“Get Stuffed” Funds

Under yesterday’s post about moral cowardice in the workplace, dearieme makes the following comment:

People should build up a “get stuffed” fund so that they can afford to tell a boss to go to hell.

To which bobby b responded:

It’s been my experience that the Eff You Money myth is just that – a myth.

If you ask ten people how much money it takes, the answer is almost always something like ([what I have right now] X 2.5.) It’s like the “Free Beer Tomorrow” signs in bars – tomorrow never comes.

Those who can truly say Eff You to a boss or a job can say it no matter how much they have put away.

The rest can salt away a million or two and still be waiting to hit that magic number. They’ll never actually catch up to it. Most people just aren’t the Eff You type.

Both deariem and bobby b make good points.

One of the most depressing things I heard during my career was a remark made by a friend and former colleague who I love dearly. I was complaining, as I often do, about the lack of moral courage in modern organisations, particularly how almost nobody will speak up against bad management decisions, poor practice, or a lack of clarity, consistency, or professionalism. I described how I’d sat through a meeting where a visiting boss failed to address any of the employees’ long-standing complaints, and instead delivered an upbeat monologue that bore no resemblance to reality. I questioned why nobody, even those quite senior, had the balls to speak up, and she replied:

Because it would be pretty irresponsible for a guy to come home to his kids and say “Sorry, I’ve lost my job because I told my boss to fuck off.”

I found it depressing because it confirmed what I have long suspected: the slightest push-back against management these days is interpreted as “telling the boss to fuck off”. The fact that there is a yawning chasm between raising valid objections and telling the boss to fuck off seems to be absent in the minds of modern corporate employees.

If anyone at work calls you a brown-noser or a suck-up, ask them how many times they’ve been fired. I’ve found this normally shuts them up. Me, I’ve been booted from one job for repeatedly and vociferously denouncing the utter incompetence of my boss and his boss above him, and hoofed off another for being overly outspoken in a quite different sense. But there have been times when I’ve held my tongue because I couldn’t afford to lose my job.

I learned the lesson early in my career that you need to make yourself as financially independent from your employer as possible. Honestly speaking, this is one of the main reasons why I didn’t want kids: once you have kids, your boss has you by the balls, and he or she knows it. They then treat you accordingly. Most people are happy to nod their heads and stay silent but I’m incapable of doing that indefinitely (family trait) and I knew if I had children there would be a good chance I’d either let them down, die of stress, or die of shame and misery. I think it’s a sad reflection on modern corporate life that a good portion of employees are thoroughly miserable and humiliated, but are trapped because of their decision to have children. Among all the talk of why Europeans are no longer breeding, this factor never comes up. Perhaps it should?

Anyway, it took me a few years but eventually I got to a point where it wouldn’t be a disaster if I lost my job. Of course it wouldn’t be ideal either, but I’d not be totally screwed. Now that didn’t mean I immediately started telling managers to fuck off, because that would be stupid. But what it did mean is I could sail closer to the wind and stand up for myself a bit more, and speak out if I’m not happy with something. This has made me a pariah in some circles as absolute, unwavering obedience to management is a requirement in modern industry, but it’s probably made me happier than most people around me. For a start, the stress relief that comes from not having to grovel on a daily basis just to pay the bills is unmeasurable. Secondly, not much actually happens. For all the times I’ve been pulled aside after a meeting by someone whispering “But you need to be careful!”, and the number of dark warnings I’ve received about how this “will impact you career”, I’m still not noticeably worse off than anyone else. Firing people isn’t that easy, and 90% of employees won’t have high-flying careers no matter how much they believe it and how late they work trying to achieve it. Contrary to the universal belief in major corporations, a less-than-perfect annual appraisal is not the end of the world. By contrast, it barely matters a jot. So if you’re middle-aged and not rubbing shoulders with the top bananas on a daily basis, you might as well stop sucking up, relax, and enjoy life a little.

So bobby b is right, most people just aren’t the “fuck you” type. The problem is, with today’s financial pressures most people aren’t anything other than the “yes, sir” type. Rather than building up a “get stuffed” fund, employees should first start working towards a “well, hang on a minute” fund. I’m convinced both employees and shareholders will be better off if they did.

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45 thoughts on ““Get Stuffed” Funds

  1. Bobby is wrong, its not a myth, and the magic number is 25 times your annual spending. He’s right though that most people never get there.

    There are a bunch of people, an entire subculture even, working towards not just FU money but financial independence and the ability to walk off into the sunset.

    These are some of their stories: https://forum.mrmoneymustache.com/welcome-to-the-forum/epic-fu-money-stories/

    Anyone who is interested in freedom from the rat race should check out the blog at http://www.mrmoneymustache.com. It could change your life. It changed mine.

  2. Bobby is wrong, its not a myth, and the magic number is 25 times your annual spending.

    I think his point was that the kind of person who will actually tell a boss to fuck off isn’t going to build up a safety cushion that big. The sort of person who would tell a boss to fuck off will do so with a few quid in his pocket and the confidence that he’ll find something else shortly and be no worse off.

    Thanks for the comment and the links, though. It’s clearly a subject others have devoted a lot of thought to.

  3. “Contrary to the universal belief in major corporations, a less-than-perfect annual appraisal is not the end of the world. By contrast, it barely matters a jot. So if you’re middle-aged and not rubbing shoulders with the top bananas on a daily basis, you might as well stop sucking up, relax, and enjoy life a little.”

    All of that paragraph and above matters.

    I once remember a colleague of mine waking up to the reality of performance appraisals. He’d got a 4 instead of a 3. He’d worked really hard, put in lots of hours. What did he get for that? A 5% pay rise instead of 4%. “So, for all that, I get £250?” “Well (pause) it’s £200 a year, I suppose” “after tax, that’s less than £200. I could have worked in a pub for the same number of hours and made a lot more”.

    Another thing is that once you move into junior management (and not things like being a technical project manager), you’re a company man. Your future is pinned to that company, unless you reach a senior management level. It’s precarious. No-one externally can measure whether you were any good. I’ve seen managers get made redundant and next thing, they’re struggling to get a new job. “Management” covers a multitude of things.

    It’s why I work freelance. “You’re sacrificing career advancement for money”. Yes, I am. And it’s often more work – I pay for my own training etc – and a bit nerve-wracking. But it’s all on me. I’m not tied to a an idiot manager, or the whims of a company.

  4. Hmmm.

    I have told a boss to fuck off, and I did it when I was virtually broke. I’m not going to recommend it- I’m still getting back to where I need to be after three years. But it’s not all terrible.

    The one thing I would say is: this stuff never kills you. Yes, the wife wasn’t very happy when I got home (and less so when the same thing happened a year (almost to the day later)). Yes, there were many nights when I lay awake at night worrying about cash.

    The upside is that I changed careers at 40, and much prefer (for the most part) what I do now. I work with more interesting people, have more autonomy and get to go interesting places.

    YMMV, of course, but the thing I learned is that it’s nowhere near as satisfying to tell the boss to fuck himself as you would suspect. You can worry about money and change careers and all that without that part.

  5. but the thing I learned is that it’s nowhere near as satisfying to tell the boss to fuck himself as you would suspect.

    Indeed. He won’t care, you’ll be gone by tomorrow.

  6. Well, some of the people who would tell a boss to fuck off would do it with no money, true, but unless very confident in their abilities in finding a new job its a crazy thing to do with hostages to fortune and debts up to your ears as most people have nowadays.

    Most of those people will be younger people who don’t care about their jobs anyway. I never used to care if i lost a job when i was younger because it really didn’t matter much (not that i went around telling bosses to fuck off though). Then i got older and bought a house. Now i care, but mostly because it would interrupt my progress towards freedom.

    Great comment above about performance appraisals. Work extra hard to get that bonus, then calculate your hourly rate earning it!

  7. Adam,

    Blimey, I’d forgotten about that film. The best part about it was reading the comments afterwards from proper gamblers, who pointed out what Wahlberg’s character was doing was riding his luck and displaying no skill whatsoever.

  8. As a former semi-professional gambler myself, the film was atrocious. But that one John Goodman scene was pure gold.

  9. “Contrary to the universal belief in major corporations, a less-than-perfect annual appraisal is not the end of the world. By contrast, it barely matters a jot.”

    Where downsizing and contraction are forced upon organisations, it matters more. In one job, I spoke out quite a lot, and was respected by my team for doing so. On one occasion, I refused to sign forged documents designed to put the organisation in a good light. The tier above me (i.e. CEO and inner circle) certainly didn’t sack me on the spot, or even make much fuss. But when the next round of musical chairs began, I was “let go”. I could have been rubbish at my job, of course, but I don’t think so. I think my card had been marked. Probably the determining factor here is whether your skills are really rare and in demand. Mine never were, unfortunately. That particular organisation never “let go” or fired senior computer managers, or the person running HR. If you can do serious damage to the company, it’s harder to be dislodged.

  10. On one occasion, I refused to sign forged documents designed to put the organisation in a good light.

    Sounds as though you were better off out. On the two occasions I’ve been shoved out, and especially the first, my conclusion was that if this was how the management was acting then I’m probably better off out.

  11. @ Adam

    Yes, it is near impossible to become financially independent by working. Investing and investing as early as you can is a great way of accelerating your wealth creation efforts to such an extent that the investment cash flow created can replace an income. I only discovered this in middle age, no regrets but I have educated my children in this regard. My parents were old school, do not get into debt other than a house, they meant well but it is a poverty strategy. My advise to any young person would be to get yourself into as much investment debt as you safely can as early as you can and never ever pay it back.

  12. I dont think that there is any less opportunity these days than there was in the past nor that it suddenly much harder to start and raise a family.

    Saying fuck off to a boss is stupid. Everything in life is a negotiation, you are constantly negotiating for a better outcome and progressing from where you are now in life. If you find yourself in a rut surrounded by arseholes at work then you need to do something about it, to think that you cant, means that you cant.

  13. My advise to any young person would be to get yourself into as much investment debt as you safely can as early as you can and never ever pay it back.

    The problem with that is, particularly vis-a-vis Australia and the UK, that means property, which is highly-reliant on 1) there being a boom and 2) it continuing indefinitely. If the government wasn’t so pathetic, most of those people who’d gone way over their heads in property debt would be bankrupt, forcing a desperately-needed correction.

  14. Most reasonably paid professional jobs are in industries where everybody knows each other, or at least knows somebody who knows somebody. I could not hope to behave atrociously at work and get a new job elsewhere in the same industry. I could do something slightly different of course, but that would most likely entail a pay cut. I am a nice guy at work but also have a minor reputation for being awkward (e.g. “No don’t do it this way”). I fully expect to see rounds of redundancy in my industry within the next 5 -10 years (technological change plus industry is slowly dying), and, as Sam Vara said, I’d better not find myself ‘in that box’ when it happens.

  15. Recusant

    Yes it was a bit vague, it simply means loans for investment purposes. Say property, shares, business ownership, other appreciating assets or cash flow vehicles. Sometimes referred to as Good Debt and the interest on it is tax deductible as well. The debt value and repayments are eroded over time by inflation, whilst the invested asset and revenue stream appreciates in value also due to inflation and the gap ie equity between the two gets bigger. Like I said its pretty hard to save your way to wealth and I wouldn’t recommend trying it.

    Non-investment debt also known as Bad Debt is for shiny things and lifestyle, cars, holidays, boob jobs and the likes, its not tax deductible and is a big no no.

  16. I’ve never actually told a boss to f*ck off, but I have more-or-less rage quit once I got my exit strategy in order. I guess that might not strictly be rage quitting. It was a kind of cold rage, over a number of months.

    Now I’m Completely Done with corporate, and there’s just the 2 of us in the office (plus assistants). A completely different dynamic. We’ve got low overheads, all problems are real and can be acted upon (rather than artificial and insoluble due to … artificial impositions), and (touch wood) all is going well. We take decisions together, and it more or less just chugs along. I’ll never get rich this way, but that’s not the point – as Other Tim (W) says – it’s all about maximising utility 🙂

  17. Most reasonably paid professional jobs are in industries where everybody knows each other, or at least knows somebody who knows somebody.

    The oil industry is like this, but…

    I could not hope to behave atrociously at work and get a new job elsewhere in the same industry.

    This seems perfectly possible. Or at least it did, pre-crash. Perhaps things are different now.

  18. In my industry there’s such a shortage of people that they don’t tend to stay unemployed for long if they’re even half-competent. Mostly. I can think of one exception though who has set him self up as independent despite being unqualified……

    He’s entirely convinced of his own brilliance though.

  19. The problem with the oil industry was the massive boom creating a surplus of work which needed to be carried out in record time, resulting in just about any dickhead getting a job. If you were an older dickhead and knew someone socially, suddenly you were a manager. The guy who fired me the first time around was a former army officer with almost no experience in the oil and gas industry, but lived next door to the CEO. Within a year he found himself running an extremely complicated business in Russia, not a single part of which he appeared to understand. Blokes like him were everywhere 10 years ago, and thanks to their connections they’ve probably survived the culls of the past few years while competent engineers have been laid off.

  20. Tim,

    The boom and bust cycle is locked in and will repeat continuously as it is a function of our monetary and land ownership system. Gordon Brown was a moron to suggest no more boom and bust. 80% of a nations wealth finds it way into property and land values, that means that all new profits eventually get captured in the land value as it has to go somewhere as defined by David Ricardo theory of economic rent.

    So as long as you have a buffer and are aware of the bust phase and can ride it out you will be fine, that is the safety part of my advise. One of my favorite bumper stickers from the US was “Please God just one more real estate boom”.

    As for the state they just ticket clip the market and are not necessarily in control of it. In a pure state (communist) they don’t allow property ownership, this is one of the planks of their manifesto.

  21. I can think of one exception though who has set him self up as independent despite being unqualified……

    Frankly, I can’t see much disadvantage in just telling brazen, barefaced lies about your experience and competence throughout your career. An astonishing number of people seem to do quite well doing just that.

  22. @Tim – because of the chap in question we’re now a) wary of hiring ANYBODY, and b) will do some serious due diligence on their past work, most of which is publicly available.

    When he came to us it was a side move from being a consultant engineer in a big French design bureau. It seems his value add was spotting problems with projects with a pointed bit of criticism at the right moment and thereby preventing massive wastage of time, money and effort. He never seemed to adapt to what his new job required of him, or that he had to at least cover his costs with billed hours – there’s no value add here in avoiding spending time that would otherwise have to be written off.

    Absolutely convinced he was super at it though, and that any criticism was just a “difference of opinion”. From my side, repeatedly being handed work (often the same piece) that was incomplete cos he didn’t see the point in the bits we asked him to add to the degree that I would finish it for him was less than fun cos I had enough of my own work to do.

  23. It is just crazy to tell your boss to fuck off. You can show your objections and ridicule the company policies very easily without doing that. I do it all the time and a few months ago I did it to the CEO in a town hall type meeting. After I was asked by several people wasn’t I concerned about the risk and my response was that they ask for feedback. They love the +ve type but can easily ignore the -ve and they use it to show that they have a good feedback system that give -ve and +ve feedback. Not that anything changes so it as well is a crap system which I have pointed out too.

    I’ve gone out on a limb several time to comment on injustices but always kept it polite. I’ve refused to implement punishments via the appraisal system because they wanted someone punished. I’ve commented when it was done outside my control. All politely and controlled. Little risk of losing my job although I’m sure my promotion prospects are impacted slightly.

    Fuck Off does have a confrontational hint to it.

  24. Good post Tim and good comments.

    I am actually in the process of saying fuck off to my boss, only he’s me. Going to wind up the business* and head back to the world of work. Business is me, partner and lots of freelancers so not a big thing.

    I’m about half way to the FU moneypot (although I concede that I could lower my spending quite considerably) and am quite close to doing a ‘pack it all in and write a book’ downsizing. However, I have the lure of a job which could really swell the FU pot in a few years. Which I guess shows how the lure of cash, comfort and security overrides the urge to tell the boss or the world to fuck off.

    *running your own business is the greatest thing in the world when it’s going well, utterly shit when it’s not

  25. @Bardon et al

    The dangerous side to the “buy the biggest house with maximum leverage” game that is so common in Britain, is that even if you can ride out the next Bust, will there be another Boom? If property prices were simply to flatline, then the debt strategy actually means you can take much longer to reach financial independence. Gotta keep turning up to work so that you can keep paying the mortgage, gotta keep the possibility of well-paid work in 10 years’ time – no slouching off to a comfortable but less remunerative winding-things-down career – cos if the interest rates bump up in 10 years you’ll be needing a fat paycheque.

    We know it can happen, based on international comparisons. German property market has stagnated for decades. Chris Dillow wrote an excellent piece about the risks of property investment being significantly understated for many reasons, but it seems to have been paywalled sadly!

    Mr Money Mustache is an interesting chap. Very up-front about his analysis and the assumptions he makes. One major assumption is that in the very long term, the distribution market returns will not deviate significantly from their historic levels. If there are major changes to the global economy (brought about by automation-based collapse in employment, or protectionism-based collapse in trade, or a stagnation in productivity or whatever other bogeyman you can think of) then you still will need the option of cutting spending and/or going out to earn some money at some point in the future. (He does acknowledge this, good for him.)

  26. @MyBurningEars – downsizing was the best financial decision I ever made. Went from CHF2300-ish rent plus a holiday apartment that more or less wiped its own nose with ski season rentals, to CHF 720, including mortgage repayment component. By living in the former holiday apartment. OK, I’ve got commuting costs that puts the whole roof-plus-getting-to-work to about CHF1200, but worst-case scenario the difference falls away.

    Never understood putting all the eggs in the owner-occupying basket.

  27. Just to add something here and that is ‘fuck you money’ is no different to plate spinning females, always have other options in the bank, never let yourself get trapped in any given situation. This means even if you don’t need to pull the ripcord, you can at least negotiate without fear.

  28. Bardon
    “My advise to any young person would be to get yourself into as much investment debt as you safely can as early as you can and never ever pay it back.”

    In the past, this would have been sound advice. In future, I’m far from certain it’s going to work. Asset prices have structurally shifted due to low cost money and the retirement bubble pumping money into them, I don’t see the following generation in a position to carry this any higher and there is little inflation to scrub away this debt.

  29. “Gordon Brown was a moron to suggest no more boom and bust.” Nope. He said there would be no more Tory boom and bust.

    Labour boom and bust, by implication, remained on the menu.

  30. “The rest can salt away a million or two and still be waiting to hit that magic number. They’ll never actually catch up to it. ”

    Sort of related: years ago someone did a survey to ask at what point people felt they had enough in the bank to never worry about money again. Maybe it was an averaging out summary but the no-stress, no-worry amount turned out to be 17 million.

    That takes some earning or saving (or robbing) so good luck.

  31. “Honestly speaking, this is one of the main reasons why I didn’t want kids”
    I considered this also. Then I decided it was my duty to humanity to reproduce and improve the gene pool. You should consider this too. It’s a tough job but….

  32. @ My burning ears – “buy the biggest house with maximum leverage”

    I didn’t mean to imply this as that would not be a safe thing to do. Maybe some cheapies in the northern provinces with high yields, that way they are washing their own face and even if you did lose your job for a while you could still hold them. Worse case scenarios is just flog them and cop transaction costs, it wont wipe you out. If there is a bust there must be a boom.

    I couldn’t get past that paywall to read those articles but yes I would agree that housing investment definitely has a risk level associated with it and it is definitely a long term plan minimum ten year but ideally 75 years. If housing does not sit well no problems, then maybe an index linked share portfolio, buy a nail bar or something else?

    I do housing, shares and business ownership and was on the brink at one stage but am now back on the safe side so I am diversified but nothing wrong with putting all your eggs in the one basket and looking after that basket. I like housing for the working man as in my experience it has easily been the biggest source of wealth creation, just ask your friends and workmates and I am sure that in the majority of cases it will be housing that is their biggest source of wealth. Unlike shares or business ownership, folk cannot opt out of the property market, they are either suppliers or takers, they cant wake up one morning and decide that they no longer require shelter whereas they can dump their shares in IBM.

    @David

    My view on this is to ask your parents how much they paid for the place, and then come up with a logical reason why the mindbogglingly high growth will not repeat in the future. Everyone always says that the last boom was the last one, but so far this has proven false. Yes inflation is low now but so are rates, rising inflation and rising rates is actually a good thing as well as it means that the economy is flying.

    My view is that we are in the emerging phase of the Mother of All Booms, this is the big one and it is unfolding right now. Maybe a mid cycle dip 18/19 but then the huge leg up all the way to 2025, then the big bust. many cycle point converging in 2025, could be the start of long deflationary period.

    @Deraimee

    Yes Corbyn definitely need a bit of capital growth on his Islington gaff alright.

    @Watcher

    In OZ a couple retiring at 65 need at least $850k in their pension and to own their house outright to have some kind of half reasonable lifestyle in retirement. This is on the proviso that they both die within 20 years. Renting a room of theirs out through Airbnb is a good way of keeping the baked beans of a higher standard if they were to live any longer than that.

  33. @abacab

    Yup. I am not an eggs-all-in-one-basket person either in terms of my career or in terms of my investments. The way I see it, if I lose a contract here or there, the aim is to be in a place where it doesn’t bother me – either because I’m going to just go earn some more money somewhere else (it takes effort, planning and perhaps a little fortune to put yourself in the position where “as one door closes, you’re 95% sure another’s about to open” but it’s very much worthwhile) or because I’m quite happy to take the hit occasionally and be a bit less busy for once. I’m not going to be an Ultra-High Net Worth Individual, but then again, who really needs it?

    There’s plenty of HNWIs and UHNWIs who end up bankrupt, having to sell off the house and cars and so on. People who get that rich often do it on the back of some prodigious talent or luck at one singular thing, and a reversal of fortune in that field can be fatal. I might never match them on dollars, yet I can handily beat them on financial stability – how crazy is that? Plus a quick glance at the gossip columns or obituaries suggests it really isn’t difficult to beat them on a host of other key factors of happiness and well-being, such as lack of stress, time to yourself, and mental and emotional/relationship stability…

    If I was to add a handy/useless tip to this thread, it would be that it can really pay to learn how to be happy with what you’ve got – or how best to use what you’ve got, to make you happy. For example, if I bought a flashy new car and flashy new phone every year, I’d probably just wind up with status anxiety, no happier than I was before, but feeling like I needed to keep spending to keep everything new and shiny.

    I try to focus spending on those little things that aggravate me out of proportion to their cost, and focus ruthlessly on eliminating them. I reckon there’s a “Pareto principle” situation where 80% of irritations stem from 20% of the costs. That feeling when you need to grab a pen/pencil but there isn’t one there, or the ink in the pen is running out? Solution: massive multi-packs are dead cheap, strategically position in every room in the house, chuck away any pen that seems on the blink, never be irritated by it again. Problem over.

    Wi-fi fine 98% of the time, cuts out 1.8% of the time, 0.2% of the time there’s a problems with the connection to the home (fire at the exchange last time, have had roadworks disrupt cables and so on too). When internet does drop out, feelings of stress and loss of control are multiplied by the necessity of internet when working from home. In fact just the possibility that it might cut out at critical times can cause stress on a work-from-home day. Solution: wi-fi range extender and/or ethernet cabling and/or whatever else sorts out the problem in the home, bigger data package on phone as back-up. Costly, and the rational side can think “well you won’t actually use all that data plan, so it’s a waste of money” but for me the total elimination of a major stress factor is definitely worth money. Unused data allowances matters far less than peace of mind. Problem solved.

    Problem: driving around in a fully paid-up second-hand car is cheaper, but can make you feel like a loser, particularly if everyone around you is driving in their bought-on-credit flashmobiles. Solution: make sure it’s a reliable second-hand car (because if it starts breaking down on you, you really do feel like a loser, and you are only going to get more jealous of those in shinier vehicles) and try to get one with a plush interior, bloody comfortable leather seats etc. They only cost a little more than one in the same model but with a naff interior. Don’t accumulate mess in it; every couple of weekends shake off the floor mats and occasionally give it a hoover. If it smells a bit off, stick one of those car smelly things under the seat. Some people care less about their comfort than me, but since it is only the interior of the car that you can see/feel/smell during your journey, and if like me you don’t care too much about the car’s speed and performance, it’s surprisingly easy to have a cheap car and yet ride like a king.

    If you can successfully “kid” yourself that you’re living a more luxurious lifestyle than your budget suggests you are, then for all practical purposes you are living a more luxurious lifestyle – there’s no kidding at all, from the economist’s point of view your utility is just as good. Martin “money-saving” Lewis tells people to think about the brands/price-points good are offered at – supermarket food and drink mostly but it applies to other stuff too. We all know there is a spectrum ranging from the cheapo budget stuff to the premium luxury stuff. He suggests to go down two price points from your normal and see if you can experience a difference. Often you can’t (indeed, often it’s just the same stuff rebadged!) so you might as well stick with the cheaper stuff. If you do feel the difference, try going down just the one price-point instead. If even that’s noticeably unpalatable, stick with what you’re used to – but he reckons this turns out to be the minority of products, so most people save a stack of money this way, and the things you do stick with become your “luxury” items that make you feel you’re still splashing out on yourself on those things where quality matters. Give yourself the feeling that there’s something you’re really treating yourself with.

    What he doesn’t mention, but I’d suggest, is to also try upgrading a level – see if you’re missing out on anything after all. You probably aren’t. But if you find something nicer that way, and you believe the price premium is sufficiently small compared to the quality difference, then you can use some of your savings from the easy downgrades to pay for some upgrades. Same or cheaper budget allocation, yet you’ve hill-climbed your way to a bundle of goods that makes you happier and which you’d have been willing to pay rather more for the experience of. It’s money for nothing. Repeat the trick in enough areas of life and you can avoid the bind that bobby b’s colleagues found themselves in – always needing a few hundred grand more, because happiness is always just around the corner and not quite here yet.

  34. @MBE – “it can really pay to learn how to be happy with what you’ve got”

    Absolutely, true wealth is enjoying what you have now.

  35. Bardon;

    “My view on this is to ask your parents how much they paid for the place,.”

    Well, my parents live in a house I own….

    An important point here is that inflation for a long time masked true rate of house price increase. A simple example, between 1975 and 2000 in New Zealand house prices rose at roughly the same rate as wages (it’s largely true right back to 1962 too). Between 2000 and now, they have risen at twice the rate of wage increases, in Auckland it’s even more.

    That is a structural change we have seen worldwide.

    “then come up with a logical reason why the mindbogglingly high growth will not repeat in the future”

    At large part of this change in growth rate is three one-off factors;

    1. Cheap money.
    2. The rise of dual income professional couples. It times past income was limited to one wage earner plus a part time income at most. Now days there is a caste system where many couples are both high income, professionals who can afford dramatically higher house prices in the nice parts of town.
    3. Money flows out of China.

  36. @David Moore

    If you want to plan for the future from the informed ultra-pessimist’s view, it’s possible that the history of economic growth since the Industrial Revolutions has been a sequence of one-off events which may not have analogues in the next 50 years. Two very readable papers by Robert J. Gordon:

    The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections
    NBER Working Paper No. 19895
    Issued in February 2014

    The United States achieved a 2.0 percent average annual growth rate of real GDP per capita between 1891 and 2007. This paper predicts that growth in the 25 to 40 years after 2007 will be much slower, particularly for the great majority of the population. Future growth will be 1.3 percent per annum for labor productivity in the total economy, 0.9 percent for output per capita, 0.4 percent for real income per capita of the bottom 99 percent of the income distribution, and 0.2 percent for the real disposable income of that group. …

    There is no need to forecast any slowdown in the pace of future innovation for this gloomy forecast to come true, because that slowdown already occurred four decades ago. In the eight decades before 1972 labor productivity grew at an average rate 0.8 percent per year faster than in the four decades since 1972. While no forecast of a future slowdown of innovation is needed, skepticism is offered here, particularly about the techno-optimists who currently believe that we are at a point of inflection leading to faster technological change. The paper offers several historical examples showing that the future of technology can be forecast 50 or even 100 years in advance and assesses widely discussed innovations anticipated to occur over the next few decades, including medical research, small robots, 3-D printing, big data, driverless vehicles, and oil-gas fracking.

    Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds
    NBER Working Paper No. 18315
    Issued in August 2012

    This paper raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow’s seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history. The paper is only about the United States and views the future from 2007 while pretending that the financial crisis did not happen. Its point of departure is growth in per-capita real GDP in the frontier country since 1300, the U.K. until 1906 and the U.S. afterwards. Growth in this frontier gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. The paper is about “how much further could the frontier growth rate decline?” …

    There are folk far smarter than me who think he’s wrong, but it’s not an unreasoned view and the chap’s not a crank. There are people on this forum who have more knowledge about tech/engineering than me, and who may feel he hasn’t grasped the economic consequences of the next wave of change. But he seems to have made an honest effort to grapple with them, and returned from the fray unconvinced that they can save us. Since I am hoping to live quite a while longer, I wouldn’t want to discount the possibility from my planning.

  37. David

    I think that we are in agreement that inflation is the key, in an investment scenario houses are merely a by product and only necessary to secure the debt that allows us to hedge on inflation and create equity. And wake me up if the money supply stops increasing.

    As for wages, a baker and a blacksmith could afford a property in the city of London back in the day, now they cant. This is not a recent phenomenon.

    As for cheap money, the period that you mention had eye wateringly high interest rates, its only recently and in this cycle that money is relatively cheap, which if anything is bullish for now, unless I am reading your point wrong.

    The two income earners thing was probably an argument for last cycle but not this one, as its nothing new now.

    As for Chinese money it aint stopping, and then there is India etc etc.

    I am obviously bullish on property and others may not be which is fine and none of us know what will happen tomorrow but I would bet the house on it that house prices will be an awful lot higher in 2025 than they are now in the UK, Aus and NZ.

    I accept the bear argument, but as its stand now the bulls are winning according to the scoreboard.

  38. @MyBurningEars – what you wrote there is pretty much aligned with what we do. Certainly with respect to food – in CH that’s a major point where you can save serious money, particularly if you shop at Aldi rather than Migros/coop (quality’s the same for most things).

    The other thing here is that the best investment by far is paying more into your pension – at my tax rate, that makes me 30% in the year it’s put in, and you get more guaranteed growth than anything else. OK it’s taxed when it comes back out, but hopefully you’ve got your ducks in a row by then so as not to get too whacked if you take some of it as a lump sum.

  39. @MBE – “It questions the assumption, nearly universal since Solow’s seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely.”

    Yes there have been a number of periods in time where we have have went through very long deflationary periods the last being the Victorian era where prices didn’t rise for a hundred years.

    There is no doubt that we will have another one, this is when you wouldn’t want to be holding assets either. I can join you on this but only after 2025, this business cycle is locked in and so is the KWave which interestingly enough also tops at 2025 as well. So I think if you were planning for a long deflationary period then it could well start in 2026 but not before. The Great Wave by David Hacket is a must read if you are interested in this he charts the price of consumables in England since 1201 (the longest duration charted that I am aware of) and describes the transition of inflationary to deflationary periods and also highlights the trigger points. Its not an investment book its a historical book but its all the same at the end of the day, I thoroughly recommend it.

    Here is the chart of inflation in England since 1201, note that the current inflationary period has the steepest grade of them all, I think you are feeling this and when we transition of this one it will be tumultuous, house prices may be the least of our worries.

    Good luck with your economic planning and budgeting I like what you are doing and would gladly give you a job looking after my business if you were to do it like that.

    The chart of inflationary/deflationary periods over time is on the free preview page 4 of the book.

    https://www.amazon.com/Great-Wave-Revolutions-Rhythm-History/dp/019512121X

  40. This means even if you don’t need to pull the ripcord, you can at least negotiate without fear.

    Perfectly put!

  41. There’s a lot to be said for building up an insurance fund, irrespective of inclinations to tell one’s superiors to go play with themselves. Nothing in life is either permanent or predictable & anyone who thinks otherwise is kidding themselves. Today you’re the irreplaceable kingpin of the organisation. Tomorrow you’re history. Nothing, but nothing, is secure.

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