Documentary "Broken Eggs"

[hausfrau]

I think it's as much of a problem of the "I want this, so I'll buy it" mentality, as the $5 latte is the poster child.

People think "MMMmm...that grande double mocha latte sounds good, so I'll buy it". They don't think of the compounding effect of not spending $5 on that coffee every day, just like they don't think of the compounding effect of any other purchase. Their brains live in a vacuum that can't connect the cause/effect of NOT consuming whatever, and instead saving that money to benefit their life in another area.

In the same way, I think the student loans is part of not having a plan to pay it back...but also just having the mindset of "Oh, Prestigious University, I want to go there, it sounds great!". Just like with that latte, they have a total disconnect between the cost of something, and the value/benefit of not consuming it. It's almost like they live in a world of expiring dollars, where if they don't buy that latte or pay the high tuition, the money will vanish, so there's no downfall to consuming it, and no benefit to not consuming it and delaying your gratification.

Those are good points. I think the best approach to this is putting the money away before you even see it. Then you are free to buy whatever you want.

Regarding the student loans, the parents need to take some responsibility too. Kids can't get those kinds of loans these days without a cosigner. IMO, that's a terrible thing to facilitate. I suspect the family had a high income (he was in sales) and lived in a HCOL area (NJ) and weren't eligible for a lot of financial aid. Still, lots of upper middle class kids go to state schools and they are starting to get better and better stat-wise, compared to when I went to college. Look how hard it is to get into Michigan, Wisconsin-Madison, UC-Berkeley, UNC, UVA etc. these days.

 

[BBQ-Nut]

From the sound of things, the title of that piece is a misnomer if 'eggs' is supposed to refer to someone's retirement 'nest egg' - seems like most of the people showcased never had any eggs to begin with!

 

[daylatedollarshort]

We personally know several parents / kids with 6 figure school debts and useless degrees that only made the kids overqualified for Starbucks and the parents short on retirement funds. I think when it happens to so many people nationwide there is something larger going on than one family's bad judgement. One trillion in student loan debt is a huge drag on the whole economy and impacts us all.

I know most regular posters here are money-smart about paying for college, but for other readers, as a public service announcement, I would like to suggest parents of prospective college students look online at the free Payscale reports by college, by major and by tuition ROI, the Job Outlook Handbook and the Forbes articles on financial aid.

 

[RetiredAndFree]

Regarding the student loans, the parents need to take some responsibility too. Kids can't get those kinds of loans these days without a cosigner. IMO, that's a terrible thing to facilitate. I suspect the family had a high income (he was in sales) and lived in a HCOL area (NJ) and weren't eligible for a lot of financial aid. Still, lots of upper middle class kids go to state schools and they are starting to get better and better stat-wise, compared to when I went to college. Look how hard it is to get into Michigan, Wisconsin-Madison, UC-Berkeley, UNC, UVA etc. these days.

Likely correct for undergraduate degrees, but not the case for advanced schooling. Our older daughter's Masters and JD were obtained via student loans in her name only, as was our younger daughter's Master.

Regarding state schools in general - I graduated from a fairly modest state school in the mid-90's, after being a stay at home mom during my 20's, and went on to make well into the six figures over my career. If one distinguishes themselves in both school and work, as I did, then where one graduates from quickly becomes a non issue.

 

[rodi]

Bravo gentlemen . . . nicely done!

LOL - I may not be ladylike - but I'm definitely not a gentleman.

 

[RetiredAndFree]

LOL - I may not be ladylike - but I'm definitely not a gentleman.

So sorry. I was rushing to finish the post before I left the house!

 

[tuixiu]

Yeah, I signed in with the name "hjadskhfkjashfjaskdhkasjhdjaskhdjkashdas" and email address "sskjasfhdahsdfhsakdfhklsjdfhskljdhflksdhf@aol.com", and it let me in. I watched the first part, found it boring, and skimmed to the end. It was clear they're selling something.

Dammit was wondering who took that one, it wouldn't let me use it.

 

[Independent]

I probably won't watch it as it is 80 minutes long and I have MADD (movie attention deficit disorder)

.

If we're talking about advocacy pieces, I'm with you. Just give me the transcript and I can skim it in a tenth of the time it takes to watch the thing. If it seems interesting I can read more carefully.

 

[meierlde]

The comments above raise a question I have: Have we created a society that is to complex for the average person to understand? Other posts discuss most folks not knowing insurance terms, this discussion shows not understand retirement issues, etc.
Is the amount of things that need to be understood beyond the capacity of a lot of folks to absorb and understand?

 

[daylatedollarshort]

The comments above raise a question I have: Have we created a society that is to complex for the average person to understand? Other posts discuss most folks not knowing insurance terms, this discussion shows not understand retirement issues, etc.
Is the amount of things that need to be understood beyond the capacity of a lot of folks to absorb and understand?

I think that is a good point and a big part of the problem. Another is billions spent on marketing to get people to part with their money and very little on how to save it, except for financial ads which often come with high priced fees.

Used clothes are becoming one of our largest export items. Retirement savings are lacking but people in the U.S, on average, throw away 68 pounds of clothes per year -

The fashionista's dilemma: Cheap clothes - CNN.com

 

[CaliforniaMan]

The comments above raise a question I have: Have we created a society that is to complex for the average person to understand? Other posts discuss most folks not knowing insurance terms, this discussion shows not understand retirement issues, etc.
Is the amount of things that need to be understood beyond the capacity of a lot of folks to absorb and understand?

My kids understand it*, probably most of the kids of folks on this forum understand it. The problem may be that this is not something intuitive. For example reading and writing is so natural to us that we take it for granted, feel it was maybe intuitive. It was not. It took many years for us to learn to read and write. Let's not get smug about our reading ability. If there were no teachers there to teach us we would all be illiterate.

For a lot of people there are no financial teachers, the parents are incapable, the school system doesn't do it, but all the time they are bombarded with commercials telling them how wonderful it is to buy this or that, by for profit schools telling them how great their future will be with that cooking degree. Nothing teaching kids fundamental flaws in this logic.

All kids deserve a chance at an education. And part of this education now is in financial management. In addition society, business, and national defense benefit from an educated population. This is where there might be a place for government (who else could do it), not in adding more savings requirements, but in providing a counter to all the advertising nonsense. Remember when tobacco companies used to advertise all the health benefits to smoking?

The crusade against smoking might be a model, but unfortunately there seems to be so much antagonism in DC that nothing is likely to happen. Eventually, if financial ignorance is not addressed it will affect us all.


*it: importance of acquiring assets rather than debt.

 

[Andre1969]

Used clothes are becoming one of our largest export items. Retirement savings are lacking but people in the U.S, on average, throw away 68 pounds of clothes per year

Now I feel better about the leather biker jacket I bought my freshman year in college. 26 years old, and it's still wearable!

I tend to buy clothes that aren't too flash-in-the-pan, style wise. And then just wear them until they start getting ragged.

 

[photoguy]

I just watched it. It was OK, but sometimes these documentaries make me feel too judgmental. Especially the older couple who bought a large house in the Bay Area with a huge mortgage in their late 50's/early 60's. What were they thinking?

I did watch the trailer but I try to avoid documentaries like this because I'm afraid it will bring out too much schadenfreunde in me. Also the blatent way they try to manipulate our emotions is a turn-off to me.

No, while there have been proposals for an enhanced SS that would effectively force people to save more for retirement like SS does that in theory would "solve" the problem because it would be a government imposed solution to their lack of discipline. The problem I have with such a proposal is that it penalizes those who are diligent and save because it forces them into a low-return option like SS. Existing tools are sufficient, the problem is that too many people don't have the discipline to use them properly.

I agree and I don't see any need for an "enhanced SS" or alternative program. I think SS payments are quite generous and very progressive. Someone making 40k/year can obtain 1900/month if they wait until 70 before drawing on it.

I'm in Toronto right now and was discussing/researching CPP (candian pension plan) with relatives. I was very surprised to find out social security pays out 2-3 times as much as the Canadian Pension Plan. And socialism isn't even a dirty word in canada.

 

[imoldernu]

50% of all Americans have an I.Q. of 100 or less. Until there's a genetic solution to this, I can't be judgemental.

 

[pb4uski]

...: Have we created a society that is to complex for the average person to understand? ...Is the amount of things that need to be understood beyond the capacity of a lot of folks to absorb and understand?

Perhaps, which would indicate that more education is needed. OTOH, if one just saved 10% of what they made tax-deferred, picked low-cost target date funds and let it ride over a 30-40 year career they would have a nice retirement nestegg to supplement SS in their retirement years. I know that saving 10% might be hard early in one's working life, but you should be able to get to that 10% or more in your late 20s but it would require some sacrifices and living within your means which some people refuse to do.

 

[Major Tom]

Used clothes are becoming one of our largest export items. Retirement savings are lacking but people in the U.S, on average, throw away 68 pounds of clothes per year -

Capitalism is a good system if you think like a capitalist, even if just on a small scale. Nearly everyone in this forum does.

 

[RetiredAndFree]

The comments above raise a question I have: Have we created a society that is to complex for the average person to understand? Other posts discuss most folks not knowing insurance terms, this discussion shows not understand retirement issues, etc.
Is the amount of things that need to be understood beyond the capacity of a lot of folks to absorb and understand?

I think that is a good point and a big part of the problem. Another is billions spent on marketing to get people to part with their money and very little on how to save it, except for financial ads which often come with high priced fees.

Used clothes are becoming one of our largest export items. Retirement savings are lacking but people in the U.S, on average, throw away 68 pounds of clothes per year -

The fashionista's dilemma: Cheap clothes - CNN.com

Interesting points, both, but I feel exactly the reverse. The internet has provided access to information previously unavailable to us average-Joe's/Jane's. It's there for the taking if one has interest and/or initiative, and it's incredibly beneficial when one does. Remember the legal adage "Ignorance of the law is no excuse"? I feel very much the same about all aspects of our financial health - there is simply no excuse for not taking the time to educate yourself.

 

[Bestwifeever]

It isn't complicated if you take out the middlemen. Go to the library, check out even a "for dummies" book about personal finance or retirement, follow directions. Most people won't have sizeable estates or sums of money in sophisticated portfolios that need special treatment. Insurance planning is also pretty cut and dried.

 

[daylatedollarshort]

50% of all Americans have an I.Q. of 100 or less. Until there's a genetic solution to this, I can't be judgemental.

If people that post here cannot have empathy and look out for the bottom half, who will?

I think many here are just wired differently so maybe it is easier for us to resist the marketing siren calls.

 

[pb4uski]

If people that post here cannot have empathy and look out for the bottom half, who will?

I think many here are just wired differently so maybe it is easier for us to resist the marketing siren calls.

Empathize, yes, and that is why we have SS. Subsidize, no. Sorry to be harsh, but grown-ups need to live the the consequences of their decisions - good or bad.

 

[daylatedollarshort]

Is making a wiki on how to ER or even just the R part something we could do here?

 

[CaliforniaMan]

If people that post here cannot have empathy and look out for the bottom half, who will?

I think many here are just wired differently so maybe it is easier for us to resist the marketing siren calls.

Seriously, I don't know why you would think that people who post here would be any more empathetic to the bottom half than the population at large. But to my mind, helping educate that bottom half is not a question of empathy. It is a question of maintaining the future wealth and health of the economy, which is beneficial to us and our kids. After all, these 50% do vote you know. And unless we are planning to take that away, they had better be educated.

 

[Walt34]

For a lot of people there are no financial teachers, the parents are incapable, the school system doesn't do it, but all the time they are bombarded with commercials telling them how wonderful it is to buy this or that, by for profit schools telling them how great their future will be with that cooking degree. Nothing teaching kids fundamental flaws in this logic.

I think that is a lot of it, and that the self-reliance that earlier generations had to learn (often the hard way) isn't taught now. Schools generally don't teach finance, few parents do, so the kids don't even know what they don't know or that it is important to learn about it.

I just sent a young lady who is 24 and just starting out in the working world a bunch of finance books because she indicated she did know what she didn't know but I think she's the exception. She had a childhood that no kid should have to endure and is on track to do well for herself. She casually mentioned that she wanted to learn more about 401ks and IRAs. So I sent her The Millionaire Teacher, How a Second Grader Beats Wall Street, The Millionaire Next Door, A Random Walk Down Wall Street, Predictably Irrational, and Your Money and Your Brain. I did emphasize that she wasn't expected to read them all this month! But I also made it clear that this is important stuff to know.

Along with the rough childhood she received zero instruction about finance stuff. Her father is a nice guy but lousy with money.

 

[daylatedollarshort]

Seriously, I don't know why you would think that people who post here would be any more empathetic to the bottom half than the population at large. But to my mind, helping educate that bottom half is not a question of empathy. It is a question of maintaining the future wealth and health of the economy, which is beneficial to us and our kids. After all, these 50% do vote you know. And unless we are planning to take that away, they had better be educated.

I meant most people here are in the top half of IQs, not necessarily the top half of empathy.

 

[CaliforniaMan]

I think that is a lot of it, and that the self-reliance that earlier generations had to learn (often the hard way) isn't taught now. Schools generally don't teach finance, few parents do, so the kids don't even know what they don't know or that it is important to learn about it.

I just sent a young lady who is 24 and just starting out in the working world a bunch of finance books because she indicated she did know what she didn't know but I think she's the exception. She had a childhood that no kid should have to endure and is on track to do well for herself. She casually mentioned that she wanted to learn more about 401ks and IRAs. So I sent her The Millionaire Teacher, How a Second Grader Beats Wall Street, The Millionaire Next Door, A Random Walk Down Wall Street, Predictably Irrational, and Your Money and Your Brain. I did emphasize that she wasn't expected to read them all this month! But I also made it clear that this is important stuff to know.

Along with the rough childhood she received zero instruction about finance stuff. Her father is a nice guy but lousy with money.

+1000
Wow! What a wonderful thing for you to do!