Friday, June 2, 2017

Temper Tantrum Economics

Temper Tantrum economics make no sense at all.

I get a response from some readers, that saving your money, investing wisely, and paying down your debts are all idiotic ideas, because no matter how much you save or how much you cut down on spending you will never be as rich as Warren Buffet so why bother?  The system is stacked against you!  It is all so unfair!  Waaaaah!

The "logic" behind this argument goes like this:
 1.  There are people in the world who are Billionaires, who make more money in a day or week than an ordinary person could in a lifetime.

2.  There is no realistic way we can all be Billionaires.

3.  This is unfair. Wah.
I am not sure how to parse this, only to note that life is grossly unfair, and if you think you got a raw deal in life, you really need to travel more, overseas, or even read a newspaper.  This argument isn't being made to me by a starving African who is likely to lose his life trying to migrate to a new home. Rather, the argument is made by middle-class people in the United States and other Western countries who have a house, at least one car, modern appliances, computers, smart phones, and are grossly overfed.

But that's not enough for them - because someone has so much more.

The other thing I would note is that while putting aside $5 a day isn't going to make you a Billionaire, over a 40-year working life, at 5% interest, it will make you $244,330.55 richer that you otherwise would be.

And that is the point of this blog - not how to be a Billionaire, but how to have a better life by spending less and investing wisely. I never promised any get-rich-quick schemes, because quite frankly, most of these all of them are frauds.   Anyone who knows how to get rich quick doesn't tell other people how to do it  - or sell the idea in seminars and books.

No, you likely won't ever be a Billionaire.  That requires a lot of work, smarts, and plain good luck.  But you can be better off than you are, particularly if you live in the West and have even a modest income.

And I know this, because I fell into the trap that the middle-class does - spending and not saving (enough) and squandering money, also assuming that the next paycheck would get me ahead.   It never worked out very well.

Besides, is being a Billionaire all that great?  Having to hire bodyguards for your family?  Worrying about money all the time?  Happiness is in having less stress and less anxiety, not in having piles of money and complex financial arrangements and issues.   If you can live on $1 less than you make, you can be happy.  The problem for the middle-class is that they want to live on $1 more.