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Financial musings

I read the other day that Warren Buffett, the world's second richest man, started investing when he was 11. This didn't interest me nearly as much as the fact that he purchased his first farm at the age of 14, with money he made delivering newspapers. Now, I delivered newspapers for most of the little town I grew up in. I did this for seven years, which is a long, long time when you start at 11 years old, and don't stop until you graduate high school. By my best estimate, over those seven years I made about $3600. Even if I delivered newspapers for seventy years, I would never have been able to afford to do such a thing.

It used to be that an immigrant could come to the United States and start working right away - honest, hard work, say as a grocery store clerk - and after three or five or seven years, he could have saved up enough money to buy a store of his own and go into business for himself. Say a person today started in the same fashion - let's even say he's making much more than your typical retail worker - maybe $12 an hour. He never misses a day, he always works full time. He doesn't make much, so taxes don't take out too much - about 8%, according to a federal tax estimator. Say he doesn't live in a state with income tax, say he rides his bike to work, never gets sick, his clothes never wear out, he doesn't wear glasses, he eats rice and beans to the tune of about $30 a week for food, and he splits an apartment with four other people for about $200 a month. That's about $19,000 left at the end of the year! Joy! But wait... depending on where you are and how big it is, a grocery store will run you somewhere between $300,000 and a couple of million dollars! At the lowest end, it'll take you almost sixteen years of penny perfect savings just to get the property, and then you're left with nothing to actually start and run the business. That's also provided the price of the business doesn't go up faster than your wages. Realistically, working hard from the bottom rung will never, ever, ever get you anywhere.

Comments

( 9 whispered thoughts — leave your dreams behind )
cetriya
Dec. 18th, 2010 11:06 pm (UTC)
definitely not in this time, rarely do I see retail works moving up in rank just cause they worked for so long. the most is be coming a supervisor.

Its all in what you know, who you know, and how you work your resources (besides toling away day in and day out at some 'job')
ghostfire
Dec. 20th, 2010 07:43 am (UTC)
Sadly, if you're at the bottom, everyone you know tends to be at the bottom too. Even at the crappy retail jobs I worked, I saw managers being hired from outside when there were workers who had been there for years. I wouldn't call retail managers much better than bottom rung, though.
goodbyebartleby
Dec. 18th, 2010 11:24 pm (UTC)
Corporations have proven to be the death of democracy, self-sufficiency, the environment, upwards mobility, creator ownership, the media, jelly beans, and the moon. But at least they let us buy cheap underwear.
zahdi
Dec. 19th, 2010 10:34 am (UTC)
I like this comment.
ghostfire
Dec. 20th, 2010 07:37 am (UTC)
Time to start knitting my own underwear. :P

It is sad, though. Our society depends on its inhabitants being human beings with a moral compass, in addition to enough intelligence to follow basic rules. Now, we've given too much over to corporations - given them rights, as if they were people, but the only direction they face is towards money, and fast money at that, damned be the consequences.
zahdi
Dec. 19th, 2010 10:38 am (UTC)
Yeah... things today cost a lot more than they did when Warren Buffett was growing up. Have you ever seen Michael Moore's "Capitalism: A Love Story?" He talk some about how his family had the ability to have tons of savings when he was growing up, to buy homes and new cars whenever.

There are other things that go into it of course, from government aid (which people did get in the 1950's - grants to buy homes from the US government) to family aid.

Who taught him how to invest? for example. Who started up his fund or helped him along the way?

Nowadays, those sources are mostly cut off from us... the government doesn't readily help people anymore and the families that are in the know are by and large not the ones that are connected to the families that need to know .... which is probably a much larger number than it was 60 or 70 years ago.
ghostfire
Dec. 20th, 2010 07:34 am (UTC)
I haven't seen that one, but it's on my list to check out. It's disturbing to see society stratifying back to the point where it was 120 years ago.
ramothhe
Dec. 19th, 2010 09:36 pm (UTC)
Realistically, working hard from the bottom rung will never, ever, ever get you anywhere.

It is too true. My great grandparents actually started a potato farm and a potato chip company out of nothing and actually grew to be quite financially successful- but you really don't see that kind of thing anymore..
ghostfire
Dec. 20th, 2010 07:33 am (UTC)
I'd love to be able to buy a little farm, but a tiny farm property, even in the sticks of Pennsylvania, is several hundred thousand dollars. If someone doesn't start with family and connections to get a boost, it seems like you have to work your whole life to get to the point where people could get in just a few years, a couple of generations ago.
( 9 whispered thoughts — leave your dreams behind )