> As is usual in journalism about social problems, this article confuses
> "earning more money in wages" with "becoming non-poor." Despite the
> bestsellerdom of Stanley and Danko's book, apparently it still hasn't sunk
> in that being well-paid is a long way from being non-poor. If you make
> $100,000/year in wages but lack sufficient invested savings to supply a
> subsistence income, then when for whatever reason your wage income stops, in
> short order you'll become as effectively destitute as the people described
> in this article.
I strongly agree that there is a disparity between income and net worth; the
media does a disservice to everyone by frequently equating one with the
other. Furthermore, this disparity is encouraged by a government (in the
U.S., but probably in Europe as well) that stiffly penalizes people who make
enough to have substantial savings. These days, every extra penny I make
between January 1st and April 15th has to be saved to cover the difference
between what is withheld from my income and what the punitive tax rates
require me to pay. Sure, I may still manage to actually save money 6 months
out of the year, but a moderately high gross income doesn't imply vast
quantities of net income after taxes and basic living expenses.
Given this situation, the fraction of the money I earn that I am able to
save seems to be largely invariant of my actual gross income, despite the
apparent reality that more-or-less fixed expenses should allow me to save
more. Because of this, I don't think it is substantially easier to save
money with an upper-middle class gross income than it is with a lower-middle
class gross income.
> I've been saying for years that America's "affluence" is
> really a clever illusion, given the relatively small numbers of people who
> wind up financially independent even after decades of work.
Despite my mini-tirade above, eventual financial independence is easily
within reach of pretty much everyone, except perhaps for people with
pathological psychological conditions. The "illusion of affluence" exists
mostly because it is easier to maintain the illusion of affluence than it is
to actually *be* affluent. The biggest problem is finding the discipline to
build real affluence, and recognizing this at a young enough age that it can
really make a difference. Too many people, like my parents, don't start
thinking about these things until they are in their forties.
-James Rogers
jamesr@best.com
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