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How to Turn Your Dumb Summer Job Into $162,000

2011-07-04 · John · watch on YouTube · Economics · advice recommendation

Lower-confidence wave

2011 videos did not pass the QA gate (17 %); their analysis is shown but less reliable.

On Independence Day John argues that young people can turn minimum-wage summer-job earnings into large retirement savings by putting some in an IRA early and letting compound interest work; he then asks viewers to watch and vote in YouTube NextUp Europe.

What is said

00:00:00 — Independence Day intro: financial independence; John dressed up as a money expert after the Wall Street Journal

  • ★★ In the description John adds that any investment account will do: sock the money away in a low-fee diverse mutual fund and wait 50 years; he is not a financial advisor. — 00:00:00
  • ★★★ On Independence Day John talks about financial independence: how young people can turn crappy summer jobs into hundreds of thousands of dollars (or the equivalent in other currencies). — 00:00:01
  • ★ John is dressed up and giving financial advice because he was in The Wall Street Journal last week, which he jokes makes him technically an expert in money. (playful) — 00:00:14

00:00:21 — Summer-job maths: John's warehouse 'manual labor Tetris' job at $7.50 an hour; $2,470 a summer, $1,970 after spending

  • ★★ In high school John worked in a hot warehouse loading stereo equipment into semi trucks ('manual labor Tetris') for $7.50 an hour, not a living wage unless someone else pays your living costs. — 00:00:21
  • ★★ John's example: $7.50 an hour is $247 a week take-home; ten summer weeks make $2,470; after about $500 of spending, $1,970 is left. (hypothetical) — 00:00:50

00:01:26 — Set up an IRA: what it is and how compound interest works

  • ★★★ John tells young viewers to go to a bank and set up an IRA, an individual retirement account; non-US countries from Brazil to Europe have equivalents. — 00:01:26 · Europe
  • ★★★ An IRA is essentially a machine that produces money from nothing but time, through compound interest: $10 at 10% earns $1, then $1.10 the next year, and keeps rising. — 00:01:39 > «a machine that produces money using nothing but time»

00:02:02 — The numbers: $162,000 from three summers, $50,000 from $2,000, versus $20,000 for 33-year-old John; save early; open an account at a bank

  • ★★★ Saving $1,970 a year from age 16 to 19 ($5,910) and doing nothing for 50 years gives more than $162,000 at 69, inflation-adjusted, from 'manual labor Tetris'. — 00:02:02
  • ★★ John says the world economy, adjusted for inflation, has grown about 6.5% a year over the last 100 years. — 00:02:06
    • number check: 6.5% — doubtful
  • ★★ More realistically, $400 a summer from 16 to 21 ($2,000 total) still yields more than $50,000 at retirement: effectively $125 an hour, not $7.50. — 00:02:27
  • ★★★ By contrast $2,000 saved by John at 33, 37 years from retirement, is worth only $20,000; so saving early matters more than saving a lot. — 00:02:48
  • ★★ At many banks these accounts can be opened with about $100, and bankers are happy to help because they are paid for each account they open. — 00:03:08
  • ★★★ In short, John says, you don't have to be rich to do what rich people do to maximize their income and avoid taxes. — 00:03:17

00:03:23 — YouTube NextUp Europe: Nerdfighter entries including Rosianna; watch all and vote; suit gag and sign-off

  • ★★ Many Nerdfighters reached the voting round of YouTube NextUp Europe; John links their entries and asks viewers to watch all the videos and vote, since they can shape YouTube's future. — 00:03:26 · Nerdfighteria, YouTube, doobly-doo
  • ★ One NextUp Europe finalist is Rosianna, who John says is responsible for the title of The Fault in Our Stars. — 00:03:29 · The Fault in Our Stars

Humor (significant)

  • John explains why he is dressed up and giving financial advice: he appeared in The Wall Street Journal. — 00:00:16 > «which means that I am now technically an expert in money.»
  • Describing his high-school warehouse job as 'manual labor Tetris', John adds the real conditions. — 00:00:37 > «manual labor Tetris in an un-air-conditioned, 110 degree warehouse with a lot of people yelling at you about how much you suck at Tetris»
  • After ranting about the crappy family vacation to Mount Rushmore that cuts your summer work, John turns on the rant. — 00:01:09 > «On the other hand, they did pay for your diapers all those years ago.»
  • Telling viewers to go to the bank and set up an IRA, John disambiguates the acronym. — 00:01:29 > «which is not an Irish Republican Army»

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