I "retired" at 33 (still doing other things, but without steady cash paycheck). Lived cheaply, worked hard, saved up a ton of money. I went back to work in 2020, right after interest rates were dropped to zero and the pandemic stimulus went out, because I figured that every single retiree, no matter how old, was about to get reamed by inflation. Have been right so far, and IMHO it's only going to get worse. Living cheaply works when the basic necessities of life are cheap. The basic necessities of life are about to get very expensive, if they haven't already.
I am older than you, but one issue that I need to contend with is being in a demographic that will contain a lot of other retirees, so I believe I need to financially be better off than other retirees of my age to have a reasonable lifestyle (and I am unsure how to avoid thundering crowd effects for my generation). Reasonable = comfortable (e.g. could choose to have a small fizzboat, but not a megayacht).
Problem is that inflation is rarely steady. Typically you get stops and starts. Inflation will rise, and the Fed will try to contain it by raising rates. Then the raised rates create a recession, all asset prices fall, the Fed flinches and drops rates. Inflation takes off again. Repeat for a decade or more.
In an environment like this, you can't lever up too heavily, and you need to actively manage. Otherwise you'll get reamed by the busts. Optimal strategy is to buy surviving high-growth stocks right as the recession gets to its peak, as everyone feels like everything's going bankrupt, and then hold them as rates drop and the economy recovers. Then sell right as the Fed signals it's going to get tough on inflation again.
Optimal strategy is pretty hard to execute. Failing that, it's often best just to buy & hold profitable, low-competition businesses.
The demographic time-bomb of everybody retiring at once and trying to cash out of the market at the same time is another issue. There's no real fix for this: living standards are going to have to drop, for retirees or workers or both (and more likely retirees). The way to profit from it is to look for companies that are successfully automating parts of elder care, and then invest hard in them.
Run hard, every hour you work is an hour you’ll never get back, so max the comp for each of those hours. Your future self will thank you.
(Huge mmm fan btw)
Another way to view it: say you get a pay boost 90k -> 190k. The custodial parent will request the imputed income to be recalculated. You now owe an extra 20k PER YEAR. That's your new imputed income, even if you don't get a job like this again and it only lasts a year. Eventually you lose that job and can't find one like it again -- fast forward 10 years. You've paid an extra $200k, just to make an extra 50 or 60k net in one year. You lost $200k by working a higher paid job for a year.
One year of raise followed by 17 years of a slightly more relaxed job at your original income means you LOSE money. In this example, falling from 190k back to your 90k income means child support went from 1/3 of your net check to 2/3 of your net check. A brutal risk to take if you don't think you'll be making the high wage for life.
Strictly no, but this is basically what imputed income does. It's saying you have the capability to earn it. If you actually HAVE earned that amount, it can be extremely difficult to convince a judge that the certainty that you HAVE earned that amount is countered by some vague uncertainty you may not be able to again. Fighting against a known factual salary history with some hand waving about not being able to do it anymore is a hell of a hill to climb. Plenty of anecdotes show people having extreme difficulties lowering child support.
1. This is crazy to me. I could maybe cut $3K by taking a huge hit to quality of life (that would probably not be sustainable with a full time job anyways). Getting the other $7K would involve either homelessness or cutting back on eating and visiting family. How do salary earners manage to rack up $10K per year of purely unnecessary expenses?
2. That number is still way too small to be a better strategy than income maximization in tech. Of course "and" is always better, but given the choice between an extra >$100K/yr in savings or $10K less in life expenses the choice is pretty obvious.
12 years ago, my food budget was $3/day, and the only reason it wasn't less than even that was because I worked at a Subway and could get 1, sometimes 2 meals a day free if I was working a long shift. Going to Taco Bell was considered splurging.
I caught Mono and had to miss 3 days of work. I had to get an advance on my paycheck to pay the rent. At least my boss was cool about it.
> Said Diogenes, ‘Learn to live on lentils, and you will not have to be subservient to the king.’
Cleaning services, vacations, picking the fancy and nice daycare using some trendy educational system (Montessori, unschooling, whatever) instead of the one run out of someone's house in a scary part of town, ordering food delivery, monthly subscription services for all kinds of crap, new car every 2 years instead of a used one every 5 years... the list goes on and on.
No one’s saying it’s completely free from trade-offs , but a lot of people have leaks in their bucket that they mindlessly assume are “required” when, in fact, they’re small luxuries and should be considered that way. It doesn’t mean you can’t do them, but rather just means you should consciously determine if they’re actually worth the tradeoff to you.
The first option often isn't available to folks.
Agree with your second point though.
You learn to spend what’s in your pocket.
In fact, it's doubly effective. If you can learn to reduce your expenses by $10k and live happily, not only do you have an additional $10k to save/invest, but you need less each year to live independently.