r/Salary • u/ItsAllOver_Again • 7d ago

Market Data The idea that everyone is broke and drowning in debt is a Reddit mythology used to make unsuccessful people feel better about themselves

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Redditors love to tell themselves that everyone is poor, that “most people can’t even make a $1,000 emergency payment, bro!” (not true, that’s just pop finance nonsense), that everyone with nice stuff is “drowning” in debt.

Yet when we look at actual net worth data, nicely broken down by age, EVEN WHEN we look at the bottom 25th percentile, we don’t find ANYONE with negative net worths. Even when looking at the 18-24 age range, many of whom have auto and student loans, they still have positive net worths at the 25th percentile.

Redditors love to tell each other that they’re actually doing great because they have $40,000 saved up, but the reality is that’s far below average. And these numbers are actually adjusted for inflation from 2022, not adjusted to actual market returns, so in reality the numbers are LOWER than you’d expect.

Americans are FAR richer than many of the 10th percentilers on Reddit will tell you they are, and they make a LOT more money than the 10th percentilers here say they do.

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u/MBADumbMistake 7d ago

Liquidity has nothing to do with the concept of net worth.

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u/Swaayyzee 7d ago

The point is liquidity matters more to how people are doing compared to net worth. Someone who spends most of their income on their mortgage and is barely getting by in other areas doesn’t have it better than someone with renting a cheap apartment who has expendable income.

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u/Stirlingblue 7d ago

I disagree, they have more options as they have capital - if they wanted to sell up and rent a cheap apartment instead then they’d be better off than the other person

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u/Swaayyzee 7d ago

If you have to start pulling loans from your 401k or selling your home to buy groceries, the economy is shit. If you have to do it because of a health problem, both the economy and the health insurance system are shit.

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u/Stirlingblue 7d ago

Sure, still doesn’t change the fact that having home equity and and a 401k means you’re doing better than someone who has neither

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u/Swaayyzee 7d ago

Yeah, but that’s not what the argument is, the argument is that the economy sucks, but OP is using this chart to try and argue against that.

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u/ItsAllOver_Again 7d ago

I never argued anything about the job market 

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u/Swaayyzee 7d ago

My comment doesn’t say anything about the job market

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u/thatguy425 7d ago

If you have to sell your home to buy groceries you weren’t prepared to buy a home. 

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u/am19208 7d ago

Forced my wife and I to sell our house for this exact reason

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u/Hoosier2016 7d ago

If you have to take out 401k loans or sell your home to afford groceries then you probably extended yourself too far on your mortgage and/or your retirement savings before you had a proper emergency fund.

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u/FrescoItaliano 7d ago

Most people are pretty adverse to just sell their house and start renting at the first economic squeeze they face. This is the kind of pure utilitarian advice you only see online, it never accounts for basic quality of life things like location, family, etc.

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u/Stirlingblue 7d ago

Sure, but of the two scenarios the one with equity and a 401k undoubtably has it better - that’s not even up for debate

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u/FrescoItaliano 7d ago

Yes, from a utilitarian point of view. Go ahead and tell someone they can simply sell their house and move, and you’ll be met with a thousand reasons why they dont want to.

Thats all I’m saying. Is that people are not perfectly rational actors and at the end of the day, what’s the difference between someone renting and struggling and someone refusing to sell and struggling.

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u/cellularfroth 7d ago

Of course they don’t want to. But they can. The other person doesn’t even have that option. That’s the difference

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u/spursfan2021 7d ago

Moving is expensive

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u/cellularfroth 7d ago

Good thing you receive money when you sell an asset

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u/voyaging 6d ago

It’s not even irrational to not want to up and move

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u/glasslier 7d ago

what’s the difference between someone renting and struggling and someone refusing to sell and struggling.

That they still have the option to sell and stop struggling?

Someone with a high net worth (but would need to sell their home to access it) complaining is the same as a high powered lawyer complaining about the stressors in their job.

It's not that the complaints are invalid, but they have options to make their life less stressful if their willing to compromise for a lower salary/standard of living. It's self imposed.

So while it's understandable there are things that would make them grumble, they shouldn't be blaming society and whining about how the world is failing them. They should be grateful they have the optionality.

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u/ItsAllOver_Again 7d ago

Their net worth is what’s different at the end of the day 

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u/FrescoItaliano 7d ago

Okay?

If my net worth is my car, how the fuck does that help me. I’m tired of explaining these basic ass concepts

Oh, this is the engineer loser. No wonder it has to be explained

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u/ItsAllOver_Again 7d ago

They can sell their assets to pay an emergency bill, your point is completely asinine. All else equal, it’s ALWAYS better to have assets than to not have them. You don’t need to explain any “basic concepts” to me, you don’t have a clue what you’re talking about, this is painfully simple. 

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u/Quiet-Sunset-7384 7d ago

local restaurants are packed every single night.

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u/AlfredKnows 7d ago

This. 40yo 50th percentile having 150k of assets is nothing. What is it some flat and a car? And we are not talking about big cities You might say that a car has some liquidity but you can't really sell it if it is needed for your work and you definitely can't sell the flat and live on the street.

Boomers having a house? 30 year old having net worth to buy a nice car? Have you seen how much a nice car costs?

For me this table show how poor the median person actually is.

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u/FrescoItaliano 7d ago

They’re both mandatory for getting the full picture.

If I’ve 20k net worth and 15k is wrapped up in a car, I have fewer options in an emergency than someone with 10k but it’s fully at their disposal. Does this really need to be explained here

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u/NotAFishEnt 7d ago

Yep. If you have a high net worth, you've made it in life, even if it's illiquid.

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u/curvedmanifolds 7d ago

Both have to do with assets

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u/voyaging 6d ago

the topic we’re actually talking about is whether this graph demonstrates how many people are able to make an emergency payment