If you have a big downswing before a big upswing, then you are probably right. If you get lucky and have a big upswing early, then it may work in the opposite direction. Agree?

Using some math (which I can show the steps of later if you want), I got an expression for the average rate of return required to make it work. (In case you care, I think we can also do more analysis, by looking at the variance, and how swings affect things.)

Y/X0 = [r^n - r^(n+1)] / [1 - r^(n+1)]

Y = the amount of money you want to spend per year
X0 = the amount of money invested the first year
r = the annual rate of return (can be viewed as random variable if want to analyze variance/swings) (note in this discussion, this would be the real rate of return, since we want our income to be controlled for inflation)
n = the total number of years you need to live off Y (in other words, set n equal to the number of years you expect to be alive)

If anyone is good with Matlab (or a similar program), maybe you could explicitly solve for r in terms of Y, X0, and n. If that's too complicated, just plug in Y = 40K, X0 = 1M, and n = 50, and then solve for r. (Feel free to play with the numbers if you want to say how that changes things, such as changing n = 50 to n = 60).

Yeah, but we're discussing Bayesian probabilities, not like "How to luck yourself to 1M forever", but how to actually do it.

Most of the people who have tried to make budgets have used $300 a month for entertainment. I can't even see how that is possible if we assume the individual lives alone and owns a car.

Yes of course -- today being a good example as I'm hung over but even on days like that I'm going to spend more than the hypothetical allows. I had three coffees from Tim Horton's, a Red Bull, and an orange so I'm already close to $10. Thinking of getting Quiznos for lunch then go pick up my car and go to see the GF. Since I moved some of my computers into an empty office at her business there are wires everywhere so need to get a proper power bars and tidy **** up ($30). My razor broke so I need to mail that back to Germany and I did my parent's taxes so need a ream of paper and also to mail those to them ($7 for paper + $12 total in postage). Add in that I'll likely burn though $5-10 in gas and while I won't pay for it today my clothing will need to be dry-cleaned so $4 for that. Then I still have dinner and the evening to think about. Also vitamins, supplements, skin care products, and just other miscellaneous things like hair cuts while not paid for daily they do add up to $3-4 a day. By the end of the day I'll easily have spent over $120 (plus the $2700 for the car repair) today and Quiznos, Staples, and the Post Office are my fun destinations. I don't know for sure but I think $40-50 would be the least I've spent on a day where I do nothing.

Nope. Usually when I'm posting and it is afternoon I'm at Hy's, Social, or O'Connor's.

This might be true when you work but I don't find it is true at all when you have no job. I was taking care of a dog for a few days so staying at a friend's house in the country and it was 45 minutes to get into the city so I figured I would just watch TV and read. I was going stir crazy and had to come into the city. Having no human contact for 24 hours is about has long as I think most social people would be happy with. I don't see myself even lasting that long. It doesn't have to be anything fabulous but I need to do something even if it is just reading the newspaper at a coffee shop.

These things can all be worked into my equation above. You can let r be a random variable with whatever distribution, mean, and variance you want. (Obviously, we'd need to choose a distribution, mean, and variance consistent with the empirical evidence.) That allows you to analyze the probability of going broke before the time runs out. The equation is actually pretty robust, I've assumed you want to die broke, but we can easily adjust for this by adding a constant if you want to have some money left over after 50-60 years just to be safe.

I hear what you're saying about downswings. I'm just trying to point out that upswings are on the other side of that coin.

I agree, $300 for entertainment is not enough for most non-working people in a month. That's why all of my budgets have tried to leave more than that for entertainment.

We've established that you couldn't afford your current lifestyle on $30K-$40K, but I didn't think that was the argument.

Fair enough.

I understand, I'm similar, even though I go to school. If I go one or two full days without hanging out with people, I go stir crazy. However, I don't think it's crazy to think there would cheap days even if I didn't work. Not because I'm trying to be cheap, but just because some days I will spend a lot of time reading and surfing the internet, and eat cheap stuff at home because I don't feel like leaving. Furthermore, hanging out with people is not always expensive. Again, it's not because I'm trying to be cheap, rather it just works out that way sometimes. For example, sometimes hanging out with friends just means going over to someone's house watching sports (putting up on some beer and pizza is not that expensive). Sometimes hanging out with friends just means playing sports. Some days are unintentionally cheap, even if you do have human contact.

Ironically, dying broke doesn't work since we don't know when we die.

That had nothing to do with lifestyle. My point was that just basic running of errands costs money that makes this impossible. The only way to do this is to walk around with a backpack full of bottle water and snacks.


While we prefer to go out to a sports bar we have done this. A 24 of domestic beer is $38.50 and two pizzas, twenty wings, a salad, and a few dipping sauces will come out to $50 with delivery and tip. So even this cheap activity is $90 divided by four guys you are looking at over $20 a person.

Doing it in LV would be quite easy:

EXPENSE
-$200k 3 br/3 bath home, 15 year loan 80% mortgage financed @ 4.25% = $14,500
-home furnishings ($20,000 of stuff financed) = $5,000
-property tax = $2,500
-utilities = $3,000
-car = $4,000
-food = $5,000
-clothing = $1,000
-misc = $3,000
-IRS = $4,000

TOTAL EXPENSE = $42,000

INCOME:
-rental income (2 @ $350/month) = $8,400
-passive income on $960,000 (4.5%) = $43,200

TOTAL INCOME: $51,700

NET SAVINGS: $9,700 or $800/month

Basically $800 per month to burn, or save, whichever you choose.

And in 15 years, your $200,000 home is paid off. So when you are 40 you got $1.2M in net worth which equals $770,000 in today's dollars with 3%/year inflation.

I completely agree with you here.


I'm guessing a lot of this depends where you live. Ticket prices are $9.00 in the evening by me, or $6.75 for a matinee. A 3D ticket is $12.00.

Rent for $600 is entirely possible as well.

Again ENTIRELY POSSIBLE. Just because your electric bill is $200/month does not mean everyone's is. I live in a 1BR 950-1000 sqft apartment and my electric bill has averaged $68.40/month over the last year. This includes air conditioning and heat that I leave at the same temperature all year long. If I made any attempt whatsoever to conserve energy I could get that lower.

My digital cable + internet is $87/month. I don't get any premium channels (HBO/SHO) right now but have everything else.

My cell phone is $65/month.

Total for me is $220.40/month and that is without trying to pinch pennies.

Again ENTIRELY POSSIBLE. Yes there are going to be emergencies or months where you need to spend way more than is "budgeted" but that is made up for my being under budget in all the other months. Inusrance is also less than $50 on a **** car as you don't need comp/collision, just liability.

Have you ever heard of a grocery store? I buy everything my stomach could possibly want when I go to the store and spend about $250/month on food TODAY. If I was trying to save money I could get easily lower that amount. For example, my $250/month includes about $50/month on blueberries which could easily be spent on other fruits that are cheaper if I wanted.

$250 a month is absurdly low. Like breathtakingly impoverished low. I probably spend that much on just meat a month.

Just because you spend a lot of money does that make that a low amount. My $250/month includes plenty of meat and still has a ton of breathing room in it.

$250/month for meat. Do you have a pet lion at home?

You spend less than 10 dollars a day. What are you eating? Like 1200 calories? ~50g of protein?

Seriously, if I want a wide variety of meats and cuts of meat it probably will average somewhere around 6-8 bucks a pound. A pound of meat a day is pretty conservative.

I guess I could cut my meat consumption down to like $2.50 per pound. Just use on sale ground beef and chicken thighs.

Some days I eat a pound of meat but that definitely the exception, not the norm. I average about a half pound of meat per day and it averages $3-4/pound.

Okay. So I need to dramatically alter my diet. Just making sure that I can't have the option of a normal variety of food.

I like chicken + beef as much as anybody.

I can get a large fryer at Sams for $5 and it will last me most of the week for sandwiches.

I can get decent sirloin cuts at $4/lb and 2 lbs will easily provide 4+ meals at 8 oz./meal.

Chicken and beef are cheap as hell. And that is mad hoodrat eating. I don't want to thighs and "decent" sirloin cuts. I wanna eat what I want, when I want. Can I not have a ****ing filet without blowing up 10% of my monthly food budget?

Throw a porterhouse in there occasionally.

And a fryer is a whole chicken, not just thighs.

I can get a large fryer, 2 lbs. of choice sirloin, a 16 oz. porterhouse, and fresh 12 oz. halibut steak for <$40/week.

I don't want a whole fryer. Not to mention they're a pita to prep/cook unless I'm feeling adventurous. And we're still short several pounds of meat on that. But atleast we're making reasonable progress.

Boil it. It's easy+healthier. You're welcome.

6+ lbs. of meat per week is not "several pounds short". In fact it's probably more than 80% of the population eats.

And I can buy a lot more with my budget if you want to overspend on meat or other stuff.

$1 million is easy.

lol boil it? You've got to be joking. lol healthier. gtfo

lol

Chicken to me is chicken breast and unless it is on sale it is $22/kg or $15/kg if you are ok with removing the bone yourself. I realize food is cheaper in the States but I can't imagine it would be that much of a difference. Assuming a chicken breast is 8oz it is $4 a chicken breast so even if food is 50% less in the States that is still $2 a breast which makes meat impossible with this budget.