I'm 32, my household net worth exceeds that of the median 75+. Our household income didn't exceed $50K until 3 years ago. It is still below $100K. It is about making good financial decisions, and people don't.
Am reminded of onion article: man removes last dregs of daily pleasure by packing lunch to work and saving roughly $5. (Or something like that.)
I eat leftovers daily at work. The average lunch is $6-$10. Take it at $8 and thats $160 a month. Take that $$ amount when your wife gets pregnant - put it in a good 529 for your kids college fund & when they graduate High School you'll have $81,902 for their college fund. so the Onion can make all the jokes it wants, but I prefer to be a real dad and help provide for my kids future.
I think this is a bigger problem than Starbucks, eating out, buying tech gadgets, etc. $500 car payment is just insanity. And that's just the average. Financing a depreciating asset at a very high interest rate (and in many cases rolling over negative equity from the last depreciating asset) is not a good way to win with money. Yet, it's such an accepted way of buying a car that most people would probably scoff at the idea of saving up and paying cash for a less expensive car. Gotta keep up with the Jones's! Beside student loan debt, I think car debt is the biggest obstacle keeping Americans from breaking the paycheck-to-paycheck lifestyle.
Agreed. Car debt is amazing. I know a couple that made about 55-65k combined, maybe 75k and they rolled around in two brand new SUVs that cost 40k to 50k easy. But hey, financed over 7 years each the monthly payment is affordable! The financing trap kills people. both of my cars are financed at 0% otherwise I would have paid cash.
I do buy new cars, but I get them for very low interest <2% and pay them off in three years, then I keep the car for at least 15 years, so it isn't bad at all.
My wife's SUV is that much. Makes me sick, but she really wanted a Pilot. That was a $30K vehicle at about 2%. Thankfully my car is paid off, as is her old van, which I'm about to sell. I won't do more than one car payment at a time. Too much debt service, and new cars should last at least 10 years unless you drive a ton.
Sure, of course you can. It doesn't hurt in the same way that rearranging the deck chairs on the Titanic may result in a setup that is both aesthetically pleasing to a passenger taking in some evening airs and a cocktail, and more conducive to an orderly evacuation, on the event of an emergency egress. My problem with the instant Pavlovian response of "welp, just gotta sacrifice more" - like Boxer from Animal Farm- is how horribly conditioned we are after years of bogus free-market dogma when in reality the marketers of this are working for the exact opposite, a calcified class of super rich controlling all resources siphoning more and more from the ever growing masses beneath them, rigging the odds ever in their favor. In other words, it was those ******* pigs, not Boxer not working enough. The scandal is not that you can't or shouldnt or should afford or buy a $30,000 SUV, it's that a small class of people have set up a system, in cahoots with government, in which they and their moron kids can buy 30,000 of them on a whim and sell it to self-flagellating schlubs on a message board as meritocracy, pointing the finger at the real bad guy - organized labor or black people or Chinese or Jews or whatever. The question asked by the OP in the thread is very simply answered - why do more people save less than before? 1. They make less $ 2. Things cost more $ 3. We also love in an age in which the science and technology of separating you from your $, as much as possible, is vastly simpler and easier for the superrich to accomplish due to technology and market power. All 3 of these things happened because we let them happen. That's why, in part, I find the " well kids today spend too much on the latest doohickey" line of argument to be really weak . Kids today are growing up in the world that we created for them which is expressly designed via trillions of $$$ of research and engineering to guide them on that path. This takes place in a society which sells and celebrates the illusion of the opportunity of wealth for all which is again expressly designed to result in wealth for few, and that is recently engaged in remaking it to be even more concentrated. So...thats why all of the personal finance stuff is at best a distraction and at it's most insidious a total diversion by people who want you to do the opposite . Rich wise men like Jeff Bezos or Jamie Dimon would surely preach the virtues of personal finance for their vast armies of minimum wage underlings and consumers, at the same time they will happily design pricing algorithms designed to extract every last dollar from them from Amazon or payday loans or whatever . It doesn't have to be this way but it is because we've either willingly or unwillingly let it be.
I remember you talking about a book that helped you change your financial life. You should recommend that, if it actually worked, to all these guys.
A great post, Sam. So many don't understand just how much has changed and it is because so many Americans have bought into the lies supporting the rich, largely lies put out by the GOP. It's always someone else's fault that many aren't doing well in this country, when they should be doing well. They don't realize just how much corporate executive pay has increased, dramatically increased, compared to what it was a few decades ago. Used to be that those who did the actual work made less than those who run the companies, but not dozens of times less, which is what we see today. These tax cuts? An absurd giveaway unneeded by the rich who benefit the most from them. We had a good economy busy getting better before that tax giveaway was ever passed. All it is doing, all Mr. trump is doing today with his incredible tariff war, is bringing us inflation, which will hammer those who were frugal and young, like some here, as well as those of us who are older and were smart enough to plan for retirement (people like me), not to mention the majority in the middle. Everyone will be hammered by inflation. The current majority government of this country is both unspeakably irresponsible, and unspeakably greedy. They are wealthy themselves, so they are making a money grab while the nation watches, but too many cannot see what's before their eyes.
The average low net worth is greatly due to people's financial decisions than anything. Are there people that can't save/increase net worth? Yes. Political changes could help here, as others have stressed above. But are there that can, and don't? Absolutely. It boggles my mind how it is so difficult for some to just not buy things if they can't afford it. It is the stupidest crap: who is going to take care of you when you are old? Why is taking loans at such a high interest rate a good idea? You don't need that new phone, or new car. Buy old versions: buy used. Don't eat out every day: cook. Stop getting Starbucks all the time. Cut the cords & remove subscriptions. Fly Spirit. Check out r/financialindependence or r/personalfinance. But political changes are NOT necessary for this large category. Improvement in this category would significantly increase the net worth. In my situation, if I go on the frugal end, I can live under 700/month (obviously cost of living differs in places). If I wanted to be extreme, could bring it down to 550. Obviously, I'm not saying to skip living life, but if it is not fiscally responsible, don't do it.
Entry level salaries in most fields are garbage. What if your company doesn't pay for relocation? Moving in itself can put you in a hole to start off. Auto insurance is expensive under 25 even if you drive a clunker with no collision. Internet is a necessity. Cell phone is a necessity (talking about the plan not the actual phone) Chances are some people are going to have to slum it in an older apartment complex for their first job. That means crap insulation and crap AC system that will give you massive electric bills. Lived in an older complex during college. Regularly saw $200+ bills in the summer with 3 people. Now. Even with all that I'm able to save pretty comfortably. But what if the entry level salary for my field was 10-20k lower like most other fields? Not hard to see why a lot of people end up paycheck to paycheck.
If you're a whipped dog, then you've obviously been bad. It's a tribute to the triumph of personal finance hucksters that the "starbucks is why you aren't rich" myth gets repeated all the time. This is all based on a lie. A fairly easily debunkable one at that. http://www.slate.com/articles/busin...e_has_nothing_to_do_with_debt_an_excerpt.html It's not your discretionary purchases that make you not rich. You don't make enough money for them to matter! It's the indiscretionary ones:
You're fking kidding me right? "Oh, it's not a million, but 173,000! That'll show them!" Not like this sum of money is more than the median wealth of all age groups that OP posted lol. Get a grip. Of course housing, health care, education is going to cost a lot. But SHOCKER, being fiscally responsible can affect housing, health care, education. Wanna lower health care? Take fitness seriously (obvious exception with some situations)! Lower housing? Don't buy the big house! Education? Don't go to 200k plus schools you can't afford! So it is not all that "difficult" to cut back on that stuff, either. Dumb article is dumb. If you're a dipshit, then you're obviously a dipshit.
Thanks for the post. The fact that you don't see an astronomical difference between $2,000,000, always somewhat-kinda-subsconsiously framed at present value, as sold to schmucks in these garbage books , and the plausibly attainable hypothetical value of $50,000 -$170,000, in thirty years kind of proves my point (nice job cherry picking the $173k rather than the $50k, I guess you are emotionally, if not financially invested in this)...so yeah, I do think it really kind of showed you/"them" that you've been had. Not drinking coffee is going to actually save only 2-10% of what they promise it will save you. Personally, I don't put much stock in statements that are 90-98% false. The fact that you got clowned into believing that cutting back on lattes is going to lead you to prosperity is distressing to me in a larger sense of how easily cowed we can be - but on a personal level if it's the kind of thing that makes you happy, by all means go for it. I' m fortunate enough (through "hard work?" but also mostly due to luck) to be able to buy all the damned lattes in the world that I could possibly consume without it making a dent on my bottom lined but I don't either, I buy ****-ass keurig pods most of the time. Whatever, buying things is great for a few minutes/hours/days but then it fades over time. People shouldn't spend money on stupid ****, that's good advice. But it's psychological/spiritual advice - it doesn't address the main problem with why people aren't saving today in large part. People don't save today becasue it's much harder to, even if they want to, and we make it much harder to even want to. Full stop/end of thread. . So, the fact that you're at a point in life where you have to live on $700 a month, is largely dependent on either structural or other factors. And I hate to break it to you, but that's not going to cover your kids tuition even if you double it and they go to the cheapest state school in the universe and live in a decrepit trailer park. But - it really doesn't have to be this way . It doesn't have to be that $5 for coffee (or even $50,000 for coffee accrued by the year 2048) seems like an out of reach sum. It does because you have been compressed into this bracket, and thus of thking that way, by others.
