Do a lot of people choose to spend money in a way that makes/keeps them poor? (pay, rent)
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I'm not talking about the actual impoverished people, living on (legitimately obtained) SSI, living on the street, or barely-able-to-put-food-on-the-table people. But a lot of people I know (and know of) with "lower" incomes seem, in my opinion, to waste a lot of money.
I don't want to fall back on "well it's an educational thing, and if they had a better education, they would be better with money." Because that's really not true. Lots of these people I see wasting money have a college degree, some even have a Master's. I'm seeing people with various levels of education spend their money in ways that seem wise and ways that seem unwise. To me, "wise" means "in a way that will increase wealth" and "unwise" means "in way that will decrease wealth, or that can be dangerous."
I have some co-workers/employees at my company who only earn like $13 an hour, but they have fancy manicures, and the newest iphones. I recently heard one of them (whose salary is in the 29,000-32,000 range) talking about having a $300/month car payment. Another person who I know earns only about $45,000 has a Mercedes SUV that goes for around $90,000. Where are the priorities? Do they save or invest anything?
Again, it's really a value judgment on my part, I know. But some things people spend their money on, are really, in the empirical sense, a waste. Right?
Cigarettes
Lottery tickets
Expensive clothes/shoes/sneakers
Manicures/pedicures/expensive hairdos
The latest entertainment technology (last year's technology is unacceptable)
The highest price cable TV package & pay channels
Tacky "collections" that have no value
Casinos
I saw one of those shows about people who have won the lottery, and wasted all their money, and I was kind of shocked. And then I thought about people I know who play the lottery, and how they would likely waste their money in that way too.
Even when it comes to collecting, you can see big difference between people who are wise and the unwise. Collecting is a hobby that is purely for the purpose of investing in objects that you enjoy, and that will hopefully go up in value over time. So you might collect antique gold jewelry, rare coins, pieces of art, antique guns, early bicycles, even vintage advertising signs, etc, and those will largely increase in value over time. But the people on these "lottery" shows, and some lower-middle-income people I know, will instead invest in new objects that are labeled "collectibles" and that will never increase in value. I mean, Beany Babies were the prime example of this in the 90s, but there are many more examples. On one of those "I won the lottery" shows, the person spent tons of money on a collection of comemorative plates, with portraits of famous people on them (like John Wayne, race car drivers, Elvis, Gone With the Wind characters). The guy actually believed that these were going to go up in value, and he or his wife actually called the plate collection "our nest egg" or "the kids' college fund." It was so pitiful that they really believed this.
I'm in the middle-income range, and I'm somewhat frugal, but not overly so. The wasteful things I spend on are wine, eating out for lunch when I could pack a lunch, and stuff for my pets, and maybe a bit too much on books (I like nice hardcovers instead of paperbacks). But I only spend money on those things when all my other bills are paid, and I have put away some money into savings. Then the remainder, I allot for those wasteful things that I like. But if I were to hit hard times, those would be the first things to go. I know people who will keep spending on their "vices" and wasteful things, and let bills and necessities like saving lapse. I know people who have almost the exact same salary as I do, but they are always broke, have lots of debts, never give to charities, but somehow just got the newest iphone or drive a brand new car. If they have some kind of emergency, like they suddenly need a new heater or roof, or they lose their job, they have nothing to fall back on. They spend in a way that will make them poor.
I do buy higher-priced clothes, not because of designers or names, but because I make my clothes last a looooong time. If they are good quality and a classic style, I can still wear things I bought 10 years ago (or more!) I also do that because I hate shopping, so I don't buy clothes that often. I know people who shop every week or two, and blow money on fashions that will be out of style next year, or that are so poor quality, they will fall apart by next year.
I'm not perfect, and I'm not holding myself up as some ideal of wise spending (I do have that wine and book habit) but I do feel like I have to be a bit judgmental (silently) when I see people waste money really unwisely.
What do you see people wasting money on that you just don't understand? Do they spend money on this stuff while not putting anything into savings and/or building up debt?
I honestly think that if you could magically give every person in the US, rich, poor, or in the middle, $100,000, that after one year, they would all mostly be in the same category they started off in: rich, poor, and in the middle. Maybe very few (I'd like to think I would be one of them) would invest it wisely and move up a few notches, permanently. But the rest would be right back where they started.
Sorry for the length, but this has been nagging at me for some time, and just sort-of crytallized today.
If I was given $100k, I would finish paying off the $26k remainder on my student loans, in which I have currently paid $14k in the past four months. I would use the remainder to pay down my house.
You could go to the 'hood in my town at any day and see Lexus', Benz's, plenty of high end smartphones and designer clothes and see these owners standing on the bus stop, and going to broken down, rickety sham homes.
There are always people with messed up priorities. They get a little cash and spend it all. Someone a long time ago told me the difference between the rich and the poor is that the poor plan for the weekend and the rich plan for the next generation. And its sooo true.
My grandparents' generation (born ca: 1885) used to say "poor people have poor ways." Not always true, of course, but maybe there's some wisdom.
When I was having coffee one day I overheard a man with a $9 per hour fast-food job talking about his pedicure, and then I saw him get into a Lincoln Continental. It's beyond my imagination to think that my Dad (born ca: 1910) would ever have behaved this way, or for that matter that any self-respecting man of his generation would have.
Edit: it seems to me that some people can see themselves only in the present, whereas others can see a past, present, and future, and yet others can see for generations backwards and forwards. I am always surprised when I see people posting here about wanting not to leave anything to their kids. And then they seem to resent people who are more successful than they are. Bottom line: thrift is a wonderful virtue, especially in an ancestor.
Last edited by Hamish Forbes; 09-25-2012 at 04:54 PM..
This is a very common subject on this forum. I have even seen that link before and those 5 things really are true. I know people like that. The people that think this way are the ones that always ask other people what they are going to spend their tax return on. They are getting a check and have to find something to spend all of it on, and they think everyone else must like to do that too.
I knew someone once that was always broke, but as soon as her husband would get a bonus from work they would take the kids to Walmart and fill up shopping carts until it was gone. She described herself as someone that would get the wants and have to fix or fill it. I think there is a deeper psychological problem in some of the people like this especially if your choice of fix is Walmart.
What do you see people wasting money on that you just don't understand? Do they spend money on this stuff while not putting anything into savings and/or building up debt?
Entitlement issues and problem with long term planning and delayed gratification. I suspect some of it is escapism/distraction too. Think retail therapy. But most of time people just seem to have problem fathoming that their retirement money got to come from somewhere or that car has to be pay off somehow.
I'm living with a 30 year old relative (I'm 27) right now who never once paid rent or housing in his life. He always has money not just to spend on dining out but dining out at the some of the best restaurants in LA. Car needs to get fixed? He borrows money from family. Always telling me that he's quitting his latest job, which he does but makes sure that I'm secure with my job so that I could pay for him. Ask him to pay for his share of the cable....I'm being harsh and not generous. I'm sick of all these Generation Y folks who always expect somebody to rescue them and try to sketch their college lifestyle of being under somebody's wings financially as far as possible. Grow up and learn to pull your own weight pal.
Our country is riddled with these types. So many people look for ways to spend their money rather than look for ways to save their money. It's a mindset. And I've noticed it's a mindset that is hard to change. This mindset I speak of is rooted in indulgent thinking and feeling like things are owed to you. Barf. I don't feel education has much to do with it. I used to think it did, but I'm feeling differently about that now. Some of my most "educated" friends who have these "high-powered, impressive" jobs probably don't have many pennies to their name despite drawing a large salary b/c they reward themselves constantly with material goods and posessions. Other people I know make a more modest salary and live accordingly while focusing on saving & they are not necessarily the most educated of my "circle." I do think how you were raised plays into this a lot. I also think the social circles you run in CAN influence you. It's a sad trend that is becoming more and more prevalent in our country. I feel as though many adults don't have a dime to their name if you were to REALLY look at the nitty gritty.
I'm not talking about the actual impoverished people, living on (legitimately obtained) SSI, living on the street, or barely-able-to-put-food-on-the-table people. But a lot of people I know (and know of) with "lower" incomes seem, in my opinion, to waste a lot of money.
I don't want to fall back on "well it's an educational thing, and if they had a better education, they would be better with money." Because that's really not true. Lots of these people I see wasting money have a college degree, some even have a Master's. I'm seeing people with various levels of education spend their money in ways that seem wise and ways that seem unwise. To me, "wise" means "in a way that will increase wealth" and "unwise" means "in way that will decrease wealth, or that can be dangerous."
I have some co-workers/employees at my company who only earn like $13 an hour, but they have fancy manicures, and the newest iphones. I recently heard one of them (whose salary is in the 29,000-32,000 range) talking about having a $300/month car payment. Another person who I know earns only about $45,000 has a Mercedes SUV that goes for around $90,000. Where are the priorities? Do they save or invest anything?
Again, it's really a value judgment on my part, I know. But some things people spend their money on, are really, in the empirical sense, a waste. Right?
Cigarettes
Lottery tickets
Expensive clothes/shoes/sneakers
Manicures/pedicures/expensive hairdos
The latest entertainment technology (last year's technology is unacceptable)
The highest price cable TV package & pay channels
Tacky "collections" that have no value
Casinos
I saw one of those shows about people who have won the lottery, and wasted all their money, and I was kind of shocked. And then I thought about people I know who play the lottery, and how they would likely waste their money in that way too.
Even when it comes to collecting, you can see big difference between people who are wise and the unwise. Collecting is a hobby that is purely for the purpose of investing in objects that you enjoy, and that will hopefully go up in value over time. So you might collect antique gold jewelry, rare coins, pieces of art, antique guns, early bicycles, even vintage advertising signs, etc, and those will largely increase in value over time. But the people on these "lottery" shows, and some lower-middle-income people I know, will instead invest in new objects that are labeled "collectibles" and that will never increase in value. I mean, Beany Babies were the prime example of this in the 90s, but there are many more examples. On one of those "I won the lottery" shows, the person spent tons of money on a collection of comemorative plates, with portraits of famous people on them (like John Wayne, race car drivers, Elvis, Gone With the Wind characters). The guy actually believed that these were going to go up in value, and he or his wife actually called the plate collection "our nest egg" or "the kids' college fund." It was so pitiful that they really believed this.
I'm in the middle-income range, and I'm somewhat frugal, but not overly so. The wasteful things I spend on are wine, eating out for lunch when I could pack a lunch, and stuff for my pets, and maybe a bit too much on books (I like nice hardcovers instead of paperbacks). But I only spend money on those things when all my other bills are paid, and I have put away some money into savings. Then the remainder, I allot for those wasteful things that I like. But if I were to hit hard times, those would be the first things to go. I know people who will keep spending on their "vices" and wasteful things, and let bills and necessities like saving lapse. I know people who have almost the exact same salary as I do, but they are always broke, have lots of debts, never give to charities, but somehow just got the newest iphone or drive a brand new car. If they have some kind of emergency, like they suddenly need a new heater or roof, or they lose their job, they have nothing to fall back on. They spend in a way that will make them poor.
I do buy higher-priced clothes, not because of designers or names, but because I make my clothes last a looooong time. If they are good quality and a classic style, I can still wear things I bought 10 years ago (or more!) I also do that because I hate shopping, so I don't buy clothes that often. I know people who shop every week or two, and blow money on fashions that will be out of style next year, or that are so poor quality, they will fall apart by next year.
I'm not perfect, and I'm not holding myself up as some ideal of wise spending (I do have that wine and book habit) but I do feel like I have to be a bit judgmental (silently) when I see people waste money really unwisely.
What do you see people wasting money on that you just don't understand? Do they spend money on this stuff while not putting anything into savings and/or building up debt?
I honestly think that if you could magically give every person in the US, rich, poor, or in the middle, $100,000, that after one year, they would all mostly be in the same category they started off in: rich, poor, and in the middle. Maybe very few (I'd like to think I would be one of them) would invest it wisely and move up a few notches, permanently. But the rest would be right back where they started.
Sorry for the length, but this has been nagging at me for some time, and just sort-of crytallized today.
Maybe because they are already poor.Poor people spend money .Rich people economize
I have a soon-to-be-ex sister-in-law who has more-or-less has always been broke. But any time she ever made a big purchase, she always said either, "I've always wanted one" or "I deserve it," and never "I can afford it." She's bought horses on impulse and justified it by saying they'd eat the grass on the land around her parents' falling down house. Never mind all the expenses associated with them, etc., etc. She also quit a steadu job with beneifts for a sounds-too-good-to-be-true job offer that turned out to be...too good to be true. That triggered a long line of financial difficulties that has lingered for years.
So yeah, some people do seem to contantly be shooting themselves in the foot when it comes to their finances.
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