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Thread: Why do most people stay trapped in the middle class?

  1. #1
    Sun Devil asun2art's Avatar
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    Why do most people stay trapped in the middle class?

    I had a discussion with a friend of mine a few nights ago. we were talking about ways to make money and how to become wealthy.

    in theory, anyone can become a millionaire or a financial success.

    so, the unanswered question of our discussion was, if anyone can become a millionaire, then why does it happen for only a "few" people? *most* people are born into the middle class, and never escape it. and most of them are not lazy. they are hard workers, but never make it to the next level.

    just wondering why?

    any thoughts?

  2. #2
    I Mastered Dead Technology TallGuyLittleCar's Avatar
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    you have to work really hard. Generally you also have to work for yourself, this will often be done while you are working for somebody else. So you figure 40 to 50 hours for the "man", then another 40 to 50 hours for yourself if you are talking in terms of income. There are also many "sacrifices" you have to make. alot of nice new cars on the market these days, but you better of investing the money and just keep driving the 78 datsun 810.

    Now if your talking in terms of behavior... well old habits are hard to break.
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    Most people would rather live in the middle class than jump into the upper class. They'd rather waste money and 'live well' than work 80-100 hours, save money, and eventually succeed.

  4. #4
    PAZ nordberg's Avatar
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    people are afraid to take risks.

    i also think more people are more lazy than you think.
    well, not lazy, just satisfied with the way things are.

    Ah, these boys is all swelled up. So this was earlier...getting set to trade. Then, woooaaah differences.
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    Filmmaker J-Luv's Avatar
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    i think the older generation is moreso like that. seems like the youger generation is more focused on entreprenuership.

    i'm curious as to which 'ways to make money' u are referring to because it all depends. some of those 'ways to make money' may not be as easy for most people as it is for you.
    Never take life too seriously. Nobody makes it out alive anyways. Film Portfolio


  6. #6
    Banned indivision's Avatar
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    i think it's mostly that people have a hard time saving properly or don't understand what to do with their savings. a lot of people lock all of their investment power into things that merely hold value against inflation (residence, butter). the people that move up financially invest in things that pay them back (rentals, investment properties, stocks, businesses) and have the discipline to use the proceeds toward more pay-back (guns) investments.

    as tglc alluded to, people who work for themselves have a tendancy to learn about and pay attention to all of their financial details (taxes, investments, inflation, rates, creditability, liquidity) while those working for a company are happy to just punch a time card each day, not knowing that there is a price to pay for that simplicity.
    Last edited by indivision; 06-24-2005 at 03:31 PM.

  7. #7
    An Inconvenient Serving Size hurricaneone's Avatar
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    I don't get how anyone can put 'easy' and 'to become a millionaire' in the same sentence. It's not at all easy.

    Just because the terms 'millions', 'tens of millions', 'billions' and the occasional 'trillions' are thrown around on the TV and in films like they're talking about M&Ms doesn't make the figure any less.

    Make no mistake, it's still a helluva a lot of cash and not at all easy to come by.

    I think another interesting point is that it seems to be the people who are self-made millionaires never set out with the goal of making a million. They ended up doing something that they love and it also happened to be popular, then one day they looked at their bank account and said, 'well I'll be, look at all them zeros'.
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    Filmmaker J-Luv's Avatar
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    aside from real estate i cant think of what's a motivating investment these days? stocks are shaky....i never really got into it that much but maybe when its shaky is the best time to jump in?
    Never take life too seriously. Nobody makes it out alive anyways. Film Portfolio


  9. #9
    Banned indivision's Avatar
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    one of my all time favorite quotes:

    "It's easy to make a lot of money, if all you want in life is to make a lot of money." - Charles Foster Kane (Citizen Kane)

  10. #10
    Banned indivision's Avatar
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    Quote Originally Posted by J-Luv
    aside from real estate i cant think of what's a motivating investment these days? stocks are shaky....i never really got into it that much but maybe when its shaky is the best time to jump in?
    it generally is the best time. but, it's actually not shaky right now. more like middle of the road. the best time to have gotten in was a few years ago when everyone was freaking out saying how bad bush was for the economy. they've gone up a lot since then.

    anyway, the best time to get in is now. unless you plan on making a career of it, timing stocks doesn't usually work out. hold for the long term.

  11. #11
    Filmmaker J-Luv's Avatar
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    is the best way to use a stock broker or do it yourself? are you in it? what has been your experience?
    Never take life too seriously. Nobody makes it out alive anyways. Film Portfolio


  12. #12
    PAZ nordberg's Avatar
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    it's definitely a life style choice. i would love to follow my passion straight to the bank, but if that doesn't happen, oh well. at least i'm doing something i love. as long as you play nice and keep your ducks in line, your kids can go to college and you can retire from earnings made at a normal job.

    as much as creating wealth is important, managing debt may be even more important.
    it's easier to build a mountain than climb out of a hole...

    Ah, these boys is all swelled up. So this was earlier...getting set to trade. Then, woooaaah differences.
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  13. #13
    I Mastered Dead Technology TallGuyLittleCar's Avatar
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    Quote Originally Posted by J-Luv
    aside from real estate i cant think of what's a motivating investment these days? stocks are shaky....i never really got into it that much but maybe when its shaky is the best time to jump in?
    there are a good amount of stocks with decent p/e ratios. Not only do you,hopefully, make money of the long term growth of the stock, but you also get dividends. Real estate as you mentioned is a good bet, but real estate bubbles break just like stock bubbles, but of course you do have your monthly income of rent.

    Then there are business investments...Lots of startups need capital.
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  14. #14
    Filmmaker J-Luv's Avatar
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    Quote Originally Posted by nordberg
    as much as creating wealth is important, managing debt may be even more important.
    it's easier to build a mountain than climb out of a hole...
    u hit the nail on the head. i feel for some of my college friends who came out with $20k and $40k of school loans. I'm almost proud of my measley $3k of debt compared to what everyone else has, lol.

    debt can slow up EVERYTHING.
    Never take life too seriously. Nobody makes it out alive anyways. Film Portfolio


  15. #15
    Filmmaker J-Luv's Avatar
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    Quote Originally Posted by TallGuyLittleCar
    Then there are business investments...Lots of startups need capital.

    can you elaborate?
    Never take life too seriously. Nobody makes it out alive anyways. Film Portfolio


  16. #16
    Banned indivision's Avatar
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    Quote Originally Posted by J-Luv
    is the best way to use a stock broker or do it yourself? are you in it? what has been your experience?
    i dont think a broker should be necessary until you either have a lot of cash(over 100k) or come into an inheritence or something that needs to be invested. for just starting out, go with a low-cost mutual fund from www.vanguard.com .

  17. #17
    PAZ nordberg's Avatar
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    yeah, for long term investing, nothing beats a no-load index/mutual fund.
    as long as the apes don't take over, you will make money...

    Ah, these boys is all swelled up. So this was earlier...getting set to trade. Then, woooaaah differences.
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  18. #18
    Didn't do it. japangreg's Avatar
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    Quote Originally Posted by J-Luv
    u hit the nail on the head. i feel for some of my college friends who came out with $20k and $40k of school loans. I'm almost proud of my measley $3k of debt compared to what everyone else has, lol.

    debt can slow up EVERYTHING.
    As long as you don't have credit card debt - interest on student loans is miniscule compared to what CC companies charge. Your friends with $20k in student loans might be in better shape than you if you have $8-10K in CC debt on top of your student loans.

    The general rule is go for the higher rate: if you're paying off a loan with an interest rate of 10%, and have an investment that pays 5%, put more of your money toward the debt. If you have a debt with a rate of 3% (like a student loan) and have an opportunity to invest in something with a return of 10%+ (like an annuity) put more towards the investment and pay the minimum on the loan.
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  19. #19
    Banned indivision's Avatar
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    Quote Originally Posted by J-Luv
    u hit the nail on the head. i feel for some of my college friends who came out with $20k and $40k of school loans. I'm almost proud of my measley $3k of debt compared to what everyone else has, lol.

    debt can slow up EVERYTHING.
    you're right that debt CAN slow up everything. but, you really need to understand credit, debt and cash.

    it's always a nice feeling to not have debt. but believe it or not, and i hate to break it to you, you probably would have been better off going with the big school loans!

    school loan rates are super super low right now. you can get those loans at 3-5%. you should always figure that you could safely estimate to make 10% a year on safe stocks. that means that, if you had invested the 30k school cost in stocks and paid for school with a loan, you would be making 5-7% per year on the 30k. on top of that, school loans are treated a little differently by creditors because so many people have them and the terms are so long, so having the loan may actually improve your credit.

    i doubt your friends actually did this, so you are probably ahead of them in that regard anyway. but, that's a good example of why you should take some time to learn what all those boring numbers mean.

  20. #20
    I Mastered Dead Technology TallGuyLittleCar's Avatar
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    Quote Originally Posted by J-Luv
    can you elaborate?
    through networking and personal and business contacts you will quite often find alot of people that are trying to start a business but do not have the necessary money to get the ball rolling. If you have the money you can become part owner of somebody else's business.
    ONLY RON PAUL AND ALUMINUM FOIL CAN SAVE YOU NOW!
    annoy your politician fairtax.org, a political forum

    Catapultam habeo. Nisi pecuniam omnem mihi dabris, ad caput tuum saxum immane mittam.

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