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Climbing the Wealth Ladder

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Re: Climbing the Wealth Ladder

#31

Post by nradov »

sixdimensional wrote: post #21
nimbius wrote: post #5

im presently reading Paul Fussells "Class" and this is a fascinating take on the idea in the age of wage stagnation. >the best way to climb the wealth ladder is to spend money according to your level. This is directly contradictory to, and detrimental to, how the US Economy expects its consumers to act. Credit has largely filled the gap of wages and productivity such that consumers now have no real sense of their lev…

I think the hidden danger in this model, which I think about a lot, is that doing philanthropy is shown as an activity you can’t afford to do until you are very wealthy. The trick is to do good for the world long, long before then. You shouldn’t need to be wealthy to volunteer a few hours a month.. Before anyone judges me negatively, I say this as someone who has spent the vast majority of my lifetime trying to “clim…

If you don't have money, you can contribute time.

Re: Climbing the Wealth Ladder

#32

Post by jackcosgrove »

Another positive aspect of gradually ramping up spending is that you slowly and safely learn how to use money. Your behaviors have to be calibrated to your income and wealth to avoid wasting money.

Although the person overspending is probably using credit or living paycheck to paycheck, there is the rarer but more acute problem of windfalls. If you receive a windfall without previously having experience with money, there's a good chance you will fritter the windfall away.

A common way this happens is when professional athletes overpay for a mansion after signing a contract. Five or so years later the mansion is sold for a huge loss or sits on the market for years with an unrealistic selling price.

Re: Climbing the Wealth Ladder

#33

Post by marvin »

Kirby64 wrote: post #6
clktmr wrote: post #4

The article completely ignores the last and most important level of wealth, which is being financial independent. Being able to pay for rent, food, healthcare etc. for the rest of your life without the need of a day job will probably have the biggest impact on your life.

That's completely tangential to this article though. It depends on what your definition of that is, and some people handle it better than others. You see those people retiring on 500k (for a couple) and living in a van or something at one extreme. Then there's folks making 500k+/yr and somehow manage to spend most of it without saving any of it. Independence is a state of mind, not a dollar amount.

It’s not entirely a state of mind. There is a qualitative difference between having an investment income approximately equivalent to a middle-class salary, and not having it.

Certainly you can find people who would feel miserable with that amount of money, and people who could thrive on a small fraction, but it would give most people a freedom that very few ever get.

Re: Climbing the Wealth Ladder

#34

Post by jlawson »

CPLX wrote: post #29
disintegore wrote: post #8

I understand this isn't the point of the article, but it seems like a roundabout way of saying "don't overspend". This part in particular bothers me : > More importantly though, the best way to climb the wealth ladder is to spend money according to your level. As far as I (a non-economist) can personally tell, any notion of climbing up some abstract wealth ladder is synonym with a salary increase for the vast majorit…

Yup. I see this kind of logic in personal finance discussions all the time but it's bullshit. There simply aren't any spending decisions you can make that will change you from not wealthy to really wealthy. Those things can just move you from poor to middle class at best, or to a better level of middle class. Outside of real outlier status where you're paid really, really large amounts of money for your services (lik…

Saving money, even from a salary job, gives you the breathing room you need to take economic opportunities. For example, if you save a year of expenses you can start a software business without external capital or connections.

Most of the paths from middle-class to wealth involve avoiding frivolous spending.

Re: Climbing the Wealth Ladder

#35

Post by nradov »

jacquesm wrote: post #13
nimbius wrote: post #5

im presently reading Paul Fussells "Class" and this is a fascinating take on the idea in the age of wage stagnation. >the best way to climb the wealth ladder is to spend money according to your level. This is directly contradictory to, and detrimental to, how the US Economy expects its consumers to act. Credit has largely filled the gap of wages and productivity such that consumers now have no real sense of their lev…

>>the best way to climb the wealth ladder is to spend money according to your level. I would argue that the best way to climb the wealth ladder is to spend below 'your level'. Keeping up with the Jones' who are doing their best to display their achieved status is an excellent way to end up just like they will at the end of a long life of hard work: in hock to the bank for their primary residence and with little to no…

With mortgage interest rates being so low right now it hardly makes sense to pay off your primary residence. Better to have the cash available for emergencies or to take advantage of investment opportunities.

Re: Climbing the Wealth Ladder

#36

Post by [deleted] »

CPLX wrote: post #29
disintegore wrote: post #8

I understand this isn't the point of the article, but it seems like a roundabout way of saying "don't overspend". This part in particular bothers me : > More importantly though, the best way to climb the wealth ladder is to spend money according to your level. As far as I (a non-economist) can personally tell, any notion of climbing up some abstract wealth ladder is synonym with a salary increase for the vast majorit…

Yup. I see this kind of logic in personal finance discussions all the time but it's bullshit. There simply aren't any spending decisions you can make that will change you from not wealthy to really wealthy. Those things can just move you from poor to middle class at best, or to a better level of middle class. Outside of real outlier status where you're paid really, really large amounts of money for your services (lik…

[deleted]

Re: Climbing the Wealth Ladder

#38

Post by yboris »

I highly encourage people in developed nations to become philanthropic as soon as they cross their country's poverty line. Giving to cost-effective charities can do tremendously more good for others, way more than you can do for yourself.

I currently give at least 10% of my income but my aim is to get back to giving 50% again.

Join others who give at least 10% https://www.givingwhatwecan.org/

Re: Climbing the Wealth Ladder

#39

Post by brazzy »

CPLX wrote: post #29
disintegore wrote: post #8

I understand this isn't the point of the article, but it seems like a roundabout way of saying "don't overspend". This part in particular bothers me : > More importantly though, the best way to climb the wealth ladder is to spend money according to your level. As far as I (a non-economist) can personally tell, any notion of climbing up some abstract wealth ladder is synonym with a salary increase for the vast majorit…

Yup. I see this kind of logic in personal finance discussions all the time but it's bullshit. There simply aren't any spending decisions you can make that will change you from not wealthy to really wealthy. Those things can just move you from poor to middle class at best, or to a better level of middle class. Outside of real outlier status where you're paid really, really large amounts of money for your services (lik…

I really think this logic is more about avoiding spending decisions that can change you from middle class to poor rather than the other way round.

Re: Climbing the Wealth Ladder

#40

Post by hk__2 »

I feel like education has an important role in this perception, too. I grew up in an environment with $10-$100 problems, and now I still compare the prices of what I buy in the $1-5 range, even if spending $400 on a gift once a month wouldn’t significantly alter my finances. This is some sort of conditioning where you _feel_ like being at some level while in fact being above it.
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