Q about wealth/poverty

[creekland]

When someone is discussing about being sad or worried about being "poor", the difficulties they face, etc, it does not help to tell them to work harder, read a book, or invest, when they are barely able to scrape by.

 

But for some, offering plausible suggestions DOES help - showing that it has worked (multiple times) does inspire confidence.  Saying one is sorry for their situation is a first step.  Offering suggestions to change their situation is the second.

 

When someone has a medical issue we don't all just add our condolences.  Many who have BTDT also offer advice.  Others who are knowledgeable about these situations also offer helpful advice.  "I'm sorry" shows folks care, but suggestions can help change things.  Both are important.

 

It's no different with finances IMO.

 

Not changing anything won't help either situation.

 

No one has to take or act upon the advice given.  That's up to them.

[SKL]

Not after half a century of hard work and deprivation.

 

This might be where we disagree.  A person who wants to be upwardly mobile needs to be satisfied with small incremental improvements and needs to stick to it for the long term.  The goal isn't to become a multi-millionaire, it's to be financially secure and be able to meet one's family's needs.  Anyone, rich or poor, who goes in with the expectation that they're going to hit it big in a short time is going to be discouraged.

 

Personally I think a savings of $900,000 with no strings attached is awesome no matter how many years you've worked for it.  And, it's a heck of a lot better than no savings (plus the health problems that tend to accompany self-indulgence).

 

I've been laughed at and called Mother Teresa (an allusion to having only 2 saris, one to wash and one to wear) by people who are never satisfied and never solvent.  But I've felt financially secure and satisfied for years despite never having had even close to $900,000 in cash.  And yes, I worked 2 and 3 jobs for years nonstop, but I have never regretted that.  What's to regret?  The job experience?  The exercise?  The distraction from activities that are less worthwhile?  The reason to get up in the morning?

[Reefgazer]

Yes, this was an interesting explanation for why some kids pull out of poverty and some don't.  The book is so short, but is very well-written and I learned so much in those very few pages!  I highly recommend it!

I agree. Paul Tough's book is interesting and worth reading. It isn't simply poverty that causes problems. Kids who've experienced a lot of early trauma and who have insecure attachment to at least one parent/caregiver will develop a different neurological setup that, if not dealt with properly, will cause significant lifelong problems. They are more impulsive, more likely to engage in early drinking/drugs/sex, more violent, more suicidal. Their life spans are much shorter even if they manage to not do those things because the unhealed trauma manifests itself in autoimmune diseases, especially heart disease. Trauma and insecure attachment cause tremendous problems and that is what must be addressed first. People like Alicia Lieberman and James Heckman have been working on these problems for years, and they are getting some decent results.

 

 

If you want to read more about early trauma and its effects, check out the Adverse Childhood Experiences study.

 

http://www.acestudy.org

 

[aggieamy]

Mergath, you seem like you are defending hopelessness. I don't get it. Is there anybody working fifty years, perpetually at minimum wage, who thinks they will be wealthy some day? I don't know anybody that dense.

 

Why would someone who has been working for 50 years only be at miminum wage?  Possibly if they have mental limitations but otherwise?!?!?  My cousin and her husband had kids young and neither went to college.  After working for fifteen years they have learned skill sets that are much more marketable than what they had 15 years ago.  At 17 they both worked minimum wage jobs.  Now cousin's DH is managing a branch retail store because he has slowly made his way up the ladder.  He is dependable, hard working, motivated, and always tried to learn more than he already knew.  

 

My cousin started as a clerk in a mortgage company.  She was also dependable and hard working so when she asked for just a little bit more responsibility they were happy to give it to her.  Slowly over the years she learned a better job and did it well.  Now she has a good skill set.

 

They are not UMC but they are solidly MC and I had no doubt that one day they will retire and do well for themselves.  

[SKL]

I never said people can't break the cycle of poverty.  I said that poor people with little education statistically aren't going to end up wealthy.  

 

But is "wealthy" the goal?  And what do you mean by "wealthy"?

 

My dad is severely dyslexic, dropped out of school at 15 with a 2nd grade reading level.  After a life of hard work and relative frugality, he isn't what you'd call "wealthy," but he is middle class and has a rather large old house that is paid off.  Is that not good enough?  And while he's just one guy, there are lots of similar stories out there.

 

[Reefgazer]

Yes, I see your point.  My dad is also a very extreme example of tighwad-ish-ness.  This example has actually been the family joke for many years now, because it's so ridiculous.  Several years ago, my dad's belt broke (must of been 40 years old, LOL).  Instead of heading to Wal-Mart to buy a $5 new one (which he could afford on his pension and social security), he unraveled a green Christmas ribbon and wound that around his waist.  He laughed at himself when we all laughed, but wore it for a year that way, until the following Christmas, when someone (my sister, I think) broke down and bought him a new belt as a gift.  No kiddin'.  He'd just laugh when we made fun of his ribbon-belt, and didn't care that it really upset my mother.  His tight-wad-ish-ness is so very extreme, I think it borders on a mental illness.  But there are far more common examples in my family where the deprivation was not extreme, but just...uncomfortable, and sometimes only for a time.  The other people I referred to in my post of tightwads don't make ribbon belts, and the deprivation doesn't mean a miserable quality of life for them, but just skimping on things other people see as creature comforts.  I do think there are extremes of deprivation, but then again, my dad doesn't see himself as deprived.  When us kids used to complain about not having something or another, he would just say "you don't know what it means to go hungry".  And coming from a guy who was a poor immigrant farmer during the depression, he was right about that.

 

ETA:  I don't think how my dad lives and what he does with his money is my business, and he is not obligated to support his grandchildren.  I only offer this example because I think it demonstrates the extremes to which some people will go to save money.  But save he did.  I think some people really think it is best in the long run to have their kids struggle it out and that is what drives them to hoard not share their assets. 

But to what end? My dad for example has no problem being a tightwad and maintains a comfortable middle class life. His grandchildren all only eat because of food stamps.

 

[Sdel]

Why would someone who has been working for 50 years only be at miminum wage?  Possibly if they have mental limitations but otherwise?!?!?

 

Possibly because they've never stayed at a job longer than 6 months, or the jobs they routinely hold are temp positions that are designed to fire their employees before they can move up after a year?  This is a can be a big problem with unskilled labor jobs.  We have a large number of call center type places in my area, and there is a whole segment of the low income population that is just continuously, cycling though them year after year.

 

Stefanie

[justamouse]

Yes, this was an interesting explanation for why some kids pull out of poverty and some don't.  The book is so short, but is very well-written and I learned so much in those very few pages!  I highly recommend it!

You can get the book free on kindle unlimited if you're a subscriber. And even if you're not, it's free for the first month. :D 

 

Yes, I see your point.  My dad is a very extreme example of tighwad-ish-ness.  This example has actually been the family joke for many years now, because it's so ridiculous.  Several years ago, my dad's belt broke (must of been 40 years old, LOL).  Instead of heading to Wal-Mart to buy a $5 new one, he unraveled a green Christmas ribbon and wound that around his waist.  He laughed at himself when we all laughed, but wore it for a year that way, until the following Christmas, when my sister bought him a new belt as a gift.  No kiddin'.  He's just laugh when we made fun of his ribbon-belt.  His tight-wad-ish-ness is so very extreme, I think it borders on a mental illness.  But there are far more common examples in my family where the deprivation was not extreme, but just...uncomfortable, and sometimes only for a time.  The other people I referred to in my post don't make ribbon belts, and the deprivation doesn't mean a miserable quality of life, but just skimping on creature comforts.  I do think there are extremes of deprivation, but then again, my dad doesn't see himself as deprived.  When us kids used to complain about not having something or another, he would just say "you don't know what it means to go hungry".  And coming from a guy who was a poor immigrant farmer during the depression, he was right about that.

 

Can it be that he just doesn't care? 

 

My Dh is like that. He really just doesn't care. He's not slovenly, but he is so not focused on what other people think that it wouldn't bother him to use a ribbon for a belt. I wouldn't let him walk out of the house like that, but he would just shrug and tie his ribbon. :D 

 

I'm not saying that there's no bad side to being a tightwad, but some people just have very different priorities. 

[Indian summer]

You are so inspiring. Thank you for posting.

No, I'm not, but thank you for your kind words. I wish I could tell you all about my amazing siblings, nieces, nephews, uncles, cousins... There are some amazingly inspiring stories there. I see inspiration all around me - tons of examples of rags to, well, middle class, at least. I am the least among my family as far as accomplishments.

 

That's why I tell my little story, because believing in upward mobility despite the crappy statistics is 90% of the battle. The stats may be accurate, but you can have an attitude that will increase your chances of being on the right side of them. We need to surround ourselves with the good stories or we will never believe its possible.

[Reefgazer]

Oh, he absolutely does not care a whit.  The ribbon is only one example...I could write a book.

You can get the book free on kindle unlimited if you're a subscriber. And even if you're not, it's free for the first month. :D

 

Can it be that he just doesn't care? 

My Dh is like that. He really just doesn't care. He's not slovenly, but he is so not focused on what other people think that it wouldn't bother him to use a ribbon for a belt. I wouldn't let him walk out of the house like that, but he would just shrug and tie his ribbon. :D 

I'm not saying that there's no bad side to being a tightwad, but some people just have very different priorities. 

 

[justamouse]

Oh, he absolutely does not care a whit.  The ribbon is only one example...I could write a book.

 

Lol!

[fraidycat]

And you are 100% sure how those friends obtained every one of those items and how much they paid if it was not a gift AND that they are "new"?

Yeah this. Another homeschool mom at park day one day made a comment on Dh's job/income so of course our kids would "have all the iPods, 3DSes, etc".

 

Except that she didn't take into account that we had purchased exactly NONE of the above items. They were grandparent gifts.

[hornblower]

That's why I tell my little story, because believing in upward mobility despite the crappy statistics is 90% of the battle. The stats may be accurate, but you can have an attitude that will increase your chances of being on the right side of them. We need to surround ourselves with the good stories or we will never believe its possible.

 

Or we could do that AND address the systemic problems that make this a losing proposition for most people who will not advance no matter what.

 

In a parallel situation, we have health issues with stats like that & for them there are bike rides, ribbons & fundraisers & researchers working like crazy on new therapies.

 

But in this, we're supposed to just be positive & work hard! It's just a placebo, combined with a juice fast & painful coffee enema; just to make you feel like you're doing something & maybe finally suffering enough to be one of the lucky ones. 

 

 

[Tanaqui]

That's why I tell my little story, because believing in upward mobility despite the crappy statistics is 90% of the battle. The stats may be accurate, but you can have an attitude that will increase your chances of being on the right side of them. We need to surround ourselves with the good stories or we will never believe its possible.

 

 

The trouble is that believing in stories like yours keeps people from seeing the bigger picture - the system is designed to keep everybody in their place. (And really, with the way the system is set up, some people are always going to be on the bottom. Our society can't function without that. The only way you move up is if somebody else moves down, and do you really think the people at top are going to let that happen in large numbers?)

 

As long as people focus on playing the game and getting themselves ahead - as futile as that's going to be for most people, because in a zero sum game there can only be a certain number of winners, no matter how good all the players are - their focus is taken off the fact that the system is unjust. Sure, maybe you can do well by yourself, but what good is that when the entire thing needs a complete overhaul? You can maybe win a game of chess with no knights or queen, but if some people always start queen-less and others always have a surfeit of them, maybe it's time to tip the board over. (Maybe I've stretched this analogy to the breaking point.)

 

[leeannpal]

Stats? Most business owners I know are still in business. And they're not HUGE businesses, they're just mom and pop places that provide good service. 

 

 

 

After the economic downturn starting around 2008, many small business owners lost their business. My father has owned his own business for over 40 years and nearly lost everything in the last few years. Even now, the business that my parents counted on to provide retirement funds is worth less than half of what it was even 6 years ago. But my father feels fortunate because so many other men who owned the same type of business lost everything after investing and saving for years. My 78 year old father still owns his business and goes to work everyday and hopes to sell it before he dies. It is certainly not the retirement that he envisioned.

 

Let's face it. Building wealth or even staying wealthy has luck involved. I believe my father did everything "right" and feel angry that he and my mother are facing these circumstances at this time in their lives.

[MBM]

Yes, this was an interesting explanation for why some kids pull out of poverty and some don't.  The book is so short, but is very well-written and I learned so much in those very few pages!  I highly recommend it!

 

I thought it was eye-opening, too.

 

Here are some stats about secure attachment. In the Sutton Study, about 40% of US children were found not to have secure attachment to at least one caregiver.

 

http://www.princeton.edu/main/news/archive/S39/59/37A89/index.xml?section=topstories

 

 

...about 60 percent of children develop strong attachments to their parents, which are formed through simple actions, such as holding a baby lovingly and responding to the baby's needs. Such actions support children's social and emotional development, which, in turn, strengthens their cognitive development, the researchers write. These children are more likely to be resilient to poverty, family instability, parental stress and depression. Additionally, if boys growing up in poverty have strong parental attachments, they are two and a half times less likely to display behavior problems at school.

 

 

 

 

Here is a link to a long article explaining how the ACE Study came to be and what was discovered. If anyone wants to get down to the results of the affects of early trauma, do a search for the following sentence and begin reading there: "Things start getting serious around an ACE score of 4." The whole article is worth reading, though.

 

http://acestoohigh.com/2012/10/03/the-adverse-childhood-experiences-study-the-largest-most-important-public-health-study-you-never-heard-of-began-in-an-obesity-clinic/

 

Many people here in the US have ACE scores that are too high and that early trauma causes the behavior that leads to problems in their lives. The good news is that we are beginning to understand this better and we can now devise ways to prevent early trauma and help vulnerable people.

[SKL]

You can get the book free on kindle unlimited if you're a subscriber. And even if you're not, it's free for the first month. :D

 

Can it be that he just doesn't care? 

 

My Dh is like that. He really just doesn't care. He's not slovenly, but he is so not focused on what other people think that it wouldn't bother him to use a ribbon for a belt. I wouldn't let him walk out of the house like that, but he would just shrug and tie his ribbon. :D 

 

I'm not saying that there's no bad side to being a tightwad, but some people just have very different priorities. 

 

Also, if you have multiple "poor relations," you have to be careful, or your own kids' education fund will be gone before they finish elementary school.

 

When my oldest niece graduated high school, my brother called to hit me up for a "loan" for $XX,000 to cover the "family share" of her *first* year of college at the school that had offered her a partial scholarship.  My first reaction was, yeah, I have the money, I'm not doing anything with it right now, I can lend it.  Then I thought, what are they going to do for years 2-4?  (And beyond, considering that she is now in her 4th year and I'm told she has 3 more years to go for her bachelor's?)  What about my nephew, 3 years younger?  Is this family really ever going to have money to pay me back, considering they had 18 years and managed to save $0?  At this rate my kids are going to have no options when they finish high school.  And then I have younger nieces too.  So considering all of it, I had to say no to the loan.  I set aside a fixed amount of money for each niece and nephew and informed their parents that that is going to be it, period.  It is a heck of a lot more than anyone gave me.

 

Another point is that if you give people $$, they will not be eligible to benefit from the subsidies that we as taxpayers pay for.  If all else is equal other than the tightwad auntie, why should this family be ineligible to receive food stamps etc?  That would be hitting up the auntie twice - once for her own relatives, and again for all the food stamp recipients who don't have tightwad aunties to hit up.  How does that make sense?  There is a reason we pay for a safety net.

 

But yeah, it seems to make some people feel good to blame their problems on the tightwad aunties.  My sister reported to me years ago that my SIL had said, "I hear SKL has money but I've never seen any of it."  Really???  I was not aware I was obligated to give my SIL an allowance.....  BTW she has more luxuries than I do ....

[Reefgazer]

Been there - done that, with this situation too.

Also, if you have multiple "poor relations," you have to be careful, or your own kids' education fund will be gone before they finish elementary school.

 

When my oldest niece graduated high school, my brother called to hit me up for a "loan" for $XX,000 to cover the "family share" of her *first* year of college at the school that had offered her a partial scholarship.  My first reaction was, yeah, I have the money, I'm not doing anything with it right now, I can lend it.  Then I thought, what are they going to do for years 2-4?  (And beyond, considering that she is now in her 4th year and I'm told she has 3 more years to go for her bachelor's?)  What about my nephew, 3 years younger?  Is this family really ever going to have money to pay me back, considering they had 18 years and managed to save $0?  At this rate my kids are going to have no options when they finish high school.  And then I have younger nieces too.  So considering all of it, I had to say no to the loan.  I set aside a fixed amount of money for each niece and nephew and informed their parents that that is going to be it, period.  It is a heck of a lot more than anyone gave me.

 

Another point is that if you give people $$, they will not be eligible to benefit from the subsidies that we as taxpayers pay for.  If all else is equal other than the tightwad auntie, why should this family be ineligible to receive food stamps etc?  That would be hitting up the auntie twice - once for her own relatives, and again for all the food stamp recipients who don't have tightwad aunties to hit up.  How does that make sense?  There is a reason we pay for a safety net.
 

But yeah, it seems to make some people feel good to blame their problems on the tightwad aunties.  My sister reported to me years ago that my SIL had said, "I hear SKL has money but I've never seen any of it."  Really???  I was not aware I was obligated to give my SIL an allowance.....  BTW she has more luxuries than I do ....

 

[justamouse]

Yeah this. Another homeschool mom at park day one day made a comment on Dh's job/income so of course our kids would "have all the iPods, 3DSes, etc".

 

Except that she didn't take into account that we had purchased exactly NONE of the above items. They were grandparent gifts.

 

They're jealous. Some of the most sabotaging people are within your own circles. 

 

And since so many of you have so many ideas about how to get out of poverty, perhaps you could share some practical tips? For instance, if starting a business is the way to go, where does someone with no money obtain start-up capital?

 

We normally start our businesses as small as we possibly can. Yes, we have a few now. And we're starting some more. Most recently with a couple hundred dollars, lots of research, and a lot of hard work. 

 

We started our biggest company (the manufacturing company) by selling shares to which we now pay dividends. We gave out prospectus' and held an informal meeting with interested parties. 

 

When we started, we had three machines, and my husband and his two partners did ALL of the work, including my Dh not only working the machines, but doing all of the FDA work and accounting. He worked endlessly. 18 hour days. His mother typed up all of the MSDS, the SOPs and binders worth of OSHA papers. Now we have a 37k square foot building, a lab, and a truck. 

 

He started his very first business in high school with a 3k dollar loan from his parents. 

 

His parents also gave my BIL a few thousand to start his tool manufacturing company and my BIL, like my Dh, started with one machine (and an old clunker at that) and long, long hours. Now Hewlett Packard is one of his biggest accounts, he has two houses, a boat, and bought a Ferrari cash. But it started with a 3 thousand dollar loan. That was 20 years ago. 

 

* My ILs are not super wealthy, they just were savers. They lived comfortably, but modestly, which enabled them to help their kids. 

 

Or we could do that AND address the systemic problems that make this a losing proposition for most people who will not advance no matter what.

 

In a parallel situation, we have health issues with stats like that & for them there are bike rides, ribbons & fundraisers & researchers working like crazy on new therapies.

 

But in this, we're supposed to just be positive & work hard! It's just a placebo, combined with a juice fast & painful coffee enema; just to make you feel like you're doing something & maybe finally suffering enough to be one of the lucky ones. 

 

 

 

There will always be people at the bottom because you can lead a horse to water but you can't make him drink. Human nature itself dictates that some people just will not break through. That doesn't man that everyone is slotted to live in poverty or that there is no room for growth. 

 

How much $ should society invest in a person that is incapable of taking care of themselves and refuses to better their own life (I am NOT talking about the permanently disabled)? 

 

How do we make sure that those being provided for don't just suck $ out of the providers and start generational poverty? How big must the safety net be?

 

 

[Sdel]

And since so many of you have so many ideas about how to get out of poverty, perhaps you could share some practical tips? For instance, if starting a business is the way to go, where does someone with no money obtain start-up capital?

 

Well, while being educated about money isn't the a sure way out of poverty, it at least helps to be educated enough to not shoot yourself in the foot.  There are many things that people (across the class spectrum) do to make things harder for themselves financially without even realizing it.

 

 

Stefanie

[Guest]

And since so many of you have so many ideas about how to get out of poverty, perhaps you could share some practical tips? For instance, if starting a business is the way to go, where does someone with no money obtain start-up capital?

See, I might be misreading, but this sounds like sneering disdain for bootstrapping ideology. Poverty in the US is a complex problem. I don't think anyone here is saying it's so simple, or that we have spades of great ideas that will solve every problem.

 

What I have seen many times, up close with friends and family whom I know well, is people who are chronically poor (bottom of middle or working class) and repeatedly do things that don't make sense. So, boss gives them a Christmas bonus and they head straight to the store to buy the camera they have been wanting, totally forgetting that they were trying to scrape up money to put their house on the multi-list. (true story, real life).

 

As for starting a business, there has never been a more advantageous time in history to start a low start-up cost company or cottage industry. People sell hats on Etsy, or ride share, or walk dogs, or sell birthday card services to people too busy to keep track themselves, or do handyman services, or personal shopping, or clean business offices at night, or set up weddings, or go to cosmetology school and cut hair in their kitchen. Resourceful people focus on what they *DO* have, what they *CAN* use; they don't dwell on what they lack. What you focus on expands.

[SKL]

I should clarify that I have given my relatives a lot of money, as in multiple $XXX,000 which I will never see again, and most of it flew into the abyss leaving people still in too much debt.  I have taken care of my parents in particular.  Of course I don't announce these things to everyone, so maybe I look like the most selfish person who ever lived, I don't know.  You would sure think nobody ever helped some of those people, considering their condition never improves.  And knowing that there is pretty much zero chance any of them will ever help my kids, it makes me wonder if I haven't actually given away too much.  I don't think I have, but at the same time, I don't feel like I should keep giving and giving either.  My kids are my primary responsibility, next my parents.  The others are entitled to my love but not my money.

[leeannpal]

Nope, that's not what I'm suggesting at all. I'm suggesting they diversify their investments in the tried and true. I don't think investing $18,000 annually is a small amount, certainly it's big enough to diversify a lot - again, here's another place where they'll have to invest some effort in educating themselves to make the wisest choices.

 

What are they supposed to live on? If they make $18,000 a year, do you really think they can invest it all? A person making that amount of money would only have a fraction of that to invest after paying for housing, cars, gas, and other living expenses. Believe me, I would love to $18,000 a year to invest.

[justamouse]

See, I might be misreading, but this sounds like sneering disdain for bootstrapping ideology. Poverty in the US is a complex problem. I don't think anyone here is saying it's so simple, or that we have spades of great ideas that will solve every problem.

 

What I have seen many times, up close with friends and family whom I know well, is people who are chronically poor (bottom of middle or working class) and repeatedly do things that don't make sense. So, boss gives them a Christmas bonus and they head straight to the store to buy the camera they have been wanting, totally forgetting that they were trying to scrape up money to put their house on the multi-list. (true story, real life).

 

As for starting a business, there has never been a more advantageous time in history to start a low start-up cost company or cottage industry. People sell hats on Etsy, or ride share, or walk dogs, or sell birthday card services to people too busy to keep track themselves, or do handyman services, or personal shopping, or clean business offices at night, or set up weddings, or go to cosmetology school and cut hair in their kitchen. Resourceful people focus on what they *DO* have, what they *CAN* use; they don't dwell on what they lack. What you focus on expands.

Yes, but I ignored the tone and pretended it was a sincere question. 

[Indian summer]

The trouble is that believing in stories like yours keeps people from seeing the bigger picture - the system is designed to keep everybody in their place. (And really, with the way the system is set up, some people are always going to be on the bottom. Our society can't function without that. The only way you move up is if somebody else moves down, and do you really think the people at top are going to let that happen in large numbers?)

 

As long as people focus on playing the game and getting themselves ahead - as futile as that's going to be for most people, because in a zero sum game there can only be a certain number of winners, no matter how good all the players are - their focus is taken off the fact that the system is unjust. Sure, maybe you can do well by yourself, but what good is that when the entire thing needs a complete overhaul? You can maybe win a game of chess with no knights or queen, but if some people always start queen-less and others always have a surfeit of them, maybe it's time to tip the board over. (Maybe I've stretched this analogy to the breaking point.)

Right now, the system is as it is and isn't likely to change, so teaching people how to play the game is precisely what I prescribe. When I consider the numbers within my own extended family of people who have gone from poverty to wealth tells me you don't have to accept your place. If that we the case, I would expect 1 or 2 of us would have succeeded instead of the scores that have. And none of us had handouts from family to get started.

 

Remember, there are people who really don't want to improve their lot. There are people who are very content to live very simply. We don't all have to move up a great deal and be 'at the top'. The middle is fine for most of us. Since we started our business a decade ago, not one of our competitors has gone out of business, I doubt any of them even lost much if any business because of us because of how our regions population has expanded there really is enough business to go around.

[justamouse]

What are they supposed to live on? If they make $18,000 a year, do you really think they can invest it all? A person making that amount of money would only have a fraction of that to invest after paying for housing, cars, gas, and other living expenses. Believe me, I would love to $18,000 a year to invest.

 

Very few people have 18k to invest. Most people never start with amounts like that. 

[Indian summer]

What are they supposed to live on? If they make $18,000 a year, do you really think they can invest it all? A person making that amount of money would only have a fraction of that to invest after paying for housing, cars, gas, and other living expenses. Believe me, I would love to $18,000 a year to invest.

I don't actually think Mergath's example was realistic at all, either, I was just responding to an example where a person did have $18000 a year to invest. Have you actually followed the entire thread? I wasn't suggesting this was in any way realistic.

[SKL]

And since so many of you have so many ideas about how to get out of poverty, perhaps you could share some practical tips? For instance, if starting a business is the way to go, where does someone with no money obtain start-up capital?

 

We started doing consulting (on the client's site) on the side, while working full-time at a regular job.  Doing consulting made us aware of some interesting opportunities.  We bought into an old factory, fixed a bunch of problems (and worked all night on the production line to keep it solvent), and sold it for double what we paid for it.  Then that money went into other opportunities.

 

We also partnered with people who had complementing abilities.

 

We didn't quit our paycheck jobs until we could afford to.

 

We always kept our eyes open for opportunities that were missed by others, or passed over because they would require hands-on work as well as a little capital.

 

We don't ever expect to arrive at a time when we just sit back and watch the money grow.  We all continue to work more than full time, nearly 365 days per year.  We don't lose sight of the fact that hard work is a choice we make - so most of the time, it does not annoy us terribly.

[hornblower]

 

There will always be people at the bottom because you can lead a horse to water but you can't make him drink. Human nature itself dictates that some people just will not break through. That doesn't man that everyone is slotted to live in poverty and there is no room for growth. 

 

How much $ should society invest in a person that is incapable of taking care of themselves and refuses to better their own life (I am NOT talking about th permanently disabled)? 

 

How do we make sure that those being provided for don't just suck $ out of the providers and start generational poverty? How big must the safety net be?

 

 

 

Have you looked at the comparisons of other country's social mobility compared to US? I'm in Canada. We have a pretty good social safety net & yet, we're an affluent nation, hardly at risk of generational poverty.

From the article Laura posted.

 

http://www.brookings.edu/~/media/research/files/reports/2008/2/economic%20mobility%20sawhill/02_economic_mobility_sawhill_ch3.pdf

 

"

Paternal earnings had the least

effect on sons’ earnings in Canada,

Norway, Finland, and Denmark,

where less than 20 percent of

income advantages are passed

onto children. The implication

of these statistics is that in these

countries it would take three,not six, generations, to essentially

cancel out the effects of being

born into a wealthy family."

 

 

 

[Guest]

Very few people have 18k to invest. Most people never start with amounts like that.

In the book The Automatic Millionaire, the author talks about "the latte factor." (*SIDE NOTE: I know there are poor people who never buy lattés! Not who I'm talking about!) but in the book, he talks about how a woman objected in a class he was teaching, saying she didn't have thousands of dollars to invest. So he broke down her "petty cash" expenses for that day: a latté and a muffin. Point being, there are lots of people who never start an investment account because there isn't a big chunk of money sitting around to invest, but many who don't could by saving the proverbial latté money.

[justamouse]

 

Have you looked at the comparisons of other country's social mobility compared to US? I'm in Canada. We have a pretty good social safety net & yet, we're an affluent nation, hardly at risk of generational poverty.

From the article Laura posted.

No one has said that our system is perfect. But it's not holding everyone back like it's made out to seem, and there are still people making excellent livings by making good decisions and working hard. The system is not stacked against you, although it's not as easy as it could be. However, there are other countries which are much, much worse. 

 

And frankly, I know too many people (we have accounts and friends in Canada) to want our system to be like yours. Yours is not without its drawbacks. However, you have to work with what you have. 

 

I keep reading that quote and see it as a drawback, not something good. Or am I missing something? Less than 20% of income ADVANTAGES are passed on? That's sad. 

[Tanaqui]

Right now, the system is as it is and isn't likely to change, so teaching people how to play the game is precisely what I prescribe.

 

And with widespread attitudes like that, this is precisely why the system won't change. You're part of the problem.

 

People sell hats on Etsy, or ride share, or walk dogs, or sell birthday card services to people too busy to keep track themselves, or do handyman services, or personal shopping, or clean business offices at night, or set up weddings, or go to cosmetology school and cut hair in their kitchen.

 

People on Etsy undercut themselves all the time by not putting any value on the time it takes to produce these things.

 

As far as personal shopping or the "sharing economy" goes, same deal - everybody is trying to get in on the same limited amount of funds, so they sell those services dirt cheap. And when everybody is doing this, you ultimately will have to do it just to stay even, you can't rely on renting out a room to make a few extra bucks and get ahead. Darn it, I had a link on this very subject. This isn't the same one, but it'll have to do.

[SKL]

The trouble is that believing in stories like yours keeps people from seeing the bigger picture - the system is designed to keep everybody in their place. (And really, with the way the system is set up, some people are always going to be on the bottom. Our society can't function without that. The only way you move up is if somebody else moves down, and do you really think the people at top are going to let that happen in large numbers?)

 

As long as people focus on playing the game and getting themselves ahead - as futile as that's going to be for most people, because in a zero sum game there can only be a certain number of winners, no matter how good all the players are - their focus is taken off the fact that the system is unjust. Sure, maybe you can do well by yourself, but what good is that when the entire thing needs a complete overhaul? You can maybe win a game of chess with no knights or queen, but if some people always start queen-less and others always have a surfeit of them, maybe it's time to tip the board over. (Maybe I've stretched this analogy to the breaking point.)

 

See, I just don't buy this.  Who benefits from having to support unemployed and underemployed people via tax-funded subsidies?

 

Does anyone really believe that the capitalists fear the day will come when every single American is a brilliant PhD so there will be nobody to cook, clean, and work on assembly lines?  Really?  Come on.

 

We provide free, compulsory education through 12th grade because we want to keep people from learning how to read, write, and do math?

 

We so enjoy paying taxes that we want to make sure the taxpaying population is as small as possible?

[justamouse]

See, I just don't buy this.  Who benefits from having to support unemployed and underemployed people via tax-funded subsidies?

 

Does anyone really believe that the capitalists fear the day will come when every single American is a brilliant PhD so there will be nobody to cook, clean, and work on assembly lines?  Really?  Come on.

 

We provide free, compulsory education through 12th grade because we want to keep people from learning how to read, write, and do math?

 

We so enjoy paying taxes that we want to make sure the taxpaying population is as small as possible?

 

Right?? I know. 

 

Utopian ideals are held up as a comparison and people forget Utopia was a satire...

[Tanaqui]

See, I just don't buy this.  Who benefits from having to support unemployed and underemployed people via tax-funded subsidies?

 

Walmart. They get tons in corporate welfare, and they don't have to pay their employees a living wage because the US government picks up the tab.

 

Walmart, McDonald's, all the big corporations who own the country. They keep getting richer, and the rest of us suffer.

 

Does anyone really believe that the capitalists fear the day will come when every single American is a brilliant PhD so there will be nobody to cook, clean, and work on assembly lines?  Really?  Come on.

 

They're not worried about that, because as it is, there are plenty of people with PhDs who have to work retail. When everybody has a degree, a degree isn't worth as much.

 

You talk about compulsory education. You used to be able to get a job, a good job, right out of high school. Who can do that nowadays? I didn't bring up education because, honestly, when talking about socio-economic mobility, education is a smokescreen. Plumbers make more than doctors where I am, and they don't have as much to pay back. Education helps individuals when it is rare, but when it is common it's no longer as useful in terms of earning money.

 

[justamouse]

Justamouse, any ideas on how to start small without anything? Today, I bought some second-hand items from an unemployed single mom, though a website (like Craigslist in the US, I guess.) I am sure it's sometimes possible to build on things like that, perhaps by buying other second-hand things and reselling them at a slightly higher price. I am having trouble coming up with many other ideas though, unless the person already has skills they can work with. Not having a lot of (formal) education definitely gets in the way as well. 

Where I used to live there was a mother who used to go to the Salvation Army, buy good clothes there, and then resell them on ebay. She made over 2k a month just doing that. That was just a few years ago. She didn't mark things up a lot, but she was able to put out quantity. She started just by reselling her kids own clothes. 

 

Without anything, you have to find out what you are good at, find a niche and network. Brainstorm. You have to always be thinking and SEEING what is out there and looking at it from a million different angles. Eventually you will hit on the one that works. 

 

Our family talks about this stuff over meals. That is how you pass it on. 

[creekland]

Or we could do that AND address the systemic problems that make this a losing proposition for most people who will not advance no matter what.

 

 

Some of us do try to do both.  I work trying to educate and inspire the next generation in our public high school.  Sometimes this is with academics and sometimes it is with life skills.  Often it uses both.

 

Today?  I just GAVE a youngster $10 to have lunch today and for the rest of this week when I found out he was planning to skip lunch to work on math (where I'm at).  Why skip? I asked.  Mom and Dad have money issues and he didn't want to ask them for money.  On top of this, IN class he was paying attention and asking intelligent questions.

 

This is a youngster I can predict will succeed - even without a ton of parental support.

 

In our conversation, I also suggested ways he could succeed with his future.  The fact that he has the belief that he can AND the desire to really work at it is likely to make him one of the successful folks - not necessarily a millionaire, but not in the poorhouse either.

 

His case isn't alone.  I'm not always handing out lunch money (and his first inclination was not to accept it), but I am always doing what I can when I see a need.

 

Many people here in the US have ACE scores that are too high and that early trauma causes the behavior that leads to problems in their lives. The good news is that we are beginning to understand this better and we can now devise ways to prevent early trauma and help vulnerable people.

 

The guy working at our high school is literally a father figure to many of our at risk kids.  It's what helps them survive.  That guy is worth his weight in gold.

 

And since so many of you have so many ideas about how to get out of poverty, perhaps you could share some practical tips? For instance, if starting a business is the way to go, where does someone with no money obtain start-up capital?

 

Many can't get start up capital, so my more usual suggestion is to check out the local community college - get loans for the cost - and pick something with a 100% placement rate that you can see yourself doing.  This can be "just" a start for them rather than an end, but it works - for many.  They just have to do it (sign up and do the work).

 

Once they have a decent paying job, then they can move on to Step B if they want one.

[Indian summer]

And since so many of you have so many ideas about how to get out of poverty, perhaps you could share some practical tips? For instance, if starting a business is the way to go, where does someone with no money obtain start-up capital?

Starting a business may not be the right way to go for everyone. I know lots of unskilled workers who built wealth by being frugal and didn't own a business.

 

But for those who have a winning business plan, it really depends on the specifics of each situation. Some businesses cost very little to start, I know people who make a living with a vehicle or set of tools and free Internet advertising and word of mouth to start. When they begin to make money they may invest a bit into more visible ads.

 

I think most communities have organizations and programs that encourage entrepreneurship. They can often guide people in how to secure loans and grants, like counseling about proper business plan presentations and knowing which types of businesses require a top notch location and which don't and teaching basic small business accounting and things like that. Some of these orgs can even show you how to do it with little personal risk, like forgivable employment insurance payments to improve odds of business success for the first 6-12 months. And loans that are interest free for the first year or two. I'm amazed that people can live in a community for decades and not even realize these programs are in existence and available to them.

[Tanaqui]

I keep reading that quote and see it as a drawback, not something good. Or am I missing something? Less than 20% of income ADVANTAGES are passed on? That's sad.

 

It's sad that people who are born wealthy have to put in more effort to stay wealthy than in the US?

 

If you ask me, what's sad is that poor people are supposed to pull themselves up with grit and endurance, but rich people can loll around from the day they're born and nobody raises an eyebrow.

 

 

[justamouse]

It's sad that people who are born wealthy have to put in more effort to stay wealthy than in the US?

 

If you ask me, what's sad is that poor people are supposed to pull themselves up with grit and endurance, but rich people can loll around from the day they're born and nobody raises an eyebrow.

 

Your posts sound awfully entitled and bitter. 

 

Yeah, lolling around. That's just what we do.  Apparently you haven't read the thread. Not one person on this thread was born into wealth. We've all worked hard to get to these places, and most of us started with nothing. 

[Guest]

I'd like to point out, just for the record, that it's illegal to "go to cosmetology school and cut hair in your kitchen." For pay or trade.

What do you mean it's illegal? Do you mean because you have to get a license? So get a license. Several hairdressers I have had over the years did hair from their homes.

 

Not to mention - it was an example among many.

[SKL]

 

I do also believe that the majority will not make it out of poverty, though the size of that majority varies by country. A truly free public education system that includes university would help with that. Even so, there will always be a large percentage of poor people. That's how capitalism works. 

 

 

There will always be poor people in every economic structure.  Not sure how you define "large percentage" or "poor people" for that matter.

 

Not to you personally, but to everyone who insists on the "system is stacked against bettering oneself":  I wonder how many of the people who won't try harder are unmotivated because they are hearing this kind of talk.  "It won't matter anyway, why not just enjoy life while you're young?  Why keep killing yourself for The Man?"  I suspect a fair amount of self-fulfilling prophecy there.  And that feeds the statistics "proving" that it's no use.  Well, who is that really helping?

 

[Tanaqui]

Your posts sound awfully entitled and bitter. 

 

Yeah, lolling around. That's just what we do.  Apparently you haven't read the thread. Not one person on this thread was born into wealth. We've all worked hard to get to these places, and most of us started with nothing. 

 

Wow, you... didn't even read my comment. I said that I think it is sad that people who are BORN WEALTHY (that is, people with "income advantages", as per your reply) in our country can screw up massively and still stay rich and nobody raises an eyebrow, but with poor people, every action is judged. Look what's going on here. People are poor? Comment after comment talking about how poor people "make mistakes". But the problem isn't "poor people", it's the system that causes people to more or less run in place.

 

If I'm angry about those attitudes, I have a right to be. They're disgusting.

I wasn't talking about the people on this thread. I was talking about the ones with (again, as per the quoted portion of your comment, which I replied to) "income advantages" from birth.

 

There will always be poor people in every economic structure.  Not sure how you define "large percentage" or "poor people" for that matter.

 

Yeah, maybe - but they don't have to be SO poor in comparison to the wealthy.

 

I wonder how many of the people who won't try harder are unmotivated because they are hearing this kind of talk.

 

Probably very few. In my experience, people are so invested in "Oh, sure, it's possible" that they don't want to hear the numbers, don't want to hear the facts. It's like telling them there isn't any Santa.

 

[Tsuga]

So, regarding spending, I'm not white. If I don't dress at least in decent clothes (they are often used or clearance but they look nice) people will think I'm the maid. That's why I dress spiffy. I am not into clothing. I have a uniform I wear to signify that you should not ask me to empty your trash can or clear your table for you (and yes, people have asked me to do that when I was wearing cheap clothes which is how I decided to wear decent clothes in the first place).

 

But we don't spend a lot.

 

We will still never be rich for one reason: we work to contribute to society, not to get rich. We'd like to have a decent life, but it's not going to happen, because the services we provide to society are education and health. If we invested in business and made it a goal to make money, we could. We're not idiots.

 

But it's hard for us to do that because we were both raised to work, not to take. And as such, our salaries and job stability are at that level. We don't work in business.

 

We are building something--we are building a society that is not a dog-eat-dog dystopia in which the powerful provide for their children and everyone else lives in a Dickensian slum.

 

But that won't get us rich.

 

The fact is, the vast majority of people don't work to get rich, but instead work to contribute to society and were hoping to get a small house and a decent education for their kids in return. This was a stupid thing to hope for. Many businesses and the government are now paying wages that do not allow people to save. If you only own  a business, you're not making things: you're paying people to make things. You're not building, you're using capital to build. The builders built it. How much did they get? Do they get a fair cut?

 

(Some people do all their own work--that's great. But that is the definition of a small business and it's very hard to get rich at that level. The getting rich is when you pay others, right? When you expand.)

 

People are working full time and not buying new cars and falling into debt. Workers are not being paid for their work. Anyone paying minimum wage is a taker. They take human lives and say the poor aren't working hard enough.

 

You shouldn't have to spend your entire life thinking about getting rich and running a business in order to just survive. Someone has to do the science, do the welding, do the analysis, do the teaching. Should those people have a living wage to buy a house over 30 years and pay for their kids' soccer lessons, or not?

 

I have done a lot of work in my life, but I wasn't selling something at a profit and paying my workers minimum wage. I have built a LOT as a member of the community, but I'm not rich because I gave what I had.

 

I never wanted to be rich, but I did think I'd be able to retire. It is looking less and less possible these days.

 

It is insulting to hear business owners suggest that we could all own businesses. Who would do your work for peanuts if we all owned businesses? Who would really make stuff, if we all owned and traded capital?

 

Nobody. I'm not opposed to business but the notion that people who are working are not making makes me want to puke. The workers are the makers and they aren't getting paid.

 

This is not utopianism, and it's not communism. It's about honest pay for honest work.

 

 

[JumpyTheFrog]

Yes, our economy does have problems. Jobs are outsourced and many companies treat employees like dirt, especially with scheduling issues of PT jobs. Plus, we have such low interest rates that some have declared the Fed to have a "war on savers." However, despite that, everything is not hopeless for everyone. People who decide it's all hopeless so why bother to save anything when they could have that XYZ now aren't even trying to play the game. Would it be better if we could change the rules? Yes! But until then, we all have to play the hand we've been dealt. Some are dealt poor hands, but that isn't a good reason to say "I can never be #1 so why bother to try to get a few better cards."

 

And yes, some people have luckier timing as far as finishing school when the economy is good or saving for retirement during a long bull market. But that doesn't negate that hard work and delay of gratification are necessary to improve one's financial situation. Some of us keeping hearing "But the system is rigged!" and we're trying to say, "Yes, that may be, and it may be wrong and sucky, but you can either play the game the best you can while working for systematic change, or you can give up and complain about how unfair life is and not even try."

 

I thought it was eye-opening, too.

 

Here are some stats about secure attachment. In the Sutton Study, about 40% of US children were found not to have secure attachment to at least one caregiver.

 

http://www.princeton.edu/main/news/archive/S39/59/37A89/index.xml?section=topstories

 

 

 

 

Here is a link to a long article explaining how the ACE Study came to be and what was discovered. If anyone wants to get down to the results of the affects of early trauma, do a search for the following sentence and begin reading there: "Things start getting serious around an ACE score of 4." The whole article is worth reading, though.

 

http://acestoohigh.com/2012/10/03/the-adverse-childhood-experiences-study-the-largest-most-important-public-health-study-you-never-heard-of-began-in-an-obesity-clinic/

 

Many people here in the US have ACE scores that are too high and that early trauma causes the behavior that leads to problems in their lives. The good news is that we are beginning to understand this better and we can now devise ways to prevent early trauma and help vulnerable people.

 

Yes, we definitely need to find ways to reduce these childhood traumas that set people up for poor lives. 

 

 

In the book The Automatic Millionaire, the author talks about "the latte factor." (*SIDE NOTE: I know there are poor people who never buy lattés! Not who I'm talking about!) but in the book, he talks about how a woman objected in a class he was teaching, saying she didn't have thousands of dollars to invest. So he broke down her "petty cash" expenses for that day: a latté and a muffin. Point being, there are lots of people who never start an investment account because there isn't a big chunk of money sitting around to invest, but many who don't could by saving the proverbial latté money.

 

Yes, a large percent of middle class families have screwed themselves over with ridiculous spending on houses, cars, electronics, and dining out they can't afford. My dad was an engineer and had a good salary. Many of his co-workers had similar salaries plus stock options he was never given. Many of these same people will have trouble retiring because they managed to squander their $80,000 plus salaries year after year. Plus, many of them divorced their spouses, further destroying their financial future. (I think the stats show that marrying wisely and staying married is extremely helpful for financial stability. Yes, some people aren't worth staying married to, but don't shoot the messenger.)

[Tanaqui]

 

Why is it that any valid observation about extremely wealthy people is immediately met with "you're bitter," by people who do NOT self-identify as staggeringly wealthy? Why is that? Why do people CHOOSE to accept the mental paradigm of there being "people with wealth who deserve it" and "people who are not worthy of wealth and so don't have, or deserve it," and then side with the side of the deserving even while claiming they don't have all that much wealth?

 

People in the US are obsessed with this Horatio Alger garbage. It's utterly unrealistic on a societal level, and drives me batty. I better go cool down.

 

[SKL]

So, regarding spending, I'm not white. If I don't dress at least in decent clothes (they are often used or clearance but they look nice) people will think I'm the maid. That's why I dress spiffy. I am not into clothing. I have a uniform I wear to signify that you should not ask me to empty your trash can or clear your table for you (and yes, people have asked me to do that when I was wearing cheap clothes which is how I decided to wear decent clothes in the first place).

 

But we don't spend a lot.

 

We will still never be rich for one reason: we work to contribute to society, not to get rich. We'd like to have a decent life, but it's not going to happen, because the services we provide to society are education and health. If we invested in business and made it a goal to make money, we could. We're not idiots.

 

But it's hard for us to do that because we were both raised to work, not to take. And as such, our salaries and job stability are at that level. We don't work in business.

 

We are building something--we are building a society that is not a dog-eat-dog dystopia in which the powerful provide for their children and everyone else lives in a Dickensian slum.

 

But that won't get us rich.

 

The fact is, the vast majority of people don't work to get rich, but instead work to contribute to society and were hoping to get a small house and a decent education for their kids in return. This was a stupid thing to hope for. Many businesses and the government are now paying wages that do not allow people to save. If you own  a business, you're not making things: you're paying people to make things. You're not building, you're using capital to build. The builders built it. How much did they get? Do they get a fair cut?

 

People are working full time and not buying new cars and falling into debt. Workers are not being paid for their work. Anyone paying minimum wage is a taker. They take human lives and say the poor aren't working hard enough.

 

You shouldn't have to spend your entire life thinking about getting rich and running a business in order to just survive. Someone has to do the science, do the welding, do the analysis, do the teaching. Should those people have a living wage to buy a house over 30 years and pay for their kids' soccer lessons, or not?

 

I have done a lot of work in my life, but I wasn't selling something at a profit and paying my workers minimum wage. I have built a LOT as a member of the community, but I'm not rich because I gave what I had.

 

I never wanted to be rich, but I did think I'd be able to retire. It is looking less and less possible these days.

 

It is insulting to hear business owners suggest that we could all own businesses. Who would do your work for peanuts if we all owned businesses? Who would really make stuff, if we all owned and traded capital?

 

Nobody. I'm not opposed to business but the notion that people who are working are not making makes me want to puke. The workers are the makers and they aren't getting paid.

 

This is not utopianism, and it's not communism. It's about honest pay for honest work.

 

Well excuse me for answering another poster's question about how to start out in business with $0.  I never implied being a business owner is the only decent career.

 

Also I would point out that as a successful business owner, I am a JOB CREATOR and I have never paid anyone even close to minimum wage (though I myself have worked many hours at minimum wage or less).  I am also a TAX PAYER to the max, and I also support a number of charities with both services and money, including one that I co-founded when I was still working out of my apartment subsisting and paying off mega debts.  So I beg your pardon.

[Tanaqui]

Some of us keeping hearing "But the system is rigged!" and we're trying to say, "Yes, that may be, and it may be wrong and sucky, but you can either play the game the best you can while working for systematic change, or you can give up and complain about how unfair life is and not even try."

 

That's a false dichotomy. If you get invested in playing the game, you're not going to fix the system. You're not going to try, because you're wrapped up IN the system.

 

How about "Don't play the game, but don't give up either. Work on making things better."

[SKL]

 

 

Yeah, maybe - but they don't have to be SO poor in comparison to the wealthy.

 

 

Why is "comparison" important?  Why isn't it a reasonable goal that everyone who wants to work can have "enough"?  Many people work until they have enough, and then they change focus, and that is fine.

 

[Reefgazer]

This comes across as extreme bitterness and class envy.  It's a waste of your valuable energy that you could be putting elsewhere if you chose.  If wealthy people lolled around all day, they wouldn't be wealthy for very long.  Perhaps it only seems as if the loll around.

It's sad that people who are born wealthy have to put in more effort to stay wealthy than in the US?

 

If you ask me, what's sad is that poor people are supposed to pull themselves up with grit and endurance, but rich people can loll around from the day they're born and nobody raises an eyebrow.