\ndividend-paying healthcare or life insurance policies
\nInsurance Savings accounts (like for healthcare costs or car insurance costs, legal in some states)<\/td>\n | mandatory non-dividend-paying car or health insurance<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n The real test of where you are poverty-wise is whether you can afford to have any rich-people money. There are certainly plenty of barriers to entry — the primary of which is a relatively massive lump of money you can leave lying around without needing to spend it. Here are examples:<\/p>\n \n- The minimum balance for an interest-bearing checking account<\/li>\n
- A savings account with no service charges that would cancel out any interest earned<\/li>\n
- A downpayment for a car or a house<\/li>\n
- Equity (value above the remaining balance due on your mortgage) in a house or property<\/li>\n
- A retirement account<\/li>\n
- A trust fund<\/li>\n<\/ul>\n
Many people, if not most, who currently have rich-people money received seed-money in a lump from a family that had enough rich-people money to be able to share some of it — and so far have managed not to squander it. Other owners of rich-people money budgeted for savings accounts and used that money to seed downpayments and minimum balances.<\/p>\n The largest barrier to transitioning from poor-people money to rich-people money is the ability to stop spending it all month-to-month, which is quite possibly the ultimate luxury in the current economy. The difference is really triggered by rich-people vs poor-people cash flow<\/em>, i.e., the ability to pay all of your existing obligations while still putting at least ten percent of your income into a savings account — or the lack thereof.<\/p>\nThere are very few barriers to transitioning to poor-people money from rich-people money. In fact, here are some relatively easy ways to cross the threshold downward:<\/p>\n \n- Spend or give away all of your rich-people money. (After all, it just seems like its sitting there doing nothing, right?)<\/li>\n
- Lose your rich-people money in a financial crisis, like:<\/li>\n
\n- a serious medical emergency that isn’t covered by health insurance<\/li>\n
- a sufficiently long spell of unemployment that forces you to spend your reserves<\/li>\n
- a crash in house values that makes your house more expensive than the cost of your mortgage (wipes out your equity)<\/li>\n
- become a victim of theft or arson (without appropriate insurance)<\/li>\n
- be forced to replace some destroyed large appliance, like a refrigerator, hot-water heater, central heat\/AC, or a necessary vehicle\n<\/li>\n
- suffer a divorce (with insufficient prenuptial armor)<\/li>\n
- bury a loved one (who died without appropriate insurance)<\/li>\n
- lose a law suit or have to pay a crippling fine\n<\/li>\n<\/ul>\n<\/ul>\n
Given the huge number of ways it is possible to lose all of your rich-people money (if you have any) or be prevented from saving enough poor-people money to use for seed, it would seem that the biggest factor in holding onto rich-people money is good luck. Or the absence of bad luck. Or generous wealthy relatives to lend you money to help with crises. Or enough rich-people cash flow to be able to afford a huge suite of insurance premiums. However, I am routinely informed that it is a skill.<\/p>\n Regardless, I strongly recommend that at the first opportunity you scale back your spending and expenses to be able to afford socking away ten percent of your income into an interest-bearing savings account and put the maximum amount you can afford\/legally invest (usually caps out at 15% pre-tax) into a Retirement Account. You may still have to dump it should a crisis occur, but at least you will have a cushion.<\/p>\n That’s all. Thank you for your attention.<\/p>\n [*]<\/p>\n","protected":false},"excerpt":{"rendered":" Just in case you’re having trouble telling the difference: Rich-People Money Poor-People Money living (grows) dead (decays) interest-bearing accounts (accounts that pay you to keep your money with them) checking w\/minimum balance savings trust funds IRA money-market non-interest-bearing accounts (accounts that CHARGE you to hold onto your money for you) checking w\/no minimum balance cash […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"footnotes":"","_jetpack_memberships_contains_paid_content":false,"jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[1],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1rL5j-49","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/posts\/257"}],"collection":[{"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/comments?post=257"}],"version-history":[{"count":0,"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/posts\/257\/revisions"}],"wp:attachment":[{"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/media?parent=257"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/categories?post=257"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/xal.li\/eri\/wp-json\/wp\/v2\/tags?post=257"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}} |