Middle class - worse off than the numbers show

[werepossum]

And frankly nobody should really not be able to afford to eat today. I've known people on food stamps. Something interesting about all of them was that despite not being able to feed themselves, the whole family all had their own smart phones with data plans, never thought twice about eating out, went out drinking several nights a week.

Priorities have changed in the US. Living in a small home and eating is still affordable. It's all the extras that people get caught up spending money on that make the necessities hard to afford.

Yeah, it's hard to find someone making minimum wage or near it who doesn't have a smart phone, much less someone on food stamps. Just a matter of priorities.

Many live beyond their means these days. Rather than buy a house that I qualified to buy I bought one I could afford, i refinanced last year and it reduced my house payment by $400 a month. I have a 2008 Trailblazer LS and 2011 Aveo LT with no loans on either. Granted I do have the AT&T $160 plan for the family, all phones are 2 years old. I am guilty of splurging on TV and internet.

When I bought my house it was insane how much they qualified me for. Then (as now) I had no credit card debt, no car payments, no debt of any kind, but the payments they'd have me making would have precluded buying a car on credit or making major repairs to house or car for thirty years. Or at least until I was earning substantially more money.

 

[zanejohnson]

It's the same in NJ. These people have $500k homes and pay $10k in property taxes. They drive 2 cars, have a pool in their back yard, etc..

BUT... They don't have accumulated wealth. Both mom/dad make good money but how long could they possibly last if they both lost their jobs? They know how to spend, but they don't know squat about investing and saving. How can they have a high consumption lifestyle. The sad thing is their children will do exactly what their parents are currently doing. They will expect to live the same lifestyle that they had when they were living at home. They to will become high consumption adults.

Check out "The Millionaire Next Door." The book was written 15-20 years ago, but the principles in the book are timeless.

my family has done the complete opposite.......

we drive old cars/beaters...that are good on gas (besides a couple of nice cars, for special occasions, and those are just mid level) an Audi A6, an Escalade, and a Cadillac CTS..... besides that, it's chevy trucks, and cheap honda cars...

we eat wal mart food, go out to eat maybe once every two weeks...

we dont pay for cable, or a home phone (land line)

we dont have central A/C (old house, its heated in the winter by 3 fireplaces, and cooled in the summer by window units (electic bill stays under 300 in the most intense months......under 80, during the easy months


we own real estate......every single member of my family (mother, stepfather, father, stepmother, brother, sister, myself) all contribute 33 percent of our incomes, to the real estate mortgage payments, we'll pay it off way early) we own rent houses, and we do ALL the work... we dont buy throw away things... we dont "stack cash." we invest, in real estate, and back into our own businesses (4 in the family, My mother owns a mid size home hospice company, my stepfather owns a start up trucking company (2 trucks), my sister owns 2 tanning salons, and i run my IT/security consulting business...... my father and brother work together, they work for a large casino chain.. they do pretty well also..

me and my brother live in the first house my parents bought, my mother lives on 13 acres on a farm, with my stepdad, my sister right now bounces back and forth between me and my brothers place, and dads.... she's just finnicky.. she's got the latina and the jewish thing going on at once..so you can imagine.... Dad and His wife, live in there own house in town (closer commute to the casino, where his wife also works)



..... i'm very grateful my parents made excellent financial choices.... it's a blessing, and i'll make sure to carry on as well as i can in there footsteps..they set the bar pretty high though...


but, let me tell you.......to this day... we dont go blow thousands of dollars a night, or drive around in 100,000 dollar cars, to show off.... we mostly stay at home, eat in, real cooked food.. sometimes after i pay bills, i'm broke.... i literally dont have the money to (actual money, i dont use credit) go do those types of things.. not without messing up my budget, what i force myself to contribute, which is 33 percent of my income, end of the month, i transfer 33 percent of my profits to a common account, mother takes care of it from there, and i pay myself 12 bucks an hour to live on..... same amount i pay the guy that works for me part time...

 

[Engineer]

Complaining about free trade or globalization is akin to complaining about automation or technology eliminating jobs. They are all inevitable because under capitalism, humanity is strongly incented to minimize costs and maximum profits.

What the U.S. faces uniquely is that your system of taxation does less to smooth out the extremes of your young and poor than any other Western country. That's in some ways a good thing - it makes it the country to move to if you want to make it really big - but there's a negative to it as well. I think it makes a lot more sense to try to address the problem with more progressive taxation than to try to ignore the reality of globalization.

In other words, tax and distribute as welfare than to have better paying jobs for the masses. Wonderful....

Globalization has led to the ability to more easily pack up and leave too. The people who would be paying the taxes are already showing that they are ready to pack up and leave even at the current low rates. Just try to raise them and see where it gets you.....more welfare....more debt.....less taxes.

 

[IndyColtsFan]

And frankly nobody should really not be able to afford to eat today. I've known people on food stamps. Something interesting about all of them was that despite not being able to feed themselves, the whole family all had their own smart phones with data plans, never thought twice about eating out, went out drinking several nights a week.

Priorities have changed in the US. Living in a small home and eating is still affordable. It's all the extras that people get caught up spending money on that make the necessities hard to afford.

The wife and I took a vacation to New Orleans in April. I was shocked at the number of "beggars" on the streets, but even more entertaining was the time we were walking down the street and noticed 3 guys sitting on a bench playing with their smartphones. As we got near, they hurriedly put them away and started begging us for money. I just looked at them and shook my head as I walked by as they called us names like "rich crackers" and stuff like that. They probably had new cars with nice, shiny rims parked around the corner too.

People don't understand how to live appropriately. I wish I could say some basic financial education would help most of them, but at this point, I have my doubts about that. People just seem to feel entitled to get whatever they want, costs be damned, and don't feel like they should have to work and save for it. This is why they'll always be poor or struggling and people like me, who drive beaters, buy appropriate homes, save and invest, and only splurge on an occasional vacation will likely never be poor (knock on wood).

 

[IndyColtsFan]

Complaining about free trade or globalization is akin to complaining about automation or technology eliminating jobs. They are all inevitable because under capitalism, humanity is strongly incented to minimize costs and maximum profits.

What the U.S. faces uniquely is that your system of taxation does less to smooth out the extremes of your young and poor than any other Western country. That's in some ways a good thing - it makes it the country to move to if you want to make it really big - but there's a negative to it as well. I think it makes a lot more sense to try to address the problem with more progressive taxation than to try to ignore the reality of globalization.

It isn't really free trade when one side manipulates their currency and/or restricts imports from other countries.

 

[Tweak155]

I have the opposite problem as the beginning of this thread... I set aside too much and don't spend much. I keep saving up for that next big life purchase (currently my next house) so I don't spend a whole lot compared to my income.

I really hate taking loans but I have to tell myself it is worth it sometimes. I have a loan rate of 1.84% on my car and I have to keep telling myself not to pay it off. Even then I overpay so I can just pay less interest.

I think the real thing that keeps me from buying is that a lot of things I might actually consider purchasing are just overpriced to me. I have to really convince myself it is worth the price tag before I even consider it. Rarely do I just say the heck with it and buy it anyway, but it does happen.

 

[bshole]

I have the opposite problem as the beginning of this thread... I set aside too much and don't spend much. I keep saving up for that next big life purchase (currently my next house) so I don't spend a whole lot compared to my income.

I really hate taking loans but I have to tell myself it is worth it sometimes. I have a loan rate of 1.84% on my car and I have to keep telling myself not to pay it off. Even then I overpay so I can just pay less interest.

I think the real thing that keeps me from buying is that a lot of things I might actually consider purchasing are just overpriced to me. I have to really convince myself it is worth the price tag before I even consider it. Rarely do I just say the heck with it and buy it anyway, but it does happen.

Same with me EXCEPT for computers. I alway pay more to get the baddest ass video card, motherboard and case...... I never skimp on those.

 

[werepossum]

These are encouraging stories. Hopefully such people are more common than we think.

 

[fleshconsumed]

Back to the topic, CNN posted another article on the same topic
http://money.cnn.com/2014/06/11/news/economy/middle-class-wealth/

I thought it was relevant because it actually included both average and median net worth numbers. The average is 300K, however the median, which is much more accurate measure of true wealth is only 45K per individual. The article doesn't say if that number is all inclusive or if it excludes kids/retired people, but either way, that is downright depressing and frightening. I have to presume that the 45K figure includes retirement savings which means we're screwed.

 

[Spungo]

It isn't really free trade when one side manipulates their currency and/or restricts imports from other countries.

I've never understood this argument. The government always seems to be saying conflicting things about the value of currency. On one side, the government fights extremely hard to maintain a strong currency. Our current arrangement is called the petrodollar standard, and the reason we have so many foreign entanglements. Anyone buying oil from an OPEC country must have US dollars, so this greatly increases the value of US dollars. On the other side of the coin, the government is saying our currency is too strong and that's why we can't compete globally. If they really believed that, they would drop the petrodollar and allow the dollar to become worthless paper backed by nothing.

The more obvious question is why Germany has a trade surplus. Their currency is 35% more valuable than ours, yet they don't seem to have a problem exporting things. Why is that?

 

[IndyColtsFan]

I've never understood this argument. The government always seems to be saying conflicting things about the value of currency. On one side, the government fights extremely hard to maintain a strong currency. Our current arrangement is called the petrodollar standard, and the reason we have so many foreign entanglements. Anyone buying oil from an OPEC country must have US dollars, so this greatly increases the value of US dollars. On the other side of the coin, the government is saying our currency is too strong and that's why we can't compete globally. If they really believed that, they would drop the petrodollar and allow the dollar to become worthless paper backed by nothing.

The more obvious question is why Germany has a trade surplus. Their currency is 35% more valuable than ours, yet they don't seem to have a problem exporting things. Why is that?

I'm talking about China.

 

[Engineer]

http://www.moneynews.com/Economy/Wealth-Gap-Income-Economy-Factories/2014/06/15/id/577144/

Middle class families losing good paying jobs. No wonder Walmart is getting itchy to get those jobs back in here (from other thread)...it's hurting their bottom line. They can sell cheap, imported stuff all they want but if their customer's income is on the decline and the credit bubble popping, it's "oh shit" time from Walmart.

I'm sure 'someone' will jump in here and tell me that, even though many of these people have slipped down the 'poor class', they are actually better off because they can now afford the stuff that they once used to make because it's now cheaper.

 

[BoberFett]

http://www.moneynews.com/Economy/Wealth-Gap-Income-Economy-Factories/2014/06/15/id/577144/

Middle class families losing good paying jobs. No wonder Walmart is getting itchy to get those jobs back in here (from other thread)...it's hurting their bottom line. They can sell cheap, imported stuff all they want but if their customer's income is on the decline and the credit bubble popping, it's "oh shit" time from Walmart.

I'm sure 'someone' will jump in here and tell me that, even though many of these people have slipped down the 'poor class', they are actually better off because they can now afford the stuff that they once used to make because it's now cheaper.

Don't worry, once we hand out Amnesty 2.0, we can replace ALL middle class jobs with minimum wage ones.

 

[Engineer]

Don't worry, once we hand out Amnesty 2.0, we can replace ALL middle class jobs with minimum wage ones.

There's a lot of smug people on these forums that are thinking "I've got mine, fuck them" without realizing that their jobs will be the next to fall to globalization. Per their own words, why pay overprice Amercians when you can get cheap labor abroad!

 

[Mai72]

That bubble you will hear bursting soon will be the unfunded pension liabilities of city, state and federal government workers...there is no telling how far those cans have been kicked down the road but soon or later, it will be time to pay the piper...

That is currently happening with the teacher pensions in New Jersey. Chris Christie has stated that he plans to rob the teacher pensions because the state is $6 billion in debt. The NJEA has threatened to sue.

The time will come one day when we will not have the money to fulfill our obligations. I guess all hell will break lose.

 

[Mai72]

There's a lot of smug people on these forums that are thinking "I've got mine, fuck them" without realizing that their jobs will be the next to fall to globalization. Per their own words, why pay overprice Amercians when you can get cheap labor abroad!

When people don't work and contribute to society it affects everybody.

I wish people would see that, because these issues just weaken America.

 

[bozack]

Nobody is forced to do any of the things you just mentioned. This is the issue. People are spending money on sh*t they don't need!

You should read "Start Late, Finish Rich." The author talks about the Latte effect. You basically eliminate most/all small expenses. Get rid of the cable and don't purchase smartphones. Stop buying coffee from Starbucks. Make your own at the house. That type of stuff.

It's the same in NJ. These people have $500k homes and pay $10k in property taxes. They drive 2 cars, have a pool in their back yard, etc..

BUT... They don't have accumulated wealth. Both mom/dad make good money but how long could they possibly last if they both lost their jobs? They know how to spend, but they don't know squat about investing and saving. How can they have a high consumption lifestyle. The sad thing is their children will do exactly what their parents are currently doing. They will expect to live the same lifestyle that they had when they were living at home. They to will become high consumption adults.

Check out "The Millionaire Next Door." The book was written 15-20 years ago, but the principles in the book are timeless.

anyone that can "afford" niceties now even at the expense of potential current/future savings doesn't want to give that up...

we live in a society of people that live for the now, and worry about the later ... later..

the media, heck even the government encourages that as it drives our consumer economy

Personally I am not a fan of TMND as I think it is exceptionally extreme, sure it will drive one to accumulate wealth, but its the type of wealth that will only be exploited by surviving heirs as the person doing the working/saving would never get any tangible benefit from it if they followed the book to the letter.

 

[boomerang]

The time will come one day when we will not have the money to fulfill our obligations. I guess all hell will break lose.

We don't have the money now. The bag of tricks propping up the nation will eventually be empty. It's pure mathematics and there is no getting around it.

 

[alcoholbob]

How quickly society forgets. The US went from agriculture to industry, and from there to what we are today. Why did we do this? Was it because we did not like factories? No. It was because families made more wealth in the factory than they did on the farms. They then leveraged that wealth to advance. The upward mobility pulled society out of poverty and into the modern age. We are now so productive we have time for things like watching TV, and going on vacation, and all the other modern things.

China is starting to do the same. Those who work in factories send a large chunk back home. That money helps get the family stable. They are then able to focus on more productive activities. They will then sell their surplus on the market, making a profit. That profit will in turn drive their demand for goods that would would have been useless to them before. This causes the middle class to spend their new wealth.

You are seeing all of this happening in china now. Yes, many of the goods are produced in China, but it wont last long. Economic isolationism was the predominate way of life for, well thousands of years. It finally opens up and boom, huge growth. I cant see how this is a bad thing at all.

Productive doing what? Guarding oil fields? We aren't making anything for export. I think you are confusing the dollars reserve status for oil contracts with actual productivity. Unless your argument is that the US military is our economy and they're very productive at guarding oil fields which gives civilians at home time to watch TV.

 

[BoberFett]

There's a lot of smug people on these forums that are thinking "I've got mine, fuck them" without realizing that their jobs will be the next to fall to globalization. Per their own words, why pay overprice Amercians when you can get cheap labor abroad!

Didn't we determine that was your attitude? You care about Americans, not foreigners. So instead of outsourcing jobs, we'll insource poor people. Now you can have tens of millions of new Americans to care about.

 

[Engineer]

Didn't we determine that was your attitude? You care about Americans, not foreigners. So instead of outsourcing jobs, we'll insource poor people. Now you can have tens of millions of new Americans to care about.

My attitude isn't just about me, it's about the entire country. The people I'm talking about don't care whether anyone anywhere has anything other than themselves. Sorry you don't like my nationalistic attitude. I'm rather proud of it. Too bad more aren't.

Not for insourcing anyone but be careful, you'll end up with a few highly educated people who will work for peanuts and you'll be out to pasture.

My loyalty stops at the border...and that includes stopping millions from entering and lowering our standard of living even faster than it's dropping now.

 

[BoberFett]

My attitude isn't just about me, it's about the entire country. The people I'm talking about don't care whether anyone anywhere has anything other than themselves. Sorry you don't like my nationalistic attitude. I'm rather proud of it. Too bad more aren't.

Not for insourcing anyone but be careful, you'll end up with a few highly educated people who will work for peanuts and you'll be out to pasture.

My loyalty stops at the border...and that includes stopping millions from entering and lowering our standard of living even faster than it's dropping now.

Well then you're out of luck. Because whichever major party holds office, they're both selling us down the river. I know you don't like Republicans, but the Democrats don't care about you either. They pretend to care just enough for your vote. Promises are easy, real change is hard.

If you're trying to appeal to my sense of self preservation, you're barking up the wrong tree. If tomorrow I woke to find the middle class was gutted and everyone from janitors to upper management was out of work, I'm fine with that. I've always thought the end of the world could be fun to watch, LOL.

 

[Engineer]

Well then you're out of luck. Because whichever major party holds office, they're both selling us down the river. I know you don't like Republicans, but the Democrats don't care about you either. They pretend to care just enough for your vote. Promises are easy, real change is hard.

If you're trying to appeal to my sense of self preservation, you're barking up the wrong tree. If tomorrow I woke to find the middle class was gutted and everyone from janitors to upper management was out of work, I'm fine with that. I've always thought the end of the world could be fun to watch, LOL.

Not trying to appeal to you at all. I already know your feelings and stance on it all. You're one of those fuck everyone but immediate family type of guys. You've said it several times.

 

[Attic]

If everyone tightens their belt to save/invest more, whose gonna actually buy shit to make those investments payoff. We need better income distribution, otherwise only a few can invest and everybody can't afford shit. Taxes shouldn't be used to achieve this, but it's the only thing at governments disposal, folks left to their own accord would pick the bones of the underprivelaged and poor.

The economy is 70% consumer driven and its Ben broken (yes pun) for awhile. QE tells us that. We'll know more when it ends, but so far during QEs time wealth inequality has exploded and that's bad for the economy.

The economy is one massive skim operation to the top, everything about the economy and markets reveals this.

Consider how much government spending is actually private sector (crony capitalist kind) profit and ask if more government spending is an answer or a curse.

 

[uclabachelor]

How can the average American save when they are forced to buy $100/month data/text plans, $130/month for cable/satellite with 8 channel DVR's, 70" flat screen TV's, two $35K cars in driveway, $450K home, pay for all their kids' soccer and gymnastic expenses, vacations in Aruba, weekend dinners with friends at the Cheesecake factory....after all of that, saving for kid's college expenses, remodeling the kitchen and master bathroom, building the home theater room with 120" screen and 4k projector....it just never ends....

:thumbsup: