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That average payment is for all Americans, not just working-class. The bottom 20% of American households spends only $3559/year on transportation (overall, not just on car payments). So either their car payments are much lower, or they just don't own many cars, but in any case they don't have many $500 car payments to forgo.

http://uk.businessinsider.com/how-high-income-and-low-income...

I can't find a way that $500 per month adds up to "multi-million dollar net worth". Even at a very optimistic 10% return rate, it comes to just over 1.1 million over thirty years. What assumptions are you making in your calculation to come up with 2million+ at retirement from $500 per month of savings?

$500 a month is $6000 a year. $6000 a year invested from 26 to 66 at 10% interest per year is $2,921,110.87. At 12% it's $5,154,854.34.

Keep in mind this is just from a single decision the average person is making.

And isn't that 10% and 12 % growth assumption the reason all pensions are in trouble?

Just for clarification, where is 10% interest coming from? Mutual funds? 401k? Something else?

Serious question, I am not financially knowledgeable but I know you'd never get 10% interest in a savings account (for example).

Mutual funds / index funds / real estate

WTF kind of fairy land is this? 10% is already a dream, but at least it's a round number, unlike the 12% you just arbitrarily threw out there.

So you're expecting people to make 10-12% in after-inflation returns?

Making 7 to 10 percent after inflation is possible and it is sufficient to amass more than 1 million dollars by retirement just from changing this one habit. The point was that the average financed car is worth a massive amount in opportunity cost.

Ok so you're assuming 40 years instead of 30. That's where the discrepancy is. Thank you for clarifying.

Yep. You can also assume 45 years if someone starts working at 20 and retires at 65.

Not many places offering 10% ROI to people who can invest $500 a month.

So invest it as $6,000 per year. Doesn't have to be $500 per month.

... and how is spending $0 on transportation a reasonable solution, anyway?

It's not. Even if you walked to your job. The additional money you would pay in rent / time / uber is not worth it. Just buy a car unless you live in an actual pedestrian city.

In order to finance a dollar of monthly spending, you need roughly $300 invested. Actual returns are generally somewhat higher, due to requiring a lower amount of variance to handle sequence-of-returns risk in distribution, but the rule of thumb holds. Which suggests the car-buying habit puts you roughly $150k in the hole.

> Americans also need to do better

Blaming any problem of this magnitude on individuals is not reasonable.

There's a systemic pressure toward overspending through advertising, etc., and we've created a society where many people make an amount of money, that, if spent "wisely", procures a stressful and unfulfilling existence.

Clearly Marxism is not the right solution: our system isn't inherently and completely broken, but it needs adjustment. I think Piketty has the right idea. A progressive tax on capital would do a lot to equalize this inequality — if we could ever amass the political will to implement it — though it wouldn't correct our current situation where everyone is constantly manipulated to think they'll be happy if only they buy this one more object.

> Blaming any problem of this magnitude on individuals is not reasonable.

This is just anecdotal, but I see this a LOT. The stubborn insistence that blame is paramount in any discussion and that the world should be made fair before action can be taken to improve one's life is a pretty substantial barrier to said improvement. Sometimes the deck is stacked, and working on unstacking the deck can happen in parallel with reacting to the world as it is now. Out of college, I had friends who made half as much as me and spent twice as much; income aside, we were both exposed to pretty much exactly the same environment, and somehow we made purchasing decisions that were completely swapped from what you'd expect. As the parent comment said, "Amazon needs to do better" too, but putting personal behavior outside of the realm of control of the individual isn't helping anyone, it's harming them.

I agree with your general point that simply wishing that people would do better for a behavorial issue at this scale is unlikely to do much, but I don't think that's implied by the GP comment's suggestion. There have been successful campaigns to cause large-scale behavioral shifts before[1], and recognizing personal choice as a potential mechanism of improvement doesn't mean we can't approach the problem in an intentional, structural manner.

Just an aside, but in all of this I'm taking on faith the power of advertising that the HN community at large seems to consistently think that we're helpless before; this has never been my experience; I don't care much about ads, I don't see any mechanism in which they could drive my purchase decisions, etc etc. To wit, I buy the cheapest option (that I haven't already tried and disliked) for cheap items and extensively research medium to high priced ones. There's no question that brand advertising affects my level of brand awareness, but it's _really_ not difficult at all to remove that factor from your purchasing decisions. If anything, my prior would be that all the people who blindly purchase based on brand awareness are shifting the value prop towards brands that are _less_ well-known, since theoretically they need to compete on something else (price, features, quality, whatever).

[1] Spend any time with Europeans and you'll appreciate how impressive the American anti-smoking campaign was.

I think my actual position here is a little more nuanced than it came across before, and I pretty much agree with you.

I find it silly to blame individuals (if only they would do better!). The law of large numbers applied to these cases guarantees that there is a systemic issue, not an individual one — however — I think this sort of "you all should do better!" campaign can be a perfectly viable solution to a systemic issue in some cases, if it can effectively shift enough mindsets to turn a cultural tide.

Blame is a ridiculous concept when talking about large-scale social dynamics, and effectively shuts down the search for any systemic adjustment that would constitute a fix.

Thanks for the response. I guess my main point of contention was assuming that the GP commenter was saying that it's 100% an individual blame problem, when that's belied by "Amazon needs to do better too".

> Blame is a ridiculous concept when talking about large-scale social dynamics, and effectively shuts down the search for any systemic adjustment that would constitute a fix.

I agree with you. Frankly, I rarely find the concept of blame to be all that useful for improving matters. For an example from the other side of the politically-coded spectrum, terms like "victim-blaming" are most often used as thought-terminating clichés, selectively applied to avoid having to justify one's point. For example, telling women not to dress provocatively when going out and telling tourists to keep their passport close to them and watch their bags are both just as "victim-blaming" as the other, but only one of these is given that label. (FWIW, the reason I disagree with the former and agree with the latter is that being able to dress as one pleases is a lot more core to my conception of fsirly fundamental rights than being able to avoid paying attention to one's belongings).

The people who whine about systemic causes will never admit that there's elements of personal responsibility in these choices.

Personal responsibility on a large scale is a systemic factor. It's like quantum and classical mechanics. A single quark has probabilistic behaviour, but a million quarks behave in an aggregate, predictable way. You can tweak personal responsibility en masse through new systemic inputs, but I don' think personal responsibility nor individual blame map well onto discussions of issues involving large groups of individuals.