Okay, one more thing: our schools don’t teach financial management. Much less in urban and poor economic areas.
If you’re born with parents who are financially savvy, you learn about investment, stocks, and calculating financial risks. You may have to be thrifty through your 40s, but you’ve been contributing to an IRA and so on.
That was a very good article, especially because the author Neal Gabler was (as he briefly mentions in the article) on the movie review show ‘Sneak Previews’, that I remember him from, where he was always trying to slip in left wing political comments. I expected the article to be similar but it wasn’t at all. It was factual and fair on broader points, and he comes right out and says that the reason he’s on the edge financially is choices he (with his wife) made, like putting two kids through expensive colleges (both kids apparently justified sources of pride), having the two houses, etc.
This discussion has shifted from rich all the way to poor. Actually poor people, forget for a moment how we define that exactly, have an extremely difficult time saving without imposing actual want on themselves or loved ones. Perhaps that’s a good definition of ‘poor’ actually. At the other end of the spectrum some people make so much (or even inherit so much) they’d have to go crazy with spending to avoid achieving financial security…though some do exactly that.
But for most people it’s a simple inductive process. If they make $75k after tax, somebody in their area is making $65k and spending every penny. If the first person lives like the second, they can save $10k. Likewise the $65k person relative to the $55k person, and them relative to the $45k person and so on down to the actually poor level where ever that is. But most people make their own decisions that lead to lifestyles which soak up nearly every penny they can make, or more. This isn’t a moral judgment, it’s just what it is. Gabler is just one typical example of the issue as he admits, even if the specifics of his income and spending decisions are different. Each person’s is different, but it doesn’t invalidate the basic point.
I think you’re asking a question with infinite answers.
Howard Hughes understood the value of money. He drove an old car because it gave him the value he was looking for. But he was also capable of buying a brand new airplane and dumping it because it didn’t deliver on value he was looking for.
I’m that way only without all the money. I try to buy used when it’s cost effective and it usually is. I just looked at a new electric motorcycle and I have to say it’s tempting at the price they’re selling for. But for less than half that I can buy a nice used cruiser that delivers a great deal of value. The cost savings leverages my discretionary money and provides the best bang for the buck. I’ll be able to buy a used sports car with the savings.
But that’s me. The opposite side of that coin is someone who likes the new car smell and the latest product. Without them I wouldn’t be able to buy used stuff so it all works out.
Points well taken, Corry.
But I have to respectfully disagree that some rhetoric (especially as linked to race) about the poor is based in moral judgement. The poor are poor because they want to be/don’t work/like being on the Government’s teat.
Are a lot of people just shitty money managers? Of course! Can generational poverty be pathological in nature? Yup. Should folks concentrate on saving instead of buying an Escalade: absolutely!
I need to disclose that I’m currently teaching a unit on poverty in America . . . so it’s occupying my frontal brain cells and I may be a bit shrill today 
:rolleyes:
Well said, Magiver. I haven’t bought a new car in almost 15 years and drive two used luxury cars – only because so many people lease for just a year or two or dump nearly perfect cars after light use (and luxury items tend to depreciate very quickly!) Maintenance can be expensive, but it’s often much less than making just six months of new car payments.
All said, I do wish someone could effectively create that new car smell for used cars. Those little “New Car Scent” trees just can’t capture it! 
Financial management isn’t complex or hard. Living disciplined and for the long term is.
Which is a good reason for teaching financial sobriety, right?
well you have to invest a little more money. New car smell.
Have you tested this spray? The aroma of deadly upholstery materials and toxic glue are kinda hard to emulate 
This is very true. I learned to leverage my money by doing things myself. My dad was a do-it-yourselfer so all repairs were done by him. If he couldn’t figure it out there was a library book on the subject. He could have worked a 2nd job to pay for repair work or just do the work himself.
I was a little more lazy than him. He built his first house. I took a different route. I bought a used mobile home, lived in it for 5 years and sold it for more than I bought it. That was the down payment on a modest house. I used less money than it cost to rent an apartment in the process. It was 3rd grade math to work out the details. I could have leveraged that further by taking in a room mate which I should have done since I was working my way through school. It would have been easy to seek out another student who I was familiar with and was similarly motivated. I could have used the mobile home as a cash cow and banked the savings after it was paid off. But I was young and lazy and didn’t want to be bothered.
What should be taught in school is the time value of labor not just money.
Few people understand what their disposable income is worth in labor hours. They should be taught to take the money left over from paying the bills for a week and dividing it by the number of hours worked in a week. So if they have $25 left over and they worked 40 hrs then labor value per hour of that money is $25/40 or .63/hr. Every non-essential item purchased is paid for at the rate of .63/hr labor. So a $500 TV costs 793 hrs of labor or 19 weeks to pay off.
There are some mentality differences between savers and spenders.
Spenders are often either very optimistic or very pessimistic - that article talk about it a little. You get a good job - lets say $100k a year. And you increase your expenses to live like you make $100k a year - you will get regular increases, you will always make that much money. You don’t think in terms of the expenses coming up - the money will somehow be there when you need it for daycare or college and you don’t think about the transmission going out on the car, the washer needing to be replaced, or the roof needing new shingles.
or…
You are going to die young anyway. You know someone who dropped dead at 47 - why should you save anything.
Savers tend to have a different mindset. I have “extra” money today I may not have tomorrow - I’d better stash it. My pessimism is that I’ll have to go through a big economic downturn, I’ll get sick and unable to work (wait, I AM sick and that’s why I run our companies out of my home instead of holding a ‘real job’) - and my optimism is that I’m going to live long enough to have to go through a few rough times :).
I think growing up really poor and having to save for every stinkin’ thing since I was 6yo was a powerful thing that created decades of “want it/buy it” because I was scared that I wouldn’t ever have anything and being paid 1.00 a week in allowance meant that I got very few things because my allowance didn’t allow it. And we’re talking hard 1970s-type labor, like mowing an acre of grass with a push mower!
Teaching kids to save is a laudable thing, but IMHO, an eight-year old kid who managed to save $50 toward a ten-speed bike should be spotted $20 from the parentals so she can have something her hardworking little soul deserved. Working another five months to save $20 was kind very demoralizing and, IMHO, kind of taught an opposite lesson. Waaaa waaa
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You are going to die young anyway. You know someone who dropped dead at 47 - why should you save anything. .
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Oddly and horribly, my 47yo neighbor dropped dead of a brain hemorrhage last November. Her early retirement papers were stacked on her table, ready to sign and submit. :eek:
The problem with living each day like your last is that most of the time, it isn’t.
Well, honestly, I bought a motorcycle a couple of years ago after finding out an old girl friend had past away. Nobody in my family does well after retirement so I decided I needed to adjust my perspective.
Although a tad younger, at 65, I find myself in a somewhat similar state, a tad surprisingly.
Not complaining…
And I love that Max Berry saying and agree wholeheartedly. My health is pretty good and I’m not worried about money. If I should also happen to trip over love, I will have won the Trifecta.
I grew up poor so I don’t like the idea of not saving anything. I also feel that you need to enjoy today within reason. We save but we also make sure to enjoy life. It’s a difficult balance and I’m content if it’s not optimal since there are so many unknowns. I can see how a little bit different wiring can lead to vastly divergent outcomes due to compounding.
Yeah, but one day it will be. Exactly one day.
I think its a matter of balance. Extreme savers who amass millions, but never spend money to enjoy life - never travel, never enjoy a good meal - live in crappy apartments - those people have issues.
But the other end - the live for today types - are far more common. And yes, at the bottom end of the ladder you have no choice - but his and her BMW families without savings accounts, the six figure a year salary who live paycheck to paycheck - but excuse it with “you could drop dead tomorrow” - really aren’t better.
People with a healthy relationship with money (and middle class incomes) manage to save. It may not be millions (although give it 40 years and it can be - compounding is the best thing ever). They also spend - it might not be trips to Hawaii or luxury German cars. Sometimes they make emotional purchases because they are human, but most of the time they act rationally. They don’t stop living today, but they do plan on being here tomorrow (if you are terminally ill - you get a pass).
I worked as a Taylor Swift for about a year in college. The job was ok, the pay was good, but they wouldn’t let me get drunk every night and sleep in the next day.