andymesa.blog

"I was always a rebel and probably could have got much further had I changed my attitude. But when..."

Thu, 02 Feb 2012 09:16:55 -0800

“I was always a rebel and probably could have got much further had I changed my attitude. But when you think about it, I got pretty far without changing attitudes. I’m happier with that.”

- Veronica Lake

How much money would I need to be "rich"?

Wed, 14 Dec 2011 15:20:00 -0800

I recently read an article based on the results of a Gallup poll that asked Americans how much money they would need to make a year to be “rich”. My first thought was, “that’s dumb, I don’t consider how ‘rich’ I am based on how much money I make.” Yes, it’s cliché, but it’s also true. A lot of people would say they value intangible things more than money, be it significant others, or whatever.

For me, it’s time. I consider time to be the most valuable thing I have and I’m pretty stubborn about giving it up. I spend as much time as possible doing what I want to do, and as little time doing what I don’t want to do. That means I end up working about 25% as much as the average American, but also only make about 62% as much as the U.S. per capita income. That’s a trade-off I’m very happy to make; a decision I made at an early age and continue to reaffirm as I get older.

So I got to thinking: what’s the answer? What would I need to consider myself “rich”? I value time more than anything, and I already have more of it than most people. Am I already rich? Maybe. I do what I want to do most of the time, but I still have to work occasionally, and though I like what I do, it’s still work; it’s still forced upon me. I might still work on things just because I enjoy it, but only if and when I felt like it.

I don’t think I would consider myself “rich” until I didn’t have to do anything I didn’t want to do. That’s not terribly practical, if not impossible, as there are many unpleasant things in life you have to do for your own benefit, but work doesn’t have to be one of them. So as loathe as I am to admit it, my concept of wealth does tie into money, because I would need to be financially independent to consider myself “rich” by my own definition, even if indirectly.

Okay then, so how much money would I need to become “rich”? Well, I would need a lump sum that would last me the rest of my life. Because I’m perfectly happy living my life the way that I do now, I would only need as much as I’m spending to live comfortably right now and adjust that for inflation. According to Mint, that’s about $1500 per month, which includes all the travel I do. In fact, I would probably travel more and spend less - since most countries are cheaper than the US - but I think that’s a reasonable average.

Now it becomes an issue of assumptions and math. First, the assumptions.

I will live 90 years. This is probably the most optimistic assumption I will make. It’s entirely likely that our generation won’t even outlive our parents due to our own unhealthy habits, but I’d rather overshoot than undershoot and risk outliving my savings.
I’ll get a net annualized return of 8%. This is historically what the stock market has grown over the last 140 years. The last decade has been incredibly volatile, with net returns virtually flat, and it’s possible that will be the “new normal”, but I think if I invest my money in a retirement income fund over the next 60 years, more likely than not, it’ll grow roughly about as much as it has for generations.
The inflation rate will be 3%. Again, this is historically what the inflation rate has been for the last 100 years. It might change, but it probably won’t.
I’ll get nothing from the government. Whether Social Security will be around in 30 years is up for debate, and most would probably say yes, but I’m not going to depend on that assumption. Again, I’d rather overshoot.

These assumptions make or break my end result, but I think they’re reasonably conservative. If I made these assumptions 60 years ago, or 60 years before that, it’d be about the same. So we can reasonably assume they’ll be the same 60 years from now.

Then it’s just down to the math. How much would I need to distribute $1500/mo, adjusted at 3% inflation, accounting for 8% return, over 60 years? Luckily, there’s a lot of retirement distribution calculators out there that will do the work for me and the end result surprised me.

It turns out I only need $355,000 to last me for the rest of a very long life. Granted, that’s no small amount of money, but it’s considerably less than I would have guessed.

Currently, I have a plan for my retirement that uses similar assumptions. Assuming I live until 90, and retire at 60, and want to live on just $25,000 adjusted for inflation, I would need to save up $818,000. So I need to save up more than twice as much money to be spent in half the time. I guess that shows you the power of compound interest.

So there you have it. In order to consider myself “rich”, infinitely rich in fact, since I’ll never have more time than I would if I stopped working, I would need a lump sum of $355,000. It’s a number so small to me, so achievable, that it makes me reevaluate my beliefs. I’ve always been quite happy, and grateful, that I didn’t spend (waste) my time working more, either at school or work. If anything, I only regretted spending (wasting) as much time as I did.

But I’m wondering now, if I worked really hard for the next several years, or did so for the last several years, if I would or could be infinitely “rich”. It’s not something I ever really considered, or cared to consider, but I guess I’ll have to reaffirm yet again whether my current path is the one I want to be taking.

"Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma, which..."

Thu, 06 Oct 2011 10:01:41 -0700

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma, which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice, heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

- Steve Jobs

"Many of us can make more money. None of us can make more time — the latter should be treated with..."

Wed, 05 Oct 2011 10:31:23 -0700

“Many of us can make more money. None of us can make more time — the latter should be treated with the respect it deserves.”

"Do not fear to be eccentric in opinion, for every opinion now accepted was once eccentric."

Sun, 25 Sep 2011 13:58:36 -0700

“Do not fear to be eccentric in opinion, for every opinion now accepted was once eccentric.”

- Bertrand Russell, A Liberal Decalogue

"‘Kindness’ covers all of my political beliefs. No need to spell them out. I believe that..."

Sat, 17 Sep 2011 19:04:00 -0700

“‘Kindness’ covers all of my political beliefs. No need to spell them out. I believe that if, at the end, according to our abilities, we have done something to make others a little happier, and something to make ourselves a little happier, that is about the best we can do. To make others less happy is a crime. To make ourselves unhappy is where all crime starts. We must try to contribute joy to the world. That is true no matter what our problems, our health, our circumstances. We must try. I didn’t always know this and am happy I lived long enough to find it out.”

- Roger Ebert

Photo

Thu, 01 Sep 2011 22:14:07 -0700

I wrote these comments in 2004. What hit me next was the person I was writing this to, and...

Tue, 30 Aug 2011 23:33:00 -0700

I wrote these comments in 2004. What hit me next was the person I was writing this to, and eventually I made my way home. My only regret is that I waited so long to do it.

I am now thirty. I have a little more grey and I feel a little more adult. I feel like I’ve made a lot of progress, especially in the last six months, and yet I still feel like I have a long way to go. You only know how bad you are at something when you start to get better at it.

How schools kill creativity.

Tue, 02 Aug 2011 02:37:08 -0700

How schools kill creativity.

“No one shall bomb us into silence or shoot us into...

Tue, 26 Jul 2011 13:36:00 -0700

“No one shall bomb us into silence or shoot us into silence.

Nothing will frighten us out of being Norway.

The answer to violence is even more democracy.”

Norway is one of my favorite places on earth for reasons like this.

"How did the hipster burn his mouth? He started eating pizza before it was cool."

Fri, 22 Jul 2011 00:20:01 -0700

“How did the hipster burn his mouth? He started eating pizza before it was cool.”

"In Dick Tracy, the future was one where our phones were integrated into our wristwatches. Now, our..."

Tue, 28 Jun 2011 16:37:57 -0700

“In Dick Tracy, the future was one where our phones were integrated into our wristwatches. Now, our watches are kept on our phones.”

For those that are as bummed as I am that Jet Blue will not be offering their All You Can Jet...

Mon, 20 Jun 2011 12:05:00 -0700

For those that are as bummed as I am that Jet Blue will not be offering their All You Can Jet promotion this year, there’s still fun to be had flying multi-city itineraries for next to nothing.

Though it’s not as straightforward, applying for credit cards with award bonuses or buying miles outright and maximizing their potential can give you a similar experience to that which you would get with AYCJ.

Here’s a great post about using oneworld award miles to fly around the world for cheap. Citi recently offered 75,000 American Airlines miles on new credit card signups which may still be available.

Here’s a series of excellent posts on using British Airways miles to fly multiple stopovers with any oneworld airline for the cost of one award. Chase recently offered 100,000 BA miles, and will likely offer it again.

US Airways is offering a 100% bonus on purchased miles. You can use these with any Star Alliance carrier and are allowed one stopover per award. Here’s a great post on how to maximise those miles.

I’ll miss the unforgettable experiences I had with JetBlue and AYCJ, and I hope they bring it back in the future as there are more things I’d like to do that I otherwise never would have, but there are other adventures to be had with other carriers.

"If you’re not paying for it, you’re not the customer; you’re the product being..."

Sat, 04 Jun 2011 01:31:20 -0700

“If you’re not paying for it, you’re not the customer; you’re the product being sold.”

Mostly good tips, but I disagree with a few. I’d never...

Mon, 30 May 2011 15:10:00 -0700

Mostly good tips, but I disagree with a few.

I’d never suggest someone eat at Subway in Norway, or anywhere else if they can help it. A discount grocery store (like Lidl) is cheaper, and there’s always better, local options. Hostels usually offer free breakfast, you can horde some of that for lunch, and there’s probably communal dinners and free leftovers in the fridge. Also, most don’t check if you’re actually staying there.
Don’t avoid “expensive” countries. I spent two weeks in Scandinavia and the UK for only a few hundred dollars. If I never visited these countries because they were “too expensive”, I would’ve missed out on some of my favorite experiences. Eat grocery food, sleep on trains, and visit free sights.
A laptop isn’t really necessary unless you need to work. A decent smartphone will do you fine.
A credit card with no exchange fees (like Capital One) is your best bet for purchases. It also makes it easier to keep track of your expenses and earns points/miles for future trips. Definitely have cash on hand in both local and popular currencies (USD, EUR, etc) but don’t use it unless you have to.
If you do need to take out money, become familiar with your bank’s partners around the world. For example, Bank of America lets you take out money from Deutche Bank and Barclays ATMs for free. This is the cheapest, easiest way to withdraw money in local currency.

Photo

Sat, 30 Apr 2011 01:35:30 -0700

source: Maria Montessori

Tue, 26 Apr 2011 05:02:00 -0700

source: Maria Montessori

Video

Sun, 17 Apr 2011 17:52:00 -0700

Photo

Sun, 10 Apr 2011 14:40:46 -0700

"Nobody knows what’s wrong with themselves; everyone else can see it right away."

Sat, 26 Mar 2011 13:26:07 -0700

“Nobody knows what’s wrong with themselves; everyone else can see it right away.”

- Mad Men