How MacArthur Geniuses Handle Their Money Windfalls

https://www.nytimes.com/2015/09/26/your-money/how-macarthur-geniuses-handle-their-money-windfalls.html

by astdb • 9 years ago

71 62 9 years ago

S_A_P• 9 years ago

The TLDR of this is basically that the MacArthur Geniuses have a solid trajectory/purpose in life so the sudden windfall does not seem to affect them in the way that the lottery does to some people.

However, while this is certainly a windfall and I wouldn't turn it down its not a lifestyle changing windfall. I would say this is enough money to do anything for at least a short amount of time, but it is certainly not enough to do nothing. I think that combined with the fact that the awards are given to people who are pursuing their passion is a large differentiator to those who've won the lottery and aren't rooted in some cause.

chrisparton19912• 9 years ago

For me—in my 20's living at home—this kind of money would mean I could buy a house/apartment without needing a mortgage.

It would be a huge kickstart to my independent adult life, and the savings over the decades from not having a mortgage would absolutely be lifestyle changing. I'm not talking about yatchs and lamborghinis, but it would certainly provide the freedom to live on less income in exchange for more free time to pursue hobbies and side projects.

Not that I have any reason to complain, I'm very grateful for who and what I have in my life right now.

cantrip3• 9 years ago

I get the sentiment, but I'd just like the point out that with current interest rates it makes sense put 20% down and invest the rest in mutual funds. You get mortgage interest deduction and are paying 4% interest while making 7% market gains. Buying a house all cash is not the way to do it.

sudhirj• 9 years ago

The article misses the point that people who’ve achieved enough to warrant the award needed to have a financial system in place already that allowed them to focus on whatever they’re doing. For people with such a system the award money itself is a relatively minor change, which is pretty much what the article reports.

Asparagirl• 9 years ago

There was no mention in this article of Lin-Manuel Miranda (who won a MacArthur genius grant in 2015), but he reported on Twitter at the time that he had used his grant to pay off his and his wife's student loans.

blinkingled3• 9 years ago

Maybe because they covered one case of a grantee repaying their $180k(!) student loan.

labster• 9 years ago

The doesn't seem all that large for someone with a professional degree, like a M.D. or J.D. America is the land of the free until you get to university.

ggg99902• 9 years ago

One year before he made multiple hundreds of millions of dollars with Hamilton.

DaniFong• 9 years ago

did he actually make that much or are you guessing? :-)

i'm sure he's doing well, but the play business is a tricky one and never that large, afaik. i'm sure he's well positioned tho!

blinkingled3• 9 years ago

Steve Coleman, a saxophonist who won last year at age 57, said he had created a life over decades that required little money to maintain and could be supported with even less when times were tough.

I spend quite a bit of time thinking about this but it doesn't appear to be a solveable problem for people with kids/family even if their earnings as an IT/SDEV person are well above average.

njarboe2• 9 years ago

Check out Mr Money Mustache[1] for one example of solving this problem.

[1]https://www.mrmoneymustache.com/

humanrebar3• 9 years ago

One half of his solution is having two professionals earning good money for a while. His initial savings rate would have been very different if his initial circumstance was more blue collar, there was a serious illness in the family, and any number of other things.

The principle of not wasting money is well taken, though.

pc865• 9 years ago

MMM is a charlatan whose entire ethos can be boiled down to "make a lot of money initially to pay off all your debt (debt is an emergency), then do little things that make very little difference (no air conditioning), then make a ton of money off of credit card affiliate offers (his entire business)."

Yes his stuff works in the same way that Amway works for the people making a lot of money off of it - it's not realistic for the majority of people who want to do it.

tonyedgecombe• 9 years ago

Your partner is really key, if you are both thinking off the same page then it makes a huge difference.

jdietrich• 9 years ago

Renowned indie games developer Jason Rohrer raised his family for several years on a budget of $10,000 per year. It's possible to live on very little if a) you're prepared to move to somewhere cheap and b) you're prepared to examine your definition of the word "essential". Possible, but not necessarily pleasant.

http://hcsoftware.sourceforge.net/jason-rohrer/simpleLife.ht...

ComradeTaco• 9 years ago

Doable as long as nobody gets sick and requires the attention of a doctor.

astura6• 9 years ago

you're prepared to examine your definition of the word "essential".

This is the real, real big issue. We are surrounded by our peers spending money and ads that tell us to spend more. It makes us lose touch with what's a need vs a want and what sort of spending would actually improve our lives. It's going to be different for everyone, of course, we aren't the same, we all have different priorities in life. I remember reading a Reddit post where someone thought a stay at home mom selling her (financed) car was totally ridiculous because the kids might have a doctor's appointment one day. This was an upvoted post. This was a second car and the family was in very siginficant debt. Sure, a second car is very nice but not anywhere near a "need" for a stay at home parent.

Like, uh, if she needs the car one day she can jut drive her husband to work and pick him up again.

Personally, my family can certainly afford a second car, but we have one car because a second car would costs thousands of dollars and it's just not worth thousands of dollars to us just to avoid the inconvenience of dropping my husband off at his work on my way to my work and picking him up again. That money is better spent on things that give us more joy then avoiding spending more time in the car together.

Every dollar spent requires trade-offs.

Having a spouse that agrees with you in the realm of personal finance and life goals is incredibly important. I don't think a marriage could last without having the same financial/life goals. Not without a large amount of resentment anyways.

claudiulodro2• 9 years ago

Why do you think that's so? I have a wife and kids and I've been working towards something like this. The difficult part is getting debt-free (no student loans and paid off mortgage), but once you've accomplished that you really just need to be able to afford health insurance and food.

blinkingled3• 9 years ago

I think it takes lots of compromises and some luck to get there. Housing is another costly thing you need to factor - depending on your current and future job prospects that may be a significant source of expenditure. Buying also limits your job choices unless you want to live separately / travel. (In our case we bought a decent 2800sq.ft. house where we could afford it but the house was older and so we have had significant expenses maintaining it (roof, hvac, other stuff). Renting is very expensive in this city - we pay less mortgage than renting a smaller town home in a nice area where the public schools are decent.

Two working people == two cars in most places where public transportation is unavailable or very inconvenient. There's insurance, taxes and maintenance. Health insurance - I probably don't need to say much but it's insanely expensive for most people.

I guess for a couple without kids and the right jobs at right places some things are simplified. You could rent a 1BR without worrying about the school districts, have decent health insurance for two, use public transportation and keep your entertainment needs limited. That might get you to a semi comfy retirement at not very old age but it feels like anything else is just going to be a constant hustle.

Kyragem• 9 years ago

What a nonsensical article. Similar to Malcolm Gladwells revisionist podcast (episode: My Little Hundred Million) these awards predominantly go to well connected faculty at elite schools who are already well funded and who don't need the money (other than to add to their palmares). Many of these awardees are already millionaires. They should just split this award into smaller grants and give it to faculty/teachers at smaller unknown schools in the midwest. You don’t have to be a genius to see this would do more good.

alister• 9 years ago

other than to add to their palmares

I learned an interesting, though obscure, word today:

palmarès: a list of races a (bicycle) rider has won. (French, meaning list of achievements or list of winners).

ambivalents• 9 years ago

Thank you! You saved me a) a quick Google search myself, and b) the attendant self-conscious wondering about whether this is a word everyone knows and that I too should know by now.

jdmitch• 9 years ago

I don't think it's that obscure in British english usage, even outside of cycling contexts (source: American living in the UK)

jacobolus• 9 years ago

I’ve known a few MacArthur grant winners, and none of them were wealthy, or even upper middle class. Most were stably employed, but some extra money with no strings attached can really help a lot if people want to set aside time to work on their own projects, not beholden to some employer or grant agency expecting quarterly or yearly status reports with well-defined short-term project goals.

Personal art projects, long-term research projects, etc. are often difficult to get funded because they are risky and may not have an immediate path toward revenue. There is surprisingly little money available in the world designated to fund people’s green-field creative work, with project leads allowed to just hire smart people and tell them to work on whatever interests them for 5+ years without worrying about immediate payoff.

eecc• 9 years ago

This

teddyh2• 9 years ago

Most people who randomly get a windfall of money were previously poor. If you’re poor and suddenly get lots of money, you most probably can’t handle it; “#4. Extra Money Has to Be Spent Right Goddamn Now!”: http://www.cracked.com/blog/the-5-stupidest-habits-you-devel...

MacArthur winners have two advantages: First, they are probably good at something, and therefore are likely not poor. Secondly, even if they are poor, they are probably very focused on their thing which made them get the prize, and any money goes to their thing, not to themselves, which makes most people a little more rational when deciding things.

logicallee• 9 years ago

One and two are usually true of Darwin award winners too, but even if that came with a cash prize, the other thing MacArthur geniuses have going for them (by comparison) when it comes to managing the windfall is that they're MacArthur geniuses... surprised this didn't make your list!

Jack000• 9 years ago

I think this depends on your poverty culture. Growing up poor as an Asian immigrant, my experience has been "Extra money must go in the savings account, no luxuries EVER!", which is bad in its own way.

teddyh2• 9 years ago

I’m not sure I would call it bad.

http://www.mrmoneymustache.com/

jgamman• 9 years ago

the very first example in the story was a dancer that paid off $180k in loans - almost a textbook example of someone that's 'poor'. this grant is literally a lottery win for some of them

jmathai• 9 years ago

Most people who are passionate enough about something to receive these fellowships will take the opportunity to pursue their passion.

I had a Shuttleworth Fellowship for 2 years which is very similar to the MacArthur Genius grant. They are both often enough to not worry about having to work a job to pay your bills and feed your family. (The Shuttleworth fellowship includes enough to pay for legal, financial, travel, contractors, etc)

I worked harder during my fellowship than I can recall otherwise. I knew it was a once in a lifetime opportunity and that I only had a finite amount of time to do something great.

I wrote about my experience as a fellow here.

http://jaisenmathai.com/articles/shuttleworth/

cantrip3• 9 years ago

These seems like very different programs to me. The MarArthur Fellowship is a no strings attached financial grant to nominated individuals in any field, they do not allow applications. The Shuttleworth is by application and specifically funds individuals working on projects related to "openness".

scoobydoo12345• 9 years ago

Richard Stallman made good use of his $240,000 grant when he used it to fund the Free Software Foundation.

oceanghost• 9 years ago

In all seriousness, what does it take to get a Macarthur grant?

dsr_• 9 years ago

You don't apply. You get nominated; and nominators are invited by the foundation.

https://www.macfound.org/fellows-faq/

chengiz• 9 years ago

I found it a little disconcerting that the most selfish usecase (spent it on "her children") among the 5 or 6 reported got a picture. Apparently looks matter even in the genius world.

cantrip3• 9 years ago

I don't follow this at all, what are you saying?

First off, there are two pictures in the article, so the idea that "looks matter" as pertains to selfishness, whatever that means, is in question.

Secondly, the idea that "looks matter" doesn't make sense. She seems rather regular looking, not picked out specifically because of her looks.

Lastly, spending money on your children to me is far less selfish than paying off your personal debt, which did not get a photo.

How MacArthur Geniuses Handle Their Money Windfalls

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