Why don't Americans save?

nutmeg · Dec 30, 2008

You sound like you feel defeated so much that you lost hope. Get away from that pizza place and you will feel positive again when you make a little more money.

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I agree Trendlover, perhaps discouraged. He seems to be trying different things without much success.

The struggle to success is lonely and sometimes it is hard to tell if it just you or the environment. I can suggest "consistency", you gotta keep plugging away, even if it means finding out what doesn't work.

Sandybestdog · Dec 30, 2008

Quote from trendlover:

Quote from Sandybestdog:[/

75k jobs are a bit of an extreme. I get $4.50 an hour plus tips when I get them and no benefits. Iâm barely getting by on that, so even twice that would make a huge difference.
http://www.payscale.com/research/US/Job=Bartender,_Hotel/Hourly_Rate/by_Employer

Look Sandy, this is twice per hour rate more than pizza place that is making you stressed and frustrated, and your tips will be very good. Look at the other information on benefits at the top of the page. It is a start. You sound like you feel defeated so much that you lost hope. Get away from that pizza place and you will feel positive again when you make a little more money.

More...

Thank you. I will start looking next week. I don't think it's going to be as easy as it sounds. It's amazing because even though I get paid $4.50 an hour and don't get hardley enough to pay the car expenses, there is at least one person everyday that comes to fill out an application. Many people need jobs now and a lot of them will take just about anything right now.

Sandybestdog · Dec 30, 2008

Quote from brokershopping:
My good friend and I went to college together 20 years ago. In high school, he worked his butt off and saved a lot of money. I worked as little as possible and blew most of my money on junk. (I am not proud of this, just stating the facts)

When we paid for college, they took all of our money, his big pile and my little pile. We both got student loans, mine was only slightly higher than his. The rest of the money was paid by grants. A big pile of grant money for me and a small pile of grant money for him.

This is an anecdotal example of why it doesn't always pay to save. There are disincentives like this built into the structure of our society. It was not fair to my buddy, he got screwed for doing the right thing, and that shouldn't happen. (OTOH, the gov got a good return on it's investment by sending me to college, in the form of subsequent tax revenue).

When I first went to the local community college a few years ago, I filled out all of the typical financial aid forms. I live with my parents but I was pretty much alone for the tuition. They said I didnât qualify for anything but the âBoard of Directorsâ scholarship. I thought I was all special until I looked up what it was for. It ended up being a one time scholarship for new students who didnât qualify for anything else. So I got $500 for my first 2 semesters. I ran out of money after the first and didnât go back.

I think we just need to find ways to lower the costs instead of looking for ways to pay for it. When my parents went to college I think they got half scholarships and worked part time jobs and graduated with no debt. You definitely canât do that now.

brokershopping · Dec 30, 2008

I say "amen" to the lower college costs. I am now saving for my daughters college education.

(I have abandoned my previous strategy)

Sandybestdog · Dec 30, 2008

Quote from nutmeg:
You sound like you feel defeated so much that you lost hope. Get away from that pizza place and you will feel positive again when you make a little more money.
________________________

I agree Trendlover, perhaps discouraged. He seems to be trying different things without much success.

The struggle to success is lonely and sometimes it is hard to tell if it just you or the environment. I can suggest "consistency", you gotta keep plugging away, even if it means finding out what doesn't work.

Thank you for the kind thoughts. You guys have certainly showed much more understanding than others here. I donât want sympathy though. Yes I am very discouraged. I feel like Iâve tried everything and have lost at it all. I donât blame anybody, but it is very difficult because literally nobody I know has any ambition. Nobody wants to change the world like me. Nobody wants to make lots of money and stick it to the man. Nobody wants to start a business. Nobody I know knows the what the bid â ask spread is. Iâm trying to build an automated system now with Visual Basic. Itâs like learning a whole new language. Nobody I know knows anything about programming. I search on the internet, but sometimes you just want someone to bounce ideas off of. The local community college has some intro classes which I might take. I feel like Iâm swimming upstream by myself. I donât know whatâs wrong with people nowadays. Itâs like they donât want to get ahead.

marketsurfer · Dec 30, 2008

Quote from Cutten:

On the other hand, someone who makes no significantly bad decisions *cannot* get wiped out by any market event at all, no matter how extreme (bad luck outside the markets can of course hit them e.g. cancer, car accident etc).

Trading is one of the few entrepreneurial businesses where the role of bad luck can be almost entirely eliminated.

however, without taking substantial, some may say extreme risk, you are just going to churn and barely survive. you will not be wiped out if your skilled, but your not going to get wealthy either unless you take huge risk---- of course there may be some exceptions--but they are indeed extremely rare.

in other words, if you eliminate the potential for bad luck by not taking enough risk, you will also eliminate the good luck that will make you rich.

surf

surf

trendlover · Dec 30, 2008

Quote from nutmeg:

You sound like you feel defeated so much that you lost hope. Get away from that pizza place and you will feel positive again when you make a little more money.

________________________

I agree Trendlover, perhaps discouraged. He seems to be trying different things without much success.

The struggle to success is lonely and sometimes it is hard to tell if it just you or the environment. I can suggest "consistency", you gotta keep plugging away, even if it means finding out what doesn't work.

Yes, not easy. Sometimes a change to a different environment gives a better view, and less stress and anger. So much difference in living in a crime and poor neighborhood, then moving to a better place. Everything looks better.

mokwit · Dec 31, 2008

Quote from gnome:

That is ESPECIALLY true of career traders. For the most part, (1) few survive "many years", and (2) those who have "survived many years" have done so because the conditions which could hurt them have not come around... YET. Unfortunately it takes only 1 or 2 significantly bad decisions to wipe out 20 years of gains...

Agree, if you are going to survive long term i.e more than a few years you have to be brilliant or average but 'shock proof', which for me translates buying below a long term average or low and not using leverage. Effectively a value approach. Value players make money over the long term by not having devastating losses becuse they bought just after the conditions that cause devastating losses to those that buy higher up. It seems to me that many approaches are the same thing come at from a different angle. What I do would be regarded as Value by some, a Low P/BV by an academic etc.

I would argue true value investing is probably one of the few ways that almost anyone who is prepared to put in the same learning and effort as they would to develop a successful law or other professional practice can generate (possibly only modest) positive returns over the long run. i.e it is a viable business just like many others for someone of reasonable intelligence and dedication. The cash flow charateristics are 'feast and famine' but then so are many businesses. a friend in the high end Jewelry business pointed out to me that in that business, just like the stock market there are brief periods when you can make extraordinary returns, but you have to recognise it and be positioned to take advantage of ot - sound familiar to stock market players?

Seems to me all the money managers with multi year tenure are value players - if you buy below a long run average at some time the market will bail you out if you are unleveraged (this is key).

Riding commodity futures or hot stocks at nosebleed valuations seems to yield much shorter term success, as we have repeatedly seen. I was told by someone who would know that there a tiny handful of people who make serious money consistently and most make money one year and give it back over the following two years ie. make in bull and lose in bear.

As for 'buy and hold' this seems to have been a mantra that came about as commissions dropped. i.e. it was promoted by Wall St for their own benefit as they shifted to asset based fees as a way to offset this as fewer customer contact people would be needed to manage the same client base under this model and they could concentrate on selling higher value (to Wall St) products.

blackjack007 · Dec 31, 2008

Quote from Sandybestdog:

Buying the Dow 30 years ago at 500 and buying a house for 30k that is now worth 500k, doesnât make you an investing genius or hard working.

this is a bad example. how many homes went from $30k to $500k in 30 years? only in particular markets like san francisco did that happen. yet you compare best-case real estate markets with the dow which is merely an average case for stocks.

why don't you compare individual best-case stocks to best-case real estate markets?

doesn't take a genius to see which wins.

tradingbug · Dec 31, 2008

Quote from gnome:

That's what "they" tell us. We don't need savings because we have RE and stocks...

How's that working out for everybody?

Problem on the RE end.... too many paid too much and leveraged to high without proper assets to support their risk exposure.

On the stocks end, they told us "buy and hold"... with no concept of basic timing.

By the time this mess is cleaned up, likely 2 or 3 generations of Americans will never invest in RE or stocks again...

Where will the money go? What are the other options to put savings towards that will keep up with inflation?

Seems like RE and Stocks are the only place to park wealth. Sure we are on a downswing in both assets but they will swing up eventually as over the long term the indexes and RE have continued to make new highs. I did say Lonnnnnnnnnng term.