The poor man goes to....the rich man goes to....

If you contribute 20,000 to the age of 30, then only 5,000 the remaining years until 60 you will have 2.7 million (at 9%). Basic finance.

Myopic,

Dude, you're making too many assumptions brother. First I was accused (by someone else) of being born into a priviledged life, which I wasn't. Now I've been accused by you of not understanding what it is to be poor (that I haven't seen it as an adult), well, you're wrong brother. I used to teach for a non-profit organization in Detroit, MI where I taught the poorest of the poor (adults) computer skills, basic reading and math, how to create a resume and interview well, etc. I could give you story after story of the hillbilly (Detroit has lots of hillbillies if you didn't know) guys who came in after being laid off from a minimum wage job who then trained themselves to move up in the world. One guy ended up running the car rental counter at the airport and he made more per year then that I did! Sorry brother, but you're barking up the wrong tree by telling me that poor people are trapped and can't get out. Ever read Pursuit of Happiness or seen the movie? Dramatic story yes, but I dealt with people every day who pulled "themselves by their own bootstraps out of poverty". I never said it could be "simply" done. It can be done though and is on a daily basis. Just because it's hard doesn't mean you can't do it.

Also, I never said you have to be be wealthy and callous. Wealth allows for more joy -- give money to those in need, fly loved ones TO you to visit; go visit them, etc.

You say the poor can be joyous. Fine. I never said they couldn't. I prefer to be joyous and rich. I have choices to make in my life. I decide how much to run, how much to eat, and how much of my money to save and invest. The rich can be joyous too without the worry of financial stress. I choose that.

I seriously don't see how me telling people to put away 15% a year is making too much of money. That's easy to do and not radical at all. Hell brother, you do 25%. Even if you think I put too much emphasis on money (which I don't, because if I did I'd tell my wife to go back to work instead of being a stay at home mom, or I wouldn't have left some jobs I did in order to be close to family here in Ohio, etc.), even if you do, just ask yourself this question -- is it better to retire with money to live a happy retirement or get to age 65 and discover you don't have a pot to piss in and no one really wants to hire you? I vote for the former.

The rich man will invest in the VISA IPO.

Flagpole has got it right wrote:

If you contribute 20,000 to the age of 30, then only 5,000 the remaining years until 60 you will have 2.7 million (at 9%). Basic finance.

Although that is a lot of money remember inflation. If you are 25 yrs old right now and you retire with $2.7 million (at 60 yrs old) it only has the buying power of $537,000 if inflation acts the same way it did for the past 35 yrs (1972-2007).

If you only draw 5% of that the first year you can only draw $26,850, meaning it won't be great.

You will want roughly double that if inflation stays the same way, so about $5.4 million.

Or you can work for the railroad, that offers railroad retirement and company pensions, then you probably won't need a 401K (but then again who wants to drive a train all day?)

but..remember wrote:

Although that is a lot of money remember inflation. If you are 25 yrs old right now and you retire with $2.7 million (at 60 yrs old) it only has the buying power of $537,000 if inflation acts the same way it did for the past 35 yrs (1972-2007).

If you only draw 5% of that the first year you can only draw $26,850, meaning it won't be great.

You will want roughly double that if inflation stays the same way, so about $5.4 million.

More is always better, but I'd rather have 2.7 million than nothing because I was afraid of inflation.

Going with the inflation route, a 25-year old today at age 62 will get $57,420 (in future dollars) from Social Security (based on $50,000 per year using the calculator at ssa.gov), so if you're debt free and own your house, all told it isn't going to be too bad. I'll look at the 2.7 million and decide to think of it as $135,000 a year at 5% (the first year; more after that assumng it makes more than 5%), and I'll add the 135,000 to the 57,420 and that will be $192,420. Inflation will cut into that of course, but I'm betting that's still enough. besides, the 2.7 million was with very minimal investing after age 30. Do more and we're closer to $4 million.

You made the statement that

"Wealth allows for more joy"

This pretty much sums up your life philospophy as your present yourself here and is the reason I think you put too much importance on money.

Do you really think they amount of money/wealth you have determines the amount of joy in your life or the joy you bring to others?

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The mere fact that you bring up "The Pursuit of Happiness" as proof that you can pull yourself up by your bootstraps only confirms your disconnect with reality. The main character did many admirable, amazing things and in the end wound up very successful. The story could have just as easily turned out very differently.

If they had opened that bathroom door, the authorities probably would have taken his child from him. Now, does he go to court to fight to get back his child or go to his work as an intern with the hope of getting a great job? There are so many things that had to go right for that happy ending to occur. He basically won the lottery. Go back and watch that movie again and think about how many things beyond his control/influece had to happen for him to get that job. He worked hard, but was also very fortunate.

There are lots of people working very hard that don't have things turn out in their favor. You really need to get out of your biodome if you believe that financial success is ensured if you work hard. Is it more likely? Sure. Is is guaranteed? No way.

Mark Twain said "Many people miss opportunities becuase they're dressed up in overalls and look like hard work". I don't disagree that many people could give themselves a much better shot at financial success by working hard, but it's offensive to claim all poor people are slackers. This would be the proper conclusion if people really can pull themselves up by their own bootstraps.

Flagpole, why did you delete my last post?

1) The harder you work, the luckier you get. Besides, the Pursuit of Happiness was just one example. As I mentioned, I had many first-hand experiences with watching people make something of themselves. Chris Gardner succeeded in part due to the help of Glide Memorial Church and Rev. Cecil Williams. I gave MONEY to that church when I lived in the Bay Area. I could give because I had money. My giving to THAT church helped people help themselves to a hand UP.

2) Wealth does allow for more joy. Poor people would rather not be poor. I don't think that wealth guarantees joy at all, but if you're already a joyful person, the addition of wealth can make it greater -- more fun for you, and more joy with being able to give. People with financial hardships have stress that people with no financial hardships don't have. You can pretend that money doesn't help in today's world if you want, but if you allowed for all those poor people in bad neighborhoods with GOOD loving families the opportunity to move to a place with less crime and less stress and more money, they would all do it in a heartbeat.

3) I never said poor people were slackers -- never even insinuated it. Many work hard for minimum wage and work two or more jobs. Fine. Good for them. A little education in some area, a trade or computer skills though, and they could make more. I've seen it happen to people who many would say were destined to live forever in poverty. Remember, I came from poverty. I could have toiled in the same poverty if I chose. I chose not.

4) Where also did I ever say financial success is guaranteed if you work hard? I NEVER said that. I'm a big believer in education, and the more educated a person is, usually the LESS hard they work (if they want that education to lighten their work load). More education opens up more doors and you can then pick and choose the type of work you do. Financial success is possible if you don't spend everything you earn and you invest for the future.

5) Where also did I ever say that there would not be bumps in the road? You should PLAN to put 15% or so away for retirement, and PLAN to be debt free and PLAN to not make stupid purchases that you can't afford (and you only know you can't afford something if you have a PLAN and set financial goals). Sometimes though you need to back off those plans to get through a bad spot. I've done that. I've taken an extra job when I needed additional cash flow. Once the bad spot is over though, you forge ahead and get back to your plan. Perhaps the plan has changed and you either need to work a year longer or invest more, or just do with less when retirement comes.

You don't have me pegged at all brother. When you get down to it, you're arguing with me because I tell people they should invest 15% of their salary. That's STANDARD financial advice, and in fact the more radical advise even more.

You believe that poor people are destined to be poor. I say they aren't. Not much faith in poor people you have. And I'm a LIBERAL DEMOCRAT!

Tim Culpepper wrote:

Flagpole, why did you delete my last post?

Because as a moderator I can delete anything I want. DUDE! I'm NOT a moderator!

FPW,

Your last message suggests that our views are not so different. The introduction of the word "usually" to your vocabulary moves your argument from an IF-THEN relationship to the IF-THEN, MAYBE relationship I had been suggesting.

There are many variables that affect our lives that are well beyond our control. I still struggle with statements you've made like:

"I could have toiled in the same poverty if I chose. I chose not."

Whether you mean to or not, these statements do sinuate that those living in poverty are somehow choosing to stay there.

I really do disagree with your philosophy that wealth enables more joy. I believe people choose to be happy or not in whatever circumstances they face and that money/wealth really don't affect this.

To me it's the same argument people make when talking about their salaries. When I first started teaching, I listened to colleagues talk about how much harder they would work if they made as much as engineers (my previous profession) or other people with 4 years degrees. I believe you choose how hard to work at a job based on your character and what it takes to do a job with excellence, not based on how much you're paid.

Similarly, you choose to be joyful when you recognize the many ways you have been blessed. Listen to kids complain about still being stuck with a PS2 player or being given a crummy Toyota Camry rather than a Lexus. Those who are focused on material things will almost always be unhappy. I really don't think the rich have less financial stress than the poor. They just have different stresses.

Having more money only changes what it is you're unhappy with. I fundamentally believe that you choose to be content or not. Wealth doesn't make this harder or easier.

When I changed careers, I cut my income by %60, not counting bonuses. I went from the opportunity to earn bonuses of 10 year options on 500-1000 shares of blue chip stock to $500 if I don't miss a day of school each year. The loss of income didn't make me less happy or work less hard.

Whether I am happy or work hard is based on my character, not my income/wealth.

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I wish you a merry Christmas and a financially beneficial New Year!

If it wasn't clear, Mypoic = Incremental change...

An editing feature for this messageboard would be really nice!

poor man want to be rich, rich man want to be king and the king ain't satisfied 'til he rules everything

It really bugs me when people judge how others choose to spend their own money. Some people (myself included) would prefer to see and experience life and the world to the fullest before they hit 60, and then just chill and relax til the end. What is the point of saving it all up to spend when your too old learn much, or too tired/decrepit to do stuff in exotic places, or too old to attract hot ladies in your sports car. Thats just sad to me

The rich man is too busy making money to waste his time at Letsrun.

Too much to comment on here, and really I'm getting bored wtih this topic, but I will still insist that no matter how poor you are in the United States, as long as you are physically and mentally able (this doesn't mean super smart, it means you're not mentally ill), you can pull yourself, even rapidly, out of poverty. Many free government programs or non-profit programs like the one I use to work for really do work. Just because someone lives in the projects and their parents lived there, doesn't mean they have to end up there.

Flagpole,

My initial reaction was to flame you like everyone else. But then I realized that the only reason I took it personally was because me and my wife are those "poor" people you talk about who make enough money to save, live comfortably, and debt free....and yet we are in debt to our eyeballs and constantly fretting about money (well, actually I don't worry about it because I'm just careless that way. But my wife frets all the time and that's enough stress for both of us). Now we have a daughter and we really need to start better spending habits. We've started making headway there, starting with a plan to pay off our $14,000 dollars in credit card debt by the end of 2008.

I think you're right that wealth, while certainly not the only key to happiness, has alot to do with one's happiness. It's not about buying new cars, huge homes, fancy clothes and toys, etc....it's about using the money you have wisely so you aren't scraping by from paycheck to paycheck, worrying about how you are going to pay for those cars you can't really afford.

I don't think you were being insensitive to the poor at all. Like you said, "been there, done that". And you have even helped some other poor folks find the same fortune. Good on you.

Big spender wrote:

It really bugs me when people judge how others choose to spend their own money. Some people (myself included) would prefer to see and experience life and the world to the fullest before they hit 60, and then just chill and relax til the end. What is the point of saving it all up to spend when your too old learn much, or too tired/decrepit to do stuff in exotic places, or too old to attract hot ladies in your sports car. Thats just sad to me

This has to be a troll post. You CAN'T be serious. Who said save it all? I'm saying 15%, and if you start right away at age 23 you could do 10%.

How are you going to "chill and relax" at age 60 after living your life on borrowed money until then? You won't be able to. You'll have to WORK. The way you plan to "chill and relax" at age 60 is to put 15% of your salary away NOW until then.

Let's say you wanted to JUST do $4000 a year, or $333.33 a month, and NEVER give more than that even though it will end up being way less than 10% of your salary before age 60. Start at age 23 and stop at age 60 and you've got $1,126,519.13 (at a conservative 9% annual return). Not a lot of money, but if you want to just "chill and relax" you could use that money along with your Social Security money to help you do that. This assumes of course that you are debt free and own your home.

But, if instead of investing that measly $333.33 a month, you decide to spend it, you'll end up with no savings at age 60. You'll be headed to work then brother. I'll be walking on the beach. Hopefully you won't be too tired/decrepit.

It's really not a big sacrifice at all. If you get yourself to the point that you are debt free except for an affordable house payment, you can put that money away every month and still have more disposable income NOW than people who don't put anything away but are in debt up to their eyeballs. Interest is a horrible thing to have to pay.

That's very big of you to say.

Sounds like you've hit your "aha!" moment, so no need for me to preach to you at all.

For people wanting to get out of debt, I recommend listening to Dave Ramsey --

. You can listen to archived shows of his (which I recommend because you can skip past commercials) or listen live from 2-5 p.m. Eastern. He pretty much has my same philosophy except that he says to NEVER use credit cards, and I find them just too convenient not to use; for people who have trouble paying the bill each month though, maybe it's a good idea to cut them up. I was doing what he preaches before I ever heard of him. I listen for entertainment's sake, not for advice since he's preaching to the choir with me.

You can turn it around, get out of debt and then start investing for wealth building. Focus on that debt like you would for a target race.

Good luck brother!

Flagpole, do you ever strain your shoulder from patting yourself on the back so much?

P.S. - are you going to delete this like you did the last time I posted it?

Flapole Willy = Steve Payne = Moderator