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Nidody likes the poor, especially politicians. But look at the "Silent" generation. They grew up during the Great Depression, most in poverty. And they have done better financially than any generation before or since. Perhaps poverty actually taught them good money management.
I have no idea why someone blows thru the money. I have a sister in law that will blow thru her tax return in about a month and she gets maybe $5,000 back. I keep trying to tell her to adjust her deductions so she can have the money during the year and stop giving the IRS and the State of California an interest free loan. She has never understood this and thinks to this day that the Government is giving her the money and she is 59 years old. She has no retirement, has made poor choices all the time, the only thing she owns of any value is a flat screen TV.
I can not figure what she spends the money on. During the year she struggles to make ends meet and many times is at our home doing her laundry because she can not afford to wash her clothes at the Laundromat. Many times we pick her up from her way home from work and ask her if she wants to come eat at our home. Not that I mind any of this. I would think that if you had an extra $5,000 each year you would set that aside and use that during the year.
This is all lifestyle and what someone is willing to do to get out of a bad position. Take my sister in law. We have offered to help her get a better job at the hospital where we work. She would make $5 more an hour off the bat and have benefits that she does not have right now. Her problem though, is more than likely she would need to pay more in rent. She has subsidized rent because of her income. If she went to get a second job it would be the same thing, they would require more from her and it would not benefit her.
I am not going to say that poor people are lazy, I am going to say that they are used to living in a situation that our Government has created. I can see why many would not want to do anything to change their situation. Why give up all that free stuff for a better life.
For those that do leave poverty they need to be willing to do something. I did not exactly grow up with wealth or poverty. I did grow up knowing that if I worked hard I could get what I want. I have worked more than one job at a time or did side work, or anything else to get additional money. I also along the way learned a trade. I am a locksmith and could set myself up with plenty of work if needed. When I started at the hospital almost 20 years ago I would do work on the side as well. I had a customer base of Doctors offices that I did work for. Other people and business operations used me. As my responsibilities grew at the hospital and my income increased I wanted to use my time away from work with my family. For me I am done with extra curricular work. No side jobs for me.
Getting wealthy is not hard though. No luck needed to get wealthy. The younger you are the easier it is. Young people have time to grow wealth. I read one article that stated you can grow a $200 a month investment into over $5million in 60 years. People are certainly living a lot longer these days.
Let's be realistic though. Not too many people that want to wait till age 80 to retire I am betting.
So lets say that you save $500 a month for 40 years. You won't have 5 million but you will have $1,700,000. at a conservative 8% rate. (I am averaging 12% on my money so I see it happening)
Lets say that I suddenly had $75,000 extra dollars sitting in my bank account. What would I do with the money.
My options for extra money:
1. Emergency fund, or fund a years income. We are always growing our fund as it is.
2. invest it in the market. If you don't understand the market find a financial planner that will help you with your goals.
3. If I had a money making idea I was working on I would use the money to get things going.
Pay down debt is an option if I was holding high cost debt then that would help. I am not so I don't need to pay off a high cost card. Once you pay off debt you lose he ability for growth that the money might offer you. Paying off debt is something that I would suggest that happens if you are don't understand the market or have no idea on how to start a business. Always helps to pay off debt.
Last edited by SOON2BNSURPRISE; 12-10-2017 at 01:30 PM..
There is no even playing field. Some people are super smart, some people are great athletes, some people are persistent. Some people just make excuses. If you are in a situation surrounded by people going nowhere go somewhere else. Get a mentor. The problem is not luck part of it is our educational system does not show people these things and they should.
I certainly didn't claim there was an equal playing field. Quite the opposite. I also didn't say anything about excuses. Your response is a non sequitur in regard to what I posted.
Children can't "get out of their situation," if they "don't like" where they are or the people they're surrounded by. And that's when these behavioral patterns are learned via exposure.
I'm still waiting for someone to tell me how a poor person who inherits $70K should spend that money - realistically - in a way that is not considered "blowing it."
I for one, would never invest in the stock market. I've personally known hard working people who invested, who lost every dime, and they were relying on "good" advice from professionals. Their life savings - gone.
So, you can never assume that putting $70K into the stock market will actually produce profits.
Banks aren't paying any interest - so, there's no payback there.
And, how much does this theoretical person have to pay in taxes on this windfall? Probably 50%? Now we're talking about $35K.
So, how should this person spend that $35 in a manner that wouldn't be considered "blowing it?"
And do we assume they don't have any debts? Nothing needs to be fixed like a roof on their house?
What, exactly, are the parameters for the definition of "blowing it?"
I paid off my car, which was purchased with a too-high interest rate. I'm sure I saved myself thousands as I had four years left to pay on it, a long-ago bad decision.
Ran the wheels off that car, with no payment, for years. Got a very good trade in 4k - zero interest rate this time - so I did ok with
Mom's money. She hated debt and I think she would have approved the use of the money.
Same here; my mother actually began "helping" my only sibling out of financial pinches, giving me the same amount (not much) to be fair. His wife spent and wasted his share; I invested mine by adding to my own savings to pay off my first property and then buy - with cash - rental properties. He still struggles, thanks to his wife's spendthrift ways, while I'm reasonably financially secure. (For the record he, too - coming from the same family - was frugal/savvy until he married).
Just goes to show: with some people, without a change in their ways, any gift is literally throwing good money after bad.
I'm still waiting for someone to tell me how a poor person who inherits $70K should spend that money - realistically - in a way that is not considered "blowing it."
I for one, would never invest in the stock market. I've personally known hard working people who invested, who lost every dime, and they were relying on "good" advice from professionals. Their life savings - gone.
So, you can never assume that putting $70K into the stock market will actually produce profits.
Banks aren't paying any interest - so, there's no payback there.
And, how much does this theoretical person have to pay in taxes on this windfall? Probably 50%? Now we're talking about $35K.
So, how should this person spend that $35 in a manner that wouldn't be considered "blowing it?"
And do we assume they don't have any debts? Nothing needs to be fixed like a roof on their house?
What, exactly, are the parameters for the definition of "blowing it?"
People that lose in the market 99% of the time are investing in something that they do not understand. I was at a party a week ago and someone was mentioning Bitcoin and how they had invested in it. Bitcoin is going to make a lot of people upset. It is down and it is up. It is all speculation and is no where near being a currency of any kind. This is exactly the kind of investment people end up losing money on.
For those that have no idea what to invest in the best thing is a fund where they take a basket full of stocks all combined and you let that ride for 30 or 40 years. You put money in as you go. Liken this to what is offered in a 401K or 403B.
In a fund that follows the S&P for instance over any long period of time you will always come out ahead. Take any 40 year period and see how things turn out.
Persistence is more important than luck. I have failed more at starting businesses than succeeded. Especially early on.
The opportunities are there. Especially if you are a person of color. Go to school, get at least a BA. With that you can be out of poverty. You don't have to start a business. There are lots of scholarships out there. I attended this past June a graduation of a friend of mines daughter. She attended a major university and got a scholarship partially because she was Hispanic. Now she is in the workforce with a good job. They had a ceremony just with the students who got the same scholarship and graduated. Only about 40% of the students who got the scholarship graduated. Is that luck? No some people put in the effort some make excuses. The scholarship was provided by a local employer who's CEO started out in a tough situation and wanted to help others.
To reduce success to luck is very offensive to me. I worked 70 hours a week at first to get things going right. To say it was luck or some favored treatment is not true. Persistence and hard work made it happen.
There is no mystery or luck to someone getting out of poverty. It depends on the individual.
And how do you pay for that BA if you have no money? Trust me, not everyone gets a scholarship or a grant. And what happens if you are born and raised in the inner city? You could be the most motivated student there but if the school's standards aren't up to college standards, how do you get into college even if you can afford to pay for it or get a scholarship?
As for school, if you had a learning disability that got attention, that's lucky for you. If you had a quiet place to study and do homework, that's lucky for you. And if you had parents that encouraged you and cared about you and cared that you got an education, that was also lucky for you and that started you out head and shoulders above a lot of other people.
Sure, you can say some people manage to beat the odds and go on to be successful. But that's maybe one or two out of how many? Only one or two people a year win the lottery, too. What about the other thousands of kids who aren't lucky enough to start with what you started with and need help?
Do we just throw them in the water and say if they can't learn to swim on their own they deserve to drown? Because that's what we're doing and we're losing thousands of kids a year who could be first class swimmers if someone would just teach them the basics instead of telling them that hey, Joe Blow learned to swim on his own, so you can too. Nobody wants to talk about the fact that maybe Joe Blow just got lucky and figured out how to do it himself before he drowned. Could be Joe Blow really never did learn how to swim. Maybe he walked to shore on all the other floating bodies.
Yes, it's still blowing it because you can spend 1/3 of that amount on a decent used car that will last you 10 years.
Correct. It isn't that much, which is why you don't go out and spend 36K on a car with it when you can still get a nice, reliable car for much less.
No, it won't. But that's the kind of binary black/white thinking that gets people in trouble. First off, I'd have about 55K because I would've spent 15k or less for the car. (I just bought a nice 2 year old used car a year ago for less than that, so I know it's possible). Now 55k isn't rich by an stretch. But depending on how much time someone has it could be a major contributor to their wealth. 55k invested at 8% is $387,000 in 40 years. That's a long time to wait. 55k invested in a dividend oriented stock fund such as Vanguard High Dividend Yield Exchange Traded Fund would pay out about $1573 a year in dividends. And those dividends typically increase over time. But you could certainly supplement your lifestyle with an extra $1500 a year.
I think your point about poor people starting off in the hole is well taken. The problem is, even after they've gotten some of the things they really need (like good dental care), they often do a lot of things that hurt themselves in the long run. Yeah, they may need a car, but they buy the $35K new car instead of the 15K gently used car. They don't shop around for that dental work as hard as they would if they had saved the money for it themselves. And maybe they just blow it on totally unnecessary stuff.
The bottom line is there's a lot more to eliminating poverty than just giving poor people money.
It costs a lot of money to be poor.
Poor people generally have bad credit, which means higher interest rates. Higher insurance rates. Higher well, everything.
This may not apply if you pay cash, but the higher insurance premiums do.
How do you expect poor people to know anything about the stock market?? Many people invested in 2008 and saw their investments disappear.
Quote:
Originally Posted by Listener2307
I think it's genetic. It's what I call "The Fatal Flaw" - that inability to keep your hands off the money.
And most people have The Fatal Flaw.
It can be overcome, but I do think we are born that way.
I wasn't. Even when I was 11 years old and delivering papers, I always had a couple of dollars left the day before every payday.
I am comfortably retired now.
Well, that is discouraging.
Poor people on the system are penalized for trying to better their lives. If you are living on HUD, you are penalized for making more money. If you make more money, that diminishes your benefits. Good! you say? Well, no. The increase in income can be very small from minimum wage to say, $9/hr. But the benefits cutback is drastic. The person is not making enough to become self-sufficient, but are making 'too much' to stay on the system. So, they say "**********!" and drop the $9/hr. job.
Do you all know any poor people in real life? I get a sense some of you are posting from Ivory Towers.
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