Some people think being poor is living paycheck to paycheck. The reality can be much worse.
How poverty changes your mindset
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Re: How poverty changes your mindset
#22> That’s the correct financial decision, according to traditional economics—to drive the extra distance no matter the original cost. Saving $50 is the same regardless of the amount of the item in question. But wealthier participants saw the savings in relative terms, noticing the percentage savings. By contrast, poorer participants thought in absolute terms. To them, $50 saved was $50 to spend on groceries or the ele…
I guess there’s a reason penny wise and pound foolish is a saying
Re: How poverty changes your mindset
#23It's not poverty. It's stress. Poverty is very stressful. Any kind of stress stops people from acting the way they normally would be inclined to act. It takes a lot of conditioning and practice to deal with stress without having it impact you and your performance. Take a little stress off your staff, and instantly everyone starts making better decisions, their work seems more focused. As a manager, the best thing I c…
A little "positive stress" can increase performance in the short term.
The classic example of escaping a hungry lion translates into modern-day scenarios like meeting an important deadline.
It's when stress is sustained that major health problems arise.
Re: How poverty changes your mindset
#24This is not the first time this article has come up, and as usual I'll give my 2c. What qualifies me to talk about this issue? I was raised in the UK on income support, single mother, social housing, low income city etc; Now the situation has changed somewhat in the UK; back then in the UK it was possible to get by without going into debt if you were smart about things and I believe this no longer to be the case, but…
she will treat her time as unlimited in finding similar quality goods for less money It is interesting you say this. I have a friend who struggles to get by. Single mom, two kids, a father who does the absolute bare minimum to provide support to his kids, and she is unemployed. She does get support from the state (rent assistance, energy assistance, SNAP), but it is barely enough to squeak by and what little money is…
Think of money as a form of control and you will understand you friend. When you are accustomed to being knocked down every time you get a little ahead, deal searching is something of a coping mechanism, a way to take back control from the system.
Re: How poverty changes your mindset
#25> That’s the correct financial decision, according to traditional economics—to drive the extra distance no matter the original cost. Saving $50 is the same regardless of the amount of the item in question. But wealthier participants saw the savings in relative terms, noticing the percentage savings. By contrast, poorer participants thought in absolute terms. To them, $50 saved was $50 to spend on groceries or the ele…
You're misunderstanding the question they've posed people. In either situation, the question is "is half an hour of transit worth $50 to you." Whether it's $50 saved on a $300 item or a $1000 item has no impact on the $ saved per minute.
Right, but there's a subtlety: The dollars saved in those minutes are worth a different amount to a rich person depending on their relative impact on the sale. $50 off of $300 is a 1/6 discount, so a "good deal" that they will (somewhat recreationally) decide to go and get. But they still don't inherently care that much about $50. You could say if they make lets say ten times what I do, they probably care 1/10th as much as I do, about $50.
Anyway and meanwhile, $50 off of $1000 is a 1/20 or 5% discount. Now it's still the same $50 they don't give a shit about, but it's also now an insignificant discount. Would they spend extra time on what to them is a rounding error on a $1000 purchase? They're not really getting a "deal" anymore, it's a bore, and they decide to spend the extra $50 just to buy back their half-hour. So long as the price is still "about $1000" they're OK with it.
Re: How poverty changes your mindset
#26> That’s the correct financial decision, according to traditional economics—to drive the extra distance no matter the original cost. Saving $50 is the same regardless of the amount of the item in question. But wealthier participants saw the savings in relative terms, noticing the percentage savings. By contrast, poorer participants thought in absolute terms. To them, $50 saved was $50 to spend on groceries or the ele…
You're misunderstanding the question they've posed people. In either situation, the question is "is half an hour of transit worth $50 to you." Whether it's $50 saved on a $300 item or a $1000 item has no impact on the $ saved per minute.
Most people think about a dollar as a dollar.
They don't realise it's not worth focusing on saving a dollar here and there, if they then move ahead and overpay for a house or a car (e.g. by not negotiating).
Half the battle is getting a good (or great) deal on expensive, one off purchases, if possible (say everything above $2k). Don't worry about the rest. As with everything: 20% of the "work" gets you 80% of the way there.
You can then not worry about the smaller expenses -- the ones that are generally time consuming and annoying to track -- that tend to make your life miserable.
Yes, Starbucks is expensive, but you're not going to go bankrupt drinking their coffee. You're also not going to get rich by not drinking it.
Re: How poverty changes your mindset
#27This is not the first time this article has come up, and as usual I'll give my 2c. What qualifies me to talk about this issue? I was raised in the UK on income support, single mother, social housing, low income city etc; Now the situation has changed somewhat in the UK; back then in the UK it was possible to get by without going into debt if you were smart about things and I believe this no longer to be the case, but…
Similar situation. Lived with my mother, constantly stressed about survival until she kicked me out at 14. Moved in with my upper middle class father (who should have had full custody from the beginning, courts don't always do it right eh?)
For a while (my mind says 'for now'), I'm able to make about 100k in 6 months in the midwest. My formative memory combined with the local prices make this a nearly unimaginable sum. My "resting expenses" coalesce to no more than 90$ a day at the extreme. At 90$ a day I feel like i'm spending my face off. Any more and it'd feel like I was buying a jetski while unemployed with loan shark money.
58$ a month is $7,000 over a decade. Most things aren't worth that when I think of it in those terms.
To expand my consulting services I bought a unity3d license for $1500 a few years ago. As soon as they decided MRR was the way I pivoted hard towards selling webgl to interested customers instead. Recommended the last company I worked for stay away from AWS Lambda for similar rent averse lock-in reasons. Locking yourself in to something like that reduces your degrees of freedom.
In some ways I'm definitely hamstrung by this attitude. I will never own a home unless I save up enough to buy one in cash (I'm trying!). I rolled my truck a few months after graduating and had to get an auto loan then. I paid it and my student loans off like I was on fire and had to spit myself out. Last time I checked my credit, the "not enough lines of credit" penalties had me in the basement, which is hilarious.
I'm just glad I can life like this, for now.
Re: How poverty changes your mindset
#28This is not the first time this article has come up, and as usual I'll give my 2c. What qualifies me to talk about this issue? I was raised in the UK on income support, single mother, social housing, low income city etc; Now the situation has changed somewhat in the UK; back then in the UK it was possible to get by without going into debt if you were smart about things and I believe this no longer to be the case, but…
Similar situation. Lived with my mother, constantly stressed about survival until she kicked me out at 14. Moved in with my upper middle class father (who should have had full custody from the beginning, courts don't always do it right eh?) For a while (my mind says 'for now'), I'm able to make about 100k in 6 months in the midwest. My formative memory combined with the local prices make this a nearly unimaginable su…
The "not enough lines of credit" thing bit me too, if you don't take debt you can't have debt, it's so bizarre.
Regarding your AWS lambda aversion, I am also guilty of aggressively avoiding lock-in with cloud vendors... Now I wonder if that is related to my upbringing.
Re: How poverty changes your mindset
#29Earlier quoted context omitted.
You're misunderstanding the question they've posed people. In either situation, the question is "is half an hour of transit worth $50 to you." Whether it's $50 saved on a $300 item or a $1000 item has no impact on the $ saved per minute.
Right, but there's a subtlety: The dollars saved in those minutes are worth a different amount to a rich person depending on their relative impact on the sale. $50 off of $300 is a 1/6 discount, so a "good deal" that they will (somewhat recreationally) decide to go and get. But they still don't inherently care that much about $50. You could say if they make lets say ten times what I do, they probably care 1/10th as m…
The rational answer is that if you would drive 30 minutes to save $50 off a $300 tablet, then you should also drive 30 minutes to save $50 off a $1000 tablet. You've described the psychology of why a wealthy person might not drive the 30 minutes for the $1000 tablet well (but still will spend the time to save money on the $300 tablet), but that choice is still irrational.
Re: How poverty changes your mindset
#30I love how when this comes up, it's people either saying "Here was my experience when I was poor in the past." or "Here is what I think about economics or the wording of this article."
Don't get me wrong, I know what website I'm on.
But in all seriousness, is there room for currently poor people in this discussion?