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What if he started with a pile of student loan debt which prevented him from buying a home? (I presume you own your home.)
What if not being able to buy a home caused him to have to pay ever-increasing rent, which resulted in his paying more for housing than you have? The combination of the two above could definitely impair his ability to save and invest. How does a rent slave take control of their spending when rents are necessarily skyrocketing?
I had student loan debt, but I also worked full time while going to school and paid it off as fast as I could.
I rented for years while I worked a second job and saved for a house. My house was what I could afford -- not what the bank told me I qualified for.
I'm saying for the last time, quit with the excuses and being a victim and start finding solutions.
I am another "high tweener". Our household income this year will put us in the territory where most would call us rich but I doubt my job lasts more than a year or two and assuming I find something quickly (likely if I go for contracts) it will be for a lot less and even if I find it quickly there will likely be a gap. Retirement savings will fall short of the "magic million" but will be well over half unless life throws a curve ball and drains some. The path to a comfortable retirement is narrower than for those I consider rich, but at least there is one.
Yeah. That's where I'm going to land if I have any break in employment over the next 7 1/2 years. Divorce math from two divorces really set me back in the whole wealth creation thing. Considering my lifetime earnings, my net worth is kind of embarrassing. I'm having to really focus on maintaining a very high savings rate in my last work years to get up to the 90th percentile household net worth with that "magic million" in investable assets by the time I can retire at age 65 1/2. I have no pension so it only works when I add in the Social Security check.
Still, by any rational set of metrics, I'm "rich". I could stop working today and have a roof over my head & food on the table for the rest of my life.
No one says they can't. They are free to purchase anything they want. Now, me paying for it? Different story.
It may be a different story, but some different stories need to be told. I think if we want someone who needs assistance to have a reasonable chance of getting a job and getting off assistance, not having a phone is a serious impediment.
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The "old car disease" may be a problem there in the black heart of rust country, but I bought my Scirocco (1982) for $1000 over 10 years and 200K miles ago, and it has been basically a reliable car. I spent some time and money taking care of it's needs, all older rigs come to you with needs unless you get them from the estate of a deceased a guy like me. And of course I have a couple more older, but reliable cars, so when one is in MY shop with ME wrenching on it, I drive another.
But, I know how to do my own wrenching. And I don't live in rust country. There are several of us on the various forums here who don't go running to a shop with their tail between their legs when their car has an issue.
That said, someone who has not been doing his own maintenance and repair for years can't just sell his late model hoopty and buy a cheap car from a "walking man's friend" type lot and expect to make a go of that. There was a poster on the Automotive forum who did just that, he bought an older Exploder (Explorer) that promptly started giving him transmission issues, which he was not able to handle himself.
As to Dave Ramsey - it's pop psychology. At least some of his advice - his idea to pay off your smallest debt first rather than pay off the debt with the highest interest rate - is mathematically incompetent. His overriding them of "spend less than you make" is sound of course, but this takes about as much intellectual horsepower to master as "water runs down hill".
Last edited by yellowbelle; 06-19-2016 at 10:22 AM..
Reason: orphaned - quoted post deleted
Dave Ramsey has said its not about math. If it was, people would be able to do it. Its about changing your mindset and motivation. And it works. If it was so easy, he wouldnt have millions of followers. Yes, it seems simple. Then why can't people do it? Why are so many people so deeply in debt they will never get out?
It isn't possible to "live quite well" depending on government assistance and food banks.
The only forms of government assistance left are Medicare, Medicaid, subsidized housing (which in most places is less than desirable abodes run by private-sector slum lords), and food stamps. Welfare can be used only by women in poverty with children. Since the Clinton administration's so-called "welfare reform," welfare can be used for only five years out of a woman's entire life. Even food banks have limits and people must take what is offered without personal choices.
Social Security (which offers less to fewer than it did in the 1970s) is not government assistance, but a retirement pension system people and every working relative they've ever had paid in to their entire working lives no matter how poorly they were paid for their work. The people who need it most are those who never had much if any "disposable income" and they've paid a higher percentage of their incomes into social security than have the wealthy, including the likes of Bill Gates. The person making $10.00- an-hour, with no benefits, pays the same percentage up to the same cap as does the wealthiest person in the country. Not a single penny that a wealthy person earns above that cap is taxed for social security. That means $10.00-an-hour earners and families living on $35,000.00 or $50,000.00 a year pay social security tax on 100% of their incomes, but those rolling in dough don't and they draw the biggest social security checks despite not even needing them. Yet, gawd-forbid we should raise that cap a few percentage points or make the wealthy pay a slightly higher percentage so that the system will be flush for the foreseeable future!
Add to that, Americans ensure that in this country poverty is accompanied by humiliation. The national attitude is that anyone who falls on hard times deserves the humiliation.
Until we stop blaming everyone who has less as though bad luck in life or less ability are moral failures, and instead start focusing on where we've gone wrong so that so many Americans live with financial insecurity, it is only a matter of time before most of us hit the skids. Anyone who doesn't believe that needs to remember that our thriving middle-class the rest of the world aspired to has all but disappeared in the space of about 30 years.
When you get in this shape, what's another $20-$25 burger/beer or a weekend trip to the Great Lakes? $25 here, $50 there seems insignificant with a $500/month car payment.
Between the debt, lack of employment security, and not liking the field I'm in, retirement saving is way down the list. I'm just day to day right now like many Americans.
Instead of spending 50 bucks or so a pay period on whatever, you might consider purchasing U.S. savings bonds. You can open an account at www.treasurydirect.gov (and, should you decide not to buy any, you are not obligated to do so). Personally, I recommend I-bonds (inflation protected savings bonds) rather than EE bonds. The minimum purchase amount is $25 and it can be any amount above that. For example, you can purchase a bond for $25.19 or $104.67, whatever amount you can spare. Since these are electronic bonds, interest begins to accrue on the purchase amount. Both EE and I bonds are guaranteed to double in value in 20 years, and they earn interest for 30 years. They're a simple and painless way to save and were specifically designed for the small investor.
Some things to remember:
1. Bonds must be held a minimum of one year before they can be redeemed. You can redeem bond(s) within your account. Also, you are not required to redeem the whole amount, so long as the minimum $25 is left in the bond. For example, if you have a $200 bond and you only need $75, you can redeem just the $75. The proceeds will be in your bank account in two business days.
2. You forfeit three months of interest if the bond is redeemed between the 2nd and 5th year.
3. The annual limit is $10,000 per bond type (EE/I).
4. You can name a beneficiary or co-owner on the bonds. In fact, it is smart having a beneficiary or co-owner in case something happens to you. That way, your executor doesn't have to jump through hoops taking care of the bonds, they automatically go to the person named on the bond, although, they will need an account so the bond(s) can be transferred to their account.
On a personal note, should you open an account, you will be required to answer three security questions. Keep the answers simple, you will need to type the answers exactly as you entered them initially. In other words, should you answer, "What was the make of your first car?" Don't put "1989 blue Chevrolet Caprice two door". You will need to type that answer exactly as you entered it the first time, so something like "Caprice" would be easier to type.
Also, don't be cute, don't put answers that have nothing to do with the questions. I can't tell you the number of times I assisted someone who had gotten locked out of their account and the answers had nothing to do with the questions because they thought they'd be funny. One a side note, you might also want to be careful of your answers, someone might have to ask you your security questions. We actually had someone who, for the question "What is your favorite movie?", answered, "Deep Throat". And he knew the answer! We all got a good laugh out of that one, but, quite frankly, we didn't care. All we cared about was the fact that he knew the security answer.
Dave Ramsey is not aiming at sophisticated people such as most of the posters in this Retirement Forum. His message is more like an inspirational pep talk for the financially clueless. If you look at him from that point of view, I think most of the criticisms will become more understandable. In other words, he is simplistic on purpose, and it suits his purpose well. He does a lot of good for his intended audience.
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And he knew the answer! We all got a good laugh out of that one, but, quite frankly, we didn't care. All we cared about was the fact that he knew the security answer.
Dave Ramsey
