I don't understand people who "save" money

[Tenacity]

An idiot, that will die a millionaire, and a selfish one, too.

On what planet does dying a millionaire make someone an idiot? Wouldn't the fact that they acquired a million dollars to DIE with in general, make them at least a person of a decent IQ?

 

[Boilermaker]

Interesting that I found this thread today. I was just thinking about all the things I could buy but won't just because I don't need them. Until today I thought I might be a little selfish because I honestly hate spending money, even more if it's on others. But I realized I just hate spending money period. I like having money more than I like spending it.

I was referring to this comment --

 

[PrettyBoyAJ]

Can you elaborate Boilermaker? It's very confusing what you said about a millionaire being an idiot.

 

[Boilermaker]

Let me try to clarify.

Money is simply a means to an end in real life, by itself it doesn't mean anything. If you are saving money for the sake of "dying a millionaire" but not utilizing it, it's a pathological situation.

I'll give you an example: My brother's ex-landlord used to live in a "mansion" by the lake in Cleveland and he was this extremely frugal personality. With millions in the bank, he would still vow to never buy from Omaha Steaks since they were too expensive, he would always buy a second hand Lexus and never brand-new and so on ...

But the same guy would invite us all to dinner and open up 2 bottles of 1982 Petrus for us to "learn the feel of good wine" like it's nothing (~ 3k a bottle) ... In the right occasion, he would be the most generous person you had ever met, it was clear he had no qualms about "spending" money whatsoever. Above all, It was more WHAT he was paying for.

The point is, you are saving money, only to use it in some other functional way, a way of allocating your resources. He is saving from Omaha and giving it to Petrus because that's how he celebrates life, by sharing and using his resources wisely.

Part of using the resource is -money- which is simply a TOOL to that end. Therefore, if you are saving because you have developed a pathological attachment to money itself, and not for a well-defined purpose, and then you ended up dying a millionaire by tipping 1% your whole life,

then you are an idiot in my opinion.

 

[PrettyBoyAJ]

Ok got it. That makes perfect sense and I agree.

 

[Tenacity]

Let me try to clarify.

Money is simply a means to an end in real life, by itself it doesn't mean anything. If you are saving money for the sake of "dying a millionaire" but not utilizing it, it's a pathological situation......

The point is, you are saving money, only to use it in some other functional way, a way of allocating your resources........Part of using the resource is -money- which is simply a TOOL to that end. Therefore, if you are saving because you have developed a pathological attachment to money itself, and not for a well-defined purpose, and then you ended up dying a millionaire by tipping 1% your whole life,

then you are an idiot in my opinion.

Oh man, I totally disagree with this line of thought and there's a number of things wrong with it (in my opinion).

- For one, when you "save" money by putting it into the bank, into a bond, into a stock, etc., that money is being put to USE in the economy. If you just simply leave it in the bank, the money is being leveraged to lend out to other people seeking loans. So the generic generation of money from your productive activities does "in and of itself" produce value to the national, state and local economy because you will either spend it or save it, and both are economic stimulation.

- Two, none of us can predict the future and none of us can predict when we might die. There's a lot of studies out about how a good chunk of retirees will run out of money in retirement. I would rather die with a million dollars still at my disposal with a trust or will tied to it (that directs its use after I pass away into prudent investments) than to have spent all of it, still be alive, and be living in poverty during old age. Plus coming back to the prediction of the future example, who is to say a major illness or lawsuit might not take place? Again, I will never advocate that a guy doesn't live his life and enjoy his life, but I would also never advocate that he just SPEND all of his money either.

- Three, you say that money in and of itself doesn't "mean anything," so I assume you are talking about the paper it's printed on? The value of any currency is based on having someone in the market that will trade for it. So if you have currency that the market will trade for, but you decide to just store it and NOT trade, your currency doesn't lose value (unless we get into discussing inflation or the fall of monetary systems).

- Finally, understand that it's the savers in the country that are the true "investors". We have just recently got addicted to using debt as leverage, but what really makes one a prudent investor is to have a significant storage of their own equity capital. You gave examples of a guy SPENDING money on things that are depreciating at best, and while that provides economic stimulation as Ray Dalio says "one man's spending is another man's income," you have to realize that even money that's not spent (but just saved) is still being invested.

So my point is that a guy that generates a lot of money in general, from an "income production financial standpoint," is a genius. Doesn't matter if he "spent" most of it or "saved/stored" most of it.

 

[Boilermaker]

This seems like a different way of thinking -- I never advocated "saving" money is idiocy and "spending" it is the only way to live a meaningful life.

#1 probably is correct, but doesn't really answer what to buy for and what to save for, for most of us, who are really average and don't make +250K a year.

#2 is valid. Being on the "safe,low-risk" side could be a better thing to do. But living like you are 80 when you are 20 may also be unwise. When you are healthy and young, it might make more sense to try "high-risk,high-reward" investments, although this is still beyond the scope of the philosophical post I was making.

#3 Seems like you repeat my point but think we disagree? Ultimately, money, as you explain, is based on someone attaching value to it. Therefore, in and of itself, it doesn't have any value. It's a tool, a resource.

#4 Just because you want to save everything you get your hands on, doesn't really make you a "true investor" -- not sure if this is a technical term, but it sounds to me like, it's a way of justifying exactly what backbreaker was criticizing.

The final point you are making and the rest of your points seem logically disconnected to me.

I am talking about saving money wisely, but actually LIVING life at the same time, as the guy who buys second-hand cars, but drinks Petrus in an ordinary dinner.

 

[backbreaker]

i'd nevver call myself an investor. I'm a serial entrapruener.

I mean, I keep rainy day money and i make sure my bills are paid but i know me enough to knw that I will never ever in my life be content not working. I have to be doing something so saving for retirement to me is pointless.


I basically have money I just haven't spent on new ideas. New ideas to me are what new cars are to most people.

Right now, elance, the biggest freelance market in the world is going out of business and is selling their clients / sending them over to upwork.com which sucks balls and they are banking on all the clients going over to upwork.com as well. Besides horse racing and my normal company what i'm focusing on now is a US based only freelance platform, where people in the US can hire people only in the US, we're about 1/3rd done with it and it's going to take another 6-8 months to get it like i want with all the verification, security, setting up the. When it's all said and done it would have cost me about 50k and probably to do it right another 50k in marketing. But this is what I do. I've never seriously put my mind to a business and it not work.


Then once that works, I'll do something else after that. That's the fun part to me.

 

[synergy1]

BB- this is a bit off topic;

1- Shocked E lance is going out of business. Thanks for the heads up!

2- I am currently into, and getting deep into web development (front/back end) at the moment. In about 2016, I'll be relocating to your neck of the woods and certainly interested in providing quality web products. If you are interested in the time frame you are talking about I'd love to chat.

3- You have the right idea with web developers in the states - I am not sure how people create quality products with people overseas. Someone has tasked me with possibly running a team with foreign programmers, and I simply don't see how we can re-segment the target market with them. American developers might cost more, but in this type of market it will be crucial to have that edge that I do not believe you will get with foreign developers.

Good luck getting your venture off the ground!

 

[Eph]

I was referring to this comment --

:crackup: I don't get on SS nearly as much as I used to, so today was the first time I saw this thread had a few more posts in it. I had a feeling you were referring to me when I saw the comment. Seems I'm still terrible at articulating my thoughts, so let me try to clarify a bit.

First, I'm no millionaire. Not by a long shot. Currently, I'm your average underpaid drone worker. Well, maybe not average. I've actually got a few marketable skills under my belt, unlike the "average underpaid drone worker". Not to overestimate my abilities either, though. Anyway, moving on...

Second, as I said, I just don't like...no, I just don't enjoy spending money, regardless if it's on myself or others. Some people get off on it, but not me. It's not that I enjoy saving, am saving, or would rather save. I just don't. I'm simply not a spender. Just as some people get off on spending, some people get off on saving every last dime. I'm not one of those people either. If we're putting people into categories of spenders and savers...I'm neither. I'd put myself into a third category. The best thing I can think of to call it is investor. I'll spend money on a whim sometimes, but I try to spend my money on things that will make me more of it.

Third, let's remember I said I enjoy having money. I did not say anything about "keeping" it. There are two things wrong with spenders and savers. Spenders don't have any money...they spend it all. To me, that's the same thing as being broke. Savers...where do I start? They don't use their money at all. They don't use it to make more. They don't use it to enjoy themselves. They don't use it to have fun. It's probably easy to look at what I've said and think, "that's exactly what you're doing". To a certain point, yes. I don't mind spending money as long as I still have some left. In every situation that made me think that I especially didn't like spending on others, what I spent left me little to nothing left. That's what I don't like. Not having money.

Four, maybe I do have a "pathological attachment to money itself". It's only human nature to want what you don't or can't have. My only "well-defined purpose" is making sure I never need to worry about if I can or how I'm going to pay for a bill. Everywhere around me, I see people neck-deep in debt, worrying about the next bill or complaining about their crappy job they work just to support themselves, and I can't help but think that I don't want to (and won't) end up like them. My "attachment" to this inherently valueless trash probably stems from my need to escape the system. I've heard people call money the new enslavement, and that seems pretty accurate. Ironic but at least to me it seems the only way to loosen the chains is to have as much of it as you can.

 

[taiyuu_otoko]

If you are saving money for the sake of "dying a millionaire" but not utilizing it, it's a pathological situation.

Consider that money is "potential wealth." Meaning you could take that stack of money and buy ANYTHING.

When I was younger, money meant buying stuff.

Now as I'm older, money means FREEDOM. I don't measure the amount of money I have by what I can buy. I measure how much TIME I CAN SPEND NOT GIVING TWO FVCKS.

In this respect, holding stacks of cash (in the bank or hidden in the closet) is NOT pathological in the least.

What you are BUYING (without spending a nickel) with your "non-productive" hoard of money is MASSIVE PEACE OF MIND.

The ability to NOT WORRY IN THE SLIGHTEST about your financial future. One, ten or twenty years out.

What one does with ones own property (money or stuff) is NO ONES CONCERN except the property owner.

The danger in your thinking lies in what happens when the MAJORITY begin to feel this way, and agree that it's OK to dip into people's bank accounts and TAKE THEIR PROPERTY because saving money is PATHOLOGICAL.

That is likely going to happen in Greece very soon.

People that have saved their entire lives BECAUSE IT WAS THEIR OWN CHOICE are now going to suffer because of the common belief of "having more than X amount saved is NOT GOOD."

I know this is an anonymous internet discussion, but this kind of thinking is what gives politicians and bankers the cover they need to STEAL OTHER PEOPLE'S STUFF.

 

[Tenacity]

Consider that money is "potential wealth." Meaning you could take that stack of money and buy ANYTHING.

When I was younger, money meant buying stuff.

Now as I'm older, money means FREEDOM. I don't measure the amount of money I have by what I can buy. I measure how much TIME I CAN SPEND NOT GIVING TWO FVCKS.

^^^ Solid information here from Taiyuu and it's actually a strategy I incorporate. I focus on having a very LARGE CUSHION, the cushion is defined as how long can I live on my current assets without generating any new income, before I am literally down to ZERO? True financial freedom and peace of mind, is having YEARS of cushion stored so if you just want to tell the world to go to hell, sit on your a.ss and watch NetFlix all day, you can do that.

I'm at that position in life right now because I made very prudent choices in bringing in Income, keeping Expenses low, keeping Taxes low, making good Investments (by firstly NOT losing money and then getting conservative growth), good decisions with my Credit and good decisions with my Insurance structuring.

The ultimate goal of financial management, is to manage your finances efficiently to achieve true financial freedom and peace. You can't do that if you are spending/consuming too much, having kids you can't afford, getting married and losing a lot of assets in divorce, etc. I would say that while we always tend to focus on "making more money," the real issue with majority of Americans is their spending. Their cost of living and their lifestyles are just very freaking expensive.

 

[BeTheChange]

I'm at that position in life right now because I made very prudent choices in bringing in Income, keeping Expenses low, keeping Taxes low, making good Investments (by firstly NOT losing money and then getting conservative growth), good decisions with my Credit and good decisions with my Insurance structuring. .

The problem with your line of thinking and your posts in general is that the conservative mindset you have will only ever lead to moderate levels of wealth. Yes you might be "financially free" if you're living like a hermit (which by your own admission is a condition of you having this freedom). I'd rather take risks and lose some money than eliminate the downside completely and be happy with those sub 2% return on bonds that you like to chat about so much.

Show me a self made millionaire who has never lost money by taking risks. It doesn't exist.

 

[prison/con.net]

you can have a ball on 5k a year, as long as you don't get sick or hurt, if you know how to go about it. "conservative " investments actually make you NOTHING, cause we've averaged over 5% annual inflation for 45 years. So,if you make 6%, after tax, 5%, all you did was stay even with inflation. even if you make 12%, clearing 8% after taxes, all you made was a real 3%, not worth taking any risks for. I refuse to even look at stuff that doesn't pay me at least 20% per year, and I do my investing as a corproation, so that I don't have to pay 15% SS. If I can't make that sort of money, my assets will stay locked up in gold, so at least, I aint LOSING that 5% per year to inflation. gold coins are anonymous, portable, durable, smugglable. Real estate is visible and not portable, but if you go at it right, it can clear you 50% per year, if you are directly involved in managing weekly rental rooms and don't count any profit as salary (beyond half time, min wage. Corporations get to stow-ahead money as "retained earnings' (against future losses) paying no taxes on that money. So why take it as salary, and have to give a big chunk of it to your enemies, hmmm?

 

[BeTheChange]

Corporations get to stow-ahead money as "retained earnings' (against future losses) paying no taxes on that money. So why take it as salary, and have to give a big chunk of it to your enemies, hmmm?

Very true. I operate a number of corporations for investment and saving purposes, all of which are much higher return and much more tax efficient than the "conservative" (boring, riskless, still die poor) strategy.

For example I operated my first business outside of my regular job which I established through small savings I had made from my regular job. The business was a success and netted me after "expenses" (many of which are regular day to day expenses I simply charge to the company) as much as I made from my paid employment.

I never took a salary and simply use it as a vehicle to save cash paying the much smaller business tax rate than I would have had I simply been freelancing as a sole trader.

After I had saved a considerable amount I set up a holding company and another corp. I created an intercompany loan between my old corp and the new one and used that to purchase the company's first investment property, which I flipped and then repeated the process.

And this all stemmed from my small savings.

Mr Conservative investor would say stick those savings in an ISA and get your 2% per year!

Remember you'll never make a loss that way!

 

[Tenacity]

The problem with your line of thinking and your posts in general is that the conservative mindset you have will only ever lead to moderate levels of wealth. Yes you might be "financially free" if you're living like a hermit (which by your own admission is a condition of you having this freedom). I'd rather take risks and lose some money than eliminate the downside completely and be happy with those sub 2% return on bonds that you like to chat about so much.

Show me a self made millionaire who has never lost money by taking risks. It doesn't exist.

Okay, let's not make out of the box assumptions here.

1.) I'm not living like a hermit. I stay in Clinton Township, MI which is a suburb area with a great economy, good upper middle class area. I currently stay in what is defined as a "luxury" apartment setup which includes all of the bells/whistles in the apartment, as well as our own fitness center, pool like resort area, business center, recreation hall, poolhouse, and lounge area. I drive customized Muscle Cars. Next year I'm updating my current unit to get the 2015 Dodge Charger. You can live a decent QUALITY of life in a low cost of living area with excellent expense management.

2.) I don't JUST invest in CDs and Bonds making 2% - 3% per year. I operate a Sales Office (a business). My returns are at minimum 500% over a 12 - 18 month period (that's bare minimum but the actual returns are much higher as I have client ownership making recurring revenue). So the way it breaks down is that the majority of my annual "investments" goes into my Office, once revenues come in and the small amount of business expenses are paid off, then I would pay for personal expenses and the small amount of taxes I have to pay for. The excess monies are THEN put into my safe/conservative Bond/CD portfolios for the sole purpose of preserving capital and generating additional fixed income. In terms of beating inflation and taxes, my investment matrix beat inflation and taxes TWICE.

3.) Your concept of "taking risks to lose money" is the most insane mentality in investing but A LOT of people think just like YOU. But common sense says that if you are going to invest just to lose money, what is the point? A learning experience? You can't learn without losing money ?. If you are investing just to lose money, why invest at all, why not go flush it down the toilet at the Titty Bar? At least you get a rock off in the process of flushing your capital down the toilet.

4.) You want to know a successful business owner who has never lost money while taking risks? Okay, ever heard of Warren Buffet? Buffet believes firmly in the following mantra about investing: "Rule No.1 is never lose money. Rule No.2 is never forget rule number one."

5.) This is just a side note. The biggest, best, and most efficient returns you will have in investing is owning a profitable business. You have control over the business, you can shift things here, there, etc. You have product control, control over marketing, market targets, etc. Being a business owner (entrepreneur or solopreneur) is the BEST way to earn the BIGGEST returns. You want to talk about the most successful investors? Well, the most successful investors and the people with the most WEALTH in this country, did not get that way through trading stocks or holding stocks. They did it through owning PROFITABLE BUSINESSES. And your friend Tenacity (that's me) has operated a profitable business for going on 9 years now and I have build up a good amount of wealth in the process seeing as though I started out homeless.

So don't make these insane assumptions sir.

 

[BeTheChange]

Okay, let's not make out of the box assumptions here.


2.) I don't JUST invest in CDs and Bonds making 2% - 3% per year. I operate a Sales Office (a business). My returns are at minimum 500% over a 12 - 18 month period (that's bare minimum but the actual returns are much higher as I have client ownership making recurring revenue). So the way it breaks down is that the majority of my annual "investments" goes into my Office, once revenues come in and the small amount of business expenses are paid off, then I would pay for personal expenses and the small amount of taxes I have to pay for. The excess monies are THEN put into my safe/conservative Bond/CD portfolios for the sole purpose of preserving capital and generating additional fixed income. In terms of beating inflation and taxes, my investment matrix beat inflation and taxes TWICE.

You took the cash you generated from your business and put it in safe investments making 2 to 3% returns.

I put the excess cash generated from my business which in its first year generated earnings of around 20 times the original investment (mainly initial marketing costs, fixed asset purchases, etc) into real estate which generated 50% > when I sold. That's the difference between us.

I don't see it as a overwhelmingly risky because it is cash that I am willing to lose.

3.) Your concept of "taking risks to lose money" is the most insane mentality in investing but A LOT of people think just like YOU. But common sense says that if you are going to invest just to lose money, what is the point? A learning experience? You can't learn without losing money ?. If you are investing just to lose money, why invest at all, why not go flush it down the toilet at the Titty Bar? At least you get a rock off in the process of flushing your capital down the toilet.

I did not mean take risks with the goal of losing money and I'm sure you knew this.

One should accept that the risk reward scale will always reflect the fact that greater rewards incur increased risk of losses. Basic market forces.

4.) You want to know a successful business owner who has never lost money while taking risks? Okay, ever heard of Warren Buffet? Buffet believes firmly in the following mantra about investing: "Rule No.1 is never lose money. Rule No.2 is never forget rule number one."

Warren Buffet has lost money on a number of his investments...ALOT

http://www.thisismoney.co.uk/money/...investor-Warren-Buffett-loses-678m-Tesco.html

5.) This is just a side note. The biggest, best, and most efficient returns you will have in investing is owning a profitable business. You have control over the business, you can shift things here, there, etc. You have product control, control over marketing, market targets, etc. Being a business owner (entrepreneur or solopreneur) is the BEST way to earn the BIGGEST returns. You want to talk about the most successful investors? Well, the most successful investors and the people with the most WEALTH in this country, did not get that way through trading stocks or holding stocks. They did it through owning PROFITABLE BUSINESSES. And your friend Tenacity (that's me) has operated a profitable business for going on 9 years now and I have build up a good amount of wealth in the process seeing as though I started out homeless.

Respect.

 

[Tenacity]

I'm in BOLD

You took the cash you generated from your business and put it in safe investments making 2 to 3% returns.

I put the excess cash generated from my business which in its first year generated earnings of around 20 times the original investment (mainly initial marketing costs, fixed asset purchases, etc) into real estate which generated 50% > when I sold. That's the difference between us.

What's the difference between us? First you said I only invest in 2% - 3% CDs and Bonds, now when I show that you assumed wrong, are you changing the narrative to the fact that I don't invest in Real Estate? I do not invest in Stocks or Real Estate, as I pointed out on this Forum before. Both are investments that are based on capital appreciation that's out of my immediate control. The good thing with Real Estate though is that it can be turned into a rental business that generates fixed income, but for "right now" I'm still only focusing on my Business, CD and Bond Portfolios. But again, this is my strategy, there are guys on here like Guru who are efficient at Trading Stocks.


I don't see it as a overwhelmingly risky because it is cash that I am willing to lose.

Again, brings me back to this insane mentality. What do you mean by "cash you are willing to lose"? What does that mean? Does that mean you DON'T WANT it? Give it to me then since you are willing to lose it. Give it to a homeless shelter then. Go give it to a single mother stripping at the Titty Bar so she can pay her rent. When Investors talk about this notion of having money "they are willing to lose" that just sounds completely insane to me. Why in the hell would anyone say, "Welp, I have $200k in my bank account so I guess I can take $40k of this and lose it on something."


I did not mean take risks with the goal of losing money and I'm sure you knew this.

Hey buddy, I'm just going based off WHAT YOU SAID lol. That's what you said man, you even repeated it lol. For example you just said you put cash in investments you are "willing" to lose. The word "willing" means "prepared" which is like you are saying I have $40k and if I'm prepared to lose it on something. Tenacity can have $1 million sitting in 5 different bank accounts and you will NEVER hear me say I'm "wiling" to lose a dime of it.


One should accept that the risk reward scale will always reflect the fact that greater rewards incur increased risk of losses. Basic market forces.

This again is a mentality I disagree with. No prudent investor takes on an investment with more RISK thinking that it ultimately means more REWARD, that's insane. What you do is you analyze an investment's positives and negatives. Positives are in relation to the potential gain on the investment and negatives are in relation to the costs, expenses, time, energy as well as the risks of losing principal. A prudent investor RISK MITIGATES the negatives in a way to where even if the WORSE occurred, he would still be covered in terms of a minimum amount of return. Just because something has more RISK on it doesn't mean it has more REWARD, if the risks can't be mitigated.

Warren Buffet has lost money on a number of his investments...ALOT

http://www.thisismoney.co.uk/money/...investor-Warren-Buffett-loses-678m-Tesco.html

Buffet's main source is his business operations, that's what has made him a billionaire times over. If you own a business, you would be doing a multitude of individual deals within the business and not every single deal would be a "good deal" but the majority of them should be good deals. Overall, it's the standing of the total business at the end of the day that determines if your investment is solid or not. The divisions of the business making the most money are usually funded with more capital while the divisions making the least amount of money (or losing money) are either scaled down or phased out. Same goes for having employees, most of your employees will make you money but some of them will be a drain on the business.

 

[BeTheChange]

You are beating your own strawman to death.

Not once have I said taking on more risk is inherently positive.

It is a simple fact that if you want to generate higher returns in any field you have to take on additional risk to do so.

If you could get rich without taking risks everybody would do it.

This is a simple concept. 3 posts in and you haven't grasped this.

I won't be wasting anymore time on this fruitless conversation.

Enjoy your 2% returns buddy.

 

[Tenacity]

You are beating your own strawman to death.

Not once have I said taking on more risk is inherently positive.

It is a simple fact that if you want to generate higher returns in any field you have to take on additional risk to do so.

If you could get rich without taking risks everybody would do it.

This is a simple concept. 3 posts in and you haven't grasped this.

I won't be wasting anymore time on this fruitless conversation.

Enjoy your 2% returns buddy.

Well, I guess you might as well bow out of the discussion buddy because apparently your reading and comprehension skills are extremely subpar. Might as well go back to discussing how to "seduce women"