Author Topic: How the Other Half Saves  (Read 5544 times)

Taylor

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How the Other Half Saves
« on: March 21, 2012, 02:11:04 PM »
Great article on how families in third-world countries manage to save significantly more of their income than Americans do.

http://www.theatlantic.com/business/archive/2012/03/how-the-other-half-saves-financial-planning-on-2-a-day/254761/

"How do families in poverty save?

Creatively, collectively, and conservatively"


Hey MMM, this might make a good blog post :)

Adventine

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Re: How the Other Half Saves
« Reply #1 on: March 22, 2012, 08:00:20 AM »
I've lived in a Third World country all my life, though I was fortunate enough to have been born into a middle-class family. The success stories in this article are inspiring, although I have witnessed too many horror stories to feel good about this news. For every creative, hardworking, frugal poor person, there is another person out there who is simply crushed by the burden of living on so little.

I like browsing local and international PF sites precisely to avoid failling into the same poverty trap, but sometimes I wonder if Mustachians in the First World (pretty much everyone in the First World) realize just how good they have it.

I remember a conversation I had a couple of years back with a French taxi driver who took me from Charles de Gaulle airport to central Paris. He drove a BMW, was stylishly dressed, used GPS to find my hotel, and complained to me about how incredibly hard it was to make a living driving a taxi in one of the most beautiful cities in the world. He charged me 65 euros (about 85 USD) for a trip that was about 30 kilometers long.

Compare that to taxi drivers in the Philippines, where the most upscale taxis are Japanese or Korean cars, and where you only have to pay 350 pesos (about 8 USD) for the same 30 kilometer distance. (Yes, I looked up the distance on Google Maps. No, Filipino taxi drivers don't get any kind of fuel subsidies). I have never seen a local taxi with GPS, either.

So yeah, vastly different worlds here. Vastly different lifestyles.
« Last Edit: March 22, 2012, 08:03:46 AM by Adventine »

velocistar237

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Re: How the Other Half Saves
« Reply #2 on: March 22, 2012, 06:41:54 PM »
So yeah, vastly different worlds here. Vastly different lifestyles.

Last week, I was curious about income levels worldwide, so I looked it up. The Global Rich List puts the global median income at about $850, but that's not adjusted for purchasing power. It turns out the adjusted amount isn't much different at $1225 (2005 USD). Early retirement (at least the good kind) just isn't possible.

An immigrant in the U.S. is in the sweet spot-- extremely frugal (and culturally expected to be so), and earning an outrageous amount of money compared to incomes back in their home country.

sol

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Re: How the Other Half Saves
« Reply #3 on: March 22, 2012, 08:21:57 PM »
One of the reasons why I have felt that international travel has been so valuable to me is that it highlights our relative position in society.  Even the worse off among us live like kings compared to most of the world.

Are you upset that you can't afford to pay your utility bill and get your old beater car running in the same month?  Do you walk past child lepers begging for food on your way to carry your daily ration of giardia-infested water back to your mud hut?

Americans have access to clean running water, and heat, and food in astounding abundance available in every neighborhood.  Neighbors very rarely rape neighbors as a tool of political oppression, and I haven't lost anybody in my family to a machete hacking in, well, ever. 

So the next time you worry about having enough to save for your comfortable retirement, please remember that most of humanity doesn't expect to live that long.  To them, hearing you complain about having to cut your cable bill is like us listening to someone complain that his butler army has had to cut down to twice weekly waxings of the golden crapper in his flying invisible palace.  It just baffles the mind that such a thing would be seen as a hardship.

arebelspy

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Re: How the Other Half Saves
« Reply #4 on: March 22, 2012, 09:10:09 PM »

Last week, I was curious about income levels worldwide, so I looked it up.

Yup, in that vein, we are all (on these forums) basically the 1%. 

This is a good article about that, "You Are Already the 1 Percent"

http://www.iam1percent.com/you-are-already-the-1-percent/

If you're making above 34K USD annually, you're in the 1% of income earners globally.  Crazy.

Back on topic, OP's article was interesting, but brief.  Basically an ad for the book.  I'm curious about the book now though.  Wondering if it it has some good stories/anecdotes or tips or anything like that.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
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MrSaturday

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Re: How the Other Half Saves
« Reply #5 on: March 23, 2012, 08:10:45 AM »
I wouldn't call that a good article.  They left out the part where that $34K is after taxes, which is pretty clearly stated in all the other articles about the subject as far as I've seen.  They also fail to acknowledge the source, which would be the book The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality.

But it is pretty sobering to find out that even the frugal lifestyle I'm enjoying is practically decadent compared to the rest of the world.

Here's a better article about the world 1%.  It's interesting to see that we've got it really good even compared to other developed countries.

velocistar237

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Re: How the Other Half Saves
« Reply #6 on: March 23, 2012, 09:51:04 AM »
Yup, in that vein, we are all (on these forums) basically the 1%.

The 1% concept is what got me curious, too. Anyone in the US who isn't in the 1% is in the top 5% by income. Being in the same neighborhood as the 1%ers has its benefits, too. Also, income is not the only way to be rich. (In no way do I mean to undermine those in dire straits within the US.)

Here's a better article about the world 1%.  It's interesting to see that we've got it really good even compared to other developed countries.

That article is where I first saw the $1225 figure, for which I dug up the source and posted a Google Books link above (here it is again: The Haves and the Have Nots, page 172). From the article,

Quote
It only takes $34,000 a year, after taxes, to be among the richest 1% in the world. That's for each person living under the same roof, including children. (So a family of four, for example, needs to make $136,000.)

So, I'm not in the 1%, since I have a family of 4, and we make less than $136K, after tax? I missed that one. I had no idea that having children would cost me so much in terms of global income ranking.

menorman

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Re: How the Other Half Saves
« Reply #7 on: March 28, 2012, 08:28:38 PM »
One of the reasons why I have felt that international travel has been so valuable to me is that it highlights our relative position in society.  Even the worse off among us live like kings compared to most of the world.

Are you upset that you can't afford to pay your utility bill and get your old beater car running in the same month?  Do you walk past child lepers begging for food on your way to carry your daily ration of giardia-infested water back to your mud hut?

Americans have access to clean running water, and heat, and food in astounding abundance available in every neighborhood.  Neighbors very rarely rape neighbors as a tool of political oppression, and I haven't lost anybody in my family to a machete hacking in, well, ever. 

So the next time you worry about having enough to save for your comfortable retirement, please remember that most of humanity doesn't expect to live that long.  To them, hearing you complain about having to cut your cable bill is like us listening to someone complain that his butler army has had to cut down to twice weekly waxings of the golden crapper in his flying invisible palace.  It just baffles the mind that such a thing would be seen as a hardship.
Yep, I know exactly what you mean. Unfortunately, this country is blindly ignorant when it comes to financial matters, even among the money managers themselves. Most Americans have the ability to have their present income supplemented handsomely (and eventually replaced if so desired) by their investments in addition to saving for their retirement, but that requires small subtle changes which many would barely consider making. I've heard a lot of talk lately about how the American dream is "dying". Then I read The Millionaire Next Door and I realized the dream is still very much alive and well. The popularized American dream is to get a good job and get on the treadmill with a "starter home", a new car, and be sure to put something into the 401k. In actuality, I believe the true American dream is that just about anybody can come to this country (although native citizens aren't excluded either) and with a bit of hard work and foresight, make it to the same place as MMM: not having to work for the money required to live the level of life one wants to live. Everyone can achieve that, but only a few do and society calls them "investors" and likes to blame them for $4 gas.