The Truth About Money
I'm seeing a few subtle similarities in the economy today to three years ago, and though it would be precipitous to say a second dip is probably on the way, I don't think it hurts to share some of the wisdom I've gained over the past three years in personal finance.
When I arrived in New York back in 2007, about half of the people my age were living pretty extravagant lifestyles for analysts earning a $60K/year salary. Half of them were living in Manhattan, paying Manhattan rent and NYC taxes, and dropping $200 partying at the Pink Elephant every weekend. They figured they were in New York, they were bankers, and they wanted to live the life. Unemployment was 4.6%, credit was easy, and heck, the economy would always be good! So rather than save money, they chose to dig themselves deeper into debt.
The other half of us got to NYC and we were scared. Just out of college, we were totally broke, and now our rent was going up by a factor of three or four to cover living near NYC. Few of us had held a job for more than a few months straight, and now we were expected to sign a 12-month lease with a total rent greater than our net worth. So rather than living in Manhattan, we saved some money by living in Brooklyn or Hoboken. Rather than partying at the Pink Elephant or the Hudson Hotel Bar every weekend, we settled for beer at home or maybe going to a dive bar that served up $4 domestics if we felt like splurging. Rather than eating at trendy restaurants like Spice Market, we were content with Subway. All of that money we saved went into paying down student debt and building up emergency savings.
The bottom fell out of the market in September 2008, but the layoffs in the financial sector really started in late 2007- and even hit some newly-hired analysts then. It got progressively worse until the market bottomed in 2009, but those of us who were scrimping and saving slept a lot better at night and aged a lot less through the crisis. If we got laid off, we already had a frugal lifestyle, and we had enough money to cover that for quite a while.
So, if you're a new analyst, the next time you have the choice of going to a trendy, expensive club or a dive bar, just imagine what would happen if you got laid off. If you don't like what you see (images of evictions and creditors calling at 3AM), go to the dive bar.
The truth about money is that you either own it or it owns you. And the more of it you spend on things that you don't really need for yourself, the more it owns you.







wise words! wise words! If i
wise words! wise words! If i can get into an i-banking gig, (currently big 4 valuation intern), I plan on living the same way. Are there more of people like you out there? I feel like everything I read here is about who is the biggest pompous arrogant person around and lets go clubbing, or to the top bar, etc. It is good to here that some people out there do actually just want to be in the finance industry, like the atmoshpere, and live quiet lifestyles then going into it for the pay
Great advise man. The
Great advise man. The surprising thing is that a lot of this should be common sense, but people get carried away by the whole high finance thing. Finance career is highly volatile, almost like a yo-yo...haha.
I don't have any bananas, but can offer a 5star rating instead.
IlliniProgrammer wrote: The
The truth about money is that you either own it or it owns you. And the more of it you spend on things that you don't really need for yourself, the more it owns you.
'man made money
money never made the man'
that's ll cool j. its funny that a rapper figured out what most ib analysts are not even aware of.
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man made the money, money never made the man
Great points. It can't hurt
Great points. It can't hurt to have money saved away.
deflation deflation
deflation deflation deflation... cash is king
looking for that pick-me-up to power through an all-nighter?
Your life sounds fcking
Your life sounds fcking boring as hell and while I agree with the importance of managing your money from a longer time horizon you need to strike a balance between enjoying life and building security for the future. One could argue that you were a slave to money because you were constantly aware of it in every decision you made.
Spend money and enjoy life. Theyre gonna keep printing more of that shit anyway.
dude iliiniprogrammer always
dude iliiniprogrammer always posts about hangliding and biking and shit... he sounds like has a sweet life... i don't think he enjoys new york that much but from the way it sounds he has a pretty extreme lifestyle... i know i couldn't do that shit lol
looking for that pick-me-up to power through an all-nighter?
junkbondswap wrote: Your life
Your life sounds fcking boring as hell and while I agree with the importance of managing your money from a longer time horizon you need to strike a balance between enjoying life and building security for the future. One could argue that you were a slave to money because you were constantly aware of it in every decision you made.
Spend money and enjoy life. Theyre gonna keep printing more of that shit anyway.
You don't need to drop a grand a night to have fun (even though that is fun). I meet wayyyyyyy better girls at lower/middle of the road bars buying bottles of bud at 5 bucks a pop than I do ordering bottles of goose for 400+ at some ghey nightclub with my douchebag finance friends.
always save some money but
always save some money but dont save too much on life quality. you might earn as much as you make in a year now per month later in your life, but it's only half as fulfilling when you are old.
I think Illini is spot on.
I think Illini is spot on. One thing I might disagree on is saving on rent. If you are working a lot of hours I think it is worth paying more to live close to work. That really is a huge quality of life issue. Pissing away tons of money on stuff you dont need to bottle service is a waste, but saving yourself the misery of a cab ride and a train ride just to get some much needed sleep is torture.
Everything else I agree 100% with.
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Most of your net worth as
Most of your net worth as college graduate is in the form of long-term earnings potential, not the mere few K's that you have the option of saving as an analyst. Although frugality might have served one the short run in the past three years, it is not necessarily advisable to those with true expectation of future wealth.
Although your maxim may feel like good advice nowadays, you forget that leveraging up with expectation of high return later is likely to be the rational strategy that helps you begin feeling the benefits of that wealth earlier on.
I also wouldn't blame the risk takers. They are the most likely to reap the rewards and realize their potential.
Taking out loans to pay for a
Taking out loans to pay for a top education that you feel will pay off in the long term is a good idea. Maxing out the visa so you can get a BJ from a chick who thinks bankers with over prices grey goose is the shit is moronic. I think you are missing Illini's point. It isn't that you should not invest or live, but spending all your money foolishly is not the best plan.
I feel as if your post does not even pertain to the discussion at hand.
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While it may seem like the
While it may seem like the smart and practical thing to do, I have to totally disagree with OP. My mentor (family friend) is a partner level md at GS and I get the pleasure of having dinner with him once every few months when he is in California. Even while I was growing up, he told me to not worry about the little things in life such as saving money and being frugal. I thought he was fucking retarded when he told me that, but after hearing his explanations, it really made sense.
If you ask any guy who is at least 40 years old that has built himself a sizable net worth (>2M) based on hard work if he is willing to exchange $250,000 to be able to relive his youth (ages 22-28) again, he will say YES in a heartbeat. And $250,000 is a high estimate for the amount of money that one would save over the course of 6 years.
This mentor has discouraged me ever since freshman year from entering IB (as an analyst) and he refuses to help his son with getting an internship in IB. Instead, he pushes us to live life and make memories and then enter IB as an associate after b school if that's what we really want to do.
How much can you REALLY save during the first few years out of college? Maybe $30,000 a year? Once you make VP in your mid 30's you will make all the money that you would have saved by living frugally in a single month! So go out, piss away your measly analyst bonus, and enjoy life!
*obviously everyone should have a rainy day fund, but not as dramatic as Illiniprogrammer puts it.
Nah, the first thing I do
Nah, the first thing I do with savings will be to pay off my student loans. Period. Don't want those things to overtake my life if I let them drag on.
my $0.02: I both agree and
my $0.02:
I both agree and disagree with you, OP.
I mean, I spot on agree on what you suggests NOT to do, but I think that you go too far with your frugality.
What makes or breaks the whole thing is not how much you spend, but how you spend it. $400 for a night out is f**king stupid. But I think if you were to find an opportunity to spend $200 and have a great fun, that should be taken, provided of course that it leaves you enough resources to continue paying up your studend debts at a fast rate and that you have a nice chest for rainy days.
$200 in what? Well, the answer varies from person to person. For example, as Illini would probably agree, hangliding is awesome (don't know how much it costs in the US). If you were in London, given some planning, with $300 you could take a low cost flight to anywhere in Europe and have an awesome weekend with friends living there. As many others, said, $30-40 in the right places and the right company beat the $400 club 7 to 1.
Bottom point: don't be f**king stupid with your money, but don't play Scrooge either.
Still, if you are happy with a frugal style, and you feel you won't regret it later, go for it. Just don't do it out of paranoia.
junkbondswap wrote: Your life
junkbondswap wrote: Your life
Work hard, play hard.
LIBOR wrote: dude
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Theteller wrote: While it may
vfrex wrote: Theteller
"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
- Ronald Reagan
IlliniProgrammer, you never
What amazes me is how few
someone above got it right
Just wanted to chime in. I
Very wise words. I wish I was
dazedmonk wrote: bankers
Definitely agree on being
Ditto^2. I have seen some of
"Sounds to me like you guys a couple of bookies."
IP, Your "cognitive
Where I unload on Twits and take verbal S***s
Agree with the OP. But rather
Step 1: Dream the Dream || Step 2: Live the Dream || Step 3: Rinse, repeat.
As someone who is an analyst
My advice to anyone who is
CompBanker
cphbravo96 wrote: vfrex
Well, everyone who knows
But think of the idea of the
I disagree. I think you're
Work hard, play hard.
I am planning on spending
IlliniProgrammer wrote: I
houseofcards
Work hard, play hard.
Quote: I am planning on
Work hard, play hard.