Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Our local wages have been growing at a 3% CAGR since 2010 while housing in desirable areas has a 17% CAGR over the same period while interest rates have increased. Couple that we college tuition going up by low single digits, vehicle prices appreciating (even used) mid single digits, and healthcare premiums + out of pocket deductible going up double digits annually and something g has to give. No wonder why savings had gone negative and debts have ballooned.
It’s a very dangerous equation in the near future when the debt bubble pops.
I think the key point is that we have a generational poverty problem The places on the map with the poor class mobility out of the bottom-20% have the highest concentrations of generational poverty.
Generational poverty is poor class mobility. In countries where higher education isn't expensive and medical bills can't bankrupt you, the class mobility rates are much higher.
I remember it was a big deal when my dad had to finance part ($600) of a second car so mom could have a car when he was at work. Always before, they had paid cash for cars.
Mr. Steiconi and I have lived pretty frugally; we have Trakfones instead of expensive plans, drive our cars forever, have a 33" TV, and often shop at thrift stores. We refinanced our house to get a better interest rate, but didn't fall into the trap of taking money out. As a result, we've saved enough for a pleasant, comfortable retirement.
People often feel they need a car more often than they really do, high cable bills, huge cell phone bills, high car payments, splurge vacations, etc. All those things are tempting. Only way to manage to save more may be to reduce expenses even though it may mean having fewer or less glamourous toys. It is way too easy to fall into debt in this country.
In my opinion, this is the "pat" answer given as to why people are struggling to get by and not saving. This may be true for some people absolutely, but it's definitely not across the board, in my experience. This is, of course, the easiest answer for people with sufficient income and means who are simply not frugal in their spending habits. You know, stop buying that daily Starbucks, stop "splurging", forego that Hawaiian vacation, don't buy that $60K truck, plan a budget, etc. and you too can save lots of money and be comfortable financially and in retirement. Easy peasy. Just take those little "baby steps".
There are often so many other economic challenges and metrics at play in these times for many average working people who are diligently trying to save and plan for the future, and struggling to do so.
no we have free will.
a person lives within their means, or not.
But what if those means can't provide a decent living on their own? What you say makes sense, but when people have to cut out necessary medications or food or cut back on heat in the winter, are they "living within their means" or is something else going on?
Quote:
Originally Posted by GeoffD
It's more likely that person A had lousy parents. Person B had parents who instilled a work ethic, an education ethic, and a good decision-making framework in their children. That's the root cause of generational poverty. It has little to do with money or the quality of a school system. By the time a 6 year old hits first grade, the damage has already been done.
There isn't an obvious fix to this problem. Maybe start public school at age 3 and have a 40+ hour school week & 48 week school year with a curriculum that tries to impart all of that on children who aren't getting it from their parents. All I know is what we're doing now isn't working.
60% of working Americans make $20/hour or less. I imagine almost everybody who participates on message boards has the 21st century job skills to make more than that. I save and invest more than those people take home after taxes and payroll deductions. I pretty much can't miss even though I've made some bad life decisions along the way. The bottom 60% has to make good financial and life decisions the whole way or they're going to hit the finish line with minimal net worth. Any kind of life issue like divorce, health problems, or lengthy unemployment and you're completely off the rails. Layer on top of that the problem that most of that 60% never had a culture of deferred gratification drilled into them so they don't save & invest.
In other words, what Geoff is saying is that when you're poor, you're not allowed catastrophes or second guesses that could go wrong. Everything has to go right all the time, because there is no forgiveness for mistakes.
Let's talk about that penny that stays a penny unless it's invested. If all someone has is what he holds in his hand and it will buy the food he eats today or the rent that's due tomorrow, is it any wonder he wouldn't take a chance on investing it?
But what if those means can't provide a decent living on their own? What you say makes sense, but when people have to cut out necessary medications or food or cut back on heat in the winter, are they "living within their means" or is something else going on?
In other words, what Geoff is saying is that when you're poor, you're not allowed catastrophes or second guesses that could go wrong. Everything has to go right all the time, because there is no forgiveness for mistakes.
Let's talk about that penny that stays a penny unless it's invested. If all someone has is what he holds in his hand and it will buy the food he eats today or the rent that's due tomorrow, is it any wonder he wouldn't take a chance on investing it?
I'm afraid there are very few people on this board and in this forum who will admit that. There is no such thing as the good luck they've had and the bad luck others have had (despite doing the right things that were in their power).
It is against human nature, after all - we want to take all the credit for our own good fortune and blame everyone else for their woes because then we feel the world is fair and we are in control of our own lives - it's a well known psychological principle. However, that doesn't mean we can't rise above it and consider what others have to live through.
I'm afraid there are very few people on this board and in this forum who will admit that. There is no such thing as the good luck they've had and the bad luck others have had (despite doing the right things that were in their power).
It is against human nature, after all - we want to take all the credit for our own good fortune and blame everyone else for their woes because then we feel the world is fair and we are in control of our own lives - it's a well known psychological principle. However, that doesn't mean we can't rise above it and consider what others have to live through.
I have no trouble admitting that.
Quote:
Originally Posted by ReachTheBeach
I think one of the reasons I see both sides so well is I was a potential ne'er do well, who got lucky. I was lucky to have educated parents. I was lucky to have a brain that can solve certain kinds of complex problems with relative ease, even though I am totally inept at a lot of things. I was lucky to land my first job out of tech school with a company that let me do very advanced programming; most of my classmates ended up in true entry level jobs and probably wouldn't see anything like what I was working on for several years, if ever. I was really lucky to land the job I have now over 20 years ago; they kept giving incremental raises that have me currently earning more than double the average salary for my position with my experience. I was lucky that I was pulled in by the "free money" message at my first 401k meeting at a previous job and have always contributed as much as I can, and the ability is largely due to luck.
It's one of the reasons I feel compelled to speak up for those who are less fortunate; because I know that many really are just less fortunate. Some are struggling and putting in more effort for far less reward. I am not more deserving, just more fortunate. Standing in society is largely an accident of birth. Opportunities are out there, but not nearly enough to go around.
It is true that there are a lot of people who could be doing fine if they were more responsible. But there are more who are doing all they can and just not getting enough in return.
Last edited by ReachTheBeach; 03-18-2018 at 07:41 PM..
It is true that there are a lot of people who could be doing fine if they were more responsible. But there are more who are doing all they can and just not getting enough in return.
A whole thread of apocryphal tales of 230K zero down McMansions, new I-phones every 6 months, gigantic car payments and twice daily trips to Starbucks as the reasons for not having enough funds for retirement.
No mention of illness/injury, divorce, or care for a sick child or spouse or parent. Illness is devastating when you do have insurance. Without insurance you are on a one way trip to bankruptcy. Sometimes, people just cannot earn enough money, even when they work hard, do without, and eat rice and beans every night of the week. Sometimes companies fold, merge, or move, leaving many in the unemployment line until they find another position.
My Dad had 3 different types of cancer when I was growing up. He survived and my path in life turned out way better than if he had died. So many refuse to acknowledge that good fortune plays a roll in the way our lives play out.
+1. My father-in-law did everything right. Worked for 25 years at a union job and retired with a generous pension (as in over 6k per month, not counting social security) and lifetime health insurance, house payed off. What could not be planned for was a wife with chronic health problems, one their grown children being developmentally disabled and permanently unemployed, their property taxes doubling over the course of 5 years, and being financially unable to downsize. Folly is thinking that you are in control of your future, and that you can check off all the right boxes and make everything go according to plan.
$250k McMansion? That’s cute. $250k will just about cover the down payment and closing; maybe even upgrade a few of the appliances installed during Cinton’s first term.
Last edited by Ginge McFantaPants; 03-18-2018 at 07:16 PM..
I remember it was a big deal when my dad had to finance part ($600) of a second car so mom could have a car when he was at work. Always before, they had paid cash for cars.
Mr. Steiconi and I have lived pretty frugally; we have Trakfones instead of expensive plans, drive our cars forever, have a 33" TV, and often shop at thrift stores. We refinanced our house to get a better interest rate, but didn't fall into the trap of taking money out. As a result, we've saved enough for a pleasant, comfortable retirement.
There are 60” plus 4K HDTV’s for $300-400 and a couple years old generation smartphones for only hundreds. People can still have modern conveniences. Keeping up to date with electronics is not the litmus test of whether one is financially responsible or not. They are not mutually exclusive.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
