How I got wealthy without working too hard | Hacker News Reader

How I got wealthy without working too hard

amaca.substack.com

226 pointsyouhavetosayit329 comments

> Take a $ 500-1000 / day, full-remote job

> Take 2 months for holidays in-between contracts

> Do this for 7 years while investing most of your salary in a diversified portfolio.

Working $1000/day contracts for 5 days per week, 10 months per year is equivalent to $217K of contractor income per year. But contractor income is not comparable to normal career income because you have to handle additional taxes and health insurance, so this is more like a $150K (plus or minus) full time job once you subtract self-employment taxes and pay for health insurance.

But that’s also assuming that the author stated out making $1000/day, always made $1000/day, and always had availability of these easy, low-effort, $1000/day contracts whenever they wanted. Most people don’t start out contracting with an unlimited supply of contracts that pay exactly what they want.

Working a $150K job for 7 years isn’t really a recipe for getting “wealthy”. Even if you could reduce your expenses to below $25K per year (eg $1K/month rent, $1K/month for everything else) you might be able to save $100K of that annually after taxes. But that’s best case and you really have to compromise a lot to get there unless you really enjoy living in the middle of nowhere, never traveling, and none of your hobbies or interests cost any money.

So there’s a lot missing from this blog post. I suspect maybe the author got lucky with some outlier investments, but that’s not something that can be conveyed in a “how to” blog post.

FIRE type wealth trajectories are possible, but this isn’t what it looks like. Working normally-paid jobs for 7 years and just living your normal life doesn’t get you there (unless you luck into some 1000X investment somewhere or get a huge inheritance boost, but those are rarely mentioned).

Which is, of course, still very good money for a single earner in most of the country.

Especially in early career.

I’ve been in my current career for seven years and make 44k (52 with benefits accounted), so I am very much an outside observer here.

> still very good money for a single earner in most of the country

Not to mention the world, since we're not all in the same country.

Still great $$ if you live in a reasonable location. Where you can buy a reasonable house for $200k instead of $2M

This sounds like it's specific to a particular market (and that market is the USA). My experience has been that being an employee (in the UK) resulted in significantly more taxes than being self-employed. Europeans almost never have comparable healthcare costs to the USA, so that part isn't universally true either.

> being an employee (in the UK) resulted in significantly more taxes than being self-employed

Why would this be the case? I'm not challenging your claim, I'm just curious. Is the idea that the UK wants to give tax breaks to small businesses?

> Europeans almost never have comparable healthcare costs to the USA, so that part isn't universally true either.

Not sure about self-employment, but American professionals take home (i.e., after taxes, healthcare, and retirement/pension) considerably more than their European counterparts. To the parent's point, it's quite a lot more difficult for an ordinary (i.e., not-self-employed) American professional to get wealthy by following the approach outlined in this article, but it's quite a lot harder still for our ordinary European professional.

The UK has a progressive income tax system (iirc up to 10k is tax-free, then 20% from 10-50k, then 40% from 50-150k and 45% for everything beyond that). This means that spreading tax liability between capital gains and income tax leads to a lower total tax bill.

You also get to write off business expenses and reclaim VAT (sales tax) as a business, which a normal consumer cannot do.

Your point about remuneration is spot on. But remote work for US clients is possible and I’ve found that they’re happy to pay close to US rates for UK remote.

Working 1099 should be preferable from a tax perspective (if through an s corp) and from a liquidity standpoint (money is cash, not 401k contorbutions), not worse, I would think.

You do have to pay health insurance monthly but for a young single person I'm at 250 a month so nothing that really changes things.

Even better, if you are married, your spouse can have a job that provides health insurance and you work as a contractor.

Exactly what I was thinking, sure you have to pay health insurance and self-employment taxes but you can write off so many other expenses. You can write off computer purchases, even part of your rent or mortgage if you use an extra bedroom as an office. And then there are all kinds of ways you can re-invest earnings in your business instead of taking it as salary if your monthly costs are only $25k a month.

> Take a $ 500-1000 / day, full-remote job

How common is this as contractor pay outside the US? I'd find it hard to hit the lower end of that (i.e. 440 eur per day) in fully-remote jobs, despite the pandemic making remote jobs more common.

For context, I'm a Python dev, in finance. I used to do Java, which I note still seems to offer higher salaries, but I wouldn't be tempted to return. Maybe the AWS route could work?

Very common, worked Netherlands, Belgium and Germany for ~10 years, doing 200k eur annually on average, contracting, Python, Java, senior dev, devops, etc. My immediate contracting colleagues, about 20 guys and gals are doing comparatively (I.e., ~90 to 120 eur rates, ~2000 hours a year).

Edit: apparently very common for my bubble at least, no idea if this is “normal” In Netherlands, Belgium and Germany..

120/hr? Rates are lower now, at least the ones on the open market. And 2000 hours a year is a stretch, you need to take some holidays. But all in all, still better than..

Fully-remote I couldn't say (I feel it'd be much harder for client acquisition to build the same level of trust), but pre-pandemic, and shortly after its start I was able to consistently make ~800EUR/day (100EUR/hr) on gigs where I was in the office 1 day/week in Berlin. ~75% of clients accepted that rate on the spot, so with a lot of inbound requests, you could probably even push for more.

That was mostly for full-stack (Node)JS jobs.

>For context, I'm a Python dev, in finance. I used to do Java, which I note still seems to offer higher salaries, but I wouldn't be tempted to return. Maybe the AWS route could work?

According to SO surveys Python programmers are better payed than Java programmers: https://insights.stackoverflow.com/survey/2021#work-salary

I'm in the UK (London specifically) and have worked for daily rates between £600 - £950, with durations lasting between 6 months - 2years.

IR35 has certainly thrown a spanner in the works, but i'm noticing more and more businesses offering 'IR35 friendly' contracts.

As an aside, I no longer contract, have gone the startup route instead.

> But contractor income is not comparable to normal career income because you have to handle additional taxes and health insurance, so this is more like a $150K (plus or minus) full time job once you subtract self-employment taxes and pay for health insurance.

What ? I've never heard of a scenario where you get less money after tax as a contractor vs employee, even without doing things like claiming a bunch of everyday expenses on your business (like a car, home office rent, equipment, etc.)

IIUC in the U.S. you have to pay the employer payroll taxes if you're self employed.

https://www.irs.gov/businesses/small-businesses-self-employe...

I guess you cheat your taxes then - 1099 sucks, you don't get employer matches on taxes.

> What ? I've never heard of a scenario where you get less money after tax as a contractor vs employee

It’s called self-employment tax: https://smartasset.com/taxes/self-employment-tax

It’s not actually a separate tax. Normally your employer pays these taxes but you don’t see it. When you are a contractor you are self-employed, so as an employer of yourself you have to pay these taxes like any other employer.

Some people play games with certain corporate structures where they pretend they’re only worth a fraction of what they’re getting paid and then they extract the rest as dividends. It’s one of those tax tricks that works as long as nobody ever looks to closely at your tax returns, but if you’re caught you have to pay it back plus penalties.

I think the point is if you're a contractor and you're not getting the same rates as an equivalent company would for that contract/position you're under-selling yourself. As for the "tax trick" you still don't get out of paying income taxes on the entire revenue you generate. You just pay employment taxes on the portion that is salary. Whether that's "fair" or not is open to debate of course.

When contracting, in addition to self-employment tax, you have to consider risk of not having paid work for a time and other lost benefits like health care. The rule of thumb I've heard is $1 as an employee ~ $1.50 as a contractor.

The trick discussed by the parent pertains to S-corporations, which allow you to take distributions as long as you pay yourself a reasonable salary

Not in my country, I actually get tax break for being self employed. In the end I pay less tax on my income than someone employed earning a similar income. Not to mention I make 2-3 times what I would make being employed. And I'm not playing any tax tricks.

It depends on the country. I'm not familiar with contractors in the USA but in many countries contractors take home (with a few corporate tricks) is significantly higher than employees, especially, as you mentioned, if you can pay yourself with dividends, avoiding most of social insurance.

It's perfectly legal though, not a matter of oversight.

Countries like the UK are now closing these and other loops with IR35 but you can still do that in many places.

You also have the option of not taking money out of the company and use your company to invest your own money, paying up taxes only on the money you need to support your lifestyle.

When you're done living where you're living you can also opt for a stop in Dubai or Portugal with NHR, to withdraw the profits as foreign dividends tax free.

>It’s one of those tax tricks that works as long as nobody ever looks to closely at your tax returns, but if you’re caught you have to pay it back plus penalties.

How is that a tax trick ? Pretty much anyone owning a company pays himself a tax minimum and extracts the rest through profits, etc.

You're required to pay a "reasonable salary". So if you pay yourself minimum wage, but collect $100+k in profit, you may get funny looks from the IRS.

Rule of thumb I've heard is 50% wages 50% profit, up until $100k wages, beyond which you can really start milking the profit.

Yeah here we have a minimum director salary (which is basically median wage instead of minimum), after that everything is pulled out through profit.

> So there’s a lot missing from this blog post. I suspect maybe the author got lucky with some outlier investments, but that’s not something that can be conveyed in a “how to” blog post.

Why do you think that? All the numbers work out. Even in your hypothetical scenario, investing 100k for 7 years, especially in the last 7 years, would easily bring you 1M total investments.

> FIRE type wealth trajectories are possible, but this isn’t what it looks like. Working normally-paid jobs for 7 years and just living your normal life doesn’t get you there.

This is exactly what FIRE is, and again, using numbers from your own post, which I think are reasonable, this is exactly what it looks like. 1M invested, 25k/yr expenses = 40 years with no gains in investments, people into FIRE usually assume 4% growth, so he would be even better off. If that isn't FIRE, I don't know what is.

> would easily bring you 1M total investments.

I think this is the disconnect with GP, $1M isn't what anyone can really call "wealthy" nowadays. Yes, it's a lot of money, but does not allow one to live what most people consider to be a rich lifestyle.

I absolutely can and will call $1M wealthy. Anyone who thinks it isn't is absolutely living in a bubble.

I once shared this outlook, but when one considers their own ideas about the lifestyle "wealthy" entails, and run some numbers, specifically determine the annual spend for that lifestyle, one will quickly realize the truth. A million can be blown in a year, or SWR'd (safe withdrawal rate) at $40k a year indefinitely. Can you retire on $40k a year? Would you want that level of income and lifestyle?

Of course this depends on location and cost of living. I am referring to someone in the US.

Edit: Specifically, does anyone (in the US) consider a $40k year income to qualify as "Wealthy"? Since that's what's being discussed here.

> I once shared this outlook, but when one considers their own ideas about the lifestyle "wealthy" entails, and run some numbers, specifically determine the annual spend for that lifestyle, one will quickly realize the truth.

In other words, at some point you underwent lifestyle inflation and didn't realize it. And now you're unwilling to give it up.

> Of course this depends on location and cost of living. I am referring to someone in the US.

Millions of people raise families on 40k/year in the United States. These are your fellow citizens. Perhaps you can ask them how they do it and whether they are "satisfied" with that level of income and lifestyle.

Just adding to your point:

Not only do millions of people raise families on $40k, they also do so while still living in NYC, SF, Seattle, and other expensive cities.

Raising a family in NYC on $40k is what poverty looks like, not wealth.

Thousands of families in these cities still do this.

I think poster is saying $40k a year is fine in LCOL but not wealthy. And it's the yield of $1 mil.

$40k a year during retirement. That was the original argument.

With mortgage paid off and grown kids and social security supplement, $40k is plenty of money.

Adding in social security is really moving the goalposts. The discussed scenario is about working for less than ten years, which means much younger than 65-72.

They're also including a mortgage that's paid off lmao.

Yeah totally, $40k is plenty. You just need to not have kids, have a paid off house, no loans, live in LCOL area, get grandma's inheritance, have it come from a retirement account with minimal taxes, hope inflation doesn't kill your $40k over time, hope healthcare costs don't continue to rise, etc....

> Millions of people raise families on 40k/year in the United States. These are your fellow citizens. Perhaps you can ask them how they do it and whether they are "satisfied" with that level of income and lifestyle.

I have. They are not satisfied.

$40k

Taxes - $5000/year.

Monthly budget: $35k/12 = ~$2900/month

Rent - $1200

Utilities (incl. tv + internet + phone + gas + elec) - $300

Car payment - $300

Car insurance - $90

Food - $300

Gas - $80

Health insurance - $500

Oops we're already at $2770. Hope you don't need your tires changed or have kids. Maybe you can just go without health insurance for a while. After all, having health insurance is really just the result of lifestyle inflation.

What about laundry? You have a free in-unit machine? Otherwise that's like $40/mon. You also better not have any other loans. Fell behind during Covid and took on CC debit? Good luck paying that off for 10 years. Went to school? Hope Biden cancels some of your debt, because that's the only way you're paying that off. Also, Trump era tax changes mean you now have surprise tax bills every year because less is being taken out of your paycheck. Now you have $80 in fees and counting on top of the tax bill that you still owe.

I'm not making any of that up. That's real. Why don't you talk to people instead of pretending like $40k is enough to be "satisfied"?

$40K was the starting salary for new college grads, just out of school... 25 years ago. To think anyone with real expenses, like raising a family, would be "satisfied" with this is simply not believable.

Not going to argue with the larger point you're making, but to nitpick:

> Car payment - $300

Is way too high. I know it's "common", but it's also entirely unnecessary to pay that much. If I add up the cost of owning a car (purchase price + maintenance, but not gas), it has never been that high for any of the cars I've owned in the last 20 years. Not even close.

Buy old reliable cars. Even if one of them ends up being a bad deal you'll easily average out to less than $300/mo.

> Health insurance - $500

If your income is $40K/year, you'll pay less than that (if you're single).

> Rent - $1200

Assumption would be that you've paid for the place. Otherwise, this number is highly variable.

> Taxes - $5000/year.

I doubt it. Will highly depend on the state. You have various deductions, etc that will bring your MAGI down quite significantly.

I lived on the equivalent of today's $32K/year for many years very comfortably. Had hobbies, bought pricey electronics, and traveled cross country often - always staying at motels (so not camping or sleeping in the car).

> I'm not making any of that up. That's real. Why don't you talk to people instead of pretending like $40k is enough to be "satisfied"?

As noted above, I lived on less for years. I didn't even try to be frugal. I won't claim everyone will have it as easy as me, but I can assure you that I was not an extreme outlier. I hung around those with similar income, and their experiences matched mine.

> Can you retire on $40k a year?

Maybe in Europe.

No, in the US. Not even close. Even with a paid-off house. Certainly not before "retirement age".

Health care is the reason.

Obamacare subsidies are based on income. You are likely getting subsidies at this level of income. Will it exist for the next 40 years, who knows?

A couple years of serious illness for you or anyone you're responsible for (spouse, children) will still ruin your retirement plans, if you try to retire early on $40,000/yr in income. A "Silver" exchange plan, even if the premium were $0/m, would still expose you to so much financial risk ("max out-of-pocket") that you'd be rolling some not-very-friendly dice, trying to retire early.

What is the max out of pocket number that you are seeing that is so financially ruinous?

My out of pocket maximum is something like $7000/year. That would be painful on $40k/year, but we're talking about someone with a $1M nest egg, so unless you hit the maximum every single year, its not impossible to cover. Spending $47k/year for a couple years instead of $40k isnt going to financially ruin someone with $1M.

My assumption is that a couple (say) would be running with pretty thin margins, even assuming no mortgage interest or rent and modest living, on $40,000 a year and a fairly low CoL area, so losing another $7k (that's per person, right, not the max-out-of-pocket for the whole plan? Or maybe your exchange plans are way better than ours) would be be very painful, at best. A forever-alone hermit living in a rural trailer park might be another story—there are definitely some circumstances I can imagine in which it might be kinda OK to try to retire before Social Security and Medicare kick in on $1m savings, but not ones that involve anything like a normal life.

And sure, you may not be missing payments thanks to the $1m in the bank, but if you start eating that principle too early (=before you're 60ish years old, at a minimum) you might find yourself needing to get a job after being out of the work force for (say) 10 years and while possibly dealing with serious, chronic health problems. I'm not sure how disability works when you haven't worked for a few years due to retiring, and have six-plus figures in the bank still, but my guess would be "it doesn't", until you are, in fact, ruined.

You can still get ACA subsidies if you fall within the income level it's not means tested, they absolutely designed it this way to be gamed. Also qualified distributions from a ROTH IRA are not considered part of modified adjusted gross income.

So do your mega-backdoor ROTH conversion and take out of that and it doesn't count against the insurance-company subsidy.

The subsidies don't help with copays, deductibles, and co-insurance, right? Those can run into the five figures even on a "silver" plan, in a bad year. If someone on the plan gets cancer, congrats, now every year is a bad year.

that's partially true, but... 'retiring' on $100k year is still potentially disastrous if you have a major health issue.

Sure, yeah. My point is mainly that expenses for early retirement in the US have the potential to vary a lot compared to... well, basically any other OECD state, really, mostly due to healthcare. This makes the lower bound for a reasonably-safe early retirement quite a bit higher, such that merely generating enough safe-withdrawal income to live on in a good year isn't enough, even if the markets do exactly as well as you're counting on and that income's steady.

Agreeing here, but to clarify, a million is probably more like $32,500/year indefinitely. The 4% rule is outdated and was designed for 30-year timeframes anyway.

$40K is more than the median personal income in the U.S ($35K as of 2019). Plenty of people would consider $40K/year without having to work wealthy.

Even in VHCOL areas, $40K/year is fine if you own your own home and your kids are out of childcare years. VHCOL areas are typically VHCOL because of housing prices and their effect on service-provider wagss. If you take them out of the equation and only need to pay for food, gas, entertainment, utilities, insurance, and depreciation on your car, $40K/year (= $3.3K/month) is plenty.

> Even in VHCOL areas, $40K/year is fine if you own your own home and your kids are out of childcare years.

Are you considering "childcare years" to include college? Also, in CA/IL/NJ you could easily spend $15k/yr in property taxes alone. That would leave $25k for everything else. Lastly, the average price of a new car sold in the US is $40k. You can buy used, sure, but these days even those are getting more expensive.

So fine, US$40k/yr isn't comfortable living in some places. But it's very comfortable living (given the lack of any need to do paid work) in many others. Context is everything. If you really must live in an expensive part of the USA, then $1M in the bank is not going to cut it.

"Are you considering "childcare years" to include college?"

Somewhat. Personally I think college will be obsolete by the time kids today reach college age. It was a bubble in the early 2000s when I graduated (a significant number of my classmates did not get jobs that make back the debt they took out for it), it's certainly a bubble now, and I think the bubble will have burst in 18 years and people will realize that it's stupid to go to college.

But even if you don't believe quite so extreme predictions - the advantage of thinking in balance-sheet terms is that you set aside funds for these expenses and let them compound until you need it. I just ran a NPV calculation on 4 years of college @ $37K/year starting in 18 years with a 7% discount rate, and it's about $40K. [Note that the effect of inflation on this applies to both college tuition and the discount rate; 7% is average real (after inflation) returns to stocks, but if college tuition rises faster than inflation (say an extra 3%, which is consistent with the last 2 decades), you'd subtract that from the discount rate, and the number comes out to about $70K.] So you'd set aside an extra $40K per child when you retire, target $1.08M instead of $1M, and then you have your kids' college funds.

"Also, in CA/IL/NJ you could easily spend $15k/yr in property taxes alone."

Yup property taxes in VHCOL areas are a big issue. The math still works out though - if you take the budget yupper32 posted down-thread and subtract out taxes and rent, you're spending $1570/month on necessities and have about $1800/month for everything else, more than enough for property taxes. Or just don't live in CA/IL/NJ.

"Lastly, the average price of a new car sold in the US is $40k."

Amortized over 10 years, that's $4K/year or about $333/month, probably a little less because of time-valued discounting. That's already in the budget below - they list $300/month as car payment.

TL;DR: $40k/year in exchange for working full time = not wealthy. $40k/year without having to work = wealthy.

I consider $40k/year pretty good, and definitely enough for me to live comfortably on here in Austin TX (Source: I've lived here for 13 years now, and I'm only just now getting close to spending+taxes [retirement+charity excluded] exceeding $40k as I've started spending more liberally.) I've got friends here getting by on half that.

So no, earning $40k/year as an individual is pretty good. It's only slightly over the 50%ile (but nearly double the 25%ile). Not wealthy.

However, having enough money in savings that you get $40k/year without having to work is something else entirely. A 65-year-old with that nest egg is borderline-wealthy. A 40-year-old with that level of savings is solidly wealthy.

If you can retire by age 40 and still have a higher income than half the country in your retirement, that's wealthy. Sure, you don't have a private jet, but you do have forty hours extra free time each week.

I agree with everything you wrote here except this:

> However, having enough money in savings that you get $40k/year without having to work is something else entirely. A 65-year-old with that nest egg is borderline-wealthy. A 40-year-old with that level of savings is solidly wealthy.

Why the difference? The 65 year old is going to be able to actually draw down some of the nest egg much sooner than the 40 year old. The 40 year old will be 65 some day. Could you explain what you mean? Is it just that the 40 year may still earn/save even more money, despite not actually needing to?

Yeah, I don't have a great answer to that question, but it certainly feels like there's a tangible wealth difference between "I can retire at standard retirement age" vs. "I can retire 15 years early".

It's the same a 20-year-old owning a house vs. a 40-year-old owning a house. Same assets, but the former stands out as exceptionally well-off.

I think the statement makes the most sense if you assume the 40 year old could choose to retire but doesn't. If they do retire, there's at least a greater level of risk to get to 65 with sufficient principal to continue paying out $40K/year. (Alternatively, the market is such that the principal is higher by the time they're 65.)

$40k/yr on $1M is a 4% rate of return. Where are you seeing a guaranteed rate of 4% at this time?

It's not guaranteed, but based on historical average returns for the stock market we frequently assume ~7% growth - ~3% inflation = 4% as the amount you can take out each year indefinitely while your inflation-adjusted principle stays constant.

Looking around, a lot of places[0][1][2] are using 10% growth - 3% inflation, so I guess the 4% is the more conservative estimate.

[0] https://www.nerdwallet.com/article/investing/average-stock-m... [1] https://www.sofi.com/learn/content/average-stock-market-retu... [2] https://www.fool.com/investing/how-to-invest/stocks/average-...

If you're planning to live on your investments' income generation, and nothing else, putting them all (and arguably any) in the stock market could be catastrophic.

One minor downturn for that last just a few months, and you have zero income.

IMO, "US$1M nest egg, live on proceeds" requires guaranteed income, and more or less excludes speculative investment.

I appreciate that others opinions on this may vary.

Under what set of assumptions does a "minor downturn" lead to zero income?

I've lived through multiple major crashes that lasted a lot longer than a few months and it had no catastrophic impact on my (theoretical) ability to safely generate an income from public equities. I am having a hard time coming up with a realistic scenario where a responsible person would become insolvent investing in public equities with an expected return of 4% (inflation adjusted). And in practice, most people doing this have a hedge of some type against a protracted downturn -- the cost of the hedge is already baked into the 4% expected return.

There is no such thing as guaranteed income no matter how much money you have. The only return that can be guaranteed is a total loss since the value of all assets can go to zero. Picking a different selection of assets, including cash, is just rearranging the set of ways you can lose everything.

Most of the retirement risk is a byproduct of having inelastic expenses that run right up against the reasonably sustainable withdrawal rate. That might happen more often with only $1M in the US, but even then it depends on your lifestyle.

I suspect the difference in outlook is in defining "income". Earlier, a goal of "living off the gains" was states, implying to me either dividends or profitable sale of securities when you rebalance a portfolio.

The fiscally conservative mindset is that in a downturn, dividends shrink. At the same time, being forced to sell securities to cover living expenses means "losing" money from your nest egg, not living off of gains. Someone with this view would be balancing their portfolio to have enough cash and/or bonds to support them through some unknown future, and only expect to sell stocks when the market is doing well, to realize gains. Then, one needs to consider the rate of return of such a safe portfolio...

> There is no such thing as guaranteed income no matter how much money you have.

state bonds (free of federal tax) backed by an insurance policy are pretty close to guaranteeed income. At least that's where I put my first (and only) half-million (for a while).

> And in practice, most people doing this have a hedge of some type against a protracted downturn -- the cost of the hedge is already baked into the 4% expected return.

All true if your goal is to generate a 4% return over the long haul. Not so easy if your goal is to generate a reliable 4% income stream. The 4% return, reinvested, will be smoothed out over time, and if things are planned well, achieving that over the long haul should be fine. Pulling 4% out of the investment every year, on the other hand, is much harder to cover with hedging.

Remember, the goal in this case is not to generate a 4% average return over the lifetime of the investor. It's too generate an annual income of 4% of the investment value, without ever depleting the investment value. These are not the same goals.

I graduated during the Great Recession and got a job as a case worker for soldiers and families in need with a defense contractor that paid <$30,000/year. I lived in the DC area, which is notorious for its high cost of living. So you can definitely make things work on a shoestring budget, even in a pricey area. I guess the question is does that make you "wealthy" if you don't have to work to earn that $40k.

It's more free as in freedom than wealthy per say. You probably aren't going to go buy a Ferrari with $1 mil in the bank, but you also probably never worry about putting food on the table again. At least if we're talking wealthy in the "own a yacht" sort of sense.

> Anyone who thinks it isn't is absolutely living in a bubble

I am, for example, a native of British Columbia. My home town, a humble one, now has an average home cost of $1M CAD. $1M will certainly not furnish retirement in any above-average Quality Of Life situation. "Wealthy" isn't living an average first-world lifestyle...

Consumer expenditures, "Average annual expenditures for all consumer units in 2020 were $61,334", according to BLS.

Average isn't great, I wish they reported median, but anyway that's about 6% of a million, which is a pretty aggressive number.

$1M is certainly not wealthy in a first world country.

For example it it is not enough to retire when older and live a moderate lifestyle in New Zealand.

Firstly, you need to own an average home in the city you live in. Don’t move away from your friends. Don’t live in a dangerous suburb. I live in Christchurch where I was born, median house price: $693,000 (Wellington and Auckland are a lot more expensive).

Secondly, you need residual income from investments. New Zealand pays superannuation to everyone that reaches retirement age*, but it is not enough to keep your home warm or go to a café every day.

The figure I aim for is NZD2M. $1M buys a median home in a desirable suburb (7 suburbs in Christchurch have a median price over 1M), and $1M is left to invest. I am middle aged: the amount you need to aim for goes up drastically if: you are younger, you live in an expensive city, you live in an expensive country.

NZD2M gets a comfortable retirement at present. It definitely doesn’t get a “wealthy” retirement (no holiday homes, no wealthy holidays, no flash yacht).

* retirement age is currently 65, but is likely to be increased because that is unaffordable for the country as it currently is economically.

This depends greatly on where you live.

You could get up to 10% on 1M investment annually (that is what my friend has). Sure he does not have private yacht but one can live quite comfy on 100K without lifting a finger and that is what he does.

If your friend can reliably generate 10% (not just in the current insane bull market) he should open a hedge fund.

He had it for about 4 years I think. Also he does not manage the money. Somebody else does it for him.

If your friend gave someone a million dollars and they promised to deliver $100K per year indefinitely, your friend is the victim of financial fraud.

Who said they've promised anything? He said that he was able go get about 10% in a last 3-4 years and that is all.

Markets have been amazing the last 4 years. You can't use that short of a timeline to predict the next 40.

I think that if you tracked S&P 500 since inception years you made about 10-11% year on average.

https://www.investopedia.com/ask/answers/042415/what-average...

Returns for the past decade have been quite good even if you're just investing in a diversified equity portfolio. Drop 10% to 4%, which is the rate that most planners use, and you're down to $40K/year. Which isn't that below median US income but many people working in tech in the US would probably consider it fairly bare bones even for a single person.

> You could get up to 10% on 1M investment annually (that is what my friend has)

We have a hundred years of investment data in the United States that says this isn’t true.

A 10% withdrawal rate will lead to portfolio failure 50% of the time after about 14 years. You can calculate using historical data here: https://engaging-data.com/will-money-last-retire-early/

There are mountains of research showing the safe withdrawal rate for retirement is around 3.5-4%. A million dollars gets you $40K per year at most, not $100K per year.

Anyone expecting to live off of $100K/year with only $1m invested is in trouble in about a decade, even if they could get a mythical reliable 10% return.

Note that due to inflation and downturns, you cannot withdraw an amount equal to the interest you earn. You have to withdraw significantly less than the interest you accumulate.

On average. But if you are lucky enough to invest your first few years with extraordinary returns (say the past two years with 40%+ in index funds) that can greatly skew the outcome due to compounding.

>"We have a hundred years of investment data in the United States that says this isn’t true."

An average over extended period of time. Maybe my fried is lucky and it's only been 3-4 years of such return for him

The last 4 years have been outliers, and lucky for everyone (except those folks who sold at the bottom and moved to bonds in 2020.)

Let me guess: your friend has only been investing for the past 10 to 12 years. The past 10 years were very good times. Yes, there were a couple rough patches (March 2020, anyone?), and years where things went nowhere (2014-2016?) but if you stayed the course, you were more than fine. If you literally did nothing except put your money in an S&P fund, reinvested all dividends, and waited, you'd be up 15% annually. It won't be like this forever...

Sure, I agree with you that even in a low cost, rural part of Italy (or the US) nobody is living like a tv rich guy on 25k-35k (probably what it would be safe to count on if you're young when you stop working). You're not flying private jets (or first class), not consuming the most expensive things, and you don't have an army of personal servants.

But... the real, foundational difference between being rich and not is not any particular consumption choice but the way one relates to wage labour. The difference in the daily, weekly, and annual rhythms of my life and that of someone making 2-3x as much but with a similar ratio of housing costs to income, savings, etc. are broadly the same. Similarly, someone making half what I do, probably also with a house they're ok with in a ok-ish area which is paid for with a mortgage, has basically the same life I do. Certainly within the broad spectrum of global and historical experience our lives are almost identical and it takes people who are highly attuned to differences in consumption markers (which all humans are within their own societies) to spot them.

The very poor and the very rich have different rhythms of life that put them outside of this mainstream but 75% of the population lives broadly similar lives.

We all get up at some point in the morning five-ish days a week, timed to meet a regular or externally constrained schedule (even freelancers have to be available within certain hours). We have clients or bosses who we have to please in some way or another. Some of us have very good relationships with these people, maybe we run our own businesses and have substantial independence from clients or shareholders. Some of us on the end have a rigid relationship with a boss who sets an hourly schedule.

We go on a thing called a "holiday" (or a "vacation" which is what I believe Americans call the thing they're not allowed to take). If we are lucky, this is to a warm/culturally interesting/snowy place and we do it two or three times a year. If we are less lucky we go on one a year.

Our continued ability to live in our homes and eat is dependent on this way of living.

The little labels on our possessions and how big they are vary, but imagine explaining the real differences to someone from 1,000 year ago. "This man wears wool clothes and goes to a place where he makes phone calls and does things on a glowing screen. This other man wears other similar looking clothes and he goes to a place where he makes phone calls and does other things on a glowing screen. Banker or call centre worker? The one that is high status can expect their boss to require them to work at a moment's notice in the middle of the night."

Compare that to someone who has a potentially substantially lower level of consumption and no longer engages in wage labour for their sustenance needs. Whether they spend their day reading, staring at the clouds, swimming, or flying their private plane is less important than the difference between them and someone who has to work.

Great post, but can I suggest a three-way distinction, instead of two-way:

1. People who need to engage in wage labor in order to survive.

2. People who can deploy resources essentially at will to meet essentially arbitrary goals. This means buying stuff, capital investment, etc. etc., with the limits significantly beyond what (say) a 10x median income person might be able to manage.

3. People for whom neither 1 nor 2 is true.

I don't think we have a great term to describe the third category. Simply by not needing to engage in wage labor, such people are in many ways "wealthy". But lots of the connotations of "wealthy" are related to the second category, and they don't have these abilities either.

> Why do you think that? All the numbers work out. Even in your hypothetical scenario, investing 100k for 7 years, especially in the last 7 years, would easily bring you 1M total investments.

My point was that to show that the only way to get this to work out was to make everything work out perfectly, from getting the authors highest quoted day rate of $1000/day on every single day of every single contract from the start. You’d also have to live an aggressively non-wealthy lifestyle without any room for things like travel, hobbies, or luxuries.

So yes, technically it can work out if the stars align, you can always get those high-paying contracts without fail, and you’re willing to live an aggressively frugal lifestyle taken to an extreme.

Furthermore, I don't see any allowance for the time needed to get those contracts, take care of business stuff, etc. To say nothing of downtime when a perfectly-timed new contract just doesn't come along. Maybe it's possible in the current climate but it's not the norm.

What are those expensive hobbies and luxuries? My hobbies cost about zero (making music, doing the occasional woodworking, reading, walking).

Travel can be expensive but it can also be quite cheap and is very dispensable.

Luxuries outside of travel (expensive hotels), I don't even know what they are.

I'm sure it's not hard to spend as much money as you want on many different things; but you make it sound as if it was necessary. It really isn't.

There are many moderately expensive hobbies that are pretty mainstream: downhill skiing, scuba diving, even "cheap" activities like hiking that involve travel to many places where you can do those activities. And many others buy equipment for their hobbies that they don't strictly need but they get pleasure from. Eating at decent restaurants on a regular basis adds up as do theater tickets. Even just having work done on a house rather than doing most of it yourself.

Very little of this is strictly necessary but many people do spend money on this sort of thing without conspicuous consumption being involved. Mostly paying only for what you have to pay for is pretty much the definition of a very frugal lifestyle.

Not saying this as a personal attack but your comment comes off as incredibly out of touch. Downhill skiing and scuba diving may be somewhat mainstream compared to something like lounging on a private island, but they're not that common. Most Americans probably go their whole lives without ever skiing or scuba diving. And to posit these as regular, everyday activities is also unrealistic. Scuba diving or skiing are things that require travel and buying or renting gear, if not paying for training as well. That's not a 'hobby' for most people, it's equivalent to a big luxury like going on vacation.

Those were just 2 things I do/did at various times that popped into my head (and they're probably not the best examples). Or pick hunting, fishing, golf, tennis, or even driving somewhere regularly on weekends to camp or hike.

None of these are necessities but quite a few people do them semi-regularly and while some of these activities can be cheaper than others, they have costs--and, to the point I was perhaps poorly making, they're activities that a lot of people would hate to give up in the interest of frugality.

Of course, many things can also be done on a relative shoestring so long as they don't involve long distance travel/hotels. On the other hand, a lot of people like spending money on their hobbies, even if not strictly required.

WOODWORKING costs $0?!?!?! What???

How much have you spent on tools? Do you smoke a pipe and whittle on the front porch or something? You don't visit Rockler and buy tons of gear? Where do you get your wood, as that's not free either...

I bought tools 15 years ago and I don't use them that often, so they don't wear much, and never break. So now it's mostly free. Wood is quite cheap depending on what you do (and I'm not Nick Offerman).

Most projects cost less than €100-200 in materials and take 3 months, so that's around €50 per month on average. Not "free", technically, but not far from free.

Are you doing it all by hand…? Why does it take 3 months? Are you buying huge logs and then using a carving knife for the entire project???? I could easily spend much more on wood for a weekend project.

I cannot certainly fathom only $50/month for woodworking unless your hobby was exclusively turning small bowls and you loved waiting months for bowls to dry out.

Photography can be somewhat expensive.

I do a lot of photography. Photography can be extremely cheap. Current gear is of incredibly high quality; a camera can stay relevant for over 10 years and lenses, forever. If you buy a camera for about $1000 every 5 years that's $200/year, less than $20/month. And you can certainly buy cameras less often than that.

Then storage, software costs, while not exactly zero, are negligible.

Printing can be expensive if done well. But I've found, nobody cares about prints (except maybe the photographer).

Having kids, while not a hobby, can certainly be expensive, and is probably the most obvious missing consideration here. It also makes a lot of other things less flexible, which tends to cost more money. (Want to go to a movie at night? Now there's a babysitter involved).

Kids aside, lots of things cost money. You like eating at nice restaurants? Money. Prefer to home cook nice meals? Great, equipment costs, therefore money. (And maybe ingredients).

Want to work out? Gym subscription or trainer = money. Buying your own home equipment = money. Want some form of cardio? Biking = buying a bike. Etc.

Nice clothes cost money. A nice TV costs money. Nice tech gear costs money. Etc.

And of course, travel costs a lot of money, depending on where you live.

There are obviously lots of other examples and hobbies. None of these are necessary. You can choose to be frugal with all of them, absolutely.

But - that's parent's point. Most people earning a relatively nice salary will naturally spend more money on nice stuff. That's partly because of natural tendencies to "use up" what we have, partly because of trying to be like other people, etc. But it's also partly because spending more money gives you nicer stuff / experiences, and people like them. And if you have the money, why not? There are reasons, but parent is right - you have to consciously choose to be different than normal and not spend money the way other people do when they can.

Equipment costs are not exactly costs. They are investments that can be amortized over many years. Cooking utensils are not free but they last a lifetime, sometimes longer. I have pans and pots from my grandmother; and old gear is often better than new gear.

If one has money then spending it is good, of course. The question is, what are we willing to give up to get more money, and for what. I would argue time is infinitely more precious than money, above a threshold -- but the threshold is very low.

> Equipment costs are not exactly costs.

Yes, they are.

> They are investments that can be amortized over many years.

So, they are capex rather than opex costs.

> I would argue time is infinitely more precious than money,

Were that true, the market clearing price of people's time denominated in money would be infinite. Which would be inconvenient, since largely money exists to enable the indirect exchange of time for time (largely, as labor).

Yes, that's the reason why we are having this discussion, and the point of TFA. Some people think one should work for as long and as hard as possible in order to maximize their revenue. Others think that once their basic needs are covered, doing more work is pointless.

This difference has existed for a long time. It's discussed at length in Max Weber's Protestant Ethic and the Spirit of Capitalism for example, which has funny things to say about the philosophy developed in Ben Franklin's autobiography.

I mean, that depends. Equipment costs are certainly investments, and things like cooking utensils can be handed down...

But if you're a software developer like OP, then you need a computer. You probably want a second (or third) monitor. The computer probably needs to be replaced every few years, and you're probably getting a relatively expensive machine.

Add to that an office - desk, good chair, etc. If you're trying to save money, yeah, you might not be getting a fancy expensive chair. But if you have the money to spend, I'd argue it's still a good investment for your back. Etc.

Now you can consider all of these as investments, but then how much you make as a contractor has to take that into account.

(Btw, didn't get into this, but the article is missing a lot of things you need to think about as a contractor, e.g. there's often downtime between projects, sick days, insurance is usually a good idea, etc. I've been doing this kind of thing for basically 10 years, it's not as simple as OP makes it sound.)

Working out? A squat rack + Starting Strength book does not cost much and you won't need a trainer and you will become strong, fast.

None of the things you described have to cost a lot of money. Cheap bike, is still a bike. You can still watch a cheap tv. "Nice" does not mean much, really.

Get done with college at 22, work 7 years and retire at the age of 29. This is not impossible. Just most people don't want to do it, but it's totally available.

You will be lucky to earn US$1000/day fresh out of college.

And "don't have kids". Children are a huge time & money suck. Not saying they don't have their rewards too, because they do, but they are also a huge cost.

I see what you are saying. Yes, lots of assumptions and luck to get to this position to be able to do this for 7 years. Totally agreed.

a) His definition of wealthy isn't entirely financial: "My personal mantra is: 'try to get 80% of the reward with 20% of the work'. I’m not interested in giving 100% to get 100%: that is an overcrowded game."

b) It says that he reduced his living expenses and invested most of it in a diversified portfolio without too much in crypto.

c) the real missing ingredient is to do this all during a period of explosive growth in both the stock market and your chosen sector, which involves a lot of luck.

Yeah, was gonna add this too. This swaggering “jump ship” attitude and taking 2 month holidays is only possible during the unprecedented economic stimulus we’ve seen with Covid. In a tighter job market, even luck would be hard pressed to make this advisable.

100k invested a year at 8% return is $963k, essentially a millionaire and very wealthy in most of the world. Nothing fancy required just get standard stock market returns.

Even going slightly less aggressively, if you are self employed you can put ~52k a year into a an i401k pre-tax and then 6k into an IRA. So 58k a year makes you a millionaire after 11 years.

Run it for 20 years and you have 2.8 million and can retire relatively young. Its not driving a Rolls Royce retirement but its comfortable and you got there through low stress and got to enjoy the journey.

An 8% return is far from guaranteed over a 7 year interval. There are plenty of inertvals where you would be in the negative. A lot of people are forgetting that we have been riding a gigantic stock market bubble over the last 12 years. This won’t last.

Sure, but its done on average 9% the last 10 years and if you just invested in an S&p 500 etf you would have made a little over 13%. There are definitely down times but even if you started investing in January 2007 to ensure you caught the worst of the 2008 recession and just kept investing monthly for 7 years, your returns would be on average 12%. Of course all things end but historically and including now it works. Its a safer bet that you will get to a million in the stock market than putting your money in a bank where you are guaranteed to lose money each year with inflation.

Serious question, what's the alternative for a safer investment and having a real retirement? Everything booms and busts and then booms again (mostly).

The alternative is winning the birth lottery and sitting on so much real estate that the market doesn't really matter - it's just another source of more risky income.

>> self-employed >> you got there through low stress

My experiences differ

I’m not sure I agree with the narrative that 1$ earned as a contractor is worth less than 1$ earned as an employee. Seems to me that the opposite is true. A contractor can get much more creative with taxes, off setting loads of expenses against his income thus having a significantly lower effective tax rate than the employee with equivalent gross income.

I mean, even the author agrees with you. They start their story with this:

> Preamble: I'm extremely lucky. If we live in a Simulation and life is just a Video Game, mine was started on difficulty level “Very Easy”: I was born in a developed country in the 80s (Italy), with access to fresh water, very good carbohydrates and a decent education system. So what you're going to read is 99% luck and 1% planets alignment. Please, correct success stories for selection bias.

That’s quite a cop-out for a blog post that contains a lot of specific, actionable steps.

Most people reading this paragraph start with the same luck coefficient.

(Not all, so no need to add your personal story here. But most.)

I feel like there was more to his luck than simply being born in Italy.

I think the qualification is necessary. Even Warren Buffet admits that he got rich in a very specific way using skills that would be all but useless in any other context but him winning the "ovarian lottery". https://www.sloww.co/ovarian-lottery/

From the link: Buffett says, "I didn’t get money from my parents, and I really didn’t want it."

Which kind of elides the fact that his father was a sitting US Congressman. Investors were willing to give large sums of money to a man in his early twenties so he could flip manufacturing firms. Ovarian lottery doesn't quite cover it.

I love the video game metaphor. Just because you're playing at the "easy" level in a video game doesn't mean it is easy to finish the game. You have to put in the time and effort, and the last boss can still be difficult.

This might be the origin of the metaphor: https://whatever.scalzi.com/2012/05/15/straight-white-male-t...

It's an obligatory warning, otherwise people (even here on HN) will decry your methods as mainly due to privilege, and irreproducible for the average perso.

Not really. Good advice is often specific and actionable. People have to adapt it to their circumstances. OP included a warning to make it clear that this isn't a guarantee and to give specific circumstances in which his advice is sound.

What's the alternative? How else could you write an article that conveys the steps you took to achieve a goal, if not to write the steps you took?

This is essentially Mr. Money Mustache's formula: https://www.mrmoneymustache.com/2013/02/22/getting-rich-from...

Important to note than a seven year timeline with his calculations would take extreme penny pinching and would yield a fairly low sustainable annual income compared to your previous salary, but it's certainly possible.

So, the idea is that you save and invest, you don't have free standing cash - you put a majority of your liquidity into investment vehicles.

They live in the UK. Health insurance is literally a non factor in the developed world other than the US.

For tech people in the US it is also a non-factor. The much greater income allows for buying great insurance coverage.

The UK is one of the countries with the lowest social insurance taxes in rich Europe. NHS is also one of the worst experiences of healthcare I've ever had and good companies in the UK routinely offer private healthcare (eg. BUPA).

In Germany, the public option for health insurance runs you 14.6% of your income[0]. That is not a non factor.

[0]: https://welcome-center-germany.com/health-insurance-for-self...

But it's capped at roughly 400€/month for each employer/employee

You're almost certainly an American, who thinks that a) healthcare throughout the developed world other than the US is just like the NHS, and b) the taxes that go to pay for the NHS are inconsequential.

jdminhbg gave Germany as an example of a country that doesn't follow the NHS example. The German model of insurance based on public and private sickness funds, separate from hospitals and doctors, is a) closer to the "average" among developed countries than the monolithic NHS model of unified ownership of payer and delivery, and b) more or less what the US has post-Obamacare; the main difference is that it is harder (not impossible) to evade the mandate in Germany than in the US.

I'm not. I'm Canadian, and the taxes per capita we pay for our whole health care system is less than what the US pays per capita for just medicare/medicaid.

Yes, when you dig a bit these kind of posts they usually got extremely lucky by being at the right company at the right time (enter when it's a startup then make $$$ with stock options or RSU when the company IPO or gets acquired) or at some point worked at a big tech with a total comp between 300k or 400k.

There is no "secret" like saving or investing the right way.

The "secret" is doing it consistently, through good times and bad. You need to consistently save and invest, month after month, year after year, at least 30% of your income. When your account drops 10 - 20%, you need to suck it up and invest more.

A friend of mine is on the FIRE path. The first million took him 15 years (this covered the dot-com boom, bust, great recession, and the recovery that followed.) The 2nd, 6 years. The third, less than 2 years (thanks QE / money printing.)

> Working a $150K job for 7 years isn’t really a recipe for getting “wealthy”

It definitely is if you live in a LCOL area of an EU country. The author mentions he's Italian. So he gets health care and shit for free while being based in a country where it's very easy to live cheaply if you stay out of the big cities.

Definitely possible to save a ton of money while living well in those conditions.

> he gets health care and shit for free

Not free - he's (probably) paying taxes on that remote income, and the maximal rate is rather high in those "shit for free" countries.

In his income bracket the tax rate in Italy is only 7% higher. And you can find pretty nice places to live in Italy with a COL similar to the rural US.

Taxes in Italy are absolutely insane.

You'd be better off moving to some other country with lower taxes, shitty public healthcare and then pay for a good private healthcare.

The cost will be a fraction of a good US private healthcare (the high cost is the main problem of US healthcare, not who's financing it).

Finally some good sense. Do you live in Italy by any chance? You didn't write the usual bullsh1t like "italy has a good social security net / good and free healthcare / you live well with few money" so I'd be surprised if you were a foreigner.

You could also spend a bit of time learning about structuring a business to reduce taxes. In a moderate US state, and a bit of up-front planning, on $200k in gross receipts you can likely pay 10-15% in combined taxes (state/federal income, fica, etc).

It would still mean you should not spend more than you earn, be moderately frugal, and sock away and invest what you can. But being able to put away $50k-$100k for a few years in a row is a gigantic leg up for most people in most areas.

Getting to a bare million with that level of saving seems possible over the last 7 years mostly because returns on stock and crypto have been quite high.

Note that the author lives in Europe (Italy), where there is a robust social safety net and typical programmer salaries are about $45-60K/year. It doesn't take nearly as much to be "wealthy" relative to those conditions.

Author is basically engaging in a form of geographic arbitrage by working remote from Europe. They get to enjoy wages comparable to U.S. programmers, but get the European social safety net, and since they're not living in a big city, rural cost of living. It's not unlike U.S. tech workers who choose to live in a remote rural village, or Californians who retire to Boise at age 30, or Canadians who come to Silicon Valley to work for a FANG and found a startup and then retire to Canada after doing that for 7-10 years. (The latter is my favorite, because Canada allows citizens a step up in capital gains basis upon moving back to Canada, so you can make literally millions in Silicon Valley stock over a few years and pay zero tax on it, then enjoy the Canadian social safety net for retirement.)

Good luck retiring in most major Canadian cities if you don't already own real estate there.

That's rule 4:

> Don’t live in big cities (go for smaller, more liveable towns).

Article said "don't live in a major city". Besides, my understanding is that prices are still reasonable in smaller cities like Quebec City, Kingston, Halifax, Edmonton, Calgary, Winnipeg, etc.

Prices in all of these cities have gone up. Halifax average sale went from $330k to $370k from 2019 to 2020.

People see if they don't buy in now, they may never be able to buy in, and are buying in, driving prices up further, causing more people to panic buy, etc.

It also leads speculators to buy houses because they see property giving incredible returns. Pay in many of these cities, or employment opportunities that pay well, are limited.

If they're relatively reasonable now at this pace they won't be for much longer.

Alberta is perhaps a little different because they seem to build new housing much faster than many other provinces.

Halifax is still livable/affordable as a remote dev-- far more affordable than places like NYC or SF. On remote engineer salary the increases in cost of living aren't so much the killer as the insane income tax is.

halifax is still livable if you get money from someplace that isn't halifax, but what does that say to the future of halifax? Who will provide all the services when they can't afford to live there on halifax incomes? What's the healthcare availability in NS compared to other provinces - Halifax healthcare was in crisis even before COVID.

Just in October they announced that the child healthcare system was at capacity and they might have to start diverting patients to other provinces. How does that work for people who aren't on remote engineer salary, and how does that bode for the future of halifax?

Welcome to the Bay Area, where the only people who can buy houses are those that can funnel the retirement funds of the world into their pockets.

The answer for us is that all the local service providers live far outside the core urban areas and have terrible commutes. Or they double or triple-up, multiple families per unit. As the area becomes increasingly unlivable for people that do the local gruntwork, a number of them leave the metro area. Those that stay have less competition, and so they start charging higher wages. Eventually the local economy equalizes at a much higher price point; local service workers find they make a livable wage again; globalized tech workers find that most of their income is eaten up by daycare, housecleaning, gardening, and restaurant meals out (to say nothing of housing); and the whole region settles into an uneasy truce, yet enjoys great geographic arbitrage opportunities over other regions. We can go make Halifax unaffordable and live like a king there, for example.

You wi t have healthcare or city services and you'll create crazy crime waves as I equality grows but hey I guess that is the bag area - with lack of self awareness included.

As someone who just sold a house in Halifax last year, and with friends who weren't as lucky to have bought a home in the 2000s, I think you can safely remove that city from your list.

We moved to a town a couple hours away from Toronto, and the prices were shockingly comparable to Halifax, while Halifax household incomes are lower.

Canada allows citizens a step up in capital gains basis upon moving back to Canada

Could you elaborate on this or provide a source? Curious because I'm in the US in tech with a canadian citizenship.

https://kpu.pressbooks.pub/cdntax/chapter/__unknown__-10/

Oh, I see. this wouldn't apply to a US/Canada citizen, since the US taxes worldwide income.

45-60 is even high for Italy, it's substantially below Europe on average

Author is writing a lot of crap because every sane employer asks for where you're living and verifies it (either by bank accounts / asking for domicile paperwork / etc) to pay you a good-enough amount for that country.

FAANG companies hiring people in Italy do the same. If you can find a stupid employer who'll pay you a San Francisco salary to live in Souther Italy, then good for you, but that's _rare_.

The 'robust safety net' that you think is in place in Italy is a poor-people subsidy which is currently being discussed because totally abused by a lot of users (and it's becoming unsustainable for Italy's devastated economic situation). So the only good thing the author did is fleeing this ticking bomb.

$12000 saved per month for seven years in the stock market S&P500 FZROX or VTSAX will give you ballpark 1-1.5MM inflation-adjusted (10% return yoy - 2% inflation) this is average tho, results could be much higher/lower...

This of course isn't going to be enough anymore due to the US housing market in big cities, but could be enough if you work remote and live in a smaller town or something. We could also have inflation problems, 6% cpi hike is a lot.

Yeah, I have some questions too. Even at a rate of 150k/yr, while today that seems within the reach of many north american senior level devs, 7 years ago that was tippity top percentile pay, so it's not exactly something that anyone could've done, literally by definition.

One other thing that isn't mentioned either is market ups and downs. If your nest egg started at the bottom of the subprime crisis, that's a very very different timing prospect than if you had significant equity that lost value in the late aughts.

And lastly, is 1M in liquid assets even considered "wealthy" these days? "Well-off", maybe, perhaps even "rich", but "wealthy" in my mind means "bentleys and yatches are pocket change".

eh. my highest salary in the past 10 years has been $170K and that was living in some of the most expensive cities in the world (NYC, Bay Area and Tel Aviv). Now, I'm single, so I'm able to compromise a bit by having roommates, but I was still paying over $1K a month in rent in all the places. With that said, by being single and earning that amount of money AND living in one of the longest stock market bull markets ever (and yes, those of us who started working in 2009-2010 are very very lucky) I would expect someone like that to have been able to build a net worth close to $2mil without much effort. the bull market and "normal savings" (say $50-$100K as you mention) did most of the work.

but, as they say, past performance isn't indicative of future results.

I've done most of this. 10+ years ago I started working for a company in a city with good salaries (for Europe, not so much for the US), London. After a while I decided to go back to my home country, and the company offered me to work remotely. I've lived in my hometown for most of the past 9 years or so, a small town in southern Europe, much cheaper than London and any other big city, including the ones in my country.

Main differences vs. what the article says are: I've been working for the same company all these years, rather than chaining months-long contracts. Also (sadly?) I didn't invest most of my money, I simply saved it and bought a nice place this year almost upfront (had to get a mortgage for the taxes, basically). Also I've worked hard, very hard.

This strategy is good to make good money, I think. Often here in HN I see comments saying that you must hop from job to job in order to get raises, but if you stick long enough so that your knowledge is very valuable, the raises will keep coming.

Word of warning though: unless the company is remote-first you can forget about promotions, at least in my experience. It kinda hurts seeing how you've worked your ass off for a long time and despite making good money other people get promoted while you stick to the same role as when you joined.

>if you stick long enough so that your knowledge is very valuable, the raises will keep coming

AKA golden handcuffs.

I don't think this is something inherently bad but we should always be aware of it.

Indeed. I'm in a golden cage right now. No one would pay me as much, which makes switching jobs hard to swallow.

“Word of warning though: unless the company is remote-first you can forget about promotions, at least in my experience. It kinda hurts seeing how you've worked your ass off for a long time and despite making good money other people get promoted while you stick to the same role as when you joined.”

Agreed. This is often a bargain you have to accept. I went remote only after I had reached a point where future promotions were very unlikely anyway.

> Often here in HN I see comments saying that you must hop from job to job in order to get raises

That's because it's a pretty easy way to get a significant raise. If staying at one job, the raises are likely to be less significant due to them only being able to raise it a certain percent a year due to policy (unless there is a significant title or role change).

Now if you get another job for a higher rate and then ask your current employer to match it, and you are valuable enough that they agree, that is another way.

> Work and self-actualisation can be rewarding and meaningful, but looking at the sea from an hammock and drinking too much beer with friends three times a week is also a completely respectable way of waiting for the gravitational swallowing of the planet.

Part of wants to accept this from the author and the other part of me is wary. I didn't have a child because I wanted to be happy, I did it because I wanted a more meaningful life. It was the greatest decision I ever made.

I can relate, I have three and I feel it does give my life more meaning.

But I still feel like pointing something out: Know that phenomenon where users that paid for software are typically more satisfied with it and give better ratings than users who didn't?

Whish I knew what the proper name for it is, but having kids is kind of the ultimate version of that :D

(Update: Thanks so much for helping me figure out what to call it!)

It's akin to post-purchase rationalization and sunk cost bias rolled into one - likewise I think it's a specific bias in its own right, but a search hasn't turned up anything yet!

>Know that phenomenon where users that paid for software are typically more satisfied with it and give better ratings than users who didn't?

>Whish I knew what the proper name for it is,

Possibly these:

https://en.wikipedia.org/wiki/Mere_ownership_effect

https://en.wikipedia.org/wiki/Endowment_effect

https://en.wikipedia.org/wiki/Choice-supportive_bias

https://en.wikipedia.org/wiki/IKEA_effect

I think it's pretty much choice-supportive bias, thanks!

The more costly it is to make the wrong choice, the more is invested into rationalising the decision, the stronger the bias.

The best part of it is that just like the placebo effect it actually works. Speaking from experience. I mean, how can you look at your little child and not feel like you are looking at the face of god? It truly is a profound experience.

Sounds very close to Stockholm Syndrome.

My favorite comment of the day! And I say this as a loving father.

it's called cognitive dissonance: https://en.wikipedia.org/wiki/Cognitive_dissonance (sortof anyway).

It's called "knowing yourself"

People who think "I think I will likely be happier with children" will be positively correlated with people who have children and are happy about it.

People who think "Having kids will probably make me less happy, so I won't have any." will be negatively correlated with having children, or being happy about them if they do.

This isn't irrational. It's just knowing yourself and choosing wisely.

The biggest reality check in my life was working at an engineering firm with a bunch of near retirement baby boomers with no children. They all came across ass listless, unhappy, and living a life with no greater purpose. It was unquestionably one of the ugliest things I have ever seen. As you get older and friends drift and pass away family is one of the most important things in life. I know anti-natalism is hip right now but it makes me sad to think of all the millennials and gen-z who will reach their 50s and 60s when it is too late and be stuck in a life without purpose.

I think this is dependent on the people. I’ve also seen many couples who couldn’t have kids that have very fulfilling lives. They volunteer, are active in and well liked by the community. I think meaning can come from many places. Kids are an almost guaranteed source but you can find meaning without children if you look for it.

This might just be wishful thinking on my part since I’m unable to have kids, but I’d like to think I’m not destined for a lonely meaningless future.

I had a great uncle and aunt who could not have children. They lived to their mid/late 80s. They were definitely not living a life without meaning. It definitely is possible. I saw it.

Life has whatever purpose you give to it. That's it.

while true, I think many people struggle to give as deep a purpose to (hiking, being a foodie, knitting) as investing in another person. Not that it isn't possible. Its just a challenge. Not that being a parent isn't a challenge either.

Yes, but is fundamentally true that humans don't really have any other reason for existence than to make more humans. So it makes sense that it's the easy button for manufacturing purpose.

You can work as an obstetrician to the same end.

I don't know if I'd rate that as easy, however. LOL

All the old but happy people I know have children (and grand children). The more, the happier.

All the grumpy old people I know have no children, or just one.

On a day to day bases, it might feel like taking care of children is plenty stressful, but in the long run it's the ultimate form of joy/happiness.

Maybe it's the other way around? Grumpy people don't fxxc.

You must not live in the US. Statistically speaking anyhow.

https://time.com/4370344/parents-happiness-children-study/

Totally agree with you. I noticed that trend as well.

Maybe millennials will retain their friendship and they will be doing stupid tik-toks as 60 years old.

It is super popular to be against the idea that kids will add value in your life. I am not sure Hacker News is the right demographic to understand the value of parenthood.

Most parents would agree that having kids is life changing for the better.

> I am not sure Hacker News is the right demographic to understand the value of parenthood.

I don't know. Seems like I see a comment espousing the joys of parenthood almost every day on here.

I wasn't going to have kids for the same reasons. My son wasn't planned but he and his siblings are the best thing that ever happened to me and not having kids would have been the greatest mistake I would have ever made. Guess you never know until you know.

Completely agree on the kids part.

I also agree with the author on work though: it's just a way to pay the bills and I don't value that kind of self actualisation. Most jobs are not about changing the world in a meaningful way (and that's ok). I do more creative and research work for my toy projects than I ever did for all my professional career.

>Preamble: I'm extremely lucky. ... So what you're going to read is 99% luck and 1% planets alignment.

I mean, that's pretty much it and he states it up front. If that's the crux, then why write about this other than to brag?

Account for luck bias, but then read the recipe.

"I was born in a developed country in the 80s (Italy), with access to fresh water, very good carbohydrates and a decent education system."

If you grew up in a developed country, you're extremely lucky too.

Next up: how I won the lottery

So I read your point to be that as long as one rolls a good base character, like being born in a developed country with a good education system and fresh water, the rest just takes care of itself? You know that's not right.

Thats just being humble. Most successful people think its that way because they are special and worked hard. Wrong. Most people work hard, its the LUCK many underestimate. Being aware of this is healthy in so many ways, especially socially.

Luck and hard work aren't exclusive attributes for success.

Didnt say so, did I? Hard work is necessary but not sufficient, thats my statement.

What other attributes are there for success?

Being intelligent.

There are many other things you need other then hard work or luck. For example if you work very hard as an elementary school teacher no amount of luck will make you a millionaire. I think there is a lot of skill involved in getting into spots where you are even exposed to the opportunity and then you need luck but maybe less then you think as there are so many opportunities around it would be just very unlucky to not stumble into one after a while (that is assuming you're born in reasonably not poor country, healthy and to parents that care about you).

"Hard working elementary school teacher inherits millions from inspired student who became a billionaire and dies young."

Maybe some amount of good luck could do the trick...

Interestingly, Ramsey Solutions' study of 10,000 millionaires found that teacher is actually one of the top 5 careers for millionaires: https://www.ramseysolutions.com/retirement/the-national-stud...

(Disclaimer: there may be confounding variables the study didn't account for)

That is very interesting but I hard time believing that includes many elementary school teachers who didn't switch careers at some point. It would be interesting to see some details on it.

Veritasium has a nice video about that:

"Is Success Luck or Hard Work?"

https://www.youtube.com/watch?v=3LopI4YeC4I

yes, thats where I learned about this, forgot it concretely though. Thanks for the reference!

> Being aware of this is healthy in so many ways, especially socially.

On the flip side, ascribing success entirely to luck is not at all healthy. I see lots of people who complain about their lot in life but then do nothing to change the trajectory.

true, meant "most successful people work hard", to be more precise

Yet it is factually almost correct. Obviously its unhealthy to drop everything on circumstances and I understand what you are trying to say, however research shows: a person's home country explains two-thirds of the variation of income differences between all people in the world. This means where you are born is more important for how poor or rich you are than everything else put together.

This is another variation on the privilege discussion. It is okay to observe that some parts of the population are more privileged than others based purely on circumstance, but it is inappropriate to level the accusation of being privileged at individuals. And along the same lines, it is inappropriate for individuals who are disadvantaged to dwell on their circumstances and use that as an excuse to give up. Everyone can improve with effort, and I'd wager that the vast majority of people can improve enough to have a perfectly happy life if they try.

His luck was that his set of dna and experiences made him land a rich tech job and made him smart enough to live in a Low Cost of Living location.

Sure, if his parents divorced and had he joined a street gang, it would have been harder for him to get where he is.

Everything is luck.

> Preamble: I'm extremely lucky. ... So what you're going to read is 99% luck and 1% planets alignment.

We are all extremely lucky. We are just too cowards to move to Nigeria or South Africa or Ethiopia or El Salvador to cash out on this super luck that we had.

Reasons are health infrastructure, being far from parents and family, fear of violence, fear of diseases.

They are all valid. But by the same token there is an element of cowardness about looking at prices of stuff in foreign countries on Numbeo.com, calculate the churn rate and never actually act upon such thought.

Arrange your affairs to be a big fish in a small pond, if we don't make the mental leap we will never do it, because no matter how much you have there's always gonna be a bigger pond or a largest challenge.

It's a form of mental rumination I think, looking at people like Gates and Bezos...they have it in full swing.

They could own the universe and there is once in a billion chance of multiverses and they'd keep working to make sure they take on the new challanges that those multiverses represent

I fail to see what good it is to own a mansion and have a bunch of toys if you live in a dangerous area where you have to put up a gate, have armed guards and in general worry about someone knocking you over the head and stealing your shit. Being the richest person in the ghetto is like being tallest midget - who cares.

And none of that happens anywhere basically (except maybe some barrios in El Salvador or Venezuela)

Besides, in this world the shit is everywhere it's just the color that changes and the window dressing that makes people believe otherwise.

I'd rather deal with impoverished people and deal personally with my security than some scum of Silicon Valley such as Elizabeth Holmes or Elon Musk.

I am from a third world country and moved to the US. I have seen plenty of violence from where I am from. Elon musk has never tried to car jack me.

Have you personally tried moving from a stable, developed country to somewhere with much lower cost of living?

I lived for some years in a "good" suburb of a pretty well-known third-world city. Everyone had security bars on the windows and razor wire (or similar) atop their walls. Many of our neighbours employed round-the-clock armed guards.

I personally witnessed a police-vs-robbers shootout (leaving at least one dead on the ground) from my office window. For a while, carrying a pillion passenger on a motorcycle was banned because it was such a popular way to do drive-by shootings.

The majority of the expatriate community I knew there had personally experienced violent crime of some form (armed break-ins, hold-ups, car-jacking, etc). So had some of my local friends, of course, though many of them were much less well-off and therefore less of a target (you can't snatch someone's car at gunpoint if they don't have one).

When disorder and violence is that pervasive in a society, it can be pretty hard to live with.

But many aspects of the cost of living were indeed lower.

> I personally witnessed a police-vs-robbers shootout

https://en.wikipedia.org/wiki/North_Hollywood_shootout

Present day Lagos is not that much unlike the Los Angeles of the 1990s or the NYC of the 1970s and 80s.

Problem , of course there'll always be a safer place, by the same token people who live in present day LA or NYC are suicidal considering they could live in Montana or Utah, or Zurich.

Where nothing ever happens (good or bad)

You can't get struck by lightning unless you out walking in the thunderstorm

I mean his other three points are actually pretty good: 1. don't compete 2. live cheap 3. invest

lots of young programmers dont think that proactively and thus miss out on a lot of money.

The luck here is being born into a decent family in a first world country and having an interest in/talent for technology. It is true that having those things are unearned, but many people have those things and yet still are not millionaires or work very hard to become millionaires. This guide is still useful for such individuals, despite the luck factor in having those good starting conditions.

As far as I can tell, this piece is irrelevant to the rest of the article.

That's just a way to humble brag. If you read the paragraph, it doesn't actually say much:

> I was born in a developed country in the 80s (Italy), with access to fresh water, very good carbohydrates and a decent education system.

Yea, I was born in a "developing" aka "backward" middle eastern country in the 80s, but I still had access to fresh water and good food and decent education. Some of my cousins lived through civil wars and still managed to learn computer progrmaming while living in the civil-warn torn country.

A large proportion of readers on HN are also quite lucky in similar ways to OP and can make this work. This lifestyle also requires less luck now with remote work having taken off big time.

>If that's the crux, then why write about this other than to brag?

Haven't you noticed how pervasive the "no, I'm self made and being lucky has nothing to do with it" myth is around these parts?

Despite how trivial it is to observe the opposite. Spending a week or two living in a favela or any third world country slum easily disabuses people from harbouring such notions... Or we could just culturally recognize how much it's all about luck.

If you read further, his luck is based on being born in a first world country. Something that most of the people on this board can claim. Everything else he accomplished was part of his plan that a good percentage of the people on this board could likely follow.

While I know contractors who have worked the same job for many years, this is not the standard, they're not making $1000/day and they have huge risk exposure. For the rest of us you don't work 10 months a year and vacation for 2. You spend a lot of non-billable time lining up work and selling. Then when you get that work it's (a) gross income, (b) temporary and (c) rarely remote at the start. Add to this giant pile of preconditions that a guaranteed 5% return doesn't exist in the world today and this "advice" is essentially: "My single data point => ??? => PROFIT!"

> "Meetings are the mind-killer"

Could not agree more. They're big-corp specific and if you can avoid them - that would be a big plus for you. I can't. They lack value while being a complete waste of time. You may think it's no biggie - "but I'm getting paid for the meetig time".

True, however - they can wear you down in time, if three-four times a day... and you are still expected to deliver, regardless the time spent in meetings.

That's only my oppinion, I know some folks are fine with long meetings. My view on this is - I am not an entertainer (aka meetings "super-star"), I would like to keep it short & to the point.

Regarding the article, there is some good stuff in there, that may or may not apply to everyone (especially if you have kids).

Too many stupid meetings is the #1 reasons why I left and started something on my own. At my current company we have one official meeting per week, and it's unusual if it lasts more than 20 minutes. It's wonderful.

There are also hidden costs to meetings in terms of lost time / productivity. If I have a half hour meeting at 1:30 then another one at 2:30, I can't do much with that half hour in between (except surf HN, of course.) If this happens a few times a day, most of the day is gone.

"Agile" and its "rituals" makes this even worse: standups, sprint planning, retros, on top of miscellaneous team status meetings. It's sickening how much time is wasted with this garbage.

Meanwhile, I got wealthy by living in big cities, showing up in person, and being pretty good at many things. There are multiple paths.

Agree! I should have mentioned the multiple paths.

Same here. His point of not fighting the market is true though. For me, by being a good people person, who can convince people and beging good at many things better than others gives me value no one else has. Dont be in the rat race i think is the key point to me.

As far as I can tell, the suggested way of working would be incredibly stressful for someone like me.

First, I have to learn stuff I hate just because the market currently demands it.

I can't really bring myself to do that.

With everyone jumping on AWS and the latest JS frameworks, I stick to programming in Go and deploying static binaries to a single/cheap VPS. I basically only have one library in my 'npm' depdendencies (a virtual dom library).

Second, You have to keep advertising yourself online to keep getting more contracts. I don't really know how to do that. I tried it in the past and didn't really get anywhere. I don't know how people get contracts with > $500/day rates. But still, even if I knew how to do it, it would probably still be stressful to some degree.

Third, You have to be content living in a small town. It's great if that kind of life suits you, but it doesn't really suit me. Now, being at the center of a big city is not for me either, but I like to be close to the center. I want to live in a place with lots of amenities and shopping nearby. Where a car is an optional luxary, not a necessity.

The point of money is to enjoy life. If you live in the middle of no where, what does it matter that you have a million dollars in the bank? Or even that you have a house?

I think for someone like me, going the independent product development route seems much saner/healthier.

Anyway, here's a side remark as well:

> We are all going to die, and Earth will explode in the Sun in a few billion years: please, enjoy some now.

What's up with people bothering with what will happen in a million years from now? And then concluding since it all goes away then only right now is important?

Like, why not, you know: now is important, but a 1000 years from now is important too.

This is what I think whenever someone tells me to sell something on Amazon or create an NFT. “Technically” I could figure it out and have the time to do it, but I wouldn’t because of the soul sucking nature or the pursuit.

Yea. I remember right around college all the grownups around me were telling me to go to medicine and not computer science. A friend of my father even told me "IT is in great decline, it has no future".

When I was still a student, a number of other adults were giving me advice to get into the oil business.

It might have been a bad decision financially, but I just could never bring myself to care about these things.

This sums up my feelings towards NFTs succinctly. I feel like the vast majority of people are interested in them for the potential financial gainz and not the tech.

Just yesterday I got texted by a non technical friend asking if I knew how to build a minting site. Yes, I'm sure I could figure it out over a weekend but I have absolutely 0 interest in doing that.

Fortunately I feel comfortable enough with my current income and position where I don't feel an urge to waste the brain cycles learning about them.

You do not have to learn stuff 'you hate' to be a contractor. And Go is very much in demand. Surely you could be a contractor using Go? I do not see why you have live in a small town either? You could just a well just live 20-40 min outside city center or in a smaller flat.

Most people use Go to write microservices which is ridiculous for me.

Why? Isn't that exactly what Go was designed for?

microservices is a fad, the only services we like are the ones that are rightly sized

About getting 500+ rates, in my experience, it is bubbles.

You’re in bubble A, totally by coincidence, where you and other contractors are doing say 300 a day rates. Hard to change because that’s going to be the expectancy within that bubble. Higher rates will stand out and descisionmakers will think lower is normal.

Bubble B happens to have 800 a day, work will be equal, not harder, not easier, just in this bubble, it’s that rate.. same psychology for outliers applies.

Started in 400 a day bubbles, currently working in 900 a day bubble, worked for a couple of years in 1800 a day bubble..

Psychology of normal expectancy bubbles all the way down..

He talks about getting contracts through agencies that exist for remote jobs. Not anyone has to self-promote their brand like he has.

What you do is not terribly important, but your contacts are.

I had a really neat setup for developing API and apps really quickly 8 years ago and it didn't go anywhere. All my clients were getting that and I was able to get fixed contracts done very quickly (increasing my rate) but I never managed to build an audience and find a way to productivize it and sell it. Eventually I went out of sync with some clients who needed something else and I didn't want to pay the effort to maintain it, so I just use other off-the-shelf solutions.

The primarily driver in that change was that I got new contacts and working experience together with people earning more and I was able to charge a higher daily rate doing whatever needed to be done. Most of the jobs don't find their way to recruiters, they're just word of mouth and they can be quite lucrative.

At the same time, even if I was making 500£ per day, I knew people making 900£-1000£ per day. Some of them were just incredibly specialised on something domain specific (there was a bit of a stereotype, the Java guy with finance experience contracting for a bank with water to their neck and charging 1000£ per day), but some of them were just your average frontend engineer who contributed to some cool sounding famous framework.

I managed to charge high amounts in some specific circumstances where my knowledge was needed, but I never managed to network with the people routinely making 1000£ per day doing your average job.

Recently I got to those numbers, but I think that happened mainly because my circle "upgraded" (aka people who trust me got into position of power with high spending power) and because of covid inflation. Money is just not worth much when there is so much of it around and assets keep growing.

Hope you find that helpful in your contractor career.

The second part of your post is about preferences. Preferences changes.

I used to enjoy city center life as well, partying in the cool places, going at tech events with famous people. After a while going out started feeling tired, so I settled down and started a family. With a family a big city is not very attractive. I moved to a smaller city, so I don't have to drive and I pay significantly less for the same property. The events are much worse compared to city life, but all the amenities are there, walkable distance.

I'm in the process of moving to an even cheaper location, so I can buy an even bigger property and have a nice garden. There are also some tax, weather and societal considerations into that - but I'll have to start driving again. This may have felt like a big pain in the past but it's manageable right now.

If you read between the lines of the original posts, he's basically recommending to work smart so that a little of your work goes a long way economically and to live somewhere relatively cheap, so that it's easier to retain more money. It doesn't necessarily prescribe your life.

> Really, don't spend your life getting fitter, healthier, ?more productive. We are all going to die

> looking at the sea from an hammock and drinking too much beer with friends three times a week

I get the point he's trying to make but "relaxing" is not for everyone, some people find meaning in bettering themselves.

From a personal point of view, sitting on a beach and drinking beer for more than a weekend sounds boring to say the least.

> I was born in a developed country in the 80s (Italy), with access to fresh water, very good carbohydrates and a decent education system.

I'm going to go out on a limb and posit that most of those early benefits were paid for or subsidized by highly progressive taxes.

I can only hope that wealthy people like the author understand this and don't pull up the ladder behind them.

Water and pasta are not subsidised by highly progressive taxes. I can't speak highly of the education system in Italy, it didn't change since the fascist era and it's still mostly a bunch of rote memorisation and teachers with sadist tendencies. I had to study Latin in a computer science focused high school, for **'s sake. I found the education in Finland or in the UK to be way more reasonable in terms of load.

Italy is not overrepresented in the number of people in tech, as far as I can tell; the way in which the author was lucky, was that he had access to tech and was in a stable (familiar and societal) environment that allowed him to focus on computer science, which happened to be a good move, given the value of tech nowadays.

Besides "highly progressive taxes" just means that wealthy middle class are footing the bill with half their salary while millionaires use company loopholes to pay 0.

Taxes are never going to be fair, because the richest people in society will always have the greatest incentive (aka: a large potential tax bill) and the greatest skills (aka: a lot of bribes and lobbying) in changing the laws so that they're somehow exempt.

Being a contractor would require me to spend about $10,000 more for health insurance above what my workplace premiums are. US, obvi.

When I was a contractor fifteen years ago, I billed at $1,000 a day ($125/hr) in the US, not remote. Seems like wage stagnation has hit the software market as well.

Really enjoyed the story. I love seeing the personal histories of people in my profession.

i have the impression the max contracting rate is 175/hr. when you ask for more, “HR says they never seen such high rates”… that doesn’t leave you with much in california. and i think that once you move to a cheaper place you cannot demand that rate. so how can you increase your rate as a software engineering contractor?

$175 is definitely not the ceiling for the US. "HR says they never seen such high rates" is a negotiating tactic - you have to counter. Of course, you also have to be worth it by establishing a track record of being a subject matter expert, delivering the results, and being great to work with.

Another way to get exceptionally high hourly rates is to do per-project or per-phase bidding, but that has its own pitfalls, so a good in-between can be to have some of both.

per project, as in "fixed price"? you say you will do the job for 50K, then hope you can actually pull it off. seems very risky unless there is a provision in the contract to renegotiate without any consequences when it turns out it will take longer?

I don't even understand why they involve HR since it's none of their business. After all, you are a professional service provider. How would you counter?

Yes, the risk is one of the main pitfalls I was alluding to, and the best way I know of it mitigate that are the 2 I mentioned - per-phase and having some hourly rate in there too. A renegotiate-with-zero-consequences provision is unrealistic - that's too lopsided in your favor - but some provision to reassess if things are just completely out of whack is reasonable. But yes, there is always risk in this model, so it pays to start conservative and to really get good at it. But to some degree you want that risk, as the risk and reward are related to each other of course - if it's uncomfortably risky, then maybe a more stable 9-5 salaried job is a better route.

As an example of what mixed billing might look like, you might scope out the work for a basic website and then your proposal would boil down to $20k for the initial phase of the site, and that includes 5 hr of customizations not covered in the requirements doc, and then $200/hr for additional customization beyond that, and then already have a rough breakdown of what will be included in phases 2 and 3. The 5 hours you've built in to the bid is your way of recognizing that no requirements doc is going to be 100% comprehensive (nor is your client going to know with 100% certainty up front exactly how they want everything). The hourly rate beyond that shows that you're willing to let some stuff be added, so they don't have to totally stress about getting the requirements doc 100% right. And then the rough sketches of future phases helps prevent you from getting stuck in just hourly mode for everything after the first phase - if they start asking for a really big chunk of work you can say, "yes, we can definitely do that, but that's a big enough chunk of work that it'll really delay the initial launch of the site - let's talk about putting that in phase 2".

One huge advantage of milestone- or phase-based billing (assuming you do it right) is that you are rewarded for efficiency and optimization - improving your skills, creating reusable libraries/templates, finding trusted people you can outsource un-fun work to, etc. - because you are billing on value provided, so over time you hopefully reduce your costs while the value you provide stays the same or increases. If you are always billing at an hourly rate, you have limited incentive to improve in those ways because you end up passing all of those gains on to your client.

> I don't even understand why they involve HR since it's none of their business. After all, you are a professional service provider. How would you counter?

Exactly right, and I think you counter by essentially saying that (in a nice way). But really you want to make the conversation about value you're providing and that if you really get down to the nitty gritty, it's a good deal for them. Don't forget that they aren't paying employment taxes for you, or paying you benefits like medical and paid vacation - those are big numbers. Also, part of the appeal of a contractor/consultant is that it doesn't have to be a long-term commitment, and they don't have to invest in finding or creating the skills you bring to the table. All of these really matter, so it's ok to make them part of the discussion. There are more subtle things too - in talking with them, you can usually get a sense for the level of dysfunction in their org and, if it's not so much that you want nothing to do with them, you can really play up things like your ability to deliver quickly.

There are some cases where you have to stand firm and be willing to walk away. If it's a client you really want to land long-term, then occasionally you might decide to do a smaller introductory project at a lower rate with them as a way to build the relationship and prove out your services, with a clear understanding that this is a good-faith concession you're making and not a permanent reduction of your rates. And then in that intro project you do your best to absolutely kill it and be a great person to work with such that when it is done, they are more convinced than ever that they want to keep working with you and that your services are worth it.

> “HR says they never seen such high rates”

The company isn't desperate enough! When SHTF, other concerns take precedence. Like if they have a deadline they can't hold, or a problem that has been messed up before.

> so how can you increase your rate as a software engineering contractor?

Increase steadily every year, to select companies that value your rare skillset. If you are asked at inconvenient times, practice surge pricing like Uber. It will also help you realize how acceptable such prices here.

In finance, rates >$1000/hr do exist. If I'm on vacation, there's an automatic multiplier to that, minimum of *2 in the US, more if I'm abroad.

But competent people that deliver on time (and are always available when you need them) are so rare that it isn't much of a problem.

And to protect regular clients from sticker price shock, I have a "full refund no question asked clause". But I can (and will) fire them if I think they abuse it.

You can get higher rates, but not for extended periods of time, or as a reliable income. Only for a short time as you advise/solve an emergency issue. The highest hourly rate I've ever seen was in London for a very specific banking tax issue that only existed briefly. It was the equivalent of $7500 an hour.

thanks. when I was thinking of higher rates, I meant 400-500/hr, sustained, basically working full time for a client or half time for 2 clients each. your full refund clause sounds interesting. has that helped win clients over who would otherwise not have brought you in?

You can bill several times that amount both in the US and Europe. Companies think nothing of it if you have the right skill sets.

What are some examples of the right skill sets? I think I could get pretty good at anything I put my mind to, but I don't have knowledge of what kinds of things businesses consider important enough to spend that kind of money on to know what I should study.

Couple of areas to consider:

- emerging tech - it was lucrative being a mobile app developer when iOS first released its native app SDKs because everybody wanted an app but companies generally didn't have the skills for it internally yet.

- niche/specialized tech - deep knowledge and expertise with things companies often stumble on. For a long term, being an RDBMS expert a "DBA" gave you the ability to print money.

- dregs tech - it's no longer the new shiny thing, but there's still a lot of demand to keep systems running. So a COBOL master or an enterprise Java guy (especially someone with the ability to come in and fix large systems without taking them offline).

So today, skills sets could be embedded/IoT, crypto/blockchain, AI/machine learning, etc. You can bet on something that is becoming popular but still emerging, and then move on once it becomes ubiquitous, or you can establish yourself early and stay with it long term and just be really good at it.

At the end of the day, though, you're looking to add a lot of value and to be easier than a company just doing the same internally. So it can be pretty much anything if you have a good value proposition.

> - dregs tech - it's no longer the new shiny thing, but there's still a lot of demand to keep systems running. So a COBOL master or an enterprise Java guy (especially someone with the ability to come in and fix large systems without taking them offline).

I’ve read and heard this over and over. So much so that I actually looked into it before committing to learning COBOL.

I have never found any actual evidence of this. It seemed like there were very few COBOL roles, they didn’t pay that much more or less than any other language, and a lot of it was outsourced to Indian sweatshops with which we can’t really compete in the west because it’s a race to the bottom where only price matters.

That is to say, be wary of what you read on the internet. A lot of it is apocryphal rather than actual. Some of it (like this blog post) is good for getting your imagination running and thinking out of the box but don’t take it as gospel.

Haha, yes, I definitely wouldn't recommend anyone make life choices based on what some random person posted on HN! :)

I have first-hand knowledge that these jobs do exist (and can pay anywhere from well to obscenely well), but I have absolutely no idea how many of them there are.

Regardless, the idea is that a good consulting/contractor opportunity can be carved out at various points along the tech age spectrum, and that the demand probably follows a bell curve.

I don't get the suggestion of not going to startups. I can't predict the future, but how many people got financially free by joining the right startups/blow-out small companies in the past 10 years? There are tens of thousands of opportunities there, and one can further maximize their chance by decisively leaving bad startups. A bonus to one's career is they get to build cool technologies in the successful startups too. Google, Amazon, Facebook, Netflix, AWS, Airbnb, Uber, Lyft, DoorDash, Pinterest, Databricks, Snowflake, Arista, a slew of PLG SaaS companies. That's just the companies that are on top of my mind. Think about the first 500 - 1000 engineers of each company, or hundreds of those who joined the company when the stock price was low. A simple math: say the chance of failing at a top startup is 80% (top companies have lower chance of failures than the average startups), and one stays at a startup for an average of 2 years before landing on a successful one. The chance of failing everyone of them in a 20-year career is 0.8^10 = 10%! And you don't want to take a risk of 10% of failure to be financially free?

Anyone who has been making software engineer level money, but living frugally and dumping it all in stocks and crypto for the last 7 years is probably close to retirement. I guess his hack? is that he contracts and doesn't work very hard. I always found contracting more difficult due to the huge amount of hustle and bookkeeping you take on in addition to the actual work.

I’ve contracted full-time off and on throughout my career and am in an ‘on’ period at the moment. It gets easier with time, you get better at it like anything else and learn to outsource and delegate to other small businesses and freelancers as well as build up steady recurring work.

Million dollars ain't what it once was.

That checks #4, "Don't live in big cities"

Yep, where I enjoy living, 1m takes you comfortably to a ripe old age. I can see that if you want to live in the center of some popular city (or any city?), this won't really move the dial. Luckily, for me, that would be hell on earth.

Yep. It'll buy you a house, a nice start on your retirement, and maybe the ability to fund your kids education. But no more than that.

well if you prefer to live in the city like SF/NYC, it won't even buy you a house. a solid mortgage down payment and reserve fund - that's it.

Depends on your age.

$1M in 30s? Congrats you won the game.

$1M in 40s? Congrats you are doing well.

Receive a $1m windfall at age 35 in 1990: "Hot damn, I'll never work again!"

Receive a $1m windfall at age 35 in 2021: "Hot damn, I'll actually be able to retire at 65!"

Yeah that's true, but still (of course depending on your age and location) it's enough to live in many many places without having to work again

Do people here like working? That's a thing that often seems missing from these wealth optimization conversations. I love working. I don't love working all day. But I got into programming because I love programming and then I found that I also love what I can build through programming and what people do with the things I build.

I spent a lot of my career leveling up my situation so that it was more of doing those things I loved and less meetings and other BS. But overall, I didn't optimize for speed to retirement. In our financial planning what we have is an earnings cliff where for "safety" reasons we assume we are still working but that our max earning potential went away.

I love working.

If I was wealthy enough to not to have to work I'd maybe even pay for the privilege.

But,

I would love the luxury of having total freedom in choosing what work I'm doing.

If I account for my time over the years corporations have paid me, but ultimately wasted a significant amount of my time.

If I wanted to design an alternative CPU architecture or fiddle with an approach to 3D printing metal, I'd love to have the freedom to do so - even if the expected ROI is maybe 0.

That's indeed what's missing: I enjoy what I do. Not sure if "work" is what I enjoy, but the challenges I face in software development. If I was a millionaire I'd still find time to program. I'd do Open Source and just learn new things for the hell of it, without pressure or deadline, but I wouldn't sit on my ass on the beach all day. And I love the beach.

Honestly, I'm kinda good at this, at least more so than I am at anything else in my life. That alone gives me some sense of purpose. "Being a millionaire" is not a purpose.

I like working on things I want to work on not on things other people tell me to work on that only benefit them in some way.

I enjoy programming. I do not enjoy working. I do not need a scheduled, 8 hours a day, 5 days a week time block where I am mostly doing things I do not like in order to get what I enjoy out of programming. I am absolutely optimizing for getting out of the cycle.

I don't like working. I don't hate it, but if I had the opportunity to stop working forever (say 1/3 of my annual current tech salary, but with no work), I will take it immediately.

Now, it does not mean I would stare at the ceiling all day, but "work", which entails some kind of responsibility I don't want to have, negotiations I don't want to deal with, meeting I would skip even if the alternative would be selling parking lot tickets, is of very little interest for me outside of dollars.

Years ago, I was chatting with a fellow academic and he told me he would still work even after retirement. "I'd like to work a bit", he said, "some new research here and there, a paper written in 3 years instead of 3 months". Lovely perspective, but that is not "work, that's a hobby.

Yeah well two more points that the author followed but actually didn't realize:

4. Flee Italy, the most corrupt of 1st world countries 5. Do not even attempt at reproducing in a healthy family in first world countries ESPECIALLY IN ITALY (https://interessesuperioredelminore.wordpress.com/2020/11/01...). It's a russian roulette pointed to your head and whatever you do, it's out of your control if your life will be completely ruined for corruption.

By keeping these additional two rules in mind, you can live a decent life, albeit a quite meaningless one if you, like me, was born with the idea that forming a happy family is the best thing you can do within your lifetime. Drop that pal, it's no longer the right period of time (if it ever has been).

The most important part is missing: How did he managed to work 2 hours a day while being paid 1000 a day?

Sooo, the article skips the biggest question: How the hell do you find a $1000/day contracts?

"Yes, but big cities have more opportunities and more connections". True. Probably they are more bearable at a young age, when grappling with the existential urge to mate.

Hey! Wait! "The existential urge to mate" is kind of a big deal! Should we be hand waving away that entire bedrock motivation of human nature?

Social institutions designed for turning children into adults i.e. family units, day cares, public schools, youth sports, universities, studio apartments in big cities (a kind of halfway house between childhood and adulthood) have been continually stretching out adolescence, and this article takes that long adolescence for granted. But it's fraught with all kinds of outcomes that will sabotage the very financial independence the article is advocating for.

That pesky urge to mate starts to hit hard around 11-13 years of age. So we're resigning young adults to unfulfilling, casual sexual relationships until they get established and they can truly explore their sexuality, including making new humans of their own, in their mid-thirties. That's 20+ years of avoiding unwanted pregnancy, venereal disease, various kinds of sexual violence (from harassment to assault), and a host of psychological issues that can crop up in that casual environment.

And, oh, BTW! Bad outcomes in sexual relationships are the ones most likely to inhibit financial success [0].

So all of those "loner" self help articles about getting rich young and retiring early simply do not apply to the vast majority of the population.

What we should be helping young adults to do is become competent early (as the author suggests), but also to find a competent mate early as well. Then you can increase your household income, continue living in that studio apartment, and sidestep the most dangerous obstacles to financial independence before they ever have a chance to strike.

[0]https://www.brookings.edu/opinions/three-simple-rules-poor-t...

To me, "wealthy" means you can stop working at any time and maintain your desired lifestyle without worrying about money.

Doesn't mean that you have to, but having that freedom of choice is huge.

Yeah, rich vs wealthy.

Rich = have a lot of money.

Wealthy = have enough money to live off the interest/earnings, pay somebody else to manage it, etc.

All wealthy people are rich. Most rich people are not wealthy.

Does having a few million tied up in a 401k make somebody rich? Yes. Does it make them wealthy? No. It makes them a successful, but not exceptional, middle-aged professional.

Here are a few things that should be inscribed on the foreheads of people

""THERE IS NO QUICK FIX (AT SCALE)""

""THERE IS NO GET RICH QUICK SCHEME THAT WORKS (AT SCALE)""

""YOU WILL NEVER BECOME AN EXPERT IN 24h/7d/30d"" (You may convince some people that you did)

It is all a scam, and it will leave you poorer, dumber, more resentful and less fulfilled. )

: Some people do win the lottery. Chances that you will win even if you buy a ticket every single week for the rest of your life? Infinitesimal.

Key is financial discipline. Always contribute to your savings before you start spending. This will get you far, regardless of your salary. The rest is speculation.

I guess this article isn't for me, since I have no problem with working hard. I enjoy it, and derive meaning from doing good work.

In "Man's Search for Meaning", Viktor Frankl identifies three areas of focus to find meaning in life: doing good work, loving someone unconditionally, and the experience of suffering.

I've never had any trauma remotely like living through the holocaust, so I can't really related to Frankl's journey, but those three things have always have resonated with me as source of true meaning in life. When I meet other people who really seem to be profoundly happy with their life journey, they always have derived that from: doing great work, loving someone deeply, or experiencing true suffering.

> Preamble: I'm extremely lucky.

Good for the author, but this really says it all. Specialization as a software developer seems like good advice though.

He says he's lucky for growing up in Italy. If you grew up in a developed country, you're extremely lucky too.

Specialization can accelerate your career during the first decade (or maybe first two decades) of working.

But I've found that people who are generalists end up doing better further into their careers, particularly if their job includes a leadership/management component.

I'm not saying that if you're in the top 0.1% on one very specific technology, you won't be in demand throughout your career.

But should you choose a leadership/management path later in your career, you're often going to need to be able to do a bunch of things reasonably well, and that's a generalist's sweet spot.

What’s the purpose of an article like this if the author starts with a list of decisions which lead to his success, but then immediately follows with “my journey was 99% luck and 1% planets alignment”?

The article is clearly supposed to be a “how-to” of sorts, but then goes and muddies it’s messaging with that second part. The list of things to do isn’t really useful then, is it?

> I was born in a developed country in the 80s (Italy), with access to fresh water, very good carbohydrates and a decent education system.

This seem like a pretty hard to follow "how-to"

Given that 80% of the world doesn't have that, yeah. But for that 20%, the author's path isn't entirely unreasonable (if a bit quick). Make $$$, spend $, invest $$. it requires living somewhere other than CA and probably not having kids, but if you can make those sacrifices and can play the software engineer game, it's more a matter of math working out than it is an unreasonable path.

JFYI, an old Italian proverb/saying:

Fare i conti spesso, moderar le voglie, spender men di quel che si raccoglie.

That roughly translates to:

Do the (financial) math often, limit your cravings, spend less than you can gather.

The feeling I get from reading the article is that the author felt the need to apologize because of the current social climate, and not for some real reason.

He wasn't born into a rich family and inherited wealth, he simply studied, worked, spent less than he made and invested the difference.

The apology basically boils down to being born in a relatively okay country and being smart.

To add another data point: I'm a contractor in the London charging day rates from 300 GBP (in the beginning) to 1100 GBP (today) over the past eight years. Net worth has just crept into the seven-figure GBP range with profits being mostly invested in global equities ETFs.

Meeting is not bad, there's only bad meeting and good meeting.

In case you don't mind, daily meeting actually help you in the long run, as it forced what you're procastinating into habit without your notice.

And building a good habit is hard, good daily meeting/standup could help.

7 years to become a millionaire is probably unrealistic for most but this post gives a lot of good advice. If not 7 maybe 14 but that's better than never. It definitely gives a good roadmap to getting to work independence. Definitely worth considering.

This article is reposted every 2 weeks with a different title

>Do this for 7 years while investing most of your salary in a diversified portfolio. Don’t go too crazy with Crypto.

Easy to do in a massive bull market.

That’s what people are forgetting. There are plenty of 7 year periods where the stock market will return nothing or almost nothing.

How would we know ? Should we stop investing because of uncertainty ?

There are plenty of people that lived through this bull market and didn’t come out of it as millionaires

You can't know. But people should stop talking about 7% per year ROI like it's a natural law you can rely on. For some people it works out, some do way better and a significant number do worse. And for most part it's just luck.

Isn’t it better to invest when its a bear market?

Everything’s basically on sale. Why would you want to buy stuff at a premium?

At least that’s how I see.

> Isn’t it better to invest when its a bear market?

Everyone says that when they are in a bull market

> Don’t do a startup

Someday your kids might ask you "Why did you spend your whole life letting other people tell you what to do?"

> Don't go too hard on crypto

> 11.2% of NW is tied up in crypto

It's quite possible that he started out putting 1% into crypto (or even less), and it just grew much faster than his other asset classes.

If you're concerned with balance initially, why wouldn't you rebalance?

The author of the article states that he rebalances out of crypto because of the growth rate.

Yep, sounds like he does. It's still possible that he would suggest someone getting started now not put in 10%, and that the reason he has so much is partly because of the historical growth. That is, he might have held onto this much partly due to the tax implications of selling appreciated assets. If he were starting fresh, he might not choose to put in this much.

that's a good point, and seems very likely given recent history.

> I try to keep Crypto around 10%

Seems like he's actively rebalancing it to ~10%

If it was stocks, you would diversify more by sector according to your risk, but in general ~10% in a broad asset class seems fine.

I don't think we would question 10% of net worth in real estate.

> I don't think we would question 10% of net worth in real estate.

No, but there's no chance of real estate going to zero. The global financial crisis housing bust saw US house prices decreases by something like 20%. There's a non-insignificant chance of most Crypto 'investments' losing 99% of their value.

I think it's very dangerous to start talking about crypto as an "asset class". People are going to lose their shirts and hardly anyone understands where the value is supposed to come from.

There is something wrong with grouping all "crypto" together.

It's like having an asset class called "coinage" that includes gold and silver coins, copper pennies, and everything in between.

But crypto doesn't function like a broad asset class, at least not for very long. Is there are future where there are 10,000 different cryptocurrencies? I don't see it. I think even crypto bulls believe that most coins will go to zero at some point. You don't get the same benefits of diversification in crypto as you do with equities.

I don't think most coins will go to zero at some point, some will, but most is too broad.

I also don't see any reason why new coins wouldn't keep getting created. Basically, what's been happening will continue. This is what I see.

You can diversify in crypto, but you have to educate yourself and pick and choose. For example, you could diversify into payment systems, metaverse tokens, smart contract platforms, oracles, prediction markets, cross-chain interoperability, DeFi, NFTs, etc. There aren't as well defined categories as in equities, but there are some ways to categorize them.

Are there equivalent protections like in equities? No. Is crypto as mature of a market? No. Is crypto high risk? Yes. However, cryptocurriences, or at least specific ones, like Bitcoin, are increasingly being considered an asset class [1].

[1] https://www.nasdaq.com/articles/jp-morgan-wealth-ceo-says-cl...

Even Benjamin Graham's The Intelligent Investor says you're fine to YOLO 10% of your net worth in speculative high-risk assets.

So…high income, low expenses, invest smart.

Got it.

Lots of posts saying $1M isn't much. What amount would you consider truly wealthy?

It’s all perspective. In some parts of the Bay Area 1M buys you little more than a shack to live in. 1M where I live would buy me a great quality home on an adequate plot of land.

Truly wealthy would be >$100M in a major US city. I know plenty of people with $3-$6M and they live very normal lives, not ostentatious, just without much stress over money.

I'm doing it all wrong...

TL;DR: Be a parasite and use the economic opportunity others create.

Works well if only a few of us do it. But someone needs to start and run the companies where you get those contracts. Or?

Those people make significantly more too. 2x-10000x

Wow try this one easy trick! Lame....

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