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Comment by abfan1127 | Hacker News Reader

I paid off $240,000 in 3 years by not being an idiot with my money. I got on a budget with my wife. We cut up our credit cards because we always double or triple spent our money. We budgeted for things like Christmas. We followed Dave Ramsey's plan. We're 2 months from paying off our house now.

Edit - I went back and checked, it was $140k.

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Heads up: this is a common pattern of expression that makes you come off as really obnoxious to people who will never tell you that that's what's happening. If you can't understand why people have a problem with this, here's the explanation: there are almost certainly smarter people than you who happened to be more unlucky than you.

You were lucky-but-stupid before, so you stopped being so stupid, and now your messages carry the undertone that anyone else is some variation of the person you were back in the stage before you wised up. It's a view that doesn't provide any space for people who were wise from the beginning. When you say things like what you said above, you're not highlighting how smart you are or getting down to how dumb other people are; you're just highlighting how lucky you were to even have the circumstances where you were allowed to be that stupid in the beginning.

Do you do social skills coaching? Plenty of tone deaf people (myself included) who would gladly pay for this.

Seriously, what an amazing comment. Imagine if we had someone like this in every discussion on the internet.

At the risk of more down votes, I'll disagree with you. There are certainly smarter people than me who are less lucky than me. However, its a much smaller subset than many would believe. Many claim unlucky when in reality their luck is a consequence of their past choices. They've taken risks and those risks didn't work out.

You can only get downvoted on a post to -4, fyi. I stopped caring nearly as much about being agreeable once I learned that.

For what it's worth, congrats on what you did. I'm in a similar position and I completely agree that for the majority of people here it wouldn't take anything beyond stopping making bad choices.

> I stopped caring nearly as much about being agreeable once I learned that.

The score is just some meaningless internet dick measuring, so why care at all?

Psychological junk, you know.

If staying in my home country is a bad decision then nothing will change my mind.

I think it's important to make a distinction here that I didn't think to make initially:

I am not saying "everyone can make hundreds of thousands of dollars per year if they stop being dumb."

What I am trying to say is "Most people can avoid being massively in debt by making better spending decisions."

I once read some advice that I'll try to repeat, but without knowing whether I can do a great job capturing it, but here it goes. The general idea was that if you're on a date with someone, then you should avoid asking or saying things that subtly insist that something is true if you don't know it to be true. An example is that if you don't know whether your date was molested by their father as a child, you should tread carefully with any questions or comments that carry the presumption that they weren't.

Here's some more sage wisdom: the average human has approximately one testicle. Except not, right? Because that's not how numbers work. So, it doesn't matter if, say, only 4% of the people you interact with are unlucky and 96% aren't. This is not an engineering problem. If you do meet someone who is (or was) unlucky, and you have an interaction with them like this, then even though they're in the 4%, their circumstances are still 100% at odds with your assumption.

interesting perspective. Thanks for sharing!

I would guess he is actually getting downvoted because he is pointing out an uncomfortable truth.

The majority of the people that frequent this site are above the median income. Being in the tech field gives you a huge leg up economically.

You can either squander that, or you can use it to stay out of debt and build wealth.

Having someone point out that you maybe don't actually make the best financial decisions is uncomfortable and makes people defensive.

Doesn't make the statement any less true. Most people on a tech salary (even outside the unicorn tech hubs) have the means to be debt free and live quite comfortably besides.

Alternatively, maybe someone really does have a "royal flush" <https://www.youtube.com/watch?v=rV8XhzG_rAg> (or anal fissures, cf The Office episode "Health Care", season 1, episode 3).

This is one of the best comments I've ever read on HN, bar none. Thank you for that.

That means you earned more than $80,000 post-tax income surplus to your needs. That surplus is a third more than the US average total household pre-tax income.

You're right. But I also changed my mentality. We became intentional with our money. Its amazing how you can find money in a budget to put towards debt. Its also how you stay out of debt going forward. You learn to prioritize your spending.

It’s amazing what you can do when you earn way more than the median household.

Yea. You can get $240k in debt.

Good luck getting anyone to lend you that kind of money if you're actually poor.

Someone who is able to get deeply in debt basically by definition has access to money. They would not be granted loans otherwise.

the largest portion of my debt was student loans (over half), which anyone can get in the US (not sure about other countries).

This is one of the hardest things to explain to people.

Here is a thought experiment. Lets assume that the minimum required to live in a given place is $20K.

So now you have two people, one makes $30K, the other makes $40K. How much more does the second one make compared to the first? Twice as much. At $30K, you have $10K disposable. At $40K, you have $20K disposable. And someone making $60K is making four times the disposable compared to $30K.

Once you get above cost of living, everything gets easier.

When we were looking for an apartment between selling and buying houses, I was surprised by how there is a decided floor to rent prices. Like nothing exists below a certain point. Somehow I felt we could just get a super cheap place because I thought housing price would scale with income. I was surprised when I found out it didn't. So your cost of living example holds up in my experience.

That's the result of housing shortages. Landlords can pick their tenants and since they don't run a charity they usually rent out to the highest bidder. The obvious solution would be to increase supply.

I think you're getting downvoted because you're missing the point somewhat. You had the opportunity and means to change your mentality and become 'intentional' with your money, and learn how to prioritise your spending, because you've had such a surfeit of wealth compared to the average that you won't have faced the same problems others would (and still) have. That's fantastic for you, don't get me wrong, but for many people it would sound quote tone-deaf.

If you can afford to put aside almost 100k a year and still live comfortably you are decidedly not in the class of people for whom saving is, if not an impossibility, a luxury.

We're not just talking about Pratchett's Boots Theorem[1], but also the fact that such people are quite literally only one or two paycheques away from total disaster. These are the people who can't afford to save because every penny is spent on merely surviving, and they can't amass the bare minimum amount of wealth it would take for them to be able to lift themselves out of that situation.

[1] https://moneywise.com/a/boots-theory-of-socioeconomic-unfair...

Being poor is only something you can truly understand once you've tasted it yourself. The stress alone feels like it's shaving many IQ points from your baseline. Even then, I got only a limited understanding compared to people in the third world. (not going for the misery olympics here, just an observation)

I completely agree here. I've never been poor. I can't imagine how some families feel that grew up in the south Chicago projects. The stress has the be very brutal.

Having been there, I second that. Juggling late utility bills in the middle of winter against having food to eat. If you come through that, it hangs with you forever in ways that others that have not will never understand. Even though that life is almost forty years behind me now, it clearly affects my life decisions every day. I am aware of that, and I manage it, but it is always there. Like you, I am not going for the misery olympics either. Just don't assume that, given my career and place in life now, I am not happy with my perfectly maintained fourteen year old car. I know I can afford a new one, thank you very much. But spending that kind of money, just because I can, does not bring me comfort. People that have never been poor will never understand that.

The deepness of my debt and the steepness of my accent are just variables in the equation.

Many people are 1-2 paychecks away from total disaster, but they never take the step to make a change. It can certainly feel impossible. But the reality is "merely surviving" has a broad usage. I know lots of people that are living paycheck to paycheck, but have the iPhone X.

https://www.daveramsey.com/dave-ramsey-7-baby-steps

I don't know if you're shilling this guy or drank too much of his kool aid but it's still blind to the reality of the situation seen across the entire world. You're talking about your 'equation', which is not the same equation other people are subjected to.

But the average household probably also isn't in 240k of debt unless they made very very poor financial choices.

I went back and checked my records. It was 140K! oops. Anyways, here is my list.

85k in student loans 30k 401k loan 20k car loan 30k car loan

So 46,000 in disposable income? That's a massive amount of money by normal-person standards.

Hell, the fact that you had $30k in a 401k that you could borrow from yourself already makes you exceptional.

Yes. I had ~$500 payments for each of those every month. Luckily, once I got the first one paid off, I was able to roll that previous payment into the next one.

401k match is nice and I'd had been working for 5-6 years when I did this, so it was vested.

I was in a deep hole, but I had a big shovel. I wish I hadn't dug the hole though. I encourage others to not dig holes either now that I've learned my lesson the hard way.

How was this "the hard way"?

going into debt in the first place is the hard way.

People say "I learned it the hard way" when in the end they lost something for eternity, went through suffering etc. Like a recovered drug addict with permanent health damage or someone who turned on the path of crime and spent his youth behind bars or something. To me it seems like you had a pretty good life, took on some debt to live even more carelessly and then matured and calmed down and channeled more of your disposable income into paying back said debt. I don't see the hardship based on your comments so far.

you know there are gray scales in life, right? Things can be hard without somebody dying. Marriage is hard. Raising children is hard. Those things are hard without dying, drug addiction, or other exceptionally hard circumstances.

You mention some pretty heavy consequences to learn lessons.

I'd say committing to something for 3-4 years that means telling yourself NO is pretty hard. Its not "survive being a Vietnam Prisoner of War" hard, but I never claimed it was.

Well said reply.

Actually, "learned it the hard way" refers to making the mistake yourself, rather than learning from someone else's mistake and avoiding making the mistake yourself at all.

It's better to learn from others mistakes, than to "learn it the hard way".

"The prudent sees danger and hides himself, but the simple go on and suffer for it." - Proverbs 22:3

Or they're in the US and had to go to hospital for treatment?

Or student debt; a doctor going 200k into debt for med school probably isn't exactly in dire financial straits.

I'd feel bad for a med student halfway through that gets sick. 100k of debt and no degree. yikes!

this is correct, the median household has a (positive!) net worth of ~$120k. you have to go down to the tenth percentile and below to find households that actually have negative net worths.

https://dqydj.com/average-median-top-net-worth-percentiles/#...

I do not think that "240k in debt" (he clarifies it was 140k in another comment) actually means owing 240k more than your total assets.

As far as the median net worth, that's just someone most of the way through paying off their mortgage...

I find it really hard to believe that only the tenth percentile has more student debt than savings. Virtually everyone I know in the 20s, and many in their 30s with advanced degrees, all have more debt than savings.

that shouldn't be too surprising. the lower net worth buckets are made up disproportionately of younger people who a.) are still paying off student loans (if they took them), b.) have yet to reach their life peak income, and c.) haven't had as much time to accumulate savings. if you look at the breakdown by age on the page I linked, you'll see that median net worth increases almost monotonically by age bracket.

you might also consider that there is probably some sampling bias in your social circle. I'd guess it disproportionately consists of people who have advanced degrees, possibly from more expensive schools. as a counter-anecdote, most of my friends got STEM degrees at a state university. the ones who took out loans paid them off completely within two years of graduation.

What the hell? So you're literally earning $80k above your living expenses. Waaaaaay above average

I'd be more surprised if you couldn't pay that sort of money off

Re your edit: I'm even more sceptical now. Your figures were off by a third. I know exactly the value of my mortgage when I took it out. That figure is burned into my mind. I don't know how you could be out by $100,000

I don't know what it will add to the conversation, but I thought it was worth adding in my two cents.

My family of five is supported by my income (~$100k / year).

I get paid weekly. Every Friday, I go into my bank account amd transfer anything in excess of $2000 into the stock market.

Some weeks that's quite a bit of money, some weeks it's not so much money.

As of a week ago when I did the math, we had $65k more to our names this year than we did one year ago.

Probably half of that was money we saved directly, and half was stock market gains, so I guess from a debt payoff perspective maybe that's closer to $30k.

But I guess my point is, I don't think it's unreasonable to think a two income household in a higher-income metro than where I live could have $80k/yr in excess income to pay down debt with.

It's certainly not unreasonable or even uncommon. But, it's still way above the norm in the US. Median household income in the US is somewhere around $65k/year (before taxes and expenses).

Side note - You're only holding $2k in cash for a family of 5? That seems low. Your efforts to invest for the future are commendable, but if you get caught on the bad end of a 2008-style recession, is it enough to keep paying bills?

> You're only holding $2k in cash for a family of 5?

I am holding $2k in a checking account. My savings accounts are appropriately sized to get us by for probably six months to a year.

The other side of this is that "average" living expense has little meaning when applied to a place as big and varied as the U.S., much less the world. In some areas, the cost of living is much higher. The commonly provided solution to living somewhere the cost of living is too high is move. Unfortunately, moving comes with all sorts of other constraints that are rarely considered.

I this case, we're talking about a family, so what if one or both of the the spouses needs to work but can't find work or is paid much less in the new location? Is it still a net win if the family income is reduced to a large degree?

What if there is family in the current location but not any target location? Beyond any help they may be able to provide (child care, if not regularly, in special circumstances), they may provide a real tangible mental health benefit compared to living in a new location where you know few if any people. Or what if you're providing help to that family member, and leaving would be problematic?

The bottom line is that is that some people are stuck in or around places like SF making very little compared to the cost of living in the area, but also don't feel like they are in a position they can leave. If you made $80k in SF and lived in SF or close enough to commute, you might find that a large portion of that goes purely to housing. For a family, probably $24k a year minimum, even if you commute in from an hour away.

I mean, that's still contingent on having a decent salary relative to the amount of debt - I'm assuming it didn't happen with a couple of ~30k/year salaries.

I was a sole provider making under $100k.

Edit: salary. We were receiving small bonuses ($10k) at the time. but we learned to keep our expenses down, and every bonus we did receive we rolled right into debt before spending it on stupid crap.

Something is off with the math here. I don't doubt your story, but perhaps your numbers are a bit off?

240k over 3 years is $80k/yr in principal alone, substantially more with interest. If your post-tax take-home was $95k, that leaves only $15k/yr for living expenses for your household, which is extremely low.

Maybe that's possible with a lot of beans and rice, paid off used cars, and second-hand clothes and such.

Seems like part of the debt you are paying down is a mortgage, so that means your housing cost at least is part of the $80k/yr debt service. Still doesn't leave much for transportation (often second biggest expense for a household) and the rest.

no, you may be right (it was a few years ago). It may have been 3.5 or 4 years. I did receive small raises over the years, but we kept our budget fixed. I did receive a big windfall near the end from a company acquisition ($40k iirc). But at the rate were were paying stuff off, it brought it in ~6 months.

The math still shocks me every time I do it.

So it was really around 100k over four years with the last 40k covered by your acquisition earnings. So 25k a year on a 100k salary (pre/post-tax?). Which is a lot less than 80k a year. Still impressive, and kudos, but let's not pretend that it's anywhere the same. That's a difference of two whole median incomes per year.

Jeez, I made $99k last year and saved more than $25k and I AM an idiot with my money (I consider my lifestyle to be lavish). So I suspect it's more the "making a lot of money" part instead of the "not being an idiot with my money" part. Absolutely nobody is going to "not be an idiot" themselves to a six figure loan payoff in a few years on a 30k/year salary.

This math doesn't check out. $240k for three years is $80k/year. Assuming you are already factoring interest in. So you and your wife lived off less than $20k a year? Where?

Arizona

Must have had extremely cheap rent, be very frugal when it comes to eating and basically any expense, really. In rent alone I pay $10.5k/year (with what most people here extremely cheap rent). When I still was in school living off school loans, our frugal weekly groceries (almost no meat, very rare, mostly fresh produce in discount markets) came out around $80 a week, so about $4-5k/year. We're already at $15k. This leaves $5k for literally everything else. I'd wager no kids, no car payments, no cell phone outside maybe prepaid, basically nothing in utilities, buying used clothing, no appliances that broke, no internet above basic, next to nothing in terms of entertainment expenses, etc. Quick mental math keeping the strict minimum from what I pay right now and I'm already over $20k. This is weirdly cheap.

And honestly, if the numbers are right, good on him for having the discipline to do it, but this sounds like a rather awful three years.

I didn't mean to make this about finance or the ability to pay off debt, it just reminded me so much of the type of writing that is really, really common in "pop finance"-type publications.

I wasn't at all saying that I believe that it's impossible to pay off a large debt quickly or that nobody ever does - just that, of course you are going to if you're in such an extraordinary situation. So the entire thing ends up being not very interesting or actionable, yet the title promises that it will be both.

I guess there's an audience for it though, because they keep getting published.

>by not being an idiot with my money

It was also due to the fact that you were making $80k/year ABOVE your living expenses.

Living expenses is a flexible item. You learn to keep your living expenses down.

Yes but it's a touch difficult to keep living expenses below $0, which most people in the developed - let alone developing - world would need to do on their salaries to save the extra $80k/year.

ha, yes. looking back, I don't know how we did it as fast as we did. we kept our expenses low (20-25k/year low) and poured every dollar into the debt. We didn't live in a fancy house or have new cars (beyond when we got in to it with the new car loans).

Living expenses are only flexible when you have the money to be flexible.

If you're on a low wage, maybe with some kids. You're buying whatever inefficient car, low quality clothes that need replacing more often, a house near your child's school. Having that huge amount of disposable income offers you a lot more luxuries

You're being completely tone deaf to the point that its frustrating to believe that people like you exist.

tone deaf to what? That some people have big problems? That those big problems may be bigger than mine? That sometimes solutions to big problems are hard? That sacrifice for some isn't the same for sacrifice for others?

Or that some people's problems are as big as they are because they fail to recognize the change needed to solve them, or are unwilling to make that change? That often times, people fail to recognize the change needed because it first requires them to acknowledge and take responsibility.

Just be thankful you don't work with them

Congratulations for that!

However, you also paid of that $240k by earning at least $80k / year.

How much did you tally as living expenses during that period? As a rough estimate

it was 10ish years ago, so this is a guess...

Mortgage was $750ish water/electric $200 phones/internet $100 food $500-600 fuel $25 insurances ??? $100-200

maybe $1500-2000 a month. $20-25k year in real expenses.

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