Hacker News Reader

Comment by dkokelley | Hacker News Reader

I like the part about waiting one year before making any major life changes. It makes sense that you would be more risky with new found wealth immediately after acquiring it. Giving yourself time to "get to know" your money should help put things in perspective.

View on HN

I like that part too but it might be simply too strict. The point is to keep lifestyle changes reasonably small during that first year. Replace your old car worth $10k with a new $40k one (but not $200k) and don't buy many cars. Move from a $0.5M apartment to a $3M home (but not $15M) and preferably rent it for now, you will have better idea what you really like to buy after that year. There's no reason you couldn't get some reward for your hard work - but you need to make it small to don't fall into spending spree.

Imagine an Amazon delta dweller who suddenly got a $50K estate and moved to Miami. The choices of goods and services are nothing like he seen before, and their cost is nothing he can relate to. He might overpay a lot, tip too excessively, get things he doesn't need and do not invest into services that are truly necessary.

Which I think was the point of the advice, take a time out to figure out the value of things in your new price range.

I think the most you can push that rule is repair. If you were not quite satisfied with your apartment because it doesn't have in suite washer/dryer, go and pay an extra $100-$300 a month and get one that does. Get those small things that are cheap, but not really justifiable and reduce your stress level.

Back in 1999-2000, I knew a guy that sold his website about $20m (a few million in cash, the rest in stock of the buying company). Within a month he had spent around $3m on a new home and his wife had a $20k/month shopping habit. It was then things got ugly---the tech market crash, legal problems from the sale of his company and a high maintenance wife. From what I've been able to find, he no longer has the wife, the house, a company or the money.

So yeah, I can see waiting a year before any major lifestyle changes.

I was with you until the home (although I wouldn't spend that much on a car right away either - miserly college days habit). Sure, you can update your beater car or move out of that bad neighborhood. If you're living in an environment that is hostile, dangerous, or just unhealthy then by all means improve your situation, but I can't imagine many people who suddenly earn millions who are in a housing situation that justifies a $3MM upgrade. I think it might desensitize you to the power of your new wealth, and set you up for trouble down the road.

Reply on news.ycombinator.com