
Nearly half of Americans would have trouble finding $400 to pay for an emergency - sergeant3
http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/?single_page=true
======
Lazare
I think the article can be summed up by this sentence:

> We have no retirement savings, because we emptied a small 401(k) to pay for
> our younger daughter’s wedding.

The author isn't mysteriously broke. Money is not being stolen from his
account. Rather, he's spending a _lot_ of money on things which he believes
are necessities (like paying for a child's wedding), and sacrificing a lot of
things which he believes is optional (like having retirement savings). Some
would suggest both categorizations are wrong.

Also:

> we believed [our children] had earned the right to attend good universities

That's actually not how university tuition works, and the rhetorical tricks
being deployed here leave me cold. Your daughters did not have the _right_ to
attend those expensive private universities; they had the _privilege_ of doing
so, because you spent a lot of money you didn't really have to obtain that
privilege for them. Which is awesome for them! No doubt it will benefit them
(which is why you paid all that money, I imagine). But it's not entirely clear
to me how "middle class" paying for your children to go to some of the most
expensive schools in the world really is?

~~~
carsongross
There is no doubt that they have spent money foolishly, but bear in mind you
are talking about them spending on a wedding and college. These are not trips
to Vegas with hookers and blow, but rather core human experiences, closely
tied to the concept of "middle class" themselves, and not financial back-
breakers for middle class families in the past.

So, yes, there is some blame to be apportioned for the spending habits.
However, there is also the systemic problem of real incomes declining
significantly, with major life costs (housing, education, medical, taxation)
increasing dramatically:

[https://research.stlouisfed.org/fred2/graph/fredgraph.png?wi...](https://research.stlouisfed.org/fred2/graph/fredgraph.png?width=880&height=440&id=MEHOINUSA672N)

This problem is significantly worse if you use the old CPI, which some people
feel is more honest:

[http://www.soundmoneyproject.org/wp-
content/uploads/2012/03/...](http://www.soundmoneyproject.org/wp-
content/uploads/2012/03/Household-income.png)

Either way, the decline in real wages in the face of rising major life costs
is a major contributor to the increasingly precarious position of many middle
class families.

~~~
whatok
None of that excuses poor financial decisions. Raiding your 401k for frivolous
(yes I'm calling a wedding that) expenses is against any personal finance 101.
I'm willing to bet that the author's financial illiteracy did not start at
whatever age they happen to be and that they likely have made a series of poor
financial choices throughout their life. Financing your kid's college when you
have no savings will have a crippling effect on you as well as your kids when
they have to not only pay back the money you borrowed but also pay for your
retirement because you didn't save any money.

~~~
thomaskcr
When did it become normal for parents to pay for college? I always thought
that was something you do as basically a huge gift. I came out with a bit over
$100k but I chose that school knowing full well it would mean 10 years of
higher payments and it was worth every penny in my opinion (I got so much out
of college - I feel like the only person who came out with a huge loan that's
happy with it). My parents paid the interest on my loans all through college
and made the first couple payments while I transitioned into the real world --
I am eternally grateful they did even that for me.

I see it more and more that parents are expected to pay for their children to
go to school - which also means that a big part of my loans are probably
because of my father's income being counted when I did the FASFA. If the non-
dischargability of the loans is based on a lack of finanical history (which I
know I'm in the minority but I do feel that's fair), then the applications for
financial assistance really shouldn't take it into account unless your parents
are actually paying for your school.

------
JonFish85
Stories like these terrify me, mostly because I am very concerned about what
will happen to the retirement savings of people who did the responsible thing
and did save, and lived well within their means, and contributed to their 401k
(or other retirement savings).

The most active voters are the older groups, and as people like the author
reach their elder years with nothing to retire on, they presumably vote in
their own best interest.

As it stands now, there are ~$4 trillion dollars[1] in 401k savings. It is
currently not being taxed, with the assumption that it will grow during a
person's working years, and be taxed when it is withdrawn, as income tax.

However, as people like the author reach a certain age, I am fairly convinced
that there will be a significant tax on retirement savings from the
responsible folks to pay for those who didn't save appropriately. Politically
it's fairly straightforward: we have millionaires who can "afford" to help pay
for the less fortunate! This ends up hurting the people who saved so that they
could properly afford to send their kids to schools, to be able to go on
vacations in their retirement, etc.

As much as the story has been "max out your 401k!", I'm fairly convinced that
it's going to end up being a worse deal than people count on. I don't really
have a solution other than to "diversify investments", but stories like this
do terrify me. I plan for retirement and try to be responsible about how I
live my life so that when I choose to retire, I'll be able to enjoy it and
spend time with kids/grandkids or golfing/traveling/whatever.

[1]
[https://www.ici.org/policy/retirement/plan/401k/faqs_401k](https://www.ici.org/policy/retirement/plan/401k/faqs_401k)

~~~
MatthewRayfield
Two words: Roth IRA

~~~
brewdad
I can almost guarantee Roth IRA holders will get screwed in the future. At
least 401k holders got a tax break on the front end. Also, most middle class
workers have at least something in a 401k, especially since companies are
moving towards an opt-out model on 401ks. Relatively few Americans use Roth
IRAs and most are "high" income types.

Politically, it will be a slam-dunk to tax the crap out of money coming out of
Roth IRAs in the future.

~~~
rskar
I'm trying to imagine under what political circumstance the Roth IRA would
have its basic premise completely up-ended. Between a breach-of-contract and a
gaggle of irate retirees, I see no slam-dunk here at all.

------
neogodless
Discussion on a frugality forum:
[http://forum.mrmoneymustache.com/antimustachian-wall-of-
sham...](http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-
comedy/the-secret-shame-of-middle-class-americans/)

In my friend group, our incomes vary by about a factor of 5. We all _spend_
about the same, though. Which means those that are making more are much more
comfortable, putting money away for a rainy day.

In contrast, a college friend that keeps in touch makes more than any of us,
but she _likes_ to lease new cars every three years, and she _must_ spend
money on the poshest pre-school in the area, and she is _shocked_ to hear
about people saving $2/3/5k a month. That's money that could be _spent_!

I don't think I have a point here. I just can't wrap my mind around people
making $150k and not being able to "raise $2000" in a month's time.

~~~
Merad
> I just can't wrap my mind around people making $150k and not being able to
> "raise $2000" in a month's time.

A person making $150k who has no savings/retirement/etc is a someone with very
serious money management problems. In every state in the US, a $150k
_household_ income places you above the "middle class."

Source: [http://www.businessinsider.com/middle-class-in-every-us-
stat...](http://www.businessinsider.com/middle-class-in-every-us-state-2015-4)

~~~
donatj
We make much less than that and we saved nearly that much a month saving for
our own wedding last year. I don't understand where the money goes with some
people.

~~~
gryphonshafer
It's really easy if you purchase lots of little things using a non-cash form
of payment. It's even easier if what you're buying is non-physical, like
streaming movies or video games for a tablet/phone. The key is to remove the
physicality on one or both ends of the transaction and keep the single
transaction cost in 2-digit range or the low 3-digits. And of course, never
budget, ever, and try not to mentally track how many purchases you've made
over the past few weeks. Do that as a pattern, give it some time, and money
will evaporate Brewster's Millions style.

~~~
tamana
Only the rare whale can make a huge debt in savings buy spending on digital
goods. The real money goes out on car payments, rent payments, vacations, and
eating out every day.

------
jpmattia
I think a lot of folks are missing a big point: The author understands that he
spent more than his income:

> _In retrospect, of course, my problem was simple: too little income, too
> many expenses. Credit enabled me to forestall this problem for a time—and
> also to make it progressively worse—but the root of the problem was deeper.
> I never figured that I wouldn’t earn enough. Few of us do. I thought I’d
> done most of the right things._

The article is really about grappling with having "done most of the right
things", yet not being able to afford "the right things", as well as the
ensuing penalty.

I think the real point the article is missing: The standard-of-living in the
US relies on unsustainable spending, compared to the 1990s-2000s. A deeper
article might explore why the standard-of-living was being artificially
inflated (a credit bubble, with its roots in the 80s). As a bonus article,
consider if society turns against debt-as-a-way-of-life (like the generation
that lived through the depression) or if the securitization-of-debt market
begins to falter. That would be a true horror story.

PS. I think this is one of the meatiest articles to come out on personal
finances in a long time, and it's far too meaty for the full discussion it
should have (it'll be gone in a day on HCN, way past the 10 minutes or so any
of us will spend on it.)

EDIT: Changed the bit about standard-of-living, which distracts the point. Yes
real earnings are down, yes the employment ratio is down, yes college is
unaffordable. But Total sq ft per house is way up, cell phones are a tech
advance, so how you measure standard-of-living turns into another big topic.

~~~
harryh
Standards-of-living may have dropped dropped (though I'm pretty skeptical) but
if so the drop is pretty small. This guy's financial problems are much bigger
than this drop. I think that the personal responsibility deficit we have in
this country is a much bigger deal than whatever issues we have with middle
income wages.

For a variety of reasons (easy access to credit, the media, who knows what
else) a great many people are living above their means. And that's a big
problem.

~~~
JabavuAdams
> And that's a big problem.

Is it? Then why does it continue? It's a problem for the debtors, but not for
the people and system that encourages, enables, and profits from their bad
decisions.

Consumers must consume!

------
foobarian
The author repeatedly expresses regret at having made poor financial decisions
using the savings or debt as a metric. But it seems to me he has done quite
well in fact: his daughters went to private schools, elite universities, had a
nice wedding. What family, poor or well off, wouldn't sacrifice as much for
their kids? Then he managed to stay true to his calling of a writer without
compromising or cutting corners (this is a big one!). Look at the many
quintessential immigrant families who used to be doctors or lawyers in their
native countries who take up menial jobs to scrape by and still do a lot worse
than the author. Or others who swallow their pride and go into more well-paid
professions that they don't necessarily have passion for.

I'm probably lowering the standard of living target reasoning like this, which
is not fair to the article which focuses on what middle class should be like,
or was in the post-war boom decades. But still it could be a lot worse.

~~~
iainmerrick
His specific complaints seem pretty reasonable to me:

 _We haven’t taken a vacation in 10 years. [...] We have no retirement
savings, [...] We eat out maybe once every two or three months. Though I was a
film critic for many years, I seldom go to the movies now._

They're not destitute, but shouldn't most people expect to get at least some
of those things more often than that?

The lack of retirement savings seems particularly bad, as the author notes
they used their parents' savings to pay for their children's educations. Their
children won't be able to do the same.

And as another commenter has noted, it's not just a "woe is me" sob story, the
idea is that the author is representative of a secret 47%(!) who are ashamed
to admit how badly they're doing. The comparison with impotence seems apt.

 _[Edit: spelling]_

~~~
true_religion
It's a choice.

Is private schooling for children worth losing out on the opportunity to eat
out as a family of 4 at a good restaurant every week (that's 250 per meal, so
$1000 a month)?

Is funding your daughter's wedding (2000-10,000), worth skipping a vacation?

I think being middle-class is all about making choices between giving up
luxuries of the body (e.g. resturant food), for luxuries of opportunity (e.g.
schooling). If you are rich, you can have both your yatcht and private school.
You can go to the country club, _and_ keep a maid at the same time.

Being poor on the other hand is about making choices between _necessities_
like "should we have water or power this week? pick one" or "should our food
be nutritious or should we clean our clothes? pick one".

~~~
cableshaft
What planet are you living on where a wedding only costs $2,000, and no more
than $10,000? In the US, the _average_ wedding cost is $30,000
([http://money.cnn.com/2015/03/12/pf/planning-for-wedding-
cost...](http://money.cnn.com/2015/03/12/pf/planning-for-wedding-costs/)) now.
That being said I personally think that's ridiculous and I'll do my damnedest
to try to keep mine under $5k, but I know it won't be easy, and there will
have to be many things sacrificed.

If they're even wanting to have a modest wedding with 80-ish guests nowadays,
I can't imagine paying less than $15k (which is why I'm going to try to make
it less than 20 people for mine. Hell, I'd be happy with 2).

That being said, I wouldn't want to eat out at a $50/person restaurant with a
family of four once every week. You could take them to a bbq or pita or
chinese restaurant and they'd eat well for under $15 per person.

I don't really disagree with your main point, just your numbers seem to be bad
estimates to me.

~~~
MatthewMcDonald
> What planet are you living on where a wedding only costs $2,000, and no more
> than $10,000? In the US, the average wedding cost is $30,000

The idea of spending $30,000 on a wedding seems insane to me, and it reminds
me of the Dave Ramsey quote “If you will live like no one else, later you can
live like no one else."

> That being said I personally think that's ridiculous and I'll do my
> damnedest to try to keep mine under $5k, but I know it won't be easy, and
> there will have to be many things sacrificed.

My wedding (2 years ago, in the midwest) had about 100 guests and cost us
about $5000 total (doesn't include the rehearsal dinner or the bar tab, which
our parents covered). There were probably some things that we could have spent
even less on, but it would have required us doing more things ourselves. A few
things we did that might be different than the norm:

* My wife, mother, and grandmother made many of the decorations themselves

* The reception venue was less expensive because we had the wedding in April, because it wasn't during "wedding season"

* We had the grocery store make our cake for us

* We didn't pay anything for the ceremony location (there are many beautiful public venues that you can book for free)

* My wife chose a dress that was beautiful, but wasn't obscenely expensive. She also recovered about half of the cost by selling it afterwards.

------
true_religion
> nearly one-quarter of households making $100,000 to $150,000 a year claim
> not to be able to raise $2,000 in a month.

When people say these things, I wonder if they are perhaps not thinking about
taking drastic action.

For me, when I do disaster planning I think about extra-ordinary measures.

For example, when I was in my 20s if I _needed_ 2000 in the next month I would
have planned to at:

\- At age 21. Break my lease and move in with my parents. The lease was month-
to-month, and would have instantly put an extra $1000 per month in my pocket +
food savings.

\- At age 25. Break my lease taking a $6000 hit, but that'd be paid in
installments over the next 12 months whilst I could certianly find a place
that's worth less than $3,000 per month in rent.

\- At age 29. AirBnB my house or co-let. It's a good area, I'd be surprised if
I couldn't scrounge up $2000 that way fairly fast.

That's just an example of focusing on housing.

Another thing to do in desperate need would be to cut digital communications
and sell equipment. Do you have an iPad or Macbook? Can you sell one and use
the other? How about a smartphone. Sell it (300+ dollars back) and switch to
cheapeer services (maybe around 50-80 back).

\----

Tl;Dr.

People with $100,000 a year income have assets that they can sell or lease to
cover a $2000 transaction, but they answer the question as if thinking "if I
change nothing at all, can I come up with $2000".

That's not how budgets work.

~~~
pwthornton
The point is to be able to come up with $2,000 without taking drastic action.
The $400 example in the article was being able to come up with $400 without
selling stuff or taking out a payday loan.

I could sell my house and come up with tons of money. That doesn't count. I
can also just pay an unexpected $2,000 expense (like my $3,000 unexpected tax
bill) out of savings.

The point is that a lot of Americans don't have liquid assets they can use in
the case of a minor emergency.

~~~
true_religion
They don't have cash. They do have liquid assets. Anyone who owns a car has a
liquid asset... they just don't think of it as such because they "need" it.

~~~
CamTin
How fast do you think I can get a fair price for my 97 Sable? Fast enough to
cover an "emergency" expense?

Cars aren't very liquid. You can sell them to a huckster with a lot in the
shady part of town for 1/3 of what you could get by putting an ad on
Craigslist and waiting a few weeks. If you don't have a few weeks, this is a
problem.

------
jeffdavis
The real problem with debt is not the interest. It's that it keeps you
comfortable when you shouldn't be, so you don't make lifestyle adjustments
when you should.

These lifestyle adjustments aren't easy, and the way to be good at them is the
same as for anything else: practice.

But people don't practice when they are young because they have easy credit.
By the time the problems can't be brushed away any more (even with borrowing),
they have children, making the decision that much harder. And without
practice, they don't even know how to downsize.

There are so many perfectly reasonable things people can do to save money that
aren't even considered. What about moving into a small apartment, eating beans
and rice, and riding the bus for a few years while you get back on your feet?
Sounds bad to a lot of "middle class" people, but I bet it's more pleasant
than a downward spiral. And if you do it soon enough, you can get back to a
good place quickly.

And I don't buy in to the "whatever college you want" guilt. I'll tell my
children they have a guarantee of state school (assuming they get in), or
education I Germany (where it's free). Anything else they need to get creative
or lucky.

~~~
pwthornton
If my kids are smart and they do good work, why would I want to limit their
college opportunities by forcing them to go to a state school? In my state
there is one really good state institution (University of Maryland, College
Park), and that's how it is for many states (or there are zero good state
schools). And if my kids want to do research or study engineering or computer
science, it's a very good school for that, but almost every school has weaker
areas (and some have none they are particularly good at).

On a micro level, sure you can say maybe send your kids to cheap schools. On a
macro level, college costs are getting way out of hand. Private schools should
be able to serve more than the 1 percent and the really poor on full rides.

I graduated 10 years ago from an elite private university. It was expensive
then, but it's a complete bargain today. Prices are raising much faster than
inflation. I'm trying to save a few hundred thousand for each kid for college,
but in 16-18 years, that won't go that far.

I'm only going to pay to send my kids to a private school if its a really good
one, but I'm not going to tell them there is a whole class of schools they
can't go to just because I'm cheap.

~~~
jeffdavis
I live in California, so state schools are very good and can even be
prestigious (Berkeley, UCLA).

I'm not limiting their options. I guess if one of my children is absolutely
determined to jump into big time debt to go to Harvard, I probably wouldn't
stop them.

But I won't destroy myself financially just because I'm afraid to explain to
my children that choices have costs (list price of Harvard is something like
$80k/yr). Also, my children are more different in age, so if I go broke on the
first one, the next one wouldnt have the same opportunity.

The choice I'm offering is really not a bad one. I'll pay something
reasonable, and if they can make up the difference with work and scholarships,
great. If they want to do research, they can always go to MIT for grad school.

Also, by the time they go, things might be different. So many people got
burned by the "go to whatever college you want, regardless of price" idea that
it might shatter the prestige of any private school below ivy league. Or more
people might do the first two years at CC before going to university, and that
might carry less stigma.

------
kamaal
People's spending habits are so broken, I think there must be some equivalent
adult financial schooling/courses to give people right training on the most
important in their life.

I frequently run in to relatives and bosses and other senior people who
complain of not having money or expressing surprise when they learn some one
earning far less or doing a job that they think is beneath them makes/has made
a good investment. Finally they tend ultimately complain of life being unfair
to them. Forgetting the fact that they make 5-6 times more and their state is
their own doing.

Yet more I look at their lives, I see a spending pattern that co relates to
borderline nonsense. They take vacations because some one else is, and not
taking one frequently means losing brag rights in social circles. They have
cars they don't need, they buy expensive cameras and lenses they are likely to
never use or even know how to. They buy clothes which they are going to not
like a month later. They change gadgets every year. They seem to spend money
on everything which they don't need, or use or even remotely derive any value
from.

Its simply a never ending cycle of upgrades and added finances time after
time, which isn't unsustainable.

Even some very intelligent people I know are very poor in understanding large
timescales, how investments work, how their own spending can be destructive to
them.

At the very same I see people making far less, but a home early in life, start
contributing to that retirement fund early and come out on top.

Honestly in the free market economy, freedom seems like something most people
are incapable of handling. People have themselves to blame.

------
Balgair
Good lord, I expected more from HN commenters. Yall are talking about how he
is a bad spender and should have done better with his money. Did any of you
read this all the way through? I'll excerpt what the author _literally_ says
is his point of the article.

"I don’t ask for or expect any sympathy. I am responsible for my quagmire—no
one else. I didn’t get gulled into overextending myself by unscrupulous credit
merchants. Basically, I screwed up, royally. I lived beyond my means,
primarily because my means kept dwindling. I didn’t take the actions I should
have taken, like selling my house and downsizing, though selling might not
have covered what I owed on my mortgage. _And let me be clear that I am not
crying over my plight. I have it a lot better than many, probably most,
Americans—which is my point._ Maybe we all screwed up. Maybe the 47 percent of
American adults who would have trouble with a $400 emergency should have done
things differently and more rationally. Maybe we all lived more grandly than
we should have. But I doubt that brushstroke should be applied so broadly.
Many middle-class wage earners are victims of the economy, and, perhaps, of
that great, glowing, irresistible American promise that has been drummed into
our heads since birth: Just work hard and you can have it all." (emphasis
added)

The point is that though the author screwed the pooch on his finances, he
assumes that he is a lot better off that most Americans. If true, that should
be shocking to us all.

Other commenters point out that those that did save will have to rescue those
that have not and that is a BS thing to have to do. I think that is probable,
though not certain. However, like this student loan time-bomb, I think that
forgiveness is the best path. Yes, we can lord over those that were dumb and
did what others told them to do without really thinking. But I would rather
have happier and less-stress neighbors and fellow citizens with the
forgiveness even knowing that they will do it again and thinking to themselves
that they cheated the system and won. We can be 'right' but have to sit in the
mud, or we can forgive and all be happier and wiser for the next round.

------
seibelj
Did he really have to pay for his daughter's wedding? It's like 4000 words
about how poor he is then somehow he finds many thousands for a totally
unnecessary expense

~~~
donatj
Hah, if only my parents or wifes parents had paid for our wedding. That would
have been pure luxury. We saved for three years to pay for our wedding. We
were very frugal and it was beautiful. Paid for the entire thing without a
cent of debt. It's certainly doable.

------
auntienomen
I admire this guy for making sacrifices to educate his daughters well. (And it
seems like he's succeeded...Rhodes Scholars aren't exactly common.) It looks
to me, however, like he's might have failed in one important aspect.

He should have taught them from an early age about budgets and outlier
expenses and the real costs of things (e.g., good school district for them,
not much work for his wife). Instead, he's kept them in the dark, to the point
of burning retirement savings on a wedding.

No one is born knowing how personal finance works, and learning the hard way
sucks. Parents have an obligation to educate their children about this stuff.
It's tragic that so frequently, after learning the hard way themselves, they
hide everything from their kids, and in doing so, set the kids up for the same
set of hard knocks.

------
freedom2097
It seems that Americans have a serious issue with debt. I'm Italian and I live
in France... and there are only 2 things I would get in debt for: a car (only
if strictly necessarily) and a house. Nothing else. If you do not have the
money for something just wait till you have saved enough to buy it without
getting in "financial peril". My golden rule is to always spend as if you had
only a third of the money you actually have... and thx to it now (just got 30)
I could live with my savings for at least 2 years without working at all
maintaining the same lifestyle. An emergency of 2000$ (or euros) is really no
big deal.

------
rwc
"We don’t make [choices] with our financial well-being in mind, though maybe
we should."

Uh, hello? The paragraph consists entirely of "I" statements about the bad
choices he made and concludes with a "We".

There's no "we" about it -- I made (make) choices to improve my financial
wellbeing. If you don't, that's your problem.

~~~
KyleBrandt
I think the author's idea is that he is representative of the 47% of Americans
that don't have even a $400 dollar emergency fund. And that "We" is the people
in that 47%.

If survey is accurate, that large of a percentage of the population means that
society has a problem. That does not just impact the individuals that don't
follow good financial practices when they could. So it ends up being your
(people that make wise financial decisions) problem to a degree.

~~~
developer2
>> that large of a percentage of the population means that society has a
problem. That does not just impact the individuals that don't follow good
financial practices when they could

Just because it's 47% does not mean that the majority of those 47% are not
entirely responsible for their own situation. The things people are mentioning
(children's college/university, weddings, houses, cars) are completely
dependent on the individual's own decisions. That people actually _go into
debt_ or spend their _entire life savings_ on a bloody wedding of all things
is certainly not indicative of a problem with society.

Nobody is forced to spend beyond their means to strive to place themselves
above middle class. Spending is not justified because you fit the "middle
class" demographic and should thus be entitled to "middle class things". There
is no endemic here, only individuals making poor choices. There's no huge
secret to stashing away some money. It's _really_ not difficult. I can
sympathize for someone making less than $50k/year who genuinely struggles with
basics. The $50k/year earner who buys a new iPhone every year? Not so much.
Someone making $150k/year who is unable to withdraw $2000 from their chequing
account? Not a single ounce of sympathy for them. Unless one is in a truly
sticky spot like having to pay ungodly amounts of money to manage a severe
illness, there is no excuse other than an introspective look at one's
priorities.

Society cannot be used as a scapegoat here. The system is not flawed. The way
people try to position themselves at a higher level within the system than
they can afford? There's the issue.

------
13of40
> You look at these people and they are young professionals,” Lusardi said.
> “You expect that people would say, ‘Of course I would come up with it.’ ”
> But many of them could not.

I know when I go to work I'm pretty much surrounded by millionaires. I know
when I park my car there, it's surrounded by Lotuses and Teslas. What I really
want to see is a venn diagram of the two, because I suspect a large portion of
the latter are being mortgaged by people who don't have any real exit
strategy.

~~~
joshvm
I think this is a side effect of having jobs which are, relative to the rest
of the country, extremely well paid, combined with very high cost of living.

In the UK if you told someone you'd be moving to the Bay Area on a _starting
salary_ of $130k you would be looked at like you were minted for life. For
most tech graduates that's more than their parents' final salary and that's
where you get in at! However there's a disconnect between what seems like a
high salary and your spending power in somewhere like San Francisco.

Over here tech salaries are a lot lower, though still good compared to
everything except finance. Anyone who lives in London will assuredly _not_ be
buying a Tesla on a Google starting salary.

People like saying "Oh he earns a six figure salary", it's a status symbol,
and the natural response to earning that sort of cash after going through
college and being dirt poor is to splash it a little.

It's a fairly common question on Quora:

[https://www.quora.com/I-just-received-a-full-time-job-
for-10...](https://www.quora.com/I-just-received-a-full-time-job-
for-100k-year-and-I-really-want-to-get-the-Tesla-Model-S-Should-I-buy-one)

~~~
tamana
Some people have natural reaction to hoard their money after being dirt poor
and remember onf how hard it was.

"Natural reaction" is a cop out. People who get hired for being really
freaking smart should be smart.

~~~
joshvm
I should rephrase "a" natural reaction. Plenty of people don't waste their
money, but I think for a lot of others there is at least temptation to live a
little with their newfound windfall.

------
patrick_99
I think the lack of assets explains the angst shown by many Americans this
election cycle much better than the employment rate. Enough people are
working, they're just not making enough.

Reminds me of Mark Cuban's Ultimate Stress Test:
[http://blogmaverick.com/2016/02/08/some-thoughts-on-the-
pres...](http://blogmaverick.com/2016/02/08/some-thoughts-on-the-presidential-
race-and-sociocapitalism/)

------
klue07
> But recent research indicates that when people get some money—a bonus, a tax
> refund, a small inheritance—they are, in fact, more likely to spend it than
> to save it.

Not recent at all. I first read about it in The Millionaire Next Door book.
Referred to as the "better than" theory [1].

Plain and simple, people don't like to save when they have the option. They
like immediate reward. If you make $500 more a month after a raise, many
people will reward themselves for the raise, justify buying something they've
wanted, etc. After a while, the mindset that they are living just fine while
spending the extra money sets in and they end up never saving the extra $500.

[1]
[https://en.wikipedia.org/wiki/The_Millionaire_Next_Door#.22B...](https://en.wikipedia.org/wiki/The_Millionaire_Next_Door#.22Better_Than.22_theory)

------
masterponomo
My own practice in recent years has been to analyze trends and convert them
into investments. So for instance, I have substantial positions in McDonalds,
Altria, Philip-Morris, Exxon Mobile, Facebook, and Service Corp (none of which
do I patronize). People be gorging, smoking, posting online, and dying. To
invest in rampant financial ignorance, I looked into pawn shops and payday
loans, but those are all privately held (e.g. super-lucrative, don't need
outside capital). I'm looking into banks, Visa and MasterCard, and other
facilitators of credit and payments, as possible growth areas.

------
masterponomo
People (even those who reject Marxism) ought to recognize the fact that money
is the crystallization of labor, nothing more, nothing less. It gets more
complicated and abstract from there onward, but if one starts each financial
interaction with that "swing thought" then perhaps one will make better
decisions. I know I do.

