RodeoSchro said:

JustErin said:

Guess I'm in the minority because I don't really fully understand threads like this.

Complaining about things like the high cost of cell phones and cable is odd to me.

But maybe people are struggling because they are confusing luxury with necessity. We are a culture that is obsessed with having stuff, more and more stuff - that we really don't need....and then we complain that we can't really afford all this unnecessary stuff?

Man, I've been beyond broke a few times in my life but I always was ok - even with a kid. I carefully managed what money I had and was always able to do pretty damn well with the little that I had.

Being a pilot and having to use food stamps does not make sense what-so-ever. There are servers that make next to nothing and do not need that service. It just doesn't add up to me.

Guess it's all about priorities.

I think for most people in this situation, it's because prices have risen much faster than their income.

If one was already spending most of what one made, then over time, the rising prices put them in a position of either having to cut stuff out, or if there's nothing left to cut, get assistance.

Sadly, this is a more common occurrance today. USA monetary policy has been able to keep interest rates down, but it can't do anything about goods sold on the free market. Those have been rising steadily. Mainly food costs, but services have gone up too.

But here in Canada it's the same. I feel that as well, but I've been able to make the necessary adjustments without really having to go without much.

Perhaps it is more a case of people living way beyond their means for a while and it eventually caught up with them. You can't get away with that anymore.

Genesia said:

It costs a lot of money to keep the sloths in cable and cell phones.

I'm sure it does cost more to keep funding these programs that President Ronald W. Reagan put in place, but we have not raised taxes to keep up with the increased costs of these Reagan policies.

The federal tax burden as a share of income is at its lowest rate since the '50's. Do you think we should raise taxes?

http://www.cbpp.org/files...-10tax.pdf

Federal taxes on middle-income Americans are near historic lows,

Income taxes: A family of four in the exact middle of the income spectrum will pay only 5.6 percent of its 2011 income in federal income taxes, according to a new analysis by the Urban Institute- Brookings Institution Tax Policy Center.Average income tax rates for these typical families have been lower during the Bush and Obama Administrations than at any time since the 1950s, as Figure 1 shows. (As discussed below, 2009 and 2010 were particularly low because of the temporary Making Work Pay Tax Credit.)

JustErin said:

RodeoSchro said:

I think for most people in this situation, it's because prices have risen much faster than their income.

If one was already spending most of what one made, then over time, the rising prices put them in a position of either having to cut stuff out, or if there's nothing left to cut, get assistance.

Sadly, this is a more common occurrance today. USA monetary policy has been able to keep interest rates down, but it can't do anything about goods sold on the free market. Those have been rising steadily. Mainly food costs, but services have gone up too.

But here in Canada it's the same. I feel that as well, but I've been able to make the necessary adjustments without really having to go without much.

Perhaps it is more a case of people living way beyond their means for a while and it eventually caught up with them. You can't get away with that anymore.

I'm not so sure it's living beyond their means as it is the means changing. In other words, someone that saved 5% of their monthly income four years ago would have been considered smart.

But if their expenses rose by 10% over four years (meaning the same expenses went up, not that they added new expenses), while their income stayed the same, all of a sudden they are going backwards each month. They didn't buy anything new or start a new hobby, but still they are going backwards.

So they had to cut stuff out until there was nothing to cut any more. That's when assistance came into play.

My philosophy is, always pay cash for everything (except a house, but pay it off as soon as you can). Perhaps a lot of these people are in this situation because of credit card debt.

RodeoSchro said:

Genesia said:

It costs a lot of money to keep the sloths in cable and cell phones.

I'm sure it does cost more to keep funding these programs that President Ronald W. Reagan put in place, but we have not raised taxes to keep up with the increased costs of these Reagan policies.

The federal tax burden as a share of income is at its lowest rate since the '50's. Do you think we should raise taxes?

http://www.cbpp.org/files...-10tax.pdf

Federal taxes on middle-income Americans are near historic lows,

according to the latest available data. That’s true both for federal income taxes and total federal taxes.

Income taxes: A family of four in the exact middle of the income spectrum will pay only 5.6 percent of its 2011 income in federal income taxes, according to a new analysis by the Urban Institute- Brookings Institution Tax Policy Center.Average income tax rates for these typical families have been lower during the Bush and Obama Administrations than at any time since the 1950s, as Figure 1 shows. (As discussed below, 2009 and 2010 were particularly low because of the temporary Making Work Pay Tax Credit.)

But can you really compare 1950's with now? Cost of living was better then. A dollar went further-does this idea consider inflation?

I find it sad really. You put all your effort into your job and yet the pay is less and it's not helping to pay the bills so you have to work two or three more jobs so you can pay the bills. That's why some, like my father, just retired after years of working at the tobacco plant, and just relied on whatever money that was to come from our account. It'll probably be tough for me to get a job with a really good paycheck.

RodeoSchro said:

JustErin said:

But here in Canada it's the same. I feel that as well, but I've been able to make the necessary adjustments without really having to go without much.

Perhaps it is more a case of people living way beyond their means for a while and it eventually caught up with them. You can't get away with that anymore.

I'm not so sure it's living beyond their means as it is the means changing. In other words, someone that saved 5% of their monthly income four years ago would have been considered smart.

But if their expenses rose by 10% over four years (meaning the same expenses went up, not that they added new expenses), while their income stayed the same, all of a sudden they are going backwards each month. They didn't buy anything new or start a new hobby, but still they are going backwards.

So they had to cut stuff out until there was nothing to cut any more. That's when assistance came into play.

My philosophy is, always pay cash for everything (except a house, but pay it off as soon as you can). Perhaps a lot of these people are in this situation because of credit card debt.

While I think what you're saying is basically correct, and I think there are some pretty interesting reasons why fixed costs for households have increased ahead of wages (some of which have been discussed here, and some have not), I still get confused when I hear people say they can’t save anything. I realize there are a million moving parts in people’s lives that impact their ability to save, but I have a hard time processing the statistics that show that so many people (40-50% according to most surveys) don’t save anything and live their lives on a wire, paycheque to paycheque, because that’s completely at odds with my own experiences. There were times in my life where things were very lean for me and I was always able to save. I lead a very simple life, but I don’t think I’m deprived in any way and I currently save around 73% of my net income, with pension and a company share plan on top of that, & my salary isn’t spectacular or breath-taking in the least. So when I see those statistics and I hear these stories I feel this incredible disconnect, because my life seems to be so at odds with the experiences of others. I can certainly understand why a person at the low end of the wage spectrum would be in that situation, but it's hard for me to grasp why this seems to be the case for so many people who earn what I would say are fairly reasonable middle-income salaries.

kewlschool said:

RodeoSchro said:

I'm sure it does cost more to keep funding these programs that President Ronald W. Reagan put in place, but we have not raised taxes to keep up with the increased costs of these Reagan policies.

The federal tax burden as a share of income is at its lowest rate since the '50's. Do you think we should raise taxes?

http://www.cbpp.org/files...-10tax.pdf

Federal taxes on middle-income Americans are near historic lows,

according to the latest available data. That’s true both for federal income taxes and total federal taxes.

Income taxes: A family of four in the exact middle of the income spectrum will pay only 5.6 percent of its 2011 income in federal income taxes, according to a new analysis by the Urban Institute- Brookings Institution Tax Policy Center.Average income tax rates for these typical families have been lower during the Bush and Obama Administrations than at any time since the 1950s, as Figure 1 shows. (As discussed below, 2009 and 2010 were particularly low because of the temporary Making Work Pay Tax Credit.)

But can you really compare 1950's with now? Cost of living was better then. A dollar went further-does this idea consider inflation?

I'm not comparing cost of living, I'm comparing what part of your income was taken up by taxes.

There's no adjustment for inflation needed for this comparison. It's simply Amount Paid In Taxes/Gross Income = Percentage of Income Paid in Taxes.

And as the numbers show, that percentage is, today, at near-historic lows. So people aren't getting into financial trouble because their tax burden is higher.

They're getting into trouble for, among other reasons, their income has not risen as fast as their living expenses.

Paying for cable and cell phones for the sloths has nothing to do with it, LOL.

damosuzuki said:

RodeoSchro said:

I'm not so sure it's living beyond their means as it is the means changing. In other words, someone that saved 5% of their monthly income four years ago would have been considered smart.

But if their expenses rose by 10% over four years (meaning the same expenses went up, not that they added new expenses), while their income stayed the same, all of a sudden they are going backwards each month. They didn't buy anything new or start a new hobby, but still they are going backwards.

So they had to cut stuff out until there was nothing to cut any more. That's when assistance came into play.

My philosophy is, always pay cash for everything (except a house, but pay it off as soon as you can). Perhaps a lot of these people are in this situation because of credit card debt.

While I think what you're saying is basically correct, and I think there are some pretty interesting reasons why fixed costs for households have increased ahead of wages (some of which have been discussed here, and some have not), I still get confused when I hear people say they can’t save anything. I realize there are a million moving parts in people’s lives that impact their ability to save, but I have a hard time processing the statistics that show that so many people (40-50% according to most surveys) don’t save anything and live their lives on a wire, paycheque to paycheque, because that’s completely at odds with my own experiences. There were times in my life where things were very lean for me and I was always able to save. I lead a very simple life, but I don’t think I’m deprived in any way and I currently save around 73% of my net income, with pension and a company share plan on top of that, & my salary isn’t spectacular or breath-taking in the least. So when I see those statistics and I hear these stories I feel this incredible disconnect, because my life seems to be so at odds with the experiences of others. I can certainly understand why a person at the low end of the wage spectrum would be in that situation, but it's hard for me to grasp why this seems to be the case for so many people who earn what I would say are fairly reasonable middle-income salaries.

You make some excellent points and logically, it does seem like your case should be the rule rather than the exception.

But it's not, and here's why:

Our country's economic health was built on debt. Specifically, consumer debt. As long as incomes rose, that was no problem. People could either handle their debt more easily and put some money away, or borrow even more money since they had the means to make the payments.

Unfortunately, the vast majority of people chose the latter route. And when the bubble burst, they were left with high debt payments and decreased income to handle it.

On top of that, the GOP Congress and President passed in 2005 a credit card bill that allowed the credit card companies to charge rates as high as 35% on past due balances. So if you got into trouble, you had to pay MORE.

That doesn't make sense, does it? You can't afford your current payment, so the credit card company raises your payment substantially.

Of course that's a model that's bound to fail and it did. What happened next was what economists call "de-leveraging". That's made up of: (1) a lot of consumers not paying their bills and getting debt ultimately forgiven; and (2) consumers that can pay doing only that, and not borrowing any more money. Getting out of debt, in other words.

When American consumers quit borrowing money and buying stuff on credit, that's when you saw the US economy start contracting.

Ugh, sorry for the long answer. I can't quit typing when it comes to economics!

Genesia said:

It costs a lot of money to keep the sloths in cable and cell phones.

Sloths everywhere are partying like it's 1999!

I just try try to make my payments every month ... and stay positive .

Hey - i got a job . I have med insurance . etc . and I do have a house that is NOT underwater. It could be worse .

But I also think about my "dream" . And it feels shattered in so many ways . (thats the negative vibe and the other side of my "truth" ). When people say about living beyond "your means" etc .. I get alil frustrated because - just a few yrs ago I NEVER IMAGINED making so little money .... for what I do ... and what I have trained for etc ...

Where is my bailout ? Oh i guess technically they could say the govt saved the financial institution so ... it could have been worse ... sigh . Back to square one .

ColAngus said:

I just try try to make my payments every month ... and stay positive .

Hey - i got a job . I have med insurance . etc . and I do have a house that is NOT underwater. It could be worse .

But I also think about my "dream" . And it feels shattered in so many ways . (thats the negative vibe and the other side of my "truth" ). When people say about living beyond "your means" etc .. I get alil frustrated because - just a few yrs ago I NEVER IMAGINED making so little money .... for what I do ... and what I have trained for etc ...

Where is my bailout ? Oh i guess technically they could say the govt saved the financial institution so ... it could have been worse ... sigh . Back to square one .

i get what you're saying. it's not about living beyond ones' means. it's about a changing world and lost opportunities.

on the jobs landscape today, employers in my field are weeding out older, more highly paid workers. the same thing is happening to most of my friends and their career paths as well. younger, cheaper labor is preferable.

i think it's true that a lot of job options have disappeared over the last ten years. we are facing a much starker future in the employment world.

damosuzuki said:

RodeoSchro said:

I'm not so sure it's living beyond their means as it is the means changing. In other words, someone that saved 5% of their monthly income four years ago would have been considered smart.

But if their expenses rose by 10% over four years (meaning the same expenses went up, not that they added new expenses), while their income stayed the same, all of a sudden they are going backwards each month. They didn't buy anything new or start a new hobby, but still they are going backwards.

So they had to cut stuff out until there was nothing to cut any more. That's when assistance came into play.

My philosophy is, always pay cash for everything (except a house, but pay it off as soon as you can). Perhaps a lot of these people are in this situation because of credit card debt.

While I think what you're saying is basically correct, and I think there are some pretty interesting reasons why fixed costs for households have increased ahead of wages (some of which have been discussed here, and some have not), I still get confused when I hear people say they can’t save anything. I realize there are a million moving parts in people’s lives that impact their ability to save, but I have a hard time processing the statistics that show that so many people (40-50% according to most surveys) don’t save anything and live their lives on a wire, paycheque to paycheque, because that’s completely at odds with my own experiences. There were times in my life where things were very lean for me and I was always able to save. I lead a very simple life, but I don’t think I’m deprived in any way and I currently save around 73% of my net income, with pension and a company share plan on top of that, & my salary isn’t spectacular or breath-taking in the least. So when I see those statistics and I hear these stories I feel this incredible disconnect, because my life seems to be so at odds with the experiences of others. I can certainly understand why a person at the low end of the wage spectrum would be in that situation, but it's hard for me to grasp why this seems to be the case for so many people who earn what I would say are fairly reasonable middle-income salaries.

I'm totally with you.

XxAxX - i do agree with ya . I do have options . so I think I will casually start a job search in the next couple of weeks .

I have days where I think - positive good thoughts . I think "i am makin money and getting ahead" it is just somedays where I feel I am spinnin my wheels and ugh .

JustErin - I read that and I thought WOW ... someone saves 73% of their net income ???? that is just unheard of .... i really have never imagined ... (unless Mitt maybe does that ) . But seriously it is easier if you are making 2 million - to save money than if you are just "gettin by" but ... then I thought about it ... and I gotta say ... "budgeting" is one of those words I have always not done too well ... I have read alot about it in the past couple months because that is kinda my resolution before I started this post .... gotta just do it .... pay myself first etc ...

I think kids really add something to my life - but I never imagined how expensive they are .... I shouldnt say it that way ... I remember reading about how much a kids costs before I had kids - just never imagined NOT having that much in the bank - again another result of this economy .... stay positive colonel !

we all will be: the more things the government has to pay for the more we all have to work to make the same money. And then the cycle of inflation starts.

It is like when they raise the minimum wage. the company now paying that much more can only absorb that added cost for so long before they start to cut hours and have fewer people on any given shift. Then prices start to go up as well. It has to happen it always happens. The is often a period of time when the company absorbs it but they can not forever.

the option is to just find a way to get on and stay on the dole. the other fact is as more services are made available the less incentive there is to work. many will claim that is not so but again it has to be true, it is necessarily so.

Only suckers work. Chuck it and let somebody else pay your way.

Genesia said:

Only suckers work. Chuck it and let somebody else pay your way.

no one said anything like that. but you have to admit the less you risk losing or the less you have to gain by extra effort the incentives start to go away.

It is like the big business bailouts. If Bank of American KNOWS it can get a bail out it will be more willing to take risks. Same with anyone. If I thought I would still have a house and food and a little money whether i worked or not why work so hard?

OnlyNDaUsa said:

Genesia said:

Only suckers work. Chuck it and let somebody else pay your way.

no one said anything like that. but you have to admit the less you risk losing or the less you have to gain by extra effort the incentives start to go away.

It is like the big business bailouts. If Bank of American KNOWS it can get a bail out it will be more willing to take risks. Same with anyone. If I thought I would still have a house and food and a little money whether i worked or not why work so hard?

Ummm...I believe I just did.

Genesia said:

OnlyNDaUsa said:

no one said anything like that. but you have to admit the less you risk losing or the less you have to gain by extra effort the incentives start to go away.

It is like the big business bailouts. If Bank of American KNOWS it can get a bail out it will be more willing to take risks. Same with anyone. If I thought I would still have a house and food and a little money whether i worked or not why work so hard?

Ummm...I believe I just did.

do you subscribe to that idea?

OnlyNDaUsa said:

Genesia said:

Ummm...I believe I just did.

do you subscribe to that idea?

Of course, I don't.

But more and more people in this country do believe that (apparently) - or some form of it.

Genesia said:

OnlyNDaUsa said:

do you subscribe to that idea?

Of course, I don't.

But more and more people in this country do believe that (apparently) - or some form of it.

Don't worry, I'll tell the sloths to cut you some slack. We'll let them pick on SlamGlam.

ColAngus said:

JustErin - I read that and I thought WOW ... someone saves 73% of their net income ???? that is just unheard of .... i really have never imagined ... (unless Mitt maybe does that ) . But seriously it is easier if you are making 2 million - to save money than if you are just "gettin by" but ... then I thought about it ... and I gotta say ... "budgeting" is one of those words I have always not done too well ... I have read alot about it in the past couple months because that is kinda my resolution before I started this post .... gotta just do it .... pay myself first etc ...

I think kids really add something to my life - but I never imagined how expensive they are .... I shouldnt say it that way ... I remember reading about how much a kids costs before I had kids - just never imagined NOT having that much in the bank - again another result of this economy .... stay positive colonel !

Colonel, I occasionally post about my savings rate (perhaps not very wise of me – identity theft isn’t impossible), and undoubtedly I do it partly to brag a little and that’s not a good quality in anyone and I don’t like that part of me, but I also do it because I don’t think there’s anything particularly extraordinary about what I do and it always surprises me that more people don’t make the same choices I do. Not that I would expect everyone to live like me, but that I would think more people would make that choice.

Years ago I made a decision to never get married, never have children and to try to protect myself financially as much as possible. I live in a low income area (low rent), I’ve never owned a car & never want to and I walk everywhere (no transportation costs & good exercise) and I never eat in restaurants and only occasionally order a pizza (minimize food costs). Those are the big ticket costs, where most of our money goes, and I take a hatchet to them. I follow my savings versus net income continuously and ensure I save 70% every four weeks, and if I don’t meet that budget figure then I cut back on expenditures the next four week cycle. And there’s nothing hard about it.

I certainly don’t feel like there’s anything lacking materially in my life, and if I do want something, I always ask myself whether that thing I want is worth more to me than the financial security that comes from having that money in the bank, and the answer is almost always no. I’m pretty sure the freedom from worry having that money gives me is worth far more than anything I can think of buying.

And, at the risk of droning on and being a bore, I do want to add something else. I don’t know anything about you other than the things you said in your first post, and I don’t know anything about anyone else on this thread, but I’m pretty sure that I can say that all of us have by any reasonable measure (diet, housing, access to technology) comfortable day-to-day lives, better than almost anyone did in the past (even recent past, not in the distant past) and better than the way most people alive live right now. I believe we, even those among us who have very little, were all born on third base just by the fact that we (I assume) all live in first world countries at this moment in time, and perhaps it’s all going to go away – our way of life may simply not be sustainable – but in the meantime I can’t work up that much 1%-er vitriol over someone having more than me. If we’re all drones whiling away our hours for our capitalist overlords, then I’d say we’re the luckiest drones ever, and I think we ought to remind ourselves of that and try to remember that an enormous percentage of the world doesn’t have access to a fraction of what we have. I try to use what I’ve got wisely, and I try to consider the interests of people who have a lot less than I do in how I spend it and how I plan to use it in the future, which is why I have that link in my signature.

Blah blah blah…Sorry, I’ll get off my soapbox now.

[Edited 11/9/12 4:52am]

damosuzuki said:

I certainly don’t feel like there’s anything lacking materially in my life, and if I do want something, I always ask myself whether that thing I want is worth more to me than the financial security that comes from having that money in the bank, and the answer is almost always no. I’m pretty sure the freedom from worry having that money gives me is worth far more than anything I can think of buying.

Untill that bank falls or the dollar collapses.

damosuzuki- i do applaud ya ... cant imagine saving that much ... but i do applaud ya ...

i do foresee a time when i am debt free and ... well ... i hope to get even close to what you are doing ...

I have a terrible credit card debt from my spending addiction, have to work extra hours at a second job to make ends meet and still struggle...if I didn't have this dilemma, I could have contributed even more money at home than I already am though I still manage to pay my other bills. I feel really, really bad about it. I pay everything on time and budget well, but it's still not good enough.

[Edited 11/10/12 4:30am]

Tremolina said:

damosuzuki said:

I certainly don’t feel like there’s anything lacking materially in my life, and if I do want something, I always ask myself whether that thing I want is worth more to me than the financial security that comes from having that money in the bank, and the answer is almost always no. I’m pretty sure the freedom from worry having that money gives me is worth far more than anything I can think of buying.

Untill that bank falls or the dollar collapses.

Oh sure, I didn't mean to suggest there's no risk in my life. I try to minimize the reasons I have to worry, and control the things that I can control. If society collapses, then I'll be out there hunting feral cats with everyone else, I guess.

[Edited 11/10/12 5:52am]

Tremolina said:

damosuzuki said:

I certainly don’t feel like there’s anything lacking materially in my life, and if I do want something, I always ask myself whether that thing I want is worth more to me than the financial security that comes from having that money in the bank, and the answer is almost always no. I’m pretty sure the freedom from worry having that money gives me is worth far more than anything I can think of buying.

Untill that bank falls or the dollar collapses.

I am thinking barack would not mind if the USD was removed as the World Reserve Currency.

if that happens and we are on at least the 2nd step in that direction (not that I know how many steps there are) it would be bad.

I know just what you mean ColAngus - when I think of the job and perks I left 2 and a half years ago and now I'm working 10 times harder for less money and perks I think there has GOT to be a better way. I definitely think there has been a major shift since the GFC and employers are squeezing all they can out of their employees. The attrition rate where I work is shocking and if you ain't making target, they will show you the door with the quickness.

But then I catch myself and think "What the fuck are you complaining about? You live in a holiday resort - you've got an indoor/outdoor pool, indoor/outdoor spa, sauna, gym, oceanview and 2 minute walk to the best beach in the world - this is the tough life?"

yes- i wrestle all the time with "trying to stay positive" ...

saying i have a great home, great kids .. great wife etc ...

and try NOT to stress all the negative ..... but the job still does suck ! lol