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Up until I was 40 years old (I’m 55 now), I floundered financially. I wasn’t a basket case. I was able to pay my bills. But I was using debt to live beyond my means and acquire the superficial symbols of success—a car, a condo, a host of electronic equipment, and a bunch of credit cards to keep the party going whenever my paycheck fell short. In a nutshell, I was the typical American. No emergency fund, no retirement account, and no idea how precarious my situation was.
But then, seemingly overnight, the worm turned. I was no longer living paycheck to paycheck. I was thriving. In fact, by the time I was 45 years old, I was saving over 50% of my gross annual salary.
So what happened? Did the 1% suddenly become more caring? Did corporate America suddenly become less greedy? Did our political class suddenly become less corrupt?
Of course not. If anything, the avarice of our elites grew worse as I advanced from rudimentary financial solvency to full-fledged financial independence.
No, the only thing that changed was me. Around 2002, I stopped being a financial jerk and started embracing the behaviors that are conducive to building wealth. In other words, I kicked my subprime financial culture to the curb and adopted a prime financial culture.
A Prime Financial Culture Defined
Before I note the behaviors associated with my understanding of a prime financial culture, or PFC for short, I need to address two things. First, my PFC is not a proxy for your value as a human being. In other words, you’re not a loser if you fail to embrace all of my PFC behaviors. You’re just not likely to become wealthy. That’s all. Remember: there are more important things than your net worth. Someone who is poor but honorable and kind is way more successful in my book than someone who is rich but deceitful and cruel.
Second, notice how I emphasized “not likely” in the previous paragraph? There are no guarantees when it comes to accumulating wealth. You can fully adopt my PFC and still end up miserable and broke. All my PFC does is shift the odds in your favor. Embrace it, and things will probably end well—financially, at least.
Okay, now that I’ve gotten the necessary housekeeping out of the way, it’s time to see what my PFC thingy is all about. A culture is just a set of behaviors. Follow a culture’s behaviors and you’ve adopted that culture. For example, if you want to embrace the Hippie culture, you wear bell bottoms, travel the country in a van, and listen to Jefferson Airplane. If you want to embrace my PFC, on the other hand, you adhere to the following 9 behaviors.
Work. There’s no substitute for work. It’s the best anti-poverty program ever devised. So work at least 40 hours a week. And when you do work, be earnest, try to do your job well. You might not think so, but eventually your dedication will be rewarded. Employers and customers loathe slackers and love go-getters.
Learn. Always be learning on two fronts. First, figure out how best to serve your fellow man. For many people, this means college. You learn a trade that is highly valued in the labor market (i.e., doctor, lawyer, engineer, etc.). But college isn’t the only route. I have a friend who bought a small bread route right after high school. Within a few years, because of his natural business acumen and his hustle, he was making over $150K a year—delivering bread, for heaven’s sake. Second, learn how to manage your money. Keeping money is just as hard as earning it. Just ask the legion of former millionaires who have found themselves in our bankruptcy courts.
Save. You can’t get wealthy unless you save. Get over your ego and adjust your lifestyle so you’re able to spend less than you earn.
Invest. The best money in the world is money that works for you. Buy stocks and bonds as soon as you can. And keep on buying them. Every year your stocks and bonds will pay you in the form of dividends and, more often than not, capital appreciation. And after several years, as long as you reinvest the dividends and rebalance your portfolio (i.e. buy low, sell high), the amount of money your money will pay you will be nothing short of astounding. Last year, for example, our money paid Mrs. Groovy and me $118K.
Get married and honor your spouse. Life is the ultimate team sport. Think about it. Buying a home, raising a child, paying for your kid’s college, and building a nest egg—these are rather costly endeavors. Wouldn’t it be great if you had a fiercely committed partner to help you with these things? Hello marriage. Of all my PFC behaviors, this is the one that proved to be the most critical to my financial renaissance. In fact, if I hadn’t met Mrs. Groovy, I probably never would have abandoned my paycheck-to-paycheck mentality.
Procreate responsibly. Kids are expensive and time-consuming. So have them mindfully. Ask yourself if you have the financial and emotional wherewithal to nurture and shepherd a newborn child to adulthood. And if the answer’s no, hold off on having a kid. Far too many Americans have fornicated themselves into poverty by having kids too soon.
Protect yourself from the unexpected. Sh*t happens. You may contract a costly ailment. You may run a red light and ruin two cars. And you may come home one day and discover that Mother Nature has opened a can of whoop ass on your house. It’s therefore imperative that you protect your family and your wealth from the fickle finger of fate. And this need becomes more acute as your wealth grows. Get all the applicable insurance protection you need, starting with health insurance.
Imbibe modestly and avoid drugs. It’s hard to excel at work if you’re a drunkard. And I don’t know any crackheads who are financial dynamos. Enough said.
Obey the law. Don’t steal from people, don’t defraud people, and don’t physically assault people. It’s hard to build wealth when you’re sitting in a jail cell.
The Best Part of My Prime Financial Culture
The beauty of my PFC is that it works. What percentage of people would have a lower net worth after embracing my PFC faithfully for 10 years? What about after 20 or 30 years? Sure there would be some. Bad things do happen to good people, after all. But the percentage would be low, especially as the number of years people operated under my PFC grew.
Okay, my PFC is pretty freakin’ groovy. But here’s the best part. IT’S OPEN SOURCE. You don’t need permission from the government to adopt it. Nor do you need permission from your boss, your co-workers, your friends, or your family. All you have to do is dedicate yourself to its 9 behaviors. That’s it. You’re probably doing 3 or 4 PFC behaviors right now anyway. So go all-in and see how your financial life improves.
Final Thoughts
A few weeks ago, I came across a very interesting post about race and income over at the Financial Samurai. Here are the pertinent statistics that Sam shared with his readers.
Asian median household income: $78,000
White median household income: $62,000
Hispanic median household income: $46,000
Black median household income: $37,000
Now why do you suppose that Asian-Americans have the highest median household income? Is it because of discrimination? Or is it because a higher percentage of Asian-Americans have adopted my PFC than other races?
I firmly believe it’s the latter. And to prove it, here are some statistics that pertain to three crucial PFC behaviors: working, learning, and procreating.
First, let’s look at unemployment.
| Race/Ethnic Group | Unemployment Rate |
|---|---|
| Asian | 3.6 |
| White | 4.3 |
| Hispanic | 5.8 |
| Black | 8.4 |
| Source: Bureau of Labor Statistics | |
Now let’s look at education.
| Race/Ethnic Group | Percentage of 25- to 34-year-olds with at least an associate degree |
|---|---|
| Asian | 71 |
| White | 55 |
| Hispanic | 26 |
| Black | 35 |
| Source: Pew Research | |
Finally, let’s look at child rearing.
| Race/Ethnic Group | Percentage of out-of-wedlock births |
|---|---|
| Asian | 17.1 |
| Whites | 29.4 |
| Hispanic | 53.5 |
| Black | 72.2 |
| Source: National Review | |
Do you notice a pattern here? Our household income statistics line up remarkably well with our proxy statistics for three crucial PFC behaviors. Asian-Americans perform the best, followed by white-, Hispanic-, and black-Americans. If we dug further and investigated statistics for other PFC behaviors—especially saving and lawfulness—we would surely see more of the same. And if we controlled for PFC behaviors, and compared, say, married couples in which both spouses work full-time and have college degrees, we would find that all racial/ethnic groups would have similar household incomes.
Our manipulators in Big Journalism say an existential culture war is being waged on Capitol Hill and in our state capitols. I say bullsh*t. As important as bathroom rights and immigration policy are, the real culture war is being waged in your head. If you succumb to the transient luxuries of a subprime financial culture (i.e, debt, consumerism, sloth, etc.), you will suffer financially in the long run. If you don’t, and decide rather to adopt my prime financial culture, your long-term financial prospects will be pretty damn good.
Okay, groovy freedomists, that’s all I got. What say you? Is my understanding of a prime financial culture packed with a lot of wisdom? Or is it packed with a lot of hooey? Let me know what you think when you get a chance. Peace.
“Far too many Americans have fornicated themselves into poverty by having kids too soon.” So true! And poverty is just one part of the self-imposed limits.
While aspects outside of our control (race, gender, etc) do effect our journey, they don’t define our outcome.
After skimreading all 65 comments, I will say kudos for having a readership that doesn’t immediately crap on your “controversial” ideas! There’s too much crapping and not enough listening going on.
As an aside – My favorite quote about statistics from my junior high shop teacher: “Statistics are like bikinis. They show you a lot, but they can cover up some very important things.”
Mr. G, I love when you push back against the leftist narrative. 🙂
I think the PFC makes a lot of sense and hopefully others will view it that way over time.
Thanks, TJ. I have a lot of respect for Leftists. Good, smart people who are great at diagnosing a problem. But sometimes their prescriptions are off. And I think that’s the case here. Discrimination and structural racism were certainly a problem a generation ago. The problem today, however, is cultural. Anyone, regardless of race or ethnicity, who adopts my prime financial culture will do fine economically. Fighting discrimination and structural racism is fighting the previous war. The current war is internal. It’s the guy in the mirror.
Very interesting. Not sure what to make of the stats. As always there is more to the data than what you may think at first. As far as habits and becoming less of a jerk, I am on a similar path as you. Now in my late 40’s I am much better prepared to be financially independent than I was when I was 40. Good stuff as always Groovy, thanks for writing such good stuff !
-Brian
Agreed. Stats are easily manipulated. But when you control for family, education, age, and region, the income gaps between Asians, whites, Hispanics, and blacks narrow significantly. If you get a chance, check out the books below. They make the case that culture is more consequential when it comes to success than discrimination or any other societal defect. That’s how it played out in my little world anyway. As soon as I adopted the PFC, the evil 1% couldn’t stop my advance. Thanks for stopping by, Brian. It’s always great hearing from someone who has shed his financial jerkism. Cheers.
The Unheavenly City Revisited
Wealth and Poverty
Love this! One thing I might add (building on top of your marriage comment) is to surround yourself with people who live and breathe the PFC culture. I’ve learned so much from reading your blog and others like it. Knowing there are a bunch more awesome groovy weirdos like me helps keep me on track!
Excellent point, Chris! People model their behaviors after their closest associates. Hang with spendthrifts and you’re likely to be a spendthrift yourself. Hang with Personal Responsibility Warriors and you’re likely to embrace a prime financial culture. Bravo, my friend. I’ll work this into my revised definition of the PFC.
This list is definitely something that everyone should apply to their lives! I really should have waited until I was financially stable to have my children but I wouldn’t take them back for anything in this world (couldn’t anyway!). One thing I can say is getting over your ego is a must. I used to be horrified at the thought of driving a ‘bucket’ but my once brand new car is slowly turning into a dinged up screaming machine…and I drive it proudly.
Hey, Dyana! Thank you very much for your gracious response. I know child-rearing is a very touchy subject (for good reason). I’ve seen young unmarried women have kids and things work out fine. I’ve also seen young unmarried women have kids and things not work out. And, of course, I can say the exact same thing for young married women. So here’s my problem. I want to encourage young women to delay child-rearing because I think it will help them financially. But I also don’t want to hate on young women who 1) haven’t decided to wait, and 2) haven’t managed to secure stable partners. Can I reconcile these two conflicting wants? I try, though admittedly my attempts are sometimes ham-fisted. So thanks once again for stopping by, Dyana. I really appreciate your thoughts. And I also appreciate your newly discovered fondness for “dinged up screaming machines.” Buckets rule!
P.S. I’ve been binge reading your site. Love it. Great work.
First let me say I love the list!!!
It took me awhile to get married and we waited to have kids. My wife from time to time asks us if we should have started to have kids earlier.
I tell her all the time that I’m so glad that we had the opportunity to grow together as a couple and do some of the things that we wanted to before kids.
Thank you, MSM. I think the sweet spot for kids is 25-35. Before 25, you’re probably not financially ready. After 35, you’re probably pushing it physically. Everyone is different, of course. But, like you, I think it’s good to wait. Just don’t wait too long.
great pointers towards building a financial responsible life!
Thank you, AT. It really isn’t complicated. A little introspection, and a willingness to hold oneself accountable, is all one needs to turn his or her financial fortunes around.
“Get over your ego and adjust your lifestyle so you’re able to spend less than you earn.” Excellent post as usual. I watched my mom go from DIRT poor (as in, empty cupboards) to financially stable by adopting a similar PFC. It works. As Dave Ramsey says “I like the way my plan works better than the way yours doesn’t.” The proof is in the pudding. 🙂
LOL. I forgot about that classic Ramsey quote. It’s a great quote, and makes so much sense. It’s amazing what people can do when they discard a destructive mindset and adopt a fruitful mindset. Habits (aka culture) are destiny. Thanks for stopping by, Laurie. I’m glad your mom didn’t resign herself to her dire circumstances. She’s one groovy lady.
Yep it’s really not hard but to a lot of people these ideas might as well be like magic. lol. 🙂
I want to also add that we should be careful in what kind of degrees we get. What is practical today may not be practical tomorrow.
In addition, I worry when parents push children into law, medicine, or engineering and the child has ZERO interest in it, but could be a good dental hygienist or hairstylist, electrician, entrepreneur, etc.
An acquaintance of mine who is American-Korean chose an accounting major and has had to retake each require class for accounting about 2-3 times.
He finally made it and graduated and has worked as an accountant for, 1 1/2 years now.
But, I was talking to him last week and he was saying how if he could do it all over again he would have chosen a different major or even tried a trade like become a journeyman electrician.
In his household the trades weren’t generally accepted as much as higher-ed was. In a lot of Asian households I’ve noticed that kids don’t diverge from their parents expectations which is both good and bad.
Good because they don’t usually drop out of h.s. or experiment with substances, but bad because if they want to try different things it’s met with disapproval.
There’s this YT personality, she’s Vietnamese and born in L.A., Cassey Ho, when she was younger she told her dad she wanted to go into fashion.
Her dad replied with by saying, she wouldn’t make any money, nor have any friends, and that she would fail. She graduated with a B.S. in biology but chose to not go to med or law school like her parents wanted her to.
Anyway she chose to pursue her interests afterwards and she’s successful now. It really depends on the person. There are people who try to make it in an industry 5-10 years before they get a clue they should be doing something else with their lives.
I’ve had friends that wanted to make it as singers or actors but they weren’t great at singing or acting.
Thank you, Lila. Awesome comment. I totally agree with you. It’s all about being honest with yourself. Not everyone has the brains, temperament, or desire to become a doctor or an engineer. Fighting against these circumstances will bring a lot anguish. And your friend is a perfect example. Better to be a happy electrician than an unhappy accountant.
Love your list of PFC’s. I would like to nominate one more item to your list – “Charity”.
You have done a phenomenal job of turning your finances around within 15 years. That’s awesome!
Agreed. I definitely missed a couple of behaviors, charity being the most glaring omission. I’m working on a infographic for the post right now, and I’ll make sure to include charity. Thanks for the suggestion, Michael. I really appreciate it. And thank you for your kind words about our turnaround. We did a lot of things right, but we also caught a lot of breaks. The biggest one was moving from high-cost New York to low-cost North Carolina at the height of the real estate boom (2006). We made $250K on the sale of our condo and that shaved 4-5 years off of our FIRE date.
Nice list, and it’s well rounded for anyone to adopt. I’m a prime example of marry well. My last relationships had been just shy of a train wreck on so many levels and when I found Mrs. SSC was when I realized I needed to challenge my idea of what I thought was a good relationship. I went outside my comfort level and pursued someone that felt “not my type/out of my league/not the usual” and it’s worked out great.
She’s an excellent CFO for our household and has set us up well in so many more ways as a family.
My other one I’d add to the list is “challenge your comfort levels”. It kind of reverts back to the “If you always do what you always did, you’ll always get what you always got.”
It’s easy to get comfortable and complacent and not necessarily want to work for “more than what you’re used to.”
One of the most “out of the box” things I ever did was transition to FIRE. It was NOT an easy decision nor did it come without significant changes. It required a whole new way of viewing the definition of work and self.
Same here, my friend. It wasn’t easy. But once I started gaining a little traction, and seeing concrete results, it was impossible to stop.
Amen, brother. For most of my life, it was never my fault. But then it hit me one day. Nobody’s stopping me from doing anything. If I didn’t like the direction my life was taking, I had the power to try something different. Complacency and ego is the bane of mankind. As you so eloquently put it, Mr. SSC, three cheers for those who have the guts to “challenge their comfort levels.” And three cheers for those who have found awesome spouses. Thanks for stopping by, my friend.
Your PFC is very apt. If only more people would adopt it at an earlier age! I have to agree with several of the commenters on two points: marriage is dependent on finding the right person and race is more complicated than your statistics might suggest. But the most important takeaway, I believe, is to protect yourself against the unexpected. Not only is insurance a critical component (health, homeowner/renter, auto, disability, life and more), but to do what you can to take care of your health, drive safely, protect your marriage, and other factors where you may have some element of control.
Thank you for jumping in, Gary. Great observations. I couldn’t agree more. Your distilled takeaway–“protect yourself against the unexpected”–nailed it.
Great take, Mr. G. Your PFC list works for everyone, but I would say that as you acknowledge, it just works better than the alternatives rather than being a guaranty.
I’ll also add a couple of caveats. Getting married is great, but as others have commented, getting married to the wrong person has a lot of negative consequences. So does staying in a bad relationship. Be picky, pick well, but don’t compound a bad mistake by staying in an unhealthy environment.
And like Mrs. Picky Pincher, I’m reluctant to say that all of the statistical/racial stuff is about the individual rather than societal culture. There are institutional factors that reinforce cycles of poverty, and following the PFC strategy makes them easier to overcome than not. But it’s a heck of a lot easier for me to follow them with a background that’s frankly privileged (stable home, supportive parents, good education) than it is for someone who started out without those advantages.
Love your caveats, Emily. Marry the wrong person and you’ll surely have your hell before your death. In real estate it’s all about location, location, location. In marriage it’s all about be picky, be picky, be picky. And you’re so right about institutional factors. Babies having babies only perpetuates a subprime financial culture. Very tough problem.
Rock on Mr. Groovy! I like the idea of PFC but getting married and procreating scary the heck out of me and I don’t think they’re as correlated to financial wealth as the others. I do think procreating inside of wedlock is a determining factor of monetary gain. Along with staying married, gee is divorce expensive.
I’ll probably take the open source of your PFC and modify it to “If you get married, stay married” and “have kids when you’re ready; not sooner.” Who knows, though, I’m still young my ideas may change.
You always come up with fascinating articles, thanks for another one.
Ah, excellent points, Kraken. Those are very important qualifiers and I feel shame for not addressing them. Marriage definitely comes with one big caveat. It can be hell if you choose the wrong partner. And kids open you to a whole host of uncertainties–even if you have them when you’re mentally and financially ready. I have a friend who always states, “If you want adventure in your life, have kids.” So I perfectly understand why you view marriage and procreation with a great deal of trepidation. Thanks for stopping by, my friend. There was a lot of wisdom in your comment.
If only more people would adopt your PFC, they would be so much happier. Every point is great one. I didn’t realize you guys got started later on, but look at you now! You guys are a great example for the rest of us.
Also, that little bit on having a partner on your team (wife or husband), makes such a big difference in life. Of course you don’t HAVE to have a relationship, but it sure does make life a lot easier and very interesting at the same time. 🙂
Thank you, Mr. SS. I’ve embraced the subprime financial culture, and I’ve embraced the prime financial culture. And as you said, embracing the prime financial culture is much more rewarding. Mrs. G and I were just marveling the other night about how stress-free your life becomes when you’ve gotten your financial act together. We haven’t seriously worried about money since 2004. And how remarkable is that giving how tumultuous the US economy has been since then! We are truly blessed. And we owe it all to adopting a PFC. Thanks for stopping by, Mr. SS. It’s always great hearing from some who is part of the PFC cult and has fabulous partner.
I’m glad you included the hidden side of the iceberg. Individual character and family makeups have a huge impact on our life and legacy. A few lousy personal decisions can wipe out whatever financial productivity you have earned or can earn.
Having children is one reason my wife & I made the recent career decisions we made. We are also working hard to payoff our debt, that way our relatively low salary can be disposable income instead.
Exactly, Josh. “Individual character and family makeups have a huge impact on our life and legacy.” Habits are destiny. But here’s the beauty of America. As long as you’re relatively young, you still have time to turn things around. All you have to do is stop the behaviors that lead to financial ruin and start embracing the behaviors that lead to financial success. That’s it. Thanks for stopping by, my friend. I really appreciate your contribution to our conversation.
Can’t hide behind the data. Seems like work ethic/ focus/planning really plays a big part in PFC and that’s why some people excel and others don’t.
We were in the same boat floundering for years until we got out act together. We worked hard during the early years, but just never had a plan.
Once we flipped the switch we never looked back. We just need to continue to try and reach people earlier and earlier in life and get them on board with the PFC lifestyle.
Agreed. I think people tiptoe around the truth because they don’t want to be cruel. But being polite can sometimes be a form of cruelty too. Like you said, the data don’t lie. Want to get ahead? Embrace a PFC. It’s as simple as that. Thanks for stopping by, Brian. It’s always great hearing from someone who was once “floundering” and has now “flipped the switch.” Bravo, my friend.
Love it. To add one more that has been helpful to me: separate your stuff from your identity. I’m not my stuff, or my clothes, or my house or my car. Take all those things away, and I’m still me. (Although it is winter, so I would be cold.) It’s hard to find money to save and invest when we are consuming to create our identities. Be an awesome person outside of the stuff you spend money on, and often you will end up spending less.
“It’s hard to find money to save and invest when we are consuming to create our identities.”
One of the most profound statements on personal finance I’ve ever heard. Have you considered creating a blog and sharing your thoughts with the world (haha)?
Thank you, Ms M. You made my day.
I hear they are kind of a time sink. 😉
You heard correctly. Be wary.
Nice job summarizing three important components that likely lead to a financially more stable life. Love the charts!
It’s weird as an Asian American witnessing so much racial banter by the media and the government. We are a minority as well, composing of ~5.5% of the US population. But why is it the media and the government systematically excludes Asians from the race debate? We go through similar discrimination issues growing up as well (feels less so today though).
There are definitely some systemic issues that make life more difficult for certain races. But the one thing we can control is our work ethic. I’ve always told myself this. I can fail due to not being smart enough, or my competitors being too good. But I will NEVER FAIL DUE TO A LACK OF EFFORT.
I tell myself this at least once a week. And perhaps this mentality is born out of playing competitive tennis. One must train hard and eat well to have a chance of victory. And if you lose, you just try again, and again, and again.
Why give up?
BTW, curious to know where you found my Income By Race post? Was it a random Google search or did you read it when it was first published? Always curious to know.
Sam
Haha! You are so right about the missing Asians in our news stories. I read an article the other day on realcleareducation about how blacks lag behind whites in school. And I immediately thought to myself, why did this article compare blacks to whites. Why didn’t it compare blacks to Asians? After all, Asians are the highest performing group in our schools. Not whites. And sure enough, when I clicked the link to the source data, it showed that blacks lagged behind Hispanics, whites, and Asians. I guess comparing blacks students only to white students fits the narrative that America is a racist country. When you compare blacks to everybody, the racist narrative loses some of its power. How sad.
P.S. I love your website. I don’t get over there too often, but when I do, I do a lot of binge reading. It was during one of my binge fests that I came upon your race and income post.
I like your PFC. 🙂 It’s so simple but yet so many people have difficulty transitioning from mainstream cultural expectations of money management.
I do think it’s more complicated to involve race in this discussion, though. There are so many factors playing into the Hispanic and Black financial performance, and it’s difficult to address it here in one post. I’m tentative to agree that Asian-Americans tend to perform better financially because of cultural factors. There are a lot of systemic issues in the U.S. that prevent people of color from advancing, so I think that’s missing from this data.
It is more complicated. Asians for instance are clustered in California and New York, two high-cost states that out of necessity have higher than average wage costs. Roughly half the black population, on the other hand, lives in the south, the region with the lowest cost of living, and the lowest wage costs. So black-Americans will naturally have lower household incomes than Asian-Americans. And there’s nothing sinister about that. It has a lot to do with where each group primarily lives.
As to systemic issues holding back people of color? I’m not sure about that. When you control for key economic variables (age, region, education, employment, marriage, etc.), blacks households earn just as much as white households. Check out the book, The Triple Package, and see how certain cultural traits advance group and individual fortunes. It shows how Chinese-Americans, Jewish-Americans, Indian-Americans, Iranian-Americans, Lebanese-Americans, Nigerian-Americans, Cuban-Americans, and American Mormons all have higher than average household incomes.
I’ve hesitated to reply with our current national divisions. However I think it is good to be cautious when applying attributes to race. Cause and effect can be difficult to determine.
I would imagine you could find similar statistics from 1850 and 1950. It might change who came out on top, but there would still be racial differences.
However to imply that it was due to cultural differences and ignore slavery in 1850, or Jim Crow/segregation in 1950 would a poor analysis of the times.
Likewise to ignore the impact of the disparities in education, health, employment, mass incarceration, housing in our current culture is generally giving some of us too much credit for our situation, and others to much blame.
Of course the individual can impact how their own situation determines their outcome (both positively and negatively). But some deprevations are not able to be overcome.
I love it, Stephan. Awesome reply. I appreciate your respectful manner. I think you’re wrong, but stating my case in the comment section would be difficult. My rebuttal, in other words, would be too long. It’s going to need its own separate post. I’m not wimping out, I just need a different forum to adequately express my thoughts. I should have the post next week, my friend. I look forward to your response.
P.S. I really appreciate how you challenged my views. It made me think.
Thanks. I haven’t taken the time to review the data. I did see this article today that adds in wealth, instead of just income.
And even though the gap decreases a adjusting for circumstances, it doesn’t close.
Similarly the is a gap between men and women. And women have higher rates of living in poverty and being unprepared for retirement. Do women also fail to follow these criteria?
I still think it is a dangerous slope to assign outcome to chacteristics across racial groups.
Forgot the article.
https://www.bloomberg.com/news/articles/2017-02-08/the-big-reason-whites-are-richer-than-blacks-in-america?cmpid=flipboard
No worries, my friend. Great article. Thanks for the link. I have three beefs with it, though. First, it excludes Asians. Why? Is it because including Asians weakens the racism/discrimination narrative. Also, it says nothing about the median age of the groups in question. If I remember correctly, the median age of whites is roughly 10 years older than the median age of blacks. Since net worth correlates with age, it’s not surprising that whites, on average, have a higher net worth than blacks. Finally, the article says nothing about fertility rates. If black women have more children than white women, inheritances in black families face greater dilution. But, of course, these are just beefs. Had the author included these variables in his research, the results may have been the same. The plot thickens.
Fascinating
Indeed. For 50 years we’ve been trying to fix the systemic side of the equation. It hasn’t worked. And on many fronts, things have gotten worse. Struggling blacks (and struggling Hispanics, whites, and Asians, for that matter) need to look inward and seriously question the culture they have chosen. Habits are destiny, and strong habits will easily conquer what little racism exists in America.
Love it! I especially love the disparities in ethnic groups that you rightly point out. The distinction in my mind is cultural and has little or nothing to do with race. The root of culture is shared, learned behaviors that are adopted and replicated over time. Do Asians do better because they’re innately smarter? Call me dubious. Yet, go into any campus library on a Friday night and guess who’s there plowing away in the books? Must be racial differences that made them do that! (I kid, I kid). I fully agree that ANYBODY can change behavior and dramatically improve their odds.
I’m dubious about Asian people being smarter as well (and there are a high number of different types of Asians).
I couldn’t get higher level math e.g. Calculus. So I stopped at Trig/Math Analysis sophomore year of HS.
My SAT scores were mediocre as well <1,200 (out of 1,600), no matter how many times I tried.
It's work ethic that counts the most. I knew I wasn't very smart, so the only solution was to TRY HARDER.
Sam
Hey, Sam. I hope you’re right. But I don’t know. It just seems that a greater percentage of Asians have an aptitude for rigorous disciplines than other races. But that notion, of course, is something for psychometricians to debate. All I know is that many Asian-Americans exhibit tremendous discipline and work ethic and it would behoove many Americans to mimic that effort.
So true GO4ITUSA. When I was in high school, we had very few Asian-American students. I think there were four or five. And none of them were particularly smart. The Jewish kids in my school were the academic rockstars. So I thought the academic pecking order was Jews and then gentiles and Asians. But then I went to Buffalo University, which was primarily an engineering school. And there I quickly realized that the academic rockstars were the Asians. Everyone complained about how they “ruined the grading curve.”
This is the type of post I’ve come to love from your site. Personal finance bloggers all say the same stuff, but you have a knack for presenting the info in a way that makes you go hmmmm. Well done!
Thanks, Ty. Your kind words really mean a lot. I try to keep things fresh, and I try to tackle subjects that are finance related but teeter on the taboo. Out-of-wedlock births are a perfect example. I talk about this now and then, not because I want to vilify unwed mothers and their mates, but because unwed motherhood is very often a serious financial handicap. And I don’t want to see young girls and women doom themselves to a life of penury. Meh.
“There’s no substitute for work. It’s the best anti-poverty program ever devised.” I hope you’re happy; I just laughed out loud at my desk at work 🙂 Well said.
It’s amazing how much it actually costs to keep up with modern day consumerism expectations. I was in a similar boat. I made so many financial missteps up until I was in my mid-30s. Thankfully, I made a few good choices, too. Some by design, others by choice. But, even with that being said, I’m still sitting here at my desk. At work.
I completely agree that working and saving and resisting excessive consumption are must-haves for anyone seeking to build wealth. Unless you’re part of the glittery rich, there is no way around living below your means and investing the difference.
Your other point about committing to your partner is spot on. I didn’t realize the importance of choosing the right partner until I chose plenty of the wrong ones. Now, I finally get it. Hopefully, we’ll be joining you for those afternoon naps in the next few years (virtually speaking, of course ;).
Mrs. Mad Money Monster
LOL! Perhaps a few years from now we can get our FIRE friends together and do a group nap. Maybe even one can be arranged at FinCon 2020. And I hear you about consumerism. I was trapped in that world for the better part of my adult life. So sad. I bought things to impress others and only managed to sabotage my financial advancement. Thanks for stopping by, Mrs MMM. It’s always great hearing from someone who chose an excellent spouse. Give my regards to Mr. MMM.
I totally agree. It’s easy to blame others for our financial problems, like Capital Hill, than to take on the responsibility ourselves. I have been working on this and it has made a huge difference. We were able to save about half our income last year. Thank you for your wise words Mr. Groovy. I am glad to see that we are heading in the right direction. Thank you for sharing.
Hey, Amanda. It’s amazing what two people can do when they’re determined to advance financially. Saving half your income! That’s freakin’ awesome. You guys are in a tremendous place now. Imagine where you’ll be in ten years. It’s so exciting. Thanks for stopping by, Amanda.
PFC. I love it! It may not be “PC”, given your call outs, but it’s spot on.
Having gone through a divorce and now remarried to a wonderful woman, I confirm your financial take on a strong marriage. Never been happier too.
Love these wise words Mr. G!
Hey, Ian. Thank you. You’re definitely right about marrying wisely. I’ve seen married couples financially ruined because the sum of their financial incompetency was much greater than their individual deficits. I’ve also seen married couples ruined financially because of divorce. But if you find the right person and really work at your relationship, marriage can be the best thing that ever happened to you. Glad your second marriage worked out much better. Cheers, my friend.
Interesting statistics. I love the line in one of your rules about getting over your ego. I live close to work so I’ve been biking a lot and walking. When I bike, I don’t tend to look very fashionable at work. I have my hair in a ponytail and some kind of easy to assemble clothing that I can carry in my backpack. My ego wants to scrap riding my bike, but I sacrifice health (it’s so close to work I’m not even sure money is that much of a factor). Do I want fashion, or health? Knowing my values, I pick health, because beauty fades. lol! Anyway, there are a lot of situations where you have to get past your pride or ego!
LOL! I love people who are discombobulated fashionably at work. So keep on riding that bike to work. Overcoming one’s ego is the number one problem for most people. I finally overcame my ego and admitted that I couldn’t afford New York. It wasn’t fun admitting to family and friends that our value in the labor market couldn’t keep pace with New York’s cost of living. But Mrs. G and I put our egos aside and moved to North Carolina. Fortunately, it worked out very nicely. Thanks for stopping by, Tonya. I really appreciate how you showed your ego who’s boss.
That’s a very good list. I might add one more item, pick a direction and head that way consistently. Your PFCs are great but if you don’t know where you want to go they’ll flounder as you ask why your doing it. It doesn’t matter the where: retired in an airstream trailer, working till your 90 in a job you love, or somewhere in between. Just figure out where you want to go and start planning to get there. Thinking past tomorrow on that route is key.
Ooops! Definitely forgot about that direction thingy. Very important. Thank you for pointing that out, FTF.