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Old 04-24-2016, 11:02 AM   #81
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While I understand your point, IMO there is nothing wrong with someone graduating college with a modest amount of student debt.... it is essentially using some leverage to make an investment in human capital.
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Old 04-24-2016, 11:07 AM   #82
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Originally Posted by travelover View Post
Do you seriously think that teachers are in the same intelligence range as garbage collectors and custodians? And that farmers are stupid? You must have never know people in either profession.

You totally missed my point. I said if everyone had high IQ AND very high paying jobs. I was trying to point out what it would be like if we had no garbage collectors, teachers, custodians and farmers. Everyone would have to figure out what to do with their own garbage, how to teach their own children, grow their own food, etc.

I did not say that I thought farmers are stupid. I have great respect for teachers and farmers. I also have respect for our garbage collectors, when I see them collecting our trash. They hustle and they are out in cold weather and hot. When I passed a custodian at the hospital the other day, she gave me a very nice smile. I am not sure how much I would be smiling, if that was my job. I have also known many smart people, who either never went to high school or never finished high school. They had to get jobs to help support the family. They were self-educated.

I do agree that the author of the article made many mistakes financially, due to poor judgment on his part. I don't think that his spouse should be held without blame either. I think that he is trying to correct these mistakes, but it is a little too late for him to amass a small fortune. I think that if I were him, I would move to a much lower cost of living area. If he is a writer, I think that he should be able to write there also. He should start trying to be a better role model for his children.
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Old 04-24-2016, 11:40 AM   #83
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Try to convince her that. She still has bag lady syndrome. But that's not the point of my posts. My point is that she never earned a lot of money and she was able to accumulate a nice sum on her own which makes me doubt this lack of savings article.

Perhaps this is the key point. If you want to become rich, then don't spend like you're already rich.

If you are rich, don't think and act that you are

Of course, there is the different discussion of frugal vs cheap...
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Old 04-24-2016, 11:43 AM   #84
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The primary problem was not dwindling means, it was spending, and probably still is.

I think he will have a hard time ever getting past this because he doesn't seem to grasp how his behaviour today leads to higher probable outcomes tomorrow.
I was wondering about that, too. He didn't say how much he made but I think at one point he mentioned half of $130K, so maybe ~$65K. Even in California, that is still higher than the median household income in most counties. Wife gets a job, live some place cheaper than the Hamptons and it seems like they would be in much better financial shape.
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Old 04-24-2016, 11:43 AM   #85
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As they say: An ounce of prevention is worth a pound of cure.

He skipped the prevention. He's in a mess. No fancy solutions. Author needs to get expenses in line with income.
+1

Yep, he and his family avoided the prevention (LBYM) for decades. May take painful, radical surgery at this point...
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Old 04-24-2016, 11:52 AM   #86
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I think that's related to the IQ issue though unfortunately. Just by definition half the population is on the left half of the bell curve when it comes to intelligence. Whether this is innate or not, there's not a lot they can do about that. I would suggest that everyone here is at least on the right side of that curve. We're the lucky ones. Yes there are rich doctors that can't save, and there are poor laborers that can, but they're always the exceptions.
Yeah, volunteering in a food pantry I see the left side all the time. This is what I really struggle with when trying to see the balance in what we should do as a society vs. letting people make their own mistakes. Charity can only do so much for those born on the wrong side of the curve.
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Old 04-24-2016, 12:28 PM   #87
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The Atlantic Article on Lack of Savings

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Originally Posted by fh2000 View Post
After finishing reading the article, I have different thoughts than most posters here, coming from an Asian background: he and his parents invested almost all their funds on his 2 daughters. This is what most Asian families do today including DW and I with our children though we have more means to do so.

"Although I don’t have any regrets about that choice—one daughter went to Stanford, was a Rhodes Scholar, and is now at Harvard Medical School; the other went to Emory, joined WorldTeach and then AmeriCorps, got a master’s degree from the University of Texas, and became a licensed clinical social worker specializing in traumatized children—paying that tariff meant there would be no inheritance when my parents passed on. It meant that we had depleted not only our own small savings, but my parents’ as well."

His two daughters are well-prepared to become great contributors to the society and hopefully to his retirement if they were raised in an Asian family. I am not sure if the young ladies would pay them back like I did to my mom though. My 2 other siblings and I contributed funds for my late mother for 30 years so she could have a comfortable life after spent all her funds on us.

I consider this is one thing he and his parents did right.
I think this is a very admirable value, which also still exists among many non-Asian American families like mine that I can think of who have parents living at home, etc. But I struggle with when and how to do it myself because my parents have not made the wisest financial choices, and they have post-divorce partners with their own means, lifestyle choices and children. For example, my 76 yo DF celebrated his recent retirement by buying a brand new SUV, even though his only income is going to be from SS, which he started taking years ago as soon as he qualified for it. He's a successful engineer and I love him yet he seems incapable of imagining next year, much less 5, 10 or 15 years in the future. Fortunately, he owns his little condo and his lady friend has SS and a teachers' pension. I could cite somewhat better, though still quite poor, choices by very precious DM, who sacrificed a lot to raise me, and her partner. Then there is the pride barrier because my parents have always worked and are independent. How am I supposed to help those situations when no help is being requested (yet?). If they reach the point that they really need me, as in they still have genuine needs after they have cut back on other parts of their budgets and lifestyles that are luxurious wants, of course I will be there for them. However, I don't expect to have much participation from anyone else in my generation, as none of them are in a position to help given their own financial and lifestyle choices.

So I think it is fine what Asian and other families value and do but for my family, it's complicated. Is it always the right thing in Asian families to subsidized parents financially, regardless of their own choices?
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Old 04-24-2016, 12:46 PM   #88
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I disagree that only if you go to Harvard Medical school then you are contributing to society. My own nephew and nieces, all took the scholarship route at a low end UC vs more prestigious college. They all graduating from medical school and finishing medical residencies. I'm sure they will be contributing members to society.


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Old 04-24-2016, 01:06 PM   #89
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I have no problem saying that the author's condition is the result of his own bad decisions. He sometimes says the same thing.

But, he also says that this isn't just about him.
He claims it's becoming more common in the US, and that should worry everyone.

He says "something has changed" in the US that makes it harder to make good decisions today.

He points to three things:
1. It's easier to get credit today.
2. The financial world is more complicated.
3. The Up Elevator stopped running.

For (2), think of adjustable rate mortgages, and 401k's replacing DB pensions.

For (3): Wages in the US used to grow just because everyone shared in greater productivity. People lived better than their folks without working any harder. You could stretch to buy a house with a 30 year fixed mortgage, then discover it wasn't that hard to pay it off because your income went up.

Some people spent with the expectation that their incomes would increase enough to pay for it, then saw flat or decreasing incomes.

So the percent of people in financial trouble has increased.

The rest of us should worry because those people in trouble are going to look to politicians to bail them out. Maybe they will want to forgive all that student debt, or have a $15/hr min wage, or have tariffs on imports from China, or print money with abandon, or have big taxes on businesses, or big tax cuts because Laffer, or whatever.

In short, people who think they've got it rough and nobody is listening are more likely to elect demagogues with simplistic and damaging "solutions".

I'm wondering if other people here read the article the same way I did?
If so, is he right that more people are in more trouble these days?
And, do you agree that we should worry?
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Old 04-24-2016, 01:16 PM   #90
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In short, people who think they've got it rough and nobody is listening are more likely to elect demagogues with simplistic and damaging "solutions".
The only demagogues these people seem interested in electing are the ones who aren't inclined to do anything about it. I see no great wave of people demanding they be made whole.
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Old 04-24-2016, 01:20 PM   #91
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I'm wondering if other people here read the article the same way I did?
If so, is he right that more people are in more trouble these days?
And, do you agree that we should worry?
Trouble is relative. Go back a generation or two and the idea of living in the Hamptons and paying for two kids at exclusive colleges would not even be under consideration.

"A luxury once sampled becomes a necessity." So, what's the solution to a populace being spoiled by a high-standard of living? The author offers none.
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Old 04-24-2016, 01:32 PM   #92
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Originally Posted by Independent View Post
I have no problem saying that the author's condition is the result of his own bad decisions. He sometimes says the same thing.

But, he also says that this isn't just about him.
He claims it's becoming more common in the US, and that should worry everyone.

He says "something has changed" in the US that makes it harder to make good decisions today.

He points to three things:
1. It's easier to get credit today.
2. The financial world is more complicated.
3. The Up Elevator stopped running.
He says that because that's what happened to him. He doesn't really show how that is happening to everyone else. How much damage was caused by the housing credit bubble and subsequent collapse?
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Old 04-24-2016, 02:40 PM   #93
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Trouble is relative. Go back a generation or two and the idea of living in the Hamptons and paying for two kids at exclusive colleges would not even be under consideration.

"A luxury once sampled becomes a necessity." So, what's the solution to a populace being spoiled by a high-standard of living? The author offers none.
There is some line in the Your Money or Your Life book about yesterday's luxuries being today's thrift shop goods.

The definition of middle class living has really changed over the recent decades. Levittown houses, which were considered middle class after World War II, had 750 square feet. That is a lot less space to have to heat, cool, insure, pay taxes, furnish and repair than most American sized houses built in recent years.
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Old 04-24-2016, 03:14 PM   #94
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There's a recent article on that, too!

Why Luck Matters More Than You Might Think: When People See Themselves as Self Made They Tend to Be Less Generous and Public Spirited

Luck Is a Bigger Contributor to Success Than People Give It Credit For - The Atlantic

I do feel a lot of compassion for people who are mentally ill, ex-felons who no one will hire, and people born crack babies. DH and I have been trying to think of a retirement project or cause we could contribute to or volunteer for on that front.

I have to admit though, like many here, I also have a harder time with feeling compassion for educated people like the author with middle class and above incomes who simply want to live above their means. But who knows - maybe it is something genetic or hardwired that makes some of us not want to spend money as much as others. Many people here and other ER forums are INTJ types or close to it. Perhaps extroverts have a much harder time resisting status items they cannot afford because they care more about what other people think of them.

I also agree that billions of dollars spent on advertising for easy credit to spend on consumer goods and status items yet almost no advertising for savings and LBYMs are part of the issue as well.

True on both the compassion for those less fortunate and the INTJ account.



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Old 04-24-2016, 04:34 PM   #95
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He points to three things:
1. It's easier to get credit today.
Frankly, I agree with this. Credit cards are way too easy to abuse.

Most of the folks here know how to tame the beast - optimizing the kickbacks for maximum profit (hey, we run most of our expenses through our Costco AmEx and get a pretty big check from them every year, but we've NEVER paid interest on that card) But lots of people find it easy to easy to run them up and then get saddled with awful debt payments. I see this all around me.

For most people they would be way way better off sticking to debit cards and never touching a credit card.

My DF is an example of this, he does fine for a while, then "something unexpected" comes up and before you know it, there's a big dollar amount sitting on the card. I got him to switch to a debit card and he's actually able to keep thing under control so far. I expect many people would benefit by this approach. (RE: Dave Ramsey)
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2. The financial world is more complicated.
Maybe. I'm not sure I buy this. OK, somewhat. But, there have always been people willing to make things complicated and then take advantage - see life insurance salesmen over the decades...
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3. The Up Elevator stopped running.
Again, to some extent, but it really hasn't stopped. Maybe slowed a bit.

Part of this I think has to do with diminished inflation. When inflation was galloping along in the 70's it was easy to get a 10% raise (WOW!) when inflation was 12% and think you were getting head, but not really.

The current 2%-3% inflation doesn't leave much room for 10% or even 5% annual raises. People notice that.
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Old 04-24-2016, 07:06 PM   #96
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Well, his physician daughter can bail her parents out unless she turns out like that other Stanford grad physician Debi Thomas.
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Old 04-24-2016, 07:44 PM   #97
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He says that because that's what happened to him. He doesn't really show how that is happening to everyone else. How much damage was caused by the housing credit bubble and subsequent collapse?
When I read the article, I find attempts to support all of those.

Though, I think my examples of 401k's replacing pensions and the "creativity" in mortgages are better than his comments about (2).

He does wage data. I think he's got the right trend, though I might use other sources.
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Old 04-24-2016, 07:47 PM   #98
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Trouble is relative. Go back a generation or two and the idea of living in the Hamptons and paying for two kids at exclusive colleges would not even be under consideration.

"A luxury once sampled becomes a necessity." So, what's the solution to a populace being spoiled by a high-standard of living? The author offers none.
I agree, and he has a good quote that shows he recognizes it.

But, people are still frustrated, discouraged, looking for scapegoats or answers, expecting the gov't to "do something" even if their idea of "basics" would sound like luxury to the average Chinese worker.
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Old 04-24-2016, 07:57 PM   #99
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Again, to some extent, but it really hasn't stopped. Maybe slowed a bit.

Part of this I think has to do with diminished inflation. When inflation was galloping along in the 70's it was easy to get a 10% raise (WOW!) when inflation was 12% and think you were getting head, but not really.

The current 2%-3% inflation doesn't leave much room for 10% or even 5% annual raises. People notice that.
Yes, my example about rising incomes bailing out the couple that went in awfully deep on that 30 year mortgage was partially driven by inflation. (Also, by banks being conservative on how much they'd lend, and only offering plain vanilla mortgages.)

OTOH, I think the notion that real incomes grew significantly for a number of generations of Americans, then flattened out, is pretty accurate. I think that some people got into trouble because their expectation was that they'd live at least as well, more likely better than their parents. They spent like that, even if "prudent" financial management would have told them they didn't have the income to support their expectations.
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Old 04-24-2016, 07:58 PM   #100
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I don't feel bad for the author. I grew up without much of an education in how to handle money, but still, over time, I figured it out. Once I started working full time out of college I started reading books on finance, personal money management, and investing (a lot of bad books out there by the way). I mean, how does one get up for work every day and then not ever think to themselves "gee.... I wonder, maybe I should see if I can find a way to not have to do this forever, this money stuff they give me every two weeks, maybe I should see if I can't figure out a way not to have to work for that anymore".

Anyway, not being able to pay for a $400 emergency (and by that I mean something truely unexpected, not an appliance breaking down or a car repair which you know will happen eventually) means only one of three things to me:

1. You don't make enough money and are barely scraping by now matter how you manage your money (I do feel badly for some of these people because I do know people who do not have the mental capacity to actually do better). I have been in this group before.

2. You choose not to take the time and educate yourself on how to manage your money well. I don't feel bad for this group. I self educated myself in financial responsibility and money management, it can be done.

3. Something terrible and unexpected happened that you reasonably could not have planned for. Medical issues, your spouse withdraws from the marriage leaving you to raise the children by yourself, your business goes bankrupt despite your best efforts, ect.. I do feel a little bad for this group, however I did have a failed business that put me about bankrupt when I was in my late 20's, and I survived it, so some of the things on this list can be worked on, sometimes.

Overall I guess I'd say I do feel bad for the ones who just aren't succeeding, or are terribly unlucky, due to no fault of their own. As for the author, and others like him, suck it up. You knew what your destiny was when you were making the bad decisions.
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