It's funny how quickly you get used to the mindset that it's a good decision to trade money for time. If I value my marginal time at $50/hr, and unconsciously always choose to pay to save time, the mindset becomes ingrained and is hard to reverse.
Little things that you quickly grow accustomed to like taxis, dry cleaners, restaurants (plus a few big things like a mortgage or high rent from living alone in a decent apartment, car and all related expenses, etc) all add up very quickly.
I think that's one of the biggest advantages college students have when starting a company. They get a significantly longer runway for relatively less effort. It's much harder to adjust from making $200K to $20K.
To be fair, the money/time tradeoff breaks down pretty quickly - you've almost certainly used all the easy wins by the time you're even earning mid six-figures.
Basically, there are only so many hours of outsourceable stuff in your day. Once you've made the trade for cooking (eating out/chef/stay-home-spouse), cleaning (maid/stay-home-spouse/etc), errands, scheduling, minor research, and other miscellany (secretary), local transport (owning a car) there isn't much more to do.
If you really value your time, you can fly a private jet at the cost of maybe a few thousand dollars per hour saved, I guess.
And Warren Buffet, even in his frugality, does all of these things.
You say "by the time you're even earning mid six-figures", but "mid six-figures" is a whole lot of money. (Of course it's not much relative to Warren Buffett. but then what is?)
... Oh, wait, by "mid six-figures" do you mean $150k or $500k? Even $150k is a very nice salary by most people's standards, but I was assuming you meant $500k. (Six figures: 100k to 999k. Midpoint of that range is $550k. Perhaps the geometric mean is more natural; that's about $300k.)
The point he was supporting was "no matter how rich you are, there's only so much time you can get by trading money for it," in which context $500k/year isn't out of place--especially, as you noticed, with Warren Buffett as the example.
I meant around $500K. I think that's the point where it's reasonably likely you have a secretary/personal-assistant to take care of those last little bits of outsourceable work.
I think frugal here is relative. He doesn't care about status symbols and living a super extravagant life with huge mansions and yachts that other billionaires do. But I'm sure he has a lot of expenses that most middle class would not have.
If his car breaks down, do you really think he'll take it to the shop himself and start taking a bus to work?
Yeah, of course. On the other hand, you can live quite comfortably in Berlin for US$20k gross salary. Rent and price of groceries are huge factors in what your income actually means.
Define specific quality of life factors, instead of talking about a number.
I lived very comfortably in downtown Toronto (Church/Adelaide, the Spire), in my own fancy highrise apartment ($1200/mo rent), for a measly $56k right out of school. On top of that, managed to save about $15k in my first year.
Then I moved to Palo Alto. Now that's expensive. :P
Totally disagree. I've lived in Van for 15 years and it's hilariously more affordable than LA or NY (where I am now). The Mercer 2010 survey put Van at #75 in the world which was surprisingly one spot ahead of Toronto.
Sidenote: the job market of Vancouver is much slower and lower paying than what's happening state side.
Classic what you own ends up owning you.
Bartender classic, makin decent doe, anyone can get stuck.
All of a sudden its a big risk to leave, with all your obligations you've acquired by making a bit, doesn't matter how much it's at every pay rate.
REF: I live outside nyc in Bergen County NJ, 30min car ride, $500 a room in a 2 bedroom. I can't grab a nyc pay? Train or bus in even with no car.
I think you need to elaborate on what you mean by "not that much these days." According to a bit of Googling, 100k in NYC is about 48k where I live. 48k family income around here for a family with 2 adults and 2 children is far from rich, but it's fairly reasonable middle class and it's certainly doable with a modicum of responsible finance-handling.
$100K in expensive cities is equivalent to a squarely middle class income elsewhere. Not a bad life by any means, but it's far from, "I can't imagine what I would do with that much money". Six figures are still six figures with responsible management of one's finances, but it's not the well-off lifestyle some may imagine.
How did you fund yourself for so long? One of my friends who is a consultant doing nothing special makes $100K in 6 months. If you really want to see $100K, just be a consultant for a while.
What does this mean though? What is he consulting people/companies on and how is he finding clients? That is the hardest part of getting into any consultancy (in my opinion): finding clients.
I hate to be the bearer of bad news, but if you're an entrepreneur and you "can't imagine" what you'd do with $100k, you might be in the wrong line of work. Allocating capital is a big part of being in business.
A nice place to live, a nice car, and frequent restaurant meals. Easily done once you escape the gripping fear going broke and never making money ever again (irrational).
Strangely, I felt like I was doing all that when I was a grad student making a $30k stipend, and I actually didn't spend all the $30k. Nice condo in a nice location, recent car, ate out all the time, spent a surprising amount on microbrews. Granted, Atlanta wasn't the world's most expensive city.
I could've easily imagined being much more frugal in almost every aspect of my life, if I actually needed to save money. But certainly by other standards I was already living very cheaply. I can think of some other things I could've spent money on, but even now that I make more, they don't seem that appealing. Maybe it's just my tastes, but I prefer brewpubs to $50/plate restaurants; you would have to actually pay me to convince me to start eating regularly at high-end places (I currently go if I'm entertaining someone, or occasionally as a novelty, but it's not really my thing). And I could upgrade from "recent, fairly nice Honda" to "new BMW", but I don't really care very much about that. Maybe I'll take more trips or something, but of course I actually have less time to take trips now than I did as a grad student. =]
I honestly am not that sure what I can do with the extra money that would really improve my life, so so far it's mostly being saved, maybe for possible future self-financing, if an idea arises that I want to work full-time on. I guess I could upgrade my microbrew hobby to a Scotch or fine-wine hobby, but again, that doesn't actually appeal that much; it feels like something I would do just to spend money "because I can".
