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Rich people do have trouble understanding what it's like to be poor

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Re: Rich people do have trouble understanding what it's like to be poor

#71

Post by LocalPCGuy »

mynameishere wrote: post #62
elliekelly wrote: post #12

Earlier 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…

Have you looked at the psychology of decision making when poor and struggling? It might open your eyes as to why people don't make the optimal choices (financially or others).

And a lot of people literally do not know any better. They've never had someone teach them how to manage money and potentially had bad role models growing up. So its easy for you to say, with the knowledge it seems like you have, this is what you need to do. It's much harder to put into practice.

Especially when you consider there are many folks that do manage their money well, don't splurge on non-essentials, work multiple jobs and still cannot make ends meet.

Re: Rich people do have trouble understanding what it's like to be poor

#72

Post by licebmi__at__ »

Consultant32452 wrote: post #11

I think this suffers from a causation direction bias. Maybe people with the choice mindset wind up in positions of wealth and power because of this mindset. I can only speak anecdotally, but the hand full of millionaires I know all grew up lower middle class, and they all have choice mindset. I think the worst kinds of people create a false dichotomy here where either everything is choice or everything is a product o…

I think this is a weasily way to put an argument. Yes, we can agree that just sitting around doing nothing is unlikely to help someone’s outcome. But when you have a growing population throwing their backs on 2 jobs and still struggling to make ends meet, you might want to consider that this people do have the choice mindset, and the choice mindset is failing spectacularly. So with this in mind, and with agreement on the point that you need to try, could we focus on the externalities instead of congratulating ourselves about our choice mindset?

Re: Rich people do have trouble understanding what it's like to be poor

#74

Post by prepend »

wpietri wrote: post #39
Vespasian wrote: post #30

Earlier quoted context omitted.

The ability to save money relies on the ability to "reduce your lifestyle costs" by cutting certain expenses (raising income is oftentimes not realistic. Poor People in general are not lazy) Below a certain limit there is no way to do that without loosing more money like getting rid of your car. And it's not only the obvious things. An acquaintance of mine was a single mother (ex-husband in prison) and had to decide…

> Poor People in general are not lazy Exactly. I grew up poor and my teen employment was bust-your-ass jobs like factory and restaurant work. I was once on a contract for a large company, and throughout the day I'd watch the office employees enjoy quiet, pleasant days with plenty of chatting with coworkers. The most strenuous thing they'd do was occasionally rush from one meeting to another. They'd all be gone by 5 a…

> hardest workers in the building

It took me a while to understand that work is not paid based on difficulty, but on labor supply and demand.

The reason why many very hard jobs pay so low is because there’s lots of people who will do them.

There’s an axiom about smart work > hard work but I think that oversimplifies too much.

I did manual labor for a few summers and it didn’t pay very well. I just didn’t understand why my work was so hard and paid so little and it frustrated me.

But understanding how wages work at the macro level gave me some mental peace.

Re: Rich people do have trouble understanding what it's like to be poor

#75

Post by zpeti »

hn_throwaway_99 wrote: post #65
nanis wrote: post #36

Wealth 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…

I would love to see a parallel universe where in 2008 no one is bailed out and bankers are either on the hook for the risks they took or actually are sent to prison.

Taking it further back, what if the tech bubble of the 90s is allowed to collapse, interests aren't set at almost 0, and a housing bubble isn't blown by exploiting minorities.

And last year airlines, and other corporations who didn't account for black swan events, go bankrupt, and new management take them over (or employees), or they disappear altogether and new startups can fill the void.

I am convinced the USA is in the place it is because since about 99, no rich person has been allowed to fail or lose money, not really.

I'm not a leftie, but it really is capitalism for the poor, socialism for the rich right now. But I have to say, the problem is collusion between the rich who are close to politics, and the problem is the GOVERNMENT enabled all this.

The problem is NOT all rich people. Only the ones who are part of this system. And this distinction needs to be made, otherwise the US is headed for a communist disaster of hating the rich. But the problem is the corrupt rich, not all rich.

Re: Rich people do have trouble understanding what it's like to be poor

#76

Post by moralestapia »

GuB-42 wrote: post #45
FriedrichN wrote: post #3

A 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.

The worst part is that your wealthy family member is right. It is well illustrated by a quote from Terry Pratchett > The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. > Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a se…

This is very naive and short-sighted, what percentage of your income go to boots? 1%? Your own example is talking about a ROI of 50USD in years, yeah sure ... that's wealth right there.

People spend 90% of their wage on: rent, food and basic services. Can you be very smart and hack your way into halving your monthly rent? Can you be very smart and buy a really good potato that will last you for years? Can you be very smart and negotiate a better rate for the utilities you pay? Come on, man.

Of course, planning and spending carefully go a long way, but that metaphor is a joke.

Re: Rich people do have trouble understanding what it's like to be poor

#77

Post by teachingassist »

GuB-42 wrote: post #45
FriedrichN wrote: post #3

A 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.

The worst part is that your wealthy family member is right. It is well illustrated by a quote from Terry Pratchett > The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. > Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a se…

Being able to repair things as needed also comes into this category.

If I can't immediately afford to send something for repair, then I keep using it until it completely wears out, have an ongoing worse experience, and ultimately a larger expense later on.

Re: Rich people do have trouble understanding what it's like to be poor

#78

Post by mindslight »

I definitely attribute people's actions to their own willful choices. But I think a corollary is that the more intelligent you are, the more you see how objectively bad people's choices really are, regardless of their class. Taking everyone's bad decisions as serious character flaws would be untenable, so I have to give up and just be tolerant.

As such, it's easier for me to sympathize with a poor person who makes bad decisions due to inescapable financial stress (even though I've never been there myself), than someone upper middle class who has mortgaged their entire life to keep up with the Joneses. The latter seems to have much more opportunity to slow down and choose differently.

Re: Rich people do have trouble understanding what it's like to be poor

#79

Post by azornathogron »

lotsofpulp wrote: post #42
azornathogron wrote: post #29

Earlier quoted context omitted.

I'll grant you the loan repayment, but the other things aren't expenses. "Lost income" is a psychological artefact, not anything concrete. It's a result of comparing against some hypothetical ideal financial situation. The same for "catching up" on retirement savings. The concrete part is that people with that level of income (large, but not so large as to make all problems disappear) know that to be comfortable in t…

When currency is being devalued year after year, lost income (up to a certain amount) most certainly is an expense. The longer you sit out of the asset inflation game, the more you fall behind. So whatever the cause for you falling behind has to make up for it. Maybe I’m wrong, but that model has served me well.

I agree that currency devaluation and so on means that saving money earlier in life has a larger impact on your lifetime comfort than saving money later. I don't really follow how it's classed as an expense though. And I don't know how you determine how much income you have "lost".

I think we probably agree on the situation but disagree on what terms make sense to describe it.

Re: Rich people do have trouble understanding what it's like to be poor

#80

Post by gruez »

christophilus wrote: post #56
FriedrichN wrote: post #3

A 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.

We had a babysitter recently charge us $21 for 3 hours. It blew my mind. I insisted that we paid her $40, which still seemed insane. Someone earning $7/hr makes $280/week. I can’t imagine trying to get by on that even with no dependents.

Isn't the thinking that these jobs are supposed to be for teenagers, which has their income supplemented by their parents?
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