Not necessarily. I once got a call from HR asking why wasn’t I contributing to the company’s 401(k); I explained that, given the fee structure, the plan needed to have a return over 16% before it gave me a single cent. If I’d been putting the money in a piggy bank, the piggy would have made more sense (I was actually putting three times the maximum amount the company would have allowed me to “save” in a different investment).
She asked me to send over my calculations. I understand there were Words with the people choosing available 401(k)s and with the managers of the current ones, but what I still don’t understand is why it took a lab tech to do the numbers.
Well, the point of the article to me was that the bad financial decisions that are specific to poverty are not the result of simple stupidity/ignorance but are learned responses to the specific economic conditions that poverty creates. The article suggests that yes, giving people money, over time, might just end the bad financial practices engendered by poverty.
I’ve been very poor myself, I understand a lot of what Cheese writes about from personal experience. It is a tough trap to get out of.
The problem being that the article seems to consist of
[ul][li]Outright lies. Processed food is not cheaper per serving than fresh. [/li][li]Things that don’t make sense - how does being obsessive about how much money you have make you poor?[/li][li]Things that are not related to the specific economic conditions, except that they create and exacerbate poverty. Spending extra money right away and excessive gift-giving are two of the habits the article mentions. It is difficult to see how this is not an example of ignorance and/or stupidity - the article even says they are.[/ul][/li]Regards,
Shodan
Someday I’ll write my own cracked article about the poor financial habits the wealthy have that excuse their financial stupidity. Because I’ve been poor and I’ve been rich (well, upper middle class) and I’ve seen and heard and felt the pressure at both points in the income scale. And its just as hard a trap to get out of at the top - because habits, no matter what they are, are habits.
(And if you are a child victim of affluenza set loose on the world with college loans and an entry level job, those habits are dangerous).
I just had a complete bathroom renovation done and it was way above $5,000. So yeah, $5,000 wouldn’t come close to covering a second-floor addition and the bathroom to go in it
I’ve done a lot of reno and remodel and I know how far $5k will go, especially in a “complicated” room like a bathroom or kitchen. I kept thinking I had to be misunderstanding the conversation, but no, it went on longer than I outlined in the OP, and it kept on staying stupid and inexplicable.
What was really noteworthy was that this couple was soliciting, and listening to, advice from another family member… a graduate-degree professional who has countless un-repaid friend-and-family loans, has filed bankruptcy at least three times, and still has the most out-of-control spending habits and money management skills that would shock a monkey. This was the expert doling out advice.
I had to keep muttering, “It’s Christmas. This is a party. All you could do is make an ass of yourself.” - and wait to hear how awful the world has been to them, next year.
The other odd bit about the $5,000 upstairs bathroom renovation is that the speaker was talking about getting a third mortgage to pay for it. That seems a tiny amount to go to the trouble of a mortgage. Plus shouldn’t you be able to pay such a small amount out of savings or current income?
I’m not talking about poor people here, I’m talking about people who make a decent living. They drive nice cars and take vacations. Their kids carry Coach purses and engage in expensive extracurricular activities. Lovely houses with granite countertops and custom cabinets, a housekeeper coming in once a week. And then when college comes around they are SHOCKED to discover that there is not scholarship and grant money falling from the sky for people in the top economic quintile. Or retire and are SHOCKED that Social Security isn’t going to cover their needs.
Paying completely for private school for your kids is hard. But having set aside a few thousand dollars a year for your kids to HELP pay for a public education could have been done. Now they want a champagne and caviar college for their kids, on a dollar meal budget. And their kids, having gotten everything their whole lives - and them, having given themselves everything - can’t get their heads around the whole thing.
How typical is it for people to have at least $5K in savings? When I met my husband 31+ years ago, he’d never had a savings account (which amazes me because his mother was a money master!) Over our married life, we had financial ups and down, from having over $30K in savings to having only $20 total two days before payday. I’ve encountered far too many people whose financial planning consists of “I’ve got $XX in my pocket I can spend.” The idea of saving is totally foreign.
Seems to me someone who already has 2 mortgages on a house and is considering a third isn’t likely to have a nest egg. I could be wrong…
The story goes that John D. Rockefeller was complaining to his daughter about how much she spent on clothes. She laughed at him, and said, “Don’t be silly, daddy - we can afford it.” He growled back, “That’s all right for you to say - you have a rich father!”
I do the same; I’ve never paid more than $6K for a vehicle, have always paid cash, and I drive them until they’re ready for the scrap yard. In fact, this Friday I am driving my 1995 truck to the scrap yard, and my 1997 Jeep is probably not far behind.
Driving junkers has saved me a ton of dough over the past 30 years. A car loan? What’s that?
I have coworkers who insist on buying a new car every two to three years. I think to myself, “That’s cool. But I would rather spend my money on other things.” We recently hired an engineer right out of college, and the first thing he bought? Yep, a brand new car. I would estimate the price was around $35K, which is about 60% of his yearly salary. Thank goodness for 8 year car loans, huh?
Back in the 1970’s, I was a computer programmer, earning good money.
I saved about £200 / month into a saving account paying over 7% interest (those were the days!)
Allowing for inflation and currency adjustment, that comes to about $2,800 / month these days.
Those savings eventually got me a house.
Meanwhile a colleague, Chris (earning the same sort of salary) used to tell me what brilliant spending he’d done that week. Clothes, car, casino gambling, drinking, eating out - a never-ending stream of stuff.
I asked him how he could afford it. Chris proudly revealed his secret:
after his first credit card was maxed out, he’d get another one and max that out to pay the interest (and buy more stuff)
He was on his fourth credit card when he got transferred, so I never found out how he coped with his debt (@ 25% interest :smack: )
I had a friend years ago who had a bit of an addiction to the slot machines that were common in military clubs overseas. I don’t know how much of his paycheck went into the damn things, but he never had any money, and was always bumming cigarettes or asking me to pay for his burger or whatever. It got very tiresome and I took to avoiding him. Then one day he comes up to me, very excited. “I won a $200 jackpot last night! My turn to treat you to dinner!” I said, “Jim, you’ve pumped at least several thousand dollars into those goddamn machines. How is this such a big deal?” “Because I WON!”. Oh, and ‘dinner’ was the cheapest sandwich on the menu. :rolleyes:
I think a fairly objective line can be drawn between excessive spending for ephemeral things and better management of a lifetime’s finite income. It’s not your sports car vs. their his-n-hers snowmobiles, or your crushing mortgage on a show house vs their top-shelf jewelry - it’s proportionately spending your income for lifetime necessities and rewards.
Or, at least, if you spend every dime you make on toys and trinkets, accept your really shitty post-employment life, which may come sooner and after less total income than you envision.
In any event, what is Mr. Cleese’s motivation for lying? He’s confessing to behaviors that he knows are not smart.
[quote]
[li]Things that don’t make sense - how does being obsessive about how much money you have make you poor?[/li][/quote]
I can field this one. When you are really, really poor, you HAVE to obsess about how much money you have, because if you don’t, you can wind up not having enough to pay the electricity, or buy food, or gas your car to get to work. You are trying to juggle income that really doesn’t cover those expenses every day. If you slip up … you spend time sitting in the dark. Or going to the food bank … if you can get there, and if they are open. Plus if you are keeping your money in a checking account (you have no savings account: see – poor) the bank will ding you $35 a toss for every purchase you make when your account goes negative, and you REALLY don’t have that $35 to give to the bank. Which is why many poor people don’t use checking accounts … can’t afford them.
It’s a really sucky way to live.
[quote]
[li]Things that are not related to the specific economic conditions, except that they create and exacerbate poverty. Spending extra money right away and excessive gift-giving are two of the habits the article mentions. It is difficult to see how this is not an example of ignorance and/or stupidity - the article even says they are.[/ul][/li][/quote]
They ARE products of both, but also of learned helplessness … the repeated experience of seeing any money you earn evaporate by the end of the month TEACHES you that money that is not spent today WILL be spent tomorrow, and not necessarily on something you like. And people really DO want something out of their lives other than working in shitty jobs and subsisting on a bare minimum level. Thus, the appeal of drugs and booze for some poor people. It’s a way out.
