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Perception Distorted by Prosperity
Old 02-21-2005, 12:55 PM   #1
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Perception Distorted by Prosperity



Most Americans have got little or nothing...

relative to the actual costs of living in the U.S.A. *It's true that most of us have a fair standard of living, but it's often hand to mouth, with debt being the facilitating factor. When you look at the actual savings of a typical household it's a pretty grim picture, assuming the statistics are to be trusted.

Some on this board debate SWR's which will yield ER incomes that exceed what most normal (age 65) retirees can hope for. *People accustomed to a career with a good salary usually develop high expectations and
sloppy spending habits. *This has made me realize how prosperity distorts our perception of a quality life.
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 01:50 PM   #2
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Re: Perception Distorted by Prosperity

Rock,

Interesting post. Maybe some of your concerns are pre ER jitters. Everybody goes thru it I'm told. I'm in the midst.

Re: Yellow Tail

When the goin' gets tough, the tough cut back on the wife's beer.

BUM
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 02:18 PM   #3
 
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Re: Perception Distorted by Prosperity

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Most Americans have got little or nothing...

relative to the actual costs of living in the U.S.A. It's true that most of us have a fair standard of living, but it's often hand to mouth, with debt being the facilitating factor. When you look at the actual savings of a typical household it's a pretty grim picture, assuming the statistics are to be trusted. Retirement is the acid test.
Most middle class Americans live paycheck to paycheck. And this is even more evident now, as there are usually 2 paychecks now that wives work. There is a book out now called "The two income trap" which defines the tenous position most American Houselholds are in. They have little knowledge of the Great Depression, as the depression generation never got to speak to them directly. If either spouse loses their job, it puts them in bankruptcy status. If and when the spouse returns to work, it is usally at 50% of the former wages.

This piggybacks on why I believe that SS is not a crisis at all. Most americans cannot retire. The 3 legged stool is only 1 leg now - Social Security. There are few pensions and almost no savings.

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Re: Perception Distorted by Prosperity
Old 02-21-2005, 03:59 PM   #4
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Re: Perception Distorted by Prosperity

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When the goin' gets tough, the tough cut back on the wife's beer.
My wife will only drink Budweiser. No matter how many times I try to sway her with various fancy pilsners and lagers, she crinkles her nose and says "Get me some Bud the next time you're at the store".

Cant cut back too far from that.
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 04:08 PM   #5
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Re: Perception Distorted by Prosperity

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Cant cut back too far from that.
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 04:20 PM   #6
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Re: Perception Distorted by Prosperity

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Most middle class Americans live paycheck to paycheck. And this is even more evident now, as there are usually 2 paychecks now that wives work. *There is a book out now called "The two income trap" which defines the tenous position most American Houselholds are in. They have little knowledge of the Great Depression, as the depression generation never got to speak to them directly. If either spouse loses their job, it puts them in bankruptcy status. If and when the spouse returns to work, it is usally at 50% of the former wages.
Yep, either that or you go from being DINKs to being SITCOMs - Single Income Two Kids Oppressive Mortgage.

Life's a bitch sometimes.
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 04:24 PM   #7
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Re: Perception Distorted by Prosperity

SIOKERNM
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 04:28 PM   #8
 
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Re: Perception Distorted by Prosperity

Good one!
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 04:32 PM   #9
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Re: Perception Distorted by Prosperity

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SIOKERNM
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 04:36 PM   #10
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Re: Perception Distorted by Prosperity

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People accustomed to a career with a good salary usually develop high expectations and
sloppy spending habits. I know this is true in our case. Despite having been pretty good savers, ER doesn't look like a walk in the park
I've been thinking the same thing myself. I didn't start saving for retirement until I was 38. It is going to take 18 of my high earning years to create enough wealth to retire on. The only way I can even do this is because I bought a $100k house and have a DINK lifestyle. But, we are saving about as much as we are living on. After our house is payed off this year, our savings rate will be about 41% of gross for retirement. The end result is that we will have a comfortable retirement and live on more than what we are living on now, but it won't be a high spending lifestyle.

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Re: Perception Distorted by Prosperity
Old 02-21-2005, 05:09 PM   #11
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Re: Perception Distorted by Prosperity

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. . . I think that managing our expectations may be a bigger challenge than most budgetary issues turn out to be. . .
It has always seemed to me that, by far, the most important advice given on these boards is to learn to live below your means. If you get that right, then you will have money to invest and most investments will do okay over time. If you don't get that right, no investment advice can help you.
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 05:29 PM   #12
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Re: Perception Distorted by Prosperity

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Single Income One Kid Early Retirement No Money?

REW
Close!
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 05:35 PM   #13
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Re: Perception Distorted by Prosperity

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It has always seemed to me that, by far, the most important advice given on these boards is to learn to live below your means. *If you get that right, then you will have money to invest and most investments will do okay over time. *
Maybe I just like playing the bear, but are we taking for granted the fact that "most investments will do ok over time"? Certainly, the last 75 years in US stocks and bonds have been "ok" (and in some 20-year periods, much better than "ok"). But will history repeat itself in the coming decads?
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 05:47 PM   #14
 
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Re: Perception Distorted by Prosperity

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Close!
What he said Except No Mortgage!
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Re: Perception Distorted by Prosperity
Old 02-21-2005, 05:55 PM   #15
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Re: Perception Distorted by Prosperity

We have a winnah!

Made you all use your brains for a while

Hope it didnt hurt!
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Re: Perception Distorted by Prosperity
Old 02-22-2005, 06:13 AM   #16
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Re: Perception Distorted by Prosperity

This idea about expectations is very interesting, and right on the money. At some point, people have money to throw aound on things they never did before (big vacations, eating out a lot, etc) and after a while, they feel they're "owed". It takes a strong person to back away from that feeling.

I have a sneaking suspicion that in a few years there will be a bunch of disappointed retiress while I'll be happy as a clam. The best thing we ever did for our kids was to not raise their expectations. Modest house, modest vacations, state colleges, no personal cars, etc.

About the beer - how about The Beast (Milwaukee's Best). I know it's cheap because I use it on slugs

arrete
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Re: Perception Distorted by Prosperity
Old 02-22-2005, 06:53 AM   #17
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Re: Perception Distorted by Prosperity

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Maybe I just like playing the bear, but are we taking for granted the fact that "most investments will do ok over time"? Certainly, the last 75 years in US stocks and bonds have been "ok" (and in some 20-year periods, much better than "ok"). But will history repeat itself in the coming decads?
You pays your money and you takes your chances.

Seriously, I suspect that there will be 20 year periods in the future where returns suck, and 20 year future periods where returns are very good. If I knew which was going to be which, I would be posting this from my own private Carribean island (called Puerto Rico). Since we can't know what returns will be in advance, a thoughtful indexer can reasonably choose DCA, so that some of you investments go into high return periods and some into low periods.
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Re: Perception Distorted by Prosperity
Old 02-22-2005, 11:33 AM   #18
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Re: Perception Distorted by Prosperity

Seems to me we've used up 20 years of "good returns" in the last 10. Even with the couple of bear years we had, prices are still hanging in there (except for the internet stocks) with the late '99 bubble.

This thread reminds me a little of the "life in america 100 years ago thread" we kicked around last year. Amazing to see how far we've come, yet how little we've gained.
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Re: Perception Distorted by Prosperity
Old 02-22-2005, 12:39 PM   #19
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Re: Perception Distorted by Prosperity

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. . . About the beer - how about *The Beast (Milwaukee's Best). *I know it's cheap because I use it on slugs *

arrete
Will it work on trolls?

I've heard that it's always a good idea to carry a six-pack around in your kayak.
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Re: Perception Distorted by Prosperity
Old 02-22-2005, 12:42 PM   #20
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Re: Perception Distorted by Prosperity

I can throw a full can of beer pretty dang hard.

That might work.

Six of them, certainly.

Make it a four pack of those big guiness cans, and if I get an edge strike we're golden.
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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