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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

#461

Post by bornfreddy »

ninjanomnom wrote: post #318
bornfreddy wrote: post #299

Earlier quoted context omitted.

Is that the only goal people are supposed to have in life?

Many people nowadays see retirement, especially early retirement, as a means towards whatever goal they have in life. You can focus on whatever you like without worrying about your financial stability.

My point was that this isn't the only goal people have. Just not being willing to waste too much time in traffic (while waiting for retirement) could also be the reason one prefers scheduling their trips to the shops.

Re: Price shocks in formative years scar consumption for life

#462

Post by saltcured »

FranzFerdiNaN wrote: post #436
beezle wrote: post #297

I was a kid during both oil shocks of the 1970s. That has absolutely nothing to do with my driving. What does, and not just for driving, is the family taught cultural value of 'don't be wasteful'. So unlike so many people today, I don't make 12 trips a day to stores/friends/whatever when I can just make one or two if I actually think 5 minutes ahead. That applies whether gas is $1 or $5 per gallon. I also try to make…

> I was a kid during both oil shocks of the 1970s. That has absolutely nothing to do with my driving. What does, and not just for driving, is the family taught cultural value of 'don't be wasteful'. This is most likely caused by those oil shocks.

For me the 1970s were drought and a lifelong awareness of water conservation. Edit to add: buckets to collect water from "warming up the shower" and using them to flush toilets must be one of my earliest complete memories of a complex process.

If anything, our family culture of thrift came from parents who were small children during WWII rationing and grandparents who were children in the Great Depression. I sometimes can even imagine there is an epigenetic factor here, leading to more obsessive (compulsive?) planning, optimizing, and risk management behaviors...

Re: Price shocks in formative years scar consumption for life

#464

Post by astrange »

mcguire wrote: post #453
astrange wrote: post #324

Earlier quoted context omitted.

Muni bond and treasury ETFs are not down 21%, and neither is my emergency fund investment account.

" Stocks are liquid enough... " Neither of those are stocks. Bonds are (usually) less volatile than stocks, but yeah, be careful about using them for short-term emergency funds.

Bond ETFs are equally as liquid as stocks.

Re: Price shocks in formative years scar consumption for life

#465

Post by lmm »

evandijk70 wrote: post #435
lmm wrote: post #376

Earlier quoted context omitted.

Several months is excessive. Even if you think you might going to spend six months with no income, you don't need six months' expenses in cash - one month's worth in instant access savings (or, sure, half in savings and half in cash under the matress, just in case), two months' in one months' notice savings, and three months' worth in three months' notice savings works just as well and will get you a better return.

What if your car suddenly breaks down and you have to replace it? Is the extra income of investing, let's say, 3 months of expenses really worth it? Let's say you get 3% in an instant savings account, and 3.5% in a three months' notice savings account. If you never touch that money until your retirement in 30 years, that would give you 0.5 months worth of expenses extra interest. Compare that to the hassle, extra wor…

You could use that logic to say keep all your savings in cash all the time. What if your roof gets blown off and you suddenly need to replace it? What if your house burns down and you need to buy a new one? The relevant question to ask is when having an extra couple of months' expenses in instant access is going to make the marginal difference. IMO the window between "one months' expenses" and "six months' expenses" is pretty narrow, so it makes more sense to keep one month or so in cash or current account and then invest the rest at the best rates you can.

(e.g. I would say for most people a car probably costs more than three months' expenses, so having that much extra in instant access probably doesn't shift you from "can't buy a new car in cash" to "can buy a new car in cash". Realistically you're (hopefully) insured and you're quite likely to finance your replacement car.)

I've had an "instant access" savings account take 2 months to pay out my money - some kind of AML issue, supposedly. Conversely, a lot of "three months' notice" accounts aren't "you physically can't take money out with less than three months' notice" but rather "if you withdraw with less than three months' notice you sacrifice one year's interest" or similar. I don't find the "hassle of an extra account" to be significant when it's two accounts at the same bank under the same login, but if you do then I would seriously consider having only a notice-requiring savings account.

Re: Price shocks in formative years scar consumption for life

#466

Post by MiguelX413 »

evandijk70 wrote: post #443
krageon wrote: post #438

Earlier quoted context omitted.

Nobody is born enjoying planning things, it's something you like better as you do it more. Of course, you can accept the fact that you are not born enjoying it and then just not do it but that doesn't seem like a decision to be celebrated, to me. Edit: Because it is essentially celebrating the fact that you are at least in part measurably dysfunctional. It's part of the zeitgeist, but there is such a thing as taking…

Accepting is different than celebrating. I disagree that it's part of the zeitgeist. The zeitgeist is that you and your life have to be perfect, because that is the image you get from everyone on social media.

On what social media is this true?

Re: Price shocks in formative years scar consumption for life

#467

Post by hinkley »

fleddr wrote: post #390
hinkley wrote: post #386

Earlier quoted context omitted.

My great grandmother was 9 at the end of the Great Depression. Not that she talked about it, but I did an assignment for an anthropology class that was basically, "bother some old people about one of these Bad Times." She actually was a good cook, a lot of her dishes rode the line between simple and fancy. She had either the oldest fancy stove or the fanciest old stove I'd ever seen, and she treated every glass jar s…

I so recognize that behavior, and in our family it has carried on into the boomer generation, my parents and in-laws. Half the food in their house is expired. They have this lifelong habit of needlessly stocking lots of food as well as opening a food package and then not finishing it for way too long. Our parents never experienced a famine yet did experience a different culture of food logistics. Very large families…

Yeah the whole thing with Boomers was not just that everyone in the neighborhood had kids, it was that a lot of them had 3. 4. 6. The dynamic with 4+ siblings is to heap your plate with food because all the serving dishes were empty long before you realized that you were hungrier than what was left on your plate.

That it was another generation before obesity became a huge issue probably says more about how many manual chores the boomers still had to do. You can suck up an extra 500 calories a day pretty easy, pushing things around and hauling them in and out of storage. An extra thousand or two if you're on a farm.

Re: Price shocks in formative years scar consumption for life

#468

Post by formerkrogemp »

pchristensen wrote: post #456
formerkrogemp wrote: post #422

Earlier quoted context omitted.

I was working in a grocery store at the time. People did head out a lot for groceries due to boredom and low gas prices.

And no restaurants.

Depends on your state. In the south many of them said that they had restrictions, but in reality did nothing.

Re: Price shocks in formative years scar consumption for life

#469

Post by lbschenkel »

I was a kid during hyperinflation years in Brazil: 80s to early 90s, sometimes higher than 70% a month. To this day I'm very frugal, and I have a strong aversion to having debt of any kind: the only kind of debt I ever had was a mortgage and I paid them off as soon as I possibly could. I can only sleep well at night if I don't owe any money to anyone.

I cannot be sure, but I have this feeling that it is due to my formative years in that kind of environment.

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