Author Topic: Pay Yourself First is a Selfish Capitalist Ideology  (Read 13623 times)

4n6

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Pay Yourself First is a Selfish Capitalist Ideology
« on: February 23, 2017, 04:15:28 AM »
Hey everyone,

I need some help/answers/arguments/good vibes. So yesterday I posted a blog post on the #1 rule of personal finance being pay yourself first (I know that some may disagree, but I think it is the minimum). Anyway, I later posted a CNBC article with the title "the one, proven way you can be rich" and it was about paying yourself first. I then got into an argument with two work colleagues on Facebook. And I am not sure why this made me so mad. One of my colleagues argued "Pay yourself first," is a selfish, capitalist ideology that could only come from a perspective of privilege that ignores the reality that most people live in, which is one of dependence (economic, social, ecological)." Moreover, she points out that those who obtained early retirement are those who earned in the top 30% of income, took advantage over the system (because of financial literacy and saving) which is the dictionary definition of privilege.

Her larger point is the economic system that we have in the U.S. basically games it against the U.S. worker. Pensions are gone, people work longer for less, etc. And I don't disagree with her. I actually share similar ideological sentiments.

However, I can't get her argument against paying herself first. I am a professor so it is part of my job to have these intellectual arguments, but when my colleagues do this I agree on the one hand, but they offer no solutions whatsoever (although a critique of the system is part of the solution). And I deeply believe that if you pay yourself first, with education, you can create financial independence, even if you don't have as much money. Even if you don't earn high incomes like some of the folks here (including myself to an extent).

I guess (and sorry for the rambling) my larger point is their inability to see that we have a savings crisis in this country. We can work to change the economic system all we want, but that doesn't mean we need to also take responsibility for ourselves to dig out a bit and carve out our own independence and economic worth.

I know some of you might say don't feed the trolls. But that isn't my style. I argue for a living. It gives me great pleasure, even if this upsets met. So I guess what I am asking for are your reactions. Arguments for/against? Ideas?

Thanks.

MoseyingAlong

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #1 on: February 23, 2017, 04:44:23 AM »
If you were on a plane that was having problems, would you put your oxygen mask on first and then help others? Or run around helping others first, not take care of yourself and cause more problems for everyone when you pass out in the aisle and they have to take care of you?
Sometimes taking care of yourself first is the most helpful.thing you can do for evryone around you. It puts you in a position to provide true, lasting help.

P4J

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #2 on: February 23, 2017, 05:39:30 AM »
"Pay yourself first" means nothing more than prioritizing certain purchases (stocks, bonds, CDs) over other purchases (housing, food, services). No spending allocation is any more or less selfish than any other spending allocation. It represents only differing priorities.

The only way to make it less selfish is to prioritize giving the money away. It's not clear to me that this was your colleague's suggestion.


erae

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #3 on: February 23, 2017, 06:31:52 AM »
I've seen examples in collectivist communities (inside and outside the US) in which money isn't considered an individual asset. Healthy, working adults are expected to distribute their earnings to family members to fund retirement, schooling, etc. Scandinavian countries do this at the government level rather than the family level.

In the US, our financial system is grounded in capitalism and individualism, so "pay yourself first" seems like the only way to inoculate yourself from low wages, lack of pensions, etc. Social media postings encouraging others to pay themselves first sends a message of "here's how to win the game in the way that it's currently set up" which is pragmatic, but also hegemonic. Paying yourself first won't work for low wage workers and doesn't interrogate a system that perpetuates privilege (and thus puts the burden of that "failure" on the individual).

That said, capitalism and rampant individualism in the US will likely outlast my husband and I, so we're leveraging the hell out of our stable childhoods, good health, education, legal status to work in the US, etc. to pay ourselves first while trying and get more collectivist politicians and policies in power to hopefully dismantle this system that doesn't give everyone a fair shot.

Mezzie

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #4 on: February 23, 2017, 06:43:11 AM »
Technically, I pay my taxes/society first.

Then I make sure I am not a burden (I pay my bills, including my future post-work bills via retirement savings. I think this would also include my choice to invest in my education so I could be a productive member of society).

Then I have a choice where my money goes. I can be frugal and generous at the same time. In fact, I believe the former allows me to be the latter; if I were a spendthrift, I'd never have the reserves to help others. That said, I do, of course, spend money, but I try to vote with my money as much as possible by supporting local businesses, arts, farms, etc.

BlueHouse

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #5 on: February 23, 2017, 06:49:04 AM »
This seems so odd to me. You're a college professor with a financial blog who also writes for CNBC, yet you're asking for advice from Internet strangers on how to defend an article you just wrote.  It seems as if you should have some opinions already formed and some thoughts on backing those opinions up.

Sorry I'm not more help, but honestly, if you need to ask for help on this, maybe it's too soon in your career to be contributing to CNBC.

Would you mind sharing what subject you teach?

radram

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #6 on: February 23, 2017, 06:55:05 AM »
I am really unclear what point your colleagues are actually making. Is it that paying yourself first is not possible for most Americans, or that paying yourself first is the wrong approach?

If the former, it is really about priorities. No cell phone, no cable bill, multiple roommates to reduce housing costs, eat at home, dump your car. All of these options can lead to reduced spending in exchange for added savings. Just because many are unwilling to do these things does not mean they are unable to.

I would recommend that both of you read The Millionaire Next Door and then discuss. If she is unwilling to do that, it is not worth further discussion or time.

In short, yes, paying yourself first is selfish. Why are all selfish acts bad?

Just as volunteering has an added advantage of making the volunteer feel good about what they are doing, paying yourself first has the added advantage of being able to provide for yourself instead of relying on others.

TheStachery

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #7 on: February 23, 2017, 07:17:47 AM »
Technically, I pay my taxes/society first.

Then I make sure I am not a burden (I pay my bills, including my future post-work bills via retirement savings. I think this would also include my choice to invest in my education so I could be a productive member of society).

Then I have a choice where my money goes. I can be frugal and generous at the same time. In fact, I believe the former allows me to be the latter; if I were a spendthrift, I'd never have the reserves to help others. That said, I do, of course, spend money, but I try to vote with my money as much as possible by supporting local businesses, arts, farms, etc.

Exactly.

And as the OP says, don't feed the trolls.

neophyte

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #8 on: February 23, 2017, 07:39:22 AM »
I think her argument works if you are comparing a middle class American to a someone in South Sudan who really doesn't have a chance. It falls apart if you are comparing upper and lower middle class american workers. That's about priorities. 

I'm making $40k now, more than I've ever made before in my life, but still not that much by US standards. I can manage to save close to 50% of that. I had a pretty good savings rate when I was making $30k. Because, priorities. But I have a college education that was paid for for me. What about someone without that privilege?

There are a lot of people on these forums making much more than me without a college degree. Heck, my ex is an immigrant from Latin America with a high school education (from his home country) who refuses to do manual labor. He still found a job where he gets to sit at a desk all day and started at $50k. He thinks he's got it made. His cousin is an HVAC guy who makes over 6 figures, probably rivaling OP's salary.

Laura33

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #9 on: February 23, 2017, 07:51:39 AM »
I am totally not following your colleagues' argument because it is a nonsequitor.  Yes, our system is not fair, and the privileged tend to do fine while the poor get screwed, and we should do what we can to change that.  That has nothing whatsoever to do with whether you should pay yourself first.  The fundamental concept of paying yourself first is to reduce your basic lifestyle expenditures to below what you make.  The less you make, the harder it is -- but it is still the only practical approach to get ahead.  In fact, I would argue when the system is stacked against you, it is even *more* important to do whatever you can to look after yourself, because you know for damn sure that no one else is.  What's the alternative -- to let that system determine the course of your life and accept your role as victim? 

If you try, no, you may not succeed.  But if you don't try, failure is guaranteed.  And in many cases, it is not actually impossible for the poor to pay themselves first -- heck, my mom managed to save even while we were on Food Stamps, even if it was only $10 or so a month.  There are people here and on ERE blogs that survive, happily, on a relative pittance.  You just have to treat Future You as just as important as Current You.

I think the bigger issues are the emotional/behavioral ones, not the macroeconomic ones.  When you are talking about generational poverty, you run into a whole slew of issues like no role models, the persistent belief you will never get out (so why try -- a/k/a the revised marshmallow study that suggests that poor kids actually were acting logically in eating the one marshmallow now because they had learned the second is never guaranteed), sub-par educational opportunities even for bright kids, no outreach/training in basic investing and no one trustworthy to turn to who can tell you to dump your money in Vanguard, family expectations for the "successful" child, etc. etc. etc.  When you have a mindset that says this is all there is, you literally cannot envision a way out, and then it becomes a self-fulfilling prophecy.  I think the barriers in your own head are much harder to deal with than the external ones our current society imposes.

aschmidt2930

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #10 on: February 23, 2017, 08:04:59 AM »
I think her argument works if you are comparing a middle class American to a someone in South Sudan who really doesn't have a chance. It falls apart if you are comparing upper and lower middle class american workers. That's about priorities. 

Completely agreed. 

To the OP -- most people with this perspective are pretty hypocritical and elitist.  Unless she's living frugally, only spending for her basic needs, and donating the rest of her income, her argument is illogical.  Everybody thinks everyone else is the problem and that they're an exception.

If she's a typical consumer, by her logic, she's anti-environment and anti-climate.  Buying physical stuff is terrible for the environment.  Saving money and buying stocks is climate neutral (save IPOs to environment damaging businesses of course).

On a side note: The "victim mentality" her argument is full of is frustrating.  There are systematic inequality issues that must be addressed, but teaching our youth that they're a victim/disadvantaged is truly crippling, and perpetuates a fixed, poor mindset.  If you have an internet connection and your health, you have an opportunity to create your own destiny in the modern world. 

spokey doke

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #11 on: February 23, 2017, 08:21:42 AM »
The posts above capture most of the ideas I had in response...on the one hand, it is tough pursuing what appear to be, and sometimes are, multiple competing goods (but then again, that is life, so what's new) - taking care of yourself and taking care of others in need.  I will avoid going down the rabbit hole of common analyses from moral philosophy, and just empathize, acknowledging that the question of "what should I do?" is the fundamental challenge we face.

I also agree with many posters that your colleague's response is both right and wrong...the notion of paying yourself first is quintessentially self interested and reflects the general sentiment of capitalism...it also seems to heap scorn on the idea because of that reflection, without recognizing the legitimate place of self interest and the limits of our ability to right the wrongs of the system we are in.

So for me, it mostly comes down to where you draw the line, following the basic ideas of doing what you can to be frugal and smart with your money, taking care of yourself and your interests, while also making a reasonable effort to help others and change the system for the better.

You might ask your colleague a few questions, like what percentage of her income she gives to charities, and how much of her time is spent on the cause of societal change, and why she does specifically that amount and no more.  I think you'll find a bunch of arbitrariness in her's (or anyone's) responses to those questions, reflecting their particular, situated answer to the big question...which is fine, and just like yours and mine...

iowagirl

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #12 on: February 23, 2017, 08:25:18 AM »
Maybe I'm totally off base here but it sounds like to me she hears "pay yourself first" and hears selfish words. If it was phrased in a different way such as "put money in an IRA, ect first" then it wouldn't sound so selfish to her.

Some people are really stuck on words and don't dig into the real meaning what what is being said. Just a thought.

CorpRaider

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #13 on: February 23, 2017, 08:32:15 AM »
Prioritize saving over consumption, take the savings out first to reduce the temptation to spend on consumption; think "slow versus fast" by setting the rules before hand.  A timely and relevant message for most, which obviously does not apply to the truly impoverished.  Who could quibble with that?

I think perhaps she's not familiar with the meaning of the phrase and the personal finance specific context.  It's not referring to executive compensation or the allocation of societal resources.
« Last Edit: February 23, 2017, 08:34:24 AM by CorpRaider »

Panfish

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #14 on: February 23, 2017, 08:33:51 AM »
Capitalism has given lower classes more upward mobility than any other economic system ever devised.  That along with fundamental liberty and an amazing wealth of natural resources in this country has afforded us unparalleled opportunity.  Since Al Gore has invented the internet, we also have the cumulative knowledge of all people at our fingertips.  The ability to transform your life into a better life (at least in this country) have never been greater.

Unfortunately, this idea of opportunity never seems to trickle down to a lot of economically lower class people.  In these circles it is often a culture of 'whoa is me' and 'these 1%ers are the problem' keeping us down.  Maybe the 1%ers are keeping you down a bit, but guess what... They aren't keeping you down as much as you and your surroundings are keeping you down.  Make yourself valuable and the 1%ers and other 'Rich' people will pay you for your value and you can pull your whole family out of poverty.  Is the last statement a guarantee?  No, but you have the Liberty to pursue your dreams here, you just have to grab life by the balls a little bit.

aceyou

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #15 on: February 23, 2017, 08:39:42 AM »
How I'd respond:

1.  Acknowledge that yes, this is a privileged position we are in. 
2.  Given that we are in that position, the question becomes how to best handle the situation. 
3.  Some choices are to
        a) spend all the money on goods/services right now
        b) spend a portion and invest the rest.  Retire early, then use the rest of your life/money pursuing what YOU feel our worthwhile things. 
        c) spend a portion and give the rest away right now.  Work forever. 


If it is your goal to be philanthropic (not saying you should or have to be), then
 
option (a) is probably worst, gives society nothing, probably least moral

option (c) gives society the use of your money, but as you are working forever society gets less of your time.

option (b) allows you to give society your money, but also more of your time.  You just have to wait a few years before doling out the time/money. 

I'll take option (b) all day long for selfish and moral reason. 


NorthernBlitz

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #16 on: February 23, 2017, 08:40:23 AM »
Sounds like they are defining a problem, while you are providing a solution. You are also asking people to work on something that they have control over (by examining their spending and trying to save) instead of something they can't control (the financial inequality of the United States and the World).

I would argue that if you have the means, paying yourself first is a moral obligation. I agree that there are people in the US who truly do not have the means to secure their own financial future. But, I think it's also true that there are also those who have the means but choose immediate consumption over future consumption when they have the opportunity.

Paying yourself first means that you will minimize (or even eliminate) the burden you place on society in the future. I think that this means resources can be diverted to help other people with greater needs.

Edit: I was listening to the Tim Ferriss podcast yesterday and he was talking with Krista Tippett. One of the topics was on using emotionally charged words like "privilege". My take away from this (which might not have been the intended lesson) was that people who use language like this in an argument aren't looking to have a reasoned debate about the merits of an issue. They're trying to shut down discussion.

Like most of his interviews, I thought it was interesting and worth a listen:

http://tim.blog/2017/02/21/krista-tippett/
« Last Edit: February 23, 2017, 09:21:21 AM by NorthernBlitz »

Samuel

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #17 on: February 23, 2017, 08:49:10 AM »
You are also asking people to work on something that they have control over (by examining their spending and trying to save) instead of something they can't control (the financial inequality of the United States and the World).

Bingo. Prioritizing savings and ruthlessly examining your spending is the most effective path I've come across to gaining greater control over your life.

4n6

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #18 on: February 23, 2017, 08:50:38 AM »
This seems so odd to me. You're a college professor with a financial blog who also writes for CNBC, yet you're asking for advice from Internet strangers on how to defend an article you just wrote.  It seems as if you should have some opinions already formed and some thoughts on backing those opinions up.

Sorry I'm not more help, but honestly, if you need to ask for help on this, maybe it's too soon in your career to be contributing to CNBC.

Would you mind sharing what subject you teach?

Yes, I have a financial blog, but nowhere in my post did I say I write for CNBC. I said I posted an article from CNBC. That article basically reinforced my blog post. I don't have any career plans for CNBC (although that would be nice). My complaint/concern was basically arguing that paying yourself first is somehow some extension and manifestation of a capitalist selfish ideology, which I just don't get; 2) I came to this group, partly, to just get some reinforcement that I am not some crackpot posting shit that is far afield; 3) also some of the people here can provide other arguments when you get into these kinds of conflict with others. I like debate. I like arguing and others here have some thoughts that I hadn't put together when I was in the middle of a verbal FB conflict.

BTDretire

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #19 on: February 23, 2017, 09:02:09 AM »
EDIT, I see I somewhat misuderstood the problem,
but it seems she doesn't like the idea because only the rich
can do it and the odds are stacked against regular earners.
So, Use the facts!
Find the median US income over the last 30 years.
Take 30% of that number invested in whatever index you like.
You can go two ways, lowest savings rate required to live
on 4%, or saving rate required to retire in X number of years.
 Might need to explain the 4% rule to the non believers.
I found a page with non inflation adjusted median income.
http://www.davemanuel.com/median-household-income.php
Only goes to 2014, if you want to go later, 15 and 16 shouldn't be hard to find.
« Last Edit: February 23, 2017, 09:06:47 AM by BTDretire »

Mr Chin Stubble

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #20 on: February 23, 2017, 09:06:19 AM »
Hey everyone,

I need some help/answers/arguments/good vibes. So yesterday I posted a blog post on the #1 rule of personal finance being pay yourself first (I know that some may disagree, but I think it is the minimum). Anyway, I later posted a CNBC article with the title "the one, proven way you can be rich" and it was about paying yourself first. I then got into an argument with two work colleagues on Facebook. And I am not sure why this made me so mad. One of my colleagues argued "Pay yourself first," is a selfish, capitalist ideology that could only come from a perspective of privilege that ignores the reality that most people live in, which is one of dependence (economic, social, ecological)." Moreover, she points out that those who obtained early retirement are those who earned in the top 30% of income, took advantage over the system (because of financial literacy and saving) which is the dictionary definition of privilege.

Her larger point is the economic system that we have in the U.S. basically games it against the U.S. worker. Pensions are gone, people work longer for less, etc. And I don't disagree with her. I actually share similar ideological sentiments.

However, I can't get her argument against paying herself first. I am a professor so it is part of my job to have these intellectual arguments, but when my colleagues do this I agree on the one hand, but they offer no solutions whatsoever (although a critique of the system is part of the solution). And I deeply believe that if you pay yourself first, with education, you can create financial independence, even if you don't have as much money. Even if you don't earn high incomes like some of the folks here (including myself to an extent).

I guess (and sorry for the rambling) my larger point is their inability to see that we have a savings crisis in this country. We can work to change the economic system all we want, but that doesn't mean we need to also take responsibility for ourselves to dig out a bit and carve out our own independence and economic worth.

I know some of you might say don't feed the trolls. But that isn't my style. I argue for a living. It gives me great pleasure, even if this upsets met. So I guess what I am asking for are your reactions. Arguments for/against? Ideas?

Thanks.

So what is your question exactly? Your co-workers are pretty much right. You're renting out capital -- at a fee -- to those in need of capital. You have a good paying job and have the excess capital to rent out. Those who are living at a subsistence level do no have that. And you are also correct that we have a savings problem where people who make 100k a year also don't save because they feel they don't have the money (even though they probably really do). And yes it would be much more difficult to pay yourself first -- or rent out your capital in tax advantaged account -- if you had  for example, a couple of elderly parents or grandparents that required your financial help.

I guess if you want to be snippy with them you can argue that rentier incomes are a term coined by Marx and if you are against such an idea then you are siding with Marx. :/

aceyou

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #21 on: February 23, 2017, 09:14:23 AM »
This seems so odd to me. You're a college professor with a financial blog who also writes for CNBC, yet you're asking for advice from Internet strangers on how to defend an article you just wrote.  It seems as if you should have some opinions already formed and some thoughts on backing those opinions up.

Sorry I'm not more help, but honestly, if you need to ask for help on this, maybe it's too soon in your career to be contributing to CNBC.

Would you mind sharing what subject you teach?

Yes, I have a financial blog, but nowhere in my post did I say I write for CNBC. I said I posted an article from CNBC. That article basically reinforced my blog post. I don't have any career plans for CNBC (although that would be nice). My complaint/concern was basically arguing that paying yourself first is somehow some extension and manifestation of a capitalist selfish ideology, which I just don't get; 2) I came to this group, partly, to just get some reinforcement that I am not some crackpot posting shit that is far afield; 3) also some of the people here can provide other arguments when you get into these kinds of conflict with others. I like debate. I like arguing and others here have some thoughts that I hadn't put together when I was in the middle of a verbal FB conflict.

You're not crazy, read my post above, and of several others. 

Oh, but it might be semi-crazy to argue with people about it.  Unless they genuinely are looking to make a change in how they do things, or if you are looking to form your own beliefs/opinions, arguing is an inefficient use of time. 

Good luck!

Ricky

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #22 on: February 23, 2017, 09:24:59 AM »
It sounds to me like she's not against saving, she's against income inequality where someone just isn't capable of saving. Bottom line is she's being illogical either way and it's not worth arguing with her. You're obviously right and you just need to ignore these irrational people.

Taking care of yourself first is a pretty basic, common sense principle. Also, any money that you fairly earn is also, from a common sense perspective, yours to do with however you please.

So if she wants to argue with you about implementing a more socialistic system through developing a universal basic income or some other governmental policy that is completely out of the scope of your very simple article, then I'd say she needs to take that argument elsewhere. Also, you said she's a "colleague", so presumably she's at a similar level of income to you, so it sounds to me like she's arguing just to argue and doesn't really have any proverbial skin in the game she's referring to. I think this is where one of the other posters wondered why you didn't just recognize this is as obvious trolling and why you needed further input on.
« Last Edit: February 23, 2017, 09:32:21 AM by Ricky »

aceyou

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #23 on: February 23, 2017, 09:28:09 AM »
It sounds to me like she's not against saving, she's against income inequality where someone just isn't capable of saving. Bottom line is she's being illogical either way and it's not worth arguing with her. You're obviously right and you just need to ignore these irrational people.


Right, that would be like saying "it's immoral to eat ice cream because many in the world can't eat ice cream".  While that is true and while it sucks that everyone can't eat ice cream, that doesn't logically mean that all ice cream stands should cease to exist or that it's immoral to visit one. 

BTDretire

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #24 on: February 23, 2017, 09:30:03 AM »
EDIT, I see I somewhat misuderstood the problem,
but it seems she doesn't like the idea because only the rich
can do it and the odds are stacked against regular earners.
So, Use the facts!
Find the median US income over the last 30 years.
Take 30% of that number invested in whatever index you like.
You can go two ways, lowest savings rate required to live
on 4%, or saving rate required to retire in X number of years.
 Might need to explain the 4% rule to the non believers.
I found a page with non inflation adjusted median income.
http://www.davemanuel.com/median-household-income.php
Only goes to 2014, if you want to go later, 15 and 16 shouldn't be hard to find.
I found the Median income as above, I searching for a stock market return calculator
that I can add in 30% of the median income each year to see the growth over years.
Anyone know of such? I sure the data could be put in Excel, but I'm not Excel fluent.

NorthernBlitz

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #25 on: February 23, 2017, 09:46:58 AM »
EDIT, I see I somewhat misuderstood the problem,
but it seems she doesn't like the idea because only the rich
can do it and the odds are stacked against regular earners.
So, Use the facts!
Find the median US income over the last 30 years.
Take 30% of that number invested in whatever index you like.
You can go two ways, lowest savings rate required to live
on 4%, or saving rate required to retire in X number of years.
 Might need to explain the 4% rule to the non believers.
I found a page with non inflation adjusted median income.
http://www.davemanuel.com/median-household-income.php
Only goes to 2014, if you want to go later, 15 and 16 shouldn't be hard to find.
I found the Median income as above, I searching for a stock market return calculator
that I can add in 30% of the median income each year to see the growth over years.
Anyone know of such? I sure the data could be put in Excel, but I'm not Excel fluent.

If you have an interest rate that you want to use and you know the periodic payment (i.e. assume 30% of the median income and don't adjust for inflation), you can just the the future value of an annuity calculation

http://www.financeformulas.net/Future_Value_of_Annuity.html

FV = P * [(1+r)^n-1]/r

FV = Future value
P = Periodic Payment (i.e. contribution per year)
r = rate per period (here's the dicey part because it's clearly not a constant number, I'd agree with 4% after inflation and call it a "worst case" long term rate)
n = number of periods (years)

backyardfeast

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #26 on: February 23, 2017, 09:55:03 AM »
Fellow professor here, enjoying the conversation.  Lots of responses I agree with and think are convincing.

1. Your colleague is identifying that you and she and others in your peer group who are following you on Facebook have substantial privilege.  (umm...duh?)

2. The problem, then, is what to do with that privilege.  This will depend on your personal ideology and goals.  If your colleague's goals are specifically to undermine and dismantle capitalism, and live in a way consistent with that goal, then there are other options.  She can choose to not earn a salary for her work, or not work in a university (which is completely embedded in the wider capitalist society).  She could choose to maintain her job and income, live on the smallest amount possible--in solidarity with whomever she feels is the least privileged or wants to highlight--and then redistribute the rest to organizations that she chooses who are in line with her goals. 

That sounds radical, but there are many people who make that choice, including nuns, for instance.

If she chooses that route, which is morally impeccable in my mind, then she needs to decide how she will be supported once she can no longer work.  For nuns, for instance, or those still living in gift economy societies, there is a non-capitalist institution or family support that is in place for those aging years.  Or, she could make sure that she is comfortable living on the amount provided by SS, and be happy living a humble life. 

In our mainstream society, though, there usually isn't much of a social safety net, which brings us back to the question of retirement and savings. 

3. So if we *accept* the fact that we occupy a position of privilege in society, and don't have the courage to dedicate our lives totally to living outside the capitalist system of the community in which we are embedded, then we start looking at "next best" options.  What kind of safety net do we provide for ourselves? What kind of safety net do we work toward ensuring exists for those less privileged? What kind of lifestyle are we morally comfortable maintaining? These are not black and white questions, but ones that always come down to personal circumstances and spending decisions.

I would agree with others here that "paying yourself first" means choosing to remove as much of your money as possible from the corporate, consumer economy, which seems reasonably aligned with anti-capitalist goals.  How/where you invest it is another issue, of course.  One of the principles of mustachianism (which may not be true for what you posted) is the idea of saving "just enough."  In other words, saving enough to create financial independence, not wealth and money for its own sake.  In fact, saving TOO much money, mindlessly, is ridiculed here almost as much as not saving at all.  So, here at least, the goal is to save just enough to create your own safety net, by living modestly and not being a corporate shill, and then removing yourself from the capitalist machine where your job has been a cog in the wheel as early as possible, so as to devote yourself (if we look at Pete's example) to building community, ending car commutes, and spreading the anti-consumerism message.

You could point your colleague to threads like "what would happen if everyone became a mustachian?" where people are in fact very anxious about capitalism collapsing if everyone followed this path! :)

Though I know many academics who choose to live very simple lives in line with their values--and your colleague may be one of them--I think we're all assuming that she is actually doing the stereotypical thing and pointing the finger at "nyah, nyah PRIVILEGE" while not doing any of these thing.  Just spending and feeling threatened by the idea of not spending, accepting a university pension, etc and occupying a pretty hypocritical position in real life.  I hope that's not the case, but we've all seen it.

Kaspian

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #27 on: February 23, 2017, 09:58:06 AM »
"If I don't have it, you can't have it, and nobody can have it.  It doesn't matter if you worked you ass off for it and I did nothing--yours is ours or nobody's."  <-- This postmodern, Marxist bullshittery brainwash has to go!  They are choosing equality of outcome over equality of opportunity.
« Last Edit: February 23, 2017, 09:59:56 AM by Kaspian »

Mmm_Donuts

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #28 on: February 23, 2017, 10:20:17 AM »
One of the things I like about investing is that (*in more affluent countries*) the markets are openly available to everyone, at any level. Perhaps people aren't aware that saving and investing is possible for them, but it is. Most of us aren't educated to think this way. We get money, we spend. (In general.)

I can see the OP's colleague's POV though. The question is, for those who have money that goes above their needs, what should they do with it? They can either spend it, save it, or give it away. I've always liked (though haven't substantially acted on) the Peter Singer argument: it is imperative to give money away when there is excess, while there are people in the world who are in life-or-death need. It IS selfish to save for a future of doing whatever I want to do, living in a relatively affluent society, without offering anything to the relieve poverty in the world.

But, the way I see it, most people if given the choice between a) spend b) save c) give will choose option a). I rationalize my choice of b) by believing that I am living out an example where it isn't necessary to only choose a), and, that when I die, hopefully I'll have enough left behind to make a significant difference by doing c). Probably a selfish rationalization, but in degrees of selfishness, I believe it's more defensible than spending everything I have ever earned on superfluous consumer goods. I hope the OPs colleague also rails on everyone in her FB feed who spends money on travelling, or buys fancy cars or displays any other kind of conspicuous consumption. Interesting that that form of "paying yourself first" is more or less culturally acceptable while "paying yourself first" in the form of investment is not.
« Last Edit: February 23, 2017, 10:25:14 AM by Mmm_Donuts »

trollwithamustache

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #29 on: February 23, 2017, 10:25:48 AM »
Technically, I pay my taxes/society first.




This is best response.

Travis

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #30 on: February 23, 2017, 10:29:22 AM »
I then got into an argument with two work colleagues on Facebook...I am a professor so it is part of my job to have these intellectual arguments...

I know some of you might say don't feed the trolls. But that isn't my style. I argue for a living. It gives me great pleasure, even if this upsets met. So I guess what I am asking for are your reactions. Arguments for/against? Ideas?

Thanks.

I'd say expecting to have an intellectual argument on Facebook was the first problem.  There isn't enough physical space for a well thought out discussion and some folks get really emotional about their opinions which on Facebook are rife with confirmation bias.

To your specific questions, it's tough to say without seeing the entire argument. With what you've described, your coworker could do with some basic research on the history of pensions, productivity, and how investment capital has improved everyone's standards of living.   Her complaint about the top 30% of household income is much wider of a net than she probably realizes ($90k/year if you were curious).  Her invocation of "privilege" (a loosely defined and abused term in social media) and how reading a book on finances is somehow unfair should give you an indication that you're not going to win her over with logic.

BTDretire

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #31 on: February 23, 2017, 10:30:37 AM »
EDIT, I see I somewhat misuderstood the problem,
but it seems she doesn't like the idea because only the rich
can do it and the odds are stacked against regular earners.
So, Use the facts!
Find the median US income over the last 30 years.
Take 30% of that number invested in whatever index you like.
You can go two ways, lowest savings rate required to live
on 4%, or saving rate required to retire in X number of years.
 Might need to explain the 4% rule to the non believers.
I found a page with non inflation adjusted median income.
http://www.davemanuel.com/median-household-income.php
Only goes to 2014, if you want to go later, 15 and 16 shouldn't be hard to find.
I found the Median income as above, I searching for a stock market return calculator
that I can add in 30% of the median income each year to see the growth over years.
Anyone know of such? I sure the data could be put in Excel, but I'm not Excel fluent.

If you have an interest rate that you want to use and you know the periodic payment (i.e. assume 30% of the median income and don't adjust for inflation), you can just the the future value of an annuity calculation

Idealy, I'd like to use the stock market growth (S&P, Nasdaq, ?) per year to get what the growth could have been
in the past.
Quote
http://www.financeformulas.net/Future_Value_of_Annuity.html

FV = P * [(1+r)^n-1]/r

FV = Future value
P = Periodic Payment (i.e. contribution per year)
r = rate per period (here's the dicey part because it's clearly not a constant number, I'd agree with 4% after inflation and call it a "worst case" long term rate)
n = number of periods (years)
Hmm, I thought the average rate was 7%  inflation adjusted.
Here:
"Beyond that, the long-term data for the stock market points to that 7% number as well. For the period 1950 to 2009, if you adjust the S&P 500 for inflation and account for dividends, the average annual return comes out to exactly 7.0%. Check the data for yourself."
From: 
http://www.thesimpledollar.com/where-does-7-come-from-when-it-comes-to-long-term-stock-returns/
Quote is the 10th Paragraph.

NorthernBlitz

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #32 on: February 23, 2017, 11:55:25 AM »
EDIT, I see I somewhat misuderstood the problem,
but it seems she doesn't like the idea because only the rich
can do it and the odds are stacked against regular earners.
So, Use the facts!
Find the median US income over the last 30 years.
Take 30% of that number invested in whatever index you like.
You can go two ways, lowest savings rate required to live
on 4%, or saving rate required to retire in X number of years.
 Might need to explain the 4% rule to the non believers.
I found a page with non inflation adjusted median income.
http://www.davemanuel.com/median-household-income.php
Only goes to 2014, if you want to go later, 15 and 16 shouldn't be hard to find.
I found the Median income as above, I searching for a stock market return calculator
that I can add in 30% of the median income each year to see the growth over years.
Anyone know of such? I sure the data could be put in Excel, but I'm not Excel fluent.

If you have an interest rate that you want to use and you know the periodic payment (i.e. assume 30% of the median income and don't adjust for inflation), you can just the the future value of an annuity calculation

Idealy, I'd like to use the stock market growth (S&P, Nasdaq, ?) per year to get what the growth could have been
in the past.
Quote
http://www.financeformulas.net/Future_Value_of_Annuity.html

FV = P * [(1+r)^n-1]/r

FV = Future value
P = Periodic Payment (i.e. contribution per year)
r = rate per period (here's the dicey part because it's clearly not a constant number, I'd agree with 4% after inflation and call it a "worst case" long term rate)
n = number of periods (years)
Hmm, I thought the average rate was 7%  inflation adjusted.
Here:
"Beyond that, the long-term data for the stock market points to that 7% number as well. For the period 1950 to 2009, if you adjust the S&P 500 for inflation and account for dividends, the average annual return comes out to exactly 7.0%. Check the data for yourself."
From: 
http://www.thesimpledollar.com/where-does-7-come-from-when-it-comes-to-long-term-stock-returns/
Quote is the 10th Paragraph.

7% might be more realistic, but 4% would be more conservative.

The 4% comes from the Trinity study. My understanding of that study is that pulling 4% inflation adjusted out of a portfolio for 30 years means that you wouldn't run out of money. I believe that they define survival of the portfolio as not getting to zero, so it's not exactly a worst case scenario (because principle was eroding in some cases). I also believe that is something like 90% of cases, portfolios grew (i.e. the "average" return in most cases was > 4%).

There is no right answer when you're only picking one number because in reality the rate changes over time. Because 4% is close to the worst case, you could defend it's use against people who say that you're cherry picking a good rate.

It's easy enough to run it in both cases:

4% This is probably close to a worst case scenario (or at least that you'd expect more than this in "most" cases)
7% This is probably closer to something of an "average" case.

AZryan

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #33 on: February 23, 2017, 12:01:19 PM »
Everyone has already made plenty of excellent points, so hope I don't repeat anything (or much)...

I want to start with the idea that most people use the word 'selfish' wrong. This stems from a pro-suffering religion ingrained into our culture (religion is fantastic at twisting and ruining lots of words to suit its own dogma).

'Selfish' should simply mean something done 'for yourself'. 'Selfless' just means something 'not for yourself'. 'Loud and Quiet' just mean a high/low volume of sound. These are all inherently morally neutral terms. You modify them with other words to turn them bad or good.

But religion has bent selfish to always mean bad and immoral, and selfless to be noble and good.
And this is not some Ayn Rand argument that 'greed is good'; that's just twisting the same notions in the opposite direction and just as morally unreasonable.

If you make yourself a sandwich, you're being 'selfish'. But how many people think that sounds totally weird and would be insulted if someone said you were being 'selfish'? We've been brainwashed to be biased, and a plain, clear word was ruined by irrational thinking.
Now, if you're eating a footlong sub in front of a starving child, you're clearly being overly selfish. It's super easy to modify the word to reflect poor moral judgement. Or just use the word greedy since that's exactly what that word actually means, too.

By screwing up these fundamental words, it makes it that much harder to deal with these issues logically -which is how the OP got hit by his obviously confused critics who clearly feel morally superior.

And as others have noted above, it's not necessarily moral sound or reasonable to give everything you have away and be 100% 'selfless'. That's probably just an awful strategy for minimizing harm, pain and suffering (which is what 'morality' is).
If you give everything away, you'll probably never have much to ever actually give. You'll be super generous in theory and super useless in practice. But someone who collects a lot of cash, but lives such a modest, low spending life, can die and give all their spare money away to programs that help lots of people.
That's pretty much MMM's plan (and he can start doing it before death because he's done so well for himself). You can't logically have been greedy if the result is generosity.

Finding that perfect balance is the question, and we all have some kind of balance, 'cuz no one's 100% selfish or selfless.

shawndoggy

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #34 on: February 23, 2017, 12:35:04 PM »
The old adage, "don't hate the playa, hate the game" comes to mind.

Sure, on the basis of pure utopian cultural engineering, saving excess capital to live a life of leisure from may not be the best or "fairest" outcome for all of humanity, but it's the best outcome for you individually.

See also tragedy of the commons.

VoteCthulu

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #35 on: February 23, 2017, 12:36:38 PM »
Capitalist? Yes.
Selfish? No.
Simply paying for your own bills is not selfish, it's responsible. It's not paying for yourself and expecting others to pick up the bill that's selfish. Telling people that they are victims of the rich who can only get ahead by voting for more government money is dishonest and destructive

Tyson

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #36 on: February 23, 2017, 12:53:52 PM »
"Pay yourself first is a Selfish Capitalist Ideology".

So is earning a paycheck.

Ben Hogan

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #37 on: February 23, 2017, 01:20:56 PM »
So how does she live her own life, does she have a ton of debt buying everything under the sun, or does she save part of her income.

BlueHouse

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #38 on: February 23, 2017, 01:22:10 PM »
This seems so odd to me. You're a college professor with a financial blog who also writes for CNBC, yet you're asking for advice from Internet strangers on how to defend an article you just wrote.  It seems as if you should have some opinions already formed and some thoughts on backing those opinions up.

Sorry I'm not more help, but honestly, if you need to ask for help on this, maybe it's too soon in your career to be contributing to CNBC.

Would you mind sharing what subject you teach?

Yes, I have a financial blog, but nowhere in my post did I say I write for CNBC. I said I posted an article from CNBC. That article basically reinforced my blog post. I don't have any career plans for CNBC (although that would be nice). My complaint/concern was basically arguing that paying yourself first is somehow some extension and manifestation of a capitalist selfish ideology, which I just don't get; 2) I came to this group, partly, to just get some reinforcement that I am not some crackpot posting shit that is far afield; 3) also some of the people here can provide other arguments when you get into these kinds of conflict with others. I like debate. I like arguing and others here have some thoughts that I hadn't put together when I was in the middle of a verbal FB conflict.
Aaaahhhh, I misread it.  Sorry for the misunderstanding. 

redbird

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #39 on: February 23, 2017, 01:36:02 PM »
If building up savings and investments, with money you earned yourself, is selfish... what does that make it when you have a massive amount of consumer debt? Are you selfless then, because you're giving all of your money to big corporations?

I don't really get her point of view. At all. Maybe she's just misunderstanding the idea of "pay yourself first."

Johnez

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #40 on: February 23, 2017, 02:09:11 PM »
NOT paying yourself first (in the form of saving) is selfish because you will end up using the resources of other people in the long run if you don't save.

[Edit] I see VoteChtulu made this point prior, and with better wording.

Might be a dumb question at this point, but are you sure your coworker totally understands the phrase? All it suggests is that you prioritize saving money first, let's say the first 5% if you want to start small, and THEN figure out how the rest of your money is allocated. It forces one to think about the rest of the money and cutting costs there rather than spend first, forget to save later.

If anything-spending money is selfish and capatalistic and a sign of privilege. You mean to tell me you DRIVE to work?! In that expensive thousand pound hunk of steel you PAID for and have to feed every week with gasoline you purchase? I mean there are people all over the world who can't imagine this and walk to work. Such privilege!

Of all the things that is selfish and capatalistic, I think savings ranks near the bottom.
« Last Edit: February 23, 2017, 02:27:38 PM by Johnez »

BTDretire

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #41 on: February 23, 2017, 02:25:48 PM »
EDIT, I see I somewhat misuderstood the problem,
but it seems she doesn't like the idea because only the rich
can do it and the odds are stacked against regular earners.
So, Use the facts!
Find the median US income over the last 30 years.
Take 30% of that number invested in whatever index you like.
You can go two ways, lowest savings rate required to live
on 4%, or saving rate required to retire in X number of years.
 Might need to explain the 4% rule to the non believers.
I found a page with non inflation adjusted median income.
http://www.davemanuel.com/median-household-income.php
Only goes to 2014, if you want to go later, 15 and 16 shouldn't be hard to find.
I found the Median income as above, I searching for a stock market return calculator
that I can add in 30% of the median income each year to see the growth over years.
Anyone know of such? I sure the data could be put in Excel, but I'm not Excel fluent.

If you have an interest rate that you want to use and you know the periodic payment (i.e. assume 30% of the median income and don't adjust for inflation), you can just the the future value of an annuity calculation

Idealy, I'd like to use the stock market growth (S&P, Nasdaq, ?) per year to get what the growth could have been
in the past.
Quote
http://www.financeformulas.net/Future_Value_of_Annuity.html

FV = P * [(1+r)^n-1]/r

FV = Future value
P = Periodic Payment (i.e. contribution per year)
r = rate per period (here's the dicey part because it's clearly not a constant number, I'd agree with 4% after inflation and call it a "worst case" long term rate)
n = number of periods (years)
Hmm, I thought the average rate was 7%  inflation adjusted.
Here:
"Beyond that, the long-term data for the stock market points to that 7% number as well. For the period 1950 to 2009, if you adjust the S&P 500 for inflation and account for dividends, the average annual return comes out to exactly 7.0%. Check the data for yourself."
From: 
http://www.thesimpledollar.com/where-does-7-come-from-when-it-comes-to-long-term-stock-returns/
Quote is the 10th Paragraph.
Quote
7% might be more realistic, but 4% would be more conservative.

You mixed two different things.
I was refering to the average stock market return, 7% is the inlation adjust return of the S&P.
4% is SWR according to the Trinity study.



Kaspian

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #42 on: February 23, 2017, 02:47:46 PM »
Another good point:  Any money you earn/save will inevitably end up back in rotation somehow--whether it's during your retirement, after it's transferred to an inheritance, or all donated to charity.  It's a zero-sum loss.  So, what's the issue?  It's not like you take them off the table and burn them in a barrel somewhere.  Or bury them all with you in a coffin.  The greenbacks will get spent and put back in the rotations.  ...Unless you're one of the 0.001% of people who somehow create a dynasty?

Kyle Schuant

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #43 on: February 24, 2017, 01:21:44 AM »
Whether talking about social responsibility or prudent finances, the question is not whether to pay yourself first, but how much.

RetiredAt63

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #44 on: February 24, 2017, 08:00:57 AM »
Pay yourself first is a catchphrase.

If we look back at our agricultural roots, anyplace with seasons had good growing times and bad growing times.  People knew this and devised ways to preserve the harvest so that they could eat during winter/dry season.  And since some years could be worse than others, they tried to have more than one year's worth of supplies stored for the bad times.  The seed corn (i.e. next year's seeds for that year's crop) was untouchable.  In a sense our saving for the future is the modern equivalent of putting up the harvest, just longer term, and our investments are our seed corn. 

Maybe in discussions, if the situation were reframed like this, things would be clearer?

radram

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #45 on: February 24, 2017, 08:11:10 AM »
Pay yourself first is a catchphrase.

If we look back at our agricultural roots, anyplace with seasons had good growing times and bad growing times.  People knew this and devised ways to preserve the harvest so that they could eat during winter/dry season.  And since some years could be worse than others, they tried to have more than one year's worth of supplies stored for the bad times.  The seed corn (i.e. next year's seeds for that year's crop) was untouchable.  In a sense our saving for the future is the modern equivalent of putting up the harvest, just longer term, and our investments are our seed corn. 

Maybe in discussions, if the situation were reframed like this, things would be clearer?

I like this analogy. Thank you for it.

dcheesi

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #46 on: February 24, 2017, 08:22:13 AM »
I am totally not following your colleagues' argument because it is a nonsequitor.  Yes, our system is not fair, and the privileged tend to do fine while the poor get screwed, and we should do what we can to change that.  That has nothing whatsoever to do with whether you should pay yourself first.  The fundamental concept of paying yourself first is to reduce your basic lifestyle expenditures to below what you make.  The less you make, the harder it is -- but it is still the only practical approach to get ahead.  In fact, I would argue when the system is stacked against you, it is even *more* important to do whatever you can to look after yourself, because you know for damn sure that no one else is.  What's the alternative -- to let that system determine the course of your life and accept your role as victim? 

If you try, no, you may not succeed.  But if you don't try, failure is guaranteed.  And in many cases, it is not actually impossible for the poor to pay themselves first -- heck, my mom managed to save even while we were on Food Stamps, even if it was only $10 or so a month.  There are people here and on ERE blogs that survive, happily, on a relative pittance.  You just have to treat Future You as just as important as Current You.

I think the bigger issues are the emotional/behavioral ones, not the macroeconomic ones.  When you are talking about generational poverty, you run into a whole slew of issues like no role models, the persistent belief you will never get out (so why try -- a/k/a the revised marshmallow study that suggests that poor kids actually were acting logically in eating the one marshmallow now because they had learned the second is never guaranteed), sub-par educational opportunities even for bright kids, no outreach/training in basic investing and no one trustworthy to turn to who can tell you to dump your money in Vanguard, family expectations for the "successful" child, etc. etc. etc.  When you have a mindset that says this is all there is, you literally cannot envision a way out, and then it becomes a self-fulfilling prophecy.  I think the barriers in your own head are much harder to deal with than the external ones our current society imposes.
I think this last point is particularly relevant. Because one of those logical-in-context mentalities that keeps people in poverty is the moral obligation to help out family, friends, and neighbors in need, regardless of your own situation, which is in direct opposition to the "pay yourself first" philosophy.

Since people in poor communities can't use money to resolve life's many little emergencies (flat tire, sudden illness, etc.), they instead turn to each other for support. This helps keep such minor events from turning into life & death catastrophes for those with little or no margin for error. On the flip-side, it creates a strong reciprocal obligation to help out family and those who have helped you in the past (or might in future). The result is that any surplus you may have is in a sense "owed" to anyone around you who might need it at the moment. THAT is where I think the idea originates that "pay yourself first" is "selfish".

This mentality, as nice as it sounds, helps keep people poor by pushing them to sacrifice their own future good for someone else's immediate benefit (e.g., dropping out of school to care for a sick relative). It also leads "logically" to other behaviors, such as buying material goods whenever a surplus is available, rather than holding on to the cash --since any liquid wealth will inevitably be drained away by social obligations (and/or your own future emergencies), buying durable "stuff" is the only way to hold onto your gains long term.

FIPurpose

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #47 on: February 24, 2017, 08:48:14 AM »
Doesn't she have a pension or investments of some kind? The only reason our retirement system works is because people are constantly buying into stocks. Even though the market is worth something like $19 trillion dollars, no one has that just lying around. You can't just liquidate the stock market and then give it all away. An owner of a stock has to find someone willing to purchase it. There's no official US exchange rate where the government will buy stock from you.

Either you're buying into US stocks or you're standing on the sidelines. The only thing greedy is buying and accumulating so much that it is negatively other's ability to make a better life for themselves. But the only reason her pension/retirement even has a hope of working is because a new generation of people will come in willing and ready to purchase the stocks she owns.

cheapass

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #48 on: February 24, 2017, 09:20:11 AM »
Her larger point is the economic system that we have in the U.S. basically games it against the U.S. worker. Pensions are gone...

Pensions being gone is a good thing in my opinion. Employees aren't chained to a single employer for 40 years with a carrot on a stick dangled in front of them. Pensions are also not conducive to early retirement, why let an institution determine when you can stop working? With 401K's, employees control their own retirement dollars and can pass their portfolio on to their heirs (can't exactly do that with a pension). Many pensions rely on the solvency of the corporation, that's a lot of risk tied up in a single company (Enron?).

I can't really think of any benefit to the pension, other than that it is a "hands off" lazy approach to retirement.

Mr Chin Stubble

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Re: Pay Yourself First is a Selfish Capitalist Ideology
« Reply #49 on: February 24, 2017, 09:46:39 AM »
Her larger point is the economic system that we have in the U.S. basically games it against the U.S. worker. Pensions are gone...

Pensions being gone is a good thing in my opinion. Employees aren't chained to a single employer for 40 years with a carrot on a stick dangled in front of them. Pensions are also not conducive to early retirement, why let an institution determine when you can stop working? With 401K's, employees control their own retirement dollars and can pass their portfolio on to their heirs (can't exactly do that with a pension). Many pensions rely on the solvency of the corporation, that's a lot of risk tied up in a single company (Enron?).

I can't really think of any benefit to the pension, other than that it is a "hands off" lazy approach to retirement.

I m vested in a pension plan after working (and subsequently quitting) after 6 years. You can leave a pension to your heirs. You're really comparing a defined benefit plan to your 401k?? Is this a joke? A 401k is the one with no real benefit. You get to contribute with pre tax dollars to pay (presumably) into a smaller tax bracket when you retire? big whoop.

 

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