I just found a new statistic regarding money that my own financial planner/retirement specialist sent me. A stat that shocked even me! The average savings of a 50 year old in the United States is only $2500.
Okay, you 50 year old idiot, let’s say you started to work at the very late age of 25 (I picked that number because the math is easier.) From the age of 25 to the age of 50, you were only able to put away one hundred dollars per year. Aren’t you proud? Somehow you were able to set aside $1.92 a week. I am SO impressed.
Are you kidding me? How does that happen? There are lots of ways. You spend more than you earn – that’s certainly the biggest way. You don’t have a plan. You have screwed up priorities. You don’t pay attention. You indulge yourself. You indulge your kids.
I got an email today from a woman who explained that she and her husband filed bankruptcy in 1999. Now, eight years later, their debt is right where it was then. First let me say this: Bankruptcy gave you a second chance and you blew that too!!! She said that she and her husband don’t buy anything for themselves but do have three daughters that in her words, “don’t want for anything.” Her question was how does she explain to her daughters that they have financial problems and need to “cut back” without “failing her daughters?” I wrote her back. You can imagine how nice I was. First, her statement about how her daughters “don’t want for anything” is a lie. They want for responsible parents who are smart enough to learn from their mistakes – who know how to provide for their family’s future – who have put away for college for their three kids – who have their priorities straight – who can teach them about financial planning and budgeting – who know how to live a lifestyle they can afford – who aren’t idiots!!!!!!! Failing her daughters? One more time: are you kidding me? She and her husband have already failed her daughters. She said that her daughters all have cell phones that run more than $200 a month but that they are barely scraping by. She told me that she doesn’t think it is fair that her daughters “suffer” because of her mistakes. Holy crap!!!!! Since when is a young teenager doing without a cell phone called suffering?
I could really get off on a rant here but you get the point already I believe. Sadly, I get lots of emails like this. People just can’t figure out how they got into their mess. It’s like those bills sneaked into their house at night along with the plasma TV and the closet full of cheaply made crap they can’t get their fat butts into anyway. Then they wake up in the morning and SURPRISE!!!! they are in debt up to their eyeballs and have no money to pay for all that stuff they don’t need and probably don’t even want.
Pay attention people!!!! SAVE SOME MONEY. Get a wealth strategy! Wishful thinking is NOT a wealth strategy. Hope is a not a plan for success! Get a grip. Anyone can save money. I don’t care how bad your situation is, it can be done. How? By just doing it! Stop writing me and asking me how to save money. Really. I am sick of your stupid emails begging me to tell you the secret to saving money. There is no frigging secret! Put some of your money into a savings account. Period. Just do it. Before you do ANYTHING else – do it! It’s as simple as that.
Here is another stat for you: Only 1 out of 100 of the people who start working at age 25 will be wealthy by the age of 65. Only a total of five out of a hundred will have enough money to retire at 65. Get a plan! The first step is to spend less than you earn. I get accused of being simple and people have trashed my book, You’re Broke Because You Want To Be, because there is nothing earth shattering in it, yet 40% of our society spend more than they earn and live paycheck to paycheck. Seems to me like “spend less than you earn” is earth shattering news for 40% of society so I’ll stick with my simple approach. That simple approach has served me well. I spend less than I earn and save some and invest some and give some away. That simple approach has made me a millionaire. It’s worked for lots of my millionaire friends too.
There are as many ways to be rich as there are rich people. I am not going to tell you how to do it. That is not my area of expertise. In fact, I pay people who are richer than me to show me what to do when it comes time to invest my money. I can, however, tell you how to end up broke and heartbroken and disappointed with your life: spend more than you earn. That’s all it takes.
It’s good to hear someone say what has to be said. Sadly, these examples are very common. I meet with people like this all the time, who whine and complain about how they are struggling to get by, yet they will gladly talk about the two brand new SUVs in their driveway worth more than a small home, the private schools their kids go to, the annual cruises they take, and the great dinner out they had on Friday night.
Yet amazingly, they can’t even scrape together a couple hundred bucks a month to save or invest for the future. Hmm, weird. Of course, they find it absurd if you even suggest they cut back on some of their lavish spending. This is America! They feel entitled to have these things. Well, you can certainly have them now, but you probably won’t have anything later. People need to compromise and set priorities.
I too went through the horror of bankruptcy (filed in 2000) and was essentially wiped out–had to start from scratch–at the age of 37. Here, a little over 7 years later, I have a grand total of about $2000 in credit card debt–most of which is from medical costs not covered by my insurance, and last year buying my first new mattress since 1993.
I currently have about $10,000 (what’s left of the investments I’d built up little by little, now fairly decimated in the current market climate) saved, not counting retirement. I’d have more, but I live in NY City, and the cost of living here–especially for a one-income household–is staggering. Plus, I lost a well-paying job in 2004 (my job went to another state and I didn’t…) and I wasn’t able to find another like it. I now make half what I did then. Yet I still make sure I put away money every month in a college fund for my only niece, contribute about $80 a month to charity and put $50 a month into a “pin money” savings account. My credit scores are between 700 and 810.
I didn’t take that second chance for granted. I didn’t blow it, even after losing my job and having to settle for one that pays much, MUCH less. I live within my means… I cook instead of eating out, I accept that I already have enough clothes (and only a size 2 butt, Larry! LOL), shoes and other crap, and as long as my current TV still has a picture, it’s fine with me. I don’t waste money on vacations or nights out on the town, and I don’t drink or smoke. My only real weakness is baseball, and I make sure I go on all the “cheapo” nights.
Too many people see bankruptcy as an opportunity to start from scratch in running up debt again. Most of my discharged debt came from being in the wrong relationships and trusting the wrong people. OK, so I was a moron. But I’m older and wiser now, and will never again be a moron when it comes to money. If I don’t have it, I don’t spend it. And even if I do have it, I’d rather save it. No, I’m not even remotely rich, and I never will be. But I’m also not buried under a mountain of debt. That’s good enough for me.
Larry, People are in this situation because they have their priorities all screwed up. The chief cause of failure and unhappines is trading what you want most for what you want now. This is the microwave generation- immediate gratification is the norm.I am 42 years old and am lucky my Dad taught me about money but more importantly he practiced what he preached and lived it. I have always lived below my means and paid myself first.Pay off the damm credit cards and don’t charge if you can’t pay it off in full moving forward. You must have a savings account and good no-load mutual funds and PUT money into these each and every month. You have to be the first bill you pay every month!!! The more money you have, the more choices you have. Great work Larry- I love ya man. Time for a cigar and a little Kenny Chesney.
In Australia saving for your pension is compulsory, 9% is docked from your salary. No choice, no fuss. Sometimes these things have to be forced on people, the end result is, in fact, everybody gains (lower welfare costs, less people living on the bread line, etc). Shame the same can’t be done for other areas of people’s financial life!
I totally agree, Larry. It makes me so mad that people are totally oblivious to their situation, and I want to yell and tell them to wake up!!! My husband and I are fairly young, and I am just so blessed that we woke up and saw what was really going on. It will take a few years, but we didn’t get into debt over night. And it will be a road worth travelling. Even though we are in debt right now, I FEEL richer. And I think that makes a difference, too. I feel empowered by taking control of the mess and fixing it one day at a time, knowing that I will come out on top!
I am just sad for the rest that can’t see that. Hopefully, before it is too late, they will wake up, too!
I love reading your blogs! BTW, when is Big Spender on? I can’t seem to find it, and I have been dying to watch it!!!
Thanks!
Larry,
Thanks for the rant. I think part of the reason you have not gotten many comments yet, is because of how shocked people are by how stupid they have been.
We declared bankruptcy about two years ago, and are still crawling out of the mess it made. But we have one credit card we don’t keep a balance on, and save about 8% of our monthly income.
The difference is staggering. In how we feel about ourselves, in how we spend our money, in how we chose to pass up on things that we don’t really need.
WE have never been much for the fancy clothes and electronics, but we used to eat out an awful lot, and Ikea was a major weakness. Now when we do go to Ikea (maybe twice a year), we come out with maybe $50 worth of usefull furniture (usually book shelves, we read – alot), rather than $400 of crap we don’t need. We eat out and order out maybe one tenth of what we used to – and now we go for quality rather than quantity – and as a result we enjoy it alot more.
I love what you said about “Just save the money. That’s it. Just do it.” The reality is, that we always said we couldn’t afford to save any money because our credit card bills were too high – yet somehow we could afford to eat out three nights a week, and have a $200/year magazine subscription.
I look back now, and it all seems so insane. There’s a very good spiritual guide out there that says “The definition of insanity, is ‘doing the same thing over and over again, and expecting a different result.'”
’nuff said.
Thanks!
This has nothing to do with the post, but I was directed here to ask a question. I just finished “You’re Broke Because You Want to Be,” and loved it. What are some biographies you recommend reading? I wanted to start with Ben Franklin, but would like to know your personal list. Thanks!
I just bought “It’s called work for a reason!” yesterday and I read it cover to cover last night. I needed a huge kick in the ass to to get off this freakin’ cry me a river sob story I’ve telling anyone who would listen to explain the poor performance I am getting at the car dealership I manage. Anyway I read a lot of books and not one has ever got me to really and I mean this…to do anything to change the way I think. I laughed out loud last night a few times but it was funny because it spoke volumes of truth about me, the people I work with and the people I work for the customers. I don’t have any story to tell about the change this book has brought but I know I will. I will be a religious drinker from the fountain of Larry because I found my Coke and Pepsi just won’t do anymore. Thanks for the wisdom I won’t piss it away…
Don Willimont General Manager Ttriple Seven Dodge, Regina Saskatchewan
I chose bankruptcy in 2006! I currently own and operate a promotions and apparel business that I began from scratch…I am in charge of my own destiny. 85% of the money I make is funneled into my business or business related expenses. I spend very little on myself…drive a 10 year old Honda, wear clothing most of which is 5 to 10 years old.
I am 59 and damn the torpedoes, full speed ahead. I learned that “If you always do what you’ve always done you’ll always get what you’ve always gotten” but you know Larry…”No pain…no gain”…it’s a conscious choice we all have to make. Let’s go to work and make it happen.
Larry,
As usual, you are so right. It is truly a shame that we have such a materialistic, instantant gratification mentality. We spend today with no thought of the future.
I recently wrote an article, The Greatest Financial Lesson You Can Teach Your Children. In the article, I gave an example of two people. One starts saving $300 per month at age 20, invested in a tax deferred inventment account earning 8% per year compounded. Upon reaching age 40, this person stops investing. The other person waits until age 40, but then doubles the investment, that is $600/month in the same type of tax deferred investment account earning 8% per year. But this person does not stop investing in 20 years – they keep doing it for the rest of their lives. How long do you think it will take the second person before their investment catches the person that started at 20? The answer is surprising. The lesson is about the power of compound interest which Einstein called the greatest power on earth.
Don’t work hard for your money, make your money work hard for you. You can (should) read the entire article and pass it along to any young person you know. The entire article can be read at http://tinyurl.com/2r5zhz
Laurie……..there are many great biographies out there. Better to tell me what you are looking for in a read. I read biographies to learn about specific people I am interested in. I wrote a blog about the Five Books That Changed My Life you might want to review.
thanks
Larry
I think this is classic of a majority of people not taking responsibility for their own actions. They blame their spending habits on things supposedly outside their control. I built up a lot of debt a couple of years ago with my business. I didn’t have to file bankruptcy, but the plan I made to get out of debt hasn’t been easy.
I refused to file bankruptcy. I got off my butt and made a plan to pay off my debts. It will take a while, but I’ll never charge stuff I can’t pay off within the month any more. I put money into savings and donate every month even though there’s not a whole lot to spare.
Something is better than nothing in my book.
And something is way better than excuses!
Thanks for being real with people!
I get sick to death of all the “sugar coating” out there.
I think Larry’s reply was meant for you, Lauren! 🙂
Yes, we do have our values all messed up! We were one of them and we never intended it to happen. We saved a little but it took us losing everything before we got it. The key is finding someone to help you see the light – and thank you Larry for Blasting it to us. Sometimes we need to be hit hard with the facts.
The site that helped me with finding my passion and how to get out of the mess was http://www.cashflowpotentials.com. They had a bunch of free information.
Keep blasting!
Heidi
yep Laurie, meant Lauren.
thanks!
I see a lot of poor people in my volunteer work. Many do not have front teeth. Yet most seem to have cell phones. You would think that having front teeth would be a priority for people. But apparently not.
So, yes, people at all income levels have bizarre, skewed priorities. The mother who is whining about getting herself right back into debt clearly is unwilling to accept responsibility for her wild spending. She deserves the lambasting you gave her. But I doubt if she’s listening. She’s too busy keeping up with the spending habits of people far richer than she is.
I’d love to find your TV show and see how people react to you in person.
One thing that strikes me about the mother who emailed is that she pays for her teenagers’ cellphones. Teenagers are quite old enough to work, and pay for their own luxuries. I did when I was their age. When I was a teenager, I babysat for a dollar an hour and worked at Burger King after school. I didn’t get an allowance or anything even approaching luxuries. If I wanted to go anywhere, do anything or buy anything, I worked for it.
And if the mother feels that equipping the kids with cellphones is a necessity, fine… give them all prepaid phones and tell them that keeping the minutes topped up is their responsibility. There are working adults who can’t afford cellphone contracts with hundreds of minutes and text-message packages. Why should kids be handed such a luxury if they’re old enough to work?
So, I’ll ask this question one more time, Larry. WE have lived well below our means all these years (I turn 60 and just retired), owe nothing to anyone (incl our house), raised 3 kids, they went to college on the “repayment plan: get at least a C average, we’ll reimburse you for tuition – better and we’ll pay for books too”. Our million dollars is tanking from here to next year thanks to the 40% who have lived way beyond their means while the gov’t is now bailing everyone in the industry AND the consumer out of debt. I’m not so sure I like the moral of the story. Why should MY money bail out a bunch of morons??? (Sorry, but I am truly riled about this!)
Linda, you should be riled about it. I have said this in countless interviews including Fox News with Neil Cavuto. But that’s the way it is. You can be mad but that won’t change much. Sorry I don’t have a better answer for you because there isn’t one.
Part of the problem is the “American Dream” myth, the one that says you are a complete failure unless you own your home. People think that no matter how much debt they’re in, they simply MUST take on hundreds of thousands of dollars worth of debt they can’t afford to pay back… no matter what it takes to get that mortgage. Renting would be “throwing their money away.” There’s “always” equity in bricks and mortar.” Meanwhile, they’re basically renting it from the bank anyway, and will still have all that debt when they leave. They’ll essentially owe their landlords money when they move, even after all those years of paying rent.
Home ownership is great if you actually OWN the home outright. But with a mortgage, there’s no guarantee that you can get out when want or need to, and as we’ve seen, no guarantee the house will be worth what you paid for it. I went through this in the early 90s… when property values tank, your home becomes an albatross, dragging you down against your will. You’re screwed. You’ve been paying for years, but you still don’t own the thing and you can’t sell it for enough to pay back what you borrowed to “buy” it.
Too many people have their minds dead set against renting, even though they are in no position to take on a mortgage. And all those people stubbornly clinging to false ideals and irrational biases are now buried under debt they never needed to take on in the first place. When I leave my rental, my landlord will owe ME money… not the other way around.
Spend less than you make? My first 12 years out of college, I worked 3 jobs and slept midnight to 4am. I still couldn’t make ends meet. If it wasn’t for credit cards, I would have starved. If a single guy, who works 20 hours a day can’t make enough for the basics like food, shelter and trasportation, how do people afford to save for retirement or even raise a child? Just because I’m mature enough to realize I can’t afford a child ($205,000), since I can barely take care of myself, society lables me as “gay”. I guy over 30 who isn’t married must be gay, right? I can’t afford a house ($300,000), a fancy car ($40,000) or an engagement ring ($10,000), so I don’t deserve to have a woman look at me, right? I don’t have time to date anyway, since I barely have time to even sleep. It must be nice to rant and rave in fron’t of a crowd of people and writea few books and have millions thrown at you for it. Easy for you to say people should save.
Andrew – you are done. This is MY website and my blog. You are a guest here. I have let you rant and rave and belittle my opinions for too long. In answer to your comment about how nice it is to rant in front of a crowd, write a few books and have millions thrown at you for it – yeah it is. But IF you had read those books or ever listened to what I have to say, you would have known what I did to make that happen. You would know that I grew up dirt poor and worked my ass off to get ahead. And I have yet to see anyone throwing the money at me – it seems like I work pretty hard for it. Oh, by the way, I tried to buy one of YOUR books – didn’t see one. Did I miss it somehow? So if you haven’t written one and haven’t read one (at least mine) don’t show up and put mine down. It is NOT easy for me to say people should save. I did it though whether it was easy or not. When I was much broker than you. How? I just did it. Period. In closing let me just say this: take your whiney self elsewhere. You are NOT welcome here. You are a pain in the ass. You are blocked.
I love the show big spender for several reasons, one of which I finally feel justified in not racking up hugh credit card depts or living at or above my means. Where I live in South Florida you are judged how you live and how you dress and look . My house is almost paid for, I have no credit card debt and my cars are paid for. I sleep well at night and have few money concerns and yet everyone around me has all got money issues, crying a river complaining all the time as they sit in their brand new granite counter kitchen with new stainless steel appliances in their upside down mortgaged house ( I have good old fashioned Mica and white appliances… sometimes I want to tape Larry’s shows and hand it to my friends and co-workers when the whinning gets on my nerves; but this would be rude and Larry has taught me a little me about being Rude as well. I just orderd You’re broke cause you want to be” at B&N online.
Hi. A couple of us where just talking about how big of losers we where because at 40 years old we had almost no savings accounts. You think here and there we could have put in $100 or something. My 11 year old has 15x as much in her savings account. Its not that I live beyond my means. I have never carried a credit card balance because I work hard for my money and am not about to had it over to some guy in a suit. I have a house that is about half of what I could afford. If I owe money on a car I work overtime until it is paid off (usually less than 18 months). I am really good at paying my bills. Its just that its not on the radar to put money into a savings account. It’s not something I think about. I put a crapload away in my 401k, hey its automatic. I fund my Roth, its treated like a bill. If I treated contributing to a savings account like a bill I bet I could do it. I get from Larry that he’s less “get rich quick” and more if you want something its going to be alot of hard suckie work. I wouldnt mind some magic beans once in a while. They really should include retirement accounts in the savings rates though when the government says we have a zero percent savings rate. That’s really not the whole story.
I LOVE YOUR REACTION LARRY!
I couldn’t agree more! most Americans are so busy buying the latest “trendy crap” that they never think of retiring or worst, there friggin kids!
And yes, They are IDIOTS! and should be told like it is!
Larry I totally agree with you. People are idiots and I was one too. In the last 3 years I have paid off over $21,000 in debt incurred mostly by my spoiled, inmature thinking. I wanted what I wanted when I wanted it and didn’t give a thought on how I was going to pay for it all. In the middle of paying off that debt I have managed to have (before the stock market tanked) mutual fund assets over $31,000 and take two nice trips, one to Mexico and one to Utah and Arizona debt free. With in the year I will be debt free. I am still saving and still buy mutual funds toward my retirement. Oh and I got a promotion at work and studied for and passed a licensing exam to further my career ( and I am 58).
If you wanted me to tell a sob story I could certainly do it. But I won’t because my life is the way it is because of the choices I have made. I have made some poor ones and I have made so good ones. I own all of them good and bad and guess what now that I am at last taking responsibility for my life I found true happiness.
So, I find it hard to believe that someone could have a college education, be single, work 3 jobs and still not make ends meet unless that person wanted to so everyone would feel sorry for him. I really don’t understand how that is possible unless they are working for minimum wage and then I would ask why a person with a college education is working minimum wage over 12 years out of college. Maybe the answer here is to stop underearning and stop blaming the economy for their problems. The economy hasn’t been bad forever. I don’t make a lot of money but I could still take care of myself with out working 3 jobs.
When are people going to start taking responsibility for the choices they made? Stop being victims and stop blamming everything and everyone but themselves for their life.
Ok Larry, I will get off the soapbox now. Thanks for the blog.
Karen