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  • FIRST POST
    • longleggedhair
    • By longleggedhair 11th Sep 17, 12:26 PM
    • 268Posts
    • 342Thanks
    longleggedhair
    What's wrong with people.
    • #1
    • 11th Sep 17, 12:26 PM
    What's wrong with people. 11th Sep 17 at 12:26 PM
    Despite earning big money, why are some people in big debt and have no savings.

    I think it's definitely a psychological thing. I had parents who were professionals & earned very good money, but never had any money, because while they are both intelligent people they are financially illiterate. Money was just wasted on needless things and quite often financial problems would crop up.

    The experience as a child changed my whole mindset and as an adult I've saved & invested with every pay rise. Just added up my latest total and im around £200,000 after 12 years....and it really was very easy! I don't earn big money (just above minimum wage) I did have a small inheritance and have done well with my investments.

    The key is not to chase the posh cars/clothes/phones. I absolutely love my life, I live it to the full but that money gives me so much security and happiness you wouldn't believe. I know that if I want I can walk out of work tomorrow I can, it gives you choices. And that security is worth far more than material things.

    As others have said it's important to live life and enjoy it, we only come this way once, but what I don't understand is why most people haven't "seen the light" (time is precious, we don't have much so why spend most of our life at work to buy things that make us feel better about going to work, which then results in us having to be at work almost forever) I work with people who hate work, are desperate to leave but have no prospect of ever being able to become they are driving the posh car, the designer clothes etc

    It seems so simple to me...but why have so few seen the light?
Page 1
    • eskbanker
    • By eskbanker 11th Sep 17, 12:36 PM
    • 5,818 Posts
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    eskbanker
    • #2
    • 11th Sep 17, 12:36 PM
    • #2
    • 11th Sep 17, 12:36 PM
    As you say, it's a psychological thing - some are motivated to save while others choose to spend. You may evangelise about having 'seen the light' but many wouldn't necessarily see your way as being better than the one they've adopted (whether consciously or not), and to suggest that this means that there's something wrong with them is at best narrow-minded and frankly comes across as smug....
    • JohnRo
    • By JohnRo 11th Sep 17, 12:40 PM
    • 2,458 Posts
    • 2,213 Thanks
    JohnRo
    • #3
    • 11th Sep 17, 12:40 PM
    • #3
    • 11th Sep 17, 12:40 PM
    to paraphrase Dave Ramsey

    “Don't buy things you don't need with money you don't have to impress people you don't like.”

    "Rich people stay rich by living like they're broke, broke people stay broke buy living like they're rich."

    "Where you are is the sum of the choices you've made, don't like it, make different choices."
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • B_G_B
    • By B_G_B 11th Sep 17, 12:45 PM
    • 388 Posts
    • 395 Thanks
    B_G_B
    • #4
    • 11th Sep 17, 12:45 PM
    • #4
    • 11th Sep 17, 12:45 PM
    The guy with the Ferrari on his drive and no savings might be thinking the same about you. Personally I’m more like you. A bit of cash in the bank gives me a good sense of security. Doesn’t mean I’m right though. Everyone is different.
    • eskbanker
    • By eskbanker 11th Sep 17, 12:52 PM
    • 5,818 Posts
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    eskbanker
    • #5
    • 11th Sep 17, 12:52 PM
    • #5
    • 11th Sep 17, 12:52 PM
    • sorcerer
    • By sorcerer 11th Sep 17, 1:05 PM
    • 814 Posts
    • 390 Thanks
    sorcerer
    • #6
    • 11th Sep 17, 1:05 PM
    • #6
    • 11th Sep 17, 1:05 PM
    I agree with you I love to save and have a nest egg, but I have nothing against people who don't. In fact people who spend everything they have might be better off then us when they are older, with a nice pensions, free healthcare, free nursing and care homes...etc. Assuming the government hasn't gone broke by then.
    • bowlhead99
    • By bowlhead99 11th Sep 17, 1:06 PM
    • 6,907 Posts
    • 12,423 Thanks
    bowlhead99
    • #7
    • 11th Sep 17, 1:06 PM
    • #7
    • 11th Sep 17, 1:06 PM
    I had parents who were professionals & earned very good money, but never had any money, because while they are both intelligent people they are financially illiterate. Money was just wasted on needless things and quite often financial problems would crop up.

    The experience as a child changed my whole mindset
    Originally posted by longleggedhair
    Strange phrasing: for the entirety of your childhood your parents were financially illiterate, and did not educate you in financial matters or exercise budgetary control - and that 'changed your mindset' in a positive way... so was your mindset 'pre childhood', as a baby, not to watch the pennies but now it is to watch the pennies? I guess we all grow up.

    It is great that you 'saw the light' but a problem for many people would be that if both parents are financially illiterate and short of cash because they overspend, it's probably more likely (not less likely) that their offspring brought up in that environment will lack financial literacy and are less likely to have great natural budgetary control, as they haven't had someone showing them the way.

    and as an adult I've saved & invested with every pay rise. Just added up my latest total and im around £200,000 after 12 years....and it really was very easy! I don't earn big money (just above minimum wage)
    Minimum wage is now £7.50 having been lower than that for the last 12 years. At £7.50ph working a standard 9-5 with an hour for lunch, assuming you get that salaried for a full 52 weeks a year, that's a little under £164k gross of tax and national insurance after the 12 years.

    Most minimum wage earners find housing, bills, and essentials like food will gobble up a large percentage of their income leaving little to put away beyond a basic emergency fund and then it is a slow slog to build capital to acquire property to live in (if at all possible) or to invest for retirement. So, while earning less than £164k gross in today's money over a period of 12 years, with bills to pay, to accumulate £200k in the bank over that period is a pipedream for most and not a useful target.

    I did have a small inheritance and have done well with my investments.
    Granted it is perhaps quite a lot easier if you inherity property and/or cash and are investing your surplus funds over one of the the longest investments "bull markets" of the last five decades.

    The key is not to chase the posh cars/clothes/phones. I absolutely love my life, I live it to the full but that money gives me so much security and happiness you wouldn't believe. I know that if I want I can walk out of work tomorrow I can, it gives you choices. And that security is worth far more than material things.
    A chunky inheritance can give you that. Frugality over a long period of time and getting used to an inexpensive lifestyle is also handy. When you have a chunk of money in the bank to support you, you can put further money into investments which may more than double in a decade without you having to worry about them halving before you need to spend them, because you don't need to spend them because you have a big stash of cash; you are on the way to financial independence.

    For most people it takes a while to get there and I wouldn't pour scorn on someone who didn't have £200k savings and investment from their decade of minimum wage work as if it were easy and a no-brainer. You don't get £200k in the bank from deciding to save £100 a month by cutting out takeaways and Sky and mobile phone contracts for a decade. Stuffed into a 4% interest rate product for a decade you'd turn £100pm into about £15k, before it gets eroded by inflation. Not to be sniffed at - and I don't recommend people on NMW spend their money on the latest iPhone, Macbook or Samsung Galaxy - but nowhere near financial independence.

    So, it's a nice story (and there are plenty of blogs which are very evangelistic about financial independence / retire early etc - Mr Money Mustache is quite fun). But, "why doesn't everyone do it like me it was eeeeaaasssy" seems a bit like bragging, tbh.
    Last edited by bowlhead99; 11-09-2017 at 1:10 PM.
    • ChesterDog
    • By ChesterDog 11th Sep 17, 1:21 PM
    • 800 Posts
    • 1,447 Thanks
    ChesterDog
    • #8
    • 11th Sep 17, 1:21 PM
    • #8
    • 11th Sep 17, 1:21 PM
    Be grateful that there's something wrong with them.

    Their spending keeps the economy going, and drives company profits in which we are all free to have a share.

    I think it is hard for many people to develop what we would call an appropriate mindset at the moment because of low interest rates. It is easy to see saving as pointless, and that fosters a 'money is for spending' attitude.

    Conventional wisdom is that your health is the most important thing, but having reached a position of good financial security and correspondingly suffered very ill health (in my wife's case, and that is having a significant impact on my own), the very strong financial position we have got ourselves into makes dealing with the consequences of the poor health much easier, and frees us completely from the financial impact that generally accompanies such things.

    I am something of an investment/fiscal security evangelist at heart and have always taken a belt and braces approach to our finances. The result of that approach (which has not affected our enjoyment of life) is, perhaps ironically, priceless.
    I am one of the "Dogs of the Index".
    • jimjames
    • By jimjames 11th Sep 17, 1:24 PM
    • 12,194 Posts
    • 10,711 Thanks
    jimjames
    • #9
    • 11th Sep 17, 1:24 PM
    • #9
    • 11th Sep 17, 1:24 PM
    You may evangelise about having 'seen the light' but many wouldn't necessarily see your way as being better than the one they've adopted (whether consciously or not).
    Originally posted by eskbanker
    I don't think that anyone having no emergency funds, living from payday to payday in overdraft and needing loans to cover unexpected items could be seen as anything other than worse than having savings to cover such items. Entirely their choice how to live their life but I can't see a lot of dispute that spending more than you earn is less preferable to having savings. Obviously the level of savings could make a massive difference.

    However as shareholder in various banks and lenders I obviously appreciate the people who do live in such a way as they generate more profits.
    Last edited by jimjames; 11-09-2017 at 1:31 PM.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Glen Clark
    • By Glen Clark 11th Sep 17, 1:29 PM
    • 3,889 Posts
    • 2,896 Thanks
    Glen Clark
    Despite earning big money, why are some people in big debt and have no savings.
    Originally posted by longleggedhair
    Its often due to the high cost of rent and commuting.
    You have obviously managed to avoid that and should think yourself lucky.
    Some salaried professionals in London are reduced to going to foodbanks
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • mollycat
    • By mollycat 11th Sep 17, 1:34 PM
    • 950 Posts
    • 1,911 Thanks
    mollycat
    TBH didn't read the OP as "bragging" or "smug"....just a legitimate, (but unnecessary) frustration with people who make a pig's ear of their finances.

    I'm a bit like him/her; sometimes struggle to understand why people would choose to rack up debt, buy stuff they don't need.

    Unlike him/her I'm not bothered

    These "consumer suckers" as MMM calls them are essential for the economy.

    If everyone watched the pennies stagnation would follow.

    Well done OP, don't sweat it though
    • JohnRo
    • By JohnRo 11th Sep 17, 1:50 PM
    • 2,458 Posts
    • 2,213 Thanks
    JohnRo
    It's my opinion, controversial no doubt, people who are struggling simply choose to make bad financial decisions and don't seem to have the capacity to recognise as much or more importantly the desire to seek help and/or mend their ways. Everything that's wrong is someone else's fault.

    Being frugal is not cool.

    One thing that stuck with me after watching one of those nasty poverty porn TV programs years ago which paradoxically I object to and typically avoid...

    This glamorous young thing, caked in makeup, nice hair do, thousands in debt, living with parents and struggling to make ends meet day to day speaks into the camera,

    'Just because I'm on low pay why shouldn't I have nice things.'
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • ChesterDog
    • By ChesterDog 11th Sep 17, 1:59 PM
    • 800 Posts
    • 1,447 Thanks
    ChesterDog
    It's my opinion, controversial no doubt, people who are struggling simply choose to make bad financial decisions and don't seem to have the capacity to recognise as much or more importantly the desire to seek help and/or mend their ways. Everything that's wrong is someone else's fault.

    Being frugal is not cool.

    One thing that stuck with me after watching one of those nasty poverty porn TV programs years ago which paradoxically I object to and typically avoid...

    This glamorous young thing, caked in makeup, nice hair do, thousands in debt, living with parents and struggling to make ends meet day to day speaks into the camera,

    'Just because I'm on low pay why shouldn't I have nice things.'
    Originally posted by JohnRo
    Reminds me of a tenant who was renting my dad's house for a while. He said to me once "We always try to punch above our weight financially".

    It didn't end well...
    I am one of the "Dogs of the Index".
    • BLB53
    • By BLB53 11th Sep 17, 2:04 PM
    • 1,157 Posts
    • 939 Thanks
    BLB53
    I think its a combination of lack of financial education...parents/school; mass media advertising which converts wants into needs very successfully; a culture where debt becomes the norm and starts with student loans; a government which continues to live well beyond its means and a Bank of England which refuses to reward savers as it may upset too many borrowers....all very depressing.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • strongboes
    • By strongboes 11th Sep 17, 2:13 PM
    • 83 Posts
    • 58 Thanks
    strongboes
    what is big money exactly?

    some people want nice cars, houses, and have families, maybe they are happy. how do you know others financial position anyhow? sounds like you just want a pat on the back tbh
    • talexuser
    • By talexuser 11th Sep 17, 2:18 PM
    • 2,284 Posts
    • 1,763 Thanks
    talexuser
    Down to upbringing and education? As a child relatives started off savings accounts, and any birthday and xmas money was always encouraged to be saved at least partly for a special day or treat, and not all spent straight away. That lesson stayed with me.
    • Crashy Time
    • By Crashy Time 11th Sep 17, 2:33 PM
    • 5,233 Posts
    • 2,210 Thanks
    Crashy Time
    Its often due to the high cost of rent and commuting.
    You have obviously managed to avoid that and should think yourself lucky.
    Some salaried professionals in London are reduced to going to foodbanks
    Originally posted by Glen Clark


    ..and massively inflated house prices due to the credit bubble that all these debt junkies were encouraged into by the banks....
    • Crashy Time
    • By Crashy Time 11th Sep 17, 2:37 PM
    • 5,233 Posts
    • 2,210 Thanks
    Crashy Time
    what is big money exactly?

    some people want nice cars, houses, and have families, maybe they are happy. how do you know others financial position anyhow? sounds like you just want a pat on the back tbh
    Originally posted by strongboes


    I think it is just common knowledge that a large proportion of people are in eye watering debt, whether it be the massive mortgage or the debt to finance the bling lifestyle, cars on monthly payments etc.?
    • somethingcorporate
    • By somethingcorporate 11th Sep 17, 2:41 PM
    • 8,841 Posts
    • 8,533 Thanks
    somethingcorporate
    It's a bit hypocritical to say we only live for now and criticise people maximising their current enjoyment of life (whether or not they can afford them)...it's just as easy to say they have "seen the light" about maximising their enjoyment of today without worrying about how they will pay for it tomorrow (because they may not be here).
    Thinking critically since 1996....
    • Barny1979
    • By Barny1979 11th Sep 17, 2:47 PM
    • 3,817 Posts
    • 43,621 Thanks
    Barny1979
    Well a small inheritence is more than some people have, also though you may have more than £200k saved, do you live life? Have you seen far off places, or new interesting places? What is your aim in life, is it to be retired by a set time or just build up money?
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