I got rich on the other hand (2019) | Hacker News Reader

I got rich on the other hand (2019)

sive.rs

47 pointsdamir91 comments

Until you get sick. Or your loved ones get sick. Or any of a thousand other things happen for which our society has no safety net.

Make more than you spend is indeed very good advice. But the bullshit stories that the wealthy tell themselves about themselves never cease to amaze me.

I'm amazed most people in the US are so concerned about healthcare costs, it factors in when calculating relative wealth.

What is going on there?

People with health insurance in the US typically get it through their employers. If you get sick enough to miss work for extended periods of time, you get fired.

People will say “that doesn’t happen!” Happens all the time. Or they’ll say “but COBRA!” Sure. And without a job, you’ll be making those large premium payments.... how?

I enjoyed Derek's writing while I ran my own business, but he's forgotten the difference between having millions of dollars in the bank and living comfortably, and living hand-to-mouth with the tiniest of buffers. He's literally confused the two.

This bit is impressively tone deaf:

Once I had $12,000 I could quit my job and become a full-time musician. I knew I could get a few gigs per month to pay my cost of living. So I was free.

I bet loads of musicians knew that in January 2020 too! (also what freelance musician can get good US health insurance?)

Such helpful advice to the people living paycheck to paycheck. Just spend less money! Why didn’t they think of that?

Perhaps if more rich people would explain it to them, it would help them understand.

I don’t mean to be rude but I am genuinely confused why this is interesting? The author is saying: “to be rich, save more than you spend”. Isn’t this obvious?

He said'the moment you save more than you spend you are rich' this is not obvious (and not true). Really rich means if a unsuspected big expense (medical bill e.g.) you can afford it.

I know. Also saving $0.01 after all expenses per month isn’t great either. I at least gave the benefit of the doubt and thought maybe he meant FIRE and the 4% rule eventually. But still, this is all kind of obvious and the story doesn’t seem particularly profound. Maybe I am missing something.

There story is later in life he got really rich, but if people ask him about it he gets into guru mode and claims he was rich before. Mildly interesting for the arrogance.

He's the guy who built and sold CD Baby. The way he did that is actually quite interesting (including the odd ownership structure he had to navigate) and he has lots of interesting things to say. But few people say only interesting things.

And when generally interesting people say some incredibly boring things, people treat them as still interesting in some weird afterglow of the other things.

So this post is entirely halofied by his other stuff. This is self help guru shit. Which is fine, right? He's writing the blog perhaps for himself and we may not be the intended audience. But that's what it is.

Oh right. I hadn’t heard of him so I just read his words without context of who he was. To be honest, we should all try to separate the author from the words.

> When I finished telling my friend this story, he asked for more. I said no, that was it. He said, “No, what about when you sold your company?”

I said no, that didn’t make a big difference in my life. That was just more money in the bank. The difference happened when I was 22.

Yeah I think I get what Derek is saying. However if I was his friend, I would also be unsatisfied by this answer. It feels like Derek should know what he's asking and is being obtuse.

Likewise

> It’s not how much you have. It’s the difference between what you have and what you spend.

is in a real sense very true, but it's also vacuous. The more you have, the less effort is required to have a big difference between what you have and what you spend.

In my opinion Derek's friend was probably framing this question in the sense, "How did you end up with so much?" and not, "How did you end up with such a great burn rate?"

He knows he is being obtuse. Its the guru mentality.

I think he's being obtuse too :). The guru mentality is a good way to put it. It also drove me nuts when Dumbledore gave a thought-provoking non-answer to Harry when he asked, "Is this real or is it happening in my head?"

There's a time and a place for Enlightened perspectives, but if my friend answered me the way Derek did I would find it kind of patronizing, personally.

Small lessons once learned are what often underpin the big lessons and achievements.

Weird he left out the fact his dad lent him money to start the recording:

https://sive.rs/mistake

I don't know who this person is, but this is a story that can only be told by a rich person, or someone who's family has money.

How do I know, because he isn't worried. You see when you are poor, or have been poor, you have this persistent worry that something bad is on the horizon, that the good times are going to come to an end.

It take real privilege to not have worry when you are just barely scraping by.

Was his plan to do the same few gigs a month for the rest of his life? Into his 70s and 80s? What if something happened to his hands, and he could no longer play? I'd actually love to quit my job now and only do enough work on the side to break even every year. But I wouldn't be able to sleep at night knowing my life was a ticking time bomb that could blow at any second.

Reductive gibberish. It would be more accurate to say once you are earning more than you spend while spending as freely as you want you are rich. Maybe he forgot that eating pb sandwiches all day doesn’t feel real rich.

That's cool as long as you don't care about having kids, a spouse, a house, ...

My one question: how did he make it to 22 without any debt? I had $5,000 in the bank at 18, but at 22 I was about $50K in the hole because of college. I know I shouldn't have worried about it because monthly payments were low and interest was low, but it felt crushing, and if I was saving $6k per year like he did, it would take me 12+ years to have "$12k in the bank and be free".

Scholarships maybe?

Or generous parents.

Or ... no college, because he's a musician?

Ah, no. Berklee.

Community college can shave off two years of tuition.

Not staying in dorms and instead commuting from home can shave off thousands of dollars in rent.

Working part time is enough to pay for the rest, unless it's a private college with enormous tuition.

Many people don't go to college. It's also good to remember that those who do go to college wind up with (on average) dramatically more wealth, regardless of student loans.

Stereotypically, these “I got rich early, anyone can do it, all you need is grit” blog posts have an unstated “...and wealthy parents.” This one seems to be no exception; the author’s parents had a family business that could casually loan him $20,000 to record an album <https://sive.rs/mistake>. Eating peanut butter sandwiches for three meals a day is a lot easier if you have that kind of safety net to fall back on.

Ah that makes sense. How I got rich was I was born to middle class parents who sent me to a private high school that taught me to work hard, and despite going into heavy debt for college, didn’t die from starvation or homelessness because every time I hadn’t eaten for a couple days or my bank closed my account and rent check bounced, my mom or a friend would lend me money to survive, and eventually some bets paid off. Not spending helps, but the family and friends were the dominating factor.

> author’s parents had a family business that could casually loan him $20,000 to record an album <https://sive.rs/mistake>

Boom! Great find. Amazing how behind so many Bootstrappy, Self Made Millionaire stories lurks the entrepreneur's wealthy family either 1. directly contributing money, 2. loaning and investing or at least 3. providing a roof and food to fall back on during rough times.

I think there's something to this but Derek is falling into a couple traps here - first the trap of good, pithy writing, and secondly assuming everybody else has he has.

I absolutely accept that learning to live frugally and no longer make the same old mistakes with money is a huge advantage. It's amazing how that can compound and no longer having to worry about money is very freeing.

But then there's the whole 'and never had a job again' bit and the implication that his further success was either immaterial or just an inevitable consequence of having saved some money or maintaining a surplus - obviously not the case for very many.

It's very well written and pithy but, like much of PG's writing, leaves you feeling like hands have been waved like windmills.

The headline is incorrect, the article is not a story about how the author got rich.

I don't get his analogy of 'sleight of hand'. If anything, sleight of hand is fooling yourself into thinking you are rich, when in all probability you are not, whatever 'rich' may mean to you, because it's not all about money. 'Some people are so poor, all they have is money' as the saying goes.

Also: certain monetary events in life do not automatically make you happy, as your foundation for that wealth has to be fundamentally sound. If you can't handle $1000 of disposable income correctly, then you can't handle a million.

I feel like people take the idea that an obsessive pursuit of more money won’t make you happier and then extrapolate that money has zero effect on your happiness. This simply isn’t true.

The amount of money you have plays a role in your happiness. Of course, the marginal value of a dollar will change immensely depending on how many dollars you already have and your stage of life, but it is a factor. It also really matters how much you have to sacrifice to make that extra dollar.

That first feeling for true financial independence is different for everyone, I guess. For me it's having enough to pay for unexpected medical bills and children.

Setting aside the merits of this blog post, someone needs to chime in with the relevant Dickens quote:

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

https://en.wiktionary.org/wiki/Micawber_principle

Interesting how many comments here bring up the inability to live modestly as a freelance musician and have health insurance in the US.

Amazing that this status quo is so widely accepted. And that pursuit of art for happiness and income is frowned upon (or deemed too risky). Meanwhile people are willing to waste their youth in unhappy menial jobs in order to have health insurance.

Why shouldn’t people be able to pursue art as work and have a doctor?

Because I don't want to pay for both my doctor and your doctor so you can pursue art. If that's the deal, then I'll go pursue art too.

Now we both need to hope that there are plenty of progressives out there who will go do real work so they can pay for our doctors, comrade. And not get mad at us wreckers who spend all day pursuing art.

Hate to break it to you but you (and your employer) already do pay for someone else's doctor. That’s how insurance works.

Hate to break it to you but what's being described is not insurance.

Insurance would be, "I work at a job and a pay a premium each month to a company that will cover my costs if I get sick".

The situation being described is, "I quit my day job to pursue art and can't afford the premium, but I still want someone to cover my costs if I get sick".

That's not how insurance works.

My point is that if you want to pursue a non W-2 job, you are on your own for health insurance in many/most states. “art” could very well be freelance programming.

With that in mind, how does widening the insurance group to include all (taxed) Americans make the situation worse for the average household?

AFAICT the only folks who benefit from the “I don’t want to pay my neighbors Dr. bill” argument are the insurance companies.

I would tweak the definition of rich provided by Sivers

Having more money than you spend for a year is not enough is not enough to be 'rich'. You want assets where you will always be able to generate more money than you need spend for every year that you live.

I think people read Siver's blog because he got to this tweaked definition of rich. This article does not seem to acknowledge that reality.

I don't think he answered his friend's question very well. All he did was describe how he made it to a point where he didn't need to worry about very small costs. That isn't "getting rich" in my definition, but merely becoming middle-class.

Relevant: https://web.archive.org/web/20030812081806/http://klausler.c...

I'm glad Derek never felt anxiety after he had saved up 12k, but I am sure that's uncommon. The article comes off as extremely condescending to me as a result, which I am sure wasn't meant but I am having a hard time not feeling.

My family is big into the whole financial independence thing, albeit at a much higher level of spending than this person. I think it's great to have such conservative needs, but I'm not sure it's practical for most people.

I guess we all have different things that make us happy. Is life about amassing cash? You need to decide what happiness means to you.

Its good to have goals. Its good to make plans to achieve your goals. What that means is different to everyone.

True yet by 'rich' most people mean a buffer above bare essentials large enough to weather most storms and indulge in some personal pursuits. Being one accident or medical bill away from homeless isn't what most people consider wealthy.

Most people misunderstood the spirit of the story.

There's another story on HN's frontpage today, that is highly related and correlated to this one: https://www.outsideonline.com/2401643/life-lessons-97-year-o...

I'll be honest this is a stupid story.

He's sharing a three bedroom apartment with two roommates. There isn't some beautiful moral to be taken here. what about when you have a family? What about when you have children? What about when you have a medical expense come up? Insurance is very expensive.

I hate these anecdotes that imply that you can just live simply in the United States and be happy. So much is left unsaid. Maybe this guy wants to live an ascetic life, but most people don't.

I understand that the idea of spending less can apply on varying scales, but this implication that you can just give up the material world and be a musician making minimum wage and be happy is silly.

Indeed the story implies it’s just you. The moral of the story is sound but unrealistic in today’s economy.

Especially since most people end up with a significant medical expense. Being poor doesn't cover even mediocre care in large parts of the US.

Or want a family or just have kids then the lower end of independent finances is much higher.

> He's sharing a three bedroom apartment with two roommates.

that was before he made a company and then sold it for $22m.

.... Which the story implies had nothing to do with his later happiness.

yes. the point is that fuck you money is a lifestyle, not a number.

What? Good for Derek that he never had any kind of unexpected expense that exceeded his savings.

Homelessness can be a lifestyle too, but most don't choose it. He could have saved more money in the same amount of time by sleeping on a park bench. We all have our limits.

it's funny to me how worked up people on this website are getting about a mundane platitude.

I think people worried about how much they feel they need to spend, are upset when "just spend less money" is presented as sage advice from millionaires on how to be happy. It's hard not to feel offended when the obvious implication from the advice seems to be that you are being frivolous and that's why you feel anxious and poor.

the point of the article is that he started spending less money -before- becoming a millionaire; that he became a millionaire -as a direct consequence- of spending less money, not the other way around.

Not sure if this is what you meant, but the point of the article is that he achieved the feeling of financial freedom that millionaires have by spending less money - "what it was like to get rich". I think there are pretty big differences between feeling like a millionaire and being one. And presumably the author does as well, because they kept many of the millions he got from selling his company.

Heaven forbid you or people you care about ever contract a serious health condition, a major car accident, or want to have children.

If that happens, then even being relatively rich won’t help you.

Let’s say I have 2 million dollars, but my three kids are born with genetic heart defects requiring 1.5 million in surgery each. Well, since I have the money, I will eventually be forced to spend it as insurance is limited, and government assistance prioritizes those with less resources.

Being rich won’t save you from disaster leading to poverty, it only makes things easier in normal life.

There is always the possibility of a wipeout event, but being relatively poor means than much smaller problems can have the same effect. For a recent personal example, I had a relative reach out to me, unable to make their mortgage because of a few thousands of dollars in unexpected hardship. I never lost sleep over it, but if I was fixated on my burn rate like this article suggests, that could have ballooned into a much larger problem of bankruptcy and/or homelessness quickly.

It's a matter of degree. This advice forces you to treat potentially minor unplanned hardships on the order of thousands of dollars the same way as 1.5 million dollar wipeout problems. My point is, if you have a great safety net and nobody else is depending on you, sure, fixate on your burn rate. But if not, this advice seems bad.

Ah, disagree, poor argument. That would only apply to the absolute far end of medical circumstances. The vast majority of medical needs cannot bankrupt a millionaire with insurance and using those rare cases to imply that having money doesn't make much difference is disingenuous.

The vast majority of normal circumstances are covered by having a job with medical insurance. And those normal circumstances can ruin people without insurance (e.g. a diabetic without insulin.)

As you say, the vast majority of normal circumstances won’t bankrupt normal people either.

It’s only an out of scope disaster that brings suffering.

Forgive me on the insurance bit, I was speaking from the context of a country which provides some healthcare to its citizens, regardless of income. Not many people, millionaires included think to have insurance that would pay out millions for rare circumstances.

Well, son, it was 1932. The depth of the Great Depression. I was down to my last nickel. I invested that nickel in an apple. I spent the entire day polishing the apple and, at the end of the day, I sold the apple for ten cents. The next morning, I invested those ten cents in two apples. I spent the entire day polishing them and sold them at 5 pm for 20 cents. I continued this system for a month, by the end of which I'd accumulated a fortune of $1.37. Then my wife's father died and left us two million dollars.

Haha did you just come up with this?

No, it's a famous copypasta/quote.

Nope, it is making circles from at least 1990s and possibly earlier.

> you can just give up the material world and be....

You are correct. The vast majority of people cannot pursue their dream life because they cannot give up their iPhone and other material things; we are a consumeristic society.

Frankly this is an ignorant comment, no offense.

This isn't about giving up your iPhone. It's about giving up your insulin, giving up your car that you need to get to your job, giving up birth control, giving up the daycare that takes care of your children so that you can go to your job, giving up dentistry, giving up repairing the hole in your roof that causes a leak into your bathroom, giving up your college classes, or giving up your children's college classes.

Think twice. Just because you have it easy doesn't mean everyone does.

There's iPhone and there's insulin. I talked about iPhone not insulin.

I am not the one making ignorant comment or logical fallacies.

https://owl.purdue.edu/owl/general_writing/academic_writing/...

Speaking as one of the few people who has no difficulty saving (to the extent I bought my first home without needing a mortgage), I have observed that there is a lot more going on than the occasional expensive item like an iPhone. Normal people buy a lot more of everything — eating out, holidays, films, clothes, subscriptions, everything — and do so continuously, not just on special occasions. I don’t know why I’m different in this regard, only that I am.

Still, if everyone engaged with the economy the way I do, the economy as we know it would collapse. I feel that my luck is simply in being different rather than anything else.

Like you, I am not "normal".

Today's economy not only is based on people buying thing they don't need, with money they don't have, to impress people they don't like; but also it is rooted to the core of the ID and Ego, it's a quasi-spiritual experience, and, like all belief-system, when challenged, it would bring out its ugly side.

Did you read the book: The Millionaire Next Door? You'd enjoy that. I bet your local library has it.

It meant he was free to be a musician and maybe that freed up time to learn to program and through serendipity to start cd baby.

I think he is really talking about a mindset here. Also a lot of monks and nuns give up things and are happy.

It's too late once your older, which is perhaps the travesty of the USA - under sufficiently intense competition, your success was determined, not by you, but by your lineage. To a certain point. Hard work is necessary, but not sufficient, therefore meritocracy is not real.

> this implication that you can just give up the material world and be a musician making minimum wage and be happy is silly

I’m sorry you feel this way. The outlook above seems perhaps jaded though.

I can easily imagine being extremely happy focusing on what I love while taking on the minimal set of responsibilities necessary to pay the bills, especially at age 22. Hard to do for sure once you have a family etc.

It's relative. You obviously can live on peanuts and be happy if your expenses are low.

At a different stage of life with more responsibilities and a family, you need more to be happy but it's still within reach of a household income in the low six figures if you're smart about where you live and not upgrading your lifestyle beyond what's easily sustainable. The moral of the story is don't live beyond your means. That takes a little discipline, but it's worth it.

The point is that if you desire to live a simple existence you are one small catastrophe away from total financial ruin. I have a child who developed an autoimmune disorder. The medicine is $5000/month (insurance won't cover it, I have involved attorneys.). How many people living a simple life would be able to soak up that expense? How quickly would they draw down a savings account?

Exactly.

I don't see how that's an argument against living beneath your means. If you're doing that you'll have some savings. But you'd have to have insane savings to soak up $5000/month without serious lifestyle changes.

> in the United States

Interesting political undertone to your comment. I always get the feeling Americans don't know how much most of the rest of the world struggles to live.

> but this implication that you can just give up the material world and be a musician making minimum wage and be happy is silly.

Equally naive implication that somehow living a complex life in a jetski or having a comfortable suburban existence will make you "happy" either

Much to learn young grasshoppah

I specified my country to head off anyone replying that the healthcare problems I mention aren't an issue where they live.

I was not implying that a complex life in a jet ski or comfortable suburban existence would make you happy, I was implying that giving up your education or watching your children die for lack of medicine would make you unhappy.

Read between the lines old grasshoppah

Americans aren’t watching their children die due to a lack of medicine

Having children is an essential part of the human experience. Not everyone does, but it’s a strong biological imperative for most. Good luck sending your kids to a decent school, where they won’t learn to be criminals, on a shitty income. Public school is “free”, but housing in a good neighborhood isn’t.

My kids are now in a bad public school.

The good news is that the public school is very instructive - my kids are 'rebeling' against the seven deadly sins they are seeing there.

The part he bolds is:

> It’s the difference between what you have and what you spend

I think I hear a lot of people rewriting that as

> It’s the difference between what you CAN MAKE and what you NEED

Depending on the 'YOU' in question, the 'CAN MAKE' and 'NEED' vary dramatically. So many debates on both a personal and societal level are trying to fit everyone into a single 'YOU', and telling everyone else that their calculations must be wrong.

Yes it's really stupid. All the poor people who barely get by are on the brink of becoming rich if only they shared an apartment with others and started to eat peanut butter sandwiches every meal ? What if you barely have enough to live already, starve yourself ? A guy who got rich at 22 by selling some unspecified company telling others that they could get rich too if only they spent less is frankly very offensive to read.

> I'll be honest this is a stupid story.

Stupid in that it's incredibly reductive.

It is blissfully unaware of the explosive costs of items needed for life and its continuation (AKA children) like healthcare, housing, and education (the last last two especially explode in cost together in unison).

Yeah I get it. Frugality is useful. When coupled with creativity it even sometimes results in amazing workarounds that sometimes turn into novel solutions that more people benefit from.

But people who aren't rich don't need to be lectured on frugality by someone who is rich. For every disparaging anecdote you hear about a non-rich person with a 65" TV, there are multiple families working 3 jobs to feed, house and educate their members. They also lend their spare time/effort to their neighbors, and there are entire communities that keep going on such efforts, sharing childcare and other essential needs. It takes a village after all.

Those people are engaged in a kind of community frugality the author can likely not comprehend with his peanut-butter sandwich anecdote. They don't write guru-style blog posts about these things, though, because it's so blindingly obvious to them that they need to watch their spending very carefully.

Unlike most stupid takes, this one is actually enraging. He is mocking everyone out there who is not a millionaire like him. Everyone who has kids and wants to give them a good life and is struggling to make it work financially.

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