I am going to combine two different stories and explain why most people feel their are on an endless hamster wheel trying to get ahead in personal finance.
I like to read reddit every now and then so I came across this particular post and I’m quoting some of it below that got me thinking.
I don’t get it dude. I’m college educated, work a white collar job, I have 0 debt, I have a squeaky clean record, I’m not an asshole. Yet, while I’m not living in poverty, I cannot do anything in life.
No buying a house, no vacations, no eating out at sit down restaurants, hardly any savings to speak of, no video games, no drugs, no alcohol, no partying.
I literally spend a miniscule amount of money on non-essentials. Yet I can only put away a few hundred in the savings account per month. I drive a car with 300k miles. I live in a single bedroom apartment.
I don’t understand how people can survive in this economy, especially if they have a criminal record or have kids.
source: reddit.com
Later in the day, I came across this article about 3 friends winning $50 million in the lottery in Canada.
“My spouse and I both retired in January. That was an interesting conversation with HR,” said Wall. “They asked me ‘So, when are you thinking of retiring?’ and I said ‘In a week!’”
For Austria, the win meant an immediate five-week trip back to her home country, Chile.
“I couldn’t sleep,” said Austria. “My husband and I decided that right after we got the money we would fly to Chile for five weeks and forget about it. We just took off!”
source: Yahoo News
So what do these two seemingly unrelated articles have in common? Well it’s everything about why the ‘system’ is designed the way it is and what would happen if it ever changed.
Let’s start with the lottery winners. The first thing people do when they get huge sums of money is typically quit their job. The retirement ‘dream’ is to accumulate enough money so that you don’t have to work anymore, you just have money to compel people to be at your beck and call. Want something to eat? Well go out to a restaurant or order DoorDash and have it delivered to your home. Want a home cooked meal, just hire a chef if you have enough money.
Now what about the poor guy scraping by and not having any semblance of a good future? This person is angry, frustrated, and seemingly hopeless. The choices for this person are generally to double down and work harder at two or three jobs, perhaps go back to school and earn a college degree or different one or find a new job that pays more but all of those things simply change the location of the “hamster wheel” that this person will run in a loop until hopefully, one day the person has enough money to retire.
So what would happen if everyone won the lottery or everyone was paid enough so that they could save enough after 10 years that they then could retire early and live off their investments?
Who would do work?
It may seem like a trivial question but that is the core of why the current global economic system is based on never letting the vast majority of people accumulate enough wealth to ‘retire’ because if it did work that way, no one would work anymore. No one or very few would work farms, factories, distribution centers, retail centers, and all the associated jobs related to these activities.
Very few goods and services would be produced if everyone was retired so what incentives would people have to work?
Hunger? Yes, people would be forced to grow their own food or gather it from somewhere.
Shelter? Yes, people would be forced to go out an find shelter assuming their current home or dwelling got destroyed but over the long term, all dwellings need maintenance. Roofs don’t last forever so who would do roofing?
Water? Yes, people would need to be close to water after city water mains break and no one is around to fix it.
I could go on but it’s easy to see that society would fall apart with everyone one getting enough money. The system that exists whether by design or accident requires most people end up being on a hamster wheel for most of their lives. There is a correlation between wanting more stuff requiring more hamster wheel runners. Over the last few centuries different socio-economic systems have been tried from monarchies to feudalism to capitalism and socialism and we always end up back in the same place where the very few end up with a great deal and everyone else struggles.
It’s only the lucky few (lotto winners) or the exceptionally talented or those that can get by with much much less that end up escaping the hamster wheel financial paradigm.