How Many Of You Guys Are Wealthy or Living Paycheck To Paycheck?

Singuy

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I teach a pharmacist financial class at the hospital I work at and am curious who is wealthy or living paycheck to paycheck here and the reasons why.

Statically speaking, over 30% of household making >150k/year have less than 10k in savings so if you are living paycheck to paycheck, you are definitely not the only one. An open discussion may help future PharmDs look for pitfalls and align their expectations accordingly. I have co-workers who are PharmDs ranging from millionaires to having 100k in credit card debts. I would say only 20%-30% of my co-workers are financially successful per given age.
 
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pezdispenser

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I think a big part of it has to do with knowing how to control your spending and live within your means. You have to spend less than you make, and save some money for the future as well. Also beware of the dangers of debt which makes it all too easy to spend more money than you have. This can send you into a death spiral as you try to pay back your past spending plus interest plus your current (out of control) spending.

I do consider myself fairly successful with a net worth of around 800k in my mid 30s, but I'm certainly not the richest. I still stuck to my plan and paid off all my debts including my mortgage despite the advice of many people to keep them for the tax deduction or to make more money in investments than the interest I was paying. Sure, I probably would have more if I did that, but I'm still happy with my decision and it feels great to be debt free and have no large monthly payments for a mortgage or anything. 800k is more than enough anyway, so from now on I'm going to try and balance my savings and spending to have some fun in the present. Perhaps save 50% of my take-home pay and spend 50%, and as always, stay out of debt.
 

TheBlaah

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Huh. A pharmacist financial class? Out of curiosity, what does that entail?

But to answer the question, I'm probably on the very wealthier side (>700k net worth) considering my age and 1-year graduated status. I personally agree with pezdispenser in regards to debt; I paid them all and paid them quickly.

I find that it's the little things that will always catch up to you. Eating out, gas, games/movies, and nonessentials will eventually accumulate. It's generally a good idea to keep track of your budget and your spending so you know what areas you can improve on. While I'm not in the camp of being a cheapskate, there's almost always ways to save money easily with a little planning.
 
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Lnsean

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most pharmacists only net 70-90k in take home pay....this is really not much to be talking about classes and such. the ones that have high networth or are making more are doing something else or another side hustle. If this is an e-peen contest then I submit my application:

:----->
 
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Singuy

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Huh. A pharmacist financial class? Out of curiosity, what does that entail?
I mainly focus on taxes, student loan payment plans, assets, net worth, compounding interests and budgeting using real world examples.

My students are generally those who are on their rotations.

Believe it or not, the thought of "making 6 figures" from years of living the college student lifestyle really propels my co-workers to spend "big" after graduation.

I would say the salary of a RPH (and relatively young age of acquiring such salary) is pretty susceptible to high accumulation of debt and paycheck to paycheck living. Some sees "6 figures" and want to live the 6 figures lifestyle which is also encourage by peers and friends. You may be seen as the "rich" one among all your friends and family...so it's entirely possible to overspend to meet expectations...

I put big in quotations because what I teach have been eye opening for my students in a sense that their "6 figures" salary really doesn't buy them much before they start living paycheck to paycheck.

Like one said, we pretty much take home 75k after it's all said and done. A brand name car payment, student loan payments, and a nicer apt complex than normal is all it takes to stagnant any attempt at saving money. When you add dining out, social bar tabs, and some nice vacations..there's really nothing left to save for a house. Then there's a tendency to buy a house more than any can afford.

It's pretty amazing how little some of my 50 yo+ co-workers have as their nw. I am talking about barely breaking 100k-200k in net worth. I have co-workers in their 60s who work 2 jobs and can't retire..even after a major car accident. Then you have some of the people who posted above with 800k in NW easy...and will be in the millions by 40 yo.

I myself didn't work on the side or did anything out of the ordinary. In fact I bought a house somewhat at the peak of the market. Just living like a college student for the past 9 years yield myself a net worth of 600k at 33 yo..but this was with no student loans so I don't expect students in debt to be in a similar position.
 
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msweph

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Huh. A pharmacist financial class? Out of curiosity, what does that entail?

But to answer the question, I'm probably on the very wealthier side (>700k net worth) considering my age and 1-year graduated status. I personally agree with pezdispenser in regards to debt; I paid them all and paid them quickly.

I find that it's the little things that will always catch up to you. Eating out, gas, games/movies, and nonessentials will eventually accumulate. It's generally a good idea to keep track of your budget and your spending so you know what areas you can improve on. While I'm not in the camp of being a cheapskate, there's almost always ways to save money easily with a little planning.
One year outta school and 700K net worth... What did you do? Just curious
 

Momus

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  1. Live below your means (or waaay below your means if you wanna retire in your 40s)
  2. Take smart risk (Index investing, RE investment, side businesses)
Profit!!! It can't get any simpler than that...
 
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I'm a single guy living pay to paycheck. I have student loans and I pay rent. I don't own a house, have no 401 K investment or any savings on the side. Please help
 

Ackj

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I certainly am paycheck to paycheck, and I imagine almost any recent grad would be just because of loans. I suppose you could do IBR or PAYE and get the low payments and have a ton of cash flow, but probably not the best long term plan.

I do have a fair amount of savings, and each paycheck I have a set amount allocated to certain savings, so I suppose in the strictest sense, I'm not paycheck to paycheck. However, I would definitely feel it if I missed a check or two.
 

6GodPharm

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I'm living paycheck to paycheck right now because I'm contributing 5% to my 401k and paying my loans off at a very fast rate. From start to finish i'm on pace to clear my loans in less than 2.5 years and I owed 170K. This year so far i'm on pace to make close to 200K but you gotta love taxes smh
 

TheBlaah

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One year outta school and 700K net worth... What did you do? Just curious
A combination of a lot of things. A big factor is that I saved up early in life, which allowed me to invest into opportunities I thought would have good returns. I worked in a computer repair shop both throughout highschool and college(average 20hrs/wk at $14/hr). Received a full scholarship to undergrad so I received some of the saved tuition money from parents (~15k). Invested heavily in Tesla which paid off (~15k from stock, 5k from selling a reservation spot for the Tesla S) after they paid off their loan to the government. Also worked during pharmacy school as an intern averaging ~20hrs a week all 4 years.

The biggest thing was probably when I started being involved in the housing market. After the housing crash, I bought my own condo for pharmacy school which I rented out to two friends at a low price for the 4 years of pharmacy school. I also bought several other investment properties. By the time I had graduated, all of them had at least doubled and some nearly tripled in value. I'm in the midst of selling off more of my properties, but currently 1/3 of my assets are still in the houses.
 

lord999

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I mainly focus on taxes, student loan payment plans, assets, net worth, compounding interests and budgeting using real world examples.

My students are generally those who are on their rotations.

Believe it or not, the thought of "making 6 figures" from years of living the college student lifestyle really propels my co-workers to spend "big" after graduation.

I would say the salary of a RPH (and relatively young age of acquiring such salary) is pretty susceptible to high accumulation of debt and paycheck to paycheck living. Some sees "6 figures" and want to live the 6 figures lifestyle which is also encourage by peers and friends. You may be seen as the "rich" one among all your friends and family...so it's entirely possible to overspend to meet expectations...

I put big in quotations because what I teach have been eye opening for my students in a sense that their "6 figures" salary really doesn't buy them much before they start living paycheck to paycheck.

Like one said, we pretty much take home 75k after it's all said and done. A brand name car payment, student loan payments, and a nicer apt complex than normal is all it takes to stagnant any attempt at saving money. When you add dining out, social bar tabs, and some nice vacations..there's really nothing left to save for a house. Then there's a tendency to buy a house more than any can afford.

It's pretty amazing how little some of my 50 yo+ co-workers have as their nw. I am talking about barely breaking 100k-200k in net worth. I have co-workers in their 60s who work 2 jobs and can't retire..even after a major car accident. Then you have some of the people who posted above with 800k in NW easy...and will be in the millions by 40 yo.

I myself didn't work on the side or did anything out of the ordinary. In fact I bought a house somewhat at the peak of the market. Just living like a college student for the past 9 years yield myself a net worth of 600k at 33 yo..but this was with no student loans so I don't expect students in debt to be in a similar position.
Commendable, but unsympathetic to the idea that this is a golden time and there will be periods of maintaining that lead.

I teach both the Pharmacoeconomics class for the pharmacists and the Independent Practice Management and Medical Contracting class for the Med and Dental Schools. You're exactly in the right age range (as I am) to have hit the jackpot in pharmacy:

1. Graduated in a shortage and you're actively sought after
2. Working in a low inflation (relatively) and high yield market at least until 2008
3. (Controversial) Have the majority of assets in non-income generating assets (housing), low liability "assets" (spouse actually works), or in securities (which considering the market is at an all time high)

I'll give you a couple of alternate scenarios though on how you could be a net worth of $200k at 50-60:
1. Got screwed by the 1987 crash (security destruction, and it was a big one)
2. Married a high liability asset (spouse doesn't work or is a net negative for his or her spending habits against income) or like my LDS colleagues, took the multiply part seriously and have enough children such that the income generated was used for their futures.
3. Spent some time between employment. If you started in the 1980s, the likelihood that you're still employed without a year or two break in employment in the profession is fairly low. This is a lot higher now.
4. Bought a house in a metropolis where the house went down in value relative to inflation even though the price nominally increased (this is true of more or less every major metropolitan in the Midwest and East).
5. Had your small business fail (individual pharmacies come and go)
6. Divorce. The biggest financial decision in most people's lives is not to get married or have children, but to get divorced. Watch how both of you burn your assets in the bonfire of your vanities.

I differentiate between "rich" where you have a lot of assets but you're still working and need to work, and "wealthy" where you have assets sufficient that you don't have to work at all and that your assets indefinitely produce. I would say that I am both now, but it's not due to my "virtuous" saving habits which are made easy in this market and expense class (although I am worth more than your number). It's due to being married to someone who earns 5X of my not-insubstantial salary and can exceed mine by an order of magnitude on good years. My wife has been harping on me to become the house husband for several years now, but I just can't see myself being a homebody. It would be a bit too damaging to my ego and self-worth to not be doing something.

Many of the pharmacists though who did do everything right in the timeframe, you don't see anymore in the pharmacy as they have retired (usually around 52 after 30 years worth of work from a BS Pharmacy 22). If you can survive the major bumps in your career around 38-42 (divorce being the one major matter within your control and the market being the one thing outside), then you'll be wealthy around the 30th year such that working is definitely not a good option.

The other observation I'll make it something that I do have to deal with in 50 year old physicians, dentists, and pharmacists in terms of having too much of one asset (money) and not enough of others. There is a right time for everything, and to do things out of sequence becomes costly. There is something to be said about the gypsy idea that wealth is a function of how much is spent not how much is earned. You can't pursue certain passions when you're 50 (especially spouses) when you're older unless you're willing to give a lot more in other respects as the relationship is unequal. There's certain kinds of activities like mountaineering, scuba, and the more extreme versions of those activities that pretty much can't be pursued at that level when you're much older. While I do encourage everyone to be on sound financial footing, I really don't advise people to focus on becoming a Boglehead unless that's what they want. There's nothing wrong with the pursuit of wealth, it's just that many don't think about the opportunity costs involved until they are too committed just like our profession or medicine. Re the gypsy idea, what's money for if you can't use or replace it. I have too many irreplaceable things that I'm not willing to pursue money more than I what I do (always net positive, but not so much). The other flip side is that I see one too many of us in our middle age go for things beyond their ability to "pay."

A final joke:
 
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lane one

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I mainly focus on taxes, student loan payment plans, assets, net worth, compounding interests and budgeting using real world examples.

My students are generally those who are on their rotations.

Believe it or not, the thought of "making 6 figures" from years of living the college student lifestyle really propels my co-workers to spend "big" after graduation.

I would say the salary of a RPH (and relatively young age of acquiring such salary) is pretty susceptible to high accumulation of debt and paycheck to paycheck living. Some sees "6 figures" and want to live the 6 figures lifestyle which is also encourage by peers and friends. You may be seen as the "rich" one among all your friends and family...so it's entirely possible to overspend to meet expectations...

I put big in quotations because what I teach have been eye opening for my students in a sense that their "6 figures" salary really doesn't buy them much before they start living paycheck to paycheck.

Like one said, we pretty much take home 75k after it's all said and done. A brand name car payment, student loan payments, and a nicer apt complex than normal is all it takes to stagnant any attempt at saving money. When you add dining out, social bar tabs, and some nice vacations..there's really nothing left to save for a house. Then there's a tendency to buy a house more than any can afford.

It's pretty amazing how little some of my 50 yo+ co-workers have as their nw. I am talking about barely breaking 100k-200k in net worth. I have co-workers in their 60s who work 2 jobs and can't retire..even after a major car accident. Then you have some of the people who posted above with 800k in NW easy...and will be in the millions by 40 yo.

I myself didn't work on the side or did anything out of the ordinary. In fact I bought a house somewhat at the peak of the market. Just living like a college student for the past 9 years yield myself a net worth of 600k at 33 yo..but this was with no student loans so I don't expect students in debt to be in a similar position.
Not to be a d*ck, but if you don't have student loans then I really don't want to hear about your NW. Most people I know without student loans don't realize how lucky they are. When you're paying >2k/mo on loans, no amount of penny pinching is gonna land you in early retirement.
 
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awval999

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I teach a pharmacist financial class at the hospital I work at and am curious who is wealthy or living paycheck to paycheck here and the reasons why.

Statically speaking, over 30% of household making >150k/year have less than 10k in savings so if you are living paycheck to paycheck, you are definitely not the only one. An open discussion may help future PharmDs look for pitfalls and align their expectations accordingly. I have co-workers who are PharmDs ranging from millionaires to having 100k in credit card debts. I would say only 20%-30% of my co-workers are financially successful per given age.
I live "paycheck to paycheck" but that's out of choice. I don't consider my Roth and my 403b "touchable". I only have a couple thousand truly liquid cash; enough to pay the deductible on the house and car or if the water heater breaks. Obviously in a true emergency I can access funds retirement funds but I use all my leftover liquid funds to pay-down student loan principal (and to take fantastic vacations).
 
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mentos

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Graduated 2 years ago, have about 23k in liquid cash savings, net worth around 135k. Not living paycheck to paycheck but don't feel rich by any means. Although my net worth is positive, I still hate having 20k in student loans. Share a 800SF 1 bedroom apt with wife, we drive 7 & 10 year old vehicles. Still grinding out student loans. Probably won't have enough for 20% down payment for a home + safety net for another 2-3 years. We also paid for our own wedding so that set us back.

Need to learn about investing. I go through the investment thread here and don't really know what they're talking about most of the time.
 
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lord999

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Man I hate reading this thread as a student while I watch my debt grow each semester.
Ah, don't worry about it. Consider this kind of a proxy way for us guys to compare sizes since we're all dogs in cyberspace anyway. And we were all once poor (and possibly destitute) students. I remember why everyone else was partying during my undergrad, I was cursing that I had to go to work all weekend at Walgreens at 3rd and Hell.

https://www.mattcutts.com/blog/scott-adams-financial-advice/

The general point though that is made is you should make enough and budget well enough that you don't think about money (Scott Adams's points are a bare minimum although he doesn't invest 70/30 anymore as he has too much to lose now in this market). If you can do that much and do what it takes to stay employed, you'll be fine.

And after you're fine, then think about other matters. If money interests you, then I recommend you do become a Boglehead. If you hate dependency (e.g. owe anyone anything), retire your obligations (debts) faster.

But my take on one of singuy's real points is that people DON'T think about money enough, and their lack of financial foresight and planning bankrupts them for trivially avoidable reasons. We make enough that we don't have to sacrifice involuntarily. But, it's good to reflect on what your wants and means are and make sure the reconcile in the way you want.

My counterpoint is that even if you're extremely responsible, there are plenty of responsible and rational reasons not to have a high net worth in the end. I fully understand and agree with the idea of financial security planning to the extent of "miser" but want to point out that there are opportunity costs and luck that comes into play as well.

But from the finance standpoint, we're living in a time of milk and honey and it's been real easy to accumulate assets quickly in this market, but as BMBiology points out, those days are coming to an end. I'll believe stories of wealth after they've underwent those trials. Nothing is better than adversity at showing what your weaknesses really are.

And if your weaknesses and wants involve wanting to know people in the Biblical sense, there's easier ways to than what Lyle Bootman does to get some:
http://www.pharmacytimes.com/news/new-details-emerge-in-pharmacy-dean-sexual-assault-case

This guy was the consummate obsessed money guy in academia (and the wealthiest academician in pharmacy except for probably a guy at Temple and some faculty at Rutgers who invested in Home Depot early - Home Depot being founded by two Rutgers pharmacy alumni who HATED the profession). You would hear him at dinners talking about his investment schemes (which many of them panned out well, Bootman has a good reputation in Tucson for being an intelligent property mogul). If you're spending all that money on legal bills, what's it worth now?

I totally get though what a bum deal you were handed. Why are you asked to mortgage your future where the rest of us didn't? Well, someone has to pay for my dreams, best impose that cost on someone who doesn't have the choice. It's this kind of thinking and financialization which honestly will end in tears for all of us in the end. Do you want to be a rich in Mexico (where you're afraid to go outside) or middle class in Canada (really working class compared with the US "middle class"). And the tougher competition for jobs. The pendulum has swung back, and it's really not a good place to be an entering practitioner now.
 
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Singuy

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Not to be a d*ck, but if you don't have student loans then I really don't want to hear about your NW. Most people I know without student loans don't realize how lucky they are. When you're paying >2k/mo on loans, no amount of penny pinching is gonna land you in early retirement.
Student loans is not the end all be all excuse for having no NW your entire life.
Even though I didn't have any student loans, my wife had 186k worth of student loans from optometry school. With careful planning and frugal livings, she paid it off(using 0 dollars of my own) in 2.5 years. This was a combination of living at home, no vacations, little going out to eat, driving a high school 200k miles beat up honda civic, and working 6 days a week. Our current household net worth is 1.1 million with no mortgage and no student loan debt.

As a RPH, you have TIME on your side. If planned smartly, you are a RPH at 24yo making 6 figures. You can knock out your student loan debt in 2-4 years if you do what my wife did, and by the time you are 35, your net worth should be north of 500k easy. But when you start adding new car payments, luxury apt living, and vacationing like no tomorrow..then yes..you will be poor for at least 10 years of your life.

The beginning years are crucial. This is before starting a family or needing a house. You should use this time to knock out that student loan and cushion your savings for your family's future needs(kids, house, etc etc). Too many people ends up behind and stay behind after life hits them hard.
 
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BMBiology

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Let's be real here. You are not going to be wealthy by working as a pharmacist. You are not going to be wealthy by working for someone else.

Life is always about risk vs reward. There are the "good" risks like contributing to your 401 k, saving 15-20% of your income. Then there are the "bad" risks like taking that fancy vacation you can't afford because you want to post pictures on FB.

Here are some of the dumb things I have seen people do:

- paying 7% interest on their student loan when they can refinance and pay 3.5%. Keep on thinking the government will forgive your debt when you are making 120 k+ a year

- keep on taking on debt and hoping your asset will keep on going up like buying a house with 3.5% down payment, buying stocks. You got into this game a little too late. When it goes down (and it will) you are not going to have anything to stop the bleeding. That is when you are going to feel the pain.

- buying an expensive car. I know this guy who used his student loans as a down payment for a BMW. Get this...he was using loans that were charging him 7% a year to buy a car that is also charging him interest rate.

- spent years in school and taking on debt and then you decided you don't want to work as a pharmacist and you want to be a stay at home spouse. Really? Who is going to pay off your debt now?

- renting an expensive apartment right out of school. Living in downtown is not only expensive but you also have to live a certain lifestyle which includes driving a nice car, going to fancy restaurants and bars.

The point: it is easy to take on more debt, buy things you don't need, go on a fancy vacation. It is much harder to say no to those things. So you can tell people what they should do but how many people are going to follow thru? I can guarantee you not too many people will. That is their choose. Let them live their life.

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mentos

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buying stocks. You got into this game a little too late. When it goes down (and it will) you are not going to have anything to stop the bleeding. That is when you are going to feel the pain.
Should we keep everything in cash until the market crashes like in 2008? My online savings account only pays ~1%.
 

Carol is Alpha

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Should we keep everything in cash until the market crashes like in 2008? My online savings account only pays ~1%.
We have to watch developments coming out of Jackson's hole :The 2016 Economic Symposium, "Designing Resilient Monetary Policy Frameworks for the Future," will take place Aug. 25-27, 2016.

The G20 events Finance and central bank meeting 8/31-9/1, G20 summit Sept 4-5th in China,

Fed meeting Sept 21

RMB into the SDR basket Oct 1st

G20 central banker meeting in Washington Oct 6th

Cash might not be the best asset with central bankers hellbent on targeting nominal GDP, negative interest rates, perpetual bonds to finance fiscal stimulus, etc. in this "new era of low growth."

And now this: http://www.reuters.com/article/us-mideast-crisis-syria-china-idUSKCN10R10R?il=0

Can we now recognize the petrodollar is dead?
 
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Singuy

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The point: it is easy to take on more debt, buy things you don't need, go on a fancy vacation. It is much harder to say no to those things. So you can tell people what they should do but how many people are going to follow thru? I can guarantee you not too many people will. That is their choose. Let them live their life.

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I argue that you can be wealthy by becoming a pharmacist. Unlike other professions, we get our money fast and early, which if invested correctly, can make us pretty wealthy by 55+. I see having a net worth of 3 million + if at 7% return shouldn't be a problem.

The trick is to get them before they graduate and start living their lives. I show them two paths, with two possible budgets/spending. If anything, most of my students doesn't appreciate money..and no one in their lives have told them there is another way of living besides paycheck to paycheck. 76% of Americans live paycheck to paycheck so it is all they know.
 

Carol is Alpha

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I argue that you can be wealthy by becoming a pharmacist. Unlike other professions, we get our money fast and early, which if invested correctly, can make us pretty wealthy by 55+. I see having a net worth of 3 million + if at 7% return shouldn't be a problem.

The trick is to get them before they graduate and start living their lives. I show them two paths, with two possible budgets/spending. If anything, most of my students doesn't appreciate money..and no one in their lives have told them there is another way of living besides paycheck to paycheck. 76% of Americans live paycheck to paycheck so it is all they know.
Uh...where are you going to get a 7% return? Bill Gross would like to know. CALPERS would like to know. MetLife would like to know.

Paul Tudor Jones would really like to know. http://www.zerohedge.com/news/2016-08-16/paul-tudor-jones-terminates-15-workforce-after-surge-withdrawals
 
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6GodPharm

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You can be "wealthy" as a pharmacist, especially in a hourly state where anything over 8 or 40 hours is OT. Picking up 2-3 shifts a month and if you already work 13's at your store can lead you to make close to 9-10K a month and thats AFTER taxes. Lets not forget the months you get paid 3 times so you can easily pull 13-14K AFTER taxes in that month. Retail is a grind and if you love the grind you can EASILY make over 200K a year before taxes. Everyone cries about taking on the manager position. Take the position, learn to lead a team, figure out the metrics and boom you're making over 70/hr. Some days you get paid well over $100/hr. How can you not be wealthy in that position? So yes you can be wealthy as a pharmacist but imo it must be a hourly wage.
 
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BMBiology

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Should we keep everything in cash until the market crashes like in 2008? My online savings account only pays ~1%.
Nobody knows. I am cautious but I still max out my 401 k, Roth IRA. I suggest you do the same.


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BMBiology

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I argue that you can be wealthy by becoming a pharmacist. Unlike other professions, we get our money fast and early, which if invested correctly, can make us pretty wealthy by 55+. I see having a net worth of 3 million + if at 7% return shouldn't be a problem.

The trick is to get them before they graduate and start living their lives. I show them two paths, with two possible budgets/spending. If anything, most of my students doesn't appreciate money..and no one in their lives have told them there is another way of living besides paycheck to paycheck. 76% of Americans live paycheck to paycheck so it is all they know.
Your definition of wealthy is not the same. Someone is wealthy when he can live a really good lifestyle and not having to work.

Having to work = not wealthy. $3M networth in 2050 and after taxes...it is not going to be as much as you think. Most likely a $1M house today will cost $3M in 2050. I certainly do not consider someone who owns a $1M house today as wealthy.


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PumpkinSmasher

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Student loans is not the end all be all excuse for having no NW your entire life.
Even though I didn't have any student loans, my wife had 186k worth of student loans from optometry school. With careful planning and frugal livings, she paid it off(using 0 dollars of my own) in 2.5 years. This was a combination of living at home, no vacations, little going out to eat, driving a high school 200k miles beat up honda civic, and working 6 days a week. Our current household net worth is 1.1 million with no mortgage and no student loan debt.

As a RPH, you have TIME on your side. If planned smartly, you are a RPH at 24yo making 6 figures. You can knock out your student loan debt in 2-4 years if you do what my wife did, and by the time you are 35, your net worth should be north of 500k easy. But when you start adding new car payments, luxury apt living, and vacationing like no tomorrow..then yes..you will be poor for at least 10 years of your life.

The beginning years are crucial. This is before starting a family or needing a house. You should use this time to knock out that student loan and cushion your savings for your family's future needs(kids, house, etc etc). Too many people ends up behind and stay behind after life hits them hard.
Your wife makes 5x a pharmacist salary as an optometrist? She is doing very well, I have a couple friends who own their own optometry practices and make no where near that kind of money.
 

Carol is Alpha

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The current P/E on stocks is about 23. Historically rich. It's very important not to conflate saving with investing. The risk of investing is suffering a significant loss which blows the rule of 72 right out the water. If you suffer a 50% loss on stocks as the P/E mean reverts, you have to go up 100% to get back even. But wait it get worse. Check out this inflation adjusted S&P chart.

http://www.multpl.com/inflation-adjusted-s-p-500

The people that bought at the top in 2000 just got back even in real terms 16 years later, but when they start making 401k withdrawals they will be paying taxes on the nominal 40% gain, not the flat neutral position in real terms.
 
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Singuy

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Your wife makes 5x a pharmacist salary as an optometrist? She is doing very well, I have a couple friends who own their own optometry practices and make no where near that kind of money.
What do you mean that my wife makes 5x a pharmacist salary? She paid off 186k of student loans making 130k/year (working 6 days a week on some weeks).

She now makes 2x my salary but this is after all her debt was paid off.
 
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Singuy

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Your definition of wealthy is not the same. Someone is wealthy when he can live a really good lifestyle and not having to work.

Having to work = not wealthy. $3M networth in 2050 and after taxes...it is not going to be as much as you think. Most likely a $1M house today will cost $3M in 2050. I certainly do not consider someone who owns a $1M house today as wealthy.


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What is your definition? Rappers showing off their house on MTV cribs? Or Saudi princes with 5 mega yachts?
Having a net worth of 1.8million in 2013 puts you in the top 5% of Americans. I would consider this wealthy.

3 million in 28 years is roughly 1.8 million today..so you are still in the top 5%.. This is if you have a 7% return on 50% of salary put into savings after tax, and only increasing your investment/year by 2.5%. If you were to reinvest your 7% returns, then we are talking about a nw of 5.8million by 55. These are all numbers AFTER tax have taken out.

The biggest hurdle to get through is the 10-20 years after school. This is when you have the largest amount of debt, the lowest amount of investable savings, and when life hits you the hardest. If you have 5 mil earning 7% when you are 55 with a paid off house, life will be a breeze. In fact you'll hit 9 million by 60, and 20 million by 70 yo. You will no doubt be in the 1%.

My wife and I got though this hurdle while all her friends were leasing Audis and going to Europe with 150k+ worth of student loans. Did it suck? Absolutely, watching all your peers on facebook showing off while we were eating at home with the parents. Where we are now and where they are financially is night and day..they will be paying for their spendy ways for the rest of their lifetime..while we were done at 31 yo mortgage free/student loan free.
 
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BMBiology

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I already told you my definition of someone who is wealthy. If you can live a really good life without having to work then you are wealthy in my book. If you still depend on CVS then you are not wealthy.

I am not saying what you posted is not true. It is easy to say if I invest this much and if it grows this much per year then I will have a lot of money after XYZ years.

Things will certainly happen along the way. Maybe you won't give a damn anymore at year 10 and take that fancy vacation. Maybe CVS will fire you at year 15. Maybe the stock market will crash at year 30. Get the picture? It is easy to say but hard to follow thru. There are forces out of your control. This is why most pharmacists will not be "wealthy".


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Momus

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Should we keep everything in cash until the market crashes like in 2008? My online savings account only pays ~1%.
That's the worst idea. Everyone who contributes every yr during the downside, upside, flat market makes money if they leave it long enough. Don't stop an upcoming recession stop you into putting money to work. Inflation is a real risk destroying your purchasing power.
 
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Singuy

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Things will certainly happen along the way. Maybe you won't give a damn anymore at year 10 and take that fancy vacation. Maybe CVS will fire you at year 15. Maybe the stock market will crash at year 30. Get the picture? It is easy to say but hard to follow thru. There are forces out of your control. This is why most pharmacists will not be "wealthy".


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Why will one not give a damn anymore after 10 years? If you lived the past 10 years like a college student..why not just continue? If the mindset is to be frugal, then you'll just naturally be frugal. If you don't know what it's like to drive a Maserati, I'm sure you don't miss driving a Maserati. This is why I don't even talk to those who are working already. They are in a certain lifestyle already so who am I to tell them to change their lifestyle?

As you said, the future is uncontrollable. But you know what is? The present...so I don't know why you want to put so much weight on a pessimistic future. A lot of things are in your control however. Getting fired is not random...stock market crashes are expected and rebound is also expected...and "giving up" is not a random act either. Perhaps you can put random death in the unpredictable category..but the chance of living from birth to 65 is 81.55%.

What you are saying is exactly how some of my students feel..the "what if I die tomorrow" mentality.
The math works out no matter what model you use...perhaps you'll end up with 5 million, maybe 4 million...or maybe even 7 million...but sticking to a frugal lifestyle on a pharmacist salary will guarantee you'll never be broke by retirement age.
 

BMBiology

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If I had to choose between:

(1) living it up from 25 to 65 and depending on my social security at 65;

(2) live a frugal life from 25 to 65 and then live it up after 65.

I would go with number 1 all the way. If you can afford it, get out there and experience the world. Go to some random places. Have some expensive wine with your friends. You don't want to look back and regret not living.

That is just me. I worked a lot as an intern, paid off my debt in 3 years and I have made a lot of money from my investments. I don't get any joy or excitement when I look at my bank statements or when I calculate my NW.

I look forward to retiring early, to travel and to experience life. All of these things I will be able to do because I plan on spending my hard earned money. Time is more important to me now. I am not going to trade in my time and health for a shinny penny. I have better things to do.

What is the point of making money if you don't spend it? So you can tell people you have $3M in the bank when you are 65? Trust me...you will be the only one who would give a damn.


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Singuy

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If I had to choose between:

(1) living it up from 25 to 65 and depending on my social security at 65;

(2) live a frugal life from 25 to 65 and then live it up after 65.

I would go with number 1 all the way. If you can afford it, get out there and experience the world. Go to some random places. Have some expensive wine with your friends. You don't want to look back and regret not living.

That is just me. I worked a lot as an intern, paid off my debt in 3 years and I have made a lot of money from my investments. I don't get any joy or excitement when I look at my bank statements or when I calculate my NW.

I look forward to retiring early, to travel and to experience life. All of these things I will be able to do because I plan on spending my hard earned money. Time is more important to me now. I am not going to trade in my time and health for a shinny penny. I have better things to do.

What is the point of making money if you don't spend it? So you can tell people you have $3M in the bank when you are 65? Trust me...you will be the only one who would give a damn.


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Can you please tell me how you can "living it up" with a RPH take home salary and a family?

If you have say 1 mil in investments by 40, your annual income is what you get being a RPH PLUS 70-80k/year in capital gaines/interest. There's only one way to truly live it up..and that's by having a large amount of $$$ in your investment making you money..what RPH makes at the end of the day is nothing more than a tool to build wealth..the actual take home money is chump change.
 

BMBiology

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If you think you can save $3M with a pharmacist salary then you can certainly live it up.

Like I said before, it is easy to say and make all of these calculations. It is much harder to actual implement it and actually have a life.


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Singuy

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If you think you can save $3M with a pharmacist salary then you can certainly live it up.

Like I said before, it is easy to say and make all of these calculations. It is much harder to actual implement it and actually have a life.


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Most of the income that gets you to 3 million is not the RPH money, but with capital gains/interests. It will take 75 years to get to 3 million if you are saving 40k/year without returns on investment.

I am not advocating sacrificing your life for retirement. I am advocating sacrificing the first 10 years of your career to build wealth...after the first 10 years, with loans paid off and plenty of investment money that pays you..you can start living it up and STILL hit your goal of 3, 4, or 5 million. If you squander the first 10 years away, then good luck trying to play catch up. The trick to wealth building is to stop paying interest asap and start EARNING interest ASAP.
 

Lnsean

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If I had to choose between:

(1) living it up from 25 to 65 and depending on my social security at 65;

(2) live a frugal life from 25 to 65 and then live it up after 65.

I would go with number 1 all the way. If you can afford it, get out there and experience the world. Go to some random places. Have some expensive wine with your friends. You don't want to look back and regret not living.

That is just me. I worked a lot as an intern, paid off my debt in 3 years and I have made a lot of money from my investments. I don't get any joy or excitement when I look at my bank statements or when I calculate my NW.

I look forward to retiring early, to travel and to experience life. All of these things I will be able to do because I plan on spending my hard earned money. Time is more important to me now. I am not going to trade in my time and health for a shinny penny. I have better things to do.

What is the point of making money if you don't spend it? So you can tell people you have $3M in the bank when you are 65? Trust me...you will be the only one who would give a damn.


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No one is guaranteed tomorrow. I wouldn't go out tomorrow and drop everything on hookers and blow but I agree with alot of what you said.
 

trailerpark

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Paycheck to paycheck. I applied for state assistance. We'll see though.


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pezdispenser

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most pharmacists only net 70-90k in take home pay....this is really not much to be talking about classes and such. the ones that have high networth or are making more are doing something else or another side hustle.
Not really. My income has mostly been from pharmacy at around 90k take-home. I didn't do anything special, hit a jackpot, didn't receive an inheritance, don't have any rental properties or anything. I paid for my own pharmacy schooling and graduated with $52k in student loans by living extremely frugally in school and working every weekend, some nights and Summers.

After graduating I just worked hard as a staff RPh and paid off all my debts. In fact, half of my 800k net worth now is in my paid off house which makes very little as an 'investment'. However, having a paid off house and being debt free does free up a ton of cash flow that I will now put in proper investments, and I can already see my net worth starting to compound and snowball.
 
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pezdispenser

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I would actually advise against making these comparisons to other people and their definitions of being 'wealthy'. This all too often leads to the 'keeping up with the Jones's' mentality, which results in spending money you don't have, to buy stuff you can't afford, to impress people you don't even like.

Instead, set your own financial goals for your own circumstances, your level of income and debts, and find a good balance between spending and saving.
 

sosoo

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i graduated in 2011. my biggest mistake was to gift thousands n thousands of dollars to relatives in my home country, n i spent thousands on travel each year (while i was still paying rents, n student loans. 140k in loans + a whopping 6.8% interest). it took me until early 2016 to finally pay off my student loans........... i wish i had a financial planner to help me from graduation. the first few years was wasteful spending. i regretted it so much..... today i have 90k in savings from 401k account. and 40k in checking account. i am more comfortable now in managing my financials. i don't spend thousands of dollars on flight tickets or travel expenses like i used to. i'm now happy bc i have savings each month. its been a blessing.
 

wagrxm2000

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Why does someone have to choose between living now or later? All everyone needs to do is max out their 401k and ira for thirty years and when you retire you will have 100k per year to spend in TODAYS dollars.

The wife, kids and I live a great life now and that will continue when they are gone and I retire in my 50s with my house paid off.
 

Carol is Alpha

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Why does someone have to choose between living now or later? All everyone needs to do is max out their 401k and ira for thirty years and when you retire you will have 100k per year to spend in TODAYS dollars..
With all this manure, there has to be a pet unicorn in here somewhere.

 
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fewaopi

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Commendable, but unsympathetic to the idea that this is a golden time and there will be periods of maintaining that lead.

I teach both the Pharmacoeconomics class for the pharmacists and the Independent Practice Management and Medical Contracting class for the Med and Dental Schools. You're exactly in the right age range (as I am) to have hit the jackpot in pharmacy:

1. Graduated in a shortage and you're actively sought after
2. Working in a low inflation (relatively) and high yield market at least until 2008
3. (Controversial) Have the majority of assets in non-income generating assets (housing), low liability "assets" (spouse actually works), or in securities (which considering the market is at an all time high)

I'll give you a couple of alternate scenarios though on how you could be a net worth of $200k at 50-60:
1. Got screwed by the 1987 crash (security destruction, and it was a big one)
2. Married a high liability asset (spouse doesn't work or is a net negative for his or her spending habits against income) or like my LDS colleagues, took the multiply part seriously and have enough children such that the income generated was used for their futures.
3. Spent some time between employment. If you started in the 1980s, the likelihood that you're still employed without a year or two break in employment in the profession is fairly low. This is a lot higher now.
4. Bought a house in a metropolis where the house went down in value relative to inflation even though the price nominally increased (this is true of more or less every major metropolitan in the Midwest and East).
5. Had your small business fail (individual pharmacies come and go)
6. Divorce. The biggest financial decision in most people's lives is not to get married or have children, but to get divorced. Watch how both of you burn your assets in the bonfire of your vanities.

I differentiate between "rich" where you have a lot of assets but you're still working and need to work, and "wealthy" where you have assets sufficient that you don't have to work at all and that your assets indefinitely produce. I would say that I am both now, but it's not due to my "virtuous" saving habits which are made easy in this market and expense class (although I am worth more than your number). It's due to being married to someone who earns 5X of my not-insubstantial salary and can exceed mine by an order of magnitude on good years. My wife has been harping on me to become the house husband for several years now, but I just can't see myself being a homebody. It would be a bit too damaging to my ego and self-worth to not be doing something.

Many of the pharmacists though who did do everything right in the timeframe, you don't see anymore in the pharmacy as they have retired (usually around 52 after 30 years worth of work from a BS Pharmacy 22). If you can survive the major bumps in your career around 38-42 (divorce being the one major matter within your control and the market being the one thing outside), then you'll be wealthy around the 30th year such that working is definitely not a good option.

The other observation I'll make it something that I do have to deal with in 50 year old physicians, dentists, and pharmacists in terms of having too much of one asset (money) and not enough of others. There is a right time for everything, and to do things out of sequence becomes costly. There is something to be said about the gypsy idea that wealth is a function of how much is spent not how much is earned. You can't pursue certain passions when you're 50 (especially spouses) when you're older unless you're willing to give a lot more in other respects as the relationship is unequal. There's certain kinds of activities like mountaineering, scuba, and the more extreme versions of those activities that pretty much can't be pursued at that level when you're much older. While I do encourage everyone to be on sound financial footing, I really don't advise people to focus on becoming a Boglehead unless that's what they want. There's nothing wrong with the pursuit of wealth, it's just that many don't think about the opportunity costs involved until they are too committed just like our profession or medicine. Re the gypsy idea, what's money for if you can't use or replace it. I have too many irreplaceable things that I'm not willing to pursue money more than I what I do (always net positive, but not so much). The other flip side is that I see one too many of us in our middle age go for things beyond their ability to "pay."

A final joke:
Lol wow didn't expect someone to quote Kaiki.

http://torontolife.com/city/life/spend-generation-manifesto/

Wealth depends on what you want, value, no one is the same. Some people buy a lot of crap, live in a nice house, post on Instagram/FB constant photos saying "My life is better than yours" and cause it's a better way to say, "I'm rich, successful" and a good way to make others envious. Usually I found it's just to show off, stroke ego, validation, hide insecurities. Then there are others don't really care what others think, live simple, have no debt, have a lot of $$$ but most would look and say they're poor. Just from personal experience, looking "poor" really helps sometimes hehehe even though I do much better than most my age in my area. The neighborhood you live in, the people you surround yourself with and lifestyle choices also affect what you perceive as rich or poor and where you stand. And past experiences of watching others also influence our habits and what we value. Some value life experiences, others value financial security. Neither is wrong though security is definitely wiser and more mature. We should all be grateful how lucky we are to have had good parents, families, and surrounded by good people and to even worry about financial markets. My techs and so many others, even our patients, don't get that chance and they'd say we're all pretty wealthy, whether we're worth $50,000 or > 1 million.

You see a lot of ego here on SDN as well, people want praise, likes, and validation (not always bad if it helps you achieve more). While many say they "earned" it, it's not always so simple, life never is, circumstances change. We don't always start on level footing. And I get that many of us love to compare. If you're comparing cause you want to improve, or get better at something, great! But if you're comparing or bragging so you can look down others to gloat, then that just seems like a waste of a life.

If you make more than you spend, save a good chunk above your needs and wants, you're gonna be fine. And I'd rather be rich in my head than anywhere else. No one lays on their deathbed and says"Oh I wish I had a bigger house, or a higher net worth". Hint: No one actually cares, just take care of yourself and don't mind others. And happiness or life satisfaction isn't always tied to money or "nice stuff". Having floated and seen different socioeconomic backgrounds and very different cultures, money is pretty important but not the MOST important (it's up there though). Having money for me just avoids me having stress, worries, or sadness that others might feel. I'm pretty happy (more than I should be I think) otherwise.

All in all, I don't find it at all helpful to be envious of what others have or do and would rather look to make sure my neighbor has enough rather than look to see what they have Made in China that I have to get also. Of the seven deadly sins, envy is the one you can't enjoy.
 
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BenJammin

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Including investments my net worth is about $130,000. I'm very liquid so I have the means to do a lot of things that people wish they could do but I live a very simple life. I still drive the car I got in high school, I wear plain colored shirts that I buy online for $3 each, and I'm debt free. Fancy jackets, flashy watches, and turbo sports cars don't really bring me happiness. I really vibe with the 70s hippie live life free and enjoy the world mentality....minus the lack of showering. I do that every morning.
 
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Singuy

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Why does someone have to choose between living now or later? All everyone needs to do is max out their 401k and ira for thirty years and when you retire you will have 100k per year to spend in TODAYS dollars.

The wife, kids and I live a great life now and that will continue when they are gone and I retire in my 50s with my house paid off.
Because time has changed. You probably graduated with no student loans or under 50k worth...kids nowadays are not seeing a pay increase due to saturation but breaking 150k in student loans. You really have to pick one or the other nowadays.

If you play the frugal game correctly, it's not impossible to live like a high roller and retire early. I am not recommending a life of a monk all your life..just ways to stay ahead of the game and not drown like the majority of Americans.