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  • FIRST POST
    • longleggedhair
    • By longleggedhair 11th Sep 17, 12:26 PM
    • 268Posts
    • 341Thanks
    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 5
    • AE448
    • By AE448 12th Sep 17, 3:33 PM
    • 3 Posts
    • 5 Thanks
    AE448
    Whilst I understand your thinking and I adopt some aspects of it myself, in a roundabouts way you are no different to those people who spend all their money. So you've saved 200K...but it's just sitting there doing nothing. So you could ask, what's the point in you saving that money? What're you going to do with it between now and the day you die? Those people who have the luxuries...flash cars, fine dining etc. may 'not have any money left' because they've spent it all, but there is a way of thinking that you're only here once. One day they could decide to sell the flash cars, downsize their property and live like a hermit for the rest of their lives and have the same sum of money saved as you have. You were given a property + £50K...that's whats made you. If you didn't have that initially, you would find it a very different world living on minimum wage.
    • Barny1979
    • By Barny1979 12th Sep 17, 3:52 PM
    • 3,815 Posts
    • 43,610 Thanks
    Barny1979
    Can I ask a couple of questions, how old are you OP and what is your future plan?
    Originally posted by Barny1979
    OP? are you able to respond?
    • Glen Clark
    • By Glen Clark 12th Sep 17, 3:55 PM
    • 3,889 Posts
    • 2,896 Thanks
    Glen Clark
    Driving a very expensive car doesn't always say what you think it does.
    I tend to wonder why you wouldn't buy an adequate car and donate the difference to someone in desperate need of it
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • longleggedhair
    • By longleggedhair 12th Sep 17, 3:57 PM
    • 268 Posts
    • 341 Thanks
    longleggedhair
    OP? are you able to respond?
    Originally posted by Barny1979
    Under 40. Future plans are to finish work as soon as I feel I have enough money to be comfortable. I "probably" do now, with my frugal lifestyle. But again it's that belts and braces instinct that means I will probably do another 4/5 years. I've reduced my hours to very part time over the last couple of years.

    Time will be spent doing the things I enjoy, countryside walking with my partner & my dog, gardening, National Trust properties & spending time with family & friends. It does help that my interests are mostly free/cheap. Which brings me back to my original point about time being more precious than things.
    • longleggedhair
    • By longleggedhair 12th Sep 17, 4:04 PM
    • 268 Posts
    • 341 Thanks
    longleggedhair
    So it's easy if you a) don't pay rent/mortgage and b) you were given a starter of 50k. Also guessing at no children?

    You'll find that probably some 99% of people, on minimum wage, do not get that luxury.

    Whilst I get what you were trying to say about frivilous spending, to claim it is easy, and also believe there is something 'wrong' with people, for not being able to duplicate your achievments is frankly ludicrious, and does reek of sneering, if I'm being bluntly honest.

    And, if somebody is on minimum wage, struggling to get by, can you really blame them for buying themselves something nice now and then, in an attempt to make life seem a bit better?
    Originally posted by binaryuniverse
    You miss the point, it's not specifically about my situation, more about the general concept of Time/Money/Things. If you want the nitty gritty of my situation I did have to pay a relative 50% of the property value (which as its a nice house wasn't cheap) but because of previous frugality and saving I was able to do.

    Another relative I have earns far more than me (take home £5K per month) they live in a rented house (beautiful) filled with expensive things and a Merc on the drive. Takeaway is ordered most nights. Outwardly you would look at their lifestyle and mine and think how well they had done and how badly I had done. The truth is they own no property, have no pension, are around 50K in debt and have no prospect of ever retiring, and will most likely have to work indefinitely to service their ever growing lifestyle and debt.
    • Barny1979
    • By Barny1979 12th Sep 17, 4:10 PM
    • 3,815 Posts
    • 43,610 Thanks
    Barny1979
    Though they haven't been lucky enough to inherit a house
    • binaryuniverse
    • By binaryuniverse 12th Sep 17, 4:46 PM
    • 468 Posts
    • 249 Thanks
    binaryuniverse
    You miss the point, it's not specifically about my situation, more about the general concept of Time/Money/Things.
    Originally posted by longleggedhair
    But that's exactly what you have done. You've taken your experience and applied to it to everyone, claiming it should be 'easy'. Which it most certainly isn't.
    • Audaxer
    • By Audaxer 12th Sep 17, 5:22 PM
    • 574 Posts
    • 252 Thanks
    Audaxer
    I spent week after week post Brexit watching my portfolio increasing by several thousands of pounds (as the supposed meltdown turned into a surge) earlier this year I just thought this can't possibly continue and felt that I should capitalise the gains. I'm still doing the regular monthly investing as I always have but for me there is a little too much heat in the market. It's a personal thing, by and large I always have been a buy and hold person. That strategy has done very well for me over the years-but for the minute I'm waiting it out.
    Originally posted by longleggedhair
    I can understand that as I've previously cashed in equities gains when I thought they were at an all time high, and then they kept rising. It might have been better to rebalance your portfolio by reducing your percentage of equities rather than cash it all in.
    • Fatbritabroad
    • By Fatbritabroad 12th Sep 17, 5:36 PM
    • 184 Posts
    • 79 Thanks
    Fatbritabroad
    That's excluding insurance and fuel to run the car and maintenance costs!!

    Ah that's why I can't convince myself to get a car. Imagine the opportunity costs of not using that money to be invested!!
    Originally posted by darkidoe
    Two different things there. Mating and the other benefits of owning an car. On the second point, that can be covered without owning one*, it's just a matter of balancing the various costs and a lot of people are saying new technology will seriously change the balance towards non-ownership.

    * many people don't actually "own" their cars now.
    Originally posted by AnotherJoe
    The answer would appear to be yes. It's been known for a long time that increasing wealth doesn't produce a corresponding increase in happiness, probably because happiness is inextricably linked to status, which is a zero sum game.

    When Mr Jones buys a bigger car than Mr Smith, the happiness only lasts until Mr Smith buys a bigger car, so if you look at the collective happiness of them both, particularly over the long term, there's no change, in spite of the escalating size of their cars.

    There's also the effect of habituation. When you drive to the car dealer on the way to pick up your brand new car you may be daydreaming about how much more fun it will be to drive, and how much more pleasant you commute will be, but you've completely forgotten that you felt exactly the same way about the car you're sitting in when you bought that. The excitement of a new purchase quickly wears off because of habituation, but when people don't understand this you get the Imelda Marcos effect: buying hundreds of shoes/handbags/dresses/whatever in an attempt to maintain the feeling. As Geoffrey Miller says: consumerism is founded on the denial of habituation.
    Originally posted by jack_pott
    This is very true I lease a BMW for nearly 600 a month and regretted getting it the moment I had it delivered. I will probably still lease but get something alot closer to my car allowance at work probably half that amount next time and save the cash. That said I could have afforded to buy the car I lease outright but the investment returns narrow the gap considerably by leaving g the money I would have spent invested so I console myself with that 😊
    • davieg11
    • By davieg11 12th Sep 17, 8:37 PM
    • 253 Posts
    • 150 Thanks
    davieg11
    You miss the point, it's not specifically about my situation, more about the general concept of Time/Money/Things. If you want the nitty gritty of my situation I did have to pay a relative 50% of the property value (which as its a nice house wasn't cheap) but because of previous frugality and saving I was able to do.

    Another relative I have earns far more than me (take home £5K per month) they live in a rented house (beautiful) filled with expensive things and a Merc on the drive. Takeaway is ordered most nights. Outwardly you would look at their lifestyle and mine and think how well they had done and how badly I had done. The truth is they own no property, have no pension, are around 50K in debt and have no prospect of ever retiring, and will most likely have to work indefinitely to service their ever growing lifestyle and debt.
    Originally posted by longleggedhair
    Most people ( not all ), would rather work and have expensive things like the new iPhone X, Merc in the drive etc, than retire early and hang about all day visiting garden centres, countryside walking, gardening etc,etc.
    • Hattie625
    • By Hattie625 12th Sep 17, 8:51 PM
    • 617 Posts
    • 480 Thanks
    Hattie625
    Most people ( not all ), would rather work and have expensive things like the new iPhone X, Merc in the drive etc, than retire early and hang about all day visiting garden centres, countryside walking, gardening etc,etc.
    Originally posted by davieg11
    Is your assertion based on research and can you provide a link please?
    • davieg11
    • By davieg11 12th Sep 17, 9:52 PM
    • 253 Posts
    • 150 Thanks
    davieg11
    Is your assertion based on research and can you provide a link please?
    Originally posted by Hattie625
    No official research. When I go around my work colleagues and explain that if they increased their pension payments to 5% the work would increase their payment to 10%. More free money. The overwhelming response is 'no way, I'd rather spend what I have now on luxuries' , 'I won't make retirement age anyway' , 'I can't afford it' , etc,etc
    • fiisch
    • By fiisch 12th Sep 17, 10:44 PM
    • 201 Posts
    • 78 Thanks
    fiisch
    The point is that compound interest works against you when you spend then save, but it works in your favour when you save then spend.
    Originally posted by jack_pott
    I completely get that - and I have realised that even the small things e.g.: paying insurance monthly - is just giving money away. However, the housing market also moves - had we not got on the property ladder when we did, our first flat would have been considerably (>£50k) more expensive. The mortgage "we" took on our parent's property cost circa £2,500 interest on a £25,000 sum, although we did benefit by paying this off early.

    Cars on PCP is an interesting one - I am a sucker for PCP however cars are a passion of mine. There is an argument to say that a cheaper PCP/lease deal is cheaper than an older car owing to the known quantity regarding maintenance costs. Then there's the safety, economy and reliability aspect.

    I do question my own logic of spending £500/month on a Honda when my daily commute is a round trip of 3 miles, but I get a lot of pleasure from it, and you do only live once....

    I think what I'm saying in a roundabout way is there is a balance, a happy medium - the OP's lifestyle would not suit me, but at the same time living from paycheque to paycheque and not having a buffer is stressful, and removes the luxury of choice.

    I'd also add into the mix - as a younger generation, we're taught from an early age that debt is good - to go to university, we're lumbered with excessive debt that is then discretely removed from our wages in "small manageable" chunks (or so we're led to believe when we accept the debt), a system decided by the very people who benefited from free grammar schools and university education in years gone by......
    • Audaxer
    • By Audaxer 12th Sep 17, 10:56 PM
    • 574 Posts
    • 252 Thanks
    Audaxer
    I do question my own logic of spending £500/month on a Honda when my daily commute is a round trip of 3 miles, but I get a lot of pleasure from it, and you do only live once....
    Originally posted by fiisch
    I assume the pleasure is from driving the car in general, rather than the 3 mile round trip commute. One and half miles each way is not even worth getting changed into my cycle gear for, never mind taking the car. That length of commute would be ideal for a brisk walk to work in all but the worst of weather conditions. Think of the health benefits and money you would save.
    • fiisch
    • By fiisch 12th Sep 17, 11:13 PM
    • 201 Posts
    • 78 Thanks
    fiisch
    I assume the pleasure is from driving the car in general, rather than the 3 mile round trip commute. One and half miles each way is not even worth getting changed into my cycle gear for, never mind taking the car. That length of commute would be ideal for a brisk walk to work in all but the worst of weather conditions. Think of the health benefits and money you would save.
    Originally posted by Audaxer
    It gets worse.... we have a bit of a dodgy work car park, and I'm particularly fussy, so I drive in 2 hours early every day to get one of 3 wide spaces, then walk across the road to the gym!

    In my defence, although distance-wise you could walk it, there's no suitable path (through muddy fields/along main roads with no pathways etc.).

    You're right - the enjoyment comes from weekend driving, although after a year I've only managed to clock up 5000 miles. But I'd class cars as a hobby (I know I'm sad), and has been a motivation for me for a very early age (I started saving hard for my first car aged 11).
    • eskbanker
    • By eskbanker 13th Sep 17, 12:17 AM
    • 5,813 Posts
    • 5,705 Thanks
    eskbanker
    I've got several formula's if anyone wants to work it out properly but as a rough guide assuming 5% a year growth an investment will double in 20 years.
    Originally posted by Anonymous101
    That's much too rough as it takes no account of compounding - 5% annual growth would double your money in just over 14 years and even 4% growth doubles a pot in less than 18 years....
    • adonis10
    • By adonis10 13th Sep 17, 8:16 AM
    • 1,477 Posts
    • 194 Thanks
    adonis10
    No official research. When I go around my work colleagues and explain that if they increased their pension payments to 5% the work would increase their payment to 10%. More free money. The overwhelming response is 'no way, I'd rather spend what I have now on luxuries' , 'I won't make retirement age anyway' , 'I can't afford it' , etc,etc
    Originally posted by davieg11
    That really baffles me, but I'm sure it's quite a common occurrence. Knowing the value of that free money, compounded year after year, total at retirement would probably make them think twice. Also, if they only took a minute to actually work out what that 5% does to their net pay (minimal difference, given the benefits) maybe they would change their way of thinking. I jumped at the chance to up mine when I could, and wish I had gone even higher as who knows then that offer will reduce/cease with job changes, cost cutting etc.

    Also, where does this feeling of "not making it until retirement" come from?! Sure, retirement age will be 70 odd but people are generally living much longer nowadays. On the flip side, perhaps the "have it all now" consumerist society we live in will help people die off early - fast food, booze, drugs and the rise of social media giving everyone the "you can have it all" and " live for the moment" outlook on life. Wouldn't surprise me if this was all planned by the powers that be to rinse people of their cash leading them to work until the die, increasing early deaths due to unhealthy lifestyles etc., but that's another debate!
    • kauto
    • By kauto 13th Sep 17, 8:24 AM
    • 24 Posts
    • 28 Thanks
    kauto
    Under 40. Future plans are to finish work as soon as I feel I have enough money to be comfortable. I "probably" do now, with my frugal lifestyle. But again it's that belts and braces instinct that means I will probably do another 4/5 years. I've reduced my hours to very part time over the last couple of years.

    Time will be spent doing the things I enjoy, countryside walking with my partner & my dog, gardening, National Trust properties & spending time with family & friends. It does help that my interests are mostly free/cheap. Which brings me back to my original point about time being more precious than things.
    Originally posted by longleggedhair

    Good on you !! I too hope that I'm in a similar position when I get into my 40's.

    Oh and don't listen to the haters,

    Haters gunna hate haha!
    "Be Fearful when's others are Greedy and Greedy only when others are Fearful"
    • Hattie625
    • By Hattie625 13th Sep 17, 9:38 AM
    • 617 Posts
    • 480 Thanks
    Hattie625
    No official research. When I go around my work colleagues and explain that if they increased their pension payments to 5% the work would increase their payment to 10%. More free money. The overwhelming response is 'no way, I'd rather spend what I have now on luxuries' , 'I won't make retirement age anyway' , 'I can't afford it' , etc,etc
    Originally posted by davieg11
    I don't think I would want to be a customer of a company or organisation which employed a majority of employees with such a blinkered and short-sighted attitude to their own financial well-being. If they don't care about their own futures, why would they care about their customers?
    • armchaireconomist
    • By armchaireconomist 13th Sep 17, 9:38 AM
    • 182 Posts
    • 211 Thanks
    armchaireconomist
    Ah that makes sense, a tad misleading that you've "saved 200k on minimum wage" (with only a *small* inheritance of 1/4 of the cash value plus a house)


    Good on you having the willpower not to spend it. Not sure why you're making ludicrous claims though, unless this was some form of willy waving exercise...
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