Decluttering - The Rich Person's Privilege
Paradox of Poor People Purchasing More Products
“A person making $30,000/year can become a millionaire.
A person making $200,000/year can be living paycheque to paycheque.
It’s what you do with your money that will make all the difference”
-Twitter Personal Finance Gooroo
Bad financial takes like the one quoted above are rampant on twitter. Fake personal finance gooroos will tell you that even on poverty income, you can be a millionaire.
You can’t.
I repeat. It isn’t happening.
No one making $30,000 a year for life will be able to turn that into a million (unless they win a lotto - hence why gooroos are wrong about the lotto too).
Get Money
But don’t take this harsh truth as a negative. This is empowering. You no longer need to waste years living like a miserable pauper thinking if you just save $1 more a day you will hit that 7-figure retirement. You can now pivot to something that can work. Because there is atleast a dozen reasons why the intro tweet is wrong.
My biggest issue, tweets like this cause harm to anyone that listens. If you make $30k a year, you have no business investing. You should spend all your capacity and energy getting your cashflow up to 6-figures.
There are numerous resources out there to help you get side income. That isn’t what I am going to address. I am going to address the fact that the gooroo above has clearly never been poor. Anyone who has spent time living at the poverty line knows $30k is leaving no room to invest, even if you wanted to.
“But F’er, my favorite twitter gooroo says they only spend $10,000 a year and invests the differences. If they can live a $10,000 minimalist life, poor people can too!!!!”
Wrong.
Living frugally and decluttering is a rich person luxury. In one of life’s great ironies, you need to be rich to live a minimalist life.
A person making $200k can live a less expensive life than a person only making $30k a year. The richer you are, the less money you can choose to spend over your lifetime…
(The trade-off, when you have money and live minimalist you won’t shut up about it. No Janice I don’t care that you live in a 400 sq ft house out of choice. It’s not impressive when people have families in 400 sq ft out of neccessity)
Don’t believe me? Read on
Disclaimer:
Note - Before diving in, a disclaimer - if you are poor go get your cashflow up….read that again. If you aren’t at 6-figures, go find a way to get to 6-figures above all else. This post is going to go over the reality of being poor.
It is not justification for being poor.
It is not justification for you to go splurge on stuff you don’t need.
It is not justification to buy things you don’t need because “frugal mindset is for losers”.
It is not justification to embarrass yourself, family, and future bloodline by missing out on the best opportunity to gain significant wealth in the history of mankind.
Why Poors Can’t Afford To Be Minimalists
When you are poor, you are always 1 unexpected expense away from being rekted. The oft-quoted study that 63% of Americans can’t afford a surprise $500 bill is the perfect example of this.
Growing up, if ANYTHING unexpected popped up, it was time to start mailing in your checks ‘accidently unsigned’ to buy some time to the next paycheck.
“Exactly F’er,” you say to yourself, “so poors should live a frugal minimalist lifestyle. 1) Declutter. 2) Reduce multiples. 3) Repair Broken Items. 4) Quality Over Quanity. 5) Avoid Debt” (see this list. Now show it to a poor person and watch how hard they laugh at you).
These concepts are all Rich people luxuries.
Declutter & Reduce Multiples
Decluttering was a big trend a few years ago amongst upperclass people who wouldn’t shut up about Marie Kondo. “Look how much money I saved by organizing and decluttering”.
[Note - If you are a young single guy, you won’t get the Kondo reference. She got super famous for a while with women on decluttering and organizing. Imagine taking a 10x10 drawer and filling it with a bunch of 1x1 boxes each with a printed label and a separate item inside. Basically that…And if your first thought is “I can open my drawer and find what I want great now, why would I want to have to open a drawer, then read 100 labels, then open another container to get what I needed…yes completely impractical but looked great on the instagram]
When you have money and something breaks, you can just go buy a new one. Of course you can declutter. You don’t need multiples of items because you can just buy things that you need when you need it.
When your poor and something breaks, you can’t go get a new one. We had at least 3 old fuzzy and/or black & white TVs in our basement growing up. If anyone was moving or if there was a TV at the curb, we were picking it up to see if it worked. Why? If our TV broke it’d be months (if ever) before we would be able to get a new one. So you would go grab one of the extras downstairs and plug it in.
Similarly, there is a cost to get rid of some items.
Why is there an old refridgerator in the backyard? Because the garbage company is going to charge you to take it away. Better to just leave it out back (and at some point take the door off so the kids don’t die trapped inside it…maybe tomorrow). Unless you happen to live in/near a town with condos that have dumpsters & a few sons & a truck. Then you just do the 3am run to drop it off by the condo dumpster.
If you are rich and your fridge breaks, when you buy a brand new expensive one, the installers will take the old one away and its baked into the delivery price.
When you are poor, you are going to scratch and dent or good will and you are bringing it home yourself…aint nobody got a spare $150 for delivery. You aren’t paying utilities for a few months already just to afford this fridge.
[Note - Scratch & dent is where companies put damaged, returned, and/or floor items for discounted prices. Good will is where people donate clothes and appliances and you can buy used. Since some people don’t know.]
In Summary:
Poors can’t reduce multiples because you never know when something will break and you need a back-up
Poors can’t declutter because of clean-up cost, cost of organizers (see below), and smaller living spaces combined with the need for multiples
Repair Broken Items & Quality Over Quanity
“Buy quality items that last and you save money over the long-term”
Yes. But quality items cost more upfront. It is a paradox of being poor, you will spend more money over the long-term by buying cheap. However, you never have enough money in the short-term to buy quality.
The paradox of being poor: You will spend more money over the long-term by buying cheap. However, you never have enough money in the short-term to buy quality.
If you have kids you will instantly see it with kids clothes. We have some items of clothing that all of our kids have been able to wear. Nice, sturdy, high-quality baby clothes that they can crawl in and not get ruined. Some of these items we got as hand-me-downs from relatives. Over 5 babies have worn it and it still looks good.
We also have cheap kids clothes that get destroyed in 1 season on a single child. But guess what, the cheap clothes cost like 1/2 the price upfront.
An example of how this plays out in real life.
A quality outfits cost $10 outfits and a cheap outfit costs $5
A kid needs 5 outfits
A rich person buys 5 nice outfits at $50 for baby #1
A poor person buys 5 cheap outfits at $25 for baby #1.
Baby 2 comes and the rich person can use the same 5 outfits. Poor person needs to buy 5 more cheap outfits ($50 out)
Baby 3 comes and the quality clothes still last. Poor person buys 5 more cheap outfits and has paid $75. Poor person just paid 33% more money to cloth their kids.
Now take this and apply it to EVERY purchase. Over time it is more costly to buy the cheap items. But at every purchase point, the logical move is to buy the cheap item becuase you need it.
This also impacts the “repair things”. Poor people absolutely repair as much as they can. But cheap items break easier and are flimsy which makes it hard to repair.
Think about a solid, expensive, solid oak piece of furniture vs IKEA particle board crap. You can repair that nice antique piece of furniture. The cheap furniture likely broke because the particle board turned into sawdust. There isn’t repairing that. There is basically rebuilding it from scratch.
Summary:
You never have the money to buy quality, so you have to continually buy cheap products which leads to a higher expense over the long-term
Cheap products have a lower chance of being repaired when they break
Bonus: Poor Tax On Time & Energy Spent Being Frugal
Guess what other poor ‘tax’ there is. The one on all the time and energy spent trying to save $.
Spending time clipping coupons. Spending time driving to 3 different grocery stores for the best deals. Spending time to drive to the cheap gas station. Spending time walking around outlet stores where you never know if they have what you are looking for. Spending time trying to balance the timing of when your paycheck hits and the money gets withdrawn for bills.
There is a drain on your time and money when you are poor and trying to save money. Telling someone to ‘find ways to save more’ really means ‘spend more time not increasing cashflow’.
This is the spiral being frugral imparts on poor people. Taking all their time looking to save another $5 here or $10 here instead of looking to increase their take home.
Again, if you are wealthy and you ‘skip a luxury’ (like a coffee or a new gadget) that is very different than telling someone already jumping through hoops to ‘find $5 to save’. It is such a fundamental misunderstanding.
Avoid Debt
Let’s say you are poor and you listened to your gooroo who told you to not have a credit card and avoid all debt. Let’s even go as far to say you skrimp and save and pay cash to get a beater car to avoid a car loan. You rent your house. You didn’t go to college so no student loans…(which actually may be a good decision since college literally preys on poor kids)
Then tragedy strikes and you have a big unexpected expense. You need to take a personal loan.
Yea, you f’ed.
Look at the tweet below with an offer from SOFI for personal loans. The median (average) loan they made in 2021 was 11.66%.
11.66%
Interest rates were sub 3% for the year. Do you know what the lowest personal loan rate is? Around 5%. I went through and the preliminary rate estimate for me was 5.15%. More than half of the average loan people had to take.
If you been living the gooroo recommeded lifestyle of no credit cards - Lord help you if you need a loan. You are paying 11.66% for a personal loan.
Even worse, you can’t even use my recommeded infinite debt cheat code because with no credit history, you can’t get a good credit card either.
Avoiding all debt is a great rich person luxury. You have savings to dip in and never NEED to access the credit market. Poor people should be building a credit history and responsibly handling their debt in order to not be screwed if they ever NEED credit.
However the catch-22 is once you need to take a loan or put money on a credit card for that one-off unexpected expense, it doesn’t change your day-to-day cost of living when poor. If you didn’t have the ability to save some money before the surprise expense, you won’t have money to pay the loan back after the surprise expense. Poor people are likely stuck paying the interest on their loans.
This makes it all the more imperative to have low rates available when they need it.
Poor people don’t all have debt because they are buying flex items (granted, some do, but its a visible minority IMO). They have debt because one or two unexpected items popped up. And then because of no credit history, they are stuck paying loan shark rates on it making it impossible to get out of it.
A common problem is with cars. Avoiding a car loan because ‘debt bad’ means poors buy a crappy beater car. But their beater car keeps breaking down, which means they can’t get to their job. Not working means they can’t get money to fix their car. On and on. If they had credit history and got a slightly more expensive but reliable used car on loan they would be much better off long term. (Side note - beater $2,000 cars are another great example of the poor tax. People put in $100s-$1,000s a month just to keep it running. Just like the baby clothes example above, over a 10-year period owning beaters will cost you more.)
Summary: Why Minimalism Is a Rich Person Privilege
Who is this post for?
To be honest - this one is more of a stream of conscious rant.
Too many gooroos are telling people that you can get rich on $30k by investing a bit. Some even go so far as showing math that on the surface looks acheivable. And honestly it is harmful to any follower who believes it. However, it show a complete misunderstanding what being poor is like.
If you make $30k a year you aren’t getting rich (from investing excess income). Life has way too many bumps and the cost of trying to be more frugal will leave you worse off than going and getting more cashflow.
This shouldn’t be seen as a negative message though.
Instead of wasting years trying to be extra frugal and saving and skimping to your "$1,000,000”, you now know its impossible. Now you can spend your time better with the following 3 steps:
Get your Cashflow up
If you aren’t over 6-figures, that should be all your focus. If you don’t know how to make ‘wifi’ money, go hit the pavement old school. People are making $10k+ a yr cleaning windows one day a month. Also this:
2. Get Your Cash Flow Up
Genuinely, if you don’t have 6-figures this is your only focus. Worth repeating.
3.Are you on pace to have at least 6-figures coming in? Look to Refinance your debt and invest excess now
Now that you are making a respectable income, look to refinance debt and invest (Read more about “Should you pay down your debt in high inflation environment”).
A higher income should help you get a better rate on any refinance
Consider pushing all your maturities out as far as reasonably possible
You can always pay more than the required payment to pay down a loan faster
Pushing the maturity out lowers your required payments giving you flexibility for any unexpected expenses
Start investing your excess cashflows
At today’s inflation rates it might make sense to pay the minimum on loans
When investing has a good risk/reward it might make sense to pay minimum on loans
Currently you can earn almost 20% on stable coins
There you have it.
Gooroos who never been poor should stop misleading people about the ability to invest and live on little money
Followers shouldn’t believe they can be rich by being frugal on a small income
Get your income & cashflows up, then look to refinance your debt, then look to start investing your excess cashflow
Sounds about right. Shopped at the outlets frequently for sneakers and other items. People also take knowing their credit history for granted. Back in the day (I forget when they changed the laws to make credit info accessible, 90s?) the banks kept all that info hidden from you. If you were poor, you really had no way of knowing what was even on your credit report.
Great post. Yes, nobody should be investing on 30K. Get your income up. I'd even argue there's a difference between investing and degenerate gambling.
Keep it coming.