My last post was xposted with David. In reading what his friend had to say, it's clear that he's defining "savings" differently than I was, and that we were arguing sideways. I have no problem with investing in any fairly readily accessible way instead of keeping cash on hand, although I'm paranoid and lazy enough that I don't do that. And I don't have any problem with having credit. Instead, I'm concerned with the increasing reliance on credit card credit, which is not practical or reasonable for non-wealthy people. Since, I don't think your friend was arguing for using credit card debt instead of saving, but for investing instead of saving, nebbermind.

Let me posit it this way, because this is something I personally understand better.

When you play the game of Monopoly you quickly learn that you need to buy properties and develop them in order to win. Because as much money as you stockpile, and as much as you generate a regular income by passing Go, you will quickly fall behind compared to investing your money.

There is risk involved in taking your cash and buying hotels. You have to be cash rich enough to do it and survive your costs. However, if you don't invest your money you will lose.

It's just that notion. That savings in that context provides an illusory sense of security. You have to make your money work for you.

Here's another angle on it: one of the inefficiencies in the market that money managers exploit is that people are fearful and don't understand how finance actually works. Savings is how people respond to their insecurity about not understanding finance.

Mind, I say all this as somebody whose finances suck. So, it's not like I've sorted all this out personally either.

But I think the principles of finance are logical, and how people feel about risk is not.

Here's another angle on it: one of the inefficiencies in the market that money managers exploit is that people are fearful and don't understand how finance actually works. Savings is how people respond to their insecurity about not understanding finance.

Oh, I understand how finances work. I may not always do what I should, or rather as much as I should (again, Lazy), but I do understand them. I also understand that having some extra money available in addition to having investments works for me indivdually because of other factors that other people may not have.

I wonder what the rate of return would be on investing in workers seizing the means of production and smashing the state....

I suppose the risk involved would be pretty high....

Another element of his argument which I'm not doing justice to is simply that people already have invested in various Emergency Funds that they don't think of as an investment because it is insurance, or taxes on unemployment or disability etc. This is actually a fairly significant part of his argument, that people don't see/understand that they've already invested in an emergency fund and it's called insurance.

Now I've read ( well skimmed) What Gary said. Logically - his idea works for someone like me - DH and I have a house, some retirement, some other investments. DH had an opportunity to move some $$ into a higher yield account - but it could take over a week to get to it - I said go for it.

Now , I know other people that 1) have no investments 2) no house 3) no or little retirement -

they could use some saving - just so they can live in the no job emergency zone.

I have a pretty severe money fear. Logic is actually making me rethink things . Can I go as radical as no savings - probably not. But I think I can get way more radical with paying things off. After April. Just in case the bullshit with Matt's 401k comes back and tries to bite us in the ass.

Der. I'm with those that didn't realise the precise argument. I should invest, but it would require paying attention.

I don't mean to be ornery, but relying on insurance seems less secure to me, of late, as well.

I'd be more interested if I weren't in the Snot Boogie income bracket.

1. Who actually plays Monopoly long enough to lose? I always got bored before it got that far.

2.

(Too dripping with sarcasm? I just cant help myself.).

You are right: your friend's manuscript positively screams its douchebaggery. Please tell me it has never been published.

3. Your friend appears to assume that everyone on the planet is nimble and logical in their financial dealings, which is demonstrably untrue. The emotional exaggeration of risk is a nice, built-in brake on the headlong self-destructiveness of the impulse-buy.

4. I think the object lesson of the last year's financial shenanigans has been: use undue credit in haste, repent at leisure. And, I mean, undue credit is like mold on cheese, these days. One might even call aversion to risk somewhat of a virtue, especially where house-flipping in South Florida is concerned.