Gyroscopic Investing

I know a guy who has the goal of dying one million dollars in debt. He is well on his way and he lives very nicely.... So far.
Sometimes I wonder if he handles fiscal policy for my country.

Something I was reading a couple of days ago, about Japan, I don't have the link handy and don't exactly remember which blog...
Anyway, it mentioned that in Japan when the economy was tanking, upper management started to cut their salaries instead of laying off employees. Maybe that is one reason why unemployment isn't as bad as we would expect. I'd think here in the US it is the other way around, as soon as management is missing targets, they lay off people. That way their bonuses are protected...

In the Netherlands, in the 1980s, we went to a 36 hour workweek. Not because we're lazy, but because that way 9 employees cut enough hours to keep employee #10 on board...

Tortoise wrote: Don't get me wrong; I agree that we live in a "Jetsons world." I just think it's a very expensive Jetson's world--far more expensive than we think, as the financial crises in recent years have started to show us--and as Moda said, there is a sense in which we seem to be mortgaging the future to enjoy it. As much as I sincerely hope otherwise, I suspect much of it may eventually be revealed as an illusion.

The term "standard of living" probably means slightly different things to different people. Personally, I see the skyrocketing costs of education and healthcare, for example, as suggestive of a steadily decreasing standard of living since those two items alone consume such a large chunk of so many people's paychecks and taxes. Plus, I see dual-income households all around me when single-earner households used to be much more prevalent in previous decades. I concede that maybe it's by choice for a lot of them; perhaps most families could get by just fine on a single income if they were only willing to scale back their consumption.

That's a whole series of good points.  Education is a puzzle that badly needs solving.  With the tools available today, learning is easier and more accessible than ever.  Anyone with an internet connection has free access to things like the Khan Academy, courses taught at one of the finest engineering schools in the country, and the most extensive encyclopedia produced in human history.  It's therefore very disconcerting to watch the price of a college education rise and rise.

With health care, you've got that mixed bag of much better care and technology but with much higher prices.  On the one hand, my parents talk very fondly of a time when doctors made house calls and you simply paid them directly (at an affordable price) right out of your pocket.  Insurance was insurance, not a prepaid health plan, and government interference in that market was minimal.  On the other hand, I'm extremely happy that modern miracles like the MRI machine are so accessible.

I've observed the same thing as far as dual-income households are concerned.  I agree that this is due in large part to the desire to "keep up with the Joneses".  But even for those of us who couldn't give a wet fart what the Joneses are doing with their money, I think many people struggle with the idea of giving up or not having a career.

I humbly submit that people do not make as much money with the second household income as they think.  When you add in the expense of having to pay someone to raise your children for you, costs for mileage on a second vehicle, dry cleaning, paying a higher tax rate, etc. you don't really make that much more money.  If you factor in the many hours of time that you do not get to spend with your children, life as a second earner may not be such a stellar deal.  Going with the more modest house, a little bit smaller TV, and canceling the cable might be the better overall package for many.  Everyone makes their own calculations on that, though, and I don't pretend to have the answers for anyone but myself.

Thanks for the recommendation on "Bourbon for Breakfast".  I read a few of the essays in there but lost the PDF a while back.  I should go grab that one again.

Reub wrote: I know a guy who has the goal of dying one million dollars in debt. He is well on his way and he lives very nicely.... So far.
Sometimes I wonder if he handles fiscal policy for my country.

That's hilarious.  How old of a guy is this?  Does he "lose" if he is forced to declare bankruptcy?  You've got interesting friends.

I've thought of the idea of "dying in debt" before.

How possible is it?

If I don't have kids, the idea of dying with a boatload of money saved would feel like I've done something wrong in my work/life balance calculations.

moda0306 wrote: If I don't have kids, the idea of dying with a boatload of money saved would feel like I've done something wrong in my work/life balance calculations.

I think that's only true if you know when (and if (!!!)) you're going to die.

I personally like the idea of having enough money that I can support a modest lifestyle with a 3-4% drawdown (which ought to be sustainable.)  I place a great value on comfort, security, and flexibility, so saving feels better to me than consumption.  It's also my hedge in case it turns out that I am immortal, like a Highlander. 

Either that or I'm going to spend all of my money building an enormous pyramid in the Nevada desert with my face carved onto the side of it.  I haven't decided which it will be yet.

Lone Wolf wrote: Education is a puzzle that badly needs solving.  With the tools available today, learning is easier and more accessible than ever.  Anyone with an internet connection has free access to things like the Khan Academy, courses taught at one of the finest engineering schools in the country, and the most extensive encyclopedia produced in human history.  It's therefore very disconcerting to watch the price of a college education rise and rise.

I'm glad you pointed out those free online educational resources, because I think they're revolutionary. The Khan Academy is awesome. Salman Khan gave this great TED talk a while back describing how it all started. What an inspiring story!

Unfortunately, I fear that technology evolves much more rapidly than traditions and cultural norms do. We do not yet live in a world where a self-taught person--no matter how demonstrably proficient--is in the same ballpark of opportunity as a person with a formal degree from an accredited institution. Most people would not agree to let a self-taught person give them medical treatment, most companies will tend to hire someone with a formal degree over a self-taught person, and so on. I sincerely hope that changes--and soon--but for the moment we seem to be stuck in a system that effectively requires us to pay an obscene amount of money to receive the educational imprimatur of the State. Unless, that is, one prefers to pick lettuce, wash dishes, or bounce bars while developing new cosmological theories.

Lone Wolf wrote: With health care, you've got that mixed bag of much better care and technology but with much higher prices.  On the one hand, my parents talk very fondly of a time when doctors made house calls and you simply paid them directly (at an affordable price) right out of your pocket.  Insurance was insurance, not a prepaid health plan, and government interference in that market was minimal.  On the other hand, I'm extremely happy that modern miracles like the MRI machine are so accessible.

Funny you should mention that. My father, a retired physician, has often lamented that many of the modern high-tech medical tests--while amazing and invaluable when used in the appropriate situations--are grossly overused due to "defensive medicine." That term refers to the ultra-conservative way in which many doctors now practice medicine as a result of the growth in (successful) medical malpractice lawsuits in recent decades. Enough doctors got their asses handed to them in court that they gradually started to order all sorts of tests and procedures for their patients that their training clearly taught them were unnecessary.

Based on simple physical symptoms alone, doctors can generally diagnose something straightforward like a broken bone or a sprain with a very high likelihood of being correct. But because the tiny number of diagnoses that turn out to be incorrect have the potential to financially ruin the doctor (think Black Swan effects), he is all but forced to order all sorts of extra tests to prove his diagnosis beyond the shadow of a doubt. It sounds very nice and thorough, but in many doctors' estimation, it is wasteful and increases the cost of medical care significantly for everyone.

I guess what I'm trying to say is that the existence of new high-tech medical procedures like MRIs are indeed a good thing, but they are by no means as necessary for the average person as we tend to think. A lot of medical care is for standard checkups and emergency room stuff like broken bones, bad cuts requiring stitches, really bad fevers, etc. Checkups and treatments for those kinds of basic medical issues generally do not need to be super-high-tech, yet they're growing in cost just like the more technology-intensive treatments (e.g., surgeries, cancer treatments, brain scans, etc.). That is the sense in which I see the growing cost of medical care in recent years as being a net burden on most people rather than a reflection of universally better medical care.