Lisa

Yes, people have different audiences, however the demographic of people who read Yahoo and MSN finance vs. the people who read Forbes online is going to be substantially different.

And Yahoo and MSN get better numbers. I was simply remarking that the websites for wealth are completely different than websites for the middle class. The websites for wealth are aimed at ‘wealth preservation’ and how to generate wealth. It’s a whole other ballgame that, as a reasonably educated person in their 20’s, I was shocked to find I had never seen before in my life.

If you want a concrete difference: on Yahoo or MSN, many articles talk about saving for retirement or for your child’s college education. On Forbes I read about something called a legacy that pays for what you want without you ever touching the principle.

If that isn’t a WTF moment, I don’t know what is.

Let me explain. Simple problems when you live on the edge, like a washing machine breaking down, can cost you tons of money in having to use the laundromat to wash your clothing.

If your only “beater” car breaks down and you have to repair it to go to work, then you may pay your other bills late that month and incur a ton of late fees or higher interest rates.

Medical problems for those of us in the lower income are also a bigger deal because we tend to have less than wonderful medical insurance, though we get the same illnesses/diseases as others. Ever worked where you had no insurance, your boss did, and they came to work sick and caused you and your entire family to then become ill? Where it cost the boss a $10 co-pay it could end up costing a family $1000 if something like strep or infection is involved. (Or in our case it caused my DH to have to be in the hospital for over a week!)

What I have noticed between the times I have had the 80K income, and the 20K one of today (for a family of 4 in California…) is that money essentially buys you choices. When you have a higher income you can pay to fix that washing machine or even buy another one, even if it has to be on credit. When you have NO extra income or credit available and the washer breaks you lug your items to the laundromat and pay the $2.50 a load to wash them… until such time as you can replace the washer… You know ultimately it’s cheaper to buy/repair your washing machine but it’s much easier to come up with the $10 for laundry each week than to deal with the $100-300 all at one time.

When you just don’t have enough income each month you also are more likely to let the auto/home/human body maintenance issues slide for as long as possible. This in turn causes you to end up with higher bills in the longrun when things do go wrong and require immediate fixing. But, sometimes it’s hard to justify not paying a bill to have your oil changed, eat organic/healthier foods, go to the doctor for a check-up, or fix a small hole in the roof, or whatever….

Like I said, we have been on both sides and there is a lot of stress and frustration in being “low income” that I think most people who haven’t been there simply can’t relate to. Some of us simply don’t have a “latte” factor to cut-out and when the $hit hits the fan hard chices have to be made.

In my case I was forced to change my spending habits by being laid off from a very good job. While I have since found a job that pays about half of what I once made, I actually find it easier to save than I ever did when I was earning much more money, thanks to having had to adjust to very little income for several years.

Unfortunately, the “get laid off and 3 years later find a job paying half of what you previously earned” approach to improving one’s finances is not likely work for most Americans. I just happened to find a way to make it work for me, simply because I had no other alternative.

“Natural drive and ambition are also important ”
I really appreciate that you acknowledge that.

All and all, good article. I think that many pf blog readers tune in for frugality stuff initially, but once you have the basics down, people are looking for more. Or they just read to pick fights and argue. ;)

Having owned and managed rental properties for 20 years, there is nothing “passive” about passive income. Real estate must be actively managed and maintained, by the owner and your employees, and treated like a business instead of a hands-off investment. Some years you make money, some years you lose money. But just like most businesses, you’re likely to make more money when you take a hands-on approach to your properties. And your handyman skills will become well honed.

Here’s the short story, I got blindsided by Uncle Sam two years ago, I was hit with the Alternative Minimum Tax. I hired a tax accountant for guidance in restructuring my financial life to avoid paying an extra $12K towards income taxes each year.

As a result, I sold the rental properties and converted the “passive” income stream into a financial flash flood. I managed to ride the real estate bubble before it crested but paid a considerable fortune in capital gains taxes. I made it just in time for the stock market to flounder AND savings interest rates to collapse.

I’m still in the middle class, slightly wealthier after cashing out and paying Uncle Sam but much poorer than I was on paper. Unlike the wannabe real estate tycoons lead us to believe, most of your gains goes toward taxes, repairs, improvements, commissions and fees.

What I’m afraid of is that with the cost of health care, living a simple and happy life while being prepared for the worst might take having a million dollars.