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Old 10-20-2014, 05:44 PM   #41
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I think it is mostly the personality type and being able to defer immediate gratification for long term gain. As brewer correctly notes the math is grade school stuff and because of that I never understood why so many people behave so weirdly with their money and are then surprised at the outcome.

This book, Please Understand Me II, was an eye-opener for me. It's about different personality types, their characteristics, and contains a likely occupation that the different types will likely end up with which in my case was not only correct for what I did, but for occupations I considered.
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Old 10-20-2014, 06:07 PM   #42
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For me it's a combination of luck and personality. My family always LBYM and emphasized saving for goals over spending, so that helped me gain a useful view of saving. Plus, I'm naturally a worrier and I try to deal with worrying by preparing and doing the things I can control. So I tried to address a fear of being unable to work (whether because I couldn't find a job or health reasons), by saving for a rainy day at an early age.

When i started saving it wasn't for the purpose of retiring early, but more to make sure that I'd be "ok" if something unfortunate happened.
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Old 10-20-2014, 06:36 PM   #43
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I did have the opportunity during graduate school to live on pinto beans and biscuits and a future of that or cat food was no longer appealing.
It doesn't matter what no longer appeals to you: Remember that old saying: 'Badgers can't be choosers."
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Old 10-20-2014, 06:46 PM   #44
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If I am being honest there are two things driving my desire to obtain FIRE.

1) Fear:
The thought of being unable to provide for myself in old age definitely drives my desire to obtain FIRE. Similarly, a health scare when I am older, or not being able to work plays into that a lot.

2) A desire for something more:
That is the only way I can describe it, but it boils down to the fact that Time > Money. If I am diligent in my plans to FIRE, then I can get time back. Maybe I am selling my present in the hopes of mortgaging my future, but I guess that's just the way I am wired. To me, that is worth the risk and potential trade off.
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Old 10-20-2014, 06:51 PM   #45
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For those of you who say it is luck, what is your advice to a 20 year old who doesn't want to work until they are 65 or older? Do you tell them it doesn't matter what you do, you just need a lucky break or two, or do you tell them to LBYM along with some relevant career and investing advice? Or do you look at their environment, and tell the urban youth to forget it, it'll never happen, and the kid from the upper middle class not to worry, he's got it made?
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Old 10-20-2014, 06:52 PM   #46
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It doesn't matter what no longer appeals to you: Remember that old saying: 'Badgers can't be choosers."
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I think it is mostly the personality type and being able to defer immediate gratification for long term gain. As brewer correctly notes the math is grade school stuff and because of that I never understood why so many people behave so weirdly with their money and are then surprised at the outcome...
Yes. How do people buy high/sell low, and do it again and again? I have seen so many housing bubble cycles, where people that I know keep buying and selling at the wrong time. I think people are afraid to be different. They think strength is in the number.
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Old 10-20-2014, 07:02 PM   #47
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I would say it's mostly determination. But you also have to have one other characteristic: IMAGINATION. I think there are many folks who simply don't imagine it's possible.
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Old 10-20-2014, 07:14 PM   #48
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For those of you who say it is luck, what is your advice to a 20 year old who doesn't want to work until they are 65 or older?
Last month I sent some books to a 24-year-old who had just started a new job and said she didn't know what to do about the 401(k). The books I sent were The Millionaire Next Door, The Millionaire Teacher, Your Money and Your Brain, A Random Walk Down Wall Street, How a Second Grader Beats Wall Street, and Predictably Irrational.

This is the letter that I sent to her with the books:

Dear Sarah:

As we briefly discussed I have sent you several books on saving and investing ordered from Amazon. This stuff is important to learn since what you do or don’t do now will dictate your lifestyle when you do retire. And while I know that right now retirement is so far over the hill that you find it hard to conceive, let alone see, trust me (I was once 24 years old) that day will eventually and inevitably come either voluntarily or involuntarily because of health issues. What the financial services industry wants is your money so that they can take as big a chunk of it for themselves as they can. They are running a business, and the sole purpose for the existence of a business is to make money. They don’t give a damn about how well funded your retirement is. Never forget that.

Fortunately this stuff is not rocket science despite what the financial services industry would have you believe. In fact it is so simple that a second grader can do it as the title of the book How a Second Grader Beats Wall Street implies. I have my own portfolio invested in just this manner and it is performing as advertised. I recommend that you first read either that book or The Millionaire Teacher first. Another point not emphasized strongly enough is that the 401(k) with company match at 5% of pay or so is a starting point and is not nearly enough to fund a retirement. To do that you will need to save 15% to 20% of your pay, right off the top. Take any employer match first – that’s free money and anyone is a fool to not accept the maximum offered. After that further investment goes into a Roth IRA or 401(k) up to the legal limit. After that the savings/investment goes into a taxable account. This is called “Paying yourself first”. If you believe that “Gee, I can’t afford that!” I will say this: You can’t afford not to. The retirement clock is ticking, right now, and that clock does not stop for anyone.

I spend about ten or fifteen minutes a year managing our investments. Once you learn how it really isn’t that hard. And again, what you do now in your 20’s will have a huge effect on how your life will be in your 60’s and beyond. Your future self will either pat you on your back or say “What an idiot I was!” You know what it should be.

The other books are about psychology and exploring why you do the things you do with money. I’ve always wondered why people do the weird things they do, and some of the weirdest are with money. The short answer is that human beings evolved to survive on the plains of Africa, not do long-term financing. The result is that while your gut instincts and emotions will tell you to do exactly the right thing to survive for the short term, in the long term, what your guts and emotions tell you to do is the worst possible thing to do with your money. That is very difficult to do and it does take a while to learn to do it. And that, dear Sarah, is the hardest part of saving and investing: ignoring your instincts and emotions. You have to learn to ignore the sinking feeling and near-panic when the stock market drops half its value (and sure as tomorrow’s sunrise, some day it will) and with it half the value of your retirement fund. That’s when investing and staying the course is the hardest.

During the last Great Recession in 2008 when so many people panicked and sold their investments one investment broker said the only people buying stocks were people in their 80’s. “They had seen this movie before and knew how it ended.” You will read that in one of the books, I forget which one.

A mantra we have learned the hard way is LBYM, or Live Below Your Means. Spend Less Than You Earn. Pay Yourself First. The thing about loans is twofold. One is that in taking one out your future options and opportunities are limited by the amount of the loan and the interest you are then committed to paying on it. The other is that you are then funding someone else’s retirement and not yours. Not all loans are bad of course. You do need a car to get to work in and it does not have to be a new one. You also have to have a roof over your head and depending on circumstances buying on credit may be wise. But do make sure that whatever you buy on credit will still be around when the loan is paid off. You have by now been in the position of “paying for a dead horse”. Not fun, is it? Remember how that felt too.

One other thing, and then this already-too-long letter will end. Why am I doing this? Joan and I do care deeply about what happens to you. No child should have to endure what you and your sister did growing up. What we admire about you is what and who you are in spite of it. So many others turn miserable and take to drugs and alcohol and hate the world because of their circumstances and spend their lives as miserable people.

But not you. You got your act together, went to school (the hard way, paying for it yourself). Not many people have the self-discipline to do that. I also think that you are one of the few people who will actually do two things; read those books and then act on what you learn from them. While investing doesn’t take high intelligence or math skills (not to imply that you don’t have those!) I believe that what you do have that so few others do is the maturity to defer immediate gratification for long term gain. That’s another difficult part about saving and investing.

Please do not feel overwhelmed at the volume of material. It digests easily, but slowly, so take your time going through them, and I realize that you do have a life. There is no expectation that you will read them this month or even in the remainder of this year and there will be no quizzes. But understand clearly that what you do or don’t do with your money now will have a multiplying effect on your standard of living in the last half or third of your life.

If you can find a job that has a pension plan remember that every dollar of pension income is one less that has to be generated by investment income. But it is always better to be in a career that you enjoy. Too many people work at well-paying jobs they hate and get sick or die early because of the stress. But as retired employees of Detroit are learning to their dismay that promised pension may not materialize so it is best not to rely too heavily on promises. No one has a clue where the economy is going to be in 5 years, let alone 30. So while an employer that is financially sound now, as Detroit was in the 1960’s ‘70’s and ‘80’s, may not be when you retire. Plan on that scenario as well.

The best to you always,

Walt 34
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Old 10-20-2014, 07:14 PM   #49
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I would say it's mostly determination. But you also have to have one other characteristic: IMAGINATION. I think there are many folks who simply don't imagine it's possible.
I am reasonably imaginative but in a different way. As a perennial pessimist, I imagined all kinds of bad financial scenarios. So, I was always LBYM. I did not have specific goals of saving so much from my income, but I rationed my consumption because I was afraid to spoil myself.

I did in fact learn that some big spenders were optimistic people. They thought things would always work out for them, and they would live happily forever. Maybe they will. Who knows? Ignorance is surely bliss.
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Old 10-20-2014, 07:18 PM   #50
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I feel it's personality and not luck. I just had someone tell me the reason I had money was luck. Luck nothing! I save a good portion of my salary. They spend their money on cigarettes, buying breakfast and lunch instead of brown bagging, vacations. Can you image what other bad financial (& health) decisions this person is making.
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Old 10-20-2014, 07:50 PM   #51
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For me, it was just dumb luck.
I was FI and didn't even realize it until I was laid off and really took a good look at my situation. Finding this board was a big help!
This was pretty much true for me too. One day I discovered that I was FI and it was also at a point in my career where it made sense to ER.

There really wasn't much of a plan. There was no time table or sophisticated investment strategy. My philosophy was to spend some and save some. I was pretty much LBYM all my life. I don't think this was a lesson from my parents or something absorbed from life. I think it mostly helped that I wasn't extravagant and none of my friends were either.

There was a certain amount of luck in my life circumstances that helped me to achieve ER
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Old 10-20-2014, 08:00 PM   #52
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Interesting to hear the same echo of my own thoughts here on a particular issue: raise your hand if you plan for the worst possible outcome. This might be just my own mental issues playing out or it might be an industrial disease of someone who spent years dealing with junk credit, but I almost always spend far more time plumbing the downside than the upside. In most cases, I try to figure out a reasonable worst case scenario and how to hedge against it in the most cost effective way. Once I have done this, I am usually pretty risk tolerant of anything but the ugliest outcomes as long as there is substantial potential reward.
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Old 10-20-2014, 08:05 PM   #53
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Interesting to hear the same echo of my own thoughts here on a particular issue: raise your hand if you plan for the worst possible outcome.
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Old 10-20-2014, 08:24 PM   #54
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I would argue it's the ability to delay gratification, and/or anticipate the future. You can be dumb and lazy and still have this foresight.
This most closely matches my experience. I was lucky to be born on third base and intelligent enough to sleepwalk through having decent jobs, but never hard working or driven enough to make the most of them. I don't like to be told what to do, even by managers I like, even doing work that is somewhat interesting. Those were the good jobs, most of them were much less enjoyable so I was motivated to save and buy my freedom from having to work. A lot of life intervened, so my original plan from my first job to save like crazy and retire in 5 years never happened, but being stubborn enough I have kept saving and look forward to FIRE soon.
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Old 10-21-2014, 01:53 AM   #55
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Nice letter Walt. Great to pass on that knowledge to someone who can and will benefit from it. Well done!

I believe it is combination of luck
- being born into the worlds largest economy regardless of economic standing gives a far better chance than being born into one of the worlds worst economies.

Determination and grit - no safety nets. No want to help you except yourself. No one to depend on but yourself. The will to succeed. The ability to see the vision years later. Seeing parents or family struggle in retirement is a hell of a wake up call on what NOT to do.

And probably most important is discipline - the ability to forego a jelly bean today for 2 jelly beans tomorrow

Interesting comments on the engineering / aspie types. Not sure I agree with that. There are a few more engineers in here but I attribute that to playing with computers more and being on inanimate message boards vs specifically being more retirement minded.

Anyway. No secret recipe. It's a combination that very few people have so kudos to a you fire types. Good good !! Carry on !
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Old 10-21-2014, 02:36 AM   #56
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For those of you who say it is luck, what is your advice to a 20 year old who doesn't want to work until they are 65 or older? Do you tell them it doesn't matter what you do, you just need a lucky break or two, or do you tell them to LBYM along with some relevant career and investing advice? Or do you look at their environment, and tell the urban youth to forget it, it'll never happen, and the kid from the upper middle class not to worry, he's got it made?
The whole luck issue comes into play for everyone.

Determination and intelligence are definitely at the top of the list to build wealth.

Luck is not having your job outsourced or downsized. Millions of Americans have experienced this and most never recover to their previous income levels.

In my city we have lost tens of thousands of great paying jobs in Education, Aerospace,defense,Automotive industry,technology,airlines,Financial industry,retail,etc. all in the disguise(excuse) of achieving shareholder value.

Many promised pensions lost or greatly reduced which puts many people in a bad spot.

Through my megacorp job I have witnessed this outsourcing firsthand over the last 3 decades and its just made me extremely aware of how lucky I am. I still have a solid pension(fingers crossed) and a pretty solid low cost 401k, and paid for health care and generous vacation time. So I feel very lucky even though I have worked VERY hard to get it.

I don t know why some people get defensive about being lucky because its just part of what life gives you.

And if some poor kid does find a path out of poverty than yes that in itself is part luck. Because most poor people get stuck in the cycle of poverty.
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Old 10-21-2014, 06:57 AM   #57
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At my former company, many of my longer-term coworkers had considerable company stock holdings, some of them higher than mine. We were all lucky to have been working for that company back in the 1990s when the ESOP was first set up and we acquired humdreds of shares at low prices and saw the stock price explode in the early 2000s.

But that did not mean all of us could just ER from this newly found wealth. Some, like me, did. Others didn't or couldn't for the usual reasons we have seen here before - they didn't LBYM, they didn't want to, they needed the health insurance, to name a few. Those that did ER were often childfree like me, had working spouses with health insurance, and/or were old enough to get grandfathered into phased-out retirement benefits such as HI or pension, and/or were old enough to begin collecting SS or from their 401k/ESOP.

The right combination of luck and lifestyle decisions can lead to FIRE.
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Old 10-21-2014, 07:37 AM   #58
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The whole luck issue comes into play for everyone.

Determination and intelligence are definitely at the top of the list to build wealth.

Luck is not having your job outsourced or downsized. Millions of Americans have experienced this and most never recover to their previous income levels.

In my city we have lost tens of thousands of great paying jobs in Education, Aerospace,defense,Automotive industry,technology,airlines,Financial industry,retail,etc. all in the disguise(excuse) of achieving shareholder value.

Many promised pensions lost or greatly reduced which puts many people in a bad spot.

Through my megacorp job I have witnessed this outsourcing firsthand over the last 3 decades and its just made me extremely aware of how lucky I am. I still have a solid pension(fingers crossed) and a pretty solid low cost 401k, and paid for health care and generous vacation time. So I feel very lucky even though I have worked VERY hard to get it.

I don t know why some people get defensive about being lucky because its just part of what life gives you.

And if some poor kid does find a path out of poverty than yes that in itself is part luck. Because most poor people get stuck in the cycle of poverty.
You are obviously pretty down on things. I certainly agree that things could definitely be improved but all my suggestions would just have the moderators slapping me again for "political comments."

From your post, my father should have just given up when he lost his steel industry job in the 1950s and then again when Boeing laid him off in the 1960s. I should have stayed on food stamps when I was on them in the 1970s. There's no way I had any hope of finding a new job when the plant I worked at in 1982 shut down and laid 1,100 people off (including me). This should have been my plan when I lost another job during a buyout of my company in 2002. There's no way I could now possibly be making more than I ever did before and have more than enough money to retire.

Most people that have crap happen to them have a choice. You can pick yourself up, dust yourself off and move forward. Alternatively, you can wallow in your despair, complain how life isn't fair (it isn't) and wait for the blue bird of happiness to magically appear.

Opportunities are presented to everyone. When someone is prepared and willing to use these, the people that aren't call them "lucky." I've worked side-by-side with people that were as smart or smarter than me, made as much or more than me and had the same opportunities or better ones put in front of them. Some of these people are really well off and others are living paycheck to paycheck thinking they'll work forever.
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Old 10-21-2014, 07:45 AM   #59
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Yes. How do people buy high/sell low, and do it again and again? I have seen so many housing bubble cycles, where people that I know keep buying and selling at the wrong time. I think people are afraid to be different. They think strength is in the number.

Simple. We live in the present. In a depressed market, people are afraid to spend, since they may lose they're job. In a roaring economy, confidence in spending is up (causing the roaring economy). So a lot of the economy is dictated by emotion. In 2008 and 2009, it was hard to picture 2013. By the same token, I'm not looking forward to the next big down cycle, but I really need to look at it as a buying opportunity.


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Old 10-21-2014, 08:49 AM   #60
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The whole luck issue comes into play for everyone.
My folks grew up during the depression. LBYMs did finally pay off, took quite a few years.

Mother Nature's "layoff"

Dust storm in Cimarron County, Oklahoma, 1936. The 1930s Dust Bowl drought had four drought events with no time to recover in between: 1930-31, 1934, 1936 and 1939-40.



A dust storm approaches Stratford, Texas, in 1935
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