[jmathai]

If you follow some basic rules, you don’t have to worry about economic fluctuations or crashes.

1) Save diligently.

2) Think in terms of 5 or 10 years.

3) Have sufficient cash accessible for emergencies.

4) Do not over leverage yourself such that a job loss or housing crash will immediately crush you.

5) Diversify your assets sufficiently. Don’t have all your money in your company’s stock.

[blitzar]

5 tips to survive on a 7 figure salary.

[baobun]

This is perfectly applicable for 5 figures.

[blamestross]

I don't think any of these things are viable on the lower end of 5 figures.

People aren't realizing just how financially tight and desperate poorer people are getting right now

[flappyeagle]

Are you saying people making 5 figures should not follow this advice?

[FooBarBizBazz]

They can't do (1) because they don't have extra to save.

Maybe (2) is doable, but it's hard when you're worrying about next week.

(3) is basically the same as (1).

I'm not sure about (4). Your choice is between throwing money away on rent, and being house-poor, overleveraged on a house.

Again, you can't do (5) when the only asset you have (and can just barely hang on to) is a house. And most people sure as hell don't get equity from their employer.

So, sure, if you're a typical tech worker making $200k+ with some stock options -- which probably does characterize a substantial fraction of people here -- then the advice is very reasonable. Yes, "seven figures" is an overstatement. But a ton of people make nowhere near this.

I think the advice for lower incomes needs to be about (a) increasing skills/qualifications/income (but choosing education wisely), and (b) pooling resources with roommates/family to reduce expenses.

[flappyeagle]

> pooling resources

This is a great way to achieve (1). Immigrant families have been doing it forever.

It’s a good tactic no matter how much money you make.

[Wool2662]

This comment is so divorced from reality for 95% of people it's not even funny.

[jahnu]

Real median US household income was $74,580 in 2022. This advice surely applies to at least 50% of households, no?

[mistrial9]

this is about as real as the unemployment number

more than fifty percent of American children do not have a two parent home; more than one million American men are in prison right now; the majority of the population lives in urban areas, etc

report: https://www.pewresearch.org/social-trends/2021/10/05/rising-...

[heresie-dabord]

> 4) Do not over leverage yourself such that a job loss or housing crash will immediately crush you.

I can reasonably assert that an economically significant number people would be in big trouble if they lost their jobs.

As for a housing crash, it depends on your specific meaning. If enough of the value of property were lost, banks would be forced to take action to survive their lending risks. The ramifications of that would be extensive, let us say.

[throwaway22032]

Yes, but _you_ can protect yourself against this by simply not over leveraging.

Instead of buying the 250k house, buy the 200k house and put 1/4 of the mortgage payments away. After a year you have three months buffer, after four years you have a year.

The key is simply to live slightly below your means.

Re housing crash: the banks are not going to foreclose en masse on people who are paying their mortgage payments regularly simply because they are in negative equity. They are not incentivised to do so.

[constantcrying]

But doing that is very expensive, the moment your interest starts rising you are paying hundreds of dollars/euros/etc. each month just so that you have the money available in your account, constantly depreciating. That is obviously something you need to be able to afford.

[throwaway22032]

I don't understand what you are saying.

If you can afford a 250k house then you can afford a 200k house + 25% saved per month. It's exactly the same amount of money.

You then have a buffer. It's the opposite of expensive.

[constantcrying]

Not spending money to pay off debt means you continue to pay interest on the remaining debt you decided not to pay off.

If you spent money to reduce your debt, you aren't just reducing the money you own, you reduce all future interest. Saving money instead of paying off your mortgage is expensive, it costs a lot of money each month.

[throwaway22032]

Mortgage rates where I am are basically always within 1-2% of the risk free rate and less than most investments return over time so this isn't really true.

You have a very small opportunity cost, which reduces your risk of default to near zero.

Holistically, you can then take greater risks in other areas and end up longer term positive.

To me your argument is like saying that an airbag, or a crumple zone, or a seatbelt, increases the weight of your car, and therefore fuel consumption, and therefore it's expensive. It's true but only in a pedantic way, when you need it it suddenly goes from being "expensive" to a huge net positive no brainer.

[RecycledEle]

> If enough of the value of property were lost, banks would be forced to take action to survive their lending risks.

I do not believe so.

Banks are predatory. They want power and will do anything to het it.

[utensil4778]

Just skip breakfast to save money, quit buying avocado toast and Starbucks. Something something bootstraps something something lazy millennials

[constantcrying]

Total nonsense. None of that is of any help if you are facing a real economic crisis. The economic disasters in the last decades all have been mild, some people lost their jobs, some companies went under, some lost everything in the stock market.

During some historical economical disasters, people lost all their saving, their jobs and all safety they thought they possessed. None of your suggestions would have helped, many, many people who were well off, saved diligently, spent cautiously and never borrowed too much were suddenly destitute and had to make serious efforts to find calories.

The reality of economic disasters is that no one is safe, regardless of what you do or don't do.