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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

#471

Post by Markoff »

varispeed wrote: post #460
Markoff wrote: post #89

Earlier quoted context omitted.

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…

This is totally reasonable. However, I found that going out of her way to find a product marginally cheaper to be counter productive. I was unable to explain to her the concept of alternative cost. For instance spending extra 30 minutes to save £1-2. I mean there is nothing wrong with that if you don't have anything else to do and can be a form of entertainment, but these things pile up and that shows in her looks -…

I mean if she doesn't do it during her work time it's difficult to calculate cost of free time vs savings, personally I don't see it that way either, it's just thing I have to do and whether my grocery takes 20 or 30 minutes makes really no difference, those few extra minutes spent on checking cheap (expiring) things I could not use elsewhere.

I don't really think she would literally spend extra 30 minutes to save 1 GBP, seems like exaggeration and I also doubt she is really allocating time to those activities. She can be constantly tired more likely because she is burned out (my case, not taking any vacation in years besides bank holidays when they often bother me anyway) than because of time spent on saving money.

Re: Price shocks in formative years scar consumption for life

#472

Post by solarkraft »

ravenstine wrote: post #275
Nick87633 wrote: post #170

Earlier quoted context omitted.

They still had installment plans for buying appliances and repossessions. I'm pretty sure usurious loans have existed since money was invented.

Of course. Loans have existed since the beginning of money. That doesn't mean average people were using credit and loans to buy everything from Lambos to Cheetos to pornos like they can today. Not until very recently. Credit wasn't really something that was available to most people until around the 70s when it began to be digitized successfully. The psychology of debt today compared to that of a few generations ago i…

Haven't (later) Millennials already learned from the mistakes of those before them? I know I'm scared of any type of debt due to the stories I've heard about it going wrong.

Re: Price shocks in formative years scar consumption for life

#473

Post by blindmute »

cableshaft wrote: post #322
nomel wrote: post #305

Earlier quoted context omitted.

> we only need a month of backup As someone who went through two recessions, survived multiple layoffs, and had a few medical things, this seems like crazy talk. The general rule of thumb is 6 months of savings. I've known many that didn't follow this rule, and ended up in very bad debt.

Do you need it all sitting in a savings account, though? Inflation ate almost 9% of its value this past year. Granted stocks are down 20% this year, but assuming you don't have to touch it for a while, they should more than recover in a few years (well, assuming no massive global disaster, which seem more and more common lately). We have a decent amount sitting in our savings account, but not six months worth. But I…

If you need six months of expenses, you likely got laid off, which means your stocks are likely tanking as well, and it takes longer to get a new job. A cash or bonds emergency fund is perfectly logical. Six months isn't even that much money; in a normal 2% inflation year, that means you're losing less than 0.01% of the amount each month to inflation. The peace of mind is worth that, isn't it?

Personally I have 2 years in cash because I like to take 6+ month sabbaticals between jobs, but even that is a negligible amount due to my expense/income ratio.

Re: Price shocks in formative years scar consumption for life

#474

Post by teddyh »

fknorangesite wrote: post #301
ev1 wrote: post #223

Earlier quoted context omitted.

Was this formerly a good site? I remember running into cracked periodically in the last few years and it always looked like the absolute worst of clickbait spam, but these articles are rather decent

Once upon a time, yes. I mean, it was always a bit fluffy and lighthearted - that's the point, right? - but they often had quality articles. But then they were acquired in 2016 and it was downhill from there.

I sometimes still see people referencing this article: 6 Harsh Truths That Will Make You a Better Person

https://www.cracked.com/blog/6-harsh-truths-that-will-make-y...

Re: Price shocks in formative years scar consumption for life

#477

Post by aoeusnth1 »

throwawayarnty wrote: post #420
aoeusnth1 wrote: post #363

Earlier quoted context omitted.

Minimum buffer / maximizing investments in ETFs has higher EV and depending on your time horizon and model, may even be lower risk.

This strategy essentially ensures that you will never have much capital ready for when stocks and other assets suddenly get cheap. Your strategy means that the best time to buy assets correlates with when your net worth dips then lowest.

Do you try to time the market? Holding cash waiting for stocks to "get cheap" is a losing strategy unless you have some serious edge.

Re: Price shocks in formative years scar consumption for life

#478

Post by jlawson »

wolverine876 wrote: post #274
jlawson wrote: post #251

Earlier quoted context omitted.

>(bought a new phone? Let's keep the old one even if it has a cracked screen, just in case... .) Never been poor; me and my whole family have always done this. I just forced them to get rid of their standalone DVD player. They have remote controls for devices going back to the 90's. The cellphone example is even better; you'd be a fool to immediately dump your old phone. It's small and easy to store, and if your new…

> Never been poor So what basis do you have for commenting on the experience of it? > me and my whole family have always done this. I'm sure there are other things that both your family and poor families have done, but that doesn't have explanatory value.

I'm not commenting on the experience of being poor; I'm saying that the mentioned behavior isn't "part of being poor", it's part of being frugal.
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