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What do the wealthiest know that others don't?
- mdisc 10y agoI wonder if Slate has an arrangement with Quora... and if I posted an answer that they wanted to republish, could I insist on just rewriting it into a different piece so it was more like I was published on Slate? Why wouldn't they do that with all of these Quora "articles?"
- deanCommie 10y agoWhat an atrocious answer. Does this guy think "the 90%" are just poor and irresponsible? All of these answers assume the 90% is ignorant, short-sighted, and bad with both money and math. Newsflash: The 90% includes the entire middle class, and not everyone who is poor is such because they are bad with money.
- gwbas1c 10y agoActually, this guy gives a very well-written common-sense guide to getting rich. There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly.
- jamesroseman 10y agoI'd love some citations there..
- leftnode 10y agoAnecdotal, I know, but look at all the recent articles where 53% of American's don't have $1000 in liquid cash, or hell just read /r/personalfinance for your daily dose of poor financial decisions.
- jamesroseman 10y agoAs I replied above, not having liquid cash is proof of being poor, not of managing your money poorly. What I want a citation for is: > There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly. What I want is definitive proof that, as claimed, most poor people in this country are poor because they manage their money poorly.
- ljf 10y agoYou are asking for proof for something the the parent you first responded to did not say > There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly. Where in that sentence do they say 'most poor people in this country are poor because they manage their money poorly' ?
- jamesroseman 10y ago> because they manage their income poorly That's a good start. "There are a lot" may not mean most, but it doesn't absolve it of providing some proof.
- ljf 10y agoHe also doesn't say poor - he just say manage their income badly - which I would say at least 50% of my friends fall into the bucket of.
- jamesroseman 10y agoWhat? > There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly. I want a citation on that, that's all. I want a statistic on how many people who live paycheck to paycheck live that way solely because they manage their income poorly. Again, the notion that everyone could be rich if they only worked harder is asinine, and frankly pretty offensive. This comment supports that notion by equating living paycheck to paycheck with being bad at managing income. I want statistics, I'm tired of that opinion.
- eli 10y agohttp://www.npr.org/2016/04/24/475432149/could-you-come-up-with-400-if-disaster-struck http://www.npr.org/2016/04/24/475432149/could-you-come-up-wi...
- jamesroseman 10y agoThis is a citation for the claim "people in the United States are poor". What I want a citation for is: > There are a lot of people in the middle class who live paycheck to paycheck because they manage their income poorly. What I want is definitive proof that, as claimed, most poor people in this country are poor because they manage their money poorly.
- imtringued 10y agoSpend less than you earn Set some cash aside Invest the difference Honestly this is all it boils down to. Having a higher income does make it faster to accumulate wealth but even the "poor" can accumulate considerable wealth over very long periods of time (think 30 years) if they are willing to sacrifice their standard of living.
- diiq 10y agoA person making a lower-middle-class wage and saving 25% of it from the time they're 20, and never facing a financial emergency, will never be "rich" by any causal definition of rich -- let alone among "the wealthiest". In fact, they'll barely have saved enough to retire and live the same tightened-belt lifestyle they lived the whole time. A penny saved is certainly a penny earned, and saving is better than spending it all immediately. But if you're lower-middle-class and your goal is to "be rich" then you'll need some way to get more money not just spend less money.
- deleted 10y ago[deleted]
- kamaal 10y ago>>Does this guy think "the 90%" are just poor and irresponsible? One could make a case for that. A lot of people are really bad with money. The tragedy is they don't know it yet, or do not really understand the consequences of their actions on the long term. Its hard to define 'bad with money' because many people don't exactly classify their actions as such. Which is why some one calls out such activity, people feel offended because they never thought their spending patters could be considered irresponsible. Spending cash on cameras and expensive lenses which you are not going use, eating out regularly, spending on vacations, changing phones often, cigarettes, alcohol... the list is endless. There is always a need every week on which you could spend $100 here and there. Without a way of tracking your habits, looking at it and extrapolating it over the long term you would pretty much believe that you are doing nothing harmful to your finances at all! Now some body else is probably saving up and investing all the time and is likely to come out on top by a very huge margin. The very same people in the former category will end up calling such a person greedy. Self reflection is hard because it destroys you, fixes the center of blame on you, you run out of excuses all when you realize it was all your own choices and actions which bought you to where you are.
- gwbas1c 10y ago"Those people who got a 'great deal' on Ikea furniture or faux leather couches will be buying another one sooner than the person who bought quality goods" But what will you sit on while you save?
- leftnode 10y agoMoreover, a really nice couch will probably run you north of $2000. We have dogs, three kids six and under, things get messy. A cheap pleather couch from Big Lots is $350 (and is plenty comfortable). I'd rather buy a handful of those over the next 15 years and just throw them out when they're destroyed than a nice $2000-$3000 couch. (Note: I haven't read the article yet, I'm planning on doing so, and I generally agree with buying nicer well made things, BIFL, but sometimes it's easier/cheaper to buy something you know will be ruined and you won't care as much).
- bluetomcat 10y agoFinancially responsible people are far more likely to keep and maintain their stuff in good condition over long periods of time. That is a huge (and often overlooked) aspect of saving.
- matwood 10y ago$5 deck chair. Either buy something nice that will last, or buy something so cheap you expect to throw it away. Used is also a great option.
- pjc50 10y ago> buy something so cheap you expect to throw it away So, IKEA furniture? /joke Another factor people are ignoring is that furniture durability is not the only criterion of how long you get to keep your furniture. If you're in an unstable living situation (which renting often is, especially if you have to share), then you may end up having to move at short notice. I know a couple of people who've had to ditch everything they couldn't fit in a large car as part of a move; bed/table/wardrobe/chest of drawers stuff. Fortunately it was all just cheap melamide. Couches are an even worse place to invest in quality because of the risk of damage from spills, pets, and kids.
- MrTortoise 10y agonot to click on link bait?
- baking 10y ago"life insurance is hands-down the easiest and lowest-impact way to pass wealth on to the next generation. . . . If you’re retired, your adult children should be paying the bill for you." Can anyone explain the math and/or logic behind this to me?
- hacknat 10y agoThey will get the inheritance money, why should you be paying for it?
- jessaustin 10y agoWhy don't they just put their money in a bank, or invest it?
- jamesroseman 10y agoSomeone can either find a citation for me or dispute this, but the ROI on life insurance is pretty high. The morbid problem is obviously you personally never prosper from it (except in cases where you can borrow against it or use a certain percentage of it to pay for terminal illness coverage).
- gwbas1c 10y agoBecause, at that point, life insurance is basically your children's inheritance. Everything beyond what goes to paying burial costs and remaining debt is your adult children's inheritance. If you don't believe in transferring large inheritances to adult children, then there is no point in paying for life insurance beyond funeral costs. What the author didn't explain is that life insurance is a way to avoid inheritance tax. Depending on circumstances, it's cheaper to pay an absurd amount of money for an insurance policy, because the payout to the beneficiaries is taxed differently than a straight-forward inheritance, and thus might, after taxes, result in a better payout.
- baking 10y agoI understand the idea of avoiding inheritance tax, but that has become less of an issue with a $5.45M estate tax exemption. Leaving that aside, my question is why would my kids pay for my life insurance as an investment. Assume they have paid of their debts, maxed out their 401k and Roth IRA contributions and they have extra money to invest for retirement. If they put it in the stock market they will pay income taxes and any dividends they receive, which they don't have to pay any taxes on life insurance so I see that. But it still seems to me that life insurance is a bet on when I die and if they are not dependent on my income I don't see why they would want to take that bet. I am 57 and I can get a 20 year term-life insurance for $5k/year with a payout of $250k. If I outlive the policy that is $100k in sunk costs and the next term life policy will be even more expensive. Whole life makes even less sense at my age. The only way this makes sense to me is that if you had a whole life policy that you started wen your kids were younger and now you are retired and can't afford the payments do you cash it out? Well, if I cash it out then maybe I end up spending it or the nursing home gets it, but if my kids take over the payments then they get the benefit (unless the nursing home still takes it.) This still assume I bought whole-life 20 years ago which everyone at the time told me was a sucker's bet so I'm still not sure that this makes any sense.
- ap22213 10y agoMove to where the money is. Befriend those who are already wealthy. Emulate them. Befriend people who are on the fast track and believe in loyalty. Be very useful to them. Help them rise. Invest at least 25% of your income. Get out more. Talk to more people. Increase your opportunities to get lucky. Eliminate toxic people in your life (you can help them later if you want). And, don't burn bridges. Edit: forgot one - dump bad investments (and places, people, etc.) quickly
- ceejayoz 10y agoMost of these require (or are at least significantly easier with) some level of wealth already.
- lotsofcows 10y ago"Move to where the money is." Ah, yes, immigration. Very topical.
- ceejayoz 10y agoI suspect they meant more "move from Kansas to NYC/SF" than international immigration.
- jamesroseman 10y ago> Move to where the money is. Oops I was born in a small poor suburb outside of Pittsburgh and barely make enough each week to feed myself and pay rent, where am I getting money to move? > Befriend those who are already wealthy. Emulate them. > Befriend people who are on the fast track and believe in loyalty. Be very useful to them. Help them rise. This entirely depends on living in an area "wealthy" people would live. In my hypothetical poor suburb the richest guy is the guy who owns the only bar within a drive. > Invest at least 25% of your income. I make $1200 a month post-tax. In any given month: - $500 rent - $50 car insurance - $200 food - $80 enjoyment ($20/week) - $75 utilities That leaves me with $295 for everything that's a non-essential in my life. This is a flat tire. This is a doctor's appointment. This is medication. This is Christmas gifts. This is a leaking roof. This is a broken stove. This is money that I need to be liquid every month, you suggest I invest all of it? I probably wind up spending this money just to get by, it's less than $75/wk for expenses outside of a pretty barren lifestyle. > Get out more. Talk to more people. Increase your opportunities to get lucky. Again, this is entirely dependent on there being people of value in my immediate vicinity. > Eliminate toxic people in your life (you can help them later if you want). > And, don't burn bridges. Believe it or not, these are the only valid points you've made to apply to my hypothetical life... And this is for a single person who makes 15000
- ceejayoz 10y ago"Answer by Ron Rule, CEO of As Seen on TV" Where's "how to scam low-income folks out of their money with cheap useless crap" on the list? This is someone whose business model is literally marketing shitty, unnecessary products to low-income folks via infomercial advising purchase of "quality goods".
- mungoid 10y agoSeriously? Life insurance is a great way to pass down wealth?? Depending on your situation, your life insurance will barely pay for the funeral. What, do you think everyone can afford million dollar policies for 'a few measly dollars a month'? Sorry to dissapoint, but teaching people to wait for their family to die is a horrible way to 'pass on wealth'.
- edc117 10y agoYeah, the rest was fairly coherent, but that one threw me as well. Life insurance tends to fall into the same category as most optional 'insurances' for me - you end up paying out considerably more then you get back. That said, for those with children, I can understand the purchase. Overall it's very circumstantial.
- crgwbr 10y agoWell, life insurance, by definition, means you pay more than YOU get back :P. Agreed. I'd say it's a better bet invest the same amount in index funds than life insurance.
- Agustus 10y agoThat is what insurance is for, the unforeseen instances in your life. You may pay out what appears to be a significant sum, but what if something happens to you? Life insurance should be something people think about. 1. Student loans: There was a story floating around of how a family co-signed on loans for a child and then were on the hook for said child when they passed away. 2. Family: If you have a kid, get life insurance. You should have the ability to leave the living with a sum of money to ease the burden of your absence. This means the loss of income and life adjusting to a one-parent family, not meaning that there is a pile of money to blow. Do not say it is not affordable, grab a term policy that gets you to 65 and then be comfortable knowing that you have one less thing to think about. For those who claim it is too expensive, a million dollar , 30 year term-policy for non-smokers is as follows: --------------------------------- | Age | Sex | Monthly Cost | --------------------------------- | 25 | Male | $55 | | 35 | Male | $66 | | 45 | Male | $160 | --------------------------------- | 25 | Female | $45 | | 35 | Female | $55 | | 45 | Female | $120 | --------------------------------- I am using this as a public service announcement, get life insurance.
- overcast 10y agoFirst rule my parents ever taught me is that quality only hurts once.
- ceejayoz 10y agoQuality hurts every time your kids spill their chocolate milk on the $2k sofa. :-p
- overcast 10y agoDon't put your children on $2000 sofas. Also, don't have kids :)
- ceejayoz 10y agoAs a parent, I'm well aware "don't have kids" is a good way to get rich, at least money-wise. Holy hell, summer camp is expensive!
- JoeAltmaier 10y agoOur local Scout camp is $220 per week. Not even as much as a single night in some motel rooms.
- overcast 10y agoI grew up going to a free summer camp, it was the sixty acres of woods behind my house :)
- dmichulke 10y agoA life insurance? I'd rather say don't trust anyone with your money other than yourself. The insurance (like anyone investing your money) will take a nice chunk of everything it earns and if something is left (a big if in times of zero or negative interest rates) you might get it.
- jamesroseman 10y agoI think this article is short-sighted and poorly written. Its most grievous offense to me is lumping all non-rich people together. The 22-year old out of college who needs a place to sleep doesn't need to save up for a mattress that will last them 10 years... they need a place to sleep. Especially when (unlike the article) you stop to consider other factors besides money. With "disposable" furniture/goods, you almost never need to take it with you when you move, as a 22-year old does frequently. This is an extreme example, but if the difference between a couch you'd want to keep and a couch you'd leave is $200 and the cost of the move is $200... it's actually a wash. The middle aged parent taking care of multiple children with a poorly paid job isn't saving up for a nice couch. They're watching their family couch slowly disintegrate and they're getting years beyond what the author of this article might consider "useful". I love the tech community for all it has given me, but the political and socioeconomic views of so many of its inhabitants ([redacted] in particular) who were born on third and told they hit a triple give me the creeps. Poor people aren't poor because they're stupid. They're poor because they don't have a lot of money, and the root causes of that can be as varied as anyone's individual life. Articles like this suggest that 500 words and a subscription to Slate can stand in the way of each and every one of those root causes. The only valuable thing from this article is to avoid debt, beyond that there's not much of substance here..
- AdamN 10y agoI wish I could triple-upvote this comment.
- bluetomcat 10y agoUndoubtedly there are a lot of people in unfavourable circumstances who simply cannot afford to save and blaming them on stupidity is pure arrogance. The real "stupidity" which causes so many people to remain poor is depicted with that BMW guy in the article. It is about trying to maintain a lifestyle that is beyond your means.
- jamesroseman 10y agoExactly. This article should have been retitled "What do those who keep their wealth know that those who lose their wealth don't?"
- pystack 10y agoSociety has a limited amount of resources and manpower. Your capital is your share of society's resources and manpower. The capital can either be used on yourself or to build new products and services. Some people are better than others at building products and services people want. The free market attempts to redistribute capital to the people who are better at building products and services people want. Most people use their money for themselves. They use the money to pay for food, clothing, and cars. If they get a pay raise, they use the additional money to pay for better food, better clothing, and better cars. They don't see the money as capital to build products and services people want.
- drabiega 10y agoThis should be: What can the wealthiest afford to do that keeps them wealthy?
- pjc50 10y agoGenerally, they know other wealthy people who can get them better opportunities.
- deleted 10y ago[deleted]