Tough standards here - 4 levels of financial independence

[Bro]

Does anyone have any thoughts on the standards set forth in this link? No way I could even come close to these levels.

http://wallstreetplayboys.com/four-leve ... le-person/

[IlliniDave]

IMO, that article is pretty much garbage. They are not interested in me (frugality crowd) and I'll happily return the favor.

[Bro]

Yes, it seems they are fairly anti-frugality in their general tone.

[George the original one]

LOL, his bare minimum would be "living the good life" in my book. Good life for two people!

[IlliniDave]

Yes, it seems they are fairly anti-frugality in their general tone.

The following is the first sentence of the second paragraph. They are explicit about it.

We’re not interested in the frugality crowd. Their lifestyles are not attractive (double entendre).

[trailblazer]

I think it’s a Wheaton level thing. Obviously the spending levels in the article are absurd - you don’t have to dip down to the ERE Wheaton level to be shocked by them. But that’s because WSP places their extreme focus on income generation, not spending levels. For their target audience, young investment banker types making $250K - $500K+ (per year!), they are teaching extreme early retirement and frugality.

I’ve read the WSP site and tweets religiously since at least 2014 (and both their books), and along with ERE consider it one of my two “main sites” in terms of influencing how I view life. Personally, I’m aiming to pull off a life that is 90% ERE, 10% WSP. I have nowhere near the ambition or energy to be 100% WSP. The full WSP plan is truly hard core and exhausting. ERE is much more relaxing.

At a minimum, a new college grad that systematically follows their advice is expected to pass $1 million within 10 years and retire no later than age 35 after hitting $4 million. They are expected to live a very frugal life in comparison to peers during the accumulation phase (never more than $5K per month until multi-millionaire status is reached. If you work in IB in a major city and that is your social circle, then $5K per month is extreme frugality).

If someone did the $7K/year ERE plan and followed WSP’s career advice, they could actually retire almost as soon as they started working. In some ways, that's kind of what I did once I got serious about following the advice on both sites several years into my career (though I never achieved anything approaching those income levels).

The opening of the linked article is one of their more troll-like posts, but I’ve found the site to be a source of almost endless insight, especially into career effectiveness, questioning society’s beliefs, and interpersonal relationships. I’m nowhere near achieving their "standards," but I have demanded far more of myself (in a good way) because of them.

[Seppia]

I'm extremely surprised that the standards of personal finance found on a site called "Wall Street playboys" don't match the ones that are commonly accepted on another site called "early retirement extreme"

[Jason]

I'm hooked on the Showtime series "Billions". There was this scene where one of the hedgies incurred huge losses and was asked by another hedgie how much he had. The first hedgie responded "120" (million). After they go through his expenses, he says "Shit, I'm broke."

[Sclass]

@trailblazer

Thanks. My knee jerk reaction was to say phooey but I went back and read a little more of what they had to say on other topics at WSP. It was actually kind of interesting.

As for the standards, that’s what a lot of people say out there IRL. I used to hear this kind of talk when working people explained why they couldn’t retire. Not enough money.

The sums were smaller for my colleagues because they weren’t IB. They were software engineers. The bottom line is they’d start with their salary plus their spouse’s salary then theyd use an SWR of 5% and get back to a number in the low millions. This was a few million more than they had so therefore it was impossible to retire.

Flawed thinking on a number of levels.

First, as any Person hanging around here knows, you don’t need 100% salary to survive.

Second the tax burden on W2 income is so vastly different from investment income a retiree requires a lot less (in the USA) before taxes.

Third, the line of thinking where they needed such a big nest egg to draw interest from had currently crippled their ability to generate wealth. In simple terms they were not making enough investment returns to actually get to retirement. For example one guy kept saying he needed $6M because he could get 5% using muni bonds in retirement. The problem was in the present he had about $700,000 invested in guess what - muni bonds! He was in his fifties and was nowhere near where he thought he should be. And given his tactics he’d never get to $6M without the lottery. I really think his discussion was primarily used to explain why he couldn’t retire. Using math to prove something won’t work rather than figuring out how to make it work by turning other knobs...or rewriting the equation.

My SO has a couple of friends who were NYC IB. They moved to the west coast but still do pretty much the same thing for big tech companies with cash hoards they don’t know what to do with. The couple spends all their income and it is a fearsome sight. The intense heat radiating off the money fire just repels us. Because they still work and complain about it evertime we meet. They’re our favorite example of what not to do. So I can kind of get the WSP perspective.

[Farm_or]

"Yeah. We make a lot (of money), but we spend a lot too." - Patrick Ewing during contact negotiations when he was executive of the player's union.

[jacob]

The "bare minimum" is listed as $4,000*12 = $48,000/year. This seems about right for what many consumers would consider "struggling".

I recall a group meeting when I was working in CA as a postdoc (making $67k/year) where management expressed some concern as to whether it was possible for us minions to make a living on those wages. The informal vote was about split. This was around the same time (2008) when we'd run into people in the dog park who had mortgages (for starter houses) at $5,000/month, effectively spending one entire income on the house alone. Starter-apartments were listed in the "400s" and "500s". By the time we left CA (2011), we saw one billboard advertising apartments in the "low 300s".

In comparison, we were paying $475/month for our RV spot (the nicest one in the park). People looked at our choice with a certain incredulity. Thinking back, everybody I knew with a high income (manager-level from work, sports) came to visit us at some point to see if it was really true that we lived in a camper.

It's been my experience that high income people (and the websites they hang out in) rarely if ever consider the spending side at all. The meme is always "earn more", not spend less. I suspect the cross-over when people who are proactive about their finances start looking into possibly spending less happens around $100k/year. It's pretty hard to have a budget discussion with the typical six-figure earner. It's just not a recognized method. If the money is not there on the account at EOM, they just try to work harder or get promoted to a higher income.

[7Wannabe5]

The following is the first sentence of the second paragraph. They are explicit about it.
"We’re not interested in the frugality crowd. Their lifestyles are not attractive (double entendre)."

Ha! Gotta love it when you are a seller in a market where the buyers themselves set a price minimum.

[C40]

"Their lifestyles are not attractive"

If only they had a peak at the sex life of 7wb5, or, may I say, the women I date.

I tell you what, just managing the spending of like $10k per month and up (unless maybe you're spending 80% of it on rent/mortgage) takes a lot of time and effort - a lot of decisions of where to go eat, what new thing to buy, paying a bunch of people - these things are not living well, they are consuming 'well'

It's cool they are actually talking about wealth accumulation though, and not just spending all their income.

[Sclass]

I tell you what, just managing the spending of like $10k per month and up (unless maybe you're spending 80% of it on rent/mortgage) takes a lot of time and effort - a lot of decisions of where to go eat, what new thing to buy, paying a bunch of people - these things are not living well, they are consuming 'well'

Not to mention managing all the crap once it’s bought and delivered. All my neighbors have these elaborate shelf and bin systems in their garages for tons of junk. It looks like a lot of work just keeping stuff after it’s bought. Once the dream fades it looks like a headache.

[jacob]

Solutions for management involve renting storage units, "upgrading" to a bigger house, and buying "closet organizers". Or simply throwing things out: garbage, thrift store, donation, consignment. In CA (east bay), various charity orgs would give each household a big bag on a monthly basis and you could fill it and put it outside and they'd fill pick it up. Didn't get any bags delivered to the mobile home park though ;-P ... And in Chicago(*), these orgs exist, but you have to call and set up and pickup time and provide your own bag.

(*) The system here is that you can put stuff out in the back alley. Licensed trash collectors (I think theres are more euphemistic name but I forget.. junk haulers?) will come pick it up. They'll take anything with metal in it for example.

Solutions for acquisition involve spending $400 on a pair of paints instead of $40 or $4 for the same effort. Those who can't be bothered to shop or find the whole thing a hassle yet still enjoy the pleasure of more stuff can enjoy all kinds of subscription boxes (google it).

I've wondered in the past how people manage to get over $1000/month (twice my level) or [way] beyond; but it's a difference in kind rather than in degree. There's no way I could scale my current consumer behavior which relies heavily on organizing connections and flows and double, triple, quadruple, .. and whats the word now pentouple(?!) my spending because the money is not the limiting factor for me and nor for you guys or most people here.

[jennypenny]

People using those standards (especially the top two levels) aren't 'managing' anything, hence the expression 'Don't get a pool without a pool guy'.

[Campitor]

But that’s because WSP places their extreme focus on income generation, not spending levels....but I’ve found the site to be a source of almost endless insight.

Sometimes you have to sift through the debris of exploded error to make sure there are no hidden truths.

[jennypenny]

Thinking about it more ... the people I know who have high-end toys like the managing part. They like feeling busy, always somewhere to go, lots of phone calls, being the one who can say "I know a guy..." at parties, etc. Hustling is a part of their nature whether it's work or personal. I guess that's how they got rich in the first place. They'd much rather work harder to pay the pool guy than clean the pool themselves. It's a completely different mindset.

To be clear, I'm not arguing in favor of that level of consumption because the impact on the planet is too high. I don't see anything wrong with the mindset, however. I think they are aware of costs and budgeting, they just prefer working on the income side of the equation.


Every teenager I know has the Uber app on their phone. Parents complain about the bill every month, but they'd much rather pay a few hundred dollars in uber costs than leave work early to take their kid to practice after school. I find this more with the women I know. I think because by the time the kids are teenagers, the women have finally gotten their groove back in their careers and they don't want to jeopardize it by leaving work early all the time.

I wouldn't do it, but I'm not sure it's wrong either.

[Smashter]

@Farm_or LOL.

Ewing's former teammate, Latrell Spreewell, was just as bad (from his Wikipedia):

"Sprewell's career came to an unexpected end in 2005 when he refused a $21-million three-year contract offer from the Timberwolves, which Sprewell implied would not be enough to feed his children."

Shortly after, he made headlines for having his yacht repossessed.

As to the WSP article, that totally makes sense based on the people I know who have high-level jobs on wall street.

My hedge fund pal lives in a massive two bedroom apartment in SoHo that must cost around 7k/month in rent. Once you add in a fancy gym membership, food, restaurants, alcohol, ubers, designer drugs, designer clothes, and his designer dog, his monthly expenses have to be at least 11k.

[Jason]

"Yeah. We make a lot (of money), but we spend a lot too." - Patrick Ewing during contact negotiations when he was executive of the player's union.

http://www.espn.com/30for30/film?page=broke