What do the wealthiest know that others don't?
slate.com
slate.com
The 22-year old out of college who needs a place to sleep doesn't need to save up for a mattress that will last them 10 years... they need a place to sleep. Especially when (unlike the article) you stop to consider other factors besides money. With "disposable" furniture/goods, you almost never need to take it with you when you move, as a 22-year old does frequently. This is an extreme example, but if the difference between a couch you'd want to keep and a couch you'd leave is $200 and the cost of the move is $200... it's actually a wash.
The middle aged parent taking care of multiple children with a poorly paid job isn't saving up for a nice couch. They're watching their family couch slowly disintegrate and they're getting years beyond what the author of this article might consider "useful".
I love the tech community for all it has given me, but the political and socioeconomic views of so many of its inhabitants ([redacted] in particular) who were born on third and told they hit a triple give me the creeps. Poor people aren't poor because they're stupid. They're poor because they don't have a lot of money, and the root causes of that can be as varied as anyone's individual life. Articles like this suggest that 500 words and a subscription to Slate can stand in the way of each and every one of those root causes.
The only valuable thing from this article is to avoid debt, beyond that there's not much of substance here..
The real "stupidity" which causes so many people to remain poor is depicted with that BMW guy in the article. It is about trying to maintain a lifestyle that is beyond your means.
That said, for those with children, I can understand the purchase. Overall it's very circumstantial.
1. Student loans: There was a story floating around of how a family co-signed on loans for a child and then were on the hook for said child when they passed away.
2. Family: If you have a kid, get life insurance. You should have the ability to leave the living with a sum of money to ease the burden of your absence. This means the loss of income and life adjusting to a one-parent family, not meaning that there is a pile of money to blow.
Do not say it is not affordable, grab a term policy that gets you to 65 and then be comfortable knowing that you have one less thing to think about.
For those who claim it is too expensive, a million dollar , 30 year term-policy for non-smokers is as follows:
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| Age | Sex | Monthly Cost |
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| 25 | Male | $55 |
| 35 | Male | $66 |
| 45 | Male | $160 |
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| 25 | Female | $45 |
| 35 | Female | $55 |
| 45 | Female | $120 |
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I am using this as a public service announcement, get life insurance.
I dont consider life insurance 'wealth'. Its a safety net that nobody should look forward to, but unfortunately a lot of people do. My wife has a wealthy grandmother and every one of her children are all drooling at the moment she passes away. I can't stand all the end of life bickering that goes on and the way I read this article sounds like it would perpetuate that more.
From seeing how rabid her family gets about money, I would rather be poor than deal with all the greed involved with such large policies. I believe that a policy large enough to pay off the deceased's debt and leave some extra money to help support the family is fine, but way overshooting for too large of a policy is asking for trouble. Backstabbing, lawsuits, etc.
Sorry for the rant. I just regularly hear my wife talk about all the selfishness her aunts and uncles display constantly and I cant stand it.
Sorry to dissapoint, but inheritance is how a lot of wealth gets passed around generations. No one 'waits' for their family to die, but they will eventually. That given, on any given I would like to see my kids rich by leaving behind an inheritance.
All of these answers assume the 90% is ignorant, short-sighted, and bad with both money and math.
Newsflash: The 90% includes the entire middle class, and not everyone who is poor is such because they are bad with money.
What I want a citation for is:
> There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly.
What I want is definitive proof that, as claimed, most poor people in this country are poor because they manage their money poorly.
> There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly.
Where in that sentence do they say 'most poor people in this country are poor because they manage their money poorly' ?
That's a good start. "There are a lot" may not mean most, but it doesn't absolve it of providing some proof.
> There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly.
I want a citation on that, that's all. I want a statistic on how many people who live paycheck to paycheck live that way solely because they manage their income poorly.
Again, the notion that everyone could be rich if they only worked harder is asinine, and frankly pretty offensive. This comment supports that notion by equating living paycheck to paycheck with being bad at managing income. I want statistics, I'm tired of that opinion.
What I want a citation for is:
> There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly.
What I want is definitive proof that, as claimed, most poor people in this country are poor because they manage their money poorly.
Honestly this is all it boils down to.
Having a higher income does make it faster to accumulate wealth but even the "poor" can accumulate considerable wealth over very long periods of time (think 30 years) if they are willing to sacrifice their standard of living.
A penny saved is certainly a penny earned, and saving is better than spending it all immediately. But if you're lower-middle-class and your goal is to "be rich" then you'll need some way to get more money not just spend less money.
One could make a case for that. A lot of people are really bad with money. The tragedy is they don't know it yet, or do not really understand the consequences of their actions on the long term. Its hard to define 'bad with money' because many people don't exactly classify their actions as such. Which is why some one calls out such activity, people feel offended because they never thought their spending patters could be considered irresponsible.
Spending cash on cameras and expensive lenses which you are not going use, eating out regularly, spending on vacations, changing phones often, cigarettes, alcohol... the list is endless. There is always a need every week on which you could spend $100 here and there. Without a way of tracking your habits, looking at it and extrapolating it over the long term you would pretty much believe that you are doing nothing harmful to your finances at all!
Now some body else is probably saving up and investing all the time and is likely to come out on top by a very huge margin. The very same people in the former category will end up calling such a person greedy.
Self reflection is hard because it destroys you, fixes the center of blame on you, you run out of excuses all when you realize it was all your own choices and actions which bought you to where you are.
But what will you sit on while you save?
(Note: I haven't read the article yet, I'm planning on doing so, and I generally agree with buying nicer well made things, BIFL, but sometimes it's easier/cheaper to buy something you know will be ruined and you won't care as much).
So, IKEA furniture? /joke
Another factor people are ignoring is that furniture durability is not the only criterion of how long you get to keep your furniture. If you're in an unstable living situation (which renting often is, especially if you have to share), then you may end up having to move at short notice. I know a couple of people who've had to ditch everything they couldn't fit in a large car as part of a move; bed/table/wardrobe/chest of drawers stuff. Fortunately it was all just cheap melamide.
Couches are an even worse place to invest in quality because of the risk of damage from spills, pets, and kids.
BTW, good leather couches hold up quite well from spills, pets and kids.
People seem to think that poor people can't manage money; but the fact is that they're maximizing quality of life for the income level they have.
What the rich understand that other people do not understand is that marketing is the means by which businesses separate you from your money and until you understand this you are likely to over spend as well as buy what you truly don't need.
Look at Apple, forums are replete with people trying to scrounge up money for the latest phone, tablet, or laptop. The idea of where you shop has become this generations version of the previous generation of what you drive and where you live.
tl;dr The rich understand the power of marketing and not to be susceptible to it
Generally speaking much better to buy used while saving for quality new products. But everyone has their own priorities.
Befriend those who are already wealthy. Emulate them.
Befriend people who are on the fast track and believe in loyalty. Be very useful to them. Help them rise.
Invest at least 25% of your income.
Get out more. Talk to more people. Increase your opportunities to get lucky.
Eliminate toxic people in your life (you can help them later if you want).
And, don't burn bridges.
Edit: forgot one - dump bad investments (and places, people, etc.) quickly
Ah, yes, immigration. Very topical.
Oops I was born in a small poor suburb outside of Pittsburgh and barely make enough each week to feed myself and pay rent, where am I getting money to move?
> Befriend those who are already wealthy. Emulate them.
> Befriend people who are on the fast track and believe in loyalty. Be very useful to them. Help them rise.
This entirely depends on living in an area "wealthy" people would live. In my hypothetical poor suburb the richest guy is the guy who owns the only bar within a drive.
> Invest at least 25% of your income.
I make $1200 a month post-tax. In any given month:
- $500 rent
- $50 car insurance
- $200 food
- $80 enjoyment ($20/week)
- $75 utilities
That leaves me with $295 for everything that's a non-essential in my life. This is a flat tire. This is a doctor's appointment. This is medication. This is Christmas gifts. This is a leaking roof. This is a broken stove. This is money that I need to be liquid every month, you suggest I invest all of it? I probably wind up spending this money just to get by, it's less than $75/wk for expenses outside of a pretty barren lifestyle.
> Get out more. Talk to more people. Increase your opportunities to get lucky.
Again, this is entirely dependent on there being people of value in my immediate vicinity.
> Eliminate toxic people in your life (you can help them later if you want).
> And, don't burn bridges.
Believe it or not, these are the only valid points you've made to apply to my hypothetical life... And this is for a single person who makes 15000
And 'wealthy' is relative. There's always somebody better off. And you can contact people all over the world these days, with something called the Interweb.
I'd rather say don't trust anyone with your money other than yourself. The insurance (like anyone investing your money) will take a nice chunk of everything it earns and if something is left (a big if in times of zero or negative interest rates) you might get it.
Can anyone explain the math and/or logic behind this to me?
What the author didn't explain is that life insurance is a way to avoid inheritance tax. Depending on circumstances, it's cheaper to pay an absurd amount of money for an insurance policy, because the payout to the beneficiaries is taxed differently than a straight-forward inheritance, and thus might, after taxes, result in a better payout.
Assume they have paid of their debts, maxed out their 401k and Roth IRA contributions and they have extra money to invest for retirement. If they put it in the stock market they will pay income taxes and any dividends they receive, which they don't have to pay any taxes on life insurance so I see that. But it still seems to me that life insurance is a bet on when I die and if they are not dependent on my income I don't see why they would want to take that bet.
I am 57 and I can get a 20 year term-life insurance for $5k/year with a payout of $250k. If I outlive the policy that is $100k in sunk costs and the next term life policy will be even more expensive.
Whole life makes even less sense at my age. The only way this makes sense to me is that if you had a whole life policy that you started wen your kids were younger and now you are retired and can't afford the payments do you cash it out? Well, if I cash it out then maybe I end up spending it or the nursing home gets it, but if my kids take over the payments then they get the benefit (unless the nursing home still takes it.)
This still assume I bought whole-life 20 years ago which everyone at the time told me was a sucker's bet so I'm still not sure that this makes any sense.
Where's "how to scam low-income folks out of their money with cheap useless crap" on the list?
This is someone whose business model is literally marketing shitty, unnecessary products to low-income folks via infomercial advising purchase of "quality goods".
Most people use their money for themselves. They use the money to pay for food, clothing, and cars. If they get a pay raise, they use the additional money to pay for better food, better clothing, and better cars. They don't see the money as capital to build products and services people want.