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Old 04-23-2016, 10:53 AM   #21
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I don't look at the author as being whiny, I think he's just pointing out a problem that afflicts many Americans.

"Choice, often in the face of ignorance, is certainly part of the story. Take me. I plead guilty. I am a financial illiterate, or worse—an ignoramus. I don’t offer that as an excuse, just as a fact. I made choices without thinking through the financial implications—in part because I didn’t know about those implications, and in part because I assumed I would always overcome any adversity, should it arrive."

If it affects almost half the US population, then that's a social problem that we should try to work harder to correct. Maybe try to increase financial literacy?

It would be great if this was done in high school. Force kids to take a mandatory class teaching basic finance. Everybody should be comfortable with percentages and calculating interest. Compounding interest should also be taught, in both directions. If done in high school, then you can also introduce choosing a college/major and the associated costs. With a few basic skills and exposure to thinking about money and how they relate to your choices, I think as a society we'd be better off.
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Old 04-23-2016, 10:54 AM   #22
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I wonder if social media has effectively expanded the neighborhood, thus giving everyone more Joneses to keep up with. Someone sees Johnny From High School just bought a shiny new 328i that looks way nicer than their 05 RSX, and no way Johnny From High School is more successful than me!


When I didnt have any money in my younger days, I blew many dollars on cars. Now that I do have the money to buy cars I take perverse satisfaction in being cheap. Just this week I took my 09 Trailblazer into shop to put a new ignition switch in and mechanic said... "This Trailblazer looks brand new inside and out. Anymore all Trailblazers I see here now are all trashed out."
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Old 04-23-2016, 11:04 AM   #23
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Call me a self-righteous prick or whatever, but I have no sympathy for self-inflicted problems. Yes it takes some financial ducation and the ability to have a career that can support your given lifestyle. However, making the poor choices is not my problem.

The sad part is all these self-inflicted problem people will vote and select the person that gives them the most gov't handout. That leads to my wallet being tapped by gov't because I am responsible and make good choices.
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Old 04-23-2016, 11:08 AM   #24
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What a pantload! Its really simple: Live below or at least within your means and pay attention to your balance sheet as much as your income. The stupidity of people like the author of this lengthy whine does not make me interested in doing anything other than letting them suffer the consequences of their choices.
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Old 04-23-2016, 11:36 AM   #25
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When I didnt have any money in my younger days, I blew many dollars on cars. Now that I do have the money to buy cars I take perverse satisfaction in being cheap. Just this week I took my 09 Trailblazer into shop to put a new ignition switch in and mechanic said... "This Trailblazer looks brand new inside and out. Anymore all Trailblazers I see here now are all trashed out."
A similar anecdote... I like cars, I enjoy car shopping. I hate car purchasing because I know generally speaking I'm going to have buyer's remorse. That said, I'm OK with buying reasonable luxury because I know DW and I are going to keep it for 150,000 miles. (See the compact SUV thread where we're considering a BMW X1 as well as a Prius and Honda HRV).

Leads to the story: I've had my 2007 Infiniti G35 for going on 10 years now. It's running at 96,000 miles (I've deployed four times in that period and sometimes commute by bicycle). I replaced the AC compressor, otherwise routine stuff in that period.

My brother-in-law laughed when he saw it last fall and said, "You're still driving that thing?" Then he used it for a day and remarked at how good care I'd taken of it and how it was a really nice car still. I was pretty happy with that!

I always think that when buying a car, I aim for something I'll be happy with for a long time. I'm willing to put the latest tech on it for a few thousand more if I think that'll help keep the itch off to buy another newer car for a few more years. We spend the third most amount of time in our cars while we're working, so I'd like it to be nice, within reason.

I think the majority view cars as status symbols. I try not to, but I like nice.
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Old 04-23-2016, 11:40 AM   #26
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It is easy to look back in hindsight and analyze the choices the author made in his lifetime. I tried to remember back to those decades and I'm not totally shocked at the choices he made at that time. Though I think having his wife quit work at time two income households were increasing was going against the grain.

I have to say in my own case, I never suffered a financial setback and I was never unemployed. No changing jobs. No medical bills. No financial burden by parents. I don't have kids.

The things I did right were common wisdom but not really part of a conscious plan.

I was both prudent and lucky.
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Old 04-23-2016, 11:48 AM   #27
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What a pantload! Its really simple: Live below or at least within your means and pay attention to your balance sheet as much as your income. The stupidity of people like the author of this lengthy whine does not make me interested in doing anything other than letting them suffer the consequences of their choices.
Buried in the article is the crux of the matter... one he should've highlighted more blatantly:

Quote:
In retrospect, of course, my problem was simple: too little income, too many expenses.
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Old 04-23-2016, 11:54 AM   #28
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We do seem to be a self righteous bunch at times. I read the article and think "There but for the grace of God go I." Almost half of our peers couldn't afford an emergency room visit or a car repair? I worry that situation could come back to bite us on our collective butts. And it certainly is fueling the current anger on both the right and the left. Many of us believe drug dealers are evil people preying on the weakness of our fellows but what about this quote from the article:

Part of the reason credit began to surge in the ’80s and ’90s is that it was available in a way it had never been available to previous generations. William R. Emmons, an assistant vice president and economist for the Federal Reserve Bank of St. Louis, traces the surge to a 1978 Supreme Court decision, Marquette National Bank of Minneapolis v. First of Omaha Service Corp. The Court ruled that state usury laws, which put limits on credit-card interest, did not apply to nationally chartered banks doing business in those states. That effectively let big national banks issue credit cards everywhere at whatever interest rates they wanted to charge, and it gave the banks a huge incentive to target vulnerable consumers just the way, Emmons believes, vulnerable homeowners were targeted by subprime-mortgage lenders years later.

These guys seem to be preying on weakness just like drug dealers.

Maybe those of us "smart enough" to keep our CC balances at zero are the just the same as the majority of people who "experiment" with crack or heroin and don't go over the cliff. Did those of us who fooled around with poly-drugs in the 60s know in advance we weren't susceptible to the risk or did we just luck out. Did those of us who racked up some CC debt in our 20s know we were emotionally primed to work things out or did we just luck out?
I would agree but it's not like it is a deep dark secret that carrying credit card debt destroys wealth... CC debt is the first thing any of the mainstream financial help shows focus on. It's not like it is a deep dark secret that people should live within their means and have an emergency fund. I'm sure if you talked to these people they would confirm that they know CC debt is bad and that they should live within their means and have an emergency fund. They just choose not to.... and while I respect their right to make those suboptimal choices I also think that they need to live with the natural consequences and I have little sympathy for them.

On subprime I have a bit more sympathy... I'm sure that there were some totally clueless people who believed it when the banker told them they could afford a house.... but I think there are a bunch of others who knew better but just wished it to be true and succumbed to the temptation.
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Old 04-23-2016, 12:00 PM   #29
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Originally Posted by 38Chevy454 View Post
Call me a self-righteous prick or whatever, but I have no sympathy for self-inflicted problems. Yes it takes some financial ducation and the ability to have a career that can support your given lifestyle. However, making the poor choices is not my problem.

The sad part is all these self-inflicted problem people will vote and select the person that gives them the most gov't handout. That leads to my wallet being tapped by gov't because I am responsible and make good choices.
I think some people are truly unfortunate, run into major medical bills where they cannot reasonably expect them and don't have the income to support paying.

I think many more people allow themselves to be set up for less dire financial emergencies to crush them financially, whether by choice (sending kids to private college) or not (divorce). In the end, a lot of those boil down to poor choices.

But there are still some small number out there who truly through no fault of their own end up in rough waters. That's why I have a hard time throwing rocks and DW and I remind ourselves that not only have we been very smart to this point, we've also been pretty lucky.
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Old 04-23-2016, 12:01 PM   #30
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But what causes people to make all those spending choices? Here is a thought provoking piece from Megan McArdle in Bloomberg that takes off on Gabler's piece and attempts to answer that question.

I do not often agree with Megan, but based on my observations around my neighborhood, she seems to be on to something.

Parents Are Bankrupting Themselves to Look Adequate - Bloomberg View
She has many good points but personally I always thought it was good to say "no" to many of our kids' status item wants. It didn't take a village for us to do that. I thought learning you don't always get everything you want in life was simply a part of growing up. Some of the neighborhood kids who didn't have budgets and were just given money whenever they wanted it are actually struggling more now as young adults. We had older cars than many of our neighbors but I don't think the kids were ever emotionally scarred by that.
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Old 04-23-2016, 12:03 PM   #31
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Saw this on the nightly news last night and was shocked to hear that nearly half the people age 55 and older have little or no retirement savings. The story was on reverse mortgages and is worth a watch.

Could Getting a Reverse Mortgage Help You Save Money? - NBC News
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Old 04-23-2016, 12:09 PM   #32
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The 47% number is deceptive. The article states, "The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing..."

I bet many of us would not have $400 cash in our pocket so we'd use a credit card instead. That's borrowing.
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Old 04-23-2016, 12:12 PM   #33
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I'm not sure I believe anything any more. Even my poor sister who always makes low salary to my family managed to have a large retirement account. On top of that she owns 3 houses in California, 2 paid off completely. Never married. She had nearly 3/4 of a million in her 401k when she last showed us. There were times in the past that she could only afford to put in 4%. She was unemployed often. But the trick is she invested 100% in stocks.


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Old 04-23-2016, 12:16 PM   #34
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Saw this on the nightly news last night and was shocked to hear that nearly half the people age 55 and older have little or no retirement savings. The story was on reverse mortgages and is worth a watch.

Could Getting a Reverse Mortgage Help You Save Money? - NBC News
I saw that on the news too but I'm still skeptical.... who knows whether the reporter is financially literate enough to understand these "new" reverse mortgages and decide whether they are ok or not. My suspicion is that reverse mortgage lenders or their shills planted the story with NBC.
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Old 04-23-2016, 12:25 PM   #35
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I saw that on the news too but I'm still skeptical.... who knows whether the reporter is financially literate enough to understand these "new" reverse mortgages and decide whether they are ok or not. My suspicion is that reverse mortgage lenders or their shills planted the story with NBC.
Good point but I think Uncle Sam has stepped in and put the old kibosh some of the more unscrupulous RM lenders and capped how much a person can borrow against his home. Needless to say they have their angle and are going to make money out of the deal some way shape or form.

My surprise was that half of those 55 or older have little or no retirement savings.
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Old 04-23-2016, 12:37 PM   #36
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...She was unemployed often...
Maybe it sounds counter intuitive, but being unemployed can be a positive financial experience.

I know that after the one time I was unemployed for a moderate stretch (over a year) that when I got my next job I was plowing a ton back into savings.

To things contributed in our case:

1. We learned to live on a very minimal budget to make our savings last longer. We just didn't see much reason to step up the spending after I got a new job.

2. It focused us on rebuilding our savings. We did have solid savings to fall back on, but afterwards, we really wanted to rebuilt it. And we just keep going.
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Old 04-23-2016, 01:08 PM   #37
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The 47% number is deceptive. The article states, "The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing..."

I bet many of us would not have $400 cash in our pocket so we'd use a credit card instead. That's borrowing.
Well, hell, I'm up to my eyeballs in "borrowing" then. I buy everything on a credit card... which I then pay off completely at the end of the month.
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Old 04-23-2016, 01:17 PM   #38
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We do seem to be a self righteous bunch at times.
I get what you saying, and I don't think that these mess-ups are bad people. However, they are changing and debilitating our culture, and as you say it will bite us. In fact I think it has already bitten us, it is just that we don't yet realize that our cultural wounds will result in gangrene.

In a modern diverse social democracy, especially one where so many people cannot see beyond their noses, what bites one bites all. Bernie has one answer to the issue that you pose, but Bernie's fans forget that Russia tried this solution for ~100 years now, and what population flow that exists is toward our clearly dysfunctional society from their considerably worse one.

In older society an individual man or woman's fecklessness and stupidity caused their loss, or their children's. Today, it contributes to social gangrene.

As to my self-righteousness, I believe that when people's choices impact on me, which these obviously do, being a good person does not require me to approve of it, or to step in to help. Our government will confiscate some of my resources to hand out as they see fit, usually for no other reason than to enhance their hold on elections, no matter what high sounding spin they put on it.

Ha
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Old 04-23-2016, 01:25 PM   #39
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Maybe it sounds counter intuitive, but being unemployed can be a positive financial experience.

I know that after the one time I was unemployed for a moderate stretch (over a year) that when I got my next job I was plowing a ton back into savings.

To things contributed in our case:

1. We learned to live on a very minimal budget to make our savings last longer. We just didn't see much reason to step up the spending after I got a new job.

2. It focused us on rebuilding our savings. We did have solid savings to fall back on, but afterwards, we really wanted to rebuilt it. And we just keep going.

You maybe right. She was always annoyed that when she was unemployed she couldn't contribute money to her 401k.


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Old 04-23-2016, 01:27 PM   #40
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I think many more people allow themselves to be set up for less dire financial emergencies to crush them financially, whether by choice (sending kids to private college) or not (divorce). In the end, a lot of those boil down to poor choices.

But there are still some small number out there who truly through no fault of their own end up in rough waters. That's why I have a hard time throwing rocks and DW and I remind ourselves that not only have we been very smart to this point, we've also been pretty lucky.
+1

Exactly! DW and I worked hard and made good choices, most perhaps by luck or God's mercy, depending on your affiliation.

Our FIRE has a modest margin of safety, but it could be overwhelmed by a big hit like divorce or a huge health problem, especially if catastrophic or long-term. So DW and I say our prayers every night, and are very thankful for every day we wake up healthy together in retirement
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