Six Persistent Money Myths That Seem To Stick Around

One of the most frustrating aspects of running The Simple Dollar is reading comments where readers, who are intending to do the right thing, actually spread misconceptions and falsehoods based on some false money myths that are floating around out there. I thought I’d correct six of these misconceptions right here, right now – and I’m sure that some of these will stir up some real discussion.

1. Investing in stocks is expensive, with fees up to and over 2% eating you alive.

This might have been true back in the 1970s, but with online discount brokerages and direct connections to investment houses, you don’t have to drown in brokerage fees. There are a lot of great options out there, but here are the two that I use (the best ones).

For individual stocks, I use Zecco. Zecco offers a handful of trades per month for free – no brokerage fees at all. They are able to afford this by putting advertising for other products on their site. There are also premium features available, but for the individual investor who just wants to buy and sell a few stocks on the side, it’s the best deal out there.

For mutual funds, I use Vanguard. Vanguard allows you to invest directly with them with no fees. They offer a huge number of index funds, most of them charging very low expenses, usually below 0.2%. You can manage everything online, easy as pie, and get started investing very quickly.

The idea that you have to pay huge brokerage fees to invest in the stock market is a myth from the days before the deregulation of the brokerage industry. In today’s world, there are a lot of investment options available and, as you can see, some clearly target the frugal investor.

2. Debit cards are less secure than credit cards.

If you look at the actual federal laws that describe the basic consumer protections for debit cards and for credit cards, then debit cards offer slightly less legal protection than credit cards. They’re actually equal (you’re only liable for $50) within two days of your realization of the fraud, but after that, debit cards offer less protection.

However, virtually all credit and debit cards offer far more protection than this. If you see a Visa or a MasterCard logo on your debit card or on your credit card, it means you have zero liability on fraudulent purchases.

As long as your debit card has a Visa or MasterCard logo on it and you tell any business to use your card as a credit card rather than a debit card if they ask (meaning you don’t enter your PIN), your debit card affords the same protections as a credit card. This is because, even though they’re often criticized for encouraging people to get into credit card debt, Visa and MasterCard both give people quite a bit of consumer protection.

3. Things are set up so that the rich get richer and the poor get poorer.

I used to believe this myth as well, but it simply isn’t true. Things are set up to reward people who work hard and who provide a lot of value to others, and believing in the myth that “the rich get richer and the poor get poorer” simply ignore the people who regularly come from nothing to become a success (often by working incredibly hard and using their talents in an intelligent fashion) as well as the people who have plenty and squander it away.

The truth is that if you work hard, work intelligently, and work to continually build value for yourself, you’ll do just fine in life. If you make the choice to just put in your hours at a 9 to 5 job and then play hard on the weekends, you’re also choosing to stay in the same socioeconomic class. If you make the choice to excel at your job and then spend at least part of your off hours starting a side business and/or improving yourself, you’re putting yourself in place to move up.

It’s not about “the man holding you down,” it’s about the choices you make every single day. The next time you sit around with your pals talking about how the system is set up against you, ask yourself if you couldn’t be doing something right now to improve your situation – or improve yourself.

4. I can save a huge amount of money hitting big sales.

Lots of people get very excited about Black Friday (and other huge sales), and why not? They offer impressively low prices on consumer goods of all varieties – you can save big money, right?

Actually, sales are designed to encourage excessive and premature purchasing. They show off these low prices on certain items to get you into the store and get you into the buying spirit. I’ll see an ad and think, “Wow, that game is on sale for only $40? I’ll pick it up!” Then, I’ll go into the store, spend $40 on that game (that I shouldn’t be spending), and then spy something else I “need,” like a big pack of AA batteries. Before I know it, I’ve spent $100 on stuff I shouldn’t have bought and could very easily live without.

Even better, some retailers actually mark things as being on “sale,” but in fact they’re marked up compared to their basic original price. My uncle personally did this when working at a major retail chain in the 1980s and 1990s – when applying a “sale” sticker to an item, he’d first put a sticker on below it with a hugely inflated price, then affix a “sale” sticker on top of that with a markdown from that inflated price, returning it to a price that’s still higher than what it was to begin with.

Sale prices are fine if they match up with something you’re already planning to buy, but if you see something in an ad and the sale price is convincing you to buy it, then that sale isn’t saving you money – it’s costing you, big time.

5. Refinancing your house when interest rates drop will always save you money.

A couple I know well refinances their home seemingly every time the interest rates drop a bit. They almost got hysterical with me when they found out that I wasn’t refinancing after the recent drops in interest rates. “You’re throwing away money!” they shouted at me.

The truth of the matter is that refinancing isn’t always the best choice – in fact, unless the difference between the rate you have now and the rate you would have is more than 1%, it probably isn’t worth it. There are several reasons why.

First, when you refinance, you have to pay a big fee up front. Do you have $3,000 or so to drop up front on this refinance? Sure, it will lower your monthly payments, but for many families, that’s a lot of money to just drop on a whim.

Second, the average homeowner moves long before their mortgage ends. If you pay for a refinance and then move in three years, you’ll almost always take a nice loss on that refinancing. Refinancing can be great if you plan to stay put for a while, but if you’re even remotely considering a move in the future, it may not be the best choice.

Third, the time investment hunting for the best refinance rate can be quite high, too. In order to find a really good rate, you’ll likely have to beat the pavement quite a bit to find it. What is your time worth to you in this hunt? If you spend forty hours tracking down the best rate, getting all of the paperwork done, and getting everything signed up, that’s a significant cost as well.

If you’re even considering refinancing, use a refinancing calculator and see how long it will take for your refinancing to be worth it. For us in our situation, I think it will be, but I think there will also be another interest rate cut in a month or two, so I’m going to hold off for the moment. Remember, refinancing is never an automatic “yes!”

6. If I have any significant money at all, I’d better get a financial planner.

With the huge amount of information available online and in books, you’re better off investing by yourself for several reasons:

Financial planners often charge substantial fees. Even if an investment advisor were able to find the absolute best investment for you, they still would be charging you some fees on top of that. If you can put in some legwork, do some reading, and find the right investments for yourself, you’ll keep those fees right in your pocket.

Financial planners are sometimes paid to steer you to certain investments, often subpar ones. When you pay someone else to manage your money, you’re expecting that they will steer you towards the best investments for you – and most financial planners will. However, there are some out there (I’ve interacted with one, myself) that will steer you into investments that aren’t necessarily the top of the line. Why? Because they’ll get a kickback by steering you there. This is rare, but it does happen – whenever you entrust someone else with your money, you are taking on some level of additional risk.

So why should a person ever use a financial planner? Financial planners are useful if you lack the confidence (or time) to manage your own money. If the thought of managing a significant amount of money worries you (or the thought of doing research on investments overwhelms you), then hire a planner – the ability to sleep at night is likely worth the fees and the small risk associated with it.

Just remember: you can do it yourself. It’s not that hard, and the relatively small amount of extra time you’ll spend on learning and doing it yourself will be well compensated by not having to pay fees.

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120 thoughts on “Six Persistent Money Myths That Seem To Stick Around

  1. Nick says:

    I think its worth noting the high minimum required to open an account with vanguard. For people who are worried about the cost of investing in stocks/funds, this can be an issue as well.

  2. Gayle says:

    Wow, thanks Trent. One of my action items on my resolution to take more control of my money this year was to open a Roth IRA account. I literally just opened the account with Vanguard this morning, just before reading this post. I was having second thoughts about choosing Vanguard, but your reference to the wide range of fee-free mutual fund reinforced my resolve.

    The next step for me is to move the rest of my savings into an higher yield online savings account. I’m current wavering between ING (at 3.40% APY) and UFB (at 4.00% APY), my current account is only earning 1.88%. I’m thinking I’d like to follow the savings move with a checking move. Any thoughts or advice on this?

    Thanks again. Great post.

  3. Minimum Wage says:

    The truth is that if you work hard, work intelligently, and work to continually build value for yourself, you’ll do just fine in life.

    HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!

    We have quite a few hard workers where I work, including three with college degrees, and they all make minimum wage.

  4. Anne says:

    That is SO true about sales. One of the best things I did for my finances was to unsubscribe from all the various e-newsletters that retailers send out. I was finding myself unable to resist a 15% off coupon… when by ignoring that type of thing I have saved 100%. :)

    I also stopped buying from a certain online drugstore when I realized that its prices are marked up to make up for the rebate and free shipping offers. This post is a good reminder to take note of prices in order to independently assess whether something that seems like a deal really is.

  5. cinzea says:

    Hey Minimum Wage: you’re still making a minimum wage? You’ve been leaving depressing posts on other blogs for over a year now. I betcha those college grad friends of yours, while they may be making minimum wage now, won’t be, in a few years from now. Where will you be?

    Great posts, Trent. You are right-on the money!
    PS: I also think with Vanguard, they will lower the minimum deposit if you agree to a monthly automatic deposit. At least they did, a few years ago.

  6. riley says:

    Your point number 3 is absolutely true. I have seen it hundreds of times in my life, both of individuals that overcame adversity to create a better, richer (in every sense) life, and those that had every advantage and squandered it all, with nothing positive to show for their lives.

    I also strongly agree with your point 6, most people are way ahead handling their own financial matters at every level, from paying bills to investing.

  7. jayne says:

    It sure sounds like your “debunking” #3 is simply pointing out exceptions to the rule. The idea that “working smart” will propel anyone into a higher class completely ignores the reality of poverty. The real poor can’t afford to “play hard” on the weekends OR start up a side business. Likewise, anyone with a savings account knows that if you HAVE money, you can MAKE money with little-to-no effort.

    All your comments tell me is that you have never truly been “poor”. Poverty is not just a lack of wealth; it’s also a lack of opportunity.

  8. Megan says:

    In response to #6…there are advisors out there who do this, sure. That’s why it is SO important to seek out an advisor who is completely independent from fund companies. Make sure that your advisor is working on an open-architecture platform. I would also recommend going off personal references from someone you trust, don’t rely on national advertising (or even local).

    While there are many instances where you can handle your own finances, like you said Trent, many people don’t have the time or interest. If that is you, then yes, you need a financial advisor.

  9. SJean says:

    While I don’t want to deny an individual can do a lot to improve his/her own situation, as a whole, “the system” does promote rich getting richer and poor getting poorer. It may not apply to YOU or even ME, but as a whole, I think it is still true.

  10. Mrs. Micah says:

    Even with #1, for a person who wants to do lots of day-trading stuff the fees will mount up. Fortunately, if someone wants to periodically buy a few good stocks, it’s easier for them.

    While saving up to put the money in Vanguard, people can put it in some of the ING accounts which don’t have quite as low fees but are quite decent and easy to use.

  11. Cheapest Man says:

    I love this sentence ‘It’s not about “the man holding you down,” it’s about the choices you make every single day.’

    So many people complain about the situation they are in..yet so many people don’t have the will to get themselves out of the hole they dug themselves into. And I do speak from experience. After college I accumulated a lot of debt..but was in denial that it was my fault. When I finally admitted I was the one to blame the healing began. I got some debt counseling and worked my way out.

    Great post man!

  12. Doug says:

    Debit cards may not be less secure than credit cards, but if it does get stolen and used, you’re far better off it being a credit card because with a debit card your checking account can be depleted instantaneously causing all kinds of havoc due to insufficient funds for other bills.

  13. Ben Atkin says:

    I disagree that the heading “Things are set up so that the rich get richer and the poor get poorer” is a myth, but I agree with your advice, and will try to follow it. I think the sentence is true, but it isn’t relevant to personal finance so much as it is to politics. I think, for example, that the act of cutting interest rates is designed to bring people into a spending frenzy, which will make benefit the top 0.1% the most, and hurt foolish consumers in the long run.

    Still, people hide behind the phrase as an excuse for not achieving financial success — even when it is possible.

    This is a great post, Trent! I can’t believe the rate at which you are getting these blog entries out.

  14. The Thief's Theme says:

    I guess this is your “controversial post”, huh, Trent – particularly re: point #3. Man, it if were as simple as “it’s not about the man holding you down…”. You do a much better job here writing basic frugality tips and posts about ING Direct instead of trying to tackle the economic structure/history of the United States in one simple point. Ah, to be a white male in America…

  15. Scott says:

    I agree with the post completely and am truly impressed by the volume and quality of each post. As for “minimum wage”, go feel sorry for yourself somewhere else. Try applying yourself in a different way if what you are doing isn’t working. I am getting ready to start an ING account. Do you have any of those $25 just for starting up coupons? I see them everywhere but I would rather help your site out.

  16. David says:

    Here is a more comprehensive refinance calculator to compare fixed-rate mortgages. It takes in consideration the time you’ve already put into your currently loan and how that effects your payoff day.

    http://www.mtgprofessor.com/mpcalculators/RefinancingOneMortgage/refiI.asp

    Before paying the huge costs associated with refinancing, you might also consider giving your current mortgage company a call. They will often do a true 0-cost refinance to the lower rate just to keep your business.

  17. Michele says:

    I totally disagree with #3 – the system is set up to reward the powerful, and in our current economic and political system, money is power. For many people in the bottom echelons of society, there are substantial barriers to opportunity to economic mobility. That’s not to say that there aren’t examples of people who worked hard to improve their economic situation and succeeded. But there are also many people who are working very hard, in multiple full-time jobs, or trying to find a better job, that have been struggling to get by, particularly in light of skyrocketing health care costs. Your implication that people who are poor all put in hours at a 9 to 5 job and then play hard on the weekend is plain wrong – and, as Jayne says, reveals that you’ve likely never been in a position of real poverty.

  18. Johanna says:

    I also disagree on #3. The existence of a few counterexamples does not prove that the deck isn’t stacked in favor of those who are born rich and against those who are born poor. (There are also a few very successful individuals who are black and/or female – that doesn’t mean that racism and sexism don’t exist.) It is easier to remain rich than to become rich.

    Most of the time, people who argue that you can be as successful as you want, if only you work for it, are out to convince themselves that their own success has nothing to do with any advantages they might have been born with. But Trent takes this a step further, and it’s slightly disturbing. By going on about “building value for yourself” and “improving yourself,” it seems that he’s claiming that he’s not just a harder worker than anyone who’s less successful, he’s actually a *better person*. Bad, bad move, Trent.

  19. librarygal says:

    I’d love to see a post comparing Zecco to other online brokerages to see why you chose them.

  20. Lurker Carl says:

    @jayne – “All your comments tell me is that you have never truly been “poor”. Poverty is not just a lack of wealth; it’s also a lack of opportunity.”

    Please define poor. The poor Americans I see have electricity, TV, indoor plumbing, kitchens with a range and refrigerator, central heat, adequate food, weather-resistant houses and access to 12 years of education. That’s luxury for much of the world.

    Opportunity abounds, most people don’t recognize it or reject it. Many American jobs go unfilled because people refuse to perform them for any amount of money. Opportunity shunned is opportunity wasted.

  21. Minimum Wage says:

    Sorry, Scott, two of us are over 50 and in America, nobody wants to hire us. (The other guy is going to China to teach English because he can’t get a decent job here.)

  22. John says:

    I also take some issue with #3, but not entirely. It’s true that the choices we make every day influence the quality of our lives, and it’s true that people hide behind “the rich get rich and the poor get poorer”. It’s also got more than just a grain of truth to it.

    As an analogy, I happen to very much enjoy the game of poker. I don’t play to excess, I budget a *very* small amount of money from each paycheck to go into a fund that can finance the occasional trip to AC, so I’m not exactly a crazy person with that before anyone jumps on me for gambling.

    Point is, poker is a complicated game, and winning for any given finite length of time has a multitude of factors involved, which I happen to think reflect a little on life. First, Luck. Anyone who says luck doesn’t matter in poker, or in life, is blind. Luck swings back and forth, and for any length of time, your luck could be bad, could be good, or could break even.

    Second, Discipline, or Skill, the choices we make with each hand we draw and with each step. In the long run, this makes all the difference and given enough time and resources, a disciplined player will come out ahead. Of course, for any given length of time, our luck can be good enough that we don’t need much skill, or bad enough that no amount we have will carry us.

    Finally, and most direct to #3 – Resources. In poker, the bigger the stack you have to start with, the more you can push other people around and control the scene. It’s not an infinite ability, because someone with less resources might have the right skill to see through you, or luck to take advantage of you, but it’s certainly easier to hold the lead than to take it.

    So my point to #3 is not that you’re wrong Trent, but that I disagree with the finality you demonstrate in dismissing the adage. There is an element of truth to it, and I think your post seems to underestimate it, just as much as some people use it as a crutch or scapegoat.

  23. Gayle says:

    For all those posters having problems swallowing #3 on the list. I can only say that Trent is correct. Some may have more obstacles to overcome than others, but it is possible.

    I’ve overcome a lot to get to where I am right now. Being Native American, I’m coming from some of the poorest of the poor in America, and no, I do not receive any casino revenue or per captia payment from my tribe–my tribe doesn’t have a gambling operation. I made it through high school and then hit a wall. I was working at the local McDonald’s, hanging out with the oh-so-wrong crowd, and constantly living on the edge of hunger and homelessness.

    At some point I woke up and made some really tough decisions–cut-off contact with my so-called friends, packed my few belongings and made my way to a new place where I could start over. I got a job at McDonald’s again, but this time I knew I was not going to settle. I began working my way up the management ranks and away from minimum wage.

    It seemed to me that in order to achive something better, I was going to need a degree as more and more of the job ads were requiring not just experience, but a degree. Several years later I had managed to save enough money to quit my job and attend the local junior college full-time without working. I didn’t just take a fulltime class load of 12 units per quarter, I took 24 units a quarter. I thought, well if I can only do this for a year, I had better cram as much in as I can.

    After a year of school I found a parttime job to supplement my savings and continued a fulltime class load. I learned about loans and scholarship programs. That was 1997.

    I now have a Bachelors Degree under my belt, a job that I love and have been at for 4 years, I’m making my final payment on a car loan next month (a 5-year loan paid off in 3!!), and only have about $10,000 left in student loan debt. And aside from my mortgage, that’s all the debt I have. And you know what, it’s been frigging hard! But guess what, it is possible.

    So for all the people that feel the system is set up against you, well yes, it’s going to be harder to get ahead–but it can be done.

  24. Marcus Murphy says:

    This is in response to those people who disagree to #3 (Jayne, Michelle, and the like).

    I started out at 16 being a dishwasher/busboy/cook. I saved my money and went to college. After a bout of depression and bad grades I lost all my grants and was forced to drop out of college for lack of the finances. So I decided to take what money I had left ($600), and move to California. Mind you this was back 2002 when we had our “recession”. Through craigslist I found someone’s couch to crash for cheap and got a job down the street at the grocery store as a bagger making minimum wage. I saved up money and bought a bicycle so I had greater mobility. I then found a job paying $2 more an hour as a stock boy by using the techniques of “How to win friends and influence people”. Essentially I created this opportunity for myself. I shifted my hours at the grocery store to closing 6 nights a week. I would get up at 5:00 pack my bag hop on my bike, bike 3 miles to work and quickly take a sponge bath in the bathroom and change into my work clothes to be ready by 6. Then I would work until 2:30 go home shower, eat and then get to my next job at 4pm and work until midnight. Go home and sleep for 4 1/2 hours, wake up and do it again. I did this for 3 months until I had enough money to buy a car. I then quit the bagger job. I then found some sidework paining for my neighbor who had a “wallpapering” company. I then opened up my own side business painting. I went on to build a crew and after a while I was only estimating jobs and collecting the check. I then invested some of this money in getting a technical education (associates type degree) during the night and working everything around it. Fast forward to today and I make almost 50k a year, I drive an Audi A4 (not that that means anything) and I still have my sidebusiness and now I am working towards a 4 year degree and I hope to pursue an MBA after that.

    I did all that going from dirt poor to creating opportunities for myself. Yes I did have a lot of failures to get over but hard work and dedication is what got me there.

    So technically I think Trent is right on in post #3, the rest of you just have a different perspective.

  25. mac9 says:

    I generally like the posts here, but I take strong exception to #3. Other people made the same points I would make, so no need to rehash. One interesting point though is that the US has less relative economic mobility than the rest of the world … http://en.wikipedia.org/wiki/Economic_mobility

  26. I have to disagree with #2 there are still plenty of debit cards out there that aren’t Visa or Mastercard branded. Those cards are less secure than credit cards. Even if you aren’t liable for fraudulent charges it will be a lot easier to straighten out charges on a credit card than a debit card. If fraudulent charges on a debit card wipe out your checking account it will be difficult to pay your bills while waiting for the fraud to be resolved.

    Also most debit cards don’t allow you to dispute purchases like you can with a credit card. It is much wiser to use a credit card than a debit card.

  27. Andy says:

    No, Trent is technically wrong. The rich ARE getting richer and the poor ARE getting poorer. In terms of net worth, the poorest 40% of Americans own less thatn 1% of America’s wealth, and the richest 1% own about 35%. There was less of a gap going back 35 years. So, yea, a lot of poor people have a lot of stuff, but its borrowed stuff. The man isn’t holding you down, he doesn’t need to. But he does make you pay a .5% sales tax to build his baseball stadium, he doesn’t pay property taxes on his new big box store thats putting your tax paying small business under, he works as a doctor for a “non-profit” hospital that makes him rich, doesn’t pay taxes, and avoides treating the destitute. Get this, many of the rich pay a lower percentage of their income each year in taxes than many poor people. Personal responsibility is great, but lets apply it to the rich first for a change, and stop blaming the poor for being poor.

  28. Jim Hartsing says:

    This article certainly gets folks talking!

    I don’t want to jump into the rich/poor foray, but I must say a couple of things:
    1) You can almost always find 0 cost refis, making refinancing a no brainer. However, you need to consider that a refi makes your mortgage “start over” – something to consider.
    2) I never use financial planners, but you *can* hire fee based planners who don’t sell anything but advice, thereby removing the incentive to steer you wrong.

  29. adam lehman says:

    OK, here’s my take on #3.

    While individual success is possible, i think systemic issues are much deeper.

    Think about this. You are born in urban Chicago. You live with your mom, cuz you dad left. The school you go to is awful, cuz everyone is poor. You don’t expect to live past 25, cuz you know soooo many people who died a young death. You are harrassed by police officers continually throughout your life (just because you’re black) and you scare the rich white people moving into your neighborhood (gentrification). you join a gang because the gang is the real group of people protecting your neighborhood. Oh yeah, you’re still 14. You’re not reading personal finance blogs. you’re not being encouraged by parents. you’re not even in a school where they expect you to graduate.

    and you can’t help but wander why your grandpa (who is black) got pulled over 29 times when driving through a rich white suburb (wheaton – this is a true story). oh yeah, 27 of those times were for “random checks.” (have any of you white folks been pulled over for “random checks?”

    while there is hope for this guy. he sure can’t see it. sure he could study hard, but are you going to convince a 14 year old to stay in school and work towards college when he doesn’t really believe he’ll live past 25. Convince him that police (who represent the government) are fair. Convince him that he doesn’t have to cash all his checks (cuz he doesn’t trust a bank.) (if you could convince him of these things, you should work with people in poverty and help them; instead of simply working at making a million for yourself)

    sure there are a million parts of this guys thinking that are wrong. but he doesn’t know that. would you expect him to?

    sure the system works for some of us. but it sure doesn’t work for everyone. it was set up by wealthy, white males and is still run by wealthy, white males.

  30. SJean says:

    While I don’t want to deny an individual can do a lot to improve his/her own situation, as a whole, “the system” does promote rich getting richer and poor getting poorer. It may not apply to YOU or even ME, but as a whole, I think it is still true.

    (sorry if this is double post, my comment has been held up in moderation…)

  31. SJean says:

    Oh, and what about a poor person who is hard working but simply isn’t that intelligent? It bugs me SO much when really brilliant people think they are successful because they “work really hard”. While they DO work hard, some people are obviously blessed with great intelligence, and that is simple genetics.

  32. NRB says:

    I’m shocked at some of the responses to #3, but then again the Democrats have built a campaign base built on the lie of “rich getting rich off the backs of the poor”.

    I for one am tired of hearing about “the poor”. The “poor” in this country have cell phones, cable TV, and high speed internet.

    The “poor” are off drinking half the time or making bad decisions (like having 3 kids while still earning minimum wage) while I slog at work for 60 hours AND run my side business! All so that more of my tax dollars can go to the “poor” who are basically living it up spending MY money at the bar or playing Guitar Hero.

    I find it hard to swallow that the same people who would be savvy enough to read a personal finance site like this would be daft enough to swallow leftist bull, but here we are. Oh well.

  33. Rick says:

    @Marcus Murphy: Thank you for sharing your story. I have a similar story in my hard work has made me successful. I was born in a poor family and didn’t ever have much money for anything. My parents didn’t pay for my college education or anything. But I started at the bottom of the food chain, worked hard, and advanced from there.

    So Trent is right, but not completely. It is certainly true that this country affords anyone the opportunity to be successful with enough hard work. And don’t ever think otherwise. You can succeed in anything you put your mind to, if you just work hard enough for it.

    But it is also true that the rich class gets richer while the poor class struggles. There are more opportunities for the rich to make more money (for instance, hedge funds, which require a minimum investment amount). The tax code certainly favors the very rich. But what people fail to take into consideration is class movement. So while the rich might continue to get richer, it is not the same people that are in that class. Some significant percentage of the poorest 20% of Americans end up in the riches 20% of Americans 20 years down the road.

    And so, while it might be easy for the rich to get richer, the opportunity is still there for anyone at all to become successful.

  34. Trent says:

    I’ve been poor enough to not know where my next meal is coming from. I’ve been poor enough to live in a home where the walls were collapsing. I’ve been poor enough that the only food available to eat is what we could forage for.

    I saw people in that same situation make the same mistakes. They’d work long hours, then go home and drink cheap beer and gripe about the man. They’d go out all night and ride around on their four wheelers, trying to forget the pain, then they’d clock back in the next morning.

    I got out of that life by working hard and by working smart. You might work hard at a minimum wage job, but you’re certainly not working smart.

  35. Andy says:

    Trent would have been better to say:

    “Myth #3. — Hard Work and Education Don’t Pay Off.

    Not true. People who are more well educated and work harder make more money than those who don’t. For example, a nurse with a masters degree makes more than one with a bachelors, who in turn makes more than one with an associates.”

    When you write your book, Trent, I suggest the above revision :)

  36. Myth 3 is only a myth for those who are rich and less rich. The true poor are getting poorer and the less rich can get richer.

    Not a Marxist- just a truth teller. Don’t lie to me.

  37. DebtKid says:

    Wow…comments have gotten quite political here. I agree about “working smart”. Big difference about working smart from working hard.

    I’d like to start investing at some point, and I’ll probably take a look at Zecco then.

  38. Outlook says:

    Trent, you’re being pretty naive in regards to #3. Imagine a scenario where someone has a 5 year headstart on you. Pretty hard to catch up right? Now imagine that being 400 years. The fact is there are barriers built upon years of particular groups reaping benefits. Your #3 fails to take these points into consideration. You can not generalize because of one or two success stories. The majority who work hard do not grow as the same rate as those without such barriers. Unless of course, your advice to those people is to, WORK EVEN HARDER.

  39. Minimum Wage says:

    Opportunity abounds, most people don’t recognize it or reject it. Many American jobs go unfilled because people refuse to perform them for any amount of money. Opportunity shunned is opportunity wasted.

    Every day I see jobs that I can’t get to because I don’t have a car. I see opportunity all over the place, but lack the money or other resources (e.g. car) to take advantage of it.

  40. Joshua says:

    I just love the people who think the poor are forever held in the vice grips of poverty. My net worth is -(thats a negative)$25.000.00. I actually have to be worth something to be worthless. And you know what, I busted my butt at a string of lousy jobs and made horrible choices and when I finally decided to dig myself out of that mess, I got a better job and while I only save a tiny amount each month, its a start. And the more I save, the more it can grow. Its going to be a long road, but there is absolutely nothing “holding” me back. Yes, the odds might be stacked against me sometimes, but that just means I have to fight the odds. If I want it bad enough, I’m going to strive to make it happen. I’m not going to sit back and pout that its too hard!

  41. Sarah says:

    NRB: the reason you feel pinched is not because of those oh-so-lazy poor people, but because this country has steadily concentrated its wealth in the hands of a tiny percentage of people at the top of the structure over the past 30 years (see Andy’s post). They are profiting off everyone else, and the system is designed to amplify that.

    I grew up in the ghetto, eating government cheese and wearing K-Mart. Now I have a very well-paying job by most standards (though only average by the standard of the city I live in). So, yes, there are individual examples of economic mobility–I am one. And, yes, in general people are more likely (though hardly guaranteed) to improve their situation if they are thinking positively and acting to change it than if they are blaming other people and being passive. That doesn’t mean that our system is not facilitating the transfer to and retention of wealth to a shockingly small number of people.

  42. Minimum Wage says:

    I just love the people who think the poor are forever held in the vice grips of poverty.

    Once a poor person gets to a certain age, they are, generally, locked into poverty. It’s not like an older poor person can go to college, get an accounting degree, and get a good job.

  43. Matt says:

    #3 is one of my biggest pet peeves. I hate listening to people complain how they don’t have enough money, will never become rich, hate their job, etc. Then do nothing about it and not have any intention to do anything about it.

    I’m kind of in between jobs at the moment(my new job starts in march so I’m waiting for it to start.) However, in the meantime I’ve spent a lot of time working on a few side businesses and I’ve been working for a temp agency a few days a week. The pay isn’t bad, the work sucks but it pays the bills. During this experience I’ve had the pleasure of being constantly surrounded by violator’s of #3.

    Today’s violator was one of my favorites. She was a 30 year old single mother who was fired at the end of the shift for being late 40 times. She was obviously very upset. Her excuse, she didn’t want to walk the 10 blocks to work when she missed the bus. All day she was complaining about how she didn’t like to work and didn’t have any money. In my experience these two go hand in hand.

    Also, #5 also applies to any loan that is variable. My private student loans are at Prime + 0% when I tried to consolidate them I was offered Prime +1%. I am watching the prime rate closely and hope to consolidate them at a Fixed Rate. If nothing else I only have 1 payment to make instead of two and maybe end up with the same rate I have currently.

  44. Dan says:

    No one feels sorry for someone who feels sorry for himself.

  45. John says:

    “Minimum Wage” You said you are in your 50′s and I wonder what you have done for the last 30 years to be at that age and working for minimum wage.

    I would also be curious as to what you have done as far as networking and personal development to try to get out of your situation.

  46. keith says:

    The FACTS are FACTS. The rich ARE getting richer and the poor are getting poorer. There hasn’t been a larger financial gap in 100 years and there’s no arguing with that.

    http://thinkprogress.org/2007/12/15/rich-are-getting-richer-faster/

  47. lorax says:

    I also disagree with #3:

    1) Don’t underestimate luck. You can work hard and get kicked back down. If you come from wealth, you can fall back on that.

    2) Don’t underestimate your peers and surroundings. If you grow up in the ghetto, you probably didn’t get a good education, and found violence commonplace. That doesn’t get you far.

    3) As someone mentioned, the disparity between rich and middle class IS getting wider. Middle class wages have been flat since 2000, while upper income wages have grown though the roof. (This trend has occurred in the US in the past, and in all cases the disparity has been brought back into line at the voting booth.)

  48. Chris says:

    I’m confused regarding point #5. It seems as though unless someone is many years into their mortgage, that they may not want to refinance to a new 30 year mortgage.

    But if you are within the first few years, even with a 0.3% rate reduction, and $3000 in costs, you can recoup your costs in less than a year (assuming a modest sized mortgage).

    As to $0 cost refi’s, anyone willing to name names?

  49. Great list! #3 (Things are set up so that the rich get richer and the poor get poorer) really hit a cord with me. It is one of my pet peeve’s due to my own experience – my parents were middle class, I put myself through college working in a restaurant, I have worked (and continue to work) long hours at my job. I feel like the opportunity for me to succeed was always there.

    The thing people have to remember is results that are rewarded, and effort is what is needed to generate the results. Through great effort I have been able to earn a 6-digit salary, 6-digit bonuses (last 2 years) and a 7-digit net worth.

    It is 7:58p, I am typing this as I eat my dinner at work. I could have left hours ago with most of my employees, but then again, if I had always done that they would not be my employees, but my peers.

    Best Wishes,
    D4L

  50. Susan says:

    I think you also have to believe you can have wealth. In my experience, I was my poorest when I was constantly freaked out about money and would somehow spend it all. I believe out of discomfort of having it. I’ve seen gotten over that, but I have a few friends who are perpetually broke, no matter how much they make.

    http://www.theinnovativetraveler.com

  51. riley says:

    Trent,

    Love the debate this post has generated! Old number 3 really stirred the pot. Regarding the posts by minimum wage, I have to think this gentleman is just posting to needle everyone. No one can really be that helpless.

    In fact I didn’t know there were still jobs that actually paid minimum wage. There sure aren’t where I live. If anyone lives in a part of the country where all they can get is a minimum wage job then is time to stop crying in their beer and move to another part of the country and get on with a real life.

  52. Andy says:

    I agree that the rich get richer, think about this..for example CEO of Adidis made 5 million in 2005, he put most of that money in the bank, back then I think we were getting 5% apy, so 5% of 5 million is $250,000, alot more then most people be able to save in there lifetime and thats just interest for 1 year, he probably has ore then 5million in investments and savings compounding interest.

  53. Andy says:

    Also for the poor are getting poorer, for example The monthly wage in the Chinese shoe factory (Adidas shoes) Han Tin is between US$47 and US$72. Workers have to work seven days a week with forced overtime of up to seven hours a day – paid at the normal rate of pay.

  54. Andy says:

    Nike founder Philip Knight is number 17 on the Forbes 400 with $5.4 billion. By Forbes’s measure, he’s “self-made.” But the high-priced Air Jordans and other apparel that lift Nike’s profits and stock aren’t self-made. The typical Nike worker is an Asian girl or woman working in a sweatshop for less than $10 a week—a fraction of the price of an average Nike sneaker.

  55. john says:

    I disagree with #3.
    The corporations and tax laws are set up to help the rich become richer. Rich people make the laws, and set up loop holes that only the rich can use. And just because you make 6 figures and retire with a million dollars, doesn’t make you rich, Trent. A million dollars doesn’t get you very far anymore. Trent, imagine 50 years from now, when your 80. A million will be like $500,000 in todays money. Wow, that can buy u a house.

  56. Jim says:

    Whether one chooses to believe #3 is a myth or not, the only way to better oneself is to work at it. If you believe #3 is true, work to be the exception, and not the rule. If you believe #3 is myth, work to sieze the opportunity that is out there for everyone.

  57. Minimum Wage says:

    Not true. People who are more well educated and work harder make more money than those who don’t. For example, a nurse with a masters degree makes more than one with a bachelors, who in turn makes more than one with an associates.”

    And a hamburger with a masters degree makes the same as a hamburgfer flipper with a bachelors degree, who in turn makes the same as one with an associates.

  58. Minimum Wage says:

    I’m shocked at some of the responses to #3, but then again the Democrats have built a campaign base built on the lie of “rich getting rich off the backs of the poor”.

    If you look at the average working poor person, there are at least two people getting wealthy off his back, and he isn’t one of them.

  59. Trent says:

    If you respond to “the rich get richer and the poor get poorer” with mentions of global economics, you’re completely, totally missing what I’m talking about because you don’t want to hear the actual message. Go back and read it again, slowly this time.

  60. Andy says:

    Trent, I think everyone here agrees that education, hard work, and innovation are a better option than a defeatist attitude. The problem is that what you labeled a myth is actually a fact. The problem is the title of the paragraph, not the sentiment you are trying to convey. Also, global economics affects our daily lives a lot — just ask the person who had their job shipped overseas.

    I personally know some people who truly are rich, and sad to say, they don’t work that hard, and they aren’t that smart. Its weird.

    Minimum Wage — the person with a masters degree might be owning or at least managing the burger joint, and would be making more money than the h.s. dropout who works there, even if they both flipped burgers from time to time.

  61. Lurker Carl says:

    @Minimum Wage – Why would someone go to college and major in hamburger flipping? Students need to research employment before choosing their field of study. Personal responsibility?

    Since you brought it up . . .

    Cooking schools are experiencing a dramatic boost in attendance. And with that came a dramatic boost in cost, supply and demand. Thanks in part to Food Network, chefs are quite the glamour career. Everyone wants to be the next Paula Dean, Emeril or Julia Child. However, most graduates can not find employment that will pay enough money to live off, much less pay back the education loans. Why? Cooks are a dime a dozen, I mean chefs. Meanwhile, the school gets paid and the student is trapped with tens of thousands of dollars of debt for an education that can not pay for itself. Personal responsibility?

  62. RC says:

    I think Trent is right that it is a myth in this country, because it is a broad-brushed generalization. I have many friends from other countries who are overwhelmed at the opportunities avaliable here in the US. Do you know how poor people live in other countries, such as many in South America? They would love to have a job flipping burgers making minimum wage. But I do admit, even in the US it is not necessarily easy for poor people to get to a level many of us would think is “comfortable”. When you have amassed enough money, your money can “work” for you, providing enough interest income for you to live on at whatever comfort level you desire. Getting to that point can certainly be difficult, but it is certainly not impossible.

  63. !wanda says:

    @Andy: There are long lines for those factory jobs in China. The wages seem low to you, but for these women it’s far better than staying on their family subsistence farming plot. (Rural China has a lot of problems. For example, because of the Communist past, most peasants don’t and can’t own the plots of land they farm, and village officials can and often do sell that land out from under them to developers). Many of the women work like crazy for a few years, save like crazy, go home, buy property outright, and raise a family. These women may not be very educated- until the past year or so, rural public schools in China charged fees, and many people could not afford to send their daughters to school. So, these factory jobs are these women’s tickets to a better life.

    Besides, labor costs in China are rising, and companies are now outsourcing the least-skilled kinds of factory labor, like shoes, to places like Vietnam and Indonesia.

    As for #3, “the system” does make it easier for the rich to stay rich and the poor to stay poor. Capital gains are taxed at a lower rate than wages, for example. This tendency is compounded by the fact that poor people tend to be raised by and surrounded by poor people and tend to go to poor schools, so they start believing things that are not conducive to growing wealth and becoming rich. However, any healthy young person with the right attitude can get ahead.

    I wish I didn’t have to qualify that statement with “healthy.” A good friend of mine was 25 and in generally good health when he came down with a rare form of lymphoma. It’s completely gone now, but he’ll need monitoring for the rest of his life, and the chemotherapy drugs that saved his life also give him an increased risk of other cancers later. He works for a 50 person startup now; good for them that his mom works for Kaiser, since if he had to rely on his work insurance, the rates for all his coworkers would have gone up! He’s really, really smart and builds robots for fun, and he’s told me that he’d like to form his own company some day- but, at this point, it would mean trading his health for career freedom, since he’s almost certainly uninsurable. He’s saving money like crazy, living with his parents and using either their cars or public transit, so one day he’ll be able to make the leap, but it’s still expensive.

    Minimum Wage, too, has mentioned that he has some sort of chronic health problem and that some sort of health crisis knocked his career to the point where it is today. Being sick sucks, and unfortunately, it’s expensive on top of that.

  64. Joe Richars says:

    Trent – I suggest you think twice about the language you are using – I have found that you have become increasingly acerbic and sarcastic towards people who disagree with you. There are better ways to respond to Andy’s point(s) rather than just dismissing them outright by stating that he has totally missed your point and that he read your post, “slowly this time.”

  65. Macinac says:

    #3 – Rich get richer, etc. I think the difference today is access to information about it. We can see how they do it and to the extent that we are disciplined and can accumulate the resources, we can play the same games. For example, whether rich or not we currently get a tax break on capital gains and dividends (aka unearned income). If you therefore structure your affairs such that you get these kinds of income, you are getting some of the breaks enjoyed by the rich.

    Look around and you will find that this same unearned income gets different tax treatment by state. TN, for example, claims to have no income tax but taxes unearned. SD, on the other hand, does not tax unearned.

    I suggest that “the informed get richer and the uninformed do not”.

  66. um... says:

    I think the point that Trent was trying to make with #3 is not to let the thought that the rich get richer and the poor get poorer be a cop-out… as in using it as an excuse that you’ll never get ahead anyways so might as well just not even bother trying…

    whether its a myth or not – you do have some control over your own fate.

  67. Jessica says:

    There is a difference between experiencing poverty and being born into it. People who are born into poverty, surrounded by it, have no family members remotely near the middle class, have no mentors or chance at attending a somewhat decent school are going to have a different outlook on life and different opportunities available to them.

    Different compared to someone who lives surrounded in a middle class (or even working class) environment, who may be going through a period of poverty.

    The true myth is that everyone has the resources and environment to pull themselves up by their bootstraps. It makes for a lovely story and tends to be the rare exception, which is why individuals who do manage it get attention. And the “bad apples”, like the big-screen tv buying, welfare abusing folks. They stick out but they aren’t the norm.

    I would say number three should be “You’re not as poor as you think. Especially if you’re in the middle-class and in good health.”

  68. Minimum Wage says:

    @Minimum Wage – Why would someone go to college and major in hamburger flipping? Students need to research employment before choosing their field of study. Personal responsibility?

    Actually, I pursued a pre-law degree. Unfortunately, by the time I graduated, law school had become far more expensive and I was watching friends graduate from law schools and take minimum wage jobs.

    In that context, I couldn’t earn enough at minimum wage to go to law school, and considered borrowing the money far too risky considering the dubious financial payoff.

    So I didn’t go to law school and found myself looking for a job (I had a student janitor job but lost it when I graduated, i.e. stopped being a student) at the bottom of a recession with a low-demand liberal arts degree.

    Faced with an ongoing need to eat, I took a crummy job that kept food on the table.

  69. Minimum Wage says:

    Cooking schools are experiencing a dramatic boost in attendance. And with that came a dramatic boost in cost, supply and demand. Thanks in part to Food Network, chefs are quite the glamour career. Everyone wants to be the next Paula Dean, Emeril or Julia Child. However, most graduates can not find employment that will pay enough money to live off, much less pay back the education loans. Why? Cooks are a dime a dozen, I mean chefs. Meanwhile, the school gets paid and the student is trapped with tens of thousands of dollars of debt for an education that can not pay for itself. Personal responsibility?

    Yes, there is a high-profile cooking school in town, and it has a lot of bitter graduates with $9/hr jobs and tens of thousands of dollars in student loan debt.

  70. Minimum Wage says:

    #3 – Rich get richer, etc. I think the difference today is access to information about it. We can see how they do it and to the extent that we are disciplined and can accumulate the resources, we can play the same games. For example, whether rich or not we currently get a tax break on capital gains and dividends (aka unearned income). If you therefore structure your affairs such that you get these kinds of income, you are getting some of the breaks enjoyed by the rich.

    I suggest that “the informed get richer and the uninformed do not”.

    Do tell, how would someone earning minimum wage “structure your affairs such that you get these kinds of income”?

    Easier said than done, wouldn’t you say?

  71. Esther says:

    I’m also of two minds about #3…hard work and resourcefulness will eventually pay off, but in general, the tax system is in place to benefit the rich (and especially the rich self-employed).

    I use Zecco as well, but most of my portfolio is made up of broad-based ETFs, which require no minimum investment and are cheaper than most mutual funds (including Vanguard’s) when you pay no commissions. Trent, may I ask why you chose mutual funds over ETFs?

  72. Christine says:

    A while back you had an article about doing productive stuff with your time. That’s really broad. You have lots of posts about doing stuff with their time.

    But I’m pretty sure you had one about leaning to play guitar instead of playing Guitar Hero.

    I saw this article today, and thought of that article. This snazzy invention sort of allows you to do both!
    http://gizmodo.com/352800/guitar-rising-for-real-guitar-heroes

  73. reulte says:

    Regarding the debate about ‘rich/informed get richer, poor/uninformed get poorer’ . . . I have my own beliefs about that statement, but I would like to mention that “the rich” and “the poor” are groups and personal finance is about the individual. Statistics (which is the hidden backing of most of this debate) do not and can not apply to the individual. Personal finance is about the choices we make as individuals.

  74. mark says:

    I want to comment on your #3 suggestions. You know, there’s more to life than moving up a social class or working hard and continuing to build a “value” for yourself. How about spending time with the family and friends, enjoying free time in nature, stopping to watch the flowers? Why spend this precious time we were given climbing some ladder to nowhere building some vague “value” for yourself? Aren’t we “valuable” enough as we are?

  75. kav122 says:

    I, too, disagree with #3. I read some very inspiring stories here, and my husband is an immigrant that came from NOTHING when he was 15 (picking up cans for money), to a very good provider for myself and my son.

    I don’t disagree that that can happen. Success stories about all over the United States. But as someone else said “poor doesn’t mean wealthy or not wealthy.”

    The people who shared their stories here were not wealthy. Although they were “poor”, they obviously have brains and drive and ambition and all of these great things that America was structured to foster.

    We all realize that some people have more opportunities because they were “blessed with coming from a richer family.” And we accept that as something that they were given that others don’t have, and this gift helps them immensely.

    Have you ever thought of ambition, and drive, and self-worth and intelligence as gifts? You were all given these gifts, or you wouldn’t be on a financial blog. You need to realize that not everyone was blessed with these gifts. You can call them lazy. You can say that they need to get a job. But then you are not empathetic.

    Not everyone got that gift either.

  76. Cynthia says:

    Debit cards

    There are some things to caution people about debit cards that you didn’t mention. If you rent a car, reserve a motel room, the company takes a signifcant “deposit” out of your account. They may or may not tell you about the deposit, but it comes out immediately. It used to be that if you had no money in your account, the card was declined. That’s no longer the case. They continue to accept the card, racking up overdraft charges. Our daughter recently found this out. The bank refused to take off any of the overdraft charges to her account. Something to be aware of.

  77. Jun says:

    I’m only 20 but this is what I think of the ‘rich/informed get richer, poor/uninformed get poorer’ after reading the comments.

    If the rich ARE getting richer and poor ARE getting poorer…..SO What!? It’s not like you can do anything about it anyway.

    I guess Trent is not trying to proof whether that statement is true or not.Rather the real message he’s trying to tell us is not to let the “rich getting richer and poor getting poorer” effect you in becoming more financially well off in terms of confidence and how it will influence your decisions.In other words , just forget about it cause it will not help you in anyway.

    I like the comments with success stories ^^ ,like the one by Marcus Murphy.

  78. kav122 says:

    Excuse me, I would hate for some of you conservatives to disregard my previous because I said “my son” and not “our son,” which would obviously mean that I am a tramp and have a child out of wedlock and my thoughts are not important.

    I meant to say “our son.”

  79. LC says:

    I agree with you on #3 – hard work and education pay off and you can always do something to further yourself. There are many fields where a college degree is all that matters, not the specific field. Even if you have no education and start out in minimun wage, it’s really not that hard to get promoted if people see you working hard and trying to learn as much as you can. The general manager of my company started out as a secretary right out of high school and just moved up, so there is no room for excuses.

    That being said, I do not agree with the statement that working hard 9-5 and playing hard on the weekends will get you nowhere. There are many people moving up in the world who have 9-5 jobs. Starting your own work on the side is great for some people and can be very rewarding finacially and otherwise but definitely not all that is necessary to get ahead. There is also something to be said for enjoying life and not spending every hour working. (Japan for instance takes much more vacation time than US and one could argue that they are more advanced in certain areas).

  80. Matt says:

    I liked myth #3 I used to think along those lines as well though I’ve always seen opportunites around. If it seems that the rich get richer its because they understand money and look for opportunities to make more money. The system is set up a certain way… take action and change your life to make it work for you rather than against you.

    Great point Trent!

  81. its pretty obvious says:

    The thing about Minimum Wage is that he’s really NOT looking for advice on how to better his financial situation. He just wants everyone to pity him, and to throw out suggestions that he can shoot down, thereby justifying his self-paralysis to himself.

    He can just keep saying “oh woe is me, I can’t do anything about my unhappy life,” because for him, doing something about it is much, much harder than wasting hours and hours online, complaining about it.

    Its just one example of many classic truisms along the lines of “put up or shut up.”

  82. MJ says:

    I’m curious if all those reading who have a chronic and/or life threatening illness still believe in #3? Major illness is a large cause of bankruptcy. Major illness doesn’t care if you’re a spender or a saver.

    It’s nice to hear that people have started emergency savings accounts but those are decimated quickly when faced w/large medical costs.

    I agree w/the points made by !wanda.

    Personnally I think you should strive for success, but it’s a little naive to believe that you have control.

  83. Eric says:

    Trent I believe that one of your axioms is to look for facts. When making a financial decision you would say run the actual numbers – they won’t lie.

    But when it comes to point #3 you seem to toss that fact based approach out the window…why? Or if you have looks at actual numbers for the US could you please post them?

    I have a feeling you really believe the idea that anyone can pull themselves out of poverty. I think it is a core value for you, and I think you are really resistant to digging into the facts because you don’t want to give up that belief.

    You can do better. You talk about people who hide from their true financial situation but you are doing the same kind of hiding – just about the “myth” of poverty.

  84. Marcia says:

    I have lived in low income housing for a long time. I still do. I work for a little more than minimum wage. I have a hard time figuring out how my neighbours can afford to run a car, and/or buy cigarettes. Fortunately we are not a partying community for the most part. My Quicken program reports that I am getting richer – with every $50 per month invested and $140 gone to pay down a debt I have. I’m just not getting rich as fast as some of my friends are! We all have access to a library and the library has computers and books. If you can’t read, there are people who are very willing to help you learn! I have chosen to learn, and therefore everyday increases my wealth! I have also chosen not to smoke or drive a car – but I need to find another cheap bike!

  85. Diane says:

    If I could wave a magic wand, I’d make 4 years of financial education an absolute requirement for high school graduation. By the time an English speaking student gets to 9th grade he should be able to speak and write English fluently. Still he is required to take four more years of English! They have taken personal finance out of schools along with shop and home economics. All of these are of a more practical value than Beowulf and Hamlet.

  86. Andy says:

    I just want to clarify that two “Andy”s have posted.

  87. Kendra says:

    There’s been an excellent discussion started on topic #3. “Things are set up so that the rich get richer and the poor get poorer.” First, let me suggest that this point is phrased incorrectly.

    “The rich get richer” Trent has made an excellent point in his prior posts of pointing out that by applying the money you have correctly you create opportunities to create more money and succeed financially. Simply stated, a person who has more money has more opportunities to create more.

    “The poor get poorer” This is the point that Trent was attempting to make with this statement. As Trent has tried to point out things are not set up for the poor to get poorer. ALL developed countries have programs in place to help (not support) the poor find the opportunities that are more available to those with money. Why do we let them live off of our hard work? (Bias added) Because if the funding is not going to help the poor, they get desperate, crime rates go up and we spend huge amounts on crime control and cannot foster a stable economy. Both Republicans and Democrats agree on this. The argument should never be whether or not the government should help the poor, but which programs are the most successful and how they should be effectively implemented to save our tax dollars.

    The point is that we have programs in place to help the poor move from being poor to financial success. Unfortunately, we are human and the programs are not 100% effective. Some of the poor chose “live off” whatever program they can, some are unaware of the programs in place to help them, some are in the threshold that don’t qualify for the programs they need to succeed….and then there’s the ones that succeed and go on to build our economy and their own financial lives.

  88. Kate says:

    Trent,
    Over the past year or so that I have been reading your blog, I have really taken away a lot of motivation from it. Never more so than after the birth of our first child. So thank you.

    Regarding #3 since it seems to be the hot topic for debate, and unsurprisingly so. The title is “This are set up so that the rich get richer and poor get poorer.” Statistics on economic climbing do not debunk Trent’s point. While it may be easier to stay rich than to get rich, we cannot deny that opportunity abounds in the U.S. especially for people who are willing to take advantage of it.

    It’s not always easy and it’s not always fun, but sitting around bitching about the size of one’s paycheck will definitely not make it any bigger. Whereas looking for and taking advantage of any opportunity, no matter how “insignificant” it may seem could yield far greater rewards than anyone imagined.

    Yes things may not always go as planned. Yes things might fall through or you get a bad break. Setbacks though, do not mean that the entire world is out to get or that there is some suited white guy sitting behind his desk laughing at your pain while he tries to find new ways to screw you over. (Despite what the Capital One commercials would have us believe.)

    I could list many examples of people who have worked their way out of poverty on the backs of their own determination and drive. I can list just as many who I hear every Friday whine about the size of their checks, then in the same breath talk about buying some game, or trying to finance a brand new car they know they can’t really afford.

    They “system” is all of us. We all contribute to it in some form or fashion. Blaming the “system” is about the same as blaming “society”. In the end you’re only blaming yourself.

  89. Having gone from being $30k in debt to $7mill. cash in the bank in 7 years, the ‘old fashioned way’, I feel somewhat qualified to answer 3:

    The rich DO get richer, but they set themselves up that way. Once they learn the rules of the wealth game, their wealth accelerates. The trick is to learn and apply these rules early. Simple!

  90. George says:

    The hamburger flipper working for minimum wage should be looking to be the waiter/waitress who makes minimum wage + tips. Once you have some more money, then you can look at leveraging your skills & money to make more (via investing or job promotion) while still keeping expenses down.

    And if you can type, which most college graduates can do, then it’s not tough to find a government job that pays at least double minimum wage.

  91. partgypsy says:

    “Things are set up so that the rich get richer and poor get poorer” I have to agree with that statement. I also agree with the statement that if you work hard and try to achieve that will pay off as well, they are not exclusive conclusions.
    I don’t think many people realize how unforgiving this country can be, especially for those without health insurance.
    I have worked hard to acheive some financial stability, but even for someone like me with a advanced degree, many years of work experience, there are many things (unexpected health situation with myself or member of my family, branch of company closing, downsizing, moving overseas) that are not under my control that could affect my life dramatically. It’s not something I dwell on, but there are not the safety nets there used to be for people outside the norm of a 9-5 job with health benefits.
    Take my mother and sister. My mother is in her 60′s but despite a masters and many many years of work experience she simply cannot not get hired for a full time job due to her age (she works part time and picks up extra shifts wherever she can). Because she has had optic neuritis the insurance companies have determined she has a preexisting health condition and is uninsurable. she is so excited for the day she will be eligible for medicare! My sister (40) is very intelligent and got a college scholarship went through a period of undiagnosed depression, did not complete her degree and had a spotty work history throughout her 30′s. Although she is better now, because of that past she is finding it very difficult to get any kind of decent job without a college degree. She would love to go back to school and get a degree in something that will get her a good job, but is terrified of gambling going into debt with no safety net, no money to live on while going to school. People like my sister, yes they made some mistakes when younger, but as they get older I can see why, working full time but no health insurance, little free time, having to choose between paying car insurance or going to the dentist, they dispair that their situation will ever improve.

  92. Ro says:

    I don’t necessarily agree with #3; however, every point I would have made about it has already been made.

  93. KellyKelly says:

    Kav122,
    You write,
    “I would hate for some of you conservatives to disregard my previous because I said “my son” and not “our son,” which would obviously mean that I am a tramp and have a child out of wedlock and my thoughts are not important.

    I meant to say “our son.” … ”

    As a conservative, I have to wonder where all THAT is coming from.

    Even if I thought you were a tramp, that has little to do with how I would view your opinions expressed in the post you wrote.

    Conservatives can be logical. Really!

  94. adam lehman says:

    partgypsy

    great post.

    it is interesting to see the difference in these posts. half the people are offended because they believe an individual can work hard and smart and succeed. the other half believe the same, but understand that people living in poverty start out with some very tough disadvantages.

    i would say that we all agree that pursuing education, smart money handling, and working hard all lead to some sort of financial freedom. We need to acknowledge that we don’t all start in the same place.

  95. Trent says:

    My feeling is that if you don’t try, you’ve already failed. I’m following up on this with my afternoon post, which is probably going to draw a ton of debate.

  96. rhbee says:

    It seems to me that no matter what time of the day I come to this blog I’m always late. I usually am writing about 6 AM PST and then looking at what other folks are saying by 7 but still I find myself quite often at the end of the queue. And that would normally be alright but instead of adding to the discussion I find that means I get the last say but little or no response. But I’m keepin’ on keepin’ on anyway. Today’s post about nay saying and dooms-dayers struck a chord with me since I am one of those folks who are worried about where our economy is, and is heading. Just a short month ago my ING savings were earning 4.5%; today they are at 3.4%. Just this month our insurance carrier notified us that our premiums would be going from $426 a month to $512. This being the second raise in 6 months. The dental plan too went up another $12 with its second raise in 4 months. Just last summer, we were paying $2.99 a gallon for fuel, now its stabilizing (ha ha) somewhere between $3.15 and $3.45 depending on the day of the week. CD rates, MM rates, index funds, all falling. The only thing going up, our expenses, rent from $1500 to $1625 in one year. We are working more and spending less and failing to tread water. The national debt hovers between $9 Trillion and $11 Trillion depending on the next budget. Meanwhile, writer Thomas Sowell in his book Economic Facts and Fallacies spends chapter 5 explaining how and why the poor aren’t poor and the rich aren’t really richer. In his view, it’s just the “haves” and the “have a lots”. But ask yourself if it’s all so copasetic why would you rather be the latter?

  97. CherryJ says:

    So what if the rich are getting richer and the poor are getting poorer…what are you doing to stay in the middle. You don’t have to have millions or billions to be rich. You just need to be able to hold your own with finances. With all of the grants and scholarship opportunities around there is no reason any individual in this country can’t get a college education. If you work at a factory or burger joint there is no reason you can’t buy a used cheap lawnmower and make a few extra bucks cutting grass on the side. Staying poor to the point where you can’t feed yourself is a choice. Sure you may have hard times…everyone does. But you have to pick yourself up and start making dents in debt to get back towards the top.

  98. Minimum Wage says:

    If the rich ARE getting richer and poor ARE getting poorer…..SO What!? It’s not like you can do anything about it anyway.

    The indicators social conservatives care about will probably generally get worse, so they’ll be sure to chime in. Other than that, no problem!

  99. Minimum Wage says:

    Even if you have no education and start out in minimun wage, it’s really not that hard to get promoted if people see you working hard and trying to learn as much as you can.

    That would require the existence of jobs to which one might earn a promotion. Many menial, minimum wage jobs do not have a promotion path.

    My job technically does – we have a manager – but he’s been here 15 years and will probably stay here another 20 years, so there aren’t really any promotions to be had here in the foreseeable future.

  100. LC says:

    “Many menial, minimum wage jobs do not have a promotion path”

    If you work at a fast food place and a customer sees you going out of your way to mop up a floor when it isn’t your job or as a waiter you engage a regular customer in friendly conversation, or as a receptionist you go out of your way to help a customer with something, they will remember it. And if you make that a habit, someone who notices that might have an opportunity for you.

  101. Minimum Wage says:

    The rich do get richer: It is said that the first million is the hardest, after that they get easier and easier. There are investments reserved for the wealthy – look up “accredited investor” – and the SEC won’t let anyone else near them.

    The poor don’t necessarily get poorer, but they often do. In general, poor people pay more than other Americans for the same modest market basket of goods and services. Higher prices and inferior credit terms guarantee that the poor have inferior credit histories. Or, as I like to say, life is regressive (George Will earlier said this, in an entirely different context), and life redistributes wealth from the poor to the rich. (e.g. subprime homeowners with delinquent mortgages are losing their equity to scavengers who are already wealthy and getting wealthier)

    As someone with no hope of owning a home, I have devised a “solution” for poor people like me: How about tiny houses that people could buy without paying more than they’re already opaying for rent? All I really “need” is 400 sq ft of space and maybe 2,000 sq ft of land. This certainly would be “low carbon footprint” and environmentally friendly. But this is rarely allowed under zoning laws which are designed to protect middle class homeowners. These policies keep poor people in rent slavery and constitute a huge obstacle to wealth-building for the poor.

  102. Minimum Wage says:

    I for one am tired of hearing about “the poor”. The “poor” in this country have cell phones, cable TV, and high speed internet.

    That’s because government “poverty” statistics are pretty useless for measuring poverty.

    According to the government, a retired homeowner with a modest Social Security check, a property tax deferral and no mortgage in a $500K home can be “poor” while a hamburger flipper working full time at minimum wage and paying half his income to rent a 10 x 10 room is “not poor”. Does that make sense to you?

    p.s. I don’t have a cell phone or cable/satellite tv or a vcr or dvd or high speed internet. All I have is an old tired PC with a dialup connection – I don’t even have sound.

  103. Minimum Wage says:

    The point is that we have programs in place to help the poor move from being poor to financial success.

    For some of the poor – especially families – yes. But childless adults are at the bottom of the politiczal food chain, so there are few programs to help them.

    If you work full time for minimum wage and don’t have kids, there really isn’t any help out there.

  104. Minimum Wage says:

    I have lived in low income housing for a long time. I still do. I work for a little more than minimum wage. I have a hard time figuring out how my neighbours can afford to run a car, and/or buy cigarettes.

    A high proportion of them have unreported or exempt income. For example, some will have off-the-books employment, unreported support from family, an underground business (child care, cutting hair, dealing drugs).

    That’s why welfare reform didn’t really move a lot of people into the workforce. A lot of the people who went to work on the books were already working off the books, and those not working today weren’t working in the first place.

    I’m guessing that the families where you live are considerably better off financially than the childless adults.

  105. Minimum Wage says:

    The hamburger flipper working for minimum wage should be looking to be the waiter/waitress who makes minimum wage + tips. Once you have some more money, then you can look at leveraging your skills & money to make more (via investing or job promotion) while still keeping expenses down.

    I am overweight and missing a front tooth; I doubt anyone would hire me as a werver. Nobody cares what the hamburger flippers look like.

  106. Minimum Wage says:

    ALL developed countries have programs in place to help (not support) the poor find the opportunities that are more available to those with money.

    What programs are there for childless adults working full time for minimum wage?

  107. Minimum Wage says:

    With all of the grants and scholarship opportunities around there is no reason any individual in this country can’t get a college education.

    My grades and test scores were in the top 5 percent but I didn’t get any grants and scholarships except $100 for books (state scholarship).

    I didn’t qualify for grants because of my dysfunctional family; I was claimed as a dependent by a relative with a lower middle class income in NYC; he made “too much” money although I didn’t get any of it.

  108. kav122 says:

    And as a conservative, I know exactly how some, maybe not you, would view my lack of proof-reading my own post.

    I made the comment because of the posters have made it perfectly clear how they feel about poor people who are “too lazy to get a job” and un-wed mothers. Although I share many views of conservatives, I think I am in the minority when I say that the capitalist society should also take into account that some people, for VARIOUS reasons, are left out of the system. It is our job to make ABSOLUTELY certain, that we have done all we can to educate and inform and HELP without JUDGING those who need it most.

    It is hilarious that some think that we do not need to put more effort into helping poor Americans because they all have “cell phones and fur coats” with a welfare check tucked inside.

  109. Rob Madrid says:

    It’s generally referred to as a social safety net and it is what makes capitalism tolorable.

  110. Wow, I say wow. This is one of the most amazing series of comments I have seen on a non-political blog in a long time. I too have very strong feelings about #3, and many points on both sides of that issue have been raised. My own story relies on the “so what” theory, because I didn’t finish college but managed to ‘educate’ myself and follow an interesting and stimulating career.

    It IS very hard for the ‘poor’ to get ahead, and yes, the system is designed to keep them there – to keep them voting for the politicians that keep the programs running.

    And it is unfortunate that our media culture celebrates the successes of one-in-a-million types (American Idol’s Fantasia) rather than the Marcus Murphys of the world.
    But none of it is an EXCUSE for people to blame others for their own situation. A lot of what I see here is complaining about a lack of ‘equality of opportunity’ when they are describing a lack of ‘equality of outcome’.

    So what if the gap between rich and poor is increasing? So what if the system is set up to help rich people keep their money? That sounds like a good system to me. Who the heck wants to live in a place where the system is designed to take your money away so everyone is poor? Does anyone remember the Soviet Union? Some folks used to think that was a pretty good idea.

    I would submit that folks making comments about ‘the poor’ need a bit of a reality check. There are no shanty-towns in the US.
    No one has to carry water in a jug from a well.
    People from all over the world sacrifice everything to come here.

    The poor are not getting poorer in any real sense, and anyone who wants out and cares to improve themselves can do it.

  111. Caeli says:

    I have to admit that I lost interest in the posts on #3 about halfway through this list. But in the posts I did read, I didn’t notice anyone really point out the fees associated with being poor. If your bank account is regularly below $10, it doesn’t matter how good you are at math, chances are you will get NSF fees all the time. The reason for this is the way that banks do their business. They will immediately remove any purchases from your account, while they may not apply your deposits for several days. Did you just deposit your paycheck then go and get groceries? Chances are, the paycheck wasn’t applied to your account but the account hold for using your debit card for groceries put your account in the negative. Never mind that the money is already there, you still have to pay them $30 or more because they don’t want to give you your money immediately.
    I would also like to point out the incredible amount of other businesses who prey on the poor. For example, lets say you ran out of gas because you had no money and no gas left on payday. Usually you wouldn’t be in this position, but your husband hasn’t been able to find any jobs that pay more than minimum wage since people stopped building new custom homes and now you owe everyone money because you can’t afford all of your bills on such a small income. You wouldn’t have gone anywhere, but you had to go pick up your paycheck so you could get groceries and gas. So you gather up all the quarters you can find and put $2 in your tank and pray that it gets you there. It doesn’t. So you take your kids out of the car and start walking down the street. Two hours later, you finally have walked all the way to work, gotten your paycheck, cashed it, paid a taxi to take you back to your car, and are just in time to see it being towed away. So you pay the taxi money you don’t have in your budget to take you home, then you call around to find out where your car is. They tell you it’s going to cost $200 to get your car, plus an extra $15 per day that you don’t get it in “storage fees”. Yes, you did just get your paycheck, but after groceries, rent, child care, and a car payment, you only have $30 left and that’s supposed to go to gas to get you to work for the rest of the week. If you skip buying food, your kids will go hungry. If you skip paying rent, you’ll be out on the streets. If you skip the car payment, your car will be repossessed. If you skip the child care payment, you’ll lose your job. If you skip picking up the car, you’ll have to pay an extra $210 for “storage” the next time payday rolls around, not to mention the incredible amount of money taking taxis to work for two weeks will cost you. Oh, wait, I know, you could take out a payday loan! That will solve all of your problems, right?

    I’ve noticed that many of the people who say that they worked so hard and went to school and worked for 80 or more hours a week and they got ahead so why can’t everyone else don’t seem to have had a family to take care of at the same time. That’s not to say that you can’t do that as long as you have a partner to take care of the kids, but how about single moms? They can’t work or go to school unless the little ones are in daycare, and that costs at least $150 every week. Since most young mothers haven’t finished their education yet, they’re probably not making much more than minimum wage. If they were lucky enough to find a full time job that pays $9/hour, fully half of their income is going to taxes and child care. That leaves $700/month for rent, utilities, food, gas, clothes, and all of those little emergencies that come with having kids. I’ve never seen a one-bedroom or more apartment for under $500/month in my area. The only way these people can survive is because of the welfare agencies. If they happen to get a raise and start making $10/hour, they just added $160 income per month, before taxes. Not much. But now they aren’t eligible for government insurance or food stamps, which increases their expenses by $400/month. Is it any wonder that single mothers on welfare try to keep their income below that cut off point?

    I noticed one person say that there are no jobs that pay minimum wage in their area. I find that incredibly hard to believe. Are you saying that there is no service industry where you live? No fast food? No restaurants? No taxis? No hotels? No gas stations? How do people live without these things?

    I wouldn’t say that I entirely disagree with Trent here. I don’t think that there is a “man” keeping anyone down, and I do believe that an education and diligence can get you anywhere as long as you don’t have other commitments and priorities in life (such as family). However, the poor are penalized for being poor on a regular basis. This is a side effect of capitalism, a result of businesses wanting to make money in any way they can, even if it means capitalizing on the misfortunes of others.

  112. Dawn says:

    The latest 10-year study from the Treasury showed that almost 60% of income tax filers who were in the lowest income groups in 1996 had climbed into higher income groups by 2005.

    The poor are not getting poorer, and the fact is, all income groups are getting richer – except those in the top 5% of all income earners, who actually saw a decrease in real median income from 1996 to 2005.

    Here’s the study (not some “spun” opinion piece):

    http://www.treasury.gov/press/releases/reports/incomemobilitystudyfinal.pdf

    Life is what you make it. Your motivation to succeed (or lack thereof) will determine if you are financially successful in life.

  113. Jon says:

    Caeli, you raise many interesting points. Your examples are touching but viewed dispassionately they’re about people who make very bad decisions.

    Why have kids while living paycheck to paycheck? Why take a taxi day after day instead of renting a car for a week, or even better carpooling with a friend? When the car ran out of gas why didn’t she pull into a place where parking wasn’t illegal, or get someone to push her car to such a place? Why doesn’t she have a credit card? Why couldn’t she “float” a check for the gas, especially since she’s getting paid that same day?

    With respect to the single mother on welfare, how rational is it to give up a raise or promotion just to preserve welfare benefits? What kind of life is that? Why didn’t she think “At first I’ll make less money, but when I get *another* raise I’ll be making more, and it’s only up from there?”

    I know they’re just examples and maybe I’m nitpicking but I think there are similar nitpicks for any hypothetical example except the most awful examples based on pure bad luck. But nobody said there’s a guarantee for upward mobility, just that on average there is.

    As for the single mothers making $9/hour, why don’t they get married? Not for some moral reason, but it would greatly help their finances. If not, why not move back in with their parents? I know it’s hard (my sister was a single mom) but it can be done and can have great results.

  114. Jon says:

    I just wanted to add to my question of “Why have kids while living paycheck to paycheck?”

    In some societies people have lots of children even when they’re poor for two reasons: A) high child mortality rate and B) the children are (hoped to be) financially productive (usually in non-industrial agricultural societies). Neither of those apply in the USA at the present time.

    I know everybody has a “right” to have kids whenever they want, but for poor people it’s often a very, very bad decision.

  115. Chris says:

    @ Minimum Wage:

    Here are two suggestions for you:

    First, try selling items on eBay or Craig’s List. Research dropshipping. Basically, you place items for sale or auction on-line. After someone buys the item, you then place an order with the dropshipper to deliver the item to the customer. It requires no inventory and all transactions are handled on-line.

    Second, start a blog and add AdSense. You seem to have a lot of time to post comments, so why not start earning money on your commentary by starting a blog? (And Trent has the Building a Better Blog series available for free.)

    These two things can be done with the resources you already have available to you. You will not be discriminated against because of your age, your marital status, your weight, your color, your lack of teeth, your religion, your prior work history, your odor, or whatever reason.

    You strike me as very intelligent, but very pessimistic (glass mostly empty). It seems to me that you would rather grumble and complain than do something about your situation. Use your intelligence and use your experience.

  116. Well this time round I’m going to target number 6. I am a results person. So say if i want to become a mulit – millionaire .. who do you think that i should talk to? Richard Branson? or a bricklayer?

    same goes for if i was to build a house. If i had the same choice of two people, in this case i would choose th brick layer.

    So i guess what I’m trying to say that you need to go to the right people for advice.

    In terms of financial planners. Well i wouldn’t use them unless they had an assest base and wealth which proved how good they are.

    Let me ask you this. Why would you go to a sick person and ask them how to be healthy?

    It makes sense right? But there are so many people out there who are taking advice from the wrong people.

    Life is about accountability. Accountability for your own actions and your own success. So take accountability for where you get your advice and who you choose to listen to.

    If you just do this one thing and start listening to the right people who have the results that you are looking for .. you are going to be on a truer path to success i think

    Young investor

    http://www.investmentrealty.blogspot.com

  117. Caeli says:

    @Jon:
    Why have kids indeed. The problem with that thinking is that most people who have children in such a situation did not necessarily *plan* on having children. Due to whatever brokenness they experienced in their own childhood, they are trying to cover emotional pain with drugs and sex and whatever else they possibly can, with no regards for the consequences until the consequences are too real to avoid. Sadly, there is no going back and doing it all over, and while having children who depend on them brings many hurting people to their senses well enough to keep it together, that doesn’t change the situation they have found themselves in.

    My hypothetical person is not necessarily the most intelligent person on the block, and she doesn’t necessarily have such a support group as “friends” or “family”. This is probably because she burned all of her bridges (not to mention brain cells) while she was still in “killing the pain” mode. This is typical of people who find themselves in such a situation. Honestly, it’s not that easy to get a credit card in the US. I don’t have one because no one will approve me due to a medical bill that should have been covered by my parents insurance while I was still a teenager. Since no one will approve me, I can’t build credit, and since I haven’t built credit, no one will approve me. And if my hypothetical person had access to a bank account (at least one in the positive), wouldn’t she have direct deposit anyway?

    It is not rational to give up a raise to preserve welfare benefits unless losing your welfare benefits will cause you to lose your job. Decent child care costs upwards of $600 every month per child. With a welfare program called Title XX, you can pay a percentage of your income. I am paying $90 every month for my two children. If I made enough that I was not eligible for Title XX, I would only be making enough to pay the (at least) $1200/month in daycare (at the moment I am only making $1000/month), which means that my income would not cover gas to get to work, work clothes, food, rent, utilities, or anything else. Just daycare. In this case, would it make sense for me to even go to work? My net income would be negative. If you have to work because you don’t have a spouse, you have to have a positive net income or you will be on the streets. If the only way to have a positive net income is to stay on welfare, then it does make sense to decline a raise that will take away your welfare benefits. Sure, she may get another raise later, but I doubt it if she wears the same dirty clothes every day and doesn’t bathe for weeks at a time because she doesn’t have anywhere to live.

    You have to bring the safety factor into account as well. Sure, a single mother could move in with her parents. What if her parents are abusive? What if her father molested her? Is she going to put her children in danger? Nothing is worth that. I would rather be homeless, and was for about a year. Sure, she could get married. Who is going to take in someone else’s kids? If this person isn’t marrying her for love, he must be getting something out of the deal. Is he a pervert or does he have a need to have someone weaker to abuse, looking to prey on her children? You have to consider these things as a mother. Children get hurt every day, some even die, as a result of their mothers making poor decisions about who they let into their lives. The world is not as safe for everyone as it may be for you.

  118. Mike says:

    Caeli,

    When is your episode of Dr. Phil airing? Or is it Jerry Springer? Thanks for every worst case scenario possible.

  119. Great post Trent!

    However, I don’t entirely think that “the rich get richer and the poor get poorer” is a myth. I DO however think that the reason most people believe this to be true (specifically, “the man” keeping them down) IS a myth.

    I think the rich get richer because they know how to manage money. All the poor know how to do is spend money, and in many case more than than earn. Of course, I’m generalizing but there is a certain truth in this.

    Once people realize this, they too can become rich. This is the information age and if properly informed, the poor CAN lift themselves to ever greater heights of wealth. Knowledge is power, thanks for sharing the power.

  120. Terry says:

    It really doesn’t matter how much value you provide to others if you can be easily replaced.

    I worked several years for an employer with a few convenience stores; all hourly employees were paid within twenty cents of minimum wage, and the entrenched middle-aged manager wasn’t going anywhere anytime soon (hence, no foreseeable advancement opportunities).

    The stores were sufficiently profitable that they netted approx $3 million per year, and allowed the owner to spend nearly half the year globetrotting.

    The numbers suggest that the employees provided huge value to the employer, but the employees were not paid commensurate wages since they could be easily replaced.

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