311–320 of 351 posts
It's not just about saving money, it's about optimising for happiness.
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There was an illustrative article on this topic a few years ago [1]: "It’s not like the sacrifice will result in improved circumstances; the thing holding me back isn’t that I blow five bucks at Wendy’s. It’s that now that I have proven that I am a Poor Person that is all that I am or ever will be. It is not worth it to me to live a bleak life devoid of small pleasures so that one day I can make a single large purcha…
It's infuriating in the same way that "move more, eat less" is infuriating to obese people. It's infuriating because it doesn't pan out in practice for a lot of people trying. However, the advice is still sound to some degree, because it does work for the people who are actually able to follow it. Now, to blame it on the economic system is going too far IMO. Can you point to an economic system in practice with lower…
Earlier quoted context omitted.
Right. $5 a day is a significant amount of money to a huge number of people. In the UK, if you're on minimum wage, a 3 quid coffee represents approximately 5% of your daily income. If such an individual (someone who earned minwage for a lifetime) were to end up with even "merely" 100K in today's money at age 60 that would actually be an enormous amount relative to their cohort.
> 3 quid coffee represents approximately 5% of your daily income. So 60 pounds a day is minimum wage in UK? It seems to be very decent middle class income rather than minimum wage. Or maybe you meant 50%?
60 pounds a day for 20 days is 1200pm. That is to say, it is impossible to rent a basic small flat and you will have to live with housemates or family.
Even having done that, transport and basic food will suck up all of the rest of your time and money.
It is by no means a 'very decent middle class income', in most of the South East it's poverty level.
6 pounds a day would be utterly comical, I'm not sure if this is a troll, I doubt that would be liveable in cheaper parts of Eastern Europe.
Earlier quoted context omitted.
There was an illustrative article on this topic a few years ago [1]: "It’s not like the sacrifice will result in improved circumstances; the thing holding me back isn’t that I blow five bucks at Wendy’s. It’s that now that I have proven that I am a Poor Person that is all that I am or ever will be. It is not worth it to me to live a bleak life devoid of small pleasures so that one day I can make a single large purcha…
> Impoverished people aren't poor because they occasionally buy coffee Impoverished people might be poor because they take everything literally and can't see the big picture though. Yes, frivolous spending absolutely has something to do with poverty. It's so clear and obvious and when I look at every example of a person that I know that could be called poor vs someone that is rich there is the same pattern: The poor…
Would they work fast food for as many hours? How about in a call center where half the customers are angry and taking it out on you? How about if they couldn't afford the basics in life from the job? How about if they couldn't afford health care or food, so when working they are always tired?
The rich people you know don't have to deal with the crap poor folks do. They are more likely to be able to take vacations, spend money on things that make them happy (maybe it is their company/job, but it is still spending). They aren't worried that being late to pick up the kids will cost enough to make you have to eat less for the rest of the month, nor that a flat tire means you have to go without electricity.
IF they spend, they consider it for quite some time, look for deals or wait for special offers. Subsequently they are very happy with their purchases and keep them maintained and in good order.
Poor people don't have this luxury. Everyone would rather have comfortable shoes, but if you only have $15 for shoes and can't save up for 6 months for something better, you have to buy the $15 shoes. Even with good maintenance, $15 shoes aren't going to last like $100 shoes.
And by the way, the story of lotto winners is instructive: you simply can't spend your way out of the poverty mindset.
This doesn't prove anything. It proves that poverty deprives you of chances to practice long-term financial planning and unsurprisingly, when impovershed people suddenly get a lump sum of money, they fare poorly with the long-term planning. In contrast, rich folks have regular income. Even if you mess up one month, you have some income the next month. I'm going to guess if lotteries paid out monthly for as many years as jobs do, things would look different. Especially if it had an amount of upfront windfall followed by the monthly salary.
If part of your audience consists of people living without much a safety net, that $5 a day adds up. Also, the author's point that saving that much isn't going to be $1 million, but "only" as much as $500,000 then that point rather falls flat. Sure, inflation may decrease the utility of that amount of money, but it will also increase the cost of that latte, so you'll be saving more than just the $5 over time. Finally…
That's why the quote is there up front: "If spending $5 a day on fancy coffee puts your retirement at risk, you’ve got bigger problems." If you don't have a safety net, then indeed that $5 adds up. But if that $5 is critical to your safety net, then you're still not saving for retirement; you're saving up for the inevitable crises. This was originally in Bloomberg, and what's really going on there is an implicit crit…
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It's saying focus on issues mostly out of your control ( inflation ). I'd prefer to focus on the things that are in my control. I agree that some level of indulgence is okay, obviously this is a balance. Everyone has to figure out what they're comfortable with here, but some people we know may have become way too comfortable and complacent yet still want to complain about their financial situation. These are the peop…
When I was homeless and going to Starbucks, I used to watch people get $60 worth of takeout coffee on a Saturday morning. Family was coming over. Everyone needed a cup. But no one tells well-off people to cut back on buying $5 cups of coffee by the dozen. No one suggests that if they saved that money, they could have two or three million more and, clearly, that's the morally correct thing to do. No one is saying coff…
For the first five years of my adult life I wouldn't have even considered spending $5 on a coffee, or a take out sandwich, or whatever. It felt like a ridiculous sum of money. When I visit parts of the UK that aren't awash with wealth, it still does.
I genuinely did think of it through the lens of - not doing that meant that I could quite rapidly save a month's rent, then a few months' rent, and so on.
Would it make me a millionaire? No. Certainly not in isolation. But it would break my fall if I were to become unemployed, temporarily ill, etc.
And that initial spark of starting to save, having a buffer, not going homeless if I lost my job for a month or two or six, was an essential ingredient in me becoming what you seem to call 'The Haves'.
$5 a day for 5 years is over $9K. Non-inflation adjusted. You could stick it under a mattress and that's still six months rent here in London or a _year_ if you share a flat. It's genuinely a large amount of money.
If I'd spent my whole life chucking money at everything that came my way I'd still be poor because I would never have been able to risk switching jobs, moving, I very well could have ended up homeless in periods when I left work for a while, etc. Living paycheck to paycheck is basically suicide. You have to make hay whilst the sun shines.
Until I had a decent amount saved I essentially did not have discretionary income. I felt it was frivolous. That has worked out for me and I see no reason why it wouldn't work out for others; as such I believe expressing my opinion to be useful advice, and it is rather odd to have that lived experience be painted as "moralizing".
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"The article isn't advocating that you buy a coffee every single day." That is EXACTLY what the article is advocating, very explicitly. Your case sounds very different than the "$5 latte a day habit", which is probably just someone standing in line in the morning, grabbing their coffee and absent-mindedly sipping it as they walk to the office. You got an hour of shelter and a comfortable place to sit in a nice enviro…
On the point of the beater vs the new car... I find the best is often a middle ground. The new car is not worth the debt and the depreciation... assuming it's even an option. The beater is often just as poor an investment due to the money you'll have to throw into it like a black hole whenever it fails. There's also the stress and instability it creates knowing it may not start the next morning.
If I put a lot more miles in it then I would be more concerned with break downs as it aged.
And, you know what? I was right. I have a good job and drink a latte a day now. It brings me immense pleasure every single time. Even after years of doing it, my daily latte remains a source of joy. I will probably do it the rest of my life, circumstances willing.
None of this is the point though! The point is that economic growth has stagnated while fixed costs have risen. Quibbling over this is ridiculous. The author is absolutely right. In the big picture, $5/day is not what should matter. If income equality was not so absurd and fixed costs not so out of control, everyone would be able to afford it.
Until those systemic injustices are resolved, we are just fighting over crumbs here. It's time for major tax reform. Or revolution. That's what we should be focusing on, not critisizing people for taking care of themselves in our nightmare of a society.
Well, I learn to make coffee. In 2 weeks it cost ~$15 (5$ for a 250g ground coffee, 3$ for 2-3 liters of milk for 2 weeks, $5 for a fancy chocolate power, exclude things like electricity to boil water)
Saved $3160 a year while enjoying 2 coffee a day
I usually have 2 coffee a day, or 3 some other days. Let say $5 a cup, it will cost $3560 a year. Well, I learn to make coffee. In 2 weeks it cost ~$15 (5$ for a 250g ground coffee, 3$ for 2-3 liters of milk for 2 weeks, $5 for a fancy chocolate power, exclude things like electricity to boil water) Saved $3160 a year while enjoying 2 coffee a day