Intro/Summary:

Let’s get those beta bucks in order. All of this is geared towards guys in the US but will be relevant abroad too. The biggest and most telling piece of information I want from anyone who comments on here is:

What % of your income is set aside for the long term?

There are lots of other questions I could ask but this is the “What are your lifts” question as it relates to your financial situation. David Deida talks about how masculinity can only be developed through challenge and austerity, and this absolutely relates to dominating your financial life: what you earn (challenge) and what you’re able to live on (austerity). These are the two levers you can pull in controlling your financial situation and that’s assuming that YOU (not your wife) is in control of the finances. If you’re not in control, my advice is to get hotter and better at sex so that her hypergamy will force her to increase your allowance.

Budget: I hate budgeting. I don’t make budgets beyond (what are all my major bills) and don’t think you need to either. What you do need to do, is track what you earn each month and how many of those dollars did you keep for yourself. If that's in order it doesn't matter where you spend the rest. Almost everything you make is going to quickly belong to someone else, the grocery store, the movie theater, your gym, etc.

You just need three numbers:

Gross Income (big number on the paycheck)

Net Income (smaller number on the paycheck)

Long Term Savings (this is the one you got to figure out for yourself)

Did it go in your 401k? count it. Building up your emergency fund. Count it. Did it go back into your business or your rental property. Count it. (BTW, if you’re self-employed, don’t be such a spaz about not knowing what your income and savings is. Just figure out a way to track something the same way every month.) Are you saving for a Mexico vacation this Summer? That’s short term doesn’t count. Saving for the next car? That’s a depreciating use asset and you’ll never see those dollars again, doesn’t count.

After you do this, you might go, “holy shit I’m barely saving anything, where is all this money going?” And you’ll want to go down the depressing road of lining out your budget and you and you wife will be score boarding in no time about sephora and taxidermy and neither of those has anything to do with your actual financial problems. Have fun.

Net Worth: List out your assets. Start with all your available cash savings. Then list all your investable assets (things that can be turned into cash and used elsewhere reasonably fast). This section, the investable assets, is the thing that will dictate what you live on in retirement. List out stuff that has value but can’t quickly or reasonably be turned into usable dollars (this is stuff like your primary residence, cars, jewelry, etc.) You cannot list things like your great education or your winning smile or your crossfit friendships. These things have no real value. List your debts on the other side of the page. Calculate the difference of the totals and that’s your net worth. You should end up with something that looks like this.

Be mindful of if you live in a community property state or not.

Investments/Inflation:

I’m not going to comment on what investments to make other than to say that if you have a match in your 401k, use it, and always look for all the potential tax advantages that you can. Inflation is actually getting some attention right now, but it doesn’t have to be significant to be a tremendous burden in your life.

This chart shows what regular inflation will do over your life. It might take over $120,000 at the end of your life to buy what $10,000 got you at age 20. Probably all the money you’re going to earn in your life will come in between age 20 and 65 but about 75% of all the dollars you’re going to spend will be spent in those last 35 years. That’s assuming 3% inflation, no increase in your lifestyle ever, no big medical stuff at the end of your life which are all things I would encourage you to prepare for.

How much will you eventually need? Lets say you're in your 40's, you're going to need about 2x your current cashflow by the time your mid 60's roll around. A very common rule for what you can draw out of your investments in retirement is 4% and that's because they're assuming you're going to earn 7%, lose 3% to inflation leaving you with 4% to play with while keeping up with inflation for the last 30 years of your life. If it's 4% that means you need to have 300x your monthly draw socked away in your retirement. If it's 20 years in the future that's 600x.

Some guy's stbxw on here is planning to not work and live on $3,500/m for foreseeable future. She'd need to accumulate 2.1M to retire with that lifestyle 20 years from now. That's a huge pile of money for someone planning to only live on $3,500/m forever.

Debt:

This is a personal choice. Some people do great with huge amounts of debt. Some people don't. Be aware of your interest rate. If it's close to 3% or less you're basically borrowing money for free after adjusting for inflation. If you have a debt in the 7%+ range, think of paying it off like getting a guaranteed return equal to your interest rate.

Emergency Fund:

This is your cash at the bank that’s earmarked for emergency use only. Not for the next car, or home down payment or summer vacation, emergencies only. I am a huge fan of setting up an account at a new bank specifically for this with no card, no online access or linked accounts. Make it so you have to go visit the bank to get your emergency funds. And pick a bank on the other side of town. Because of inflation you will be paying a price for every dollar you keep in your liquid emergency fund so measure how much you need and want against the inflation cost you're paying for it.

Only you can determine what’s appropriate and it depends a lot on if you and your wife both work and how you feel about your job security. 1-3 months of your income can handle most of the emergencies life will throw at you. 1 month is better than 0, 2>1 and so on. You will eventually have an emergency necessitating the use of these funds and usually, it'll be small like an unexpected car or home repair. Bigger examples are usually medical, unexpected job loss & divorce. Also, even when there’s no emergency, these dollars help you sleep at night. Beyond that, this is the only part of what I'm talking about here that can add to your sexual strategy. A fat emergency fund can be a huge source of DNGAF power. It zaps away your financial neediness with new clients, bosses and competitors and in your relationship, it makes your go plan way more financially realistic. Every other part of this post is a neutral beta signal at best.

Conclusion:

What % of your income is set aside for the long term? If this amount is 10% or less of your gross income, how can you get that bumped up? Will 1% per year get you to 20%+ before you retire? That’s not a bad road to be on. Once you're saving more, not only will you build a bigger pile but you're living on less and the burden of replacing that is smaller. It's easier to replace 80% of your income by saving 20% than it is to replace 90% with 10%.

What are you living on now and what’s it going to be when you get to retirement?

Are you capable (through challenge and austerity) to cut everything in half and keep going? I talk to people all the time who say things like "I can live on way less, it doesn't take much to make me happy, I don't need xyz and abc, I could start all over, I'd be fine with just bla bla bla....."

Fucking try it. Spend the next month or six trying to live on a small budget that you say you'd be happy with. If it works and you stay content, great, you saved a bunch and gave yourself the confidence in knowing. If it doesn't work, now you know where you stand and how little freedom you really have.

​

One last thing before I go. u/Sorcererking asked me to comment on the impending debt market collapse and the bubble of everything. I'm not familiar with these because I don't pay attention to the doom and gloom stuff but that doesn't mean it's not coming. Not only are these things undoubtedly real and serious problems but there are other big catastrophes coming down the pipe that are not on anybody's radar.

There are "known unknowns" and "unknown unknowns" and the latter is the most costly.

​

Links to former posts:

2021

2020

2019

Non DoD post

2018

2017

2016