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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 12:45 AM   #41
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Re: So why do most people turn off their brains when financial issues come up?

May sound hokey, but a thick Sylvia Porter book that covered all kinds of money matters that my Dad gave me when I was 16, some 30+ years ago, started it all for me. I don't know it all but I think that book sparked an interest that puts me ahead of most of the crowd.
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 03:48 AM   #42
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Re: So why do most people turn off their brains when financial issues come up?

Hooooo boy.. Just had the in-laws over for New Year's and lots of fun arguments discussions about my Italian BIL's merceria, (a store that sells cloth, ribbons and zippers as well as socks and underwear and sometimes other clothes).

He only remains in business due to the fact that his wife works as a teacher (as well as in the shop) and they've had cash infusions from relatives, assumed mortgages, and have sold off their valuable garage in their apt. bldg.

He loves to talk about how great he is as a store-keeper and how assiduous he is about optimizing his merchandise and markups.. spending untold hours fidgeting with his (way too expensive yet poorly-designed) accounting program. His wife tells the real story about how they can't move around the store for the piles and boxes of ten-year-old pajamas that haven't sold, skirts from the 1980s in boxes where no one can see them, faded bolts of cloth in colors and patterns that are no longer in style, and so on.

He gets angry and says "you don't understand! I sold a pair of those pajamas for 60 euros, and I only paid 16,000 lire for them!!" But when I asked how long ago that really was that he paid 16,000 lire.. and what 16,000 lire could have bought back then, he didn't know/couldn't answer. He is really more happy to be accumulating and not selling. I tried to talk to him about the time value of money, but he could only see it in terms of absolutes: if he buys something for 2 and sells it for 2.50, he's happy, even if in the intervening 10 years the effective value may have doubled.

He keeps afloat through baroque and outmoded systems of IOUs and promissory notes. He brags about making his suppliers wait 90 days to get paid (for him, a victory!), while the merchandise they supplied then stays on the shelves for years.. But whoooo! he's outsmarted them, all right!

Despite being up to his elbows in the numbers and invoices, despite the evidence of hobbling along with debts, he thinks it's just a matter of luck, that this is just something every vendor suffers, and that his business savvy will win out. He is so far from being able to see the 'big picture' that it's not even funny. Everyone else stays away from discussing it with him, as they've concluded it's of no use, but I am worried for his family since now he's gotten the bright idea of expanding his empire into another shop that is now available for rent down the street, that's 2x as big. Also, I guess it just offends me on an intellectual level that an educated person is not able to put two and two together, even when his life depends on it.

It's sad to see him working 18 hours a day, along with his wife who has to spend her after-school and weekend time.. all 'unpaid' and uncounted. Who knows if they even end up making $3/hour? You can't even talk to him about it in such terms. As long as they bobble along with their heads barely above water, it's a "success" no matter what the true hidden cost.

If I had the numbers, I'd love to calculate for him the cost of just storing 5 or 10 cubic feet of old pajamas in terms of overhead --rent/mortage/heat/electricity/phone/renovations-- over ten years. I guarantee he would remain, nonetheless, in complete denial.

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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 06:39 AM   #43
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Re: So why do most people turn off their brains when financial issues come up?

What do families do when irrational unreasonableness affects a member? If it is alcohol, families do interventions. But if it is poor business sense that can break the family bank, do you do an intervention? Live with it or get a divorce? Tough choices.
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 11:38 AM   #44
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Re: So why do most people turn off their brains when financial issues come up?

Quote:
Originally Posted by ladelfina
It's sad to see him working 18 hours a day, along with his wife who has to spend her after-school and weekend time.. all 'unpaid' and uncounted. Who knows if they even end up making $3/hour? You can't even talk to him about it in such terms. As long as they bobble along with their heads barely above water, it's a "success" no matter what the true hidden cost.
If I had the numbers, I'd love to calculate for him the cost of just storing 5 or 10 cubic feet of old pajamas in terms of overhead --rent/mortage/heat/electricity/phone/renovations-- over ten years. I guarantee he would remain, nonetheless, in complete denial.

:
If he had an eBay store, maybe he'd spend more time on that than on his accounting programs and other distractions. And if he puts things up for auctions, he'd actually have to sell them!
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 04:16 PM   #45
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Re: So why do most people turn off their brains when financial issues come up?

grandpa had a haberdashery in the downtown of an upper-middle-class town. he had done very well for many years but then malls came into fashion, downtowns went downhill but grandpa would not give up his store. after a while of losing money my uncle talked him into closing shop and retiring to florida. i was a little kid and don't know the details but i remember it was a traumatic time for my mom & her brother. grandpa wound up being very happy playing tennis year round here.
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 05:10 PM   #46
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Re: So why do most people turn off their brains when financial issues come up?

I love that word "haberdashery"! I guess you would call this a "dry goods" store?

BIL started out selling wholesale fabric to tailors. When there started being a lot fewer tailors that aspect dried up, so he went retail about 15 years ago. DH points out that BIL hasn't changed his selling methods, though; it's one thing to 'chat up' a customer for a half-hour if he's going to place a thousand-dollar order, quite another thing when you are selling a pair of socks or a zipper.

It's still just wierd and frustrating to know that he LOOKS at the numbers, but he just doesn't SEE them. 18 hours may be just the slightest of exaggerations, but I think they'll pry the keys to that store out of his cold, dead hands. He's got a thirty-something daughter with one foot in the biz, but can't comfortably delegate either to her or to the wife. Blocked from any responsibility, the daughter is naturally discouraged from displaying an ownership-type commitment, which is then another sore point in the family!

IF he had the money to retire and play tennis (which by all rights he should have) it might be another story? Instead, it's been downward spiral (now stabilized in kind of a transverse spiral) since the more he "applied" himself, the more twisted things got, so he had to "apply himself" more.. Rinse and repeat. Sigh.

LGFNB, your grandpa was lucky in that he finally saw reason!
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 05:31 PM   #47
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Re: So why do most people turn off their brains when financial issues come up?

Quote:
Originally Posted by ladelfina
LGFNB, your grandpa was lucky in that he finally saw reason!
my memory is to the contrary. like your bil, grandpa could not see times had changed. no more sales, no more customers downtown. he wasn't blind but he just couldn't see it. his children had to do an intervention per martha & pry him out of there with one of those shoe horns he sold. he loved that place. but ya, i like calling grandpa a haberdasher; so much more upscale than merchant.
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-02-2007, 06:40 PM   #48
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Re: So why do most people turn off their brains when financial issues come up?

Inertia is a powerful force particularly in people's lives. People resist change. As people age the resistance becomes even stronger. Change means failure to some people or admitting they are not who they once were.

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Re: So why do most people turn off their brains when financial issues come up?
Old 01-05-2007, 11:45 AM   #49
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Re: So why do most people turn off their brains when financial issues come up?

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Originally Posted by Sandy
Some of the answers have been said but I would add three things:

Money is power. If you say what you have and the next guy has more, you are weaker. Better not to discuss or say anything.

Also, most people are terrible at planning. Getting a handle on this $$ stuff requires planning skills. How many people do you know who had kids by accident, fell into the jobs/careers, stumbled into and out of relationships, etc.? They don't plan for anything big or significant. There are lots of reasons - some are just not planners - ce sera sera and others are afraid to do the introspection that comes with planning, for fear they will come up short to their own standards.

And finally, since these other unplanned things generally work out, well, this $$ stuff will work out as well, so why worry.
Oh, I really like this reply. First, the power thing is really good. I think that is probably a big part of why people don't like to talk about it. I know if someone finds out a co-worker makes $500 more than they do, it's cause for endless trouble.

The planning thing is also really interesting. A neighbor of ours was talking about having kids soon. Now I happen to know their house costs almost exactly the same as ours, and she and her husband make almost the exact same as my wife and I (all equal salaries). I said we were still going to hold off, as we want to stay home with our kids if we have any. She said that she agreed, she was planning on staying home with the kids. I asked how they could afford it, as our home payments along with utilities were equal to one of our salaries. She somewhat shrugged, and said they'd figure it out. I asked if she was planning on quitting her job, or leaving for a few months. She said they'd figure it out once she was pregnant and closer to needing to take time off.

I guess that's what a lot of people do with big decisions, they just don't plan for things. They figure that things will "work out". Now certainly things can work out.. perhaps they'll get a huge bonus before she quits, or perhaps her mother will come live with them to take care of her kid, or perhaps they'll sell their house. I suppose my personality requires that I plan things before making a big decision. I suppose that's one of the reasons many of us are here on this board.
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-05-2007, 01:30 PM   #50
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Re: So why do most people turn off their brains when financial issues come up?

I think it has to do with immediate versus deferred gratification.

Some can look at a spreadsheet they have built and nearly see, feel, and taste the freedom and opportunities that those numbers represent and be willing to defer gratification to make those numbers a reality. Others, even if you show them the spreadsheet or otherwise communicate the FIRE/LBYM message to them, either won't understand it or won't be interested in it. The former would rather have a hamburger a week for the rest of their life starting in 20 years than a hamburger now; the latter would take the burger now.

I think it is partially related to a person's personality makeup in terms of whether they live in the world of ideas or whether they live in the concrete world. I think that is why so many on this board are *NT*'s in Myers-Briggs typology -- the FIRE idea is more real to them than most. Personally I am an INTJ and I think that group is only 3-4% of the US population. I think the *NT* grouping is similarly small -- perhaps 16% IIRC.

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Re: So why do most people turn off their brains when financial issues come up?
Old 01-05-2007, 01:36 PM   #51
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Re: So why do most people turn off their brains when financial issues come up?

Interesting.. I also came up an INTJ..

(I wonder what BIL would be.. do they have the test in Italian?)
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Re: So why do most people turn off their brains when financial issues come up?
Old 01-05-2007, 02:41 PM   #52
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Re: So why do most people turn off their brains when financial issues come up?

I was thinking of the Myers-Briggs typology in my initial statement. I am an INTJ as well. I seem to remember reading on this board some time ago that the ER group is disproportionately INTJ types, and it seems that that personality-type outlook fundamentally helps put someone into a FIRE frame of mind.

But there is something more to it as well, which I haven't quite figured out. For example, the nature of my w*rk pulls for INTJs, so we have a disproportionate number of this type in my office. But, of approx 100 staff I can think of only 1 other who is considering ER (at 57; never had kid expenses). What I don't see is the excessive spending and debt that others on the board report. Instead, I see basic saving (5-8% deferred comp), and then living at your means. Don't know what it means, but an observation.
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