The financial planning bit is meant to come before one has a list of expenses to "figure out" (like home+leased car+children).
Children are not a luxury product like a sports car or yacht. They are a basic function of human life.
Rich people do have trouble understanding what it's like to be poor
61–70 of 421 posts
Re: Rich people do have trouble understanding what it's like to be poor
#62A more distant but very wealthy family member once said that people wouldn't be so poor if they just saved up money. That perfectly illustrated the difficulty rich people have understanding poor people to me. I was really young, but that really stuck with me.
I thought this for the longest time. An embarrassingly long time. Then I volunteered with a program that helps people who qualify for EITC to prepare their taxes and budget how they’ll use their tax return to “get them out of their situation”. Person after person came in, we did their taxes, and then we went over their expenses and each case was a frustrating puzzle that was impossible to solve. There just wasn’t eno…
Okay...but on /r/personalfinance, people show up all the time with a litany of complaints and a litany of awful, awful budget mistakes they have no interest in fixing. 120/month cellphone, 400/month doordash, Dodge Charger with a 600/month note. And so on.
each case was a frustrating puzzle
What puzzled you? The necessities should never be a puzzle. If the rent, the food, the utilities, the insurance, and the day care add up to less than the income, then everything else could be saved if you dispense with luxuries. If the necessities are more than the income, you either have to cut back on something important or work a second job. That's not fun, but it's also no puzzle.
Re: Rich people do have trouble understanding what it's like to be poor
#63Earlier quoted context omitted.
I remember a politician complaining about having difficulties with a salary of 6000€/mo. Some people live in a bubble so far from the real world that almost seems fantasy.
One summer in high school I got a factory job. It was Michigan, so I was running an injection molding press making the rims for side mirrors. (Decades later I still remember that the press took 67 seconds per cycle, and that 1600 rims was the shift target.) I was on second shift, so my crew didn't see the executives much. But one day the CEO held an all-hands, so we shut all the machinery down and went to an area big…
O/T - How many side mirror rims were in each cycle? If it were just one, then your shifts must have been over a day long, which doesn't make much sense.
Re: Rich people do have trouble understanding what it's like to be poor
#64I had a co-worker who thought he had a typical american childhood because he didn't consider his family wealthy, even though they had millions of dollars of networth over 30 years ago. Him and his 3 bothers went to a very exclusive private school that was 50k a year per child, but since his classmates were mostly "old money" that were from family worth 10s to 100s of millions of dollars, he was picked on for being th…
No, fast food is actually just disgusting lab-made pseudo-food, if you’re accustomed to fresh, whole, real food.
I loved fast food growing up, but after a couple year stint eating only fresh foods, I went back and literally couldn’t stomach it anymore. It tastes good going down. (At the time) I had no conditioning or preconceived beliefs that it was disgusting, but within an hour my stomach felt queasy and I threw it up. After half a dozen times experiencing that, I gave up on fast food entirely.
Re: Rich people do have trouble understanding what it's like to be poor
#65Wealth is a stock measure, income is flow. You accumulate wealth out of what you can set aside out of the flow. Some of us immigrants do not come to this country with an existing stock of wealth either back home or here. We are also not in the favored group of immigrants. We have human capital which we are trying to convert to financial capital for the next generation. Then, when we sort of "make it" here, people who…
I think this is an excellent comment. What makes me very sad is that during the past 14 months the divide between those who own assets and those who don't has reached gargantuan proportions.
I mean, in my raging inferno of a housing market, over the past couple of years home prices have easily doubled. So a 400k house from 2018 now sells for 800k. Yes, if I want to move to another house in my area I'll pay similarly astronomical prices, but that just means it's about a wash for me, and of course I have many more options like moving to a cheaper locale or a cash out refi.
But if I (or my parents) don't already own a home, it means my chances of ever owning a home in my area just went to about zero. People made vastly more money just sitting around in their houses in the past couple years than I made in my job as an "essential" worker over the past decade.
I just don't see how this ends well.
Re: Rich people do have trouble understanding what it's like to be poor
#66Earlier quoted context omitted.
I thought this for the longest time. An embarrassingly long time. Then I volunteered with a program that helps people who qualify for EITC to prepare their taxes and budget how they’ll use their tax return to “get them out of their situation”. Person after person came in, we did their taxes, and then we went over their expenses and each case was a frustrating puzzle that was impossible to solve. There just wasn’t eno…
Okay...but on /r/personalfinance, people show up all the time with a litany of complaints and a litany of awful, awful budget mistakes they have no interest in fixing. 120/month cellphone, 400/month doordash, Dodge Charger with a 600/month note. And so on. each case was a frustrating puzzle What puzzled you? The necessities should never be a puzzle. If the rent, the food, the utilities, the insurance, and the day car…
I'd argue that the people posting anonymously on the internet are not the same people who mustered up the courage to seek help in person and talk face to face, sometimes (often?) with children in tow.
Re: Rich people do have trouble understanding what it's like to be poor
#67I had a co-worker who thought he had a typical american childhood because he didn't consider his family wealthy, even though they had millions of dollars of networth over 30 years ago. Him and his 3 bothers went to a very exclusive private school that was 50k a year per child, but since his classmates were mostly "old money" that were from family worth 10s to 100s of millions of dollars, he was picked on for being th…
No, fast food is actually just disgusting lab-made pseudo-food, if you’re accustomed to fresh, whole, real food. I loved fast food growing up, but after a couple year stint eating only fresh foods, I went back and literally couldn’t stomach it anymore. It tastes good going down. (At the time) I had no conditioning or preconceived beliefs that it was disgusting, but within an hour my stomach felt queasy and I threw it…
Be that as it may, he wouldn't get sick when he didn't think he was eating fast food. We'd go to a diner for breakfast sometimes, and since he perceived it as a nice family-run place, he wouldn't get sick, even though their food was still processed garbage that showed up frozen in a truck every morning.
Re: Rich people do have trouble understanding what it's like to be poor
#68Wealth is a stock measure, income is flow. You accumulate wealth out of what you can set aside out of the flow. Some of us immigrants do not come to this country with an existing stock of wealth either back home or here. We are also not in the favored group of immigrants. We have human capital which we are trying to convert to financial capital for the next generation. Then, when we sort of "make it" here, people who…
I think this is an excellent comment. What makes me very sad is that during the past 14 months the divide between those who own assets and those who don't has reached gargantuan proportions. I mean, in my raging inferno of a housing market, over the past couple of years home prices have easily doubled. So a 400k house from 2018 now sells for 800k. Yes, if I want to move to another house in my area I'll pay similarly…
Taxes even that out a bit. The person with an 800k house pays twice as much in property taxes. In many states, the amount that the state can raise taxes on someone whose house may have "increased" in value is limited.
Re: Rich people do have trouble understanding what it's like to be poor
#69I think that this is true. This is also true that you can't understand what it is of being powerful or rich when you're not. In a general way, it is very difficult to imagine living in other people's shoes, we live on the same planet, breathing the same air, we have 99.9% the same DNA, but our experience of life and our environment can be widely different.
I agree what you say, although I might add that the harm potential by a "not-understanding rich of the poor" is much greater than a "not-understanding poor of the rich"
People who are in a position of power always have more opportunities to hurt others.
But sometimes, in rare occasions, during revolutions, the rich might not be in a position of power.
Re: Rich people do have trouble understanding what it's like to be poor
#70Poor Americans often don't understand what it's like to be poor. Spending extended time in a severely damaged third world country absent all security opens all kinds of perspectives.
What I find the more useful comparison, is to compare the poor of a country, to the median income of other countries. That puts the US bottom decile household at $10800 slightly below the median Malaysian, Russian, Ukrainian or Mexican household. The bottom percent household income is at $1400 in the US, which puts them slightly below the median in Zambia, Burkina Faso and Benin. Note, these other countries also have…
I think that's probably quite misleading to just look at nominal value. Purchasing power parity might be a better metric, but I still don't think that captures the difference in people's lives in different countries.
Being poor in America is means perhaps having some comforts that are rare even for middle class people in other countries. For example, the home square footage, number of appliances, size of wardrobe, number of cars, etc. But on the other hand, middle class people in a less materially rich country may have government safety nets, accessable health care, higher education, in-demand skills, ability to save and access credit, manageable work hours, and enjoy the social respect that comes with professional careers.