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Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: Notch on November 02, 2017, 12:40:51 AM

Title: Is saving really that hard in America?
Post by: Notch on November 02, 2017, 12:40:51 AM
This tweet from Jean Chatzky, Financial Editor of NBC's TODAYshow, seems pretty reasonable right?

https://twitter.com/JeanChatzky/status/925712870179995648 (https://twitter.com/JeanChatzky/status/925712870179995648)

"By the time youíre 30, aim to have 1x your annual income set aside for retirement. At 40, 3x; at 50, 6x; at 60, 8x; and by retirement, 10x."

Now read the replies and laugh/cry?

I'm not from there so maybe I don't get it, but everyone sounds so defeated.
Title: Re: Is saving really that hard in America?
Post by: elementz_m on November 02, 2017, 02:53:16 AM
I don't think it was phrased in the best way, but the advice is mostly sound. I guess she was going for "retirement can seem like a long way off, but you only need to start small".

Saving 10% of your income from 22 to 65, assuming you only ever get a pay rise in line with inflation, will give you 12.8x your spending at 65, and assuming you still spend the same amount and have no SS you'll run out of money at 82.

If you start saving at 30, you need 15% savings for the same result. 40, 25%. And if you don't start to think seriously about retirement until 50, you need to save 50% of your earnings.
Title: Re: Is saving really that hard in America?
Post by: dreamer8887 on November 02, 2017, 03:02:24 AM
The headline about this in New Zealand reads "Financial expert savaged for terrible advice" - what?

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11939929
Title: Re: Is saving really that hard in America?
Post by: AnnaGrowsAMustache on November 02, 2017, 03:21:50 AM
The headline about this in New Zealand reads "Financial expert savaged for terrible advice" - what?

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11939929

Hahah, just read that article as a kiwi, and came straight here! It does seem like a strange reaction to the retirement advice. I guess people have to lash out when they realise they haven't made the grade. Rather than do something about it, you know, cos that would be an unreasonable ask of anyone!
Title: Re: Is saving really that hard in America?
Post by: Laura33 on November 02, 2017, 06:53:24 AM
Damn, that's pitiful.

No, no, for the average worker, it's not that hard.  You just have to prioritize tomorrow's needs over today's wants.

I think where the risk comes in is the difficulty of doing that year-in, year-out:  our safety net is pretty crappy, so one unfortunate event -- a job loss, a car accident, a hospital bill -- can put you so far behind it is hard to catch up.  Frankly, most of our country is set up as very car-centric, so if you're in an accident and lose the car and are laid up on the hospital, now you've likely lost your job, and you don't have the transportation you need to get to another one.  So now you have debt from the hospital bill, and then you add on more debt to get the car you need just to get the job to pay the debt, and it is very easy for one piece of bad luck to send you off-track and make it hard to catch back up. 

But that's not what most people seem to be complaining about -- it's more the "supposed tos."  E.g., I went to school, I got a degree, I am smart and educated and hardworking, and so I'm supposed to have my own apartment and a decent car and a 40-hr work-week and annual vacations and the ability to go out with my friends on Saturday night, etc.  They anchor to the lifestyle they expected, instead of the lifestyle they can actually afford, and when that doesn't magically appear, they feel behind and like they can't afford to save and get frustrated.  So I agree that it's not about frivolities like avocado toast and lattes.  But it is about living a lifestyle you think you deserve instead of sucking it up and getting roommates and driving a beater and shopping at Aldi's.
Title: Re: Is saving really that hard in America?
Post by: mm1970 on November 02, 2017, 09:36:08 AM
Damn, that's pitiful.

No, no, for the average worker, it's not that hard.  You just have to prioritize tomorrow's needs over today's wants.

I think where the risk comes in is the difficulty of doing that year-in, year-out:  our safety net is pretty crappy, so one unfortunate event -- a job loss, a car accident, a hospital bill -- can put you so far behind it is hard to catch up.  Frankly, most of our country is set up as very car-centric, so if you're in an accident and lose the car and are laid up on the hospital, now you've likely lost your job, and you don't have the transportation you need to get to another one.  So now you have debt from the hospital bill, and then you add on more debt to get the car you need just to get the job to pay the debt, and it is very easy for one piece of bad luck to send you off-track and make it hard to catch back up. 

But that's not what most people seem to be complaining about -- it's more the "supposed tos."  E.g., I went to school, I got a degree, I am smart and educated and hardworking, and so I'm supposed to have my own apartment and a decent car and a 40-hr work-week and annual vacations and the ability to go out with my friends on Saturday night, etc.  They anchor to the lifestyle they expected, instead of the lifestyle they can actually afford, and when that doesn't magically appear, they feel behind and like they can't afford to save and get frustrated.  So I agree that it's not about frivolities like avocado toast and lattes.  But it is about living a lifestyle you think you deserve instead of sucking it up and getting roommates and driving a beater and shopping at Aldi's.

Yes.  I saw the link on Scarymommy, and the comments there were much the same.  Though there was one poster who said "Go read Mr. Money Mustache!"  (hello?  Are you here?)

The thing that gets people's panties in a bunch about all this is that
- When you say "save money" and "don't spend money on dumb stuff", they assume that you are attacking them specifically
- The fact of the matter is, a lot of people are stupid with money - BUT - some people aren't.  They are smart, they are frugal, they just don't get paid that much/ have bad luck/ got sick.

The system for sure is rigged - if you are frugal and make a reasonable salary AND don't lose a house to flood, or get sick, or get laid off for a year THEN you'll probably be okay.
But life for many people these days is just tenuous.  Job security isn't there, the health insurance offered is expensive, too many have student loans - it kind of sucks.

The problem becomes that people use that as an excuse to not even try.

And of course, the "should haves".  Hey, some people actually do the math on paying off the loans and paying for health insurance and paying for 2 cars and a 1BR apartment and it's expensive.  BUT - who says you necessarily SHOULD have all that and a house by age 30?

I realize I should probably shut up because our net worth is well over $1M, and our income puts us in the 5% - but we weren't ALWAYS like that.  We were frugal when we had to be and kept it up.  I mean, hubs was in grad school for 7 years.  We had one car.  He was 33 before he finished and got his first post-military full time job.
Title: Re: Is saving really that hard in America?
Post by: Laura33 on November 03, 2017, 07:54:00 AM
No, no, for the average worker, it's not that hard.  You just have to prioritize tomorrow's needs over today's wants.
That second part is actually really hard. The peer reviewed literature is riff with studies that show that most people tend to prefer instant gratification now as opposed to in the future (i.e., they would rather have $5 now as opposed to $20 in the future). Just do some reading on discounting in economics and you can see how common this is. Usually the best savers are ones that had it drilled into their heads when they were children (i.e., save 10% off the top for a rainy day). That's part of the reason why there are higher savings rates in other parts of the world, the culture places more emphasis on saving for the future.

Oh, ITA.  Maybe "hard" isn't the right word.  The point is that the average American makes sufficient money to cover today's needs while still setting aside something for emergencies and for the future.  If they're not doing it, it's usually because of their own attitude/psychology,* not because society makes it impossible for the average guy to get ahead.

*Again, not considering crises -- see "our safety net sucks," supra.
Title: Re: Is saving really that hard in America?
Post by: SavingIsForSuckers on November 03, 2017, 02:24:49 PM
I think it is hard for most people. Incomes are so artificially under-inflated now. Unless if you want to live like a total pauper- drive an old beaten up car from the 90s and carry around a crusty flip phone- the only way to truly "save" is to create multiple sources of income.

Saving, in general, is for suckers. I laugh at all of the Wall Street Charlatans out there that tout their phony Black Money Investment schemes as some sort of end-all be-all to a comfortable retirement. "Hey you there! Don't spend that $100 a week on your hobbies! Give it here friend, we'll put it in a newfangled Vangaurd Triple X Reverse Dipset Growth Target Year 2054 ETF!".

You sacrifice your lifestyle, live like a pauper, embarrass your children in most cases by making them the target of jokes and bullies in school all for some selfish goal of "retirement". Motherfucker. There is no retirement, there is only making more money.

[MOD NOTE:  Don't let the TCP FIN hit you in the ass on the way out.]
Title: Re: Is saving really that hard in America?
Post by: CCCA on November 04, 2017, 10:34:51 AM
I think it is hard for alot of people.  Some are hugely in student debt and don't make enough money, but for many it's more difficult from a psychology standpoint rather than a math perspective. 


I think the 30 year advise is the hardest these days since it requires you to get things on track in your early 20's or be middle to high income in your mid 20s.  Unless you are a true mustachian, then it's easy regardless.
Title: Re: Is saving really that hard in America?
Post by: AnnaGrowsAMustache on November 04, 2017, 07:09:19 PM
Saving is hard anywhere. Even though we humans can perceive the future, we're not always good at taking steps to live in it, especially if those steps deprive our present selves. We've always been good at saving the excess, however. That's how cheese, jam, bacon and the like were invented. I think the real issue is that a lot of us can no longer tell what is excess - and that's down to the spendypants culture we live in. We're always told to save, but most people see this as sacrifice. Maybe we need to work harder on letting people see the excess in their lives.

Title: Re: Is saving really that hard in America?
Post by: Joeko on November 04, 2017, 07:55:54 PM
The twitter comments to Jeanís tweet are sad.  Bunch of negative thinking out there in Twitter land. 
Title: Re: Is saving really that hard in America?
Post by: Hargrove on November 05, 2017, 08:35:46 AM
I would rather tell people that what I'm doing is hard but worth it. I enjoyed the work to learn about FIRE and get it rolling, but it was still work. You don't need to save straight to FIRE to impact your life, either. Even if you want a big house and a fancy car and 2.2 kids, you could work 2-3 jobs for 2-3 years before starting on that road, invest everything not spent on down payments, and you'll be way, way ahead of most people. Easy in a lifetime? Easy enough... easy today and tomorrow? Maybe, maybe not.

It's significantly more difficult for anyone disabled, for single parents, for widows/widowers, for unskilled workers laid off from decades-long careers... the culture says everyone can just do a little hard work and be fine, but also blames the consumer when university admissions departments sell fantasy futures (should have done your research!). They blame the consumer when the next merger is laying off 8,000 workers (gotta be flexible!). Maybe your church says no birth control (just wait for marriage until 40!). Meanwhile, pharma peddles "non-addictive" opioids and - with billions of dollars in machinery working against them - it's the consumer who's expected to have the resources to know better. We taught our kids to get degrees so they wouldn't work at Starbucks. Now they work at Starbucks. I'm confused that we're intolerant of their dissatisfaction.

There are a lot of social expectations to spend money, and a lot of spending looked at as some sort of "mental health maintenance expense" (e.g., "but that's the one fun thing I do!"). The single most significant event that led me to MMM was a conversation with a friend who used to be my boss. He said "when you get raises, your spending fills in the gaps so quickly, often on necessities you had just previously forgone, you worry less but don't have much more money." I pulled my mental emergency brake and said "this is just not going to happen to me." Then I found MMM.

I have a number of big advantages I'm grateful for (including no debt, health, stable roommate, nothing yet that ties up my money beyond the basics for a single male). But as Anna posted, we have to develop personal ideas about "excess" that you can only reinforce in a handful of places (like these forums). Most of us our optimists and can-doers who are up for it - and, objectively, we should also be able to recognize it's not necessarily "easy" for society at large.
Title: Re: Is saving really that hard in America?
Post by: FireLane on November 06, 2017, 07:51:26 PM
My brother-in-law, who's never had a job and has no plan to look for one, was griping about this the other day. He insists the economy is rigged and no one except the super-rich can save anything, and anyone who says otherwise is spreading fake news. (It was hard for me to keep a straight face.)

If anything, Jean Chatzky is aiming low. With reasonable compounding, a 10% savings rate would beat her milestones, and anyone who's not seriously poor can save 10% of their income. Even a non-Mustachian ought to be able to do it. The people who dismiss those numbers as utterly impossible are just trying to make themselves feel better about their own refusal to make an effort.
Title: Re: Is saving really that hard in America?
Post by: Laura33 on November 07, 2017, 06:05:09 AM
I would rather tell people that what I'm doing is hard but worth it. . . . .  We taught our kids to get degrees so they wouldn't work at Starbucks. Now they work at Starbucks. I'm confused that we're intolerant of their dissatisfaction.

I think you can be empathetic to those who are struggling and still be pissed off by some of the comments to that article.  ITA that a lot of people have been sold a bill of goods and have every right to be angry, and I am happy to share a beer and a sympathetic ear with someone who is working hard and struggling and frustrated.  But I have no patience with those who would rather kill the messenger/call her a liar than look at what they can do with what they have.  Some of those comments were just ridiculous.

OTOH, I think your first comment is spot-on.  It is hard to delay gratification, and the less you have, the harder it is, because now you're stuck saying no all the time to things all of your friends think are normal.  But the best things in my life were also some of the hardest things I've ever done.  You learn and grow and succeed by working your ass off (whether it is at your job or learning about finances or figuring out DIY or whatever) -- not by spending your free time on your phone whining and throwing Twitter bombs.
Title: Re: Is saving really that hard in America?
Post by: FL_MM on November 07, 2017, 07:35:24 AM
Yes, it is for some.
Our society is very competitive. Our minimum wage is ridiculously low and many only have access to this type of job. Public sentiment is rallied against welfare and social programs.
 I have a friend with a learning disability. Graduating from high school was tough for her, but she did it. She got married and had kids. Then her partner did something stupid and went to prison. She is a single mom trying to support her family on min wage. Sheís tried a few higher paying jobs and is a hard worker, but was fired because she just canít learn the skills and gets confused easily. I have seen her worry about buying groceries vs buying something the kids need for school. I donít think savings are even on her radar so she would probably just laugh at that advice.
Not everyone has the same opportunities.
Title: Re: Is saving really that hard in America?
Post by: Imustacheyouaquestion on November 07, 2017, 08:05:03 AM
I think the tweet was poorly received because it comes across as an arbitrary target with no practical guidelines on how to get reach those goals. Concrete advice like, "invest up to the match in your 401k or else you're throwing away free money," seems more manageable.
Title: Re: Is saving really that hard in America?
Post by: fattest_foot on November 07, 2017, 10:38:19 AM
My brother-in-law, who's never had a job and has no plan to look for one, was griping about this the other day. He insists the economy is rigged and no one except the super-rich can save anything, and anyone who says otherwise is spreading fake news. (It was hard for me to keep a straight face.)

If anything, Jean Chatzky is aiming low. With reasonable compounding, a 10% savings rate would beat her milestones, and anyone who's not seriously poor can save 10% of their income. Even a non-Mustachian ought to be able to do it. The people who dismiss those numbers as utterly impossible are just trying to make themselves feel better about their own refusal to make an effort.

I feel like that's the answer. People don't really want to try. They'd rather complain.

Start maxing out an IRA after you graduate, or heck, any time before you turn 30, and do it for a decade, and you'll be set for retirement (should get close to $500k). Don't start making more money until you're 30? Fine, do it for 15 or 20 years and you'll be fine.

If you're really that poor, you're likely going to get a nice big refund check from the IRS in April or May; instead of buying the new iPhone, put it towards your retirement.

Honestly, it's not hard to have enough for retirement. Making it before 40? Yeah, that takes some luck in the income department and controlling your expenses. Just having money to retire after 40+ years in the workforce? You have to put forth minimal effort.
Title: Re: Is saving really that hard in America?
Post by: Dictionary Time on November 07, 2017, 11:27:00 AM
I think the tweet was poorly received because it comes across as an arbitrary target with no practical guidelines on how to get reach those goals. Concrete advice like, "invest up to the match in your 401k or else you're throwing away free money," seems more manageable.

I agree. I know there's a lot of complainy-pants in general, but this advice wasn't very actionable. 

Either you read it and you're good and you feel better about your situation, or you're miles away from it and it seems insurmountable.  And then the tendency is to give up.  If I'm 40 and I have 1X, well I guess I'm screwed.

You can't go back and change the past, so advice is better on a going-forward basis.  Maybe your 20s were wasted time financially, you can start where you're at and move forward from here.  But this tweet makes it seem like it's too late for you.  You're running behind a bus and you can't catch up.

Maybe you can never catch up to where Jean Chatzky wants you, but you can improve.
Title: Re: Is saving really that hard in America?
Post by: Jrr85 on November 07, 2017, 12:22:01 PM
The headline about this in New Zealand reads "Financial expert savaged for terrible advice" - what?

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11939929

Well, it is sort of terrible.  If you have 1x annual income at 30, having 3x is reasonably ambitious for 40.  Just returns should double your savings over that time frame, but late 30's will also likely be when you see some of your fastest income growth.  But if you make 3x at 40, why would you only shoot for 6x at 50?  Again, returns would do all the lifting for you if you didn't see any salary growth, so just covering the additional needs to reflect salary growth seems not very ambitious.  And then why in the world would you only shoot for 10x at retirement? 

That's really terrible advice except for people with a very particular income growth pattern over time.  Maybe that pattern is more typical than I realize though. 
Title: Re: Is saving really that hard in America?
Post by: Dmoceri91 on November 07, 2017, 02:25:40 PM
This is definitely a hard thing for a lot of people my age. (26) Myself included.
I really would like a new(er) car right now but its really hard to justify it while I finish my MBA. Earliest I'm figuring I could get a new ride would be in 2 years once both my student loans have been paid off and my grad school is finished.

2 years seems like an eternity to some people, especially those with low incomes, high student loans.  People in these crappy situations try to justify frivolous spending as a way of being happy.

Honestly to see all those comments just makes me sad.
Title: Re: Is saving really that hard in America?
Post by: solon on November 07, 2017, 02:34:35 PM
I just read the comments on the Chatzky twitter thread. Wow. So many people living without a clue, just oblivious to how money works. Depressing.

EDIT: Tried to post this on twitter, but twitter doesn't allow enough length for fully developed thoughts, so I'll post it here.

I don't understand all the hate. If you disagree with the math, that's fine, just use your own math. If you agree with the math, but don't think you can hit those numbers, why are you blaming @JeanChatzky?
Title: Re: Is saving really that hard in America?
Post by: FINate on November 07, 2017, 04:48:12 PM
Those who manage to FI(RE) are discounted because: a) they got lucky or, b) they are weirdos who enjoy deprivation, as if frugality is genetically etched in stone. And then those who struggle financially, well, obviously they are not experts so ignore their cautionary tales (oh, and none if it was in their control). The net effect is that no one is allowed to have an opinion or even offer up facts that might challenge people -- that would be judgy. Of course huge corporations are more than happy to tell people what they want to hear: you can have your cake and eat it too, you should treat yourself, you deserve it, small (or large) amounts of money here and there don't really matter and it's all about having what you want. Honestly I fear for our society.

Do the math. Save just $10 a day or about $3600 a year and at 8% compounding growth you'll end up with over a million bucks over 40 years. Start saving at 20 and you're RE at 60. Save faster and/or live more frugally and you can FIRE even earlier. So yes, that daily Starbucks habit is costing you dearly. Same for the much maligned $12 avocado toast and eating out in general. And driving everywhere instead of biking. And paying for cable. There are so many ways "average" people could save for retirement but, no, our lifestyle shall not be infringed upon.

Title: Re: Is saving really that hard in America?
Post by: WootWoot on November 13, 2017, 12:14:52 PM
Can anyone define "average worker" in terms of dollars and sense?
Thanks!

Title: Re: Is saving really that hard in America?
Post by: Goldielocks on November 14, 2017, 04:11:43 PM
This tweet from Jean Chatzky, Financial Editor of NBC's TODAYshow, seems pretty reasonable right?

https://twitter.com/JeanChatzky/status/925712870179995648 (https://twitter.com/JeanChatzky/status/925712870179995648)

"By the time youíre 30, aim to have 1x your annual income set aside for retirement. At 40, 3x; at 50, 6x; at 60, 8x; and by retirement, 10x."

Now read the replies and laugh/cry?

I'm not from there so maybe I don't get it, but everyone sounds so defeated.

LOL  so funny...


Assume income = $100k

If you have 100k at age 30, with 7% annual return, you will have over $1 million, or 10x income by age 65.... without adding any more $$'s.

I know this doesn't allow for inflation of income or CPI (using 7%), but it has ZERO dollars added to it.  Just topping it off a bit annually will match your salary growth.

The only impossible thing could be to get $100k at age 30... which should not be so impossible if you delayed having kids until after age 30, and got a degree at a cost that matches the value of the salary.   Most people who graduate by age 25 are be able to do this, if they focus, and certainly any trades person working from age 20 should.
 
Title: Re: Is saving really that hard in America?
Post by: Goldielocks on November 14, 2017, 04:16:54 PM
I think the tweet was poorly received because it comes across as an arbitrary target with no practical guidelines on how to get reach those goals. Concrete advice like, "invest up to the match in your 401k or else you're throwing away free money," seems more manageable.

I think the advice should be "If you save 1x your income by age 30, you are all set for retirement"...

Most of us were on the  "career salary ladder" by age 30  (weren't we?)...
Title: Re: Is saving really that hard in America?
Post by: WootWoot on November 15, 2017, 12:30:06 PM
Can anyone define "average worker" in terms of dollars and sense?
Thanks!

Of course, I meant dollars and CENTS.

Like, average for what? Working class? Middle class (if there is still such a thing)?
Title: Re: Is saving really that hard in America?
Post by: chaskavitch on November 15, 2017, 12:57:03 PM
Damn, that's pitiful.

No, no, for the average worker, it's not that hard.  You just have to prioritize tomorrow's needs over today's wants.

I think where the risk comes in is the difficulty of doing that year-in, year-out:  our safety net is pretty crappy, so one unfortunate event -- a job loss, a car accident, a hospital bill -- can put you so far behind it is hard to catch up.  Frankly, most of our country is set up as very car-centric, so if you're in an accident and lose the car and are laid up on the hospital, now you've likely lost your job, and you don't have the transportation you need to get to another one.  So now you have debt from the hospital bill, and then you add on more debt to get the car you need just to get the job to pay the debt, and it is very easy for one piece of bad luck to send you off-track and make it hard to catch back up. 

But that's not what most people seem to be complaining about -- it's more the "supposed tos."  E.g., I went to school, I got a degree, I am smart and educated and hardworking, and so I'm supposed to have my own apartment and a decent car and a 40-hr work-week and annual vacations and the ability to go out with my friends on Saturday night, etc.  They anchor to the lifestyle they expected, instead of the lifestyle they can actually afford, and when that doesn't magically appear, they feel behind and like they can't afford to save and get frustrated.  So I agree that it's not about frivolities like avocado toast and lattes.  But it is about living a lifestyle you think you deserve instead of sucking it up and getting roommates and driving a beater and shopping at Aldi's.

Yes.  I saw the link on Scarymommy, and the comments there were much the same.  Though there was one poster who said "Go read Mr. Money Mustache!"  (hello?  Are you here?)

The thing that gets people's panties in a bunch about all this is that
- When you say "save money" and "don't spend money on dumb stuff", they assume that you are attacking them specifically
- The fact of the matter is, a lot of people are stupid with money - BUT - some people aren't.  They are smart, they are frugal, they just don't get paid that much/ have bad luck/ got sick.

The system for sure is rigged - if you are frugal and make a reasonable salary AND don't lose a house to flood, or get sick, or get laid off for a year THEN you'll probably be okay.
But life for many people these days is just tenuous.  Job security isn't there, the health insurance offered is expensive, too many have student loans - it kind of sucks.

The problem becomes that people use that as an excuse to not even try.

And of course, the "should haves".  Hey, some people actually do the math on paying off the loans and paying for health insurance and paying for 2 cars and a 1BR apartment and it's expensive.  BUT - who says you necessarily SHOULD have all that and a house by age 30?

I realize I should probably shut up because our net worth is well over $1M, and our income puts us in the 5% - but we weren't ALWAYS like that.  We were frugal when we had to be and kept it up.  I mean, hubs was in grad school for 7 years.  We had one car.  He was 33 before he finished and got his first post-military full time job.

Hey, that might have been me on Scarymommy!  I instantly regretted it, because people just went all Debbie Downer on me with "oh, well my parents did LITERALLY NOTHING for me besides give me life".  I was just trying to let them know there were other ways to try, and that they should keep looking for new solutions, not lord it over them that my parents were supportive and I tried to make my life decisions wisely (and subsequently got lucky). 

I keep typing and deleting things here defending myself, lol, I'm obviously still really on edge about it and it's been like 3 weeks.
Title: Re: Is saving really that hard in America?
Post by: SavinMaven on November 16, 2017, 06:32:31 AM
Can anyone define "average worker" in terms of dollars and sense?
Thanks!

Average in terms of dollars? The median income in the US is around $51k.
Average in terms of sense? That's a bit more controversial.....
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 16, 2017, 08:44:14 AM
Hey, that might have been me on Scarymommy!  I instantly regretted it, because people just went all Debbie Downer on me with "oh, well my parents did LITERALLY NOTHING for me besides give me life".  I was just trying to let them know there were other ways to try, and that they should keep looking for new solutions, not lord it over them that my parents were supportive and I tried to make my life decisions wisely (and subsequently got lucky). 

I keep typing and deleting things here defending myself, lol, I'm obviously still really on edge about it and it's been like 3 weeks.

Even if your parents do nothing for you

- if a kid can graduate with good enough grades to pursue scholarships at a trade school or university or
- the military (GI Bill, opportunities to save salary due to Navy cruises or remote duty assignments) or
- a person makes very frugal choices and works their way through vocational training or university

success is still not out of reach. My method was a mixture of 2 and 3. Obviously alot has to go right. No pregnancies, no drugs, no arrests, and build that rainy day fund fast so every emergency isn't a show stopper. Avoid friends or family which will hold a person back and drag them down.

I avoid getting too deep into discussions with "people" who converse in terms of problems rather than solutions. That is why I love this forum.
Title: Re: Is saving really that hard in America?
Post by: simonsez on November 16, 2017, 09:07:17 AM
Even if your parents do nothing for you ... success is still not out of reach.
+1

Sol had a good post recently outlining the advantages we have by simply being born in the U.S.  I think someone put it up on the "Best thing I read today..." thread as well.

Anything parents do is just a bonus, but definitely not a requisite.
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 16, 2017, 09:22:55 AM
Of course there is a limit to how far a high schooler can let their grades dip and expect to attend university or vocational training immediately. They might need to work for a while to save up tuition and then return to school as a non-traditional student taking loads of remedial classes to re-establish themselves academically.

That'll be fun if they were not excited about those same classes as a teenager. Didn't like math in high school? Well here, take these 4 classes of math at the university...

Maybe it would have been smarter to get it done right the first time. 

Timely topic with our teenager right now.
Title: Re: Is saving really that hard in America?
Post by: TheGrimSqueaker on November 16, 2017, 09:37:30 AM
Hey, that might have been me on Scarymommy!  I instantly regretted it, because people just went all Debbie Downer on me with "oh, well my parents did LITERALLY NOTHING for me besides give me life".  I was just trying to let them know there were other ways to try, and that they should keep looking for new solutions, not lord it over them that my parents were supportive and I tried to make my life decisions wisely (and subsequently got lucky). 

I keep typing and deleting things here defending myself, lol, I'm obviously still really on edge about it and it's been like 3 weeks.

The whole "did LITERALLY NOTHING" line is generally codswallop.

There are sometimes cases when severely defective bio-parents who do a breed-and-dump stunt and drop a newborn baby off at a police station or fire hall, and there are cases where kids are snatched out of abusive homes and raised by foster parents, however if those noises are coming out of the mouth of a teenager or adult the speaker is overlooking the fact that *somebody* invested a ton of time, effort, and money in him or her to allow him or her to survive to that point. Otherwise the speaker would have died in infancy. Those individuals (be they grandparents, a string of foster parents, or other relatives) did indeed provide food, clothing, shelter, and access to education. If the education was subsidized in the form of public schooling or if the child made use of the school breakfast and lunch program, the resources for those publicly funded forms of help came from taxpayers. As in, other humans. The whole village helped raise that child.

The "did LITERALLY NOTHING" wail generally comes from people who received a ton of help, but it wasn't the specific kind of help they wanted from the specific source they wanted. If Mom or Dad dies young or walks out, a lot of people carry around hurt and resentment for the fact the parent wasn't there later. So they ignore the contributions made by, say, Granny. They also get so accustomed to other people stepping in to fill the gap that they take it for granted and end up believing that the extras they get in the form of lunches, tuition, grants, and need based scholarships just don't count. They didn't get what they wanted from the person they wanted it from, and so nothing else they receive from that point forward counts.

Early loss or trauma has a flip side: the person who experiences it often creates an internal narrative that tells them that it's their fault they weren't, say, born into a family that can afford expensive private schools and college educations... or their fault that they lost a parent to drugs or a car accident. So they convince themselves they're bad and unworthy, and they trash the good things and the opportunities that come their way because they don't think they deserve good things to happen to them. They ignore or sabotage education opportunities, and don't take advantage of opportunities that are set before them. This self-sabotage, which takes many forms, often comes across as a character flaw because instead of acting on opportunities to advance their educations or make themselves more employable, the former traumatized children spend time and resources either practicing a compulsion/addiction or running around wiping other people's butts by providing caregiving services to adults who don't function like adults. Then, when they reach adulthood, they don't do what is natural to non-traumatized people and create an environment that protects their own children from similar tragedy. Forget looking ahead 20 years and realizing you will one day have a child that will need college help or an insurance policy if you get hit by a bus... the paralysis is so intense that even something like applying for a better job (or any job) feels impossible. It creates an ongoing source of major stress in their lives. So like most people under stress, they focus on immediate problems that can be dealt with and solved right away: the chickenshit "high urgency, low importance" crap that Stephen Covey rightly identified as time-wasting nonsense. Solving that kind of immediate problem gives them temporary reassurance that they are in fact competent, and it lets them ignore the low-urgency, high-importance tasks that produce actual long-term success.

Amid all this drama (much of which becomes self-generating after a few years), it's hard to think clearly or see clearly. That, I think, is what's really behind "did LITERALLY NOTHING".
Title: Re: Is saving really that hard in America?
Post by: FINate on November 16, 2017, 09:39:03 AM
Of course there is a limit to how far a high schooler can let their grades dip and expect to attend university or vocational training immediately. They might need to work for a while to save up tuition and then return to school as a non-traditional student taking loads of remedial classes to re-establish themselves academically.

That'll be fun if they were excited about those same classes as a teenager. Didn't like math in high school? Well here, take these 4 classes of math at the university...

Maybe it would have been smarter to get it done right the first time.

I struggled with math as a teenager. Math is difficult and I was immature, did not have the worth ethic required to succeed. I also suspect some people continue to develop abstract thought into adulthood, which helps a great deal in understanding the material. I was a late bloomer so this seemed to be the case for me at least. Scraped by with Cs in algebra in high school, but at University achieved As and Bs in calculus I/II/III,  differential equations, discrete math, stochastics, theory of computation, etc.
Title: Re: Is saving really that hard in America?
Post by: TheGrimSqueaker on November 16, 2017, 09:53:19 AM
Of course there is a limit to how far a high schooler can let their grades dip and expect to attend university or vocational training immediately. They might need to work for a while to save up tuition and then return to school as a non-traditional student taking loads of remedial classes to re-establish themselves academically.

That'll be fun if they were excited about those same classes as a teenager. Didn't like math in high school? Well here, take these 4 classes of math at the university...

Maybe it would have been smarter to get it done right the first time.

Smarter, yes-- but for a person who's not as mature, making the minimum effort to get by "now" can seem like a good idea especially if the option to catch up later is on the table.

One of the local state universities made remedial "100-level" classes mandatory for all incoming freshmen, because so many high school graduates could not write a basic argumentative essay by formulating an intelligent argument and providing supporting evidence. Nor could they calculate compound interest, set up a basic science experiment, or add and subtract fractions.

Making remedial work mandatory was a great boon for the university, which charged the same amount of tuition to all the freshmen regardless of whether they already understood the material. The competent students tried to challenge out of the unnecessary classes, only to be told the fee to challenge the exam was the same as the cost of the tuition for the course, unless they wanted to challenge the course and replace it with another course in order to have enough credit to graduate. Only if they took "Advance Placement" or AP courses would the requirement be waived. So the upshot of all this is that AP became the new matriculation (university prep) program, and the matriculation classes previously required to get into university were dumbed down until anyone with a pulse could get a passing grade.

AP was originally a way for very advanced or gifted high school students to get ahead by taking calculus or advanced science and language classes while still in high school. The curriculum for these classes was far beyond the average high school student and not all schools offered AP. Now, at least one AP or online college course is required for the *ordinary* high school graduate-- even the kids in small group Special Ed programs who can barely tie their own shoes without supervision.

At this point, doing the "smarter" thing and studying hard in mainstream school subjects gets a student diddly-squat. They know they will be forced to repeat the material their first year of college or university and have to pay for the privilege. This is what I think of as a perverse incentive to relax and take it easy in high school.
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 16, 2017, 10:01:20 AM
Good points FiNate and TGS. I don't mind saying I was a late bloomer in many topics both in life and academically.

That is the source of my patience with our kids. Kid #1 following me down the longer "path less taken". Kid #2 = honor roll.
Title: Re: Is saving really that hard in America?
Post by: elaine amj on November 16, 2017, 10:13:52 AM
Good points FiNate and TGS. I don't mind saying I was a late bloomer in many topics both in life and academically.

That is the source of my patience with our kids. Kid #1 following me down the longer "path less taken". Kid #2 = honor roll.

Any tips/suggestions to help? Kid #1 is honor roll 90+% average student that is a self-starter. Kid #2 is flunking English this semester. Last year, he almost flunked Math. Next semester, we have Science. Thankfully, he's OK in his other subjects.

It was a similar story with my brother and I. Unfortunately, at nearly 40, my brother is still struggling a bit with work.
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 16, 2017, 03:20:31 PM
No suggestions at all.

That's the frustrating thing about this. I thought I could reach into my own past and use life experiences and wisdoms to lead my eldest to success but apparently I can't.

DW is pretty frustrated with the whole academic experience b/c she was a good student and that urge to succeed came naturally. I was at least scared of flunking the school year. Our eldest is not.

School system offers alot opportunities for the achievers and endless second and third chances for the non-achievers and I think this has hurt our eldest more than helped.

What I don't get our teen's peace with doing school work twice. Doesn't like doing it the first time but then needs to repeat it in summer school. Why be okay with that?

Teen graduates (or not) this year. I will be SO glad for the teen to be done with high school. 

Teen is otherwise a hard worker, no troubles, smart and mannered but just doesn't like rote classroom learning about typical high school topics like math and English. Plenty of friends of both genders who stay out of trouble too that like to hang out.

Does like learning about non-core topics like government, personal finance (yay!), drama class, trade school classes, things I've taught at home, etc.

Also likes school otherwise - seeing friends and participating.   

A theory I've chewed on a little is by putting all the low achievers in the same classes that they influence each other with their disinterest and lack of long term planning.

Just want to get our teen beyond HS to whatever comes next. At least college would expose our kid to more people that want to be there. 
Title: Re: Is saving really that hard in America?
Post by: WootWoot on November 16, 2017, 03:24:50 PM
I've never made that amount of money in my entire life. Was probably edging up toward it in my last job, but I lost it in the recession and subsequently, 1/3 of my income. If I made $51K certain situations would be much more comfortable and I'd have more peace of mind.


Can anyone define "average worker" in terms of dollars and sense?
Thanks!

Average in terms of dollars? The median income in the US is around $51k.
Average in terms of sense? That's a bit more controversial.....
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 16, 2017, 03:31:20 PM
I forgot to add - I welcome any and all suggestions on rising kids to be successful in school.

One of the things important to DW and I is to teach our kids to be self sufficient. Low grades shrink the number of opportunities available to a kid after school and narrow the path to success somewhat.

I hope both will find something that earns them a reasonable living so they can build savings and investments and if not retire early, then at least have the money to fund their independence as detailed here in the forums so many different ways. FU Money, money to relocate for a job, money to cope with sickness or money to pursue some business opportunity that might arise.
Title: Re: Is saving really that hard in America?
Post by: ixtap on November 16, 2017, 03:35:32 PM
My number one suggestion to getting more kids to be successful at school is to bring back vocational training. Someone who graduates high school knowing how to weld will likely be better off in the long term than someone who goes to college to be a teacher.
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 17, 2017, 08:02:42 AM
I can't argue with that. I can see that in my job as an engineer and am pushing my eldest to go the vocational training route.
Title: Re: Is saving really that hard in America?
Post by: WhiteTrashCash on November 18, 2017, 07:47:03 AM
Americans act like it is impossible to ever retire, but they insist on paying $30,000 for a car and going out for drinks at the bar twice a week, and eating out at restaurants twice a week, and going to the movies every week, and buying lots of plastic baubles that just sit in their garage gathering dust, and paying for cleaning service/lawn service, and paying $100 for hair styling, and paying hundreds of dollars each month for new clothes, and paying $5/cup for pumpkin spice lattes every morning, and paying $16 for pre-made avocado toast a couple times a week, etc. etc. etc.

Americans are spoiled rotten for the most part. I grew up in actual real poverty, so when I came down from Hillbilly Mountain and saw how incredibly wasteful flatlanders are, it simply blew my mind. Most Americans live in fabulous wealth compared to a lot of other places in this world and we are ungrateful for what we have.
Title: Re: Is saving really that hard in America?
Post by: farfromfire on November 18, 2017, 10:47:44 AM
I've never made that amount of money in my entire life. Was probably edging up toward it in my last job, but I lost it in the recession and subsequently, 1/3 of my income. If I made $51K certain situations would be much more comfortable and I'd have more peace of mind.


Can anyone define "average worker" in terms of dollars and sense?
Thanks!
It's the median household income, which is an important distinction (and has risen by a few thousand).
Average in terms of dollars? The median income in the US is around $51k.
Average in terms of sense? That's a bit more controversial.....
Title: Re: Is saving really that hard in America?
Post by: Indexer on November 18, 2017, 10:08:45 PM
Americans are spoiled rotten for the most part. I grew up in actual real poverty, so when I came down from Hillbilly Mountain and saw how incredibly wasteful flatlanders are, it simply blew my mind. Most Americans live in fabulous wealth compared to a lot of other places in this world and we are ungrateful for what we have.

+1
Title: Re: Is saving really that hard in America?
Post by: Hargrove on November 18, 2017, 10:58:21 PM
Americans act like it is impossible to ever retire, but they insist on paying $30,000 for a car and going out for drinks at the bar twice a week, and eating out at restaurants twice a week, and going to the movies every week, and buying lots of plastic baubles that just sit in their garage gathering dust, and paying for cleaning service/lawn service, and paying $100 for hair styling, and paying hundreds of dollars each month for new clothes, and paying $5/cup for pumpkin spice lattes every morning, and paying $16 for pre-made avocado toast a couple times a week, etc. etc. etc.

Americans are spoiled rotten for the most part. I grew up in actual real poverty, so when I came down from Hillbilly Mountain and saw how incredibly wasteful flatlanders are, it simply blew my mind. Most Americans live in fabulous wealth compared to a lot of other places in this world and we are ungrateful for what we have.

The insanity of this behavior is real, and I don't want to dispute that. I would like to offer, though, that a strong determinant of how you behave is simply how other people behave, and react to your behavior. I'm reminded of that experiment where subjects matched bars of obviously different length because others said they were the same.

It simply doesn't occur to many people that their lives don't have to be how they are, and can be pretty easily changed. The sad fact of being spoiled is that you don't know you're spoiled without working really hard to acquire perspective or else have it hit you in the face.
Title: Re: Is saving really that hard in America?
Post by: BTDretire on November 19, 2017, 07:00:26 AM
I think it is hard for most people. Incomes are so artificially under-inflated now. Unless if you want to live like a total pauper- drive an old beaten up car from the 90s and carry around a crusty flip phone-
Hey, that's me! Well one of my cars is into the two thousands. Although neither of my 90s vehicles are beaten up. And my flip phone works great.
Quote
Saving, in general, is for suckers.
Ya, but now that I have 40x my spend rate, things are pretty nice :-)
ie, maybe the suckers are those that fall for the spend, spend, spend mentality and don't save.
Quote
You sacrifice your lifestyle, live like a pauper, embarrass your children in most cases by making them the target of jokes and bullies in school all for some selfish goal of "retirement".
Oh, the horror! Those poor babies.
Quote
There is no retirement, there is only making more money.
There is retirement, and I am making money, WITH my money!



Title: Re: Is saving really that hard in America?
Post by: WhiteTrashCash on November 19, 2017, 07:12:07 AM
Americans act like it is impossible to ever retire, but they insist on paying $30,000 for a car and going out for drinks at the bar twice a week, and eating out at restaurants twice a week, and going to the movies every week, and buying lots of plastic baubles that just sit in their garage gathering dust, and paying for cleaning service/lawn service, and paying $100 for hair styling, and paying hundreds of dollars each month for new clothes, and paying $5/cup for pumpkin spice lattes every morning, and paying $16 for pre-made avocado toast a couple times a week, etc. etc. etc.

Americans are spoiled rotten for the most part. I grew up in actual real poverty, so when I came down from Hillbilly Mountain and saw how incredibly wasteful flatlanders are, it simply blew my mind. Most Americans live in fabulous wealth compared to a lot of other places in this world and we are ungrateful for what we have.

The insanity of this behavior is real, and I don't want to dispute that. I would like to offer, though, that a strong determinant of how you behave is simply how other people behave, and react to your behavior. I'm reminded of that experiment where subjects matched bars of obviously different length because others said they were the same.

It simply doesn't occur to many people that their lives don't have to be how they are, and can be pretty easily changed. The sad fact of being spoiled is that you don't know you're spoiled without working really hard to acquire perspective or else have it hit you in the face.

In my own personal experience, I found that the pressure to spend, spend, spend dropped considerably when I nearly completely eliminated advertising from my life. When that pressure was gone, I felt much better about myself and I no longer felt the compulsion to buy things in a vain attempt to bolster my self-esteem. Advertising is insidious and it causes a lot of the misery that people feel in their daily lives.

Once that advertising pressure is gone, it's much easier to reevaluate one's spending and reprioritize one's personal finances. I can't believe how much I have saved in just a little over two years. And this entire time, I possessed the ability to do this without even realizing it.

That's what needs to happen with the American public. If they can change the mindset they are manipulated into by advertising, they can recognize that their student loans are actually something they can pay off and that retirement isn't a pipe dream.
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 19, 2017, 07:25:33 AM
Cutting the cord was the big anti-advertising help for us although now some of the free streaming news sites are getting pretty silly with their ads.

Here is a 30 sec clip about world news, now watch 5 30 sec ads before we continue....
Title: Re: Is saving really that hard in America?
Post by: WhiteTrashCash on November 19, 2017, 07:54:36 AM
Cutting the cord was the big anti-advertising help for us although now some of the free streaming news sites are getting pretty silly with their ads.

Here is a 30 sec clip about world news, now watch 5 30 sec ads before we continue....

I've found that Ad Block plug-ins in my browser help a lot with that kind of stuff. I also found a plug-in that blocks Taboola -- those fake celebrity news articles that are really advertisements that are placed at the bottom of real articles.
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 19, 2017, 02:28:48 PM
Oh yes, I have those in my browser but if I'm watching Newsy via Roku we're stuck. I don't watch Newsy much anymore as a result.
Title: Re: Is saving really that hard in America?
Post by: BTDretire on November 19, 2017, 04:59:17 PM


Can anyone define "average worker" in terms of dollars and sense?
Thanks!
Quote
Average in terms of dollars? The median income in the US is around $51k.
Average in terms of sense? That's a bit more controversial.....
I've never made that amount of money in my entire life. Was probably edging up toward it in my last job, but I lost it in the recession and subsequently, 1/3 of my income. If I made $51K certain situations would be much more comfortable and I'd have more peace of mind
Note: that median, is household, not individual.
"Between 2015 and 2016, US median household income rose 3.2% from $57,230 to $59,039, according to a new report released by the U.S. Census Bureau on Tuesday."
Title: Re: Is saving really that hard in America?
Post by: WhiteTrashCash on November 19, 2017, 06:20:15 PM
Oh yes, I have those in my browser but if I'm watching Newsy via Roku we're stuck. I don't watch Newsy much anymore as a result.

I had an early version of a Roku, but never upgraded because I found it easier to just hook up my laptop to the TV with a HDMI cable and sit on the couch with a remote keyboard. Makes it easier to use every streaming option and use all our ad-blocking stuff. I haven't seen an advertisement in a really long time.
Title: Re: Is saving really that hard in America?
Post by: Just Joe on November 20, 2017, 01:27:47 PM
Yeah, i have an old desktop computer that I use the same way when I'm motivated to do so. Runs Linux so no viruses, no performance hits with updates, etc. The computer itself was free from the WinVista era.
Title: Re: Is saving really that hard in America?
Post by: WootWoot on November 21, 2017, 08:16:26 AM
Since this is at many levels of quotes, I'm not sure what exactly I'm replying to, BUT I should say that our household income was never that high, either.



Can anyone define "average worker" in terms of dollars and sense?
Thanks!
Quote
Average in terms of dollars? The median income in the US is around $51k.
Average in terms of sense? That's a bit more controversial.....
I've never made that amount of money in my entire life. Was probably edging up toward it in my last job, but I lost it in the recession and subsequently, 1/3 of my income. If I made $51K certain situations would be much more comfortable and I'd have more peace of mind
Note: that median, is household, not individual.
"Between 2015 and 2016, US median household income rose 3.2% from $57,230 to $59,039, according to a new report released by the U.S. Census Bureau on Tuesday."
Title: Re: Is saving really that hard in America?
Post by: CNM on November 21, 2017, 08:30:11 AM
My suspicion is that people who are posting comments to the article expressing the "impossibility" of saving 1x at 30 and 3x at 40 are in that age group.  The biggest hurdle to saving when you're 30 is repayment of student loans.  That sucks up a major chunk of money that would otherwise go to saving, investing, or consuming. 

I mean, my spouse and I are young Gen X/old Millennials so we weren't hit with nearly the amount of loans people in their 20s/early 30s are now, and we *still* paid almost $100,000. That's a lot of dough! 

I guess my point in commenting is that it can take people a longer time to get to saving because of student loan repayment and seeing the advice in this article would, justifiably, piss people off as out of touch.
Title: Re: Is saving really that hard in America?
Post by: TheGrimSqueaker on November 21, 2017, 09:01:00 AM
My suspicion is that people who are posting comments to the article expressing the "impossibility" of saving 1x at 30 and 3x at 40 are in that age group.  The biggest hurdle to saving when you're 30 is repayment of student loans.  That sucks up a major chunk of money that would otherwise go to saving, investing, or consuming. 

I mean, my spouse and I are young Gen X/old Millennials so we weren't hit with nearly the amount of loans people in their 20s/early 30s are now, and we *still* paid almost $100,000. That's a lot of dough! 

I guess my point in commenting is that it can take people a longer time to get to saving because of student loan repayment and seeing the advice in this article would, justifiably, piss people off as out of touch.

Except for the very few union-type jobs where there's a relationship between pay and seniority, people don't get to their "career" earning levels as quickly or predictably as they used to. In a blue-collar job back in the 1970s and 1980s, a person's per-hour earning rate would start out low during a training phase, increase in a gradual stair-step way as they moved through an apprenticeship, and then level out at journeyman (roughly the same age as a 4-year degree graduate). So the income you'd have at, say, age 25 wouldn't be that lower than at 30 or any subsequent year. For a master certificate there'd be another bump up between age 25 and 30. But keep in mind that this is accompanied by near-zero student loan debt although the cost of tools is roughly on par. Also, the apprentice has been earning the whole time.

Now, how many people are at a "career" level of income straight out of college? It seems to me it's pretty few. The hours aren't 9-to-5 anymore since the laws about overtime don't apply. Most of us don't get even an entry-level income until our mid-20s and have to scrape together part-time jobs at minimum wage or close to it. Then, in the professions the entry-level income is generally only about half of what you can bring in after you've been there a while. Career-level income tends to hit at around age 30. Having a year's income saved up by then would mean having saved roughly 3x your starting pay, or 100% of your gross for the first three years. Taxes alone make that extremely difficult. It's mathematically possible if your savings rate is 50% to 60% of your take-home pay and you don't have any accidents, illnesses, pregnancies, divorces, bad luck, downsizings, transfers, or job losses. That's not the normal human experience. But that means a standard of living substantially lower than the college dorm standard.

There are people on this board who have done it. I'm not one of them. I'd venture to say it's pretty rare.

The advice that says to have saved a year's income by that time fits the 1980's blue collar model but not the modern white-collar model. Only with aggressive (and lucky/successful) investments can the dollars saved reach that level. That investment angle, and the fact the individula investing doesn't control the markets, is one of the things the authors don't go into.
Title: Re: Is saving really that hard in America?
Post by: StarBright on November 21, 2017, 10:04:59 AM
My suspicion is that people who are posting comments to the article expressing the "impossibility" of saving 1x at 30 and 3x at 40 are in that age group.  The biggest hurdle to saving when you're 30 is repayment of student loans.  That sucks up a major chunk of money that would otherwise go to saving, investing, or consuming. 

I mean, my spouse and I are young Gen X/old Millennials so we weren't hit with nearly the amount of loans people in their 20s/early 30s are now, and we *still* paid almost $100,000. That's a lot of dough! 

I guess my point in commenting is that it can take people a longer time to get to saving because of student loan repayment and seeing the advice in this article would, justifiably, piss people off as out of touch.

Except for the very few union-type jobs where there's a relationship between pay and seniority, people don't get to their "career" earning levels as quickly or predictably as they used to. In a blue-collar job back in the 1970s and 1980s, a person's per-hour earning rate would start out low during a training phase, increase in a gradual stair-step way as they moved through an apprenticeship, and then level out at journeyman (roughly the same age as a 4-year degree graduate). So the income you'd have at, say, age 25 wouldn't be that lower than at 30 or any subsequent year. For a master certificate there'd be another bump up between age 25 and 30. But keep in mind that this is accompanied by near-zero student loan debt although the cost of tools is roughly on par. Also, the apprentice has been earning the whole time.

Now, how many people are at a "career" level of income straight out of college? It seems to me it's pretty few. The hours aren't 9-to-5 anymore since the laws about overtime don't apply. Most of us don't get even an entry-level income until our mid-20s and have to scrape together part-time jobs at minimum wage or close to it. Then, in the professions the entry-level income is generally only about half of what you can bring in after you've been there a while. Career-level income tends to hit at around age 30. Having a year's income saved up by then would mean having saved roughly 3x your starting pay, or 100% of your gross for the first three years. Taxes alone make that extremely difficult. It's mathematically possible if your savings rate is 50% to 60% of your take-home pay and you don't have any accidents, illnesses, pregnancies, divorces, bad luck, downsizings, transfers, or job losses. That's not the normal human experience. But that means a standard of living substantially lower than the college dorm standard.

There are people on this board who have done it. I'm not one of them. I'd venture to say it's pretty rare.

The advice that says to have saved a year's income by that time fits the 1980's blue collar model but not the modern white-collar model. Only with aggressive (and lucky/successful) investments can the dollars saved reach that level. That investment angle, and the fact the individula investing doesn't control the markets, is one of the things the authors don't go into.

These are both great comments and the part that I've bolded describes our household quite closely.  I made a little over 20k in a professional position out of grad school. My pay close to doubled the year I turned 30 and then I received another large bump when I was around 34. I almost have 2x my salary saved at age 36 but I got another bump this year that means I won't hit 2x until I'm 37. I likely will not hit 3x by 40.

The only way we've been able to accomplish that is having an almost 50% savings rate for the last couple of years. And while the actual structure of our home is much nicer than where we lived in college, most of our furniture, clothing, kitchen stuff, etc. all date to our grad school years.

Am I generally thrilled with our progress? Yes! Do I expect everyone to do it? Of course not! It is REALLY hard and often not that enjoyable.
Title: Re: Is saving really that hard in America?
Post by: FINate on November 21, 2017, 10:55:26 AM
My suspicion is that people who are posting comments to the article expressing the "impossibility" of saving 1x at 30 and 3x at 40 are in that age group.  The biggest hurdle to saving when you're 30 is repayment of student loans.  That sucks up a major chunk of money that would otherwise go to saving, investing, or consuming. 

I mean, my spouse and I are young Gen X/old Millennials so we weren't hit with nearly the amount of loans people in their 20s/early 30s are now, and we *still* paid almost $100,000. That's a lot of dough! 

I guess my point in commenting is that it can take people a longer time to get to saving because of student loan repayment and seeing the advice in this article would, justifiably, piss people off as out of touch.

Except for the very few union-type jobs where there's a relationship between pay and seniority, people don't get to their "career" earning levels as quickly or predictably as they used to. In a blue-collar job back in the 1970s and 1980s, a person's per-hour earning rate would start out low during a training phase, increase in a gradual stair-step way as they moved through an apprenticeship, and then level out at journeyman (roughly the same age as a 4-year degree graduate). So the income you'd have at, say, age 25 wouldn't be that lower than at 30 or any subsequent year. For a master certificate there'd be another bump up between age 25 and 30. But keep in mind that this is accompanied by near-zero student loan debt although the cost of tools is roughly on par. Also, the apprentice has been earning the whole time.

Now, how many people are at a "career" level of income straight out of college? It seems to me it's pretty few. The hours aren't 9-to-5 anymore since the laws about overtime don't apply. Most of us don't get even an entry-level income until our mid-20s and have to scrape together part-time jobs at minimum wage or close to it. Then, in the professions the entry-level income is generally only about half of what you can bring in after you've been there a while. Career-level income tends to hit at around age 30. Having a year's income saved up by then would mean having saved roughly 3x your starting pay, or 100% of your gross for the first three years. Taxes alone make that extremely difficult. It's mathematically possible if your savings rate is 50% to 60% of your take-home pay and you don't have any accidents, illnesses, pregnancies, divorces, bad luck, downsizings, transfers, or job losses. That's not the normal human experience. But that means a standard of living substantially lower than the college dorm standard.

There are people on this board who have done it. I'm not one of them. I'd venture to say it's pretty rare.

The advice that says to have saved a year's income by that time fits the 1980's blue collar model but not the modern white-collar model. Only with aggressive (and lucky/successful) investments can the dollars saved reach that level. That investment angle, and the fact the individula investing doesn't control the markets, is one of the things the authors don't go into.

I would venture a guess that STEM majors have a different career trajectory from, say, lit majors. Nothing against lit, but there's relatively little demand compared to overall supply.

But assuming the comments from TGS and CNM are generally applicable, isn't this just another way of saying college doesn't always make sense financially, that sometimes the ROI isn't there? There's a huge skills gap for welders, machinists, and other tradespeople. The cost to obtain these skills is much lower, and sometimes even subsidized by employers/industries. As an added bonus, jobs are often in LCOL areas.

Living in a HCOL area with a low salary while paying off large student loans is not a recipe for financial success, let alone ER. I realize this is not useful for those already in such a predicament, and I really do feel bad for folks struggling in this way. But shouldn't this be more motivation to get the message to high schoolers that college isn't necessarily the best option? That they need to be more skeptical of the "common sense" advice to get a degree, any degree. They need some idea of what they will major in, what they can reasonably expect to earn after graduation, and how long it takes for the ROI to start paying off. In many cases it makes more sense to do vocational training, something itself that needs to stop being stigmatized by parents and teachers.
Title: Re: Is saving really that hard in America?
Post by: StarBright on November 21, 2017, 11:10:19 AM

I would venture a guess that STEM majors have a different career trajectory from, say, lit majors. Nothing against lit, but there's relatively little demand compared to overall supply.

But assuming the comments from TGS and CNM are generally applicable, isn't this just another way of saying college doesn't always make sense financially, that sometimes the ROI isn't there? There's a huge skills gap for welders, machinists, and other tradespeople. The cost to obtain these skills is much lower, and sometimes even subsidized by employers/industries. As an added bonus, jobs are often in LCOL areas.

Living in a HCOL area with a low salary while paying off large student loans is not a recipe for financial success, let alone ER. I realize this is not useful for those already in such a predicament, and I really do feel bad for folks struggling in this way. But shouldn't this be more motivation to get the message to high schoolers that college isn't necessarily the best option? That they need to be more skeptical of the "common sense" advice to get a degree, any degree. They need some idea of what they will major in, what they can reasonably expect to earn after graduation, and how long it takes for the ROI to start paying off. In many cases it makes more sense to do vocational training, something itself that needs to stop being stigmatized by parents and teachers.

I often hear people on this site referring to the bolded info regarding trades and I'm starting to wonder if that is backed up by actual numbers or just "common knowledge." I have several machinists and welders in my extended family and they seem to have a hard time finding steady employment. It seems very cyclical unlike say accounting or nursing or teaching.

Title: Re: Is saving really that hard in America?
Post by: Goldielocks on November 21, 2017, 12:12:33 PM
My suspicion is that people who are posting comments to the article expressing the "impossibility" of saving 1x at 30 and 3x at 40 are in that age group.  The biggest hurdle to saving when you're 30 is repayment of student loans.  That sucks up a major chunk of money that would otherwise go to saving, investing, or consuming. 

I mean, my spouse and I are young Gen X/old Millennials so we weren't hit with nearly the amount of loans people in their 20s/early 30s are now, and we *still* paid almost $100,000. That's a lot of dough! 

I guess my point in commenting is that it can take people a longer time to get to saving because of student loan repayment and seeing the advice in this article would, justifiably, piss people off as out of touch.

Ah,  but isn't that the beauty of it too?

If young person had set up a plan before starting university, to save 1x salary by the time you were 30...  OR,  to save 3x by ag 40...

Well, I think more people looking ahead would make deliberate choices about their student loan debt, then live like a mouse for a few more years after graduating with the first nice job, until that 1x salary was saved.

I like this thread because it shows the new paradigm -- instead of paying off your house mortgage early, fund your basic retirement ASAP and then leave it to grow, which will reap far more benefits to you in future.
------------------------------------------------------------

Example of someone I know in real life:

Of course it is "impossible" to save 1x salary by 30 when you are 28, about to just pay off your student loans in the next year, starting from zero, etc.   

It is also impossible when you are 29 and have spent the last  6 years since graduating at age 23:  taking a gap year or looking for employment; getting a first career job that you hate so you spend your money as you go with 10% savings and paying off small student loans; quit that job after 4 years, sell everything, and spend 4 months at an indian yogi until your money runs out, redefining what you want in life, and are just now starting your next self-employment freelance career, with a loan from your parents.

So many people think it is normal to have $0 (No savings, but no student loans) at age 30, that they plan their lives that way.  If they have savings at age 28, they spend it*.  What if we (as a society) redefine that?   Make it like a "Pay off your mortgage" type of goal?


*Spend it -- often this is "hidden" by buying a fancier property than they need and gutting their savings back to zero for age 30 and beyond, because the mortgage payments are also much higher than they need.  Choosing to be "house poor" instead of "retirement fund rich"
Title: Re: Is saving really that hard in America?
Post by: TheGrimSqueaker on November 21, 2017, 01:03:59 PM
I often hear people on this site referring to the bolded info regarding trades and I'm starting to wonder if that is backed up by actual numbers or just "common knowledge." I have several machinists and welders in my extended family and they seem to have a hard time finding steady employment. It seems very cyclical unlike say accounting or nursing or teaching.

The economy has changed a lot, trades-wise, since the 1980's too. Because skilled trades have been gutted due to the "kollidge fur ev'rywun" trend, the overseas migration of fabrication work overseas, and the planned obsolescence concept that makes people throw things out rather than maintain or repair them, trades aren't what they used to be either. A person who does field work (pipe, welding, rig, heavy mechanic) can make good money but they have to move around and follow the work.

Machinist work is rough. I've got a relative who's a machinist, but he's got no ticket (at age 40, that's a huge problem). There are higher-paying jobs available, IF you have a journeyman's ticket, but in Alberta at least you have to have an employer sponsor you to an apprenticeship program. That of course costs money! So employers choose, instead, to find someone with no credentials and train him to do the basic work. An apprenticeship program isn't available because they don't have a master-certified person to supervise and train. So the trainee, after a few years, won't have the depth of knowledge to go toe to toe with a real journeyman, but they can complete the work the employer needs to have done. I see that happening in HVAC and sheet metal too. The employer's incentive is to hire the least competent person possible. A few apprentice slots may be open, but they go to the "best and the brightest" (that is to say, the boss's son). So there continues to be a shortage of master-qualified tradespeople to supervise, therefore there continues to be a shortage of apprentice starts. This SNAFU won't be corrected until the trade schools start being allowed to admit apprentices who aren't sponsored by an employer and who are self-funding. The risk with that, of course, is that some of the graduates may lack practical skills.

A few people are getting ahead through government or union grants that basically pay the apprentice's wage while he or she does the hands-on portion of the training, but there aren't anywhere near enough of these to go around and the apprentice tends to be put to work doing a bunch of crap work nobody else wants: they're used as free unskilled labor instead of being trained in their craft.

Overall, it seems to me that the trades that are getting it right tend to be in the building domain. Paddedhat may be in a position to weigh in on this as well. The apprentices I've seen so far have been electricians and plumbers, and they are in fact being supervised and their work is being checked. But mechanics is a free-for-all, and anyone can open a mechanic shop with zero formal credentials and still get customers.
Title: Re: Is saving really that hard in America?
Post by: CNM on November 21, 2017, 03:25:33 PM
  <snip>
But assuming the comments from TGS and CNM are generally applicable, isn't this just another way of saying college doesn't always make sense financially, that sometimes the ROI isn't there?

...

Responding to just this issue, for our family (myself and spouse) going to college/grad school was 100% the correct decision.  The ROI has been excellent.  However, the ROI did not happen immediately because you have to service the loan within a short time after graduation.

And, of course, it is not impossible to have that amount of money saved at a young age. Plenty of people on here, myself included, have met those benchmarks.  My only point is that student loan servicing tends to be left out of the conversation about why The Youth are so broke all the time.
Title: Re: Is saving really that hard in America?
Post by: FINate on November 21, 2017, 08:59:15 PM

I would venture a guess that STEM majors have a different career trajectory from, say, lit majors. Nothing against lit, but there's relatively little demand compared to overall supply.

But assuming the comments from TGS and CNM are generally applicable, isn't this just another way of saying college doesn't always make sense financially, that sometimes the ROI isn't there? There's a huge skills gap for welders, machinists, and other tradespeople. The cost to obtain these skills is much lower, and sometimes even subsidized by employers/industries. As an added bonus, jobs are often in LCOL areas.

Living in a HCOL area with a low salary while paying off large student loans is not a recipe for financial success, let alone ER. I realize this is not useful for those already in such a predicament, and I really do feel bad for folks struggling in this way. But shouldn't this be more motivation to get the message to high schoolers that college isn't necessarily the best option? That they need to be more skeptical of the "common sense" advice to get a degree, any degree. They need some idea of what they will major in, what they can reasonably expect to earn after graduation, and how long it takes for the ROI to start paying off. In many cases it makes more sense to do vocational training, something itself that needs to stop being stigmatized by parents and teachers.

I often hear people on this site referring to the bolded info regarding trades and I'm starting to wonder if that is backed up by actual numbers or just "common knowledge." I have several machinists and welders in my extended family and they seem to have a hard time finding steady employment. It seems very cyclical unlike say accounting or nursing or teaching.

Every industry is cyclical. Before FIRE I navigated two tech/economic cycles. Even teachers in California go through difficult periods of layoffs. Most tech workers know that the industry is often feast or famine.  And I know of a number of folks with STEM degrees, in the SF Bay Area, who have a difficult time getting hired and have experienced extended periods of unemployment. I also know plumbers and electricians and other tradespeople who are much better off than many of their "better" educated peers.  I also know of a lot of folks with degrees in the humanities or art, with huge student loan debt, working as bartenders and slinging coffee. I even know a guy who skipped college and went to bartending school (had no idea such a thing existed) and he's killing it in the bar/restaurant scene. My point is not that college is bad, it's that college isn't the best path for everyone.

Some statistical evidence: Go to https://www.payscale.com/college-roi/major/psychology (just to pick on something other than humanities - but this is true of other majors to varying degrees). Click "See Full List" then scroll to the bottom. Down in this area you'll find School-Major combos that have negative 20 year ROI - people in these programs would have been better off skipping college altogether and going straight into the workforce. This is an aggregate statistic, so some people came out ahead and did well, but on average poeple came out negative.

For those academically inclined who like to read, write, study, and such, college is a no brainer as long as debt levels are reasonable and a sensible major is selected. But there are large segments of the population that don't fit this description. Folks who'd rather work with their hands, learn hands on skills and trades. Unfortunately, lots of these end up in college with degrees that don't really help, and with student loans they can't repay.
Title: Re: Is saving really that hard in America?
Post by: Imustacheyouaquestion on November 28, 2017, 02:52:40 PM
Am I generally thrilled with our progress? Yes! Do I expect everyone to do it? Of course not! It is REALLY hard and often not that enjoyable.

This resonates with me. I didn't have "career-level" income until I finished graduate school at 26. My income doubled by 30. I also spent years 27-29 working a second job (12 hour shifts on Saturdays, sometimes 6 hours on Friday night or Sunday too) to save for a house down payment. We still have $35k in student loan debt, but the interest rates are low enough that I would rather keep investing the difference for now.

I had more than 1x income saved at 30 by some combination of luck and hard work. Our spending probably looks very cushy to people in our neighborhood (we make 3x the median household income in our area), and our 50% savings rate would probably sound impossibly high to our DINK friends with similar incomes in major cities. 
Title: Re: Is saving really that hard in America?
Post by: dougules on November 30, 2017, 10:52:55 AM
I don't think saving is hard in and of itself, but there are a lot of things that make it swimming upstream. 

We are embedded in a culture of high spending.
People are barraged with ads for frivolous stuff, and those ads wouldn't be there if they didn't work. 
People don't realize the full cost of driving, and most of the US is built with only car travel in mind. 
The US is not set up to build exercise into daily life, and that's huge with high medical costs.
Stress drives a lot of retail therapy. 

There are several other soft items like this that don't exactly prevent people from saving, but make it take a concerted effort to break with what's going on around them. 
Title: Re: Is saving really that hard in America?
Post by: AugustBurnsRed1 on November 30, 2017, 11:47:04 AM

I would venture a guess that STEM majors have a different career trajectory from, say, lit majors. Nothing against lit, but there's relatively little demand compared to overall supply.

But assuming the comments from TGS and CNM are generally applicable, isn't this just another way of saying college doesn't always make sense financially, that sometimes the ROI isn't there? There's a huge skills gap for welders, machinists, and other tradespeople. The cost to obtain these skills is much lower, and sometimes even subsidized by employers/industries. As an added bonus, jobs are often in LCOL areas.

Living in a HCOL area with a low salary while paying off large student loans is not a recipe for financial success, let alone ER. I realize this is not useful for those already in such a predicament, and I really do feel bad for folks struggling in this way. But shouldn't this be more motivation to get the message to high schoolers that college isn't necessarily the best option? That they need to be more skeptical of the "common sense" advice to get a degree, any degree. They need some idea of what they will major in, what they can reasonably expect to earn after graduation, and how long it takes for the ROI to start paying off. In many cases it makes more sense to do vocational training, something itself that needs to stop being stigmatized by parents and teachers.

I often hear people on this site referring to the bolded info regarding trades and I'm starting to wonder if that is backed up by actual numbers or just "common knowledge." I have several machinists and welders in my extended family and they seem to have a hard time finding steady employment. It seems very cyclical unlike say accounting or nursing or teaching.

It is only cyclical if they want it to be; part of that will come down to finding a steady local job (less pay typically) or traveling (A lot more money). For instance, in refineries, we have turnarounds/shutdowns and the plant is down for several weeks up to several months. We will work 7 days a week 12 hours a day and then move onto the next job. If guys schedule it right, they can do several TAs a year and be off for several months and make just as much as if they worked the entire year or far more. This goes for welders, pipe fitters, electricians, inspectors, QA/QC, NDE technicians, etc.