Re:Three Levels of Wealth
by hinkley on Thursday August 02, 2018 @05:52PM
(#17675770)
That's part of what I was getting at. But in addition to the math you're talking about, there are some pretty big psychological factors at play here, and I think we neglect them at our own or each other's peril.
If you ever want to be comfortable (nevermind wealthy for the moment), you must overcome the urge to spend money that you have 'lying around'. The forced austerity of paying off your loans as fast as you can is a different kind of discipline that is useful, but it avoids temptation. When you pay off your loans you make that money disappear, in a much more concrete way than for instance setting up automatic transfers.
Eventually, you have to learn to resist that temptation, and I think it's healthier and more efficient to exercise those muscles long before you hit a net worth of $1. You have to get comfortable having liquid assets, and still live below your means. To spend it when it's wise to do so instead of when you want to. If you can do that your wife can quit her job, or you can take a chance on that new job that is in a new town, or might explode in a fiery cataclysm. You can remodel your kitchen to make your house worth more than you spent on the remodel.
Even simple stuff like putting aside money for a new TV or laptop and then not buying it until there's a sale can make a huge difference in your spending money. Or bigger, like a car. Don't get the one without air conditioning because it's the color you like. Just wait.
If you ever want to be comfortable (nevermind wealthy for the moment), you must overcome the urge to spend money that you have 'lying around'. The forced austerity of paying off your loans as fast as you can is a different kind of discipline that is useful, but it avoids temptation. When you pay off your loans you make that money disappear, in a much more concrete way than for instance setting up automatic transfers.
Eventually, you have to learn to resist that temptation, and I think it's healthier and more efficient to exercise those muscles long before you hit a net worth of $1. You have to get comfortable having liquid assets, and still live below your means. To spend it when it's wise to do so instead of when you want to. If you can do that your wife can quit her job, or you can take a chance on that new job that is in a new town, or might explode in a fiery cataclysm. You can remodel your kitchen to make your house worth more than you spent on the remodel.
Even simple stuff like putting aside money for a new TV or laptop and then not buying it until there's a sale can make a huge difference in your spending money. Or bigger, like a car. Don't get the one without air conditioning because it's the color you like. Just wait.