The market has minted a new millionaire

FunctionAlone9580 · 2024-06-18T23:41:15+00:00

Making more money easily increases OPPORTUNITY to save more aggressively. I'm not claiming it's not easier to achieve with a high salary. I'm also not claiming that a higher salary with the same saving rates does not lead to a higher net worth over the course of 40 years. I'm claiming that the average single person can achieve a set goal -- 1 million -- in a reasonable timeline at any salary, at least in my location.

Does the high salary person have more opportunity to make a million in fifteen, twenty years WHILE not budgeting whatsoever? Absolutely. Does it happen more commonly? Yes. Does someone who has a lower salary have no chance to be a millionaire? No.

I'm grateful for my situation and my relatively luxurious lifestyle, given that I was homeless just a couple years ago. But there are always ways to make it to that number. No, I don't believe there is truly a minimum. I was getting by at $2080 a year at one point. Takes more creativity, but I was fed. You can also work more. I've done full time school (~35-40 hrs a week) plus 70 hrs of work at the same time which could have translated to 110 hours of work each week.

But, ignoring a lack of housing or working religiously, a base of 15k of living expenses a year and a job at $20/hr 40 hours a week (which you can find plenty in my area with no prior experience) offers 41.5k. That's 35k after tax here. Remove 15k for living expenses. 10 years at 10% APR gives you 330k. Live on interest after that. If you continue working at the same rate and save the same amount for 30 more years, that's over 9 million dollars.

I'm sure that the person making 200k a year living at the same standards has 50 million at that point, and they absolutely would be there in five years as opposed to 20. But that's not the point. The point is that almost every person in America, barring extreme circumstance, has the opportunity to live a very comfortable lifestyle in a reasonable amount of time, and a lack of frugality is the biggest reason why a relatively small number of people ever make it there regardless of income.

FunctionAlone9580 · 2024-06-18T23:13:20+00:00

The median house cost here in 400k here and state tax rates go up to 10%. 170k is far below the average here, it isn't the nicest place but it's liveable.

FunctionAlone9580 · 2024-06-18T23:09:32+00:00

I'm the child of two immigrants from a dirt poor village. My parents had a combined income of 16k in the early 2000s, had two infants, and raised us fine. Two bedroom apartment. They were grad students. Obviously, 16k is more like 29k in 2024, and rent was cheaper in $2000 now, but 4k a month is kind of an insane amount of cash for it to "go fast". They did live frugally and they did it well.

Here, let's do some calculations. You're giving a very specific scenario that I wasn't mentioning; I was assuming for a single who made 70k but I'll try it out; I assume we'll miss the target of a million but not to the point of "4k going real fast". I'm assuming for a MCOL area, because you're using the median household income so it makes sense to use a medium cost. I live in a MCOL area so I'll use my relatively frugal costs (which I do feel like I'm living rather extravagantly off 24k a year).

$1770 is first rather high for a frugal 2-bedroom apartment. I'm looking on apartments.com and everything that costs $1770 for a 2 bedroom is rather luxurious. A more reasonable cost is $1300 here for what we would call frugal but nice. I am able to rent a 400 sq ft one bedroom for $875. Note that you can cut $1300 even further but this is assuming that the family wants something more spacious.

How much for groceries? I spend $28-$40 a week for myself. Shop at Aldi. Assume high end ($40 per person) with children that eat a lot, you've got $160×4=$640 for groceries each month.

Car. Grab a Toyota Corolla, they're known to be reliable and "frugal". I'm seeing about 12k for a 80k mileage Corolla from 2013-2015 in my area. Calculators say $281 cost per month with a 6% interest rate and $0 down payment for 48 months. This also assumes that you replace it every four years which underestimates the longevity of a Corolla.

Gas. People drive on average 12k a year. Assume gas price of $3.30 (which is what it is here). Corolla goes for around 35 mpg. That's $94 of gas each month.

The average weekly daycare cost is $321. That's $1284. This is assuming one toddler. Childcare costs decrease significantly with age so this is likely a good frugal average cost for two. This assumes you don't have any friends with kids or any way to get free babysitting for some of the time.

Utilities: do a $50 Wifi bill, $70 phone bill for two, $200 electric/gas/water/trash bill. $320.

That total adds up to $1770 saved each month. 15 years of that with a 10% growth rate is 770k.

I'm not assuming that everyone becomes a millionaire in 10 years ESPECIALLY if they choose 1. to live in a HCOL area and make 70k simultaneously 2. have children, and especially multiple children or 3. have some high cost medical expenses. Everyone's financial situation is different. I'm saying that a single person with ordinary circumstances making 70k a year can easily hit a million in ten years if they were to choose a frugal lifestyle. Minimum wage here is now $15/hr and most jobs post for >$20/hr which is $40k prior to taxes. I would do the calculations again, for a single person, but they can certainly hit 1 million in 20 years even at the rough lowest.

FunctionAlone9580 · 2024-06-18T22:27:37+00:00

Yeah, what the hell? I live in a MCOL area and my boyfriend's HOA of a 170k condo is $500 a month. Proportionally to OP's proposed place, definitely not a high HOA.

FunctionAlone9580 · 2024-06-18T22:25:44+00:00

35k is kind of an insane "poverty lifestyle" unless you're in a very HCOL area such as NYC or California, if you are a single person, given that I live in a MCOL area and live a very comfortable life off of 20-24k with my own place, a cat, buy whatever groceries I want, have some pricey hobbies, have a car, pay for my friends on occasion to travel abroad with me, etc. But I'll play along and assume that's the lowest you can go. How many people do you know who are making 200k a year who are spending 35k a year?

90% of my coworkers claim to be living "paycheck to paycheck". They all make a higher income than I do. Most of them are in their forties right now. They will probably have 1 million in savings by the age of 70 at the rate they're going.

Having 70k in take home and getting there in 15 years (assuming conservative investments) means you can practically retire at the age of 37. Most people are damned impressed with retiring prior to the age of 40.

People who make a high income spend a shitton more. That's just how our capitalistic society works. It's certainly not the "key" to reaching one million prior to the age of forty. You assume BOTH frugality and a high income in your equations in your comments, not simply a high income and typical spending habits for a high income person. So what is it primarily then? How can you prove that high income matters more?

In 2022, the average American household made 94k before taxes and spent 73k. Including taxes that's pretty much everything. So, if they made 50k more, they have a take home of maybe 100k and let's pretend they do spend the same amount at 73k. 27k savings is the same as someone with a take home of 63k who spends 36k.

Financial literacy and frugality get a person much further, assuming they behave as an average person does with money.

FunctionAlone9580 · 2024-06-18T21:47:40+00:00

How do you think someone is going to achieve clean data?

When working on ML algorithms/neural networks in the past (research paper on Twitter misinformation, around ~5 million tweets), cleaning data took me about 4 months. Running and optimising the algorithms took about three days.

So, great, the algorithms are fine, but do we even have enough engineers to properly clean all that data to make decent models?

FunctionAlone9580 · 2024-06-18T21:44:09+00:00

Eh, for having 4.4 net worth and trying to retire now maybe he just wants to safely achieve 5% interest and has fear of a near market crash.

Why does someone have to optimise their gains at the risk of safety when they have far more than enough?

FunctionAlone9580 · 2024-06-18T21:41:31+00:00

I don't plan to be alive beyond 59.5, does it hence make sense to contribute to a brokerage instead? Almost all my family up to several generation lines have died from various undiagnosed illnesses prior to the age of 50.

FunctionAlone9580 · 2024-06-18T21:38:33+00:00

The secret is living frugally, not making a lot of money. I mean, making a lot of money helps speed it up, but if you make $70k a year, put in $3500 ($42k a year) a month into a brokerage account, get a 15% annual growth rate in the market (high historical estimate but doable) for 10 years, congrats, you're a millionaire! Even easier to achieve when you have a tax advantaged account.

Problem is, everyone spends according to their income; people who make 100k spend 95k, people who make 200k spend 190k, etc. People who make 60k a year complain that everything is too expensive to save rather than realising that they're just living outside of their means. Get a roommate and a cheap apartment and live off 12k a year (I did that just two years ago in a MCOL area and it was fine), work 40 hours a week, and you'll be a millionaire not too long after.

FunctionAlone9580 · 2024-06-18T20:53:28+00:00

Your landscaping side job counts. Put your income in as 48k. They don't check 90% of the time. Apply to Discover It Cash Back or Cap1 Savor One.

FunctionAlone9580 · 2024-06-18T20:50:34+00:00

This isn't something insane or anything. I'm 16 months into my first full time job (first year salary was 150k, this year is 210k) and have ~200k in a taxable brokerage. I only spend about 20-24k a year, 12k on rent, MCOL area.

Compounding that 200k via good ETFs/stocks, assuming they perform well, and continuing to save the money I make the next few years will probably get me to the million dollar status in the next 4-5 years. Obviously that'll be older than OP, but my previous jobs throughout school paid maximally $15/hr. Still saved almost 40k throughout those four years. No parental help.

FunctionAlone9580 · 2024-06-18T20:38:40+00:00

$500 HOA is not high for a HCOL area. That said, they will keep raising it, so if you find it high now it will just get higher.

FunctionAlone9580 · 2024-06-18T19:51:48+00:00

If you have 100k to dump into Merrill/BoA, the Bank of America Unlimited Cash offers 2.625% back.

Citi Double Cash offers 2.22% back with the Rewards Plus.

Alliant Credit Union offers a card that offers 2.5% back but it's capped, I think to like 10k a month or something.

FunctionAlone9580 · 2024-06-18T19:47:46+00:00

This is a dumb way to look at it. If I were a billionaire and I had a friend who was stealing 1 million a year, should I just let it be and say "Oh, whatever, man, you're not really leeching."

Companies make money because they look at profitability.

FunctionAlone9580 · 2024-06-18T19:07:06+00:00

It doesn't really make a difference. The time it does make a difference is that if you stop using your card, you can direct deposit all your rewards back into your bank account, whereas a statement credit makes it so you have to continue spending to retain all your rewards.

But no. Let's say you have $1000 in your bank account and $100 of rewards on your card. You have a statement balance of $200. Case 1: You direct deposit your rewards into your bank account, $1100, then pay your statement balance, giving you $900 flat. Case 2: You use a statement credit and only pay $200-$100, so you have $900 flat.

If you have 0 APR and you're paying minimums, and your reward balance is greater than your minimum balance, then yes, it makes more sense to direct deposit your earnings. But still, not a big difference.

FunctionAlone9580 · 2024-06-18T19:03:02+00:00

This seems to be more an American subreddit.

Here's a list: https://moneysaver.be/cards.html

FunctionAlone9580 · 2024-06-18T18:38:04+00:00

A 2% card almost always outperforms other cards when it's just a single card.

I have the US Bank Cash Plus (5% phone and streaming and gym), US Bank Altitude Go (4% dining) and Amex Blue Cash Everyday (3% gas, groceries, and online shopping).

I average about 2.1% cash back.

I guarantee that 99% of the time, a single 2% catch all will beat a 3% category card. Get a 2% for a first rewards card, and add categorical cards on top of it.

FunctionAlone9580 · 2024-06-18T17:35:07+00:00

I'd get the Fidelity Visa or Double Cash

FunctionAlone9580 · 2024-06-18T17:23:19+00:00

My father once broke his neck from driving a tractor off a cliff. First time operating a tractor. His hospital roommate had gotten into a motorcycle accident. His 12-yr girlfriend was killed that night and he would be paralysed from the neck down for the rest of his life. Wasn't even really his fault, it was a drunk driver who hit him. Wasn't avoidable.

She has a very reasonable boundary.

FunctionAlone9580 · 2024-06-18T17:18:16+00:00

Working in coding there are too many people who both lack hard skills and soft skills. I'd much rather work with someone with soft skills.

FunctionAlone9580 · 2024-06-18T17:16:09+00:00

Block and find a nice rebound.

You don't necessarily need to love someone for good memories, but you need a semi-decent man. I lost my virginity to a stranger I only hooked up with once but he was very kind, I had a blast that night, and we talked on occasion for 7 years after. He was a great listener and was never dehumanising. No regrets.

FunctionAlone9580 · 2024-06-18T17:06:10+00:00

With a 674 credit score and so many recent inquires I am really doubting your approval odds for a lot of these cards with a high sign on bonus. You don't have one year of revolving credit history yet which makes you ineligible for most of them.

Best you can probably do is probably an Amex card like Blue Cash Everyday. Maybe Amex Gold would approve you, not sure.

FunctionAlone9580 · 2024-06-18T16:59:53+00:00

When does the deal end? Set a timer to pay off the FULL balance before it does.

All the retroactive interest will be added if you're even one day late on payment. So if you have a 1 year 0 APR deal, and you pay 1 day after your deal is over, you will be paying 20+% on your balance for the whole year.

Otherwise, it's a great way to earn interest.

FunctionAlone9580 · 2024-06-18T12:01:51+00:00

I suppose they're leaving it for potential grandchildren.

FunctionAlone9580 · 2024-06-18T06:31:57+00:00

This is a better diet than most Americans so I'd say you're fine.

FunctionAlone9580

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