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Why the Poor Will Always Be With Us…

I think I misunderstood - perhaps a difference in use of the word “poor”. Where I am from “poor” means “homeless” or living in the ghetto.

If we are talking about those who chose to spend now rather than save / invest - I would not call them poor - I think broke or living paycheck to paycheck is a better classification. Many have more material goods than I do.

I think it is less about financial education (as mentioned above) and more about goals. I will live cheaply now, in my late 20s, compared to others, so that my late 30s onwards are much better than others.

There is plenty of education out there - I managed to find it and I am from a low wealth background where my parents skimped and saved to afford our house, but they now live quite comfortably.

In Australia, we have the equivalent of a mandatory 401k - 9% of your wage is automatically deposited by your employer. This is in addition to your wage, so often you will see people earn “50k”, but their actual package is 54k. Because this starts as soon as you are employed, after 30 or 40 years time, most people will have sufficient superannuation to retire reasonably comfortably. You can not touch this money until you turn 60, so it is forced saving and investing.

Kind regards,

Phil

When I was looking at foreclosures and crappy houses, there were so many times where I walked into a house where the house was a mess, no running water, garbage everywhere… but guess what… A 50″ big screen TV in the living room and an Xbox.

Next time you go looking a foreclosures, take a close look at the car in the garage, type or furniture or number of doodads in the home.

I contend that these people are poor because they choose to be poor.

- Steve

Everyone should be familiar with the “category of poor” that I’m talking about, people who “want to be poor”. I think “broke” is maybe a better word.

I’m talking about people who make enough money to live comfortably, but because of poor money decisions end up with too much debt and too little money for retirement, etc.

I’m thinking of my father, who in 2001 bought a brand new Jeep Grand Cherokee because he “needed something to make him happy”. It didn’t matter that a lot of what made him unhappy were financial problems, which the extra $20k he paid for that car vs. a comparable used car would have helped him out with.

I’m thinking of the guy you know who lives in assisted housing but has a more jewelry than you do and better stereo system than you do.

If either one of the people in the above scenarios had $30k in a “retirement account” they could gain access to, they would find a reason to spend it. The money feels idle and psychologically these people enjoy the scenarios and stories they get themselves into as “broke” people. They’ve been broke all their lives. They’re used to it. They’re comfortable with the idea in the same way a battered wife is comfortable. If they had money, they would feel bad for all of their broke friends. If they had money, they would have nothing to talk about anymore because a lot of their discussion revolve around their lack of money.

The truth is that some people have psychological problems which cause them to do self destructive things. Whether that’s eating too much or smoking or buying a bunch of stuff they don’t need.

I don’t want to avoid the issue of the “real poor” though. There are a lot of people who are struggling to get by. A lot of their problems are societal and not self inflicted. Let’s talk about ways to help here too. I’m focused on the other situation since it’s so personal to me.

Good discussion. Keep it up. I know Erin has a follow-up in the works.