Poor People are Finance Experts?

Not everybody out there in the world is financially well-off. I'm not saying there's anything wrong with that - it's just an objective observation. While lots of people on this website are easily clearing six figures a year at prestigious companies, there are a lot of people barely scraping by, making hourly wages or sub $50k salaries per year at jobs like retail/construction/restaurants/etc. Yet, somehow, these people are still getting by. And very well. All the time, whether it be shopping, out and about, I see mounds of low-income people that have children (SEVERAL most of the time), frequently go out to bars, blow money on excessive and unnecessary purchases, etc., and I'm just curious as to how people who didn't go to college, who work these low-income jobs and who aren't the brightest bulbs in the chandelier are able to afford children and all the associated expenses and still somehow get by in life and can blow money on bars/fun/amusement parks/tattoos/etc. Just curious. Any ideas?

Comments (39)

Jul 11, 2018

Debt/Financing. You'll be surprised at what people take loans out for even if they can't afford it; we had a family friend who took out a loan to go a week on holiday to a semi-luxurious destination. One can do what they want with their money but I think that is irresponsible.

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Jul 11, 2018

Wealthy people also get caught up in spending money, I think there was a scene in margin call? Where one of the bankers describes how he spends his money and how your tastes change and you start blowing cash on stuff you never would have thought of.

I just spent a bomb on a new tailor made suit when all my other suits are perfectly good.

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Jul 11, 2018

This, I started a new job a little while ago. I bought 4 pairs of 400-500 dollar shoes. Although I needed new shoes, I don't think I needed that many or didn't bargain shop as much as I could have.

Jan 9, 2019

I spent 76,540 dollars on hookers booze and drugs. I was upset until i realized i could claim most of it back as entertainment.

something like that... i love that movie

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Jan 9, 2019

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Jul 11, 2018

No sense in keeping the money if you are not going to do anything with it.
Spend the money and keep somebody employed and keep the economy booming.

Jul 11, 2018

I don't know any construction guys making $50K. I know a lot making 6 figures. No comment otherwise

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

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Jul 11, 2018

Careful, you might trigger some people.

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Jul 11, 2018

Interesting post, just some thoughts I had
1. I know plenty of people who went to college and do these "low paying jobs." I know people who dropped out, got skilled in a trade and make 100k+. We as a country are for some reason obsessed with "college" when there's ways to at minimum support yourself. I think people underestimate the significance of work ethic and not everyone in college has it and not everyone that didn't go to college sits on their ass all day.
2. You'd be surprised how easy it is to finance things like a 10k credit card. Where most "uneducated" people go wrong is they don't understand interest. Also there's people out there making 6 figures living paycheck to paycheck believe it or not. It also comes to discipline, and I hate to say it but yeah there's seems to be a correlation below a certain income threshold that would imply if you make less than that it might be because you'd rather blow money on questionable things than say build a retirement account.

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Jul 11, 2018

It's easy. They have a shit ton of liabilities and have to break there back working as a host at WalMart in their retirement years

Jul 11, 2018

Exactly this. Lots of debt, minimal liquidity, and no retirement savings.

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Most Helpful
Jul 11, 2018

There are a lot of reasons and off shoots for why you are seeing this, but the two main reasons you are seeing it is:
1) Companies make it as easy as possible to borrow money because it is very profitable for them (fees, interest)
2) Most people are very bad with money (budgeting, tracking expenses, impluse buying, saying no)

I would also add that not many people know how money works. And by works, I mean, they don't know how to create value, lose value or budget. Think about pro atheles, movie stars, or lottery winners who have wasted all there money, there are regular people in the world just like them who waste money on things, just at a lower intensity. Banks make billions each year just on overdraft fees. Think about that.

However, everything is not black and white. Going to college doesn't guarantee financial success, nor does not going to college. At the same time, your level of income also does not guarantee financial success. If you make $17mn a year, but your expenses are $18mn, you're still in debt (outside of savings). Budgeting isn't hard, you don't have to be super smart to do it, but people lack discipline.

I'm hitting a lot of topics, but remember this quote from Warren Buffett "you see whose skinny dipping when the tide goes out."

P.S.- think about what you mean by the definition of poor. Is is someone with a new car every year, custom clothes, and exotic vacations but in mounds of debt? Or someone who wears the same pair of shoes for three years but has most of their money invested?

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Jul 11, 2018

A lot of people that you classify as "low income" are actually making way more money than you. I know plumbers making $1M/year. I know people in construction pulling $2M - $3M a year. Trade skills pay very well in the US. This is compounded by the fact that many transactions are cash-based and occur under the table (i.e., avoid taxes).

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Jul 11, 2018

I'm well aware of that - and hats off to those people! What I was basically getting at with this post is how do cashiers at retail stores afford to have 4 kids, lol.

Jul 11, 2018

How do you know they're "cashiers" at "retail stores?" I would say that they can't, without significant government assistance.

Jul 11, 2018

It's free to have kids, and raising kids actually doesn't cost that much.

Raising them "right" or "correctly" or with certain luxuries, that's a different story.

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Jul 13, 2018

.

Jul 13, 2018
Distressed Industrial Buyer:

What? Who? The guy who owns the construction company? He's an entrepreneur, which has nothing to do with bending nails on a job site.

What? Who? The guy who owns the construction company? He's an entrepreneur, which has nothing to do with bending nails on a job site.

Jul 11, 2018

That's funny, I think of this too when I see a family of 6 in "the good seats" at a baseball game or at one of those expensive hotels at Disnelyand... I suppose the answer comes down to one word: save.

Jul 11, 2018

Well for a lot of people, I get it. Maybe their parents are successful - there's plenty of successful people out there! But it perplexes me how less-than-intelligent people working low-tier jobs and making low money are able to afford children and all the associated expenses.

Jul 11, 2018

I understand what you are trying to say, but you are using loosely based terms. "Less-than-intelligent"?, you would have to definite intelligent first. "Low-money"?, higher to define because different amounts of money are worth more to different people in different areas.

To answer the question I think you are asking (how to do people you perceive who make small salaries afford their lifestyle/children)- well the answer is they don't.

Change your thinking, instead of smart vs dumb, think more reckless vs forward thinking. Meaning, you can understand what string theory is, but if you also share heroin needles, you may be smart, but also reckless. Now think about it like this- a person who works as a cashier probably didn't think that far ahead to get a career they can support a family on, they didn't plan ahead (reckless). They follow through on that in their life, in that they don't save, they don't think about the size of their family, the cycle repeats. Couple that will the ease it is to obtain money/loans. They may have a car they can barely afford, a house they can barely afford, but they take their family to the movies for $100 because they can just swipe their credit card. It's what's called a house of cards. Some people build a house of cards making $50k, some do it making $500k.

This is somewhat of a generalization, but it may help to answer your question. Same thing I started with, think about what it means to "afford" something.

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Jul 11, 2018

I feel like there is so much tunnel vision. Pretty much all finance jobs pay similar to those average joe jobs you just described. PE/IB/HF/Trading/AM is an extremely small part of finance.

Jul 11, 2018

7777

Jul 11, 2018

That doesn't seem like something you would jump into after college though. That seems like the kind of thing where u bust ur ass off at $10/hr multiple years until you climb your way up.

Sorry if I'm missing the point.

Jul 12, 2018

Don't they also work like 80+ hours a week? I'd imagine their per hour pay is lower...

Jul 13, 2018

Pretty sure being a manager of a multi-million dollar business is not an "average joe" job.

My old store manager back in my high school job easily made PS60-70k+, area managers on ~PS90-110k. They all had degrees and were smart.

Jul 11, 2018

Just FYI some people in construction make pretty good money. I know a handyman type General Contractor and he clears $300k a year (he runs a rather large team), and construction management positions typically pay pretty well. In a large market (NYC/LA) they pull in 80k right out of UG. Full project managers clear 180k in large markets. Its not KKR Associate money, but its not bad. Plus, some guys move into Developer roles and can pull in millions per year.

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Jul 12, 2018

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Jul 13, 2018
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Jan 9, 2019
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