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58 Comments
- inactive, on 10/26/2007, -0/+17if you haven't heard - many of the big lotto winners are dead broke by now. I like this article and it's long term view.
- DiscoLando, on 10/24/2007, -0/+16I say this every time a personal finance story makes the front page: You cannot build long term wealth while accumulating personal debt.
- ghostfish, on 10/24/2007, -0/+9I believe you meant "cites".
- KLowD9x, on 10/24/2007, -0/+9But with inflation, that would be about 500 dollars.
- Buffster, on 10/24/2007, -0/+9great article on long-term planning for wealth. Too much of today's society is hooked on the easy, quick fix route to wealth. Studies of the great money-makers prove that planning ahead is the only way to true and lasting wealth.
- manicallday, on 10/24/2007, -2/+7No thanks. Conflicts too much with my addictions of alcohol, drugs and mania.
- minorthreat, on 10/24/2007, -0/+5I've only been thinking about this for the past 6 months or so. So far I have been playing my cards excellent. I recently sold both my cars and my motorcycle. I no longer have any personal debt or car payment and I have a pretty nice 2003 pickup. My only problem is I have around 8k in student loans. If I were smarter 2 years ago, I would have zero loans as of now and I would much farther ahead than I am now. I just wish I had this mentality back then, I feel like I just lost a few years.
- pdxa4, on 10/24/2007, -0/+5Its pretty funny that you mention that. I bet everyone on here has at least 1 friend like that. Perfect example, I have a life long friend who's wife seems to think they need a BMW. Mind you, they don't own a home, don't have either car anywhere close to being paid off, and basically live off their credit cards because their income doesn't support their lifestyle. She even says its just a status symbol, but what I don't get is why have a symbol, when you don't have the status?
- ghostfish, on 10/24/2007, -1/+5I always wonder how that happens. I mean, if you win 10 million after taxes the interest alone every year is going to be between $500k and $1 million perhaps more if you've got a good broker.
- whorunbartertwn, on 10/24/2007, -0/+4That only stands true if the only way to enjoy life is to live above your means. You can always be chasing what you can't catch, living on more than you bring home... then one day at age 60 you're clicking the alarm off the head off into traffic for your morning commute and those who lived under their means aren't.
- inactive, on 11/02/2007, -1/+5Thats because they don't respect money, as it says in the article. Anything given has no value, so its easy to give it all away. But if you actually have to go out and work hard to get it, you will fight tooth and nail to keep every single bit of it, trust me.
- inactive, on 10/24/2007, -1/+5I agree with the part about people thinking its important to "look" rich. 90% of my friends fall into this category, and man are they going to be broke till the day they die.
- edithsan, on 10/24/2007, -0/+3No more get rich quick program please! Anything worth while always takes time and worth the time to build :)
- watsoninc, on 10/24/2007, -1/+4Super winner thanks for your insights. I have several friends who try to look rich as well. It is sad to see them waste their money.
- dreesemonkey, on 10/24/2007, -0/+3It's really not that hard to buy things with cash. I was amazed how much impulsive spending I've done before I was tracking my finances, cutting that out really hasn't changed my lifestyle all that much, and I still have a 2006 BMW motorcycle.
But I have a friend that makes much more money (trust fund) than I do who has the same attitude as you. He has a lot of awesome toys, but he's never happy with what he has. He's always looking for the next thing to entertain himself, where as I'm much more content. - Smight, on 10/24/2007, -0/+3If you actually do the math you need two million dollars invested making a conservative 6% a year if you want to be able to live on a salary of just $50,000 a year adjusted for (reasonable) inflation for the rest of your life.
Those people just stick the money in the bank and then live like they make $300,000+ a year.
On the plus side, now that they wasted all that money they have a lifetime of regret ahead of them. - Smight, on 10/24/2007, -0/+3if you took out 120,000 than you just lost the inflation amount on your 2,000,000 so while you still have the full 2 million invested it's relative dollar value is closer to 1,935,000. You have to reinvest 60,000+ if you don't want to lose ground to inflation.
- watsoninc, on 10/24/2007, -0/+3Sturgent, I saw an E! news (oxymoronic) special and 20/20 story about the "lotto curse". I appreciate the comment.
- watsoninc, on 10/24/2007, -0/+3Dfarg,
I just want to say thank you for your comment. My humble opinion is that all to often we seek out "novel" advice instead of acting on the revelations we already have. - eric0213, on 10/26/2007, -1/+4$2,000,000 * 6% = $120,000.
Either your calculation for inflation is higher than mine or you're paying nearly 60% in taxes. - Bdog2g2, on 10/24/2007, -0/+2Live in S. Florida, about 90% of the people fall into that category. They had a man on the news about 2 years ago who had a Lotus and lived in a shoe-box for a house in the middle of the ghetto.
- sifiblog, on 10/24/2007, -0/+2Put $100 into a mutual fund(s) that gets at least 10% annual growth on average, travel near the speed of light for 24 hours for time dialation (or freeze your self with suspended animation), come back in 500 years, and you would have $100 X (1.1^500) = $ 49,698,419,673,122,668,962,869.43 :)
- GravitySpec, on 10/24/2007, -0/+2First, Thanks for writing a great article. You have one more subscriber.
That's the most amazing part about it. Most of the information to succeed is out there already. The problem is there are many who will twist that information and turn it into product they can sell. They lace that product with a small amount of actual truth and useful information and then the rest of the product leaves them to their own devices and waits for them to fail. I've learned my lessons the hard way and still have a long way to go before I'm financially secure. The difference now is that I've started to chart my own course. It won't be fast, but if I stay my course I will have a lot to look forward to. - expatcatalyst, on 10/24/2007, -0/+2Excellent article. Says what needs to be said in a short space!
- foohookups311, on 10/24/2007, -0/+1deeppdigger, I am also the same age and took a very important look at finances a couple years back. If you read a few books about finance you can begin to accumulate wealth. I would first and foremost start with "Rich Dad, Poor Dad" by Rob Kiyosaki. This book should be required reading in every public school. After that read "The Millonaire Next Door" by Thomas Stanley. Also listen to podcasts such as Dave Ramsey and Sound Investing by Merriman Capital and you will begin to understand how it all works. I am by no means an expert but the journey of reading and listening these past couple years have put me years ahead of my peers.
Some other good reads are:
"Think Rich, Grow Rich" by Napoleon Hill
"Common Sense Investing" by John C Bogle - CarbonAndroid, on 10/24/2007, -0/+1But I want it now.
- Spoomeister, on 10/24/2007, -0/+1This implies that one hates their job, and that their job's sole purpose is source of income. If you like the work you do, you don't have to look forward to retirement.
- KLowD9x, on 10/24/2007, -0/+1Looks like someone beat you to it.
- dfarq, on 10/24/2007, -0/+1Nothing he said here is particularly new or original, but it's all very solid advice, especially avoiding the get-rich-quick schemes. I have an uncle who was a multimillionaire and he lost it all on get-rich-quick schemes. Stupid, wasn't it? He was already rich! Patience and consistency will always win out, no matter how little you start with.
- bacon_skoda, on 10/24/2007, -0/+1except you also become a scam magnet.
- midwest187, on 11/02/2007, -0/+1Indeed, a great article. Very informative. You're doing a great job with your blog:)
- ngmcs8203, on 10/24/2007, -0/+1NM he references Millionare next door and took the opening bits from it.
- GoblinJuice, on 10/24/2007, -0/+1My addictions of tobacco, alcohol, bad women and sloth are better! =D
- edverb, on 10/24/2007, -0/+1Sure you could say "coulda woulda shoulda", but look at it like this. The interest on $8K for two years was the cost of teaching you a valuable lesson (and that puts you ahead -- most people never learn in the first place.) Since you learned from it, the money was not a total loss. It may yet turn out to be money well spent.
- mediaspree, on 10/24/2007, -0/+1or, just start digg.com
- watsoninc, on 10/24/2007, -0/+1Deeppdigger and Dead Elephant,
In addition to foohookups331's recommendations (I have practically all of those resources in my library), I wanted to include the additional links in case you wanted to look at some sites tonight.
For a basic overview of investment vehicles, I like...
1) The Motley Fool (http://www.fool.com/investing.htm?source=LN). Their bias is towards buying individual stock, but to their credit they are a strong proponent for the DIY philosophy, which means no broker fees. They also endorse Exchange Traded Funds and other Index Funds for most typical investors. A lot of their material is designed to make you buy their magazines.
2) CNN Money (http://money.cnn.com/magazines/moneymag/money101/i ... Here they have some more of the investing terminology and basic theory.
Other Resources
3)The Intelligent Investor (Benjamin Graham) is also a great (but dense) read.
4-5) The Investing Bible and Investing for Dummies also have the basics well-described.
I hope this helps. - quickricky, on 10/24/2007, -0/+1A fair article, but if you really want to learn more about index funds, I suggest reading The Intelligent Investor by Benjamin Graham. The Millionaire Next Door is also a good book
- DiscoLando, on 10/24/2007, -0/+1Spoomeister seems to think that 'Living For the Future' and 'Living For Now' are mutually exclusive ideas. He couldn't be further from the truth. There is nothing stopping me from having fun and enjoying my life now - in fact I do so regularly. The only condition is that I do so without accumulating any debt. I pay cash for all purchases and plan ahead. It's actually fun, and not hard at all.
- whorunbartertwn, on 10/24/2007, -0/+0Is reducing your spending 10% really going to turn your life into a puritan existence? I agree there are responsible ways to use credit and don't get the "all credit is bad" mantra displayed by some but you seem to have this notion that your life money = happy and studies show it's not the biggest factor in your happiness. You can't buy time, and when those who socked a little away over time can stop working 15 years before you or can recover from a financial setback without personal devastation because they've got some in the bank you'll look back and wonder if that 10% really made a difference in your happiness.
- whorunbartertwn, on 10/24/2007, -0/+0How can Spoomiester ever be happy if the requirement for happiness is always more than he has? I value time, and financial independence is the how I'll buy it. It's not a black and white thing where you're either happily spending away or saving money yet wearing shoes made from old tires and operating a wind powered vegetable canner... the overwhelming majority of people can afford to put away a little every paycheck.
- eric0213, on 10/24/2007, -1/+1Funny, I saw under Sturgent's post a "Reply to this comment".
- watsoninc, on 10/24/2007, -1/+1Gravity Spec, thanks so much for the positive feedback and for the subscription (that's great!).
Spoomiester, who said anything about waiting until you are sixty to have fun? I am just saying that one should be able to afford their fun. Live within your means, and then increase your means (i.e. by investing to create a passive income). If you do this, you will likely be able to retire early. Ironically, it is the people deep in debt who generally have to work longer than those who are financially independent. To me, that doesn't sound like much fun. I prefer tangible wealth over prosperity on credit any day. - bacon_skoda, on 10/24/2007, -2/+2article = ZZZzzzzz.....spam.....
- deeppdigger, on 10/24/2007, -0/+0i agree.. its hard to make sense of investing for me. im 24, recent grad from college. i would like to see something that 'explains it all' or some kind of crash course - or a step by step guide on how to invest, what the potential risks are and where to start. i also liked this article but would like to learn more.
- rockefeller2, on 10/24/2007, -0/+0I read that book too and it started getting repetitive. Seemed like he had one point and used about a hundered examples to prove it. I lost interest about half way through cause I felt like I was reading the same thing over and over...."This family that has nice cars and nice house really don't have ***** as far as finances are concerned....this family that saves and lives frugal has a big nest egg."
- scott2007, on 10/24/2007, -0/+0You can't have two masters.
- rockefeller2, on 10/24/2007, -0/+0"have put me years ahead of my peers"
You are a member of the superior class now!!!!!! - logosx1, on 10/24/2007, -1/+1Fine. But when you're old and destitute, don't come crying to me or the government for my hard-earned money.
- mfab, on 03/01/2009, -0/+0now that's a voice that should be heard - give it time, keep it simple and don't bet on one horse - easier said than done but still golden
- 1tb0y, on 10/24/2007, -0/+0This is very true. When I worked at the lottery where they tracked how the lottery winner's did over time (marketing purposes), around 80% of the people who choose the annual payout live check-to-check and when that stops, they're broke.
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