary-fortun...

Yes, it's a really good idea to live within your means and start saving early for retirement. No, most people who are young today will not be able to save anything like $8M doing that. Some things that are exceptional about the woman in this story:

* She worked 67 years at the same job.

* She invested in individual stocks, mostly during a period when index funds weren't available. This lack of diversification is almost unanimously not recommended for regular people because the vast majority of people who try it dramatically underperform index funds. But if enough people do it someone will dramatically outperform and you'll read about them in the paper.

* It sounds like she lived more frugally than most people would find tolerable.

* She lived in a rent controlled apartment, meaning her rent was probably closer to free than to market rates for much of her life. Needless to say, this subsidy isn't available to young people today.

* Presumably she avoided major illness or other setbacks during her long working life.

* It's also possible that she had an inheritance or some other significant source of income besides her salary.

$1M or $2M in inflation-adjusted savings is probably a realistic goal for a middle class American to have for retirement after a long career and prudent investing. $8M is not.

> * She invested in individual stocks, mostly during a period when index funds weren't available. This lack of diversification is almost unanimously not recommended for regular people because the vast majority of people who try it dramatically underperform index funds. But if enough people do it someone will dramatically outperform and you'll read about them in the paper.

Sampling biais: there's no going to be any article on the people who lost all their money doing this

>* It sounds like she lived more frugally than most people would find tolerable.

Sounds like an issue with most people.

>* She lived in a rent controlled apartment, meaning her rent was probably closer to free than to market rates for much of her life. Needless to say, this subsidy isn't available to young people today.

The subsidy is available via home purchase. Fixed-rate mortgage payments don't increase over time.

Property taxes do.

So does property value. Occasionally one, or both, of those goes down, too.

> $1M or $2M in inflation-adjusted savings is probably a realistic goal for a middle class American to have for retirement after a long career and prudent investing.

I wonder what fraction of the population reaches $1M in retirement fund by the time they retire. If 401(k) median balances by age are at all accurate, then the answer seems to be "very few."

Aside from working the same job for decades, it wasn't just any job; she wasn't a secretary at a dentist's office:

> In 1947, she joined Cleary Gottlieb Steen & Hamilton, a Wall Street law firm, where she worked as a legal secretary for 67 years and observed the investment strategies of the lawyers.

> “She was a secretary in an era when they ran their boss’ lives, including their personal investments,” Lockshin tells the Times. “So when the boss would buy a stock, she would make the purchase for him, and then buy the same stock for herself, but in a smaller amount because she was on a secretary’s salary.”

So she was likely a reasonably well paid secretary at a wall street legal firm that would have access to the best financial advice available.

Also, as far as I can tell from the article, she was married but didn't have any kids.

> Also, as far as I can tell from the article, she was married but didn't have any kids.

That's huge. Kids are expensive (and the risk they expose you to, economically, is truly enormous) and that money tends to come out at the younger end of one's years, and when you're earning less, just to compound the pain (and maximize the opportunity cost).

Here's the thing: if instead of spending your money, you invest it, guess what you end up doing with that money? Owning the means of production. Period.

A bit confused by this - you're now not actually buying anything that produces anything. I guess you could argue it produces more money, but you have no control over those things - you can only choose what you invest in, but have no control over how those things perform. Otherwise then savings is owning the means of production, given that you're still making money with it.

If you buy one share of Toyota Motor Company, you are now a part-owner of a car company, including all the factories and equipment and supply contracts and whatnot that such a thing entails. Owning stock literally entails “owning the means of production”. Buy some stock today and become an evil capitalist!

So only if I buy direct? Not index funds?

Index funds too. What do you think index funds are investing in?

(assuming you're asking in good faith)

It's the same thing, just on a different scale. If you own, say, one share of VTSAX (Vanguard Total Market Index) you now own, by proxy, 1.8% of one share of Microsoft stock. You don't have any direct voting or economic rights but because of the way a mutual fund is structured you get most of the economic benefit of that fraction of a share. I.e. you get the benefit of most of the capital gain and dividends that it distributes.

I would personally say that if you want to actually "own the means of production" then directly owning shares is the way to go, but if you don't actually care about making decisions for specific companies then you get most of the benefits without any of the day-to-day thought and worry by owning shares in a mutual fund.

I still don't know how that equates to actual ownership of anything - it seems like an incredibly abstract form of ownership, as you get no power, don't share in the profits (if you don't get dividends you only get cash if you sell, that price being only vaguely linked to the current success of the company), and can have your ownership watered down at any time. You own the stock, but that seems incredibly distant from any "means of production".

Yeah it’s pretty abstract. One correction, you definitely do get the dividends that a company pays if you own them through a mutual fund. Funds report their net asset value (NAV) every night and when a company pays dividends it raises the fund’s NAV. US funds are required to pay out dividends to their shareholders as part of their tax status (basically a very specific type of non-profit).

> If you buy one share of Toyota Motor Company, you are now a part-owner of a car company, including all the factories and equipment and supply contracts and whatnot that such a thing entails.

Assuming this is not specific to Toyota, what does "owning" mean?

If I own one share of a company, it's incredibly rare that I have any say on any of the things you listed above. I usually do not get to vote on those. I also do not have any rights to the profits (in the US, but I doubt this is US specific). So in what sense do I own it other than the company writing me a piece of paper stating I do?

I mean, if I'm part of a joint venture with others to own a 100 unit apartment complex, I would expect to get some of the profit, at least. Likely about as much as my ownership stake. Shares do not guarantee this. A company can be very profitable, and just keep the money and pay you nothing, saying that "we think the value of the stock will go up and you can get paid that way."

I'm not anti-stocks or anything - I own plenty of them. But people should understand what they are and what they are not. And for most English uses of the word "own", it is not ownership.

> I mean, if I'm part of a joint venture with others to own a 100 unit apartment complex, I would expect to get some of the profit, at least. Likely about as much as my ownership stake.

You might want to look into REITs.

Yes, REITs actually are required to distribute income to shareholders - unlike company stocks.

You own companies (stock) that produce things. It is true you have no active involvement or control over the business itself (unless you reach activist investor levels), but this is often a positive thing.

You own a portion of a company, but that portion can be watered down at any time, no? Can't a company produce more shares and disseminate them at any time? I know that conceptually you own a portion, but it's so watered down and abstracted it seems like a far cry from actually owning anything that actually correlates to an actual means of production.

No which country do you live in thease are not US employee stock options but real stocks.

There strict laws about that sort of things even more so in places like Germany and the UK

In the US:

1. You are not entitled to any of the profits of the company by owning stock. Not even if you own preferred stock.

2. You have virtually no control over decisions the company makes. And your vote may not count as much as someone else who has the same number of shares as you. Furthermore, you can have no voting privileges at all as well while owning stocks.

3. A company can devalue the shares you own by simply issuing more (similar to governments printing money).

Not only is all this legal, this is normal. For the average person, the only real reason to own shares is to hope the value goes up. In a few cases it is to get dividends from the companies that have a track record of paying out, but the RoR is not particularly good.

1 not sure what you mean I am entitled to the dividend on the Shares I own (RDSB)

2 Well multiple share classes are dodgy that's why the LSE doesn't like them and you get kicked out on the index for that

3 Are you sure US companies can do this without passing a motion at an AGM to disallow premption rights ?

>A bit confused by this - you're now not actually buying anything that produces anything.

I suggest you look up what stock ownership means. Most wealthy people only own non-controlling interest in most of their investments as well. If you own a share of stock, you own part of the means of production.

I understand what a classic stock was - it just seems so abstracted now, it doesn't feel like it's an equivalent. You aren't sharing in the companies success directly, but now there's layers of abstraction and speculation and gamification that it appears that stock success is only tangentially related to company success.

> I suggest you look up what stock ownership means.

Stock ownership traditionally means partial ownership of a business.

Except that you almost have no decision making power unless you own a lot of stocks, and that's not going to happen while working a simple middle class job.

It also doesn't mean that the company will pay you a portion of their profits. It is entirely up to the company whether they want to pay you a portion of their profits.

So you own something, but have absolutely no rights to the profits and practically no decision making power. In the spirit of the usual definition of "owning" something, you do not own anything with stocks.

Do you own stocks?

If you don't, and your reasoning above is the reason why, I strongly recommend you reconsider. There is more to be lost by fearing your lack of control and failing to invest than there is by investing, in say, index funds.

You're the second or third person assuming I'm advocating against stocks. Why do people keep assuming this from my comment? Nothing in my statement suggests owning stocks is a bad idea.

I own stocks. My wealth portfolio is high in stocks. This has little bearing on my comment. I'm not recommending against stocks - in the US I've not found a better investment (real estate is worse).

I'm simply pointing out that the notion of ownership in a company via stocks is very different from what most people imagine. You own almost nothing, and you have virtually no control over the means of production.

Your point is? a lot of the USA's railroads where funded by Investment trusts based in London and Edinburg which had small middle class investors going back to the 19th century.

The point is that if you want to "own the means of production", as was discussed somewhere above, buying stocks as a middle class investor is not going to get you there.

By that notion, most wealthy people do not own the means of production either. There are billionaires from hedge funds that own no controlling interest in any companies.

Partial ownership is still ownership.

My portfolio works for me 24x7, doesn't complain, doesn't send annoying emails, bother me after hours with an "emergency", or cause loss of sleep. I am highly diversified with index funds. You want to "own a lot of stocks"? Start a small business. Your stock starts off worth nothing, and probably stays that way.

I am having trouble connecting your comment to mine. Perhaps you replied to the wrong comment?

No, I replied to the correct one. I am pointing out some of the benefits of stock ownership and "no decision making power."

I suppose if you want to point it out to others. I'm well aware of them and own plenty of stocks.

> So you own something, but have absolutely no rights to the profits and practically no decision making power. In the spirit of the usual definition of "owning" something, you do not own anything with stocks.

I would disagree.

I can sell those stocks I own and (hopefully) get more money than I paid for them. Sometimes they pay me a dividend too (share of profits). Sounds like ownership to me. I don't care about decision making power within the company. I LIKE that I have delegated that responsibility.

What happens if you bought Enron?

It's well known there are risks, and not all investments work out.

> like notable entertainer or cardiac surgeon

Google says cardiac surgeons make $400-800k, assuming that's true a very talented engineer at FAANG can easily match this (staff or senior staff level) without being mired by an additional 10 years of school. I personally know engineers making 7 digits in liquid compensation. Obviously these are not your average engineers, but it's doable if you're the 1% (to be good enough for FAANG) of the 1% (to be amongst the best at FAANG) of engineering talent - so this isn't most people.

Just throwing it out there because I imagine most readers here are engineers and you make it sound like it's an impossibility for any of us. I bet at least a handful of readers here are engineers making over $500k.

It's not an impossibility. Nothing is an impossibility. We are all temporarily embarrassed millionaires and most of us are temporarily embarrassed for life.

You also need to consider that the median tenure at these type of companies are 2-3yrs[0][1][2] (1.1 at google!). In my experience that's not enough to get the full stock grants.

So even from those that could make it very few stay long enough to make these great riches your imagining.

[0] https://www.payscale.com/data-packages/employee-loyalty/full... [1] https://www.businessinsider.com/average-employee-tenure-rete... [2] https://brobible.com/culture/article/how-long-employees-stay...

The average tenure is short not because people are getting fired for underperforming. It is short because 1) a lot of people get hired with massive YoY growth even for their size, and 2) people leave to earn even more at other companies in which case they’re still getting the compensations discussed here.

Google and I believe Facebook have uniform monthly vesting, so these figures are accurate for any amount of tenure.

TC is not computed using the total value of your grants, it’s based on the amount that will vest over the course of a year. Yes, that means there are engineers getting grants of $2m+ over four years (putting TC around $700k+)

I'm not imagining these numbers - I've seen offers from Google and I also know what I make (as well as what many of my peers make). Standard procedure is for vesting to start pro-rata after 1 year, so even the short-term Googlers you mention would hit their $500k+ annual targets. As another commenter pointed out, I am talking about annual stock, not total.

The most accurate source for compensation I currently know of is https://www.levels.fyi/

Yes, very reassuring for the remaining 99.98% of us, I'm sure. Besides, while it's still a great salary, cost of living for most of those people is insane.

I seem to remember some one on here recall hearing a couple of transplant surgeons comparing notes where the comp was measured in millions.

I could easily believe that. I just went with the data I had. If you can find a source please share.

There are 4000 Cardiac Surgeons in the USA.

Do you think there are 4000 engineers that make over $500k?

I'm not sure what the point of this comment is, but I believe there are many, many more than 4,000 engineers that make over $500k. I'd guess it's an order of magnitude more. I bet well over 1,000 engineers just at Google alone make over $500k. Then you have the rest of FAANG, the unicorns, high frequency trading, and other industries known for paying extremely well.

Engineers at Google can make over $500k starting at the staff level, so I think my estimate of 1,000 is pretty conservative considering the company has over 100,000 employees.

https://www.levels.fyi/

I really think this logic is more about avoiding spending decisions that can change you from middle class to poor rather than the other way round.

Gotta disagree, I have personally watched people spend away 2-300k a year for decades. It's easily millions, especially considering the ROI of the markets since the 80s.

I would argue that this overlooks the factor of time and compound interest. Lets say I make 60k a year and am 25 years old. If I am living paycheck to paycheck due to bad choices (partying, eating out, etc.) and then I switch my spending habits and can now live comfortably on that 60k and I can save / invest. Lets say my take home after taxes and health insurance (32% reduction) is $3,400 a month. If I can invest $1,200 a month of that, and assume a safe 7.5% return by the time I retire at 67 I have ~$4 million which is considered wealthy, but not really wealthy.

But yes in the short term the only way to gain wealth is to earn more money.

Edit: This assumes a perfect scenario, 98% of the time, that person making 60k a year ends up on social security barely making it at 67.

42 years in the future your $4 million has deflated in value to the equivalent ~$1.4 million worth of buying power today assuming 2.5% inflation rate. Which isn't really worth much in the U.S., certainly not enough to recover from a major medical disaster.

GP was talking about saving $1200 out of $3400 take-home, which means living expenses are $2200/mo, or $26,400/year.

Let's leave things in "today's dollar" terms for simplicity: A 4% annual withdrawal from $1.4M would be $56,000, or a big upgrade over $26,4000.

A 4% annual withdrawal from $4M is $160k. But as you say, it's the equivalent of $56k today.

saving your entire salary won't make you as rich as Jeff bezos, but the end of your life will look a lot different if you save $1000 every month instead of $500.

if you have any disposable income, you can save for a decent retirement. it's useful to have a framework for deciding what indulgences you can pay for in the present without crippling yourself in the future.

Well, there are always ways to make yourself more wealthy. You spend less on consumables and spend more on investments.

People who typically become extraordinarily wealthy do so via high-risk, high-reward activities like business ownership.

Now you can argue that the risk reward equation isn't the same for people who have 20 million in the bank and 200 dollars in the bank, and that is very true, but it doesn't make the advice to spend as much as you can on investments incorrect.

No, but you can change your spending habits such that you can save up an emergency fund. That will give you some breathing room in case something happens. This alone would be a game changer for most people.

Exactly, we can't even save our way to retirement (we need to invest), let alone expect frugality to translate to wealth. If you aren't in business for yourself, pay raise is the way up.

> pay raise is the way up

Not if the person spends it all, like they did the earlier lower salary. Better beer, bigger TV, new cars, etc and you can easily blow through quite a decent raise.

Sure. But ultimately, spending it is what it's for.

i feel like by definition spending decisions only make you less wealthy.

Saving money, even from a salary job, gives you the breathing room you need to take economic opportunities. For example, if you save a year of expenses you can start a software business without external capital or connections.

Most of the paths from middle-class to wealth involve avoiding frivolous spending.

Yes but if you borrow like a maniac from credit cards and default on everything and live in a van but still start a successful software business you still get wealthy.

My point being that actually owning that successful business is the mechanism for wealth. Avoiding frivolous spending can be very, very helpful to achieving that status, as you point out correctly, but it isn't actually the status itself.

This article and many others seem to be unable to make that key distinction.

If you default on everything assets such as that successful business will be reclaimed by the creditors/government, of course this depends a bit on where you live but for instance in Sweden if you default you're required to live on minimum living expenses for five years, any assets you amass over this minimum living value will be claimed by the government.

> you still get wealthy

Do you think the bad habits go away just because you succeeded? That’s not how life works, and the evidence is people who win the lottery.

> Yes but if you borrow like a maniac from credit cards and default on everything and live in a van but still start a successful software business you still get wealthy.

What happens if the software business doesn't succeeded to the extent that it dwarfs the level of debt? What if it doesn't succeed at all?

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