Conversation with co workers/ financial literacy among non-boglehead types

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upstate90
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Conversation with co workers/ financial literacy among non-boglehead types

Post by upstate90 »

I don't consider myself an expert about finances/taxes/investing by any means but do consider myself more knowledgeable than most, as are most people on this forum I assume. Just the fact that someone is interested enough to find and read parts of this forum put them ahead of most people I think.

I (32) had a conversation with two co workers the other night (63&52) about recent market volatility and our 401ks etc. During the conversation I realized that both were of the opinion that 401k money was completely tax free after age 59 1/2. (they definitely don't have Roth based on the look on their faces when I asked). I informed them that only applied to the 10% early withdrawal penalty and a few other very specific circumstances. After some (friendly) arguing I finally just googled it and showed them. I was very surprised that something so basic (I thought anyway) wasn't even known to someone (the 63 year old) who plans on retiring in a couple years and a 52 year old who should at least be planning and thinking about retirement. I could tell after a few minutes that I as a 32 year old has spent more time thinking and planning about retirement/taxes/investing/ finance knowledge than two people much older than me.

Later when talking to the 52 year old about overtime they said they didn't work as much since they take so much more out in taxes for that pay period to which I replied that when you file taxes it will all even out anyway, which they didn't seem to understand and I didn't care enough to go into detail.
A few months ago I heard the classic "don't want to go into the next tax bracket" line as if once one dollar crosses a new bracket you have to pay all previous income in that bracket as well.

To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
Normchad
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Normchad »

I avoid these types of conversations if at all possible.

People that frequent these forums, are vastly better informed about all manner of personal finance than your typical coworker. I work with hella smart people, and they really don’t understand how taxes work. In fact, I’ve never met anybody in real life who has a decent grasp of taxes…..

Avoid it. They don’t really care or want to know, because if they did, they’d already know it. Leopards don’t change their spots.
Doc7
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Doc7 »

I have an older acquaintance who was telling me he had to visit the social security office. He was there to dispute his premiums for Medicare, seeking an exemption form because his income from two years ago was only high because he had cashed out his 401K upon his retirement and converted to Roth.


His entire 401K in one year.


I am guessing several things, and concluding one thing :
- acquaintance has no concept of managing taxable income while considering Roth conversions
- acquaintance for some reason thinks this will qualify for an exemption from Irmaa cliff (maybe one of y’all will correct me and say it does)
- conclusion: some people really need a financial advisor.




OP, wait till you find yourself mentioning Backdoor or especially mega Backdoor Roth to someone at work. Take the advice of the previous poster, just don’t do it. I am particularly averse nowadays to discussion of HSA accounts and how they work, and how you don’t have to use the one the company opens up for you.
the_wiki
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by the_wiki »

Just talking with a family member tonight who said:

“We stopped contributing to 401k because the market is down”

They are 15+ years from retirement. :oops:
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upstate90
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by upstate90 »

the_wiki wrote: Sun Oct 02, 2022 2:14 am Just talking with a family member tonight who said:

“We stopped contributing to 401k because the market is down”

They are 15+ years from retirement. :oops:
Yeah its painful to hear sometimes, I've told co workers closer to my age who complain about the market to just think about it like they're getting a discount on stocks and they will get more for their money. Some get it. If people just spent a few hours researching these things they could save years of their lives working.
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celia
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by celia »

upstate90 wrote: Sun Oct 02, 2022 12:56 am Later when talking to the 52 year old about overtime they said they didn't work as much since they take so much more out in taxes for that pay period to which I replied that when you file taxes it will all even out anyway, which they didn't seem to understand and I didn't care enough to go into detail.
This is true. In calculating the taxes to withhold, the wages earned in that pay period are multiplied by the number of pay periods in the year, income taxes are estimated for the whole year, then the taxes are divided by the number of pay periods and the result is withheld. Multiplying by the number of pay periods can easily make their income jump to another tax bracket for tax estimation purposes.

You are also correct in that it balances out for the year. But the math is not the easiest to explain.

Here’s a better example of that principle:
One of my kids was recruited on a university campus for a tech company while still a student. He would be paid a bonus in January for signing up early even though he wouldn’t start until about August. When he received his January bonus, he felt [(removed) --admin LadyGeek] that about half of the promised amount was withheld for taxes. Even though he worked zero hours that pay period, they had to multiply that promised amount by the number of pay periods in the year (26, in his case), calculate the taxes, then divide by 26. Of course his regular pay each period would be less than the bonus. Since he had already paid his estimated taxes for the whole year in January before even starting the job, I recommended that he claim lots of deductions on the W-4 when he showed up on the first day of work (and reset it the following January).

To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
I didn’t know much about employee benefits when I started working, so I kept asking co-workers who knew more than I did. In the last 20 years I worked, I helped others learn by asking questions aloud at employee benefit meetings (401K, 457, Flexible Spending plan), even if I already knew the answers. Of course, the employer first had to offer these benefits.
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celia
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by celia »

Doc7 wrote: Sun Oct 02, 2022 1:09 am I have an older acquaintance who was telling me he had to visit the social security office. He was there to dispute his premiums for Medicare, seeking an exemption form because his income from two years ago was only high because he had cashed out his 401K upon his retirement and converted to Roth.

His entire 401K in one year.
This could also be a good decision. I doubt you know the details like his age, tax bracket, and size of the 401K. His being aware he can appeal for Medicare purposes tells me he likely knows more about this than you think.
Dottie57
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Dottie57 »

I am not surprised at what OP found. My brother and I inherited. A nice amount from my mom in an inherited IRA. He did not realize that taking all from the would that the tax bill for most of the money would be over 30%.

Both wife and brother have no idea of expenses and believe they can retire at 65 with SS. FRA is 67. And of course waiting nuntil 70 is best. Hey have 200k in debt right now. SIL says they can pay off mortgage with her 401k.

I really am worried about them. But neither wants to hear from me or my cousin who is a certified financial planner. Cousin would not sell them anything and her advice is mostly bogleheadish.
Ari
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ari »

I live in Sweden and the investment knowledge here is generally a lot less than in the US (though it’s also a lot less complicated, tax-wise). Before I started researching this stuff at the age of 30 I didn’t know stocks went up over time. I talked to a colleague a few years ago who also had this belief and said that the Swedish market had just about broken even since 1980. I showed him a graph and he questioned where the data came from.

On the other hand, I have talked to my boss about investments and she started buying stocks. She has some individual stocks for fun, but most of her regular investments go into a cheap global index fund. So while I totally understand the “It’s not worth it” sentiment, it can also be very rewarding. Had I not talked to her about this and helped her open a brokerage account, she might have had a much poorer retirement. She’s ten years my junior, so she still has a lot of time to build up her assets. It’s nice to help people.
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Ron Ronnerson
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ron Ronnerson »

I find that people have different belief systems when it comes to personal finance and some are downright misinformed about things. Unless someone happens to ask me a specific question about a specific topic, I stick to the policy of minding my own business. When it comes to things like religion, politics, and money, offering advice generally comes across as meddling and is a recipe for ruining people’s moods and potentially straining relationships.

In short, I figure it’s not my job to educate the world about this stuff. I’m an educator, by the way.

Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.

I weep for them on the inside. On the outside, I just smile and talk about other things with them. My relationships stay good as a result and I won’t shoulder any blame for financial outcomes of others as I have kept my mouth shut.

Whether you have good intentions or not, if you give advice, you are setting yourself up to be blamed. Imagine you told someone to invest in the stock market at the start of the year. They would see all these recent losses and possibly think it’s your fault. They might panic and then sell, having turned each hard-earned dollar into a fraction thereof. When they see you, they will associate their losses with you.

If you tell them how taxes work on bonuses and about brackets, you’ve robbed them of the secret joy they derive from complaining about the ways of the world. Meanwhile, you’ve come across as a know-it-all.

Do you really want people to go running when they see you coming? Instead, I offer (and sometimes seek) advice on this forum, where people actually ask questions and want some random stranger’s opinion who happens to be up at 4 am on a Sunday morning.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by jebmke »

I avoid conversations about personal finance with colleagues, friends and family at all cost. Mostly downside risk. Fortunately, it almost never comes up. There are always more interesting things to talk about.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Florida Orange »

Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Jamech »

I work with an older workforce so there is interest among many about finances and retirement.
Several coworkers think that giving their money to Edward Jones is the height of financial savvy.
They like to say things like "I talked to my financial advisor and ..." or " My financial advisor says...".
I have talked to some of them enough to make them mad, no more.
Only one seems to understand how much they are giving the guy (> $1000 a month).
There are a few non-Jonesheads with whom I discuss financial issues, often informing them, learning something new from them or been given issues to research.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by SteadyOne »

Level of understanding can be low. Once I was asked if mortgage can be cancelled by bank, and I said that probably yes, but then it would be treated as a gift and therefore taxable. Individual was upset, but then asked how to open a bank, since if he is the owner of a bank and his own mortgage in that bank he would not have to pay his own mortgage. And this was well educated engineer. After encounters like that I never volunteer for financial advice and only do that if asked twice by the person directly asking for help. Even then, I would probably refer to a professional, since if say my advice lead to something bad and person loses money (say because he did not provide all the information) I would become responsible and I do not need that. Exception may be made for kids or very close family if it impacts me directly
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

I was generally laughed at, denigrated, reproached and actively dissuaded from budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said, astonished at my ignorance, “….but, that’s not possible!”

Anyway, whatever. I’m in my 50s now and very comfortable, which is what I wanted.

I find many coworkers don’t do the flexible spending account because they view it as too much trouble and they are dissuaded by the use it or lose it feature despite the grace period. They also say … which is a little more worrisome … that they don’t have enough medical expenses in a year to bother. Which implies they aren’t getting preventive health and wellness visits in.

I don’t discuss finances with friends and coworkers anymore. People tend to shoot the messenger.
Last edited by AnnetteLouisan on Sun Oct 02, 2022 8:02 am, edited 3 times in total.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Jack FFR1846 »

Most 401k providers are required to provide an annual group presentation on the 401k, options and tax treatment. Employees are not required to attend and the OP's coworkers likely assumed that they knew all they needed to know. Even after one of these presentations, which I always attended, some of my co-workers were talking about the expense ratios. One asked, "This one is point one percent. Is that per week?". So mis-understanding is quite high. Also, these presentations can be very biased to get employees to either buy more expensive products being offered (think Fidelity index target date vs managed target date) or to get employees to sign up for one on one meetings where they can then convince people to pay for account management.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Sandtrap »

upstate90 wrote: Sun Oct 02, 2022 12:56 am I don't consider myself an expert about finances/taxes/investing by any means but do consider myself more knowledgeable than most, as are most people on this forum I assume. Just the fact that someone is interested enough to find and read parts of this forum put them ahead of most people I think.

I (32) had a conversation with two co workers the other night (63&52) about recent market volatility and our 401ks etc. During the conversation I realized that both were of the opinion that 401k money was completely tax free after age 59 1/2. (they definitely don't have Roth based on the look on their faces when I asked). I informed them that only applied to the 10% early withdrawal penalty and a few other very specific circumstances. After some (friendly) arguing I finally just googled it and showed them. I was very surprised that something so basic (I thought anyway) wasn't even known to someone (the 63 year old) who plans on retiring in a couple years and a 52 year old who should at least be planning and thinking about retirement. I could tell after a few minutes that I as a 32 year old has spent more time thinking and planning about retirement/taxes/investing/ finance knowledge than two people much older than me.

Later when talking to the 52 year old about overtime they said they didn't work as much since they take so much more out in taxes for that pay period to which I replied that when you file taxes it will all even out anyway, which they didn't seem to understand and I didn't care enough to go into detail.
A few months ago I heard the classic "don't want to go into the next tax bracket" line as if once one dollar crosses a new bracket you have to pay all previous income in that bracket as well.

To make this story actionable ill ask everyone
1
how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and
2
if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
My past and ongoing experiences: (only me).
1
Often. . with very few very very rare exceptions.
("in financial/tax/investing knowledge", if not. . . verifiable fact based knowledge and higher education in general. . . . )
2
No effort. . and minimal with discretion when asked which is a very rare occurrence.
(. . lead a horse to water thing and all that. . .everyone travels their own paths. . etc).
"perception is not reality is not knowledge is not experience is not wisdom. . . etc".

To OP:
Question:

How does this benefit you on a personal finance level? (quantifiably and substantively and actionably?)

j :D
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alpenglow
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

Normchad wrote: Sun Oct 02, 2022 1:03 am I avoid these types of conversations if at all possible.
100%. Unfortunately, people know I used to work in finance, so co-workers and family will sometimes ask for advice. I tread very carefully and won't go out of my way to correct people unless specifically asked how something works.
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alpenglow
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
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AnnetteLouisan
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
I’m not laughing. Their situations are mostly very sad and I can’t help them. Some are on welfare. Some are facing significant downward mobility. Some live off social security. Some live in subsidized housing. Some went through bankruptcy and worse. Some will have to sell their homes. Recently one mentioned Medicaid to me and I was stunned (although perhaps they meant Medicare). I think we need more public service announcements about basic topics like this.

The one criticism that stung was that I had the wrong values- That I was “too into money,” or “cared too much about money.” Anyway, after a bunch of this and related comments I found other friends and stopped discussing it. That’s why it has been such a relief and joy discovering this forum.

Ps- forgot to mention, some actually married or let their boyfriends move in partly due to cost sharing promises and then had even more issues in the divorce and attempted eviction of someone who now had rights to live there…

My friends who did well mostly had parents who guided them.
Last edited by AnnetteLouisan on Sun Oct 02, 2022 8:55 am, edited 4 times in total.
strummer6969
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by strummer6969 »

I'll just leave these links here. You can connect the dots however you wish. You and I, my friend, are just cogs in a machine. Don't look down too much on your coworkers.

https://www.bls.gov/charts/employment-s ... n-rate.htm

https://www.cnbc.com/2021/12/01/ceos-an ... stock.html (Dec 2021)
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by jebmke »

alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by noco-hawkeye »

I too avoid these conversations. However - the average 401k balance is for ages 55-64 is $232,379 according to google. With that little saved by so many - it could be practically tax free. (which could be the bigger problem)
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AnnetteLouisan
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
Yep. Very true. But I also don’t give any indication anymore about my finances. I stopped all mention of my salary around 1996. I look like I make around $70k and have $175k saved, and that suits me fine.
Last edited by AnnetteLouisan on Sun Oct 02, 2022 8:19 am, edited 1 time in total.
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alpenglow
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

AnnetteLouisan wrote: Sun Oct 02, 2022 8:05 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
I’m not laughing. Their situations are mostly very sad and I can’t help them. Some are on welfare. Some are facing significant downward mobility. Some live off social security. Some live in subsidized housing. Some went through bankruptcy and worse. Some will have to sell their homes. Recently one mentioned Medicaid to me and I was stunned (although perhaps they meant Medicare). I think we need more public service announcements about basic topics like this.
I'm sorry to hear that. Situations like the ones you describe are no laughing matter. Luckily, the folks I know that poke fun at my ways will be just fine.

As a teacher, I completely agree with your last statement. A quality curriculum in personal finance should be required for graduation. And none of that "Stock Market Game" nonsense.
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alpenglow
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
That's why the older I get, the less I reveal about myself. I wish I was more tight lipped when I was younger. Even so, family and friends would have no idea of our net worth.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ed 2 »

I don’t avoid conversation with my coworkers or anyone who is asking me . On all worrying questions “when to invest in to equity’s “I start with one question: “ do you invest into equity’s based on potential recession numbers companies report if you want invest long term? “ After this question they start to think. This kind of conversation I don’t avoid, why should I ? Do I have something to hide?
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by harvestbook »

Nobody I know talks about money. Most don't have enough extra to worry about this stuff.

Very rarely a family member will ask something, knowing I at least have read about some basics and seem to be doing okay (although I have a reputation as a "cheapskate" among people who can't or don't manage money at all). The only advice I ever give is "If you buy stocks, buy the total market index and try to never ever sell."

My daughter did want to go a little deeper but isn't ready for complexity. She just started her career and set her 401k to a target date fund and I just said "You've won the game. That's all you need to do." I did mail her a copy of "Your Money and Your Brain," since I believe the behavioral aspects of money are far more important than market technicalities.

While i wish everyone security and stability because that enhances my own, ultimately the mistakes of other people benefit me...as long as I don't make them.
I'm not smart enough to know, and I can't afford to guess.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by stoptothink »

alpenglow wrote: Sun Oct 02, 2022 8:20 am
jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
That's why the older I get, the less I reveal about myself. I wish I was more tight lipped when I was younger. Even so, family and friends would have no idea of our net worth.
Yup. I was probably pretty evangelical about saving and LBYM (not so much investing) when I was younger, but over time I've discovered who I can and cannot have these conversations with. The only people who now know anything about our financial situation (NW, income) are the strangers on this board, my best friend (a banker, very boglehead mindset - heck, he might be on this board), and my parents (because they have asked us for help, been willing to learn, and have drastically changed their financial situation the last ~5yrs). It took my wife some time to realize that nothing good came from talking about our financial situation with family and friends that have a different perspective.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.
Whenever my university has such an event, I go there for a nice meal. However, to the university credit, they don't invitr people who do a hard sell, most people they invite talk about reasonable stuff and just give us their contact info.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by strummer6969 »

harvestbook wrote: Sun Oct 02, 2022 8:27 am Nobody I know talks about money. Most don't have enough extra to worry about this stuff.

Very rarely a family member will ask something, knowing I at least have read about some basics and seem to be doing okay (although I have a reputation as a "cheapskate" among people who can't or don't manage money at all). The only advice I ever give is "If you buy stocks, buy the total market index and try to never ever sell."

My daughter did want to go a little deeper but isn't ready for complexity. She just started her career and set her 401k to a target date fund and I just said "You've won the game. That's all you need to do." I did mail her a copy of "Your Money and Your Brain," since I believe the behavioral aspects of money are far more important than market technicalities.

While i wish everyone security and stability because that enhances my own, ultimately the mistakes of other people benefit me...as long as I don't make them.
Yep. I spent a lot of time learning, and I'll be helpful to a point even with friends/family. If it doesn't work out in the short term, I don't want to hear it. You've got to figure it out yourself.
Last edited by strummer6969 on Sun Oct 02, 2022 8:53 am, edited 2 times in total.
student
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I would say this is beyond the problem of financial literacy, they don't know basic math.

Joke: Maybe they were thinking about purchasing power or the amount after banking fee...
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by PersonalFinanceJam »

I think it's unfortunate more people are not willing to have these conversations. They can be done without going away all of your net worth figures or deep personal details. That said, it also doesn't mean that the people you talk to will want to fully engage or take your advice. That's ok. It took me a little bit to realize I shouldn't feel completely dejected if someone doesn't see the Boglehead thoughts on saving and investing as self evident as I do.

I have had small conversations with co-workers and family. I have purchased books for some or passed on other articles to others. Some have engaged further, many have not. One became a true Boglehead, a couple others at least started saving a bit more into their company plan. Most didn't do anything.

Small incremental change is the way I see it.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ron Ronnerson »

student wrote: Sun Oct 02, 2022 8:37 am
Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.
Whenever my university has such an event, I go there for a nice meal. However, to the university credit, they don't invitr people who do a hard sell, most people they invite talk about reasonable stuff and just give us their contact info.
The ones I’ve gone to (at the elementary school where I work) have not been hard sells either. The reps often make sales without having to be pushy as people practically sign themselves up. The products being sold have high fees. The presentation almost always comes with a “free” lunch.

Our union has also organized events where the presenters advocate investing in low cost index funds. No lunch is provided.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
Yes. No winning. Sometimes, I feel low-mid income savers are getting the short end of the stick. Imagine the following situation where both persons earn the same amount of money.
1) Spends everything and enjoys life when young, at retirement rely on social security.
2) Makes sacrifices on comfort and enjoyment when young, at retirement cannot fully receive the reward because social security is being mean tested. (I know the mean tested ss is a speculation and I do not want to discuss further because it will violate forum rule.)
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by RadAudit »

upstate90 wrote: Sun Oct 02, 2022 12:56 am how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a ... family member, how much effort do you put in to trying to explain, or teach them things that could help them?
Every day and not much effort. DW (71) doesn't care. Neither do the kids. (DD 42, DS 37). So, I gave up forwarding them info from this site and others, except for Humble Dollar.

Instead, I left a note for them in my IPS to be read after my demise. " I had it. You got it. Stuff's in the drawer. Good luck." For the grandkids, I left a note to be read at some time way into the future "If you don't get enough of my inheritance from your parents to go where you want to go and do what you want to do as long as you want, ask them what they did with it."
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by jebmke »

student wrote: Sun Oct 02, 2022 9:07 am
jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
Yes. No winning. Sometimes, I feel low-mid income savers are getting the short end of the stick. Imagine the following situation where both persons earn the same amount of money.
1) Spends everything and enjoys life when young, at retirement rely on social security.
2) Makes sacrifices on comfort and enjoyment when young, at retirement cannot fully receive the reward because social security is being mean tested. (I know the mean tested ss is a speculation and I do not want to discuss further because it will violate forum rule.)
I try not to worry about things I can't control. It has saved me an immense amount of time over the decades and probably made the difference between success and failure in my career.
Stay hydrated; don't sweat the small stuff
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

jebmke wrote: Sun Oct 02, 2022 9:10 am
student wrote: Sun Oct 02, 2022 9:07 am
jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
Yes. No winning. Sometimes, I feel low-mid income savers are getting the short end of the stick. Imagine the following situation where both persons earn the same amount of money.
1) Spends everything and enjoys life when young, at retirement rely on social security.
2) Makes sacrifices on comfort and enjoyment when young, at retirement cannot fully receive the reward because social security is being mean tested. (I know the mean tested ss is a speculation and I do not want to discuss further because it will violate forum rule.)
I try not to worry about things I can't control. It has saved me an immense amount of time over the decades and probably made the difference between success and failure in my career.
I don't think about it much because it is beyond my control. I do regret that I did not spend enough money when I saw young. Apart from visiting family and a few quick weekend trips (driving distance), I did not take "real" vacations until I was after 40. In my early years, every purchase required careful analysis. As I get older, I cannot do stuff that I could do when I was younger.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Florida Orange »

student wrote: Sun Oct 02, 2022 8:48 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I would say this is beyond the problem of financial literacy, they don't know basic math.

Joke: Maybe they were thinking about purchasing power or the amount after banking fee...
Haha! Very funny! But I think the point was you don't have to do any math. You just have to know what interest is.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

Florida Orange wrote: Sun Oct 02, 2022 9:33 am
student wrote: Sun Oct 02, 2022 8:48 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I would say this is beyond the problem of financial literacy, they don't know basic math.

Joke: Maybe they were thinking about purchasing power or the amount after banking fee...
Haha! Very funny! But I think the point was you don't have to do any math. You just have to know what interest is.
Right.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Triple digit golfer »

At 37, I've learned by now to avoid them. When I was younger and less mature, I would engage. Now, I avoid these types of conversations. People often ask me for advice and even then I don't give much because my experience is that people don't really want advice, they want confirmation bias.

A perfect example is my single, no kids friend asking me about paying extra on his 2.5% mortgage vs. investing. He is a saver, which is the most important thing, but he listens to Dave Ramsey and thinks Dave is the supreme authority on all financial issues. I told him that I wouldn't even consider paying extra on a 2.5% mortgage until all tax advantaged retirement accounts are maxed out. He asked what the max was and I told him the numbers for 401(k), IRA, and HSA. This is a guy who makes maybe $70-80k and he was appalled at the high amounts. How is he supposed to max those out?!?!?!

Never mind that I didn't say he should. I said he should prioritize doing so before paying extra on the mortgage, meaning, in his case, don' t pay extra on the mortgage because you're giving up valuable tax-advantaged space to do so. He brushed it aside.

So, instead, he's putting enough to get the company match on his 401(k) and every extra cent is going to the mortgage. So be it. At least he's not spending it on hookers and booze.

I've had worse conversations than that with co-workers close to twice my age in the past. A few years back a guy came to me somewhat angrily with his pay stub, asking why so much tax was withheld for his bonus and demanding a refund. After I explained that I'm not in Payroll or HR and have no control over withholding rates anyway, he said he's being penalized for getting a bonus instead of having it in his regular salary. I tried explaining that he'll get it back when he files and that he could adjust his regular withholding to even things out so that he can be paid more throughout the year and get a smaller refund, he didn't want to hear it and said that his refund is he and his wife's vacation money. So, quite hypocritical besides being illogical and unwilling to even consider that he is not 100% correct.

This is one example of many I've had. I should have just told the guy to talk to Payroll. If I was in Payroll I'd probably tell him those are the rates, talk to his accountant.

Not worth it.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.

I had a coworker ask me to explain the fiduciary rule and why her adviser was asking her to sign a waiver of it back 5 or 6 years ago. It was very clear the coworker didn’t understand it, and her adviser said the waiver didn’t matter, so as a last ditch I said, “if it doesn’t matter, why was the industry fighting it so hard and why is the administration so insistent on implementing it?” That clicked for the coworker and she let the waiver deadline pass without signing it (even though I don’t personally care about the fiduciary rule and think it ties advisers hands too much).

But overall I don’t discuss $ anymore with anyone. I also don’t offer help / loans / etc even when I could help and I know they are struggling. Many people I know and helped in 08 have ugly attitudes about it derived from their families, background and experience, so I don’t poke the bear. Also as you all know I have a lot to learn myself.

“It is far easier to fool a man than to convince a man he has been fooled.”
Last edited by AnnetteLouisan on Sun Oct 02, 2022 9:57 am, edited 3 times in total.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by JoMoney »

upstate90 wrote: Sun Oct 02, 2022 12:56 am...
I (32) had a conversation with two co workers the other night (63&52) about recent market volatility and our 401ks etc. During the conversation I realized that both were of the opinion that 401k money was completely tax free after age 59 1/2. (they definitely don't have Roth based on the look on their faces when I asked). I informed them that only applied to the 10% early withdrawal penalty and a few other very specific circumstances. After some (friendly) arguing I finally just googled it and showed them. I was very surprised that something so basic (I thought anyway) wasn't even known to someone (the 63 year old) who plans on retiring in a couple years and a 52 year old who should at least be planning and thinking about retirement...
Without knowing their specific tax situation, and withdrawal plan it very well could be "tax free".
A single person gets a $12,950 standard deduction, $25,900 for a couple filing jointly, before any taxes are owed. Social Security can be tax free as well if at a lower income.
Presuming a married couple and a 4% withdrawal rate / 25x $25,900 = $647,500 , that's more than most have in a 401k
https://www.forbes.com/advisor/retireme ... ce-by-age/

If they have more/taking larger withdrawals, the 10% & 12% tax brackets will take a good bit more to fill up, and while it's not "tax free", it isn't as burdensome as the 22%+ brackets, and they won't have Social Security/Medicare taxes on retirement income.
Last edited by JoMoney on Sun Oct 02, 2022 9:54 am, edited 1 time in total.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by coachd50 »

Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am

Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.
As a teacher (elementary school) I have seen the same and felt the same. The most frustrating thing for me is not that they the feel the person who brought in the sandwiches has good intentions, BUT that most believe that the school system would not bring someone in to them if it wasn't in their best interest.

My district's "benefits people" charge about a 1.5% fee on top of the fund expenses to operate 403b and 457b plans. They get invited in every year. The infuriating part, and what nobody knows (I didn't until a few years ago, 15 years into service when I finally really dug into it) is that employees can deal directly with the Louisiana deferred compensation plan. I missed out on 15 years of tax deferred space!!

So I do open my mouth a bit when it comes to this.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Triple digit golfer »

AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.
Same. I'm thankful that I'm fortunate not to be in that situation and educated enough to not get in that situation in the future.

I think my neighbors and some family members might think we are not doing great. We drive 10 year old small/average sized cars, don't wear expensive clothes, buy a lot of store brand food and don't go on expensive vacations. We're fine with that. In reality, we're worth 7 figures and doing quite well, still saving 35-40% and my wife is able to stay home and will likely soon either do something part-time or just be a full time room mom and help out at the school for our young daughter. That's the flexibility that living in a "small" house (as one friend couple calls our 1,900 square foot house) and being diligent with money will give you! People are always surprised when we sort of shrug when they ask if my wife is going back to work once our daughter is in school full time.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.
I once mentioned that my paycheck hits my Fido CMA account a day early. There was a lot of interest. Again, me talking when I shouldn't.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

coachd50 wrote: Sun Oct 02, 2022 9:54 am
Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am

Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.
As a teacher (elementary school) I have seen the same and felt the same. The most frustrating thing for me is not that they the feel the person who brought in the sandwiches has good intentions, BUT that most believe that the school system would not bring someone in to them if it wasn't in their best interest.

My district's "benefits people" charge about a 1.5% fee on top of the fund expenses to operate 403b and 457b plans. They get invited in every year. The infuriating part, and what nobody knows (I didn't until a few years ago, 15 years into service when I finally really dug into it) is that employees can deal directly with the Louisiana deferred compensation plan. I missed out on 15 years of tax deferred space!!

So I do open my mouth a bit when it comes to this.
As a teacher, I have been vocal about using the low-fee NYSDCP 457 Plan as compared to the expensive 403b options. Unfortunately, most folks have never heard of it because no one is marketing it to them (no incentive to market this!).
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Cheez-It Guy »

Ari wrote: Sun Oct 02, 2022 5:12 am I live in Sweden and the investment knowledge here is generally a lot less than in the US (though it’s also a lot less complicated, tax-wise). Before I started researching this stuff at the age of 30 I didn’t know stocks went up over time. I talked to a colleague a few years ago who also had this belief and said that the Swedish market had just about broken even since 1980. I showed him a graph and he questioned where the data came from.

On the other hand, I have talked to my boss about investments and she started buying stocks. She has some individual stocks for fun, but most of her regular investments go into a cheap global index fund. So while I totally understand the “It’s not worth it” sentiment, it can also be very rewarding. Had I not talked to her about this and helped her open a brokerage account, she might have had a much poorer retirement. She’s ten years my junior, so she still has a lot of time to build up her assets. It’s nice to help people.
This is interesting, but have you lived in the US to form these opinions firsthand, or are you drawing general conclusions about US financial knowledge from Bogleheads? The posters here are certainly not a population-representative group.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

Triple digit golfer wrote: Sun Oct 02, 2022 9:56 am
AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.
Same. I'm thankful that I'm fortunate not to be in that situation and educated enough to not get in that situation in the future.

I think my neighbors and some family members might think we are not doing great. We drive 10 year old small/average sized cars, don't wear expensive clothes, buy a lot of store brand food and don't go on expensive vacations. We're fine with that. In reality, we're worth 7 figures and doing quite well, still saving 35-40% and my wife is able to stay home and will likely soon either do something part-time or just be a full time room mom and help out at the school for our young daughter. That's the flexibility that living in a "small" house (as one friend couple calls our 1,900 square foot house) and being diligent with money will give you! People are always surprised when we sort of shrug when they ask if my wife is going back to work once our daughter is in school full time.
Same here. We all look like we earn maybe 40-70k but we are all millionaires. My richest family member got a tip once and a stranger paid for his gas at the pump once. He was cheered by the friendliness but amused as well.

Someone paid my bus fare once unasked and tbh I was a little shocked. I don’t look rich but I was dressed neatly and I don’t think I look like I need $1.75 from a stranger… but it was a nice gesture that I remember.

:shock:

My favorite quote from a friend: “I KNOW ya got money. I never hear you complainin’ about no bills…”
Last edited by AnnetteLouisan on Sun Oct 02, 2022 10:06 am, edited 1 time in total.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

AnnetteLouisan wrote: Sun Oct 02, 2022 10:02 am
Triple digit golfer wrote: Sun Oct 02, 2022 9:56 am
AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.
Same. I'm thankful that I'm fortunate not to be in that situation and educated enough to not get in that situation in the future.

I think my neighbors and some family members might think we are not doing great. We drive 10 year old small/average sized cars, don't wear expensive clothes, buy a lot of store brand food and don't go on expensive vacations. We're fine with that. In reality, we're worth 7 figures and doing quite well, still saving 35-40% and my wife is able to stay home and will likely soon either do something part-time or just be a full time room mom and help out at the school for our young daughter. That's the flexibility that living in a "small" house (as one friend couple calls our 1,900 square foot house) and being diligent with money will give you! People are always surprised when we sort of shrug when they ask if my wife is going back to work once our daughter is in school full time.
Same here. We all look like we earn maybe 40-70k but we are all millionaires. My richest family member got a tip once and a stranger paid for his gas at the pump once. He was cheered by the friendliness but amused as well.

Someone paid my bus fare once unasked and tbh I was a little shocked. I don’t look rich but I don’t think I look like I need $1.75 from a stranger… but it was a nice gesture that I remember.

:shock:
Is this recent? For the past few years, there is the trend of paying it forward, that people just pay for strangers. Some youtubers do it and post on youtube.
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