Getting Ahead, Cashwise.

[B. de Corbin]

When I was a kid, we were dirt poor. I couldn't even describe to most of you what that meant, back in the late 50's (just to give you an example, my mom would buy a can of pop - yes, just one [$0.10 per can] - and on Saturday night we'd divide it up four ways and feel like we were kings of the world... for about 1/2 hour... we made it last).

However, Dad worked his butt off, and is now retired, and sitting on top of a couple million in investments. He got that through hard work and carefully managing and investing his money.

Is it still possible today, in the early 21st century, to succeed like that?

[DanieMarie]

Re: Getting Ahead, Cashwise.

Yes it is.

My family lost most of their stocks in the crash. They're also already almost back where they were at. It's volatile but it's possible.

I think it's -more- possible in North America though than it is in Germany or the UK. Here the education system pretty much dictates that if you're born poor, you'll probably stay poor. It's BS.

[ceragonstarfire]

Re: Getting Ahead, Cashwise.

[quote author=DanieMarie link=topic=1384.msg28313#msg28313 date=1294870047]
Yes it is.

My family lost most of their stocks in the crash. They're also already almost back where they were at. It's volatile but it's possible.

I think it's -more- possible in North America though than it is in Germany or the UK. Here the education system pretty much dictates that if you're born poor, you'll probably stay poor. It's BS.
[/quote]

i hate to disappoint you, but it not just in germany, it everywhere. In sociology i was taught that everyone belongs in a different economic bracket. and most people will only get as high in that bracket as they were raised in. not sure why though, maybe i should have paid more attention......

[MythManners]

Re: Getting Ahead, Cashwise.

It is most certainly possible to accumulate wealth!

The path that works well for most is to develop financial discipline, patience, knowledge of your investments, and keeping a humble lifestyle.

Real estate is my recommendation. It is risky as a short term investment, but is always profitable as a long term investment. As with stocks and bonds, the trick is to buy low and sell high. Housing has the advantage of going through predictable cycles. House payments should always build equity, whereas paying rent offers zero return. Leveraging the original investment of your home, rental property provides an excellent return and a secure hedge against inflation.

However, it is not a very liquid investment. One should always have a nice bit of cash for the initial investment, a bit more for maintenance and improvements, and a reserve fund for emergencies. Many are put off by this prospect, due to the time needed to build up the needed monies and credit rating. Many do not fully grasp just how quickly a decade can pass, nor how quickly cash can build from setting aside a portion of your paycheck on a regular basis.

[DanieMarie]

Re: Getting Ahead, Cashwise.

[quote author=ceragonstarfire link=topic=1384.msg28323#msg28323 date=1294877699]
i hate to disappoint you, but it not just in germany, it everywhere. In sociology i was taught that everyone belongs in a different economic bracket. and most people will only get as high in that bracket as they were raised in. not sure why though, maybe i should have paid more attention......
[/quote]

Well, I didn't grow up in Germany, I grew up in Canada. And yes, it's hard to change brackets, and the gap is widening between the rich and poor there as well, but it's a LOT easier to change your situation in Canada than it is here. A LOT.

If things were the same way in Canada as they are in Germany, there is no way I'd be university educated and come from an upper middle class family.

Not that it's not possible to accumulate wealth here in Germany, but it's really unlikely if you come from a poor or immigrant background. Whereas Canada it's a lot easier and I admire that more (and it's one of the factors that make it one of the best countries in the world to live in).

[DanieMarie]

Re: Getting Ahead, Cashwise.

[quote author=MythManners link=topic=1384.msg28332#msg28332 date=1294882611]

The path that works well for most is to develop financial discipline, patience, knowledge of your investments, and keeping a humble lifestyle.


[/quote]

Totally agreed. I think too many people want to get rich quick...which rarely works. Most people lack long-term focus. And education regarding credit and basic financial skills (which help you live within your means) just SUCKS.

That being said, in order to put aside money, you have to earn above sustenance.

[ceragonstarfire]

Re: Getting Ahead, Cashwise.

not too familiar about canada. is it a lot easier to get by there? like here its like you work and work and work just to stay alive. i want to put money away but its like i am living from paycheck to paycheck. i can't seem to get ahead

[DanieMarie]

Re: Getting Ahead, Cashwise.

[quote author=ceragonstarfire link=topic=1384.msg28461#msg28461 date=1294947049]
not too familiar about canada. is it a lot easier to get by there? like here its like you work and work and work just to stay alive. i want to put money away but its like i am living from paycheck to paycheck. i can't seem to get ahead
[/quote]

There's poverty, sure, but less on average than the US. A better education system (in the top 10 in OECD's PISA study), universal health care helps I think, and also there are stricter laws about minimum wage (BC has the lowest in the country at $8 an hour, though if you're making that, you're still pretty poor) and more extensive welfare. I guess there are fewer super rich people (not that they don't exist) as well...most people are in the middle.

The country also concerns itself with these issues quite a bit. The gap between rich and poor is widening and child poverty is an issue, and there's a lot of talk at the moment as to how this can be fixed.

But overall, I think that the strong economy and social systems do help...even if you're poor, you can still get a decent education, health care and social assistance. It's not fool proof but it sure helps.

Other issues include homelessness, which in Canada isn't so much a poverty problem as it is a mental health support and drug abuse problem (which I think is a symptom of the former). Canada would do better to have better support for mental health within the public health care system.

Here is a good page with some resources about poverty in Canada: http://intraspec.ca/povertyCanada.php

Though skimming through it, there's not too much about upward mobility amongst the poor.

Wikipedia's page is also fairly accurate: http://en.wikipedia.org/wiki/Poverty_in_Canada

[B. de Corbin]

Re: Getting Ahead, Cashwise.

[quote author=ceragonstarfire link=topic=1384.msg28323#msg28323 date=1294877699]
i hate to disappoint you, but it not just in germany, it everywhere. In sociology i was taught that everyone belongs in a different economic bracket. and most people will only get as high in that bracket as they were raised in. not sure why though, maybe i should have paid more attention......
[/quote]

LOL - I wish you'd have stayed awake through that, because I'd love to hear the rationale. It is true that there are barriers to moving up, but they are mainly psychological barriers, and are easily overcome... if one is willing...

[quote author=DanieMarie link=topic=1384.msg28313#msg28313 date=1294870047]
My family lost most of their stocks in the crash. They're also already almost back where they were at. It's volatile but it's possible.
[/quote]

I imagine your dad is a pretty smart investor, and he held on to his good stocks, and maybe even bought more when they dropped. A crash like that is a golden opportunity to invest, but what happens with a lot of amateur investors is that, when the stocks crash, they panic and sell instead of holding on and/or buying - the opposite of the investor's mantra "buy low, sell high."

[quote author=DanieMarie link=topic=1384.msg28313#msg28313 date=1294870047]
I think it's -more- possible in North America though than it is in Germany or the UK. Here the education system pretty much dictates that if you're born poor, you'll probably stay poor. It's BS.
[/quote]

I guess you're talking about what I think of as the "European system," where people get tested then tracked into either a higher ed path, or a technical school path (?). There are actually some benefits to that system -

In the U.S., we try to educate every student FOR college. However, not all students really should go to college - and would be better served by a technical school education. We end up putting a lot of our public education funding into training people for jobs they neither want nor are suited to.

Both systems have their pluses and minuses - I'm not sure that one is clearly better than the other, and I can't think of a third alternative that would work better.

[quote author=MythManners link=topic=1384.msg28332#msg28332 date=1294882611]
Real estate is my recommendation. It is risky as a short term investment, but is always profitable as a long term investment. ...[/quote]

This is probably true in the long run, for a person who can play it smart... There are a lot of people, currently, who are in big trouble in real estate. They bought when prices where high, and are now (intentionally) defaulting on their loans because the prices dropped to the point where they had enormous mortgages for houses with minimal value.

But if you can keep your head, and have the money to invest, real estate is generally a great investment. And you're right - it's far better than throwing your money away on rental property. Even a trailer in a trailer part is better than renting. At least you get SOMETHING back when you sell .

[quote author=DanieMarie link=topic=1384.msg28430#msg28430 date=1294940723]
Totally agreed. I think too many people want to get rich quick...which rarely works. Most people lack long-term focus. And education regarding credit and basic financial skills (which help you live within your means) just SUCKS.

That being said, in order to put aside money, you have to earn above sustenance.
[/quote]

I think one of the problems that people have is that what they regard as "subsistence level" has changed. Not to be too personal, but when I was a kid, we never went out to eat (maybe once a year) because even "cheap" restaurant food, like McDonald's, costs three or four times what it costs to cook at home, we didn't have two TVs, a computer (or two), cell phones with expensive monthly plans, I already told you about the pop thing (no 64v oz. slurpies), etc., and yet, when I meet people who are "struggling" today, they have more gagetry than rich people did back in the 60's.

I know that there are many people today in the U.S. who are honestly poor and really struggling, but people who are honestly poor don't spend $80 a month for cell phone service...

[quote author=ceragonstarfire link=topic=1384.msg28461#msg28461 date=1294947049]
not too familiar about canada. is it a lot easier to get by there? like here its like you work and work and work just to stay alive. i want to put money away but its like i am living from paycheck to paycheck. i can't seem to get ahead
[/quote]

It can be real rough in the U.S. to get ahead, but one piece of advice I got that has paid off massively is that, if you only make one investment, invest in an education. Spending money to get the education you need for a job that will pay reasonably well pays off forever.

[DanieMarie]

Re: Getting Ahead, Cashwise.

[quote author=B. de Corbin link=topic=1384.msg28478#msg28478 date=1294950863]
I imagine your dad is a pretty smart investor, and he held on to his good stocks, and maybe even bought more when they dropped. A crash like that is a golden opportunity to invest, but what happens with a lot of amateur investors is that, when the stocks crash, they panic and sell instead of holding on and/or buying - the opposite of the investor's mantra "buy low, sell high." [/quote]

Yeah he is a good investor, but he did lose some key ones that he was pretty sure wouldn't come back, that did. They had to remortgage their home, but they both have high incomes and some investments went back up so I guess it could have been worse. I don't talk about finances as much with my dad as I used to though, but I'm using the "Christmas scale" in part to measure this (in times of prosperity in my family, Christmas spending is really high. I got a LOT for Christmas this year).

I guess you're talking about what I think of as the "European system," where people get tested then tracked into either a higher ed path, or a technical school path (?). There are actually some benefits to that system -

In the U.S., we try to educate every student FOR college. However, not all students really should go to college - and would be better served by a technical school education. We end up putting a lot of our public education funding into training people for jobs they neither want nor are suited to.

Both systems have their pluses and minuses - I'm not sure that one is clearly better than the other, and I can't think of a third alternative that would work better.

I get what you're saying, and I can see some benefits too, but I think overall it helps to have everyone at the same level and just focus a little less on university. In my province trade school is done through college, and when I gradded they were already starting to encourage more students to go that route (especially since some key trades are very highly paid in Canada!) The problems in Europe I think are also that trades are so badly paid. And in Germany specifically, there aren't enough places for every student that wants to write their A-levels to do so, and places are mostly done by nomination. And you have to decide SUPER young (like 10-11ish) to do it. I think that's wrong.
Overall, it's a nice idea because if you're not so into university you don't have to do the extra schooling, but the problems are that people from poor and immigrant backgrounds don't really get the same support at home from their education.
I'd say that overall I'm against the European system, but I don't directly have much data to support it (I'd like to find some but I'm on a break from studying). From just personal observation though, it supports a classist system.

I think one of the problems that people have is that what they regard as "subsistence level" has changed. Not to be too personal, but when I was a kid, we never went out to eat (maybe once a year) because even "cheap" restaurant food, like McDonald's, costs three or four times what it costs to cook at home, we didn't have two TVs, a computer (or two), cell phones with expensive monthly plans, I already told you about the pop thing (no 64v oz. slurpies), etc., and yet, when I meet people who are "struggling" today, they have more gagetry than rich people did back in the 60's.

I know that there are many people today in the U.S. who are honestly poor and really struggling, but people who are honestly poor don't spend $80 a month for cell phone service...

I guess that's true. It's actually what I meant about financial education.
Also, from personal experience, it's hard to downgrade as well when your income drops. I don't save at the moment because I don't earn money, and I DO spend 80 a month on cell phone (locked into a long-term contract I started when I was working), own a home (which really wouldn't be wise to sell at the moment) and I have a lot of consumer electronics I bought when I was earning money. Though, I don't really go calling myself poor much, though I do whine about being broke because this is the least money I've ever had in my life and it's kind of rough if you're used to having more (even if you still have lots!) So I guess the recession could have been rough on a lot of people that way because when you're used to more, it's hard to do with less, even if "less" is still a lot.

I think it's really important to differentiate between "broke" and "poor" though. If you're broke you're probably just living off less than you're used to but you're not poor by any means. If you're poor, you're struggling to feed yourself. Big difference.

[B. de Corbin]

Re: Getting Ahead, Cashwise.

[quote author=DanieMarie link=topic=1384.msg28488#msg28488 date=1294952084]
I think it's really important to differentiate between "broke" and "poor" though. If you're broke you're probably just living off less than you're used to but you're not poor by any means. If you're poor, you're struggling to feed yourself. Big difference.[/quote]

That's the truth . Currently, I'm flat out and totally broke... daughter's wedding coming up... but not poor...

[DanieMarie]

Re: Getting Ahead, Cashwise.

[quote author=B. de Corbin link=topic=1384.msg28493#msg28493 date=1294952567]
That's the truth . Currently, I'm flat out and totally broke... daughter's wedding coming up... but not poor...
[/quote]

Exactly... I think a lot of people confuse the two

Also I think low financial education contributes to things like inability to weed out needs over wants, and debt. It seems to be a growing problem especially with the under 35 crowd. While there are a lot of people who simply don't have money and struggle to eat and put a roof over their heads, there are people that do the above but probably could be doing better at providing for themselves (or their families) if they were able to cut unnecessary spending (even stuff like quitting smoking, which is an expensive habit, but definitely by learning to budget and learning what's a "need" and what's a "want). To an extreme this sort of behaviour can lead to debt, if coupled with access to credit and a misunderstanding about how credit works and the severity of accumulating debt.

[LiadanWillows]

Re: Getting Ahead, Cashwise.

A system I am using is working out really well for me. As soon as I started me job I starting taking 15% out of my check to put towards retirement. The investor that my work uses says that I will probably have approximately $55,000 (41,200 euro) a year for retirement. I also invested in a ROTH IRA which is doing well too. I clip coupons. I got rid of the bills I just dont need. Cable, fancy phone plans, downgraded internet, better car (lower payment though ), and actively paying off my student loans. I also chose to pay my mortgage biweekly instead of monthly which saves me on interest in my house.

[DanieMarie]

Re: Getting Ahead, Cashwise.

[quote author=LiadanWillows link=topic=1384.msg28529#msg28529 date=1294957338]
A system I am using is working out really well for me. As soon as I started me job I starting taking 15% out of my check to put towards retirement. The investor that my work uses says that I will probably have approximately $55,000 (41,200 euro) a year for retirement. I also invested in a ROTH IRA which is doing well too. I clip coupons. I got rid of the bills I just dont need. Cable, fancy phone plans, downgraded internet, better car (lower payment though ), and actively paying off my student loans. I also chose to pay my mortgage biweekly instead of monthly which saves me on interest in my house.
[/quote]

Smart!

[B. de Corbin]

Re: Getting Ahead, Cashwise.

[quote author=DanieMarie link=topic=1384.msg28513#msg28513 date=1294955099]
...To an extreme this sort of behaviour can lead to debt, if coupled with access to credit and a misunderstanding about how credit works and the severity of accumulating debt.
[/quote]

Easy credit is a major problem! Going back to my own history, one of the things which helped my parents - in a weird way - was that credit cards weren't available. If you wanted a loan, you had to apply, and theose to whom you were applying were pretty picky about who they'd loan money to. Since they couldn't borrow, they had to make do, and that kept them making hard choices, and the hard choices kept them stable.

Now, all you need is a credit card, which you can get even if you don't have a job. And I have to confess that, even knowing how bad they are, I use credit cards. If I could pick out one thing to get rid of which would improve my economic situation the most, it would be the cards. By the time I get something paid off, I've paid three times (or more) what the original price of the item was... The problem is, though, that when the car breaks down, I have to get it fixed, and the guy wants money right away...

I think plastic was invented by Satan.