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Climbing the Wealth Ladder

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Re: Climbing the Wealth Ladder

#141

Post by enraged_camel »

tonyedgecombe wrote: post #130
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…

I'm not totally convinced. It seems to me the further you get up the greasy poll the greasier it gets. Sure if you are on minimum wage then there are probably some easy gains to be made but for someone in the middle of their career they are far more likely to improve their situation by saving rather than getting promoted. That's not to say they shouldn't try but you have to realise the odds are against you getting to…

>> It seems to me the further you get up the greasy poll the greasier it gets.

Quite the opposite: the pole is greasy at the bottom, but becomes easier to climb the more you manage to climb.

The reason it's greasy at the bottom is because there are fundamental systemic factors at play that make it very difficult for poor people from making their way up. For example, here in the USA you cannot open a bank account if you don't have a permanent address, and you're likely to work multiple jobs with constant changes in schedule, and lack of easy transportation options to travel from one to the other.

Once you reach middle class though, the relative stability it provides can allow you to make decisions to climb the ladder further, if you choose to do so.

Re: Climbing the Wealth Ladder

#142

Post by Kirby64 »

clktmr wrote: post #28
Kirby64 wrote: post #6

Earlier quoted context omitted.

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.

> Independence is a state of mind, not a dollar amount. This is only true if you have no debt. Even in your low-end example you need a net worth of 250k, which is a non trivial amount of money for most people. And I would still call it naive, it's just not enough. Financial independence to me is, having other assets than your time which will pay for your most basic needs. Living in a van probably means doing a lot of…

Sure, there's a dollar amount where you literally could not live. There's even more nutso people who talk about living on $100k by retiring to some foreign country where cost of living is absurdly low, though. I don't think those people (or the 250k van people) are realistic, since obviously there's longer term problems (i.e. vans aren't going to be great for someone who is old).

I would disagree with your financial independence definition though. Basic needs threshold is much lower than 'comfortable' living. The traditional definition of financial independence is not having to work if you don't want to. What that looks like (the sacrifices you make) depends on the person. Maybe to be financially independent you are cool with a $500/mo apartment and Ramen... or maybe that means a mansion and a bunch of supercars. Either way, if you're dependent on a job or someone else, you aren't financially independent.

Re: Climbing the Wealth Ladder

#143

Post by bko »

shantly wrote: post #129
bko wrote: post #126

Earlier quoted context omitted.

Being in a country where I can negotiate with my employer as to vacation time in respect to my salary, the idea that someone has to have accept minimum of 7 weeks regardless of circumstances is mind boggling.

It's because, absent that protection, workers on the weaker end tend to get squeezed down to very low PTO whether they want that or not. [EDIT] weaker end in terms of ability to negotiate—so, the vast majority of workers.

Unfortunately what often happens is that this law applies only to full time workers at some cutoff (e.g. 30+ hours a week). If the cost of full time is too high (e.g. 7 weeks paid vacation for a low skilled job), the employer would be more likely to hire more part time workers. And you would see people working multiple part time jobs rather that a full time job. Some of those workers would likely be willing to forgo a generous benefit like 7 week vacation for the opportunity to work one job.

Re: Climbing the Wealth Ladder

#144

Post by sbochins »

I think the rules he’s using for measuring wealth are way off. It only makes sense if your goals are to work a full time job for the rest of your life. Something more meaningful would be financial independence. How long can I live comfortably without working? Do my investments still lead to net personal wealth increases without working? If so, how much?

Re: Climbing the Wealth Ladder

#145

Post by pathseeker »

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…

>Outside of real outlier status where you're paid really, really large amounts of money for your services (like notable entertainer or cardiac surgeon) the way to wealth is to own the means of production. Period.

This is a lazy view, or a really privileged one at least. I know a couple of people in their fifties who have retired from putting as much money into the market as possible (post-tax and pre-tax) while living modestly through their younger years. Having enough money to retire early is having wealth.

Views like the one you espouse are insidious because they give people a justification to stop trying and spend everything they make. Why not get the $1500/mo apartment instead of the $900/mo one? If you can't build wealth, what's the point in trying to accumulate it at all?

Re: Climbing the Wealth Ladder

#146

Post by taneq »

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…

> The undisputed "best way" to climb the wealth ladder is to receive large amounts of cash from some external source.

I agree with most of what you say here but I'm not so sure of this bit. Of course, if you get handed huge amount of cash by a rich relative, that's the easiest way to live comfortably for some time, but it won't come with the financial skills to make the cash an asset instead of just a possession.

Assuming you don't win that lottery (or indeed win the actual lottery, $100 million powerball style), I think the best way to climb the ladder is to own a business (as per your 'small business owner across the street with the McMansion and the gaudy Christmas decorations'). Receiving cash is like getting a push on your billy cart, it's nice but it doesn't, in itself, give you a way to get more. A business is like an engine for the billy cart, maybe it won't be going as fast right away but it'll keep on going and generating money.

Either way, as you say, scrimping on groceries will never make the difference between wealthy and not. Wisely investing your salary in real estate or stocks won't help either, except over timescales too long to have any fun with it or unless you're at the very top tier of a FAANG-type company. A business is a machine to make money and unless you own one, you're highly unlikely to end up in the same financial class.

Re: Climbing the Wealth Ladder

#147

Post by pathseeker »

SketchySeaBeast wrote: post #98
philwelch wrote: post #69

Earlier quoted context omitted.

Here's the thing: if instead of spending your money, you invest it, guess what you end up doing with that money? Owning the means of production. Period.

A bit confused by this - you're now not actually buying anything that produces anything. I guess you could argue it produces more money, but you have no control over those things - you can only choose what you invest in, but have no control over how those things perform. Otherwise then savings is owning the means of production, given that you're still making money with it.

>A bit confused by this - you're now not actually buying anything that produces anything.

I suggest you look up what stock ownership means. Most wealthy people only own non-controlling interest in most of their investments as well. If you own a share of stock, you own part of the means of production.

Re: Climbing the Wealth Ladder

#148

Post by tonyedgecombe »

wonderwonder wrote: post #109

People without a safety net who start out poor are generally going to end up poor. In another post I mentioned how its possible to save and due to the power of compound interest retire with millions on a 60k salary but that is a best case scenario. Most people don't make 60k. Also life has a funny way of stepping in. Just after you saved your first 3k, your alternator goes out or you get in a wreck. Or suddenly find…

Just after you saved your first 3k, your alternator goes out or you get in a wreck.

Some people seem to have these sort of problems more often than others. I guess poverty is about a lot more than lack of money.

Re: Climbing the Wealth Ladder

#149

Post by pathseeker »

SketchySeaBeast wrote: post #128
philwelch wrote: post #125

Earlier quoted context omitted.

If you buy one share of Toyota Motor Company, you are now a part-owner of a car company, including all the factories and equipment and supply contracts and whatnot that such a thing entails. Owning stock literally entails “owning the means of production”. Buy some stock today and become an evil capitalist!

So only if I buy direct? Not index funds?

Index funds too. What do you think index funds are investing in?

Re: Climbing the Wealth Ladder

#150

Post by Andhurati »

baud147258 wrote: post #95
lowercased wrote: post #79

Earlier quoted context omitted.

"not everyone can afford to take a week off work" even if you can , financially, it's often hard to do so mentally/emotionally. if you're taking time away from work, that means no income - whether you desperately need it or not may be immaterial to the mental state you've built for yourself.

> "not everyone can afford to take a week off work" Being in a country where vacation time is paid by the company (currently 7 weeks / year, even if I usually don't use up all of it), the idea that taking a day off work means less money at the end of the month is mind boggling.

What has this offered to your country? Why doesn't it have it's Amazon or SpaceX? Why is the Linux Foundation here? Why are the salaries in the most unregulated or frontier markets the best in the US and not in Europe?

Mandating a week off for everyone doesn't seem to give the space needed for poorer people to become as wealthy as they might deserve. What can be done?

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