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Price shocks in formative years scar consumption for life

knowledge.wharton.upenn.edu

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Re: Price shocks in formative years scar consumption for life

#201

Post by [deleted] »

Markoff wrote: post #89
varispeed wrote: post #51

I know someone who immigrated from a former communist country. She talked how they lived in extreme poverty and now despite having great job and substantial savings, she pretty much lives the way she learned. For instance cooking the same food her parents used to cook from whatever they managed to find, only wearing used clothing. When her phone was stolen and she had to buy a new one, she literaly cried for a week t…

I perfectly understand her, I am in similar position despite being in top 3% earners in Czechia I will refuse to buy overpriced goods I know they are cheaper in other shop. I have 4 years old phone, wanted to upgrade for really long time, but I don't see the value in new one worth spending that much money for flagship just because I want compact phone with good camera and battery (Pixel 4A was closest price wise, but…

[deleted]

Re: Price shocks in formative years scar consumption for life

#202

Post by itronitron »

DrBazza wrote: post #172
ChuckNorris89 wrote: post #2

Being poor in general, during your childhood, scars you for life. It makes you penny wise and pound foolish, adverse to taking risks in your career and investments, can destroy your confidence in yourself, while always having to look over your shoulder monetarily speaking. Habits that even after you remove poverty from your live, you still feel the the anxiety and triggers in your head.

Another way of stating that article is that most people in their 20s and 30s have only ever known low-inflation and stability. Those in their mid-40s onwards are possibly young enough to remember how what their parents dealt with in the 70s.

I remember sitting in the car with my mom outside an Amtrak train station in the late `70's asking her why she was cutting the tops off of several cereal boxes that we had just bought from the grocery store. Apparently they were for a discount on train tickets.

Re: Price shocks in formative years scar consumption for life

#203

Post by quartesixte »

tablespoon wrote: post #120
quartesixte wrote: post #73

Earlier quoted context omitted.

Some restaurants give a free basket of bread with a meal as a sort of appetizer. Most people either consume all of it or just leave the leftovers.

Ah, so it's just that the OP wrote something that was prone to be misparsed. I read "breadbasket home" as a compound noun and guessed it was some kind of food bank or something, but "home" was really an adverb modifying took. So what was meant was something like "My grandma ... always took [home] the bread from a [restaurant] breadbasket..."

Yeah welcome to split verb-adverb pairs in English!

Re: Price shocks in formative years scar consumption for life

#204

Post by wing-_-nuts »

spaetzleesser wrote: post #154
ChuckNorris89 wrote: post #2

Being poor in general, during your childhood, scars you for life. It makes you penny wise and pound foolish, adverse to taking risks in your career and investments, can destroy your confidence in yourself, while always having to look over your shoulder monetarily speaking. Habits that even after you remove poverty from your live, you still feel the the anxiety and triggers in your head.

It doesn’t have to even be in your youth. I lost a lot of money with a real estate deal in the 90s plus a lot more when the .COM bubble crashed. Since then I have no confidence in investing or jobs. I always look over my shoulder and wait for things to go bad. Especially since 2008 it made sense to blindly invest into housing and stocks even while knowing they would crash eventually. Being gunshy from previous experi…

Yeah, it's not just in childhood, it also hits early adulthood as well, when people are just starting out.

I scraped by on ~ $600 / mo in disability until I graduated college in my mid 20s in 2008. My spending habits, my hobbies, everything was ingrained around that age.

Today I make 25x as much, and barely spend 2x. It's hard to change early habits.

Re: Price shocks in formative years scar consumption for life

#205

Post by corrral »

bsagdiyev wrote: post #105
deathanatos wrote: post #103

Earlier quoted context omitted.

I'm not in SF. The last listing I looked at was 800 sq ft, run down, literally "as-is" property: $500k valuation from Zillow (it's listed for less … but not by much). That's about $2500/mo, in mortgage alone. Decent properties, in suburban areas, at ~$1M. Ir rural areas, yeah, they're cheaper … and salary would get "adjusted" the moment I try that.

Jesus where do you live? I moved from San Diego to Raleigh, didn't get a pay adjustment and even that place wouldn't be anywhere near that cost here.

I'm looking at moving to a significantly nicer [edit: than where I am now, that is], coastal region with excellent schools and within occasional-but-not-daily commute distance of two top-tier US cities, including by rail (some of you may be be able to guess the area, at this point), and the housing prices (4-bedroom with some land, even) are surprisingly affordable. Nothing like that, certainly. Houses within daily commute range of one (but not both) of those cities can be had for way under that, too, some miles away from where I'm looking, especially if you'll accept good-but-not-excellent schools.

I guess if you're somewhere insanely expensive and won't go somewhere that's not, then... you're gonna pay a lot for housing. Go figure. "Here's the 97% of the country that's not like that, just throw a dart at a US map and you'll probably hit a place with much cheaper housing"—"No, I won't, because reasons"—"Uh, OK then, kinda sounds like a choice, good luck"

Re: Price shocks in formative years scar consumption for life

#206

Post by mabbo »

ChuckNorris89 wrote: post #2

Being poor in general, during your childhood, scars you for life. It makes you penny wise and pound foolish, adverse to taking risks in your career and investments, can destroy your confidence in yourself, while always having to look over your shoulder monetarily speaking. Habits that even after you remove poverty from your live, you still feel the the anxiety and triggers in your head.

My wife grew up very close to the poverty line, with her parents always just about to lose the house. And she has this anxiety. (Edit: to be clear, she's a successful civil engineer, considered one of the best in her field locally and makes great money- she has nothing to worry about.)

In order to help with it, we have a bank account that our bills come out of that has a little more than 6 months worth of all our bills (mortgage payment included) just sitting there, collecting zero interest. Every time a bill is paid, we top it up to the target amount. If we stop making money today, we don't have to do anything differently for 6 months.

It's not logical or financially wise, but it means that she doesn't worry about money as much. I consider the opportunity cost on the interest we might collect on that money as a bill that I'm happy to pay.

Re: Price shocks in formative years scar consumption for life

#208

Post by joncrocks »

pea wrote: post #110
ChuckNorris89 wrote: post #24

Earlier quoted context omitted.

>Could you explain what you mean? Sure. I realize I waste a lot of time in supermarkets, shops or online stores, browsing/walking around and comparing prices just to penny pinch on low value things, when the savings I would make would have no meaningful impact on my yearly net worth, but the time and mental energy wasted browsing/walking around comparing prices could have better return on investment if used on other…

Strangely, I've observed the same behaviour with people on the exact opposite side of the spectrum too (i.e. UHNW). A friend of mine worked on superyachts which were £400k a week to rent. He said that without fail the owners would be penny pinching at the end over a few £ here and there (on food, drink, suncream etc.) Same with upper-class Brits who had hundreds of years of intergenerational wealth but won't turn the…

How many of those UHNW individuals came from money vs. had to build it themselves?

"Wealth does not last beyond three generations"

https://www.nasdaq.com/articles/generational-wealth%3A-why-d...

Re: Price shocks in formative years scar consumption for life

#209

Post by Infernal »

jacobr1 wrote: post #187
selimthegrim wrote: post #156

Earlier quoted context omitted.

Are interest rates high enough again to make laddering worth it?

For I-Bonds the rates are now worth it. They are very CD-like, in that you can't withdraw them for the first year, and in the first 5 there is a few month interest penalty for early withdrawal. You can only buy $10k per person per year, but as a married couple, you could build up 100K in savings over 5 years, and even faster if you hold them in a trust.

Can you explain why it would be faster to hold I-bonds in a trust?

Re: Price shocks in formative years scar consumption for life

#210

Post by bombcar »

mabbo wrote: post #206
ChuckNorris89 wrote: post #2

Being poor in general, during your childhood, scars you for life. It makes you penny wise and pound foolish, adverse to taking risks in your career and investments, can destroy your confidence in yourself, while always having to look over your shoulder monetarily speaking. Habits that even after you remove poverty from your live, you still feel the the anxiety and triggers in your head.

My wife grew up very close to the poverty line, with her parents always just about to lose the house. And she has this anxiety. (Edit: to be clear, she's a successful civil engineer, considered one of the best in her field locally and makes great money- she has nothing to worry about.) In order to help with it, we have a bank account that our bills come out of that has a little more than 6 months worth of all our bil…

People vastly underestimate the "peace of mind" costs - once those are taken into effect it can suddenly make sense to do things that many consider "financially unwise", such as having a large emergency fund, paying off a mortgage, etc.

And once you do that you can find yourself suddenly feeling much more free - knowing that even if everything goes south room and board is taken care of can give you the courage to take risks you'd not otherwise take, such as starting a business, a family, even moving.

The main thing about "living paycheck to paycheck" that scares me is that feeling of being trapped.

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