I’ve Been Watching Atlanta
Since everyone has been singing the praises of Donald Glover’s tv show, Atlanta, I decided to watch a few episodes on Hulu. The first thing I was surprised by was how much the censors let tv shows get away with today. This show has a LOT of strong language. The show airs on FX, but I stopped watching cable a few years ago. I was able to bring it up on Hulu.
So far, I’ve managed to watch the first 5 episodes and I think it’s a well-produced show. I can identify with a lot of the themes brought up and I see why the show is popular. But, I’m not here to do a review.
A quick summary
I want to discuss a plotline that was in the 4th episode titled The Streisand Effect. It really got me thinking about where I am in my life and how I’m not investing as much as I can be.
In the episode, Glover’s character, Earnest attempts to pawn his cell phone for $190. His friend, Darius, says he can get him a lot more money. All he has to do is trade the phone in for a Mongolian sword that’s also in the pawn shop. Earnest is hesitant, but Darius says, “If you need the money, take the money. I’m just saying I can get you more.” Earnest takes the sword with the expectation that he will get more money.
Long story short, the rest involves trading the sword to someone else and dog breeding. When Earnest asks how much he will get, Darius tells him between two to four thousand dollars. Earnest then asks where the money is and Darius tells him he’ll get it in September- two months away.
Even though Earnest was guaranteed to get more than ten times what he originally going to get, he was upset. He needed money for his family right then, not two months later. In his own words, “I’m poor, Darius. And poor people don’t have time for investments because poor people are too busy trying not to be poor.”
That got me to thinking. Was Earnest right in saying poor people don’t have time for investments? Do poor people really give up the opportunities for more money at a future date so easily? To answer this question, I looked back at my own life.
Paycheck to paycheck
I can’t speak for the people with absolutely no income coming in. But, I can speak on what it’s like to live paycheck to paycheck. I know what it’s like to have to pawn something precious just so my wife and I wouldn’t get kicked out of our apartment. I’ve used my bank’s overdraft “benefit” to make rent. Sometimes my balance would be so far in the negative that my next paycheck only served to get the balance to $50. Then, I’d have to wait two more weeks for my next check. We cut back on expenses as much as we knew how. We didn’t have cable, internet, or a home phone, and shared a cell phone.
My wife and I got paid every other week, but our weeks were offset. I got paid one week and she got paid the next. Still, after rent, we would have about $150 a week for the both of us. That was used for food (mostly fast food), gas for the car, and other shopping expenses. I honestly felt we had no more room to cut back.
You want me to give up 1% of my paycheck?
I had been at my job for about a year and was deep in debt. If you want to read about how I got into debt, you can read about it here. Now, I was eligible to invest in the company stock plan at a discount and 401k with company match. Human resource tried to convince me to invest in at least the 401k. The minimum was 1% of my paycheck- pre-tax. Were they crazy? I was broke and my wages were being garnished. Why would I willingly give up more money?
I know 1% of my income is a small amount, but I couldn’t see it back then. All I was thinking about was having enough money to live and get to the next week. I didn’t see the benefit of paying a little now for a bigger payoff later.
No time to invest
When Earnest said that poor people don’t have time for investing, I immediately connected with him. People who are broke like I was, really don’t think about investing. They need to make sure the lights, water, and gas are on today, not a month from now. I didn’t want to invest in anything when I didn’t know if my next paycheck would be enough to cover my bills. Yeah, I knew that investing in 401k and stock would pay off in the long run. But, I also knew that any money I invested, wouldn’t immediately be available to me. Broke people need money now.
This is why it’s mostly people on the lower income bracket that fall victim to get rich quick tactics. There are more low-income people buying lottery tickets than middle-income people. I have witnessed a person, who only had half of their rent money, gamble all of it away trying to get the other half. They were “busy trying not to be poor.”
So in a sense, Earnest was right. Poor people don’t have time for investing. Well, when I was poor, I didn’t have time for investing or saving money. That’s why I connected with the character of Earnest.
That seems to answer my question of do poor people gave up opportunities for future money. I mean, I willingly gave up the opportunity for more money by declining 401k. However, that brings up another question: is it possible for poor people to invest and save? With the benefit of hindsight, I now realize that it was possible.
It all comes down to fear. Poor people are always afraid they won’t have enough money to survive the present day. Why worry about future money when I don’t money now? That was my thinking when I was broke and in debt. That line of thinking kept me from getting ahead and saving for later. I had money coming in but was mismanaging it to the point where I had nothing left at the end of the week.
I’m now of the belief that anyone struggling with money can improve their current situation just by focusing on investing in their future. How can focusing on the future help us in the present? By preparing for the future, we are more careful about what we do in the present. First, we need to set a tangible goal for the future. It can be something simple like saving $1200 in a saving account in a year.
If I was still poor and just focusing on the present, a goal like that would seem out of reach. However, if I had just focused on the future and how I was going to get $1200 into a savings account in a year, I would have reached my goal with ease.
Face the future
When I was deep in debt and broke, I probably ate out on average twice a day, five days a week. I went to Burger King at lunch and stopped at another fast food place when I got off. That was about $8 a day. 5 days would be $40, and I’m just talking about me so far. Let’s add another $40 for my wife. That’s $80 a week on fast food for two people.
Focusing on the future forces us to pay careful attention to what we’re doing in the present. Now, there’s a difference between paying attention to your present for your future and just paying attention to the present. When you’re just focused on the present and you’re hungry, you do what I did and go get fast food. When you’re paying attention to the present for you’re future and you’re hungry, you plan on how you can eat now and later.
We were spending $80 on fast food. We could have taken $40 from that and used it to buy more grocery so we could cook at home and bring our lunch. With the $40 that was left, we could have taken $25 and put it into a savings account. That would add up to $100 a month and, by the year’s end, $1200. It would take 7 months if the whole $40 was saved.
It’s not all fear
With that being said, I still believe that the anxiety that comes with trying to survive the present keeps poorer people from saving for the future. However, it is not entirely anxiety. Yeah, I could have found ways to cut back on some things back then and found ways to save. I wasn’t too bad off but didn’t realize it.
But, what about the people who are cutting back as much as they can, and they still have nothing left. After eating every meal at home and cutting their utility bills back as much as possible, they can try to save money on the bare necessities. Surely, that can help. However, as a University of Michigan’s Ross School of Business study discovered, saving is expensive.
It all has to do with bulk. The more money you have the more you’re able to take advantage of bulk prices. I’m going to use this example I got while search Walmart’s website. I can buy a 6pk of Charmin mega rolls for $6.97. That comes out to $1.17 a roll. Not bad for name brand, but poorer people would often get generic to save money. A single generic roll is 99¢. But wait, it’s possible to save a whole lot more on those Charmin mega rolls. All you have to do is buy a 36pk. The 36pk is $16.98. That adds up to 47¢ a roll.
A person with more to spend can afford to buy more than just tissue in bulk. This adds up to more money being saved over time. I poorer person sees those same bulk deals and passes them by. Not because they don’t know it’s a great deal; they just can’t afford that great deal. I’ve done that thousands of times. Poor people can’t afford to spend more money to buy a lot of something if it would mean having less money to buy something else.
In this instance, investing and saving would be hard without an increase in income.
Hard but doable
In conclusion, while it’s hard for poor people to invest and save, it is doable under certain circumstances. Sometimes, it just requires an adjustment in the way they spend money. Of course, an increase in income would be a big help.
I wish I could say, “I did it, so can other poor people.” But, I can’t. I only started saving after my garnishments had ended and I had more access to more money. I’m just speaking from hindsight; I could have done it back then. I hope what I’ve said here can be of use to someone right now. That way, they won’t have to regret missing opportunities.
Epilogue: Take the sword
While trying to find a place to end this post, I had a realization about myself. It was about where I was and where I am now.
I was trapped in a cycle of getting money and watching it disappear; I wanted more money but was too afraid to wait for an investment to pay off. Eventually, I did start investing 1% of my paycheck into a 401k plan. It wasn’t as bad as I thought; I couldn’t even tell that anything was being taken out. I’ve been bumping it up little by little over the years and it’s great to see it grow.
The only thing is, I’m still holding back. Yeah, I no longer struggling for money and have decent savings, but I think I can do better. While writing this piece, I realized that I was still a little saddled by my poor person mentality. While certain aspects of that mentality are great for helping me save money, I find it isn’t so great if I want to live my best life.
When I was poor and in debt, all I wanted was to be free of debt and not be afraid to put more than $10 of gas in the car. Since getting out of debt and making more money, I’ve been comfortable. I save and invest, but I was only saving for emergencies, and I had a 401k for when I retired in my 60s. I was content with that until I started blogging. That’s when I first heard of “Financial Independence Retire Early.” But, I thought it was out of reach for me.
However, I realized that I was thinking like Earnest even though I wasn’t poor. I was still afraid of taking chances even though I could afford it. My wife and I are doing better than we’ve ever been, so I’ve decided to make an attempt at financial independence. It’s time for me to take the sword and see what happens. How will I do it? I have a few ideas. But, I’ll let you know what they are in future blog posts.
If you’ve stuck with me to this point, I’m sorry if I started rambling at the end. I just got a little inspired. If you would like to add something or you just plain disagree with what I’ve said in this post, please feel free to leave a comment below. Thanks.