These are the people most in need of the concept of compound interest. If they knew that small steps every day can lead to big outcomes, they would be more inclined to take them.
But every step along the way, the system is fighting her. Most recently, she's in jeopardy of losing two sources of assistance because she's doing "too well" to qualify. With those gone, she'll likely be making less than she was before she had a job.
Our system (in the United States) is seriously fucked up. All of the various programs try to pass the buck whenever they can. The negative feedback loops are overwhelming.
Can't schedule Tara for an extra 5 hours because that will be an extra $20, which will put her over $100/week, and her assistance will be cut by $50/week because she earned that extra $20. (paraphrasing the numbers here). It was also costing some of these people $x/day to take a bus to and from work, but that wasn't calculated in their earnings/cutoff calculations.
Truly messed up 30 years ago, messed up today.
Doing what's kept your head barely above water for years seems safer than putting a few dollars away every month hoping it grows higher than the next thing that fails in your car or house. That's if you can get a bank account at all. Everyone knows someone to ask for the number of a good bankruptcy attorney. That's networking when you're broke and defeated.
> The mechanism of learned helplessness is now very well-charted biologically, and the original theory got it backward. Passivity in response to shock is not learned. It is the default, unlearned response to prolonged aversive events and it is mediated by the serotonergic activity of the dorsal raphe nucleus, which in turn inhibits escape.
Learning how to help yourself isn't as easy as it seems especially when you barely or don't have the means to do so.
How much will that compound interest have added after 15 years? Only about $7,000. Not exactly a "big outcome".
To a lot of folks it is. That’s half a down payment for a house in a lot of the US.
You could save it for 15 and have 37k (7k interest)after 15 years. Or 0. You could save it for 30 and have 126k (54k interest) after 30 years. Or 0.
If it were FU levels of money, or even 100%+ returns, I might think differently. But I can't imagine someone locking away $70k of their earnings for 30 years for only a 70% return.
I imagine that people actually seeing some progress over time may encourage them to save/contribute a bit more, or to put some money in to somewhat larger CDs or whatnot (even excluding stock stuff). Or... they may be encouraged to contribute a small bit to a 401k if they end up at a job that offers it.
You may $40k/year - having, say, $3k in savings can really change your outlook and susceptibility to otherwise crippling 'emergencies'.
You could use that same 5% and have a full down payment four years sooner.
2) An outside can't sabotage your own idea. Only you can sabotage it. Sure, it doesn't make it any easier, but if someone can change your mind on your definition of "success" then you will never achieve it.
3) Yes, people spend money on dumb shit. I was in the same environment. Keeping up with the "jones" was a thing. Succeeding was also looked down upon. You know what is consistent with folks who came into success from those areas? They said f-that, I'm going to make my own path, regardless of what others say. They had mental fortitude.
4) My first car cost $2,000. My second car cost $1,000. Both I saved up and purchased. If police are harrassing you about being homeless in a car, then leave that location. That sounds like a police state (Cali anyone?). And before you say "It's not that simple to just leave!" Yes, yes it is. In order to change my situation, I literally "YOLO'ed" across the country (no job, nothing) in order to get out. Much like many in this investment group, in order to get out of hell, you have to make huge bets.
I live in the USA in 2019. I lived in the USA when I was homeless during the height of the recession. It is easier now than it was then.
You just basically said - Folks that go from A to B come from A. Of course!
You act as if your situation is the worst possible situation. For example, imagine having to take care of a sick parent and 2 kids and a wife. Imagine being addicted to drugs. Imagine having a criminal or drug-dealing record. Imagine having a disability. Imagine being suicidal.
Even if you went through all the terrible things I listed, imagine not having any mental fortitude. Mental fortitude doesn't come easily or at all to a lot of people. This pull yourself up by your bootstraps is a nothing but a shiny pokemon.
I came from poverty and I have everything I wanted now. But I also recognize that 99% of the people that were in poverty with me didn't make it out.
I think you're catching a lot of crap for being "hurtful", but I don't see it that way. I see you being direct and appreciate your comments in this thread.
> many of the folks that have gone through similar transformations don't come from "easy" backgrounds.
Some simple critical thinking skills and basic logic (often learned in a philosophy course, but not always) would help one understand that this shows only that the statement <it's impossible for any poor person to become wealthy> is false. It certainly says nothing about the idea that <all poor people could become wealthy>.
Two words: selection bias. That your path worked for you does not mean it's the only wise path for every circumstance. The path of most people around me is their savings get destroyed by surprise medical or repair bills because they were born into poverty and never get a chance to build meaningful savings. So it's better to spend it on something while you have it on things that can't be taken away in a bankruptcy.
Most people (in this context) make the mistake of spending it on drugs, worthless trinkets, junk food, etc. Most aren't encouraged to pursue skills that can pay the bills. Or they're actively discouraged. "Crabs in a bucket" is a real mentality. People I grew up around have it. I had to hide my interest in entrepreneurship just to protect it from sabotage.
I'm glad you were in a situation that enabled your path! It's great that you were able to thrive through early savings. I don't know when you came up, but cheap and functional cars are hard to come by in a post-Cash for Clunkers world and police are more aggressive with the homeless/car-homed. Your path is not as viable in the US in 2019.