Nor does he seem aware of inflation (see his "grandparents" paragraph at the end). The site below suggets $7k in 1950 would be about the same as $65k today, and I would hope people aren't amazed at the notion of being able to live on $65k per year.
Nowhere in that paragraph does he say or imply that grandparents where living on 7K dollars in nominal terms. He simply notes that they lived simpler lives. That is supported by the data. Our grandparents had median incomes about 40% of what we have today (in real terms) see:
http://www.stanford.edu/class/polisci120a/immigration/Median...
I am aware of inflation. I did not intentionally imply anything about CPI. I was referring to the old generations attitude of "make it do or do without" compared to the current attitude of "just charge it on the card".
Both are straw men that represent the extremity of a population.
There's a bit of rose-tinted glasses going on here, isn't there? I don't particular buy into this notion that the previous generation was oh so virtuous, while this one is just daft as a brick.
Well they existed before the concept of easy credit, so it's not really a matter of them being more self disciplined--just sort of the way things were. For most people, you saved up and paid cash for everything b/c that was the only option.
he implies that he owns his own home. maybe he inherited it?
he's also in his mid-30's. it's possible to have bought a property on a 15yr mortgage, paid it off on a modest salary, have some money saved up, and then just chill out.
if you don't have kids, this works. if you don't have any medical problems that cause your insurance carrier to illegally drop you (what are you going to do, sue them?), this also works.
my only question is why do this in the US? on $7k a year you can live like a king in other parts of the world...
We bought our home in cash. Our home is currently an RV---bear with me here. The cost of it was $16k. We pay a combined $6000/year in rent (half of which is my half). You need $200k in investments to support such a cash flow (which I have). So the total cost or asset base or our current living situation is about $216,000 (not counting repairs which I can mostly do myself). We're seriously thinking of moving to Oregon (away from California) buying a house in cash for around $125,000. If real estate taxes are $1,500, this requires 50,000 in investments. Thus the cost of living of switching over to a house would be $175,000. Again, a lot of the maintenance I can do myself. It would be cheaper to not live in an RV, but it was a fun experiment.
What rorrr said, but not in quite such an inflammatory tone.
I think it's great that you've found a lifestyle you enjoy that also allows you to get by with very little money. What I take issue with is your judgmental tone in the article - as if there's something wrong with everyone else for not wanting to live in an RV.
This country faces a dire economic crisis, and there is no doubt that the income of the middle class has been getting shredded - and continues to drop. Unemployment is at an all-time high. It seems incredibly callous and foolish to sweep these all away with a "well, maybe they should be living like me".
It wasn't written "for a general audience". I and my regular readers are regularly judged negatively for not choosing to consume and go into debt like everybody else so the blog is more of a support group for those who are willing to go against the stream and actually save money so they can avoid the typical middle class problems above.
I admit, there's a bit of "I told you so"-attitude, although one quickly learns that nobody really wants to take responsibility for the poor choices they've made or for that matter are going to make. Whereas everybody is willing to attribute their good decisions to their personal genius. The general zeitgeist of the housing boom and subsequent bust illustrates this well.
> "for not choosing to consume and go into debt like everybody else"
What everybody else? There's a certain contingent of people out there who have spent wildly beyond their means thanks to cheap credit, have poor fiscal responsibility, and suffer justly for it. You seem to grasp onto this and extrapolate it across all the "normals" you see.
I know a great number of people who are fiscally responsible, have no debt, are fiscally prudent, and yet do not take their frugality so far as $7000 in an RV. Many of these people have suffered through this recession, and yet you seem so glad to lump them into the "irresponsible debtors" group and just dismiss this nation's problems as entirely self-inflicted.
How utterly presumptuous. Your moralizing is not helpful, and from the blog post and your posts in this thread, you come off as smug and judgmental as those who would judge you negatively for being frugal and living your lifestyle the way you choose.
There's a gigantic swathe of middle ground between the indentured debt servant and the completely liberated, ultra-frugal. You seem to just completely ignore this and try to push as many people as you can, in your mind, towards the former extreme.
What I'm trying to say is that people who are ultra-frugal are sometimes told (insofar they don't keep it secret) that their life sucks and they're not having fun or various things about their stuff. (See examples above.) This is followed by comments about building credit and some moralizing(?) that we should be cool and spend like everybody else.
The millionaire next door [there or to be] types---the silent majority?---may get caught in the crossfire.
However, having seen this recession coming from two years away and having tried to warn people about it only to be told by some/many that there's no problem and everything is fine, etc. I can't really sympathize that much, sorry. While it may not be someone's fault for being laid off or not being able to find a job, it certainly is their fault for not having the savings to cover two years of unemployment given the known 20% risk of it. I don't feel smug about it. I feel exasperated having told people who proceeded to do nothing. And now they want my sympathy?
The Cassandra complex comes to mind. Given how I come across to you, it indicates that I'm just a poor salesman when it comes to getting my point across to your demographic.
especially when your lifestyle was enabled (albeit, in this specific instance), apparently, by public spending (grad school, postdoc, and subsidized higher education in his country of origin)
you're effectively a net neutral on the system, however, when you factor in all that society has invested in you, you're very much a net negative.
I think you can make that argument for my country of origin. They can add negative for the brain drain as far as I'm concerned. I guess the same holds for a lot of Indian or Chinese students who came to the US. As for grad school and postdocing, the way it works is that this has very little to do with training or investing. I feel I earned every cent they paid me for doing research.
Grad school and the postdoc system pretty much a cheap way for universities to get labor at 50-70% of the private market rates. Universities call grad students "students" so they can get around various labor laws and not paying for things like health insurance. The use postdocs because it's easier to lay off people compared to staff scientists.
So they hire persons with masters degrees to do grunt work for 25k/year and call them grad students. Then they hire the smart ones with PhDs for 40k/year and call them postdocs.
Basically you're put in front of a computer or in a lab and told to work on this task much like private industry except maybe your work is a bit more interesting(?) You write reports about your work called "papers" and after 4 years you write a giant progress report and call it a "PhD Dissertation". There's very little actual training or education involved in this process. Or at least not more than you find in the private sector.
It's pretty much labor like it is in private industry. I guarantee you that without grad students and postdocs, very few scientific papers would be published, because grads and postdocs are the ones doing the actual research.
When you see news of some professor discovering something, you can pretty much be sure that it was discovered at 11 in the evening by some grad student or postdoc of his. He was just the manager and subsequently in charge of public relations. That's fine BTW ... it's not like Steve Jobs single handedly built the iphone, but he still gets all the credit for it.
I myself published over 30 papers in my career, many of them first authored putting in 100 hours week a lot of the time, so I think I earned the money I made.
You can argue whether those papers are the equivalent of an $800 toilet seat, but that's a different discussion altogether. I put in the sweat equity "on the bench". I earned that money.
Professors mostly spend their time teaching, managing their workers, excuse me, "teaching" their grad students and postdocs, and writing grant proposals. Academia has the same typical structure as anywhere else. The only time you spend any meaningful effort being "educated" without giving back is as an undergraduate.
Not at all. I can vouch that he's certainly has had a positive impact on my life and on the lives of those I have recommended read and follow his advice.
The nice thing about retirement is you can engage in "charitable" endeavors (which really is what his blog is basically, I see no way he can make a lot of money off of it and that's not his intention).
Not he spends his life inspiring and educating people about how to control their finances, and make money serve them instead of the other way around. That would be a very valuable social contribution.
And yes his lifestyle is extreme, but people don't have to follow him that far to get benefit from what he says.
oh! neat! some friends of mine live in a van (it's a big van but not quite an RV), it's a pretty sweet deal.
I think you have a good thing going on for yourself. if you can save that kind of money it definitely changes how you interact with the world. I only had 1/10th of what you have in investments and it definitely made me bolder in the world.
I wasn't being hyperbolic about insurance carriers though, and I'm sure you already know about this but I'd really caution you (and others) on this. As a small (10 person) company, we had a health insurance policy that was dropped without cause by the carrier. They told us to our face, "sue us". They know we won't, because what would it accomplish? We'd lose (burn) money, they have money to burn, it makes no sense.
When you're small (an individual or a small company), they can get away with doing that to you. So, you're making payments on a policy, but I'd wager that when you need it, is when you'll be getting a letter in the mail saying "after we received your letter telling us to terminate your policy, we did"...
plus you have to pump your own shit and piss regularly.
In every RV park I've seen, people normally use the shared facilities toilet and shower facilities. Same thing with live-aboard slips at marinas. It's more like living in a dormitory than a studio.
Those common facilities are mainly intended for tourists and weekenders who would rather not have to clean their shower, toilet or deal with the pump-out station after they go home again.
Permanent residents (like we are) will have their own sewer hookup (a hose coming out of the RV which is tied into a receptacle in the septic or city sewer system), electricity, and water. So it's more like living in a small house that could technically be driven away. Every few days I have to empty the tanks which, since everything is permanently hooked up, means pulling two levers that flush the tanks into the sewer. It takes about five minutes to empty them and I can go and collect my mail while that happens.
my only question is why do this in the US? on $7k a year you can live like a king in other parts of the world...
That was the strategy I was expecting to see (the other low-budget living strategy I've seen promoted a couple times pretty much amounts to subsistence farming).
I was a bit surprised to see his total rent/utilities given as $270. I've lived in a pretty cheap area, and rent alone was that much. Of course, living there, $7,000/yr wasn't out of the ordinary for living expenses and some entertainment (though calling a car "optional" there is a stretch).
