The Atlantic Article on Lack of Savings

[Midpack]

+1 I just have a really hard time differentiating those who are struggling through no fault of their own (bad luck) who I do empathize with and those who are struggling as a collective result of bad decisions they have made for whom I have some, but less empathy.

+2. Let me know if you ever figure out how to differentiate. I am left to guess more often than not, and I'm sure I guess wrong often...

 

[Fedup]

Come'on, my brother is very average or below average intelligence. He was fired from his first job at a gas station. He was fired after his first job out of college. He graduated with a C average from a Average college. Since he was born, he didn't like school. He liked to stay home with my mother because he hated school. He wanted to be a technician, my mother said to try to be an engineer because all of your brothers and one sister were. But he has done the best in all of us, money wise. He has huge pension, huge 401k, rental properties. He marries to a smart frugal wife with the same income, same pension, same 401k size. Not only that she has retiree's insurance. He always lives frugally. He always pays things in cash. I never know why then. Now I know.


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[Exrook]

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.

They do just that in Virginia. The problem I see is that it is viewed as an "easy A", and many live in home environments that counter any good lessons they might pick up in class.

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[Walt34]

Do you seriously think that teachers are in the same intelligence range as garbage collectors and custodians?

I know of at least one garbage collector who started out with one truck and his brother as a partner. Twenty-five years later they owned a fleet of trucks and a large company, and were both millionaires many times over. And there is still the occasional article about some custodian who lives simply and leaves a multi-million bequest to a charity. Stupid people don't do that. So one finds very smart people and stupid people in almost every walk of life.

It was a bit eye-opening a few years ago at my last job when there was a payroll glitch and payroll deposits were held up from Friday to the following Monday. Not a big deal for most folks here (or at the job site) but I was surprised at the number who were a bit panicky about it, and at least two had to take out payday loans. To cover one weekend!

In contrast, in my early 20's I somehow managed to lose a paycheck, this is long before direct deposit became available. It took about six weeks to process stopping payment on the lost one and to issue a replacement. This was not a problem for me because even then I knew that "stuff happens" and I'd need some money to cover it when it did so I had the money in savings to more than cover a lost paycheck.

It is simply beyond my comprehension why this is so hard for so many people to understand. Just wired differently I suppose.

 

[brewer12345]

The short bus crowd is one thing. People with college degrees? Please. Suffer the consequences of your actions.

 

[travelover]

.......... So one finds very smart people and stupid people in almost every walk of life.............

Amen to that, but I hate to see the stereotype of teachers and farmers as inherently dimwitted. Walk a mile in their shoes and see how easy the job is - it takes multiple talents to be good at it.

 

[Walt34]

Amen to that, but I hate to see the stereotype of teachers and farmers as inherently dimwitted. Walk a mile in their shoes and see how easy the job is - it takes multiple talents to be good at it.

Oh, I would never suggest that! Most of the teachers I knew were smarter than me - that's why they were teaching me!

And running a farm is no simple matter anymore if it ever was. It is a complicated business for sure now. Those gigunda John Deere tractors and equipment ain't cheap!

 

[cyber888]

C'mon, your sister is far from poor if she has 3 houses in California and $750,000 in her nest egg. Her unemployment has nothing to do with being rich or poor. Her networth is probably more than $1 million.

Poor = by definition, means you have no cash, not even $50 in your pocket, you have no house, and you probably live on the streets begging.

Your sister is rich.

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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[Fedup]

C'mon, your sister is far from poor if she has 3 houses in California and $750,000 in her nest egg. Her unemployment has nothing to do with being rich or poor. Her networth is probably more than $1 million.



Poor = by definition, means you have no cash, not even $50 in your pocket, you have no house, and you probably live on the streets begging.



Your sister is rich.

She always said she is poor because she never makes enough money. If she gets this full time job, she makes $60k a year, not rich salary. Years ago, her income is 1/5 of ours, that she only could contribute 4% max. Yes that's why it's amazing she has more money than I thought otherwise. I agree, she is not in the poor category. But she doesn't think she has enough to retire and will keep working 5 more years until she gets her full SS and a pension. And she still shops at a thrift shop and brags about her $1 blouse.


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[ejman]

She always said she is poor because she never makes enough money. If she gets this full time job, she makes $60k a year, not rich salary. Years ago, her income is 1/5 of ours, that she only could contribute 4% max. Yes that's why it's amazing she has more money than I thought otherwise. I agree, she is not in the poor category. But she doesn't think she has enough to retire and will keep working 5 more years until she gets her full SS and a pension. And she still shops at a thrift shop and brags about her $1 blouse.


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Considering that the average household income in the US is $51,939 https://en.wikipedia.org/wiki/Household_income_in_the_United_States and the average NW is $301,000 The Average American Net Worth Is Huge! | Financial Samurai I would have to say that your sister is very wealthy. Good for her!

 

[razztazz]

C'mon, your sister is far from poor if she has 3 houses in California and $750,000 in her nest egg. Her unemployment has nothing to do with being rich or poor. Her networth is probably more than $1 million.

Poor = by definition, means you have no cash, not even $50 in your pocket, you have no house, and you probably live on the streets begging.

Your sister is rich.

This should go on that "Bubble" thread. Talk about outta touch

I know a guy who never had anything. Ever! But now he's got 5 million dollars

He's very very Rich/Poor

 

[Fedup]

Considering that the average household income in the US is $51,939 https://en.wikipedia.org/wiki/Household_income_in_the_United_States and the average NW is $301,000 The Average American Net Worth Is Huge! | Financial Samurai I would have to say that your sister is very wealthy. Good for her!

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.

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[hnzw_rui]

I think it's really easy for many of us to get judgmental... I know I put the J in in INTJ all the time.

I think the article in the OP and the article linked by Gumby both high light the human nature desire to provide the best for our kids - whether we can afford it or not... and the expectation of what a middle class lifestyle is has also gotten inflated.

I hit the lottery when it came to parents and upbringing... Dad made decent income (engineer) but lived frugally and I grew up in a household where budgets/costs were pinched constantly. Parents paid school costs - but had strings attached on the major and grades. I wanted to be a poli sci major, dad replied "not on my dime". I wanted to go to a small liberal arts college in the midwest - same reply from dad. The engineering degree from a state school turned out to be big boost in my adult life. Dad was right.

Lol, ISTJ and heavy on the J.

+1 on being lucky with parents. Mom was a math teacher, dad an architect. They like to joke that I inherited all the IQ while my brother got the EQ. We were comfortable enough and had all the necessities albeit no expensive vacations. Mom grew up poor and she put herself through college so she was always drumming into my head (as early as grade school) that while they won't be able to leave me an inheritance, what they can give me is a good education so I guess even back then, I knew that my choice of major would be dependent on career options. Thankfully, math, science, technology and engineering were already my fields of interest even in grade school so they didn't have to push me into switching into a more lucrative field. Parents would've paid for private college (my sibling and I had something similar to 529 prepaid tuition at our choice of mid-tier college) but I received a scholarship from a state university so those funds ended up paying for dorm room and allowance.

Wasn't able to finish my degree since we migrated to the US mid-way and I started working full time right away. However, my educational background has still served me well. Thankfully, once I got in at my current job, work ethic and skill set enabled me to promote relatively quickly to my current position (which is pretty much the highest available if I don't want to deal with the stress and hassle of supervising employees).

 

[ejman]

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.

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Oh, that. That was covered a long time ago..."

Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." Charles Dickens, David Copperfield

 

[daylatedollarshort]

This should go on that "Bubble" thread. Talk about outta

Someone tried to recruit me to do yard work and housework for free for the elderly - in a bubble zip code of single family homes. I am still kind of puzzled over that. Being older and house poor is not the same as actually being poor, especially in a metro area with a large homeless population. IMHO, kind of some inside the bubble thinking there on the free help part.

I would put keeping a house in retirement one can't afford to keep up more in the living above ones means category than the truly needy segment of society.

 

[Keim]

I find myself with little sympathy for the whiny author. No major issues caused his pain. Just inertia and a lack of ability to see long term consequences.

I contrast with another article I recently read stating people with $200k in investible assets were rich/affluent (Why I Believe the American Dream Just Died - Fortune) and I wonder what people are smoking.

To quote the Boy Scouts: Be prepared! (DAMMIT!)

 

[rodi]

And she still shops at a thrift shop and brags about her $1 blouse.

This is how she amassed her wealth. By spending her money on homes and putting the rest in savings rather than spending it all on fancy clothes.

I was taking my older son school clothes shopping late last summer. I told him we'd go to the trendy stores (albeit discount ones like H&M) after we looked first at Goodwill. He ended up buying 10 t-shirts of cool-nerd style (video game themes, star wars, star trek, and comic book hero). He was so happy he decided he didn't need to go any further. I also picked up a spring wetsuit for the other son for $5. Wahoo.

 

[bmcgonig]

Which just goes to show you: You can't fix stoopid.

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.


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[pb4uski]

To be clear, my post that 'You can't fix stoopid" was related to the subject's rejection of a suggestion to use $10,000 of $12,000 in cash that they kept in the house to pay off $10,000 in credit card debt as stupid, not that they could not save.

During my w@rking days in the '90's, co workers who knew I did alot of investing, asked for money tips and advice. I specifically remember once "how do I make more on my money "?

I told him if he paid off any CC debt, he would be earning close to 12%. I asked where he had his cash now. He said he had $12,000 in the kitchen drawer, that's where his wife and 2 teenage girls got their allowances, and it was also their "emergency stash " for repairs and whatever. He carried over $10,000 in CC debt!

I told him to pay off the CC debt with the cash, and use the CC for their "emergency stash". He would hear nothing of it and thought it was stupid advice. He never asked me again.

 

[Markola]

I had a small pit in my stomach reading the article, though not for the author, who wrote it with no commitment to changing his ways but apparently as just another deliverable to get the next desperately-needed paycheck. On what planet does someone who writes for a living make the decision to send a kid to Stanford and another to Emory by draining his parents' funds? He's made his family vulnerable through ludicrous decision-making, which he shows no sign of changing. I can't worry about him. What is bothersome is that many of my good friends have kids heading to college next year and are living very much like the author.

 

[daylatedollarshort]

So what would you all do going forward if you were the article author to get back on track financially?

 

[hnzw_rui]

On what planet does someone who writes for a living make the decision to send a kid to Stanford and another to Emory by draining his parents' funds?

This is actually the thing that made me cringe the most. It's one thing to endanger your own finances but his parents', too? And he's not in a position to to help his parents in case they encounter sudden financial difficulties (e.g. long-term care).

 

[Keim]

So what would you all do going forward if you were the article author to get back on track financially?

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.

 

[ImThinkin2019]

I have very mixed feelings about this article. I read it as well as a lot of the comments on this, the Atlantic site, and other sites. It took a while to come to satisfactory (for me) conclusions.

I feel bad for the author and his family. Conversely, I feel fortunate about our personal situation.

When I wonder why his family is broke and we are FI, I think back to when we were first married....Why are we OK and he is not? It's all about the choices we made.

All of our lives we lived below our means. We generally saved around 20-25% of our earnings and lived on the rest. We kept debt to a minimum and have been mortgage free since age 45. Even though we made some investment errors, our savings have increased to a level at which we could retire now.

When I read this forum about people that are FI, a common characteristic is that they all LBYM. Some made lots of money, some made not so much. But they all designed their lifestyle so that they could live on less than they took in.

It appears to me that the author describes a lifestyle that has been either at or just beyond his means. Now he's telling us about the later-life consequences.

We have taught our kids to LBYM and are very happy to see them do that. Of all the values we could have taught them, this is one that will affect their happiness in their golden years.

My wife and I have been fortunate to have reasonably good paying jobs. This allowed us to live pretty comfortably. I am sensitive to those who are not as fortunate, like those who have lower paying jobs, divorce, medical issues, etc. It's harder for them.

With that said, I still think most of us on this forum have seen people with relatively low salaries become FI just by LBYM. They made choices all their lives that allow them to save.

It's not easy to do much for people who are at the later stage of their careers. The most productive thing we can do is teach young people to start saving early.

 

[rayinpenn]

You've LBYM for the last 40 years and now you've got got quite the 'pile'. The 'pile' doesn't seem all that large to you because you were there when it was small- and it grew slowly over a long time. She clipped coupons and painted while you fixed the toilets and sinks. No tradesman crossed your threshold. You drove that old Mazda until the plastics were brittle from age. You celebrated a bonus with a good meal, an inexpensive fishing rod and banked the rest. You made the difficult but right choices.

The pile didn't just happen you made it happen you didn't cheat, steal, rob - you saved, you scrimped you played the good game. Yes there was an element of luck - no great tragedy to overcome no asset draining illness. But you did what you could.

The author chose not to clip those coupons, fix those toilets, abstain from the $4 lattes or teach his children life lessons about spending.

I have no guilt about the pile and no reluctance to say the authors financial choices were poor ones - and the results predictable.

Oh and stop eyeing my pile

Edit: I suggest the author read Dave Ramsey's Financial Peace University Book...

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