Hacker News Reader

Comment by jellicle | Hacker News Reader

There are a couple of good parts about this post. The first is the HN comments, which are an unintentional fountain of hilarity. But the second is the assumptions.

50% of the US population can't afford to put even a dollar into any sort of investment security. Of the 50% of the public that does own some sort of security, most of them are in the three-figures range. This index card, without realizing it at all, has targeted itself towards the top 10% of the population: people who have jobs with 401Ks, people for whom Roth IRAs will be useful.

In other words, if you are well into being one of the richest people in the richest country in the world, here you go - save 20% of your income, and so on. And you'll be fine!

So I'm just curious: suppose you aren't?

View on HN

The percentage of US workers with access to a retirement-benefits plan is 71%. 57% of all US workers participate in such a plan.

(Source: U.S. Bureau of Labor Statistics, 2009 National Compensation Survey, http://www.bls.gov/ncs/ebs/benefits/2009/ebbl0044.pdf)

In Table 2, it says that even 15% of the lowest income decile - people making less than 90% of workers - find a way to participate in a retirement plan.

Here's a more detailed writeup from the Bureau: http://www.bls.gov/opub/cwc/cm20100520ar01p1.htm

Meanwhile, the "top 10%" of households earn $135k per year or more, while the median income is around $50k.

(Source: http://www.economist.com/blogs/dailychart/2011/09/us-househo...)

Anyone making over $60k per year could (in theory; this is a highly abstract argument at this level, of course!) save 20% of their income without dropping below the median household income of $50k; households making over $60k per year appear to constitute 32% to 40% of the population, if I read this Census Bureau chart correctly: https://www.census.gov/compendia/statab/2012/tables/12s0690....

None of which says anything about the effectiveness of 401k plans, or anything else. But if you're going to handwave about numbers it's nice to hit the right order of magnitude.

20% of $60K is 12K. Or, put another way, 80% of $60K is $48K.

$48K is below $50K.

Your math is wrong.

> Anyone making over $60k per year could [...] save 20% of their income without dropping below the median household income of $50k.

20% of 60k is 12k, 60k - 12k = 48k. So no, the claim isn't true for the most trivial of reasons.

Nitpicking, 48k is close enough for the point to still be valid.

You are technically correct though.

> 48k is close enough ...

Mathematics is the one discipline where "close enough" isn't close enough. :)

Technically correct again but in this case it really is close enough :).

It says it has all the financial advice you could ever need, not all the advice you need right now.

Poor people: save money and pay off credit card debts. Middle Income And Above: do that + other rules.

And saying poor people couldn't save even a dollar is nonsense. Poor people are not 100% optimal in their spending and financial matters - often quite the opposite. Furthermore, poverty is often something people grow out of (the poor skew young), and this has some good advice for doing that faster.

Stop making a useful article out to be some elitist hogwash.

> Poor people: save money and pay off credit card debts.

So, "poor people, get surplus income".

Or, equivalently, "poor people, stop being poor".

> And saying poor people couldn't save even a dollar is nonsense.

If you can reliably meet the requirements of life without charity or depletion of reserves, you arguably aren't meaningfully poor. Poor people can save sometimes, but that's mostly saving a reserve for the bad times that will come (usually fairly soon and frequently), not net savings over the long term.

No. Poor people cut out non-essentials, be more efficient, and save money. A lack of nice things now will help later.

Buy cheaper clothes, stop smoking, stop drinking, eat out less, don't have a fancy car...etc. Don't live beyond your means and consider your means what allows you to save 20%. Exactly what I'd have to do if I wanted to save more money. Stop pretending like poor people are all dizzy starving idiots that can't do a damn thing to better their condition. People tend to live up to their expectations.

> No. Poor people cut out non-essentials, be more efficient, and save money.

If you have surplus income after paying for essentials, you aren't poor.

Is someone who decides to live in the wilderness poor? No steady source of income, access to medical care is remote and non-trivial. But, on the other hand, they may have a small savings account.

I think it's still being poor, given the insecurity. Even if it's a conscious and choice they made but could work out of.

Then you'd be amazed at what the government defines as "poor" now. Using data from the Census Bureau, the Department of Energy, and many other federal agencies, see this detailed report (tons of charts, numbers, and links to sources).

http://www.heritage.org/research/reports/2011/07/what-is-pov...

You may be surprised to see "poor" households usually include:

* the usual money-saving appliances (fridge, stove, microwave, coffee maker, clothes washer, dishwasher)

* plenty infotainment (2-3 TV's, DVD, VCR, stereo)

* money-draining luxuries (cable / satellite TV, xbox subscription, smart phone)

Yes, the last items are luxuries, if you're going to complain about poverty. Heck, I'm middle class and I don't have any of those three.

Let's talk about food, too. From the report:

Temporary food shortages have increased during the current recession but still remain atypical among poor households. During 2009, less than one poor household in five experienced even a single instance of “reduced food intake and disrupted eating patterns” due to a lack of financial resources.[26] Strikingly, only 4 percent of poor children experienced even a single instance of “reduced food intake and disrupted eating patterns” due to a lack of financial resources.[27]

Regrettably, most discussions of poverty in the U.S. rely on sensationalism, exaggeration, and misinformation ... an effective discussion must be based on an accurate assessment of actual living conditions and the causes of poverty.

----------

This is all to say, with concrete data, that people we consider "poor" tend to have the essentials and then some.

> Then you'd be amazed at what the government defines as "poor" now.

What the government defines as "poor" is irrelevant to the substance of the criticism being raised here. Words have different meanings in different contexts.

I could not agree with you more had I said those words myself.

A year ago I had a great job as a sysadmin, then I got laid off. Shit happens. I got a job doing landscaping for $10 an hour til I could find something better, and when winter came I worked in a restaurant serving people in the city.

What did I do? I stopped eating out and put my cooking skills to use saving money by eating in. I cut out cable, lowered my Internet speed and got Netflix. Got more conscientious about power usage.

What did I learn? At that job I both cooked and took orders in a 24/7 setting in a large city. I saw wealthy executives and immigrant Somalians alike buy food. The one thing I took away from that is that poor people stay poor by making poor decisions. Pun. Intended. When you walk around buying lottery tickets and junk food, wearing bling bling, smoking a pack a day, and clubbing every night, of course you're going to hit a financial hurdle.

My advice? Exercise that section of your mind we call common sense. Shop smarter. Do some math. Skip the club. Stop smoking. Put that on a 4x6.

That's not being poor.

Try earning federal minimum wage and providing for 2-3 people. You cut the crap out early. But your car that you need to get to work still breaks down. Your SNAP (don't know what they are? you've never been poor) benefits still run out too soon. And you and your kids still get sick.

That notwithstanding, what advice would you naysayers like to see on this card for poor people? Is there anything that simply knowing is going to help them?

This card contains all the major points of advice a poor person can use about finance. Whether that is enough to save them is a completely different question. Raising it is not a valid criticism of this card.

For poor people, there's basiclayy

#1 Convince all the rich people to do the last item on the card from the original article

#2 Try to get your kids to do something different than you, if you're earning $20k/year with no savings, no spouse and have kids it's probably too late for you to save anyway

It is being poor. If you want to define 'poor' or poverty as the UN defines it, then fewer people than you would suppose would be classified 'poor'.

When one loses one's source of income, one loses one's security. One is then eligible for state and federal benefits --for most intents and purposes, one has become poor --though perhaps not a destitute pauper.

You didn't learn much at all then. To think that being poor and having a tendency to make bad decisions, is just a matter of having developed negative personal habits throughout your life is just plain naive and ignorant.

Poor people are not just personally poor, they were raised by poor parents who taught them different values, albeit seemingly dumb ones (though I know a lot of poor people who are wayyy happier than a lot of wealthy people I know following the note card). They were taken to crappy schools, if their parents took them, or made them go at all. They were fed all sorts of unhealthy food their whole lives. They're lied to relentlessly by businesses saying things are healthy, will help them, or are good decisions (always campaigns run by wealthy people taken advantage of poor people).

They have everything around them working against them, and some dumb, naive, asshat, born to the middle class, thinks (s)he was poor for a little while and it was kind of enlightening and fun, ignorant guy telling them to put money in a 401k. Will it put rims on my car, because that would make me happy? When I'm 65? Fuck that.

Don't forget to tell them to let their babies die, those things are expensive. Parents too. Taking care of your aging folks can be expensive. Stop taking care of your parents. Any happiness you have now is because you're in the thick of a poor decision that is making you stay poor. Stop smiling, dumb shit makes you smile. Stop going to the doctor. Stop paying for vegetables, can food is cheaper. Stop the tendencies you developed by being raised by worthless, stupid poor people. Stop hanging out with your poor friends. Stop hanging out with your poor ass family. Stop being a fucking human being, open your poor, dumb fucking eyes and make a dollar.

Don't let your babies die, but really try not to have them if you can't afford them.

I never said people's poor decisions made them poor, I'm saying they can help get out of poverty by making good ones.

And if you have kids, yes, make a dollar. You brought life into this world and you have a responsibility. You can let your kids get stuck in a cycle of poverty by feeling like a victim or you can bust your ass to try and get them out of poverty. If I had a child in poverty I wouldn't be smiling, because I'd know that I brought life into this world at a disadvantage and I'd work my ass off until I did what was right. So you can keep telling poor people that they're helpless, or you can, like I do, believe they have a great perseverance and aptitude that they need to tap into and provide a better life for their children.

I'm not saying they need to do it alone; quite the opposite - we as a nation need to believe in the ability of our disadvantaged to become productive members of society and promote programs to help them get there. But we do not need to act like any nudge towards taking matters into your own hands is an implication of blame. It is not. It is a suggestion that betting your children's future on government intervention is a colossal mistake. I'll vote for legislation that enables the poor, I'll pay higher taxes and donate to 401cs and get the word out, but there is no single greater factor in the equation of your children's happiness than you yourself.

Now that sounds more sensible, and I agree completely that ultimately you can only help someone who wants to be helped.

Your earlier comments were showing that you don't understand the poverty problem at all and you don't know how to motivate people at all. The problem is not that poor people are constantly choosing to be poor, or making no choice and allowing themselves to fall into poverty, but that they are raised in poverty. Being raised poor means all sorts of things: you are taught poor values by your parents, you likely get a terrible education, you likely only have access to be friends with fellow poor people, you probably eat poorly, and worst of all your poor parents and poor friends have reinforced your entire life that these poor decisions you're making are actually good decisions.

You will never accomplish anything (or sound smart or practical at all) by slapping individuals in the face and telling them to make better decisions. They're told that these good decisions us well off people make, by their friends and by the vast majority of us well-offers, are actually making us terribly unhappy people (and in a lot of cases they're not wrong). The only way real change can happen is by addressing the cultural cycle of poverty, and by supporting, positively teaching, and motivating these people to make better decisions.

> Don't let your babies die, but really try not to have them if you can't afford them.

This is outrageous. Parenthood is one of the most (if not THE most) meaningful parts of being human. Financial issues should NOT take this away from anyone.

I don't think it's outrageous at all. I agree with you that > Parenthood is one of the most (if not THE most) meaningful parts of being human

But we cannot ignore the fact that raising a child is extremely expensive, and children raised in poverty often have very negative outcomes. He's not saying poor people aren't allowed to have children, he's saying it's a good idea to try not to, because of the likely poor outcome of a child born in poverty.

Poor outcomes such as the child being unable to graduate from high school, or go to college. Repeating the cycle by having a baby in high school, dropping out and probably to raise a high school dropout as well. No one is saying this is always what happens, or that poor people aren't allowed to have children. We're just saying it is not a good idea to have a child unless you're financially stable enough to raise a child with a better outcome. There are obviously plenty of exceptions to the idea that a child born in poverty will have a bad outcome, but the majority outcome is negative (in terms of economic achievement, social mobility, etc).

As a direct example, my parents are both poor. They are retired and their total pension is about $400 a month... which they mostly spend on smoking and coffee. Oh, and they also have four TV sets (my father has an obsession).

Ok, so I can afford to supplement that income somewhat; but saying that they couldn't save is absurd.

Honestly, when it did become so evil to give honest, practical advice to the middle class?

The wealthy have been sufficiently vilified that we now have to crucify those not born into money, bu starting to do okay?

This was a very reasonable & practical post with good advice for those starting to come into money. Why is that so bad? That type of advice can't be dispensed without a holistic social program? That's total bullshit.

Get over yourself. What is total bullshit is entitled twats like you mentally rewriting the article so it's not "all the financial advice you’ll ever need" as claimed but "all the financial advice you’ll ever need if you're in the minority and an up and coming middle class wage earner who has sufficient disposable income to act on the advice".

you are wrong. I was saving money in an IRA when I had a salary of 25k. 2011 Median income was $50k. That may not be much in the SFO and ATX and LGA's that HN populates, but for the majority of the country where the majority of the population lives, that is a good salary.

I know that HN is full of tech people who think that six figures is slumming in SFO, but you are desperately out of touch with reality. If a family of five (my dad, mom, and us kids in the 80's) can set aside money money on $22k a year, then the median family at $50k can set aside money in 2013.

The top 10th percentile of earners in US are barely even eligible to use Roth IRAs, which have gross income participation limits.

One can do a backdoor Roth conversion to get around that limit. (but you need to have no money in regular pretax IRAs to do so)

Well, you can have money in there...it would just be a taxable event when you do the conversion to a Roth, so you have to keep in mind that your taxable income will go up by the amount that you did not have a "basis" in.

You have food stamps, cheap oil and electricity, unemployement smaller than 10%, and if you are homeless you can move to a state that doesn't have winters capable of killing you.

People in Eastern Europe save money and 50% of Americans can't?

41% of working age Americans are jobless. The official unemployment calculation is a joke.

Whoa, we're gonna need a source for that kind of fact.

there would be civil war if this were remotely true. ever think about those "facts" for a second?

He's probably referring to the employment rate, which was 66.6% in 2011 according to OECD numbers: http://en.wikipedia.org/wiki/Employment_rate

Budget to save before you outlay your discretionary income. You might have to redefine discretionary to include car (if public transport suffices for your job), cable, etc.

Don't lay out your budget and set aside $x for entertainment (eating out, etc). Savings will always suffer. Set aside desired savings first and then work with what's left.

Hear hear. I can't repeat this point enough. You have to force yourself to save, first. If you spend on everything else first and figure you'll save "the rest", something will always come up. If you set it aside before other categories, it will ... be set aside!

As a corollary, just writing (and following) a basic budget does wonders. I've talked to a lot of people who said it was like getting a raise. You have regular expenses, so just plan out a basic month and then follow it. Something magic happens next: by being more conscious and deliberate about your spending, you spend less on un-necessary "wants" (if it's truly a need you'll spend it no matter what).

Plus, a written budget is like looking in the mirror: it's a reflection of your priorities, good bad or indifferent. If you see you're spending $300 / month on restaurants and $0 / month saving for retirement ... well, that shows what appears to be important to you. And, if you've got two brain cells to rub together, it shows an easy place to make some adjustments. Not that I have anything against restaurants ... even $200 and $100 would be far more reasonable.

Another point is to never assume that getting a raise will solve your saving problem. It won't.

The last line of the card is for those who aren't. Otherwise, they need to grow their income, because nothing you do is going to fix the problem if you are making 15k per year.

The promote social insurance programs line comes in maybe.

If you fall below those limits, do you really need "financial advice?" If you're making below, say, $60k/yr -- and you're still young enough that what you do with your long-term investments can serve to multiply your returns -- then what you probably need is not financial advice, but bootstrapping advice. Starting with "go to school for STEM--or finance, if you can."

I agree, but it is potentially useful to that demographic.

If we made this two or three standard deviations more exclusive, the financial advice could be: Be born wealthy. Don't borrow against your trust fund.

Reply on news.ycombinator.com