$0 makes you richer than 25% of Americans

October 24, 2015

by — Posted in Philosophy

Credit to Simon Black for this one: http://www.sovereignman.com/trends/credit-suisse-with-just-10-youre-wealthier-than-25-of-americans-18072/

Going to take it a step farther and talk about the four quadrants of life.

But first, context: apparently 10% of the North American population is in the lowest decile of wealth in the world (i.e., negative, in debt), and 20% of Europe belongs there as well. Contrast this with just about no one in China, despite China’s 1.35 billion person population.

Clearly, there’s more going on here than just how much someone makes. And that’s how much someone spends.

This is something near and dear to my heart. A lot of my friends know that I live in an RV with my wife, which is basically one of the best financial and lifestyle decisions we’ve ever made. All credit goes to Tynan, who turned me on to the lifestyle (tynan.com/living-in-a-small-rv-introduction), and also provides a yardstick for having the most awesome RV of all time: https://www.youtube.com/watch?v=BjiQFCunJqk

This meant that for a year and a half, living in the San Francisco Bay Area (Silicon Valley, specifically), notoriously known for having basically the highest housing prices in the world, I had monthly expenses of about $300-400, or annual expenses of ~$4000. We’ve now moved to the heart of San Francisco, right next to the Castro MUNI station, and unfortunately pay $400 each for parking, so that basically doubles my living expenses – but still keeps it near a reasonable-ish $9000-10,000/year.

And it’s not like we don’t have great experiences in our lives. Just this year so far, Daria and I have traveled to Denmark, Sweden, Lithuania, Norway, Iceland, China, and Mexico, and far more places in the states, including Hawaii, and probably a few other places I’m forgetting. But as you can see from this blog, travel should be basically free, and other amazing experiences I’ve had in my life show that money spent absolutely does not correlate to the awesomeness level of an experience.

I absolutely think money is plenty-justified on certain experiences, and of course money is only ever a means to an end, but there are far better ends than wasting your money on pointless consumption. This month (23 days in October), I’ve spent, aside from $400 on rent, exactly $255.39 – for a total of $655.39. And $40 of that total was on optional accountability debts (when I failed to do a goal I was accountable for in our accountability group/to Daria), and $50 was donating to the children of one of my high school teachers who was murdered by her husband this past week (gofundme.com/fn6ume9k), so my core spending was actually $165.39 this month all-in.

And I arguably live a better life than I’d say, 99% of the population easily. Possibly even 99% of the US population.


Where did that money go? Well, I keep a full list of all my tabulated expenses here: https://docs.google.com/spreadsheets/d/1x3kDpJv_0cT2zQ-pZbDAYXhhsGp_qzdh9ffXhInHcdw/edit#gid=0

$86.62 went towards groceries, which is reasonable. Notably, $0 went to eating out, which I find to be absolutely unreasonable. See this: hackcreditcards.com/10x-the-cost/

And why do I do this? Because improvements in saving and not spending yields unbelievable gains in how quickly you can achieve financial independence. See this: https://networthify.com/calculator/earlyretirement?income=90000&initialBalance=0&expenses=10000&annualPct=5&withdrawalRate=4

At my current income ($90k) and annual ROI of 5% and expenses of $10k, this calculator says I can become financially independent and retire in 3.2 years. (note: don’t know if this calculator takes into account taxes, it doesn’t seem like it does, but the point is still valid)

If I spent $30k/year instead, I could retire in 10.2 years. And if I saved only $10,000 a year and spent $80,000, I could retire in…47.5 years.

So in essence, by changing a few of my lifestyle habits and losing literally nothing that contributes to my core quality of life, I can save literally 40+ years of my life to be free to pursue whatever the hell I want to. People keep telling us time is our most important asset…but we still seem to value that fancy new car or sweet new crash pad infinitely more than years of our lives.

So yeah. If you’re lucky enough to be born in America and educated and intelligent enough to make over like, $20,000/year, you absolutely should have no trouble being financially independent and retiring far, far before you ever reach 50, to say nothing of 65 or any of that bullshit. Read http://www.mrmoneymustache.com/ or http://earlyretirementextreme.com/how-i-live-on-7000-per-year.html for more. I would write more for now, but I have to run. Hopefully someday I’ll return to flesh this out if there’s enough interest, and I can always give more color on my personal situation. If you’re interested in more, just hit me up at save@hackcreditcards.com and I’ll return to flesh this out. Cheers. Save your money.


More on this topic that I have yet to flesh out and might at some point (have to run to dinner right now):

So there are basically four quadrants:

Worst: Poor country/low income without savings
Bad: Poor country/low income without savings
Bad: Rich country/high income with savings
Amazing: Rich country/high income with savings

Being in a rich country and saving money basically guarantees you a fucking awesome life. That’s the craziest thing about places like America/Europe. We’re so insanely lucky with insane opportunity lead a better life than anyone in the world has ever been able to before and the vast majority of people still squanders that opportunity on bullshit like eating out and buying superfluous material goods (including houses and cars)

Leave a Reply

Your email address will not be published. Required fields are marked *