I just applied for a regular job. Because to be honest, it’s gonna be pretty sweet having a fat bank account, even if it’ll take till I’m 50 to have FU money.
You will never have FU money working a regular job.
You will never have FU money working a regular job.
he came to me later and asked me to expound. i told him "the formula is: spend less than you make and invest the left over. you do that long enough and you'll become wealthy."
i also told him "from what i can tell, it will happen so gradually that you'll barely notice a difference in your lifestyle. you will just realize one day that you are part of the maligned upper-crust but noone around you will know that."
he called me 2 years ago to let me know that he took my observation to heart and he's now in the millionaire club. he also said "the books say i'm a millionaire, but i certainly don't feel like it."
his next million will be much easier to get now and he just turned 40.
Also, counting a home’s net worth in assets does not make sense to me unless you can afford to greatly downsize at anytime and the market is liquid.
$6,000 per year is a significant portion of your take-home income if you're making the median income in the US, but it's possible.
Realistically though back when being a millionaire meant 'retire immediately' things were much cheaper. You could get a car for 3-4k. Now a similar car would be 30-40k. You could say 'oh but that car is so much better'. That is true, but this 10x is mostly true across most goods I have found. I think many do not realize what a number inflation did on everyone in the late 70s and very early 80s. So many of these 'sayings' are still around but their numbers off by a factor of 10.
New cars are status symbols or toys. I never understood how people could trade a human's full time salary for a car. People take old cars to work every day for a small fraction of the cost.
American lifestyles have inflated much more than the price of comparable goods. Average home size is way up over time, people prepare less of their own food, people buy fancy big cars with lots of horsepower and unnecessary capability.
I would complain about iphones and big TVs but in reality- the only things relevant to most of our budgets are our insistence to compete for the hottest real estate and new cars
Conspicuous consumption of goods is a interesting argument and probably worth talking about. But my point was scale and inflation.
It's not that simple. If nobody bought new cars, where would the used cars come from? :D
And their prices would go comparatively up.
So basically, they are just like everything else that you can get cheaper (which is, really, everything). Eg. you can get a comparable laptop for 1/2 the price most likely (maybe not with new M1 macs, but in a few years). Or the phone.
1. Reduce outgoings. It's easier to have FU money if the amount you need to be able to say "FU" is smaller, because you've perfected the art of living on a little less than most. Most people's outgoings grow to meet their incomes: resist that. You don't need to recycle everything you touch and grow your own food to make good headway here.
2. Take your age, halve it. That number is the percentage of your gross income you should be putting away each month into retirement and savings if you haven't started already. Yes, it's hard at the beginning, so have it happen automatically through employer deductions (common in the UK for pensions, not sure about elsewhere), or on payday move a %age automatically into a savings or investment account so you get used to living without it. I still struggle to do this but am getting better.
3. Learn about compound returns a little more. $500 a month at 8% (typical market returns recently), and over 10 years gives you back $92k - a $32k profit on the $60k you put in. Whether that's FU money is dependent on whether your outgoings are $50k/year or $150k/year. Keep going for another 10 years, and you're not far off $300k which isn't bad for the $120k it cost you. Think you can keep going into your fifties and do another decade? $750k off the back of a $180k investment. Is this not FU money yet? You're the problem, not the regular job.
Your chances of having FU money working a regular job are far, far higher than having it any other way. It's just too many people are trying to retire in their 20s and not getting it: that's not a very likely outcome, no matter how hard you work or how smart you are.
I think we have very different ideas of what "FU money" means. FU money is literally enough to be able to do what you want. It's being able to stop asking "Can I afford this?" because you definitely can. It's being able to stop making a choice between two sports cars because you can afford both. It's being able to buy the exact house you want because you can approach the current owner and make an offer they'd be stupid to turn down. FU money is literally the ability to say FU and do something anyway when someone says you can't.
Having enough money to retire a bit earlier if you live a relatively simple life and save a lot is not FU money.
$750k off the back of a $180k investment. Is this not FU money yet?
$750k is barely the down payment on a nice Bay Area family house. Of course it isn't FU money. You're not saying "FU" to anyone if you're also saying "I can't afford the house I want so I'll choose a more reasonable one."
So how much does it cost to travel to Alpha Centauri and back?
There are always things you can't afford, no matter how rich you are. So that's a bad definition.
I always thought FU money was enough money that you can say FU and not do something when someone says you have to. That is, enough money to retire (get fired) on a whim. Of course, even by that definition, 750k isn't FU money unless you're single in a LCOL area (or fairly close to a predictable death, I guess).
My personal criterion for FU money is 3mm. This is fairly achievable, market willing, if you have make six figures.
FU money is being able to say fuck you to anyone (including your boss) without consequences derailing your life.
At the very beginning of my career I worked in the lab for 36 hours straight trying to finish a project on a tight deadline. I didn't have any "FU" money at that point obviously. If someone asked me to do that today, there would be no way! I wouldn't quit over it necessarily, but I would still be OK financially if I was fired for saying "your deadline is ridiculous!"
in the U.S working a regular but relatively high paying job like developer should give you FU money right about the time that you start to experience health problems that will then eat into that FU money leaving you nothing.
There's a reason the song is Birth, School, Work, Death without any FU inside the comma separated list.
You might want to update your models. If interest rates will remain at 0 (or get negative like in Europe), you'd be lucky with 0-1% return.
The part people find unpalatable (and sometimes impossible, depending on circumstances) is the "live on half of it" part (but even if half is impossible, it's still worth investing what you can).
I'm not even making US software money and my budget says I can reach FU money (which, to be clear, means matching my current low-budget lifestyle, which is why it's achievable) in 5 years if no other major expenses come up.
I did decide to prioritize charitable giving because of the reasons elsewhere discussed about service being its own reward, but that only pushed it out to ~11, which is still a couple decades earlier than the typical retirement age.
Plus, when I'm gone, I can pass that income generator on to someone else and free them from the rat race, giving the next generation an even better headstart than I had.
To be honest, even your strategy there sounds tremendously flawed because you're assuming that you'll even want to live that life. What happens if you meet someone, get married, and have a couple of kids after you 'retire'? Suddenly your retirement fund is nowhere near enough. A simple example - how do you pay for your kids to go to college? You think you've got "FU money" so surely you can do something as straightforward as saving your kids from college debt. What if they're brilliant and get places at Stanford? Is your 'live on the interest from half the earnings of 11 years as an engineer' going to cover $500k in 20 years time? Of course not. You'd need to dip in to the capital, and then your whole retirement plan falls apart.
Having FU money, as opposed to just plain simple money, means you will be able to afford all those things and more besides because you are genuinely FU rich. You don't get there by having a normal job, even if it pays a lot and you can invest half your income. That just gets you a nice middle-class retirement, which is lovely, but you won't be rich.
Most people won’t ever be able to do that, no matter how much they save of what they earn.
Also, cost of living is another huge factor here. Housing isn’t always as expensive as it is in the Bay Area, and some countries have good (even sometimes great) free education. Heck, in some, you are paid to attend the top schools.
FU money isn’t about being rich. It’s about being able to keep living the life you want even in the event you were to tell your boss or the world to fuck off.
So… in this… everyone’s goal would be different, and yours is not his?
If my kids wanted to go to a half-million dollars university, I’d just burst out laughing and ask them how they expect to pay for that. If they were to reply that they expected me to, I’d probably laugh them out of the room.
Almost nobody in the whole world can afford to send their children off to a $500k college.
Not even after saving up half of everything they’ve earned across their entire life. I don’t care much about holding myself up to such an unreasonable standard.
Noboxy in the world is entitled to expect anyone else to pony up such an amount of money for them either.
If I can
- put a roof over their head,
- clothes on their backs,
- feed them well every day,
- provide them a good health insurance,
- send them to school
- and afford one or two extra-curricular activities
- as well as one or two vacations, preferably abroad, a year,
I’ll have more and be able to provide them with more than most people ever had, have and expect to be able to in their entire lives.
If I can do so without ever needing to work again, it absolutely is enough for me to tell any employer to go find someone else to do the job and please don’t let the door hit them on their way out.
To me, anything more is an extra nice to have that I don’t owe to anybody.
You appear to have a different point of view. That’s fine. To hold yourself to a different standard. That’s okay too. It’s your life.
You also seem to have a hard time grasping that different people have different needs, and to consider that everybody else should abide by your standards.
This, well… is fine too, I guess.
Just to point out, there are some _really_ good college's in the EU that don't cost $$$. eg:
https://leverageedu.com/blog/free-universities-in-germany/ (random page about it)
Which I totally get, but find hilarious nonetheless.
I got zero money from my parents after I turned 17, and the bare minimum before that, and I would have felt inadequate as a young adult if I had taken money from them, which they did not have in any case. Exception exists (e.g. disabilities).
The recipe is simple. If you spend 50% of what you make, then you only have to work 50% of your life. If you spend 10% of what you make, then you only have to work 10% of your life.
Turn off all sources of marketing and watch your free time and savings swell.
With her salary covering life expenses, my salary will be going straight into the bank. That means I can aim as high as I want; the higher, the quicker we'll hit that $1M mark. I estimate somewhere in the 10 to 15 year range, which also happens to coincide nicely with the (unfortunate) transition toward management as you get older, since that tends to come with yet more pay boost.
$1M isn't a lot. But it's FU money for us, because we have simple tastes. Fooling around with electronics, traveling wherever we want, having a multi-floor house; these things are doable on much less than a mil.
So you're right. I won't be buying a Tesla on a whim. But I won't want to.
We're immensely privileged as software engineers to have this kind of leverage. Most people -- the vast, vast majority of the world -- don't lead such comfortable lives. I intend to exploit that privilege to the fullest, in order to build the best life possible for my kiddos.
Then watch as they screw it all up, ha. But I'm fine with that too.
There are plenty of them out there.