[TamDenholm]

I just wanted to reflect on the point that $25,000 in the bank is "no personal savings".

To me thats 6 months at my current rate and a year being frugal. I'm aware its totally different economics than myself, but it just kinda made me laugh.

[Lukeas14]

I'm pretty sure most American's could live frugally on 25K for 6 months. However, it's still considered foolish if you have the means to save more because that 6 months is based on your "normal rate of expenditures". A surprise medical emergency could easily wipe that out leaving Rand in a position where he might have to take VC money at much worse terms because of his financial situation.

[TamDenholm]

I keep forgetting that Americans have to think like that, its nice that any surprise medical emergencies here cost nothing. I assume that surprise medical bills are one of the biggest fears for Americans. It would certainly be something i'd be afraid of.

[roel_v]

I don't know where you're from or what your healthcare system is like, but I'm in Western Europe and six months in the hospital with your company without a leader will ruin you if you have only 25k in the bank.

I don't know why my fellow European are so self-righteous about 'our' healthcare system - don't believe the bullshit you're being told about how great our socialism is, I'm going through a 'light' version of it right now and it ain't all roses and sunshine. And I'm in one of the richest countries of the world that is consistently ranked at the top in healthcare - snicker.

(yes I realize that in the US health care is more expensive and that a broken leg will set you back there more than over here, but if you think that you're shielded from the financial effects of health issues over here you're deluding yourself)

[danssig]

This post is nonsense. You don't understand just how bad the American healthcare system is. Of course a medical emergency is going to set you back, the difference is it won't destroy your finances for the rest of your life.

[roel_v]

Maybe I don't, but saying 'I don't need to worry about the financial side of medical issues because I live in Europe' is nonsense too, especially when you have your own business.

[danssig]

It's an exaggeration, but the difference between getting a "winning" ticket in the freak accident lottery in Europe is worlds apart from the same thing happening in the US. In Europe you might lose your business. In the US you'll probably never get a chance to try again.

[loumf]

He probably has insurance, and since he controls his company's insurance, he probably picked something reasonable. You also need to do that to be competitive at hiring in this space.

It won't literally cost nothing to have a medical emergency, but if you have decent insurance, it's manageable.

[digikata]

The thing about medical insurance in the US is that you really don't know if the policy you have is reasonable for major medical events. Everyday stuff yes, but until that rare major event happens, and you actually try to exercise what you hope you purchased - it's a giant unknown. e.g. The insurance regulators in CA are having trouble trying to stamp out issues where a major medical claim triggers a company review of your initial insurance application to see if there's any way to deny that you even have a valid policy - even if you've been carrying the insurance for years.

[runako]

s/medical emergency/sudden unplanned expenditure/ to not miss the larger point. An unplanned expenditure could very well be a medical emergency, but there are many other reasons someone might need more cash suddenly. Car wrecks, legal fees, etc. With only $25k in the bank, even making a sudden trip to a close family member's funeral can eat up a meaningful percentage of total savings.

[kosei]

It's all relative, Tam. When I was 20 in college, $1000 in the bank was huge. Ballmer and Gates pull out at least $100,000,000 every 6 months from Microsoft.

I wouldn't call $25,000 nothing personally, but it's all about perspective, I suppose.

MSFT: http://finance.yahoo.com/q/it?s=MSFT+Insider+Transactions

[kosei]

PS, Gates has taken out over a billion so far this year. Must be nice.

[sliverstorm]

Just wait until you climb the ladder a bit more, and begin to believe that you cannot possibly survive on less than $200,000 in the bank.

Expenses add up, and you make your way down the slippery slope of labeling things as "necessities".

[TamDenholm]

Perhaps. I do like to consider myself one of those people who think i wouldnt be like that, but obviously i'll never truly know until it happens. I remember when i had my first job, i thought my £650 a month wage was loads, now thats just my rent.

[dangravell]

This does happen, and it's probably the default. But it is possible to notice it's happening, and reverse the process: http://www.getrichslowly.org/blog/2006/12/27/how-to-protect-...

This is pretty much what I did when starting up, realising I wanted as much runway as possible.

Have to say I also guffawed at $25k being "no personal savings".

[lars512]

It's relative to your current level of business "success". When your time becomes worth enough at your business, it becomes false economy to be too frugal. This is what the article is all about.