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Old 03-20-2009, 12:11 PM   #41
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I found the premise in the book interesting regarding the big upswing in house prices being due to the sudden move to 2 incomes in this country from the primary breadwinner model in decades past.
That brings up an interesting chicken-and-egg question. It seems like the tendency for wage increases to beat inflation started reversing around the time two-income households became more prevalent.

So, if there is ANY cause and effect relationship (knowing that correlation != causation), did more women start working because it became economically necessary due to inflation and lower household income growth? Or did the increase in the supply of labor result in depressing the upward pressure on wages and increase inflationary pressures?

They may not even be related, though, because this period of time also coincided with the beginnings of serious economic globalization which created its own set of economic pressures...
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Old 03-20-2009, 12:27 PM   #42
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I think the idea proposed by The Two Income Trap by Elizabeth Warren is a little incredulous. Obviously the spendthrift household that blows all their money on discretionary items will weather a financial crisis better than a family who has fixed expenditures that cannot be easily reduced. But there is a third option that wasn't really focused on in that book. The family that keeps their fixed expenditures low, and saves a significant portion of the second income earner's salary for a rainy day. With this third style of personal financial management, not only do you have the spendthrift's advantage of not having all your income spoken for each month, you also have the added advantage of an ever increasing account balance to help you weather any financial storm. I really wish Ms. Warren would have focused on this in her book as the best solution that is easily implementable on an individual level.

Let's face it, when both adult members of a household are working and bringing in good incomes, that is as good as that family's income stream will ever be from working. There are so many "known unknowns" that can cause that income stream to go from salaries to one (temporarily or permanently), that you might as well plan for it, or at least a significant probability of it. To name a few: death, disability, childbirth, child rearing, homeschooling, elder care, going back to college, job loss, etc.

Ms. Warren really didn't place much expectation of responsibility to consider these "known unknowns" on the level of individuals households.

To be fair, some households have very low incomes and simply can't save much, if any, of a second income because they depend on it to live a bare minimum lifestyle. These are probably few and far between, though they undoubtedly exist in great numbers (in the aggregate) across the US. (So go ahead and bring up all the poor 2 income earning families you know that are completely unable to save anything ever to refute my point! )
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Old 03-20-2009, 12:28 PM   #43
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I am a LBYM type very similar to what Grep has described.

I suspect that I am a bit younger than Grep; but, I am not sure. And, I hope that I also continue to relax a bit as I age. But, here is a current example situation to give some insight on my particular personality quirk in this regard:

My car is 12 years old, high mileage, and (I suspect) getting close to the point where upkeep will be more expensive than buying a newer car. However, just the thought of shopping for a car and spending that kind of money (never mind that I have the means) is making me physically ill to my stomach. (The thought of repair bills for the current car also makes me ill.)

While this personality quirk has definitely helped me accumulate more savings that most of my colleagues, it definitely leads to problems as well. Grep mentioned dating which has also been an issue for me; and, not having a reliable car could conceivably impact me financially if I were to miss a client meeting, etc.

Just another perspective.
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Old 03-20-2009, 12:33 PM   #44
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To me that depends on how much enjoyment you derive out of spending $10 for lunch and how easily you can afford it (and, to some degree, how often you do it.) If you can well afford going out to lunch every day and it adds a lot of enjoyment to your life, go for it.

But maybe it doesn't add much to your quality of life, and maybe you'd rather save that $200 a month or there are other discretionary things and/or activities you'd rather spend it on when your discretionary budget is limited. In that case it makese sense to "brown bag" it, at least most of the time.

The bottom line is that we all have different "means," goals and priorities with respect to enjoyment of life in the here and now. And to some degree, suggestions of how people should handle their discretionary income is very much projecting.
Yeah, I agree. When I said the thing about going out to lunch, I should have been more specific. I didn't mean going out everyday but meant once in a while if you can easily afford it. If you're saving thousands a month, but don't want to out for lunch twice a month only because you want to save an extra $10 -- that IMO is pretty extreme.

I think I'm borderline extreme LBYM but am wondering what other people would consider extreme. I wish I wasn't so extreme because I think too much about money.
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Old 03-20-2009, 12:40 PM   #45
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I think I'm borderline extreme LBYM but am wondering what other people would consider extreme. I wish I wasn't so extreme because I think too much about money.
I would think that any LBYM led by realistic financial goals, rational planning, and enough introspection to implement some honest prioritization is not extreme. Look within yourself to discover what you really want and don't want out of life, and what your priorities are.

I would also think that LBYM led by spiritual goals is not extreme if it is not causing harm to you (physically, emotionally, mentally, or spiritually) or others.

Any LBYM that is extreme would not fall inside these parameters.

The fact that you say you think too much about money, means to me that you are not following your own priorities and need to think more about what is important to you. Not to someone else - - but to you.
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Old 03-20-2009, 12:43 PM   #46
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I would also think that LBYM led by spiritual goals is not extreme if it is not causing harm to you (physically, emotionally, mentally, or spiritually) or others.
Agreed. If it makes you feel physically ill or stressed out to spend money you can easily afford to spend, if it gnaws deeply on your conscience to do so, or if it leads to behavior that damages relationships, then it might be "excessive" -- and possibly to the point where counseling might be in order. But if being a major cheapskate doesn't cause any of these unhealthy results, then be as cheap as you want to be.
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Old 03-20-2009, 12:44 PM   #47
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But that is according to your priorities, not necessarily anyone else's.

Personally, I felt like my humungous 1975 wedding was a huge waste of money. I agreed to it because it was my mother's dream, not mine. I still could care less whether I had it or not because I felt that marriage is in the soul and heart, and has nothing to do with 350 guests that you don't even know. But my priorities are not yours.

Also, I pack a lunch for work every day because I don't want to spend $5 on lunch; your priorities would say this is extreme, but mine don't. I bring healthier food from home than I would otherwise buy, and save a little bit. Since I live alone, I also have a habit of never having more than one light on in the house. Some people might think that was unconscionably cheap.

Someone else's priorities might say that I should not have spent the money to buy my Wii last summer, but it has been such fun and makes me feel privileged, too. Again, my priorities but not theirs.
Good points.

Just to clarify -- for the lunch example that I gave, I meant never going out to lunch when someone can easily afford it and wants to, but doesn't because it would be an extra $20/$30 dollars a month. I'm not saying that's the wrong thing to do, it's just being an extreme LBYM IMO.
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Old 03-20-2009, 12:50 PM   #48
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Good points.

Just to clarify -- for the lunch example that I gave, I meant never going out to lunch when someone can easily afford it and wants to, but doesn't because it would be an extra $20/$30 dollars a month. I'm not saying that's the wrong thing to do, it's just being an extreme LBYM IMO.
Who's to say the person can easily afford it and wants to? These are decisions and priorities that the person himself or herself needs to make. See my post #45, above. Maybe (as in my case) that money would give more happiness when spent on something else (like my Wii, for me). If the person knows himself and knows these are his own priorities, then I don't think that would be overly extreme.

Just to not give the wrong impression - - it's not like I never eat out! I do. I just bring my lunch to work most of the time.
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Old 03-20-2009, 12:55 PM   #49
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Just to clarify -- for the lunch example that I gave, I meant never going out to lunch when someone can easily afford it and wants to, but doesn't because it would be an extra $20/$30 dollars a month. I'm not saying that's the wrong thing to do, it's just being an extreme LBYM IMO.
It may be extreme relative to what most people will do, but if they derive enjoyment from seeing their savings balances grow as much as possible and it's not leading to destructive or toxic behavior or impacting one's health or relationships, more power to them.

It's not always a "sickness" or an "obsession." Sometimes frugality can be a hobby for people.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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Old 03-20-2009, 01:10 PM   #50
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It's not always a "sickness" or an "obsession." Sometimes frugality can be a hobby for people.
That's it!! That's it!! People are always asking me what my hobbies are, and I draw a blank. FINALLY I have identified a hobby of mine.

Frugality, tightwadism, LBYM - - or, Applied Spiritual/Mathematical Principles of Personal Finance, I suppose. Thanks.
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Old 03-20-2009, 01:17 PM   #51
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It's not always a "sickness" or an "obsession." Sometimes frugality can be a hobby for people.
haha...I like that. Some people love making money and hate spending it. I'm one of them. Probably the biggest LBYM in the world is Warren Buffet. Doesn't he still live in the same house that he bought in 1965. I think he still has the same office too.
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Old 03-20-2009, 01:20 PM   #52
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The fact that you say you think too much about money, means to me that you are not following your own priorities and need to think more about what is important to you. Not to someone else - - but to you.
It has to do more with my upbringing than my priorities. I didn't have a lot growing up and money was often a concern. It's engraved in me to the point where it hurts to spend $0.99 on a can of corn at the grocery store when I know I could buy it for $0.69 at Target
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Old 03-20-2009, 01:22 PM   #53
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That's it!! That's it!! People are always asking me what my hobbies are, and I draw a blank. FINALLY I have identified a hobby of mine.

Frugality, tightwadism, LBYM - - or, Applied Spiritual/Mathematical Principles of Personal Finance, I suppose. Thanks.

I like to look at the spreadsheet of my portfolio in Microsoft Money. I remember seeing it getting the 7-digit for the first time one day in 2000. Nice, nice...

My friends called me Uncle Scrooge when I said I like to count my money at the end of a day when the market had a good run. But they also know that we are the most traveled, taking 3-4 trips a year, while I am driving a 15-yr old car. Heh heh heh... One needs to spend money on what matters to him most.
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Old 03-20-2009, 01:46 PM   #54
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I choose the LBYM lifestyle because I found myself in (relatively minor) debt as a young adult, and I hated it. Creditors were calling almost daily, which was bad. Even worse, I found myself avoiding a beloved relative that I owed several thousand dollars to. It was, by far, the most stressful period of my life.

I'm not frugal by nature, so I occasionally have to remind myself of the above to avoid spending money frivolously. Mostly, I'm thankful to have learned that lesson young and fairly cheaply.
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Old 03-20-2009, 02:19 PM   #55
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I've notice a lot of financial advise books tend to spend a lot of time on the "Latte factor", the small expenditures that add up to a lot over time, but often don't address the big expenditures as much.
My experienced has been that most people with high fixed cost also have problems with excessive purchases of Lattes. Not universal, but very common.
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Old 03-20-2009, 02:29 PM   #56
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I personally don't care if people want to live above their means as long as they can deal with the consequences without impacting me. But they rarely can. I am finding that those people who most vocally criticized my LBYM lifestyle a few years ago, are the same people who are now clamoring for a piece of my money.
Amen brother!
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Old 03-20-2009, 02:54 PM   #57
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Applied Spiritual/Mathematical Principles of Personal Finance, I suppose. Thanks.
So, when does your book come out??

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Old 03-20-2009, 03:11 PM   #58
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My experienced has been that most people with high fixed cost also have problems with excessive purchases of Lattes. Not universal, but very common.
I think that is due to the thought that "Hey, I never have any extra money, and I never will." What's the point of saving now since I never have any money?

I've always said that the first million is the hardest.
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Old 03-20-2009, 03:14 PM   #59
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So, when does your book come out??

ta,
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Hey, I just might write one (for my own personal satisfaction, since I doubt anyone would buy it) after ER. I'd love to get my thoughts on my "hobby" written down. Who knows? Maybe someday my dear daughter would even stop shopping long enough to read it.
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Old 03-20-2009, 03:16 PM   #60
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So, when does your book come out??
What's the point of writing a book when your target audience is a bunch of cheapskates who wouldn't buy it?
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