Most Americans can't afford a $1,000 expense

[Slimprofits]

Re: Most Americans can't afford a $1,000 expense

would offer this is due not so much to hi-tech, but to the FIRE economy having bestowed large salary/bonuses on the inhabitants of the offices in downtown beantown's finance district - vs the outskirts along 128/495, where most of the hi-tech jobs actually are - i'd suspect that damn few in those areas make anywhere near 150k, never mind 230....

but west of worcester?

heh - farms, fields, abandoned mills and huge estates... well, once you get away from amherst and the tenured crowd...

Perhaps, but I don't have any statistics. FIRE is pretty big in Boston though.

[c1ue]

Re: Most Americans can't afford a $1,000 expense

A service charge to cash a post-date is not illegal.

True, if you have a license.

Most states regulate this - in fact Colorado specifically states:

http://www.colorado.gov/oed/industry...IndDetail.html

If cashing post-dated checks, will be required to have a "supervised lenders" license from Attorney General's Office.

Some of the regulatory provisions of the Colorado UCCC include disclosure of the cost of credit (annual percentage rate, amount financed, total of payments, etc.) and compliance with the provisions on default including right to cure, delinquency charges, deferral, refinancing, prohibitions on prepayment penalties, and record retention requirements.

See "Supervised Lender Licensing Requirements." Link: http://www.ago.state.co.us/UCCC/PDF/ucccmain.cfm.html

You should be glad it was an IRS agent and not a Colorado state agent.

[dcarrigg]

Re: Most Americans can't afford a $1,000 expense

it's from here:

http://gonzalolira.blogspot.com/2011...s-were-in.html



The author was asked for clarification and a source, but provided neither.

I think the disconnect is AHamilton was talking median and the blog-author was talking average (mean).

Yes - and this is the point of MEDIAN income anyways. If you line everyone up, you take the guy in the middle's income and there's your number.

MEAN income's a whole other story (the average).

Median household income in Slovenia is actually relatively high at $18,860. It's not what the US is at $31,111.

Slovenia's median income is approximately equivalent to that of the median income at the 25% point in the U.S. - meaning you'd have to remove something closer to the top 50% to get to that number (somewhere between 40% and 50% anyways as a rough guess looking at this quickly).

Don't take my word for it.

Household income distribution in the U.S.:




Now if you were talking mean income, this is another story. In Slovenia it is $28,030 per capita at purchasing power parity. In the U.S. it is $47,284 (IMF 2010).

And according to the U.S. census bureau, we have this:



It pretty much at a glance shows MEAN per capita income of the bottom 85% somewhere in the $20,000 to $25,000 range (ballparking it). That's lower than Slovenia by my back-of-the-envelope count.

Looking at the link you sent, babbittd, it appears that the author was talking average income. He may be correct.

[Master Shake]

Re: Most Americans can't afford a $1,000 expense

Maybe they should cut their fancy cell plans, sell their iPhones, get basic cable, curtail the Starbucks lattes, stop eating out, learn how to clip coupons, and, in general, learn how to live within their means?

[shiny!]

Re: Most Americans can't afford a $1,000 expense

Maybe they should cut their fancy cell plans, sell their iPhones, get basic cable, curtail the Starbucks lattes, stop eating out, learn how to clip coupons, and, in general, learn how to live within their means?

Basic cable as a cost-cutting measure? An over-the-air antennae works just fine and costs zero.

[thriftyandboringinohio]

Re: Most Americans can't afford a $1,000 expense

Even better. My point is that way too many people live above their means, whether it be homes that are too large, getting fancy phones for their kids, or eating out too often.

All too true, Master Shake. The wife and I truly are both thrifty and boring in Ohio, depite doing well enough to splurge a bit had we chosen that. Living below our means has been a constant source of comfort over the years, especially in our professions. When the pressure gets big, we know we actually can walk out the door and be just fine, thank you.

[thunderdownunder]

Re: Most Americans can't afford a $1,000 expense

@Sutter cane.
That is the tragedy. Take the profit from healthcare and you get real healthcare. I would be lost on Americans, however it is true.
I have a card, a government issued card that says that I will never face bankruptcy. I will pay up to a Hurtful limit (as I should) after that I get free the very best.
I paid for it in my taxes and it was not cheap however I am alive now because I reached the (mandated) limit of my ability to pay without using up my house, savings and superannuation. When that happened I had the entire force of doctors specialists and professors, nation wide, at my feet. My God they were exceptional. Profit has no part in health care

[Master Shake]

Re: Most Americans can't afford a $1,000 expense

Basic cable as a cost-cutting measure? An over-the-air antennae works just fine and costs zero.

Even better. My point is that way too many people live above their means, whether it be homes that are too large, getting fancy phones for their kids, or eating out too often.

[BK]

Re: Most Americans can't afford a $1,000 expense - Life Built on Sand Foundation

Cable and eating out are Not the problems.

Yes - people might have a few more bucks to survive a couple of extra months.

Where did all the Money GO? Housing, 401K Plan, IRAs, and 529 Plans, Higher Health insurance

FIRE and The Federal Government promoted Housing, 401K, IRAs, and 529 Plans as the foundations for a successful financial life. Most humans (excluding itulipers) never examine the information they are feed and they follow the herd.

Consider a family with two incomes and making $100,000 - $120, combined. They contributed 8-12% of their income to 401K plan if they had one = $8,000-$13,0000 every year that got invested primarily in crappy equities. People were told to max out the 401k to minimize taxes and have money for your retirement. Then this nice couple saved for juniors College education $250 per month = $3000 year. This is $130,000 over ten years if it earned no interest.

Then during the last ten year or longer this nice family has seen their property taxes on their home (the cornerstone of the modern family financial plan) increase by 50%-100% to pay school crossing guards - teachers - school administrators higher wages every year. In my state one friend as seen his taxes go fro $5000 in 2004 to $9000 in 2011. My father-in-law property taxes were $6000 in 2000 and are $13,000 in 2011.

But, the couple had a sure fire Financial backup plan - Home Equity. Every where they went they were told you need to own a home if you were going to be successful financially and Home equity is always available for emergencies. To be frank only a crazy person would choose not to own a home (I'm one of those crazy folks). Very few humans can go against the herd - people are tribal and love to herd thats the norm - we ituliper's are outliers and its a small percentage of people who are capable braking away from the herd when we see a cliff ahead. Ituiper readers need to appreciate what rare birds they are and most people lack our non-conformist attitudes.

Yes - there are a lot of people who waste money - but, there are lots of powerful sources that gave people mis information about how our economy works and how to save.

[thriftyandboringinohio]

Re: Most Americans can't afford a $1,000 expense - Life Built on Sand Foundation

...Where did all the Money GO?....

"Oh, the money is still there. It just belongs to somebody else now"

- character Jack Casey, answering the same question in the movie Quicksilver

[shiny!]

Re: Most Americans can't afford a $1,000 expense - Life Built on Sand Foundation

Cable and eating out are Not the problems.

Yes - people might have a few more bucks to survive a couple of extra months.

Where did all the Money GO? Housing, 401K Plan, IRAs, and 529 Plans, Higher Health insurance

FIRE and The Federal Government promoted Housing, 401K, IRAs, and 529 Plans as the foundations for a successful financial life. Most humans (excluding itulipers) never examine the information they are feed and they follow the herd.

Consider a family with two incomes and making $100,000 - $120, combined. They contributed 8-12% of their income to 401K plan if they had one = $8,000-$13,0000 every year that got invested primarily in crappy equities. People were told to max out the 401k to minimize taxes and have money for your retirement. Then this nice couple saved for juniors College education $250 per month = $3000 year. This is $130,000 over ten years if it earned no interest.

Then during the last ten year or longer this nice family has seen their property taxes on their home (the cornerstone of the modern family financial plan) increase by 50%-100% to pay school crossing guards - teachers - school administrators higher wages every year. In my state one friend as seen his taxes go fro $5000 in 2004 to $9000 in 2011. My father-in-law property taxes were $6000 in 2000 and are $13,000 in 2011.

But, the couple had a sure fire Financial backup plan - Home Equity. Every where they went they were told you need to own a home if you were going to be successful financially and Home equity is always available for emergencies. To be frank only a crazy person would choose not to own a home (I'm one of those crazy folks). Very few humans can go against the herd - people are tribal and love to herd thats the norm - we ituliper's are outliers and its a small percentage of people who are capable braking away from the herd when we see a cliff ahead. Ituiper readers need to appreciate what rare birds they are and most people lack our non-conformist attitudes.

Yes - there are a lot of people who waste money - but, there are lots of powerful sources that gave people mis information about how our economy works and how to save.

What you say is true AND most people still live(d) above their means. Not either/or but both. For the couple you described making a combined $100,000 a year, yes, their investments got eaten up by FIRE. And their property taxes went up and the value of their home went down. All true.

But, how many couples these days are willing to live in a little old house and drive old beater cars, not have cable and all the expensive non-essential amenities of modern living? As Elizabeth Warren points out, a few generations ago the husband worked while the wife stayed home. What that meant was if he lost his job or ability to work, the wife could go to work and help pick up the slack. They wouldn't necessarily lose everything because their expenditures weren't at the maximum of their earning capacity.

Nowadays, because of FIRE Madison Avenue pushing the meme that "everyone deserves to live like a millionaire", both husband and wife have to work just to keep up. There is no financial safety margin anymore. FIRE makes it hard for people to save and get ahead, but many people have also been complicit in their own undoing by eschewing frugality.

I have a friend who is married with two children. They are maxed out on their credit cards but take family vacations to Disney Land, send their kids off to summer camps and trips to Europe, have an SUV that they make payments on, cable TV, the whole nine yards. The kids are in 8th and 11th grade and they don't have anything saved for college, and nothing saved for retirement. I was discussing this topic with her the other day and she said they couldn't come up with $1,000 for an emergency.

[BK]

Re: Most Americans can't afford a $1,000 expense - Life Built on Sand Foundation

shiny! - we are in complete agreement.
But, its so hard for most people to do what is right. For one - my wife and I have been lucky enough to turn being down sized into an opportunity. My child as had a parent available - because we only have one income - thanks to down sizing. The result is a child that is focused, behaves well, a child with down time to read, and is a great kid. The down side is I couldn't buy the BMW diesel I crave or Ski in Europe as I crave (oh, I would love to ski Les Gran Montets or Verbier ..again), and we don' have i-Phones (I did just upgrade our prepaid Cell phones to androids- finally). We rent a home and don't have a showhouse home that my wife would love. We save and we are hopefully prepared for the worst even though I worry we need to save even more.
Our path is not easy - and we have no friends or family who frankly understand our choices. If I had a buck for every time a friend asked or thought when are they going to buy a home.
The Madison avenue path is the path to feel like you belong in society - that you have arrived. The Peer pressure that pushes teenagers into drinking, smoking, and drugs is no different than the peer pressure to go to Disney or drive the BMW or have an i-phone.

People just aren't wired to take the other path because its just too hard.

[Master Shake]

Re: Most Americans can't afford a $1,000 expense

All too true, Master Shake. The wife and I truly are both thrifty and boring in Ohio, depite doing well enough to splurge a bit had we chosen that. Living below our means has been a constant source of comfort over the years, especially in our professions. When the pressure gets big, we know we actually can walk out the door and be just fine, thank you.

Same here.

An example. I have two daughters, 14 and 12. When each started Middle School, I bought them Trac Fones and reload as needed. They both have friends with iphones, Droids, and whatnot, and I know that we are better off than their families. Why does a kid need an iPhone, other than as a form of conspicuous consumption?

My 1999 Caravan has been paid off for years, as is the 03 Vibe. Both were bought used.

We eat out occassionally, but cook the vast majority of our meals at home. When shopping, buy what's on sale and store brands, use coupons.

We don't go apeshit at Xmas and Birthdays. Etc, etc.

"There are two ways to get enough. One is to continue to accumulate more and more. The other is to desire less."
— G.K. Chesterton

[dcarrigg]

Re: Most Americans can't afford a $1,000 expense

Same here.

An example. I have two daughters, 14 and 12. When each started Middle School, I bought them Trac Fones and reload as needed. They both have friends with iphones, Droids, and whatnot, and I know that we are better off than their families. Why does a kid need an iPhone, other than as a form of conspicuous consumption?

My 1999 Caravan has been paid off for years, as is the 03 Vibe. Both were bought used.

We eat out occassionally, but cook the vast majority of our meals at home. When shopping, buy what's on sale and store brands, use coupons.

We don't go apeshit at Xmas and Birthdays. Etc, etc.

"There are two ways to get enough. One is to continue to accumulate more and more. The other is to desire less."
— G.K. Chesterton

I'm in a similar boat. 2 Beds - 600sqft - no microwave, dishwasher, A/C, TV, etc. Electric bill at between $12 and $30 per month - small area with low ceilings that heats well cheap with oil - regular old cell-phones that make calls - no land-line - 2 used old sedans bought whole with cash etc. We still carry student loan debt for 2, but with no prepayment penalty, it'll be gone soon. I'm actually allergic to anything that comes with a monthly payment attached to it. If I can't own it whole outright, I don't want it.

We're a different breed here at the 'Tulip.

I figure that monthly payments are a big part of the problem. There are more and more ways to sign up for more and more monthly payment plans with plenty of ways to go over the base payment. Phones that count minutes, text messages and megabytes, pay-per-movie cable with add-ons like HBO, plus Netflix, etc. etc. One could easily spend $300/month on this stuff. Simply not having most of it is much easier.

And Thrifty is very right in that being willing and able to walk away at any time is important in life.

[lektrode]

Re: Most Americans can't afford a $1,000 expense

.... Profit has no part in health care

certainly NOT the 400 BILLION for the middlemen in the equation...

never mind the lawyers/out-of-control tort system, which IS the Number One Wildcard and of course, were never addressed by the recent SCAM known as healthcare 'reform'

put that one right up there next to 'banking reform' and one quickly reachs the conclusion that congress' output during 2009-10 has put us even _further_ down the rathole than we were in 2008!

so much for 'change we can believe in'