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Old 08-20-2014, 06:29 AM
 
Location: Florida
4,103 posts, read 5,406,054 times
Reputation: 10105

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So Ive had a lot of meaningful conversations with coworkers and close friends lately on the state of the Economy, distribution of wealth, and wage gap. It boggles my mind that people don't realize who is truly to blame in these shortfalls. Whenever I ask these "ranters" how much their net worth is, more often than not they have a negative net worth, or their worth is tucked away in a 401k. This is very dangerous my friends, we have been trained to believe that as long as you have a good cash flow (salary) and some 401k then you are better off than 99% of the world right? Wrong. The government listens to those who hold the wealth. We need to teach our kids to accumulate wealth over their "fun years" of 20-30, rather than buying a BMW like I did, getting a fancy apartment like I did, getting a mortgage at 28 like I did etc. I cant tell you where my money has gone over the past 10 years as I approach 30. Ill tell you this though, my wife and I made 300k over the last 4 years. If we had a good portion of that salary invested in the economy, then we wouldn't just be relying upon salary alone to earn wealth.

Employers are well aware that us workers rely solely upon salaries to maintain our cash flow, and they abuse this situation. They work us long hours, and fire us at the drop of a hat because they know we NEED them. Now imagine a situation where the bulk of the workforce actually had hundreds of thousands of dollars invested that brought them in almost as much as their salary, do you really think it would be the status quo to "rape" the modern worker like it currently is? The more power in the workforce, the less abuse we take.

Imagine a scenario where your wife is diagnosed with breast cancer at 35, and your direct family can collectively cover her medical bills because they have an accumulated net worth of millions. Currently if most Americans fell into her situation they would have to file bankruptcy and destroy their credit for 7 years.

Imagine if we just changed out way of thinking and collectively spent our early years building wealth, so that we could spend the REST OF OUR LIFE with less sleepless nights, and less 800 calls from creditors.

The economy would be in far better shape than it is today. Its our fault that the wealth isn't in our hands, we just don't want to admit it.
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Old 08-20-2014, 06:38 AM
 
18,512 posts, read 15,494,002 times
Reputation: 16193
Quote:
Originally Posted by thatguydownsouth View Post
So Ive had a lot of meaningful conversations with coworkers and close friends lately on the state of the Economy, distribution of wealth, and wage gap. It boggles my mind that people don't realize who is truly to blame in these shortfalls. Whenever I ask these "ranters" how much their net worth is, more often than not they have a negative net worth, or their worth is tucked away in a 401k. This is very dangerous my friends, we have been trained to believe that as long as you have a good cash flow (salary) and some 401k then you are better off than 99% of the world right? Wrong. The government listens to those who hold the wealth. We need to teach our kids to accumulate wealth over their "fun years" of 20-30, rather than buying a BMW like I did, getting a fancy apartment like I did, getting a mortgage at 28 like I did etc. I cant tell you where my money has gone over the past 10 years as I approach 30. Ill tell you this though, my wife and I made 300k over the last 4 years. If we had a good portion of that salary invested in the economy, then we wouldn't just be relying upon salary alone to earn wealth.

Employers are well aware that us workers rely solely upon salaries to maintain our cash flow, and they abuse this situation. They work us long hours, and fire us at the drop of a hat because they know we NEED them. Now imagine a situation where the bulk of the workforce actually had hundreds of thousands of dollars invested that brought them in almost as much as their salary, do you really think it would be the status quo to "rape" the modern worker like it currently is? The more power in the workforce, the less abuse we take.

Imagine a scenario where your wife is diagnosed with breast cancer at 35, and your direct family can collectively cover her medical bills because they have an accumulated net worth of millions. Currently if most Americans fell into her situation they would have to file bankruptcy and destroy their credit for 7 years.

Imagine if we just changed out way of thinking and collectively spent our early years building wealth, so that we could spend the REST OF OUR LIFE with less sleepless nights, and less 800 calls from creditors.

The economy would be in far better shape than it is today. Its our fault that the wealth isn't in our hands, we just don't want to admit it.
As a friend of mine would argue, "If everyone started saving, the economy would contract severely due to a lack of consumer demand".

Not saying it's a good argument, but you should prepare a rebuttal to it.
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Old 08-20-2014, 06:43 AM
 
Location: Florida
4,103 posts, read 5,406,054 times
Reputation: 10105
Quote:
Originally Posted by ncole1 View Post
As a friend of mine would argue, "If everyone started saving, the economy would contract severely due to a lack of consumer demand".

Not saying it's a good argument, but you should prepare a rebuttal to it.
The economy would contract, yes, but that is a very poor excuse to not build wealth. Youre saying its our job in and economy to work like dogs, AND fatten the bottom line via consumption. Bear in mind a contracting economy would actually make stocks MORE affordable. That's also making the statement that it is our job as members of society to funnel money TO THE TOP, ie the shareholders that currently own the bulkd of the wealth of the nation. That is exactly the problem. We are consuming, and making those who today hold the wealth, wealthier....

Which one is a better model of economic strength, the Dow Jones closing figure, or the % of wealth distribution among society. Personally Id rather live in a Country with a more favorable wealth distribution.
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Old 08-20-2014, 06:48 AM
 
18,512 posts, read 15,494,002 times
Reputation: 16193
Quote:
Originally Posted by thatguydownsouth View Post
The economy would contract, yes, but that is a very poor excuse to not build wealth. Youre saying its our job in and economy to work like dogs, AND fatten the bottom line via consumption. Bear in mind a contracting economy would actually make stocks MORE affordable. That's also making the statement that it is our job as members of society to funnel money TO THE TOP, ie the shareholders that currently own the bulkd of the wealth of the nation. That is exactly the problem. We are consuming, and making those who today hold the wealth, wealthier....

Which one is a better model of economic strength, the Dow Jones closing figure, or the % of wealth distribution among society. Personally Id rather live in a Country with a more favorable wealth distribution.
That's a great rebuttal. I'll try to get a response from my friend (I probably won't convince him to sign up for City Data Forums, though ).

EDIT: On second thought, what about unemployment? If everyone stopped buying brand new SUV's, then there would be mass layoffs in that industry.

EDIT2: What good are affordable stocks if you don't have a job to earn the money to buy the stocks with? And what of those who already owned stocks and lost their job and were forced to sell at the bottom of the market? They wouldn't be building wealth, they'd be losing it!

Last edited by ncole1; 08-20-2014 at 06:56 AM..
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Old 08-20-2014, 06:55 AM
 
Location: Florida
4,103 posts, read 5,406,054 times
Reputation: 10105
Quote:
Originally Posted by ncole1 View Post
That's a great rebuttal. I'll try to get a response from my friend (I probably won't convince him to sign up for City Data Forums, though ).

EDIT: On second thought, what about unemployment? If everyone stopped buying brand new SUV's, then there would be mass layoffs in that industry.
Well my argument is primarily that people should spend the decade of 20s building their wealth, Im not sure what % of this age bracket actually buys NEW cars. If so then sure there will initially be less consumption of these goods by this age bracket, that would rebound when these people enter their 30s then buy a new car. Youd just be shifting the consumption to later, not eliminating it.
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Old 08-20-2014, 06:58 AM
 
5,762 posts, read 11,611,535 times
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Many Americans don't have jobs which provide enough cushion for much saving, and quite a few make between zero and $15,000 in any given year. Not many are making very much in their twenties, or increasingly in their thirties either.
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Old 08-20-2014, 07:02 AM
 
Location: Florida
4,103 posts, read 5,406,054 times
Reputation: 10105
Quote:
Originally Posted by tablemtn View Post
Many Americans don't have jobs which provide enough cushion for much saving, and quite a few make between zero and $15,000 in any given year. Not many are making very much in their twenties, or increasingly in their thirties either.
Right in todays economy we are in a bit of a dire situation of course, however traditionally in the US it has not been the mentality to spend your youth building wealth. My rant is geared more towards those who do have the ability to tuck away more money in their youth. I think its more than fair to say that people in their 20s do a good bit of wasting.
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Old 08-20-2014, 07:04 AM
 
18,512 posts, read 15,494,002 times
Reputation: 16193
Quote:
Originally Posted by thatguydownsouth View Post
Well my argument is primarily that people should spend the decade of 20s building their wealth, Im not sure what % of this age bracket actually buys NEW cars. If so then sure there will initially be less consumption of these goods by this age bracket, that would rebound when these people enter their 30s then buy a new car. Youd just be shifting the consumption to later, not eliminating it.
Ok, say you are out of work because your company has lost customers who are trying to build wealth. Yes, they may go back to spending mode in 10 years, but in the meantime, how do you house, clothe, and feed your family for the 10 years between now and then?

A sudden drop in spending will cause high unemployment, even if there will be increased spending when they get older.
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Old 08-20-2014, 07:13 AM
 
Location: Florida
4,103 posts, read 5,406,054 times
Reputation: 10105
I think you are under the impression that there will just suddenly be a mass freeze in spending and everyone will start saving amongst all age brackets. My argument is that people should spend ONE age bracket saving. Consider that currently most retired people spend FAR less than the rest of the age brackets, where as in a better economy they wouldn't be cash strapped in their elderly years, and would therefore spend. Like I said, youre just shifting consumption from one age bracket to another. The difference is youre building your wealth early and using 50 years of compounding interest to your advantage.

Plus bear in mind that this would have a rolling impact on the generations. I would leave far more wealth to my kids upon my passing, meaning that they wouldn't be struggling as much if they cant find a good wage initially. Today many people leave little to nothing to their kids.
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Old 08-20-2014, 07:26 AM
 
860 posts, read 857,077 times
Reputation: 2189
What's best for the individual is to follow their own path and ignore the crowd. If an individual saves while everyone else spends like drunken sailors then they will be well off. If everyone saves then that money becomes meaningless. On the literal level it means everyone will have money and nowhere to invest it.
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