This is a bit of a trap. It's easier to take big risks if you have little to lose. Once you're established at McKinsey, Goldman Sachs or Google you have a comfortable standard of living and a job that gives you both challenges and social status. Letting go of all that to be the guy slaving away at a crazy idea is often harder than trying the crazy idea because you have little else.
Also when you're busy at work time can just fly by. It's easy to look up from working and find a few years have gone past.
Yes, it can be. The truth is, some of those brilliant kids going into BigCorp are lost startups, some are future startups, and most won't be startups regardless, because most people aren't founders.
"Also when you're busy at work time can just fly by. It's easy to look up from working and find a few years have gone past."
The truth is, some of those brilliant kids going into BigCorp are lost startups, some are future startups, and most won't be startups regardless, because most people aren't founders.
Exactly. I will be starting at Google in June, but I am not a "startup lost". I have thought about it, and eventually came to the conclusion that I am not startup material for a number of reasons. This may change in the future after I have worked for Google, and if so, I can always join a startup then.
You probably know this already, but it if you dream of eventually doing a start up make sure to keep your expenses under control now. Your expenses tend to grow along your paycheck. It can be really hard to downsize if you decide to go the start up route.
I agree with this. Even if your paycheque is $5k a month, practice living on half of that or less—maybe a lot less. It won't hurt to save the rest anyway.
This is/was more popular in eastern Asia, particularly in China when Confucian culture was in its heyday. I remember growing up a Chinese family bought a house in our neighborhood with cash. He was a garbage man, they had two kids, and his wife didn't work.
I've managed it since I was 25. Here's what I found.
* If you're making below or well below the median salary for your state, good luck getting past 10% of your net pay. 30% of net is much easier when you're at or just above the median. 33% of gross requires you to have made those "long-term purchases" already, such as furniture and a vehicle.
* On cars, try to buy the first "long term" one in cash. Yes, this takes time to accomplish, but the reality is once you can do it the first time, you'll be able to easily continue doing it for the rest of your life. Buy what you truly want, otherwise you'll find excuses to replace it earlier. 18-35 year olds in America would be much happier if they had bought a Miata or a Mustang or what they had actually wanted instead of their Corolla or Taurus they felt was a "more responsible" choice.
* Learn to cook. Last night I had a steak, homemade biscuit, asparagus, couscous, drink and a homemade cookie for just under $3. Packaged foods and mixes are never cheap, and the cost of prepared foods is staggering.
* If you don't love it and see yourself using it 10 years from now, why are you buying it? The pricier the item, the longer you better see yourself using it A huge sink in consumer culture is buying "disposable items", particularly furniture, gadgets, and even cars in some cases. Buy once, take good care of it, and avoid having to buy it again for some time, if at all. Furniture especially - go used to save money if the piece is still in production (typical for modern classics), because odds are even if it's already 40 years old it'll still handily outlast you.
* Live as close to work as possible. Mass transit is cheaper than anything (I can go all over Boston, as much as I want, for $59/mo). The higher cost of living is more than offset by the extra time to cook, relax, and decompress.
* Reassess your budget, in full, every year. Prune possessions and figure out why it was a waste. Repeat until your friends refer to you as that really cheap person that somehow has really nice things.
On cars, try to buy the first "long term" one in cash.
You will be absolutely amazed what it does to your finances if you don't have a car payment. Too many people treat them like they're laws of nature. Google for [Drive Free, Retire Rich], which aside from poor math due to overly optimistic assumptions of investment returns is an amazing video.
I don't think the maths was wrong, just the assumptions were possibly optimistic. A $1500 car doesn't really depreciate much (unless it dies), but a $12000 car does. And then there's the 12% investment return figure.
Ditto, my taxes are about a third of my gross, but I do save about half of my net, making for about a 1/3 savings rate overall.
Honestly, I haven't hut to cut on many things to get here, so I'm pretty happy about it. One key thing has enabled this:
No car. None, no desire for one. I pay extra to live centrally in the city near good public transit, but the extra I've paid (compared to living in a burb) is a tiny fraction of the cost of car ownership.
By my estimates that alone gets me an extra 10% savings rate at the very least. I have all the spare cash in the world to travel, buy cool toys without ever digging into the rainy day/startup fund.
Yes, I mostly save "about" a third. The hard part is getting to above a third consistently. I agree with the car part, but with the proviso that it doesn't work so well when suddenly you end up with a job in some industrial park that doesn't have good public transit.
True, but you can always wait to buy a car until you need it, and the savings will* still outdo the cost of a rental to tide you over while shopping for one.
*Estimating here. Looking at Hertz.com, you can rent for ~$250/week, which for me equals about 4 months in minimal car insurance.
I save very close or more than 2/3 of my current salary.
I own my car, I bought it in cash. Where I live I need it (I already tried the whole Vespa thing, I lasted one winter and was exhausted).
I don't have a mortgage. I sold my house.
I rent. I don't want the baggage a house brings (time, maintenance, stuck in one place). My rent is ~ half of my old mortgage which was not that much and in a much more enjoyable community (behind campus and about 2 min walk from the video store, coffee shops, and grocery store).
I only buy what I truly believe I will hang on to and be happy or content with.
Why do I do this? I don't know, maybe to retire early. Maybe do the whole start up thing someday.
However, I think it's mostly because it's comfortable for me. I don't feel comfortable in one place and like the ability to just throw everything in my car and go. I don't like things that hold me back or slow me down.
Edit: this is after taxes and whatever else they take off. I'm going by what my paycheck says.
You do not need a BMW, buy a corolla. You do not need the loft, live in the cheapest decent unit you can find. Don't get into the showy lifestyle trap.
I agree, and will add that kids are expensive, especially if you want good education. "Ramen profitable" is a lot harder to reach when your life gets to that point.
I've got kids myself, and I blogged recently about how having a family is forcing me to keep my fulltime job longer than I would like to:
Most startups seem to embrace 60-80 hour weeks, you keep reading about them and begin to believe that this is normal. After 12 hour marathon coding sessions ‘typical entrepreneurs’ walk 10 metres from desk to bed and collapse in their shared accommodations. Living in such lean conditions makes those crucial first months of business far cheaper. This work ethic and minimial living costs maximises the runway before the seed money runs out.
Paul Graham is one of my favourite bloggers, and his essay entitled The Other Road Ahead he paints a clear picture of how lean a start-up can be, stating "You can literally launch your product as three guys sitting in the living room of an apartment, and a server collocated at an ISP. We did."
No matter how much I’d love to take the lean ramen noodle approach it’s simply not practical for me. I’m a father of two, a husband of one, and an employee. I’ve got a beautiful family with young children, a modest house with a mortgage, and a full-time job to pay the bills. In short, I have a standard existence that I imagine many of my readers share. Living off noodles in a cheap apartment with my co-founders is not the only way that start-ups are built. I’ve taken an alternative route that involves just as much hard graft (harder maybe?) and allows me to remain employed full-time. The food sure is better!
> agree, and will add that kids are expensive, especially if you want good education.
These factors aren't linked if you're willing to put in the effort.
When growing up we lived in one of the worst parts of the state regarding school districts. Parents began to teach us how to read, write, and do basic arithmetic before we ever were sent to public schools. I think I entered first grade reading and writing at an 8th grade level and knowing long division. Took until about 8 years old for me to grasp basic algebra. They held back after that point, otherwise we would've had a mind-numbing experience until at least high school. However the school board was made aware that these first graders could be head of the 6th grade class, so we were allowed to freedom to learn other things (and sit in a few other classes once a week - mostly English, math and history).
Oh, right. College. That was our responsibility. They would help with loan payments a bit, but they certainly couldn't afford to even put us through a state school. We were expected to get scholarships. If we didn't, well, it was that much more we'd have to borrow.
Honestly, I can't blame them. We were certainly a lower-class family. They couldn't afford to move near a nice school district, private schools, or help with private colleges, so they decided to get us WAY ahead of the curve (even though I have memories of crying because at 3 years old I was having obvious difficulties with multiplication. ultimately we were incentivized with spare change). Even then, the nice school districts aren't all that great. What my folks did will still allow any child to get far ahead of any child in the best private schools in your area.
In the end we ended up with extremely large scholarships (that I didn't bother with because I'd still have to take out the equivalent of a home mortgage) and teenage years with an enormous amount of free time. Cost to my parents who only had a high school degree (mom) and a GED (dad)? Some of their free time every night.
Cool story, it is good to look back on your childhood and be proud of the decisions your parents made.
As a parent though, you have to remember that even basic play has a very high value to children. My little 2.75 yr old has dinosaurs in the bath and can count one, two, three, four, lots. He knows the lifecycle of the butterfly.
But I'd much rather that he did what some might consider "useless play" and mastered his social skills and self confidence than any curriculum ideas such as maths or reading. Those can wait until he is ready, though he is a very engaged and switched on little boy.
I think that forcing your children to do certain things that you expect from a 10yr old now is just ruining their childhood and can reduce their delight in learning new things.
Actually, childhood was a blast. The first 8 to 10 years of schoolwork being completely trivialized meant I could be over at some friend's house every day, futzing around in the backyard, or playing with action figures and legos. All the time.
I have few memories of before I was 4 years old.
* Rolling around some cookie monster thing.
* Being sick of flash cards.
* Spraying my grandfather with the hose, and thinking it was hilarious.
* The dog knocking me over to take the entire bag of snausages.
* Playing random games we made up in the backyard with the kids next door.
How much do you vividly remember from when before you were 5 years old? I'm guessing not a whole lot.
Interesting thoughts about memory. My early memories aren't quite that good.
I never found school particularly difficult, and I didn't learn how to read or do maths until school. There is a good chance you wouldn't have found it difficult either - even without the flash cards. Perhaps you are just smart.
It sounds like your childhood was still fairly moderate, it is not like flash cards is the only thing that you did. My main motivation for commenting at all is that I don't want any other parents to get weird, extreme ideas.
Anyway, I think I better gracefully bow out of this discussion before I step on any nerves.
Ah, but if you have managed to make yourself ridiculously employable by proving yourself at a few high-profile companies, then you suddenly have "little to lose" again.
One of the reasons I feel like I can safely Entrepreneur myself down to a few grand in the bank before looking for a contract to top up the finances is that I know I'm pretty much a single Twitter post away from a good job offer.
Had I not first established a bit of a reputation before taking off on the startup track, I wouldn't have that safety net, and might be a bit more quick to grab any contract job that came along.
Exactly. And having a "name brand" on your CV helps more than having been to a top college. 3 years at McK or GS and you will never have trouble getting anyone to take you seriously in business. It doesn't excuse you from anything important, but it does mean you don't need to waste time establishing your credentials to everyone you speak to.
Though in some ways it is great to "burn the boats", because having your back to the wall and being forced to make it work (even if that involves a week of cold calling) can be the difference between success and giving up.
I wish to start up a company. Or devote more time to the companies that I already started. But mostly because I don't feel I fit any more in the corporate bureaucracy and politics that drains my energy every day. Yet it is hard to trade the security of a good paying job for the risk of starting up a company.
Then the only other option is to go hell for leather on your start-up in your free time, even if that means you don't have a life. If it doesn't get you that fired up, perhaps you need to brainstorm a better opportunity.
Same with startups. One moment you're in college starting a startup, the next you're 3 years older still doing the same thing. Startups are a more difficult path because they don't always have forward momentum because of the high risk.
Also when you're busy at work time can just fly by. It's easy to look up from working and find a few years have gone past.