Why are people poor???

[ziggy29]

Caused by what? Relentless advertising perhaps? There sure has to be some explanation for the rampant consumerism around here.

I think we've been conditioned to believe that "we deserve it" and forgot how to delay gratification until we could easily afford it.

I also think that we made mistakes in the economic post-WW2 boom years by creating entitlements and benefits that were clearly not sustainable, and even after it was becoming obvious that the global economy had shifted to the point where we clearly couldn't afford them any more, instead of reforming them, watering them down or eliminating them we just kept borrowing. That is true of federal, state and local budgets just as it was true for a lot of household finances.

 

[misty57]

The key to breaking the cycle of poverty is the kind of message that these kids (those who did not win the "birth lottery") receive each and every day from their teachers. Teachers are, often times, the only humans that have daily contact with these kids that can deliver the message that they are valued and that someone really believes in their potential to be productive and successful members of society. I know that teaching is a hard enough profession these days, but they are probably the best hope that these kids have of ever breaking the cycle. Until we have teachers who have the talent and desire to do this, the cycle of poverty will continue. I know there are many really great teachers out there who can do this; unfortunately, I don't think there are enough of them to go around.

 

[calmloki]

Caused by what? Relentless advertising perhaps? There sure has to be some explanation for the rampant consumerism around here.

Audrey

Ahem. Oh owner of the big diesel pusher and buyer of house made for same - can you explain? Sez the guy who bought a cashmere jacket for himself last month 'cause he wanted it, not because he had any need for it. Did go to Mens Wearhouse based on comments made to TheFed here - so maybe it IS the relentless advertising on this board. Have to see if Martha and Rich buy next door to you....

 

[audreyh1]

I think we've been conditioned to believe that "we deserve it" and forgot how to delay gratification until we could easily afford it.

I also think that we made mistakes in the economic post-WW2 boom years by creating entitlements and benefits that were clearly not sustainable, and even after it was becoming obvious that the global economy had shifted to the point where we clearly couldn't afford them any more, instead of reforming them, watering them down or eliminating them we just kept borrowing. That is true of federal, state and local budgets just as it was true for a lot of household finances.

Again - who is pushing the "you deserve it NOW" message the hardest? Sure comes across loud and clear in the endless consumer advertising. I kind of suspect "free" TV broadcasting paid for by ads - a model which now is used in most cable programming as well, even though we pay for cable by subscription.

How much does that rampant consumerism correlate with the growth in the hours of TV watched per week? I wonder.

Audrey

 

[audreyh1]

Ahem. Oh owner of the big diesel pusher and buyer of house made for same - can you explain? Sez the guy who bought a cashmere jacket for himself last month 'cause he wanted it, not because he had any need for it. Did go to Mens Wearhouse based on comments made to TheFed here - so maybe it IS the relentless advertising on this board. Have to see if Martha and Rich buy next door to you....

Hey - If I were out buying stuff all the time, running up credit card debt or a HELOC, with closets stuff full of clothes and shoes and a house overflowing with "stuff", and a huge 5000 square foot house, multiple autos, other toys, etc., I might consider myself a victim of rampant consumerism.

But I saves my $$$ and then I buy it on the big stuff I REALLY want, which IMO is the whole point of $$$. You DO eventually want to spend it! Just be sure to spend it on what matters the most.

I know you know that already!

Audrey

P.S. And I eschew most advertising and I didn't grow up with it either as I lived without TV most of my childhood.

 

[unclemick]

Get born American or least find a way to get here.

1957 - An Aunt -aka 'The Swedish maid' died in New York City. She left my Father about 21k in mutual funds. Which he promptly sold because 'he knew' from the Great Depression' that stocks were evil and besides he was a FDR Democrat(don't ask there isn't a rational explanation). He probably made at least twice her highest pay as a log train mechanic.

I in the 7th grade went to the library and checked out the only book they had on mutual funds - Handbook of Mutual Funds or some such title.

heh heh heh - You can draw your own conclusions. Me being a 'poor' ER will lighten up and stop shopping the Salvation Army Family Store sales when my portfolio gets past 3 mil - inflation don't you know.

 

[bosco]

By rational, I am generally referring to the ability to list the long and short term pros and cons of a specific decision, and making a choice that will reasonably balance long and short term interest. People generally fail this test when buying cars, buying houses, choosing spouses, make career decisions, making educational decisions, family planning, etc.

I think there is little in life scarier than the prospect of everybody and everything being too "rational." Corporations behave "rationally" when they hide behind the corporate veneer and hire lawyers to stonewall people rather than behaving ethically.

Let's say I am dirt-poor, and can't afford to feed myself. There is a person walking in front of me with $1,000,000 on his person (yes, HE'S not rational). If I kill him, and there's a 5% chance of my being caught, is that rational? Especially considering that if I DO get caught, I'll probably be locked up and fed three squares per day for a long time?

I'm not sure that it's so easy to define what 'rational' really is, but I'm fairly certain that everybody behaving according to somebody's definition of what it is will not make the world's problems go away.

 

[harley]

While drinking my first cup of coffee and reading this article, I noticed that OP mis-titled the original title of the article that was copied and pasted. It was not "Why People Are Poor", but, rather "10 Reasons Why Most People Do Not Achieve Financial Success".

Ah! Just a hint to future posters - if you want to keep Harley from spouting off, post the correct title. This one makes much more sense.

 

[frayne]

Borrowing for things that loose value, so that with interest payments you pay much more the article than it cost initially.

For a cut and paste job he could have at least run it through spell check or proof read before posting.

 

[Gumby]

For the benefit of our newer members -- we discourage a wholesale cut and paste of articles from other sources. It is far better to summarize the main argument, perhaps throw in a few comments of your own and then link to the article so that those who want to read the whole thing may do so.

Thanks.

Gumby

 

[NW-Bound]

Alan and others, thanks for sharing your stories.

While I have some personal triumphs to be proud of, it would pale besides the hardships that some of you endured. How bad could it be to a kid who grew up indulging in Franco-Belgian comics, get to read not just Les Misérables but also The Adventures of Tom Sawyer in French?

But I would like to add that my life wasn't always gravy. Just for entertainment, I will tell my story.

My family got trampled by a "black swan" when I was in my late teens. For a while, we thought that we would have to go back to making a living like the grandparents that I never knew: to live off the land. Except that we had no land, and also lost our home, a 3-story house with 12 rooms and 3 kitchens, one on each floor. We lost everything! And it was through no fault of my parents.

Things looked quite bleak. Though I had very good grades in school, college was out of reach. My parents rebuilt with what they had left and kept, mostly in their heads. Us kids pitched in doing odd jobs, and luckily, we did not end up being day laborers as we had feared. And I even got to go to college, a state university even, thanks to Pell Grant. Isn't this country great or what?

We all stayed at home to help out financially, and only moved out when we got married, all 4 of us. When done with school, I had enough money saved to even get me a custom-made suit for job interviews. I was so skinny that nothing off the rack fit me; this I recently mentioned in another thread (I liked the custom suit so much that once I had a good job, I had two more made, one for my wedding ).

But talk about deprivation, how about this? I never went to one party while in school. Other than my sweetheart, I had no other friends. I once took 21 credit hours per semester, though I normally averaged around 18 to 19. My children now labor under a load of 12 hours/semester, just barely enough to qualify as full-time students. I worked 20 hrs each weekend to contribute to our household expenses. Party?

I once wrote here that compared to others, I have lived the life of a monk, and it is not too much of an exaggeration. My parents did not allow a TV in the house until I was about 15. When they finally did, I did not know if that was because they thought we were old enough to be safe from the seduction of TV, or it was because they themselves gave in to its entertainment value.

Now, you know why I became a bookworm! And frankly, I did not miss TV. Nowadays, the state Child Protective Service might come to the rescue and take custody of such abused children.

PS. It was the life-changing trauma that caused me to lose my knowledge of French. When you get bogged down with plebeian concerns, your priorities get all mixed up. And then, when you get your wallet filled again, have some free time for yourself, you find that your memory is gone. Sigh...

 

[NW-Bound]

The average person on this board is clearly two orders of magnitude more rational than normal.

By rational, I am generally referring to the ability to list the long and short term pros and cons of a specific decision, and making a choice that will reasonably balance long and short term interest. People generally fail this test when buying cars, buying houses, choosing spouses, make career decisions, making educational decisions, family planning, etc.

Just teasing...

That does not keep us from arguing about mundane stuff. Given the same facts, we wander off to different conclusions

 

[bbbamI]

That does not keep us from arguing about mundane stuff. Given the same facts, we wander off to different conclusions

What? What? Well I never.....

 

[youbet]

I noticed that OP mis-titled the original title of the article that was copied and pasted. It was not "Why People Are Poor", but, rather "10 Reasons Why Most People Do Not Achieve Financial Success".

Very true. Thanks for pointing it out. There's a big difference between being "poor" and "not achieving financial success."

This has been an interesting discussion, but as you point out, it's been a discussion about the the inappropriate thread title, not the article quoted.

The 10 reasons seem reasonably valid as obstructions to achieving financial success, but not all that relative to being truly "poor."

 

[NW-Bound]

I saw that the thread was mis-titled but thought that we would all play along, to have more to discuss and to talk about. I thought we wanted a repeat of the following.

http://www.early-retirement.org/forums/f44/what-did-you-buy-today-46587.html

 

[Tigger]

poverty and hardship build character; wealth and security destroy it

Next thing you're going to tell me that money is evil and poverty is a good thing. ;-) More seriously, I'd say "poverty and hardship CAN build character; wealth and security CAN destroy it".

I group the factors that keep you out of poverty as follows:
- Luck (things you don't have any control over, like where you're born and accidents)
- Choices (you can control these, but it helps if you're surrounded by good role models and have learned to learn)

@Calmloki I too am the eldest and do financially better than my siblings.

 

[Alan]

Next thing you're going to tell me that money is evil and poverty is a good thing. ;-) More seriously, I'd say "poverty and hardship CAN build character; wealth and security CAN destroy it".

I group the factors that keep you out of poverty as follows:
- Luck (things you don't have any control over, like where you're born and accidents)
- Choices (you can control these, but it helps if you're surrounded by good role models and have learned to learn)

@Calmloki I too am the eldest and do financially better than my siblings.

I'm also the eldest and do financially better than my siblings. - I wonder what the statistics show in a large population?

As for luck - I just heard that my brother returned to Australia from attending our Dad's funeral and then lost his job 2 days after he got back

He has had a number of strokes of bad luck over the years that have set him back enormously but he always seems to bounce up again.

 

[Tigger]

As for luck - I just heard that my brother returned to Australia from attending our Dad's funeral and then lost his job 2 days after he got back

He has had a number of strokes of bad luck over the years that have set him back enormously but he always seems to bounce up again.

Good to hear he's been able to bounce up again. Some people seem to be more able than others to stand up and fight on. But any of us could become poor if we had several bad blows one after another (loss of source of income, of spouse (alimoney money), health and/or friends). Some people who are now homeless did pretty well before a cascade of unpleasant events destroyed their world.

There's an interesting theory that says that the current poor are in fact not the descendants from the old poor but from rich people. From New York Times article:

Generation after generation, the rich had more surviving children than the poor, his research showed. That meant there must have been constant downward social mobility as the poor failed to reproduce themselves and the progeny of the rich took over their occupations. “The modern population of the English is largely descended from the economic upper classes of the Middle Ages,” he concluded. As the progeny of the rich pervaded all levels of society, Dr. Clark considered, the behaviors that made for wealth could have spread with them. He has documented that several aspects of what might now be called middle-class values changed significantly from the days of hunter gatherer societies to 1800.

 

[Koolau]

There's an interesting theory that says that the current poor are in fact not the descendants from the old poor but from rich people.

The discussion reminds me of a quote (probably attributed to several but I recall it being attributed to an actress - Betty Davis? May West??) "I've been rich and I've been poor. Rich is better."

Another favorite - I'd have to look up the exact quote and attribution: "I've never been in a situation where having more money made it worse."

Still, I always think of a missionary friend who described "rich" as having choices. If you go to your closet and have to decide which clothes to wear, you are rich. If you go to your pantry and puzzle over what you will prepare for a meal, you are rich. If you aren't sure whether to go to K-mart or Walmart, you are rich. In my friends eyes, it was difficult to consider too many Americans as poor. He knew quite a few folks who really did NOT have any of the choices mentioned. Yet, many of these folks were joyous. It was a humbling discussion. I have to remind myself of it occasionally.

 

[brewer12345]

I have friends who should be quite well off, but never seem to manage it. Six figure incomes, steady employment, mobility, good benefits, supportive family, yet they cannot scrape together the money for a downpayment and if the main earner lost his job I think they would be in real trouble inside 6 months. I think its mostly hyperconsumption, but it still amazes me.

 

[smjsl]

Who says people are poor? I was watching a few Suze Orman shows and it seems like people calling in usually are couples with 8-10k monthly NET income AFTER all taxes, social security, medicare and everything or 1 person with 4-5k net income... I think this corresponds to ~100k in salary for 1 person (with taxes, medicare, SS, and if not enough, also 401k/IRA contributions, which I think are also NOT counted there in net income adding up to 40-50%).. not bad at all..

Ok, maybe some are still poor for spending it all but I am amazed at those income numbers. Maybe it's a show for "high-income-high-debt" audience only?

 

[FinanceDude]

Caused by what? Relentless advertising perhaps? There sure has to be some explanation for the rampant consumerism around here.

Audrey

I think there is some merit to that. From early on, kids are bombareded, well before the Saturday morning cartoon onslight of commercials, to the ads in the print media, online, TV, etc............we are all bombarded. And advertisers have gotten clever over the years, everything that is expensive is sold with a monthly payment, like cars, tvs, furniture, jewelry, etc.

One of my best friends is a very successful real estate agent. He says the "stuff" he sees in people's homes is downright staggering........and its not like they got it all off craigslist or freecycle or rummage sales..........

 

[harley]

One of my favorite TV shows, Chuck, is coming back on next Sunday. From what I understand, they are trying an experiment in product placement advertising on the show in a big way. I hope it doesn't mess up the story line. I'll be curious to see how it works, since I'm such a vehement commercial avoider.

 

[ziggy29]

One of my favorite TV shows, Chuck, is coming back on next Sunday. From what I understand, they are trying an experiment in product placement advertising on the show in a big way. I hope it doesn't mess up the story line. I'll be curious to see how it works, since I'm such a vehement commercial avoider.

The problem here is that it's certainly not going to result in fewer commercials. If it did, I could probably live with the product placement plugs.

Still, this is the way it's going to have to be in the era of DVRs.

 

[Enuff2Eat]

I grew up in an impoverished broken home. My neighborhood wasn't rough, but it wasn't ideal. Having enough to eat was a major concern. I'd often go out at night to get food from garbage dumpsters. Lots of other interesting stories.

I have two brothers. One makes about $10K/yr (poor) and the other about $35K/yr (blue collar middle class). I make a little under $200K/yr. We came from the same stock. Went to the same schools. Had many of the same teachers. The opportunity was there. It was just a matter of accepting it.

I believe that 90% of poor adults are poor due to their own choices. In the United States, pretty much everyone has the opportunity to obtain at least a middle class income and lifestyle. Yes, it's certainly true that the children of poor parents are more likely to become poor adults, just like the children of middle class parents are more likely to become middle class adults. I believe the biggest disadvantage the poor have is their inability to realize that they do not need to remain poor. This can manifest itself in many ways.

One of my high school friends, whose father was a doctor, once told me that it wasn't until 8th or 9th grade before he realized that not everyone went to college. He just assumed college was a natural extension of high school. I was the opposite. It wasn't until 8th or 9th grade before I realized that it wasn't just the very rich who went to college (without an athletic scholarship).

It's not a lack of opportunity, at least in the United States. It's about perception and personal choice.

good post. My family is similar to yours. What I see is the ones that work hard and consistent throughout their life do better than the ones that tend to makes excuses and have many "personal" issue. I could only speak on what I see within my family. I do believe hard work is a choice, if you choose NOT to work hard you still can do alright and survive in this country.

enuff