Basics, Not Luxuries, Blamed for High Debt

[cal04]

Why are Americans so deeply in debt? It's not because they are using credit cards to buy plasma TVs and premium coffee drinks at Starbucks. The real culprits, according to a new analysis, are the rising costs of housing, health care and education.

The debt of the typical American family earning about $45,000 a year rose 33.1 percent from 2001 to 2004, after adjusting for inflation, according to a study based on data compiled from the Federal Reserve Board's most recent Survey of Consumer Finances. The Fed report, released in February, gave raw numbers on debt levels. The new study analyzed the data more closely to determine the sources of debt. It was conducted by the Center for American Progress, a Washington think tank that describes itself as progressive and is run by former Clinton White House chief of staff John D. Podesta.

Real wages, after adjusting for inflation, have been flat since 2001, according to the study, while the cost of big-ticket items for which families pay the most rose. In the past five years, the costs of medical care, housing, food, cars and household operations rose 11.2 percent, the study said. Many families are trying to make up the difference by borrowing, according to Christian E. Weller, author of the report and a senior economist at the center.

"Very little can be explained by frivolous consumer spending," Weller said. His views were echoed in a news conference by Elizabeth Warren, a law professor at Harvard University who analyzed the sources of debt that emerge in bankruptcy filings and reviewed the results of Weller's study. "The average American family is walking a high wire and hoping there won't be a high wind," Warren said.

more
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/11/AR2006051101779.html

[Deja Q]

1. And those trying to bring it down end up losing their jobs,

due to offshoring, offpeopling, change of management which in turn invites chaos and animalistic tendencies amongst "evolved" humans...

Not just a wind out there. It's a big-ass tornado.

[Just Me]

2. NO SHIT!!!! You mean to tell me a major NP is acknowledging THAT!!!!

I am in fucking shock!!!! *faint*

[Just Me]

4. OH, but I must add the "real wages" thingy is BULLSHIT!!!

Good GOD,...real wages "flat",...OHHHHH, they are just talking about since, like, the Bush administration coup. REAL WAGES have been "flat" since the late 70's, early 80's. They may have upped a bit during Clinton's reign, but no where NEAR inflation for BASIC NEEDS: food, clothing, shelter, warmth.

Oh, man,....I read stuff like this and just,...shake my head.

The "economy theory" that's DRIVEN this country, the "supply-side theory" proposed by those who seek to rule the world needs a freakin' stake driven to its death.

Wonder why we have the highest crime rate, the highest violent death rate, the highest prison rate in the whole world? It's cause the FANTASY of "supply-side" economics is driving people into desperation, with the media force-feeding the fantasy with brutality.

SICK COUNTRY RUN BY SICK PEOPLE!

Okay, /rant.

[raccoon]

13. "but no where NEAR inflation for BASIC NEEDS: food, clothing, shelter,

warmth"

AND medical care.

And fewer people have health insurance now than the number who had it in the 70's or 80's.

[Boomer]

3. Not in all cases

Guess I'm just weary of hearing an old dear friend of mine complain that she and her husband can't afford to pay for maintenance & repair for their house. But oddly enough, they CAN afford a week in Cancun.

Sigh.

[Just Me]

5. Well, I can identify with that.

My ex-beau couldn't afford to loan his son a couple hundred bucks to insure his car; but could afford to buy a $6,000 piece of "functional art" (that, IMHartisticO wasn't worth $500).

But, he IS my EX and he wasn't blue-collar or proletariat. He's an insurance defense attorney and PRETENDS to be "liberal". Hence, EX!!!!

[rucky]

6. Think of all the money they're saving on shrinks and divorce lawyers.

eom

[progressivebydesign]

7. Sad how the Americans accept nothing...

How pathetic that taking a one week vacation is the cause for scorn. Do you realize that in other countries six weeks of vacation is the norm? Of course they don't have to pay for their own health care, outside of taxes, and most actually earn a living wage.

I would not be so quick to damn your friends for taking a vacation once a year. "Are there no poorhouses? Are there no prisons?" Sometimes one week's vacation is a necessity, not a luxury.

[Boomer]

11. You've got to be kidding

A one-week vacation is not an indulgence, but spending that week in Cancun is hardly a necessity. Especially since they do it nearly every year. It's a luxury that some people can afford (great for them) and others can't, but seem to feel they should have anyway.

The one tangible asset my friends have is their house. Skipping basic maintenance on their property devalues their investment. They also have zippo in savings, which means that if either one of them loses their job (an increasingly likely prospect since they are both college profs) they are facing financial disaster.

I will happily deplore the financial and political system that has made a vacation in Mexico a luxury, but the reality is that living within your means is the best way to survive these perilous times. And stamping your foot while crying "But I deserve a good vacation!" isn't going to make the creditors go away.

[LostinVA]

15. A week is Cancan is actually really inexpensive

Usually cheaper than going, say, to Myrtle Beach.

I haven't been on a real vacation in two years, and I am literally having some bad mental burnout. Hell, I barely ever even take a day off. Even though the SO and I should/could use the money to blacktop the driveway, or whatever, we're taking a trip in October. Probably to Mexico, actually, and will be a budget vacation. We both work very hard, she just got her Master's (finally) after three years while also working full time, and she needs it, too. I don't consider it a luxury or an indulgence, and I honestly don't care if some people think I should spend the money on "something better." It is a quality of life issue. I don't feel like I have to explain nor apologize for this to anyone.

[elehhhhna]

19. check here for their hot deals--

funjet.com

you can usually book an off-season vaca CHEAPLY with about 60 days notice...
get the trip insurance though as OCt is hurricaine season.

[Nikia]

39. My boss has a time share down there

Is advice for doing things cheaply is to get away from the American tourist places for things like eating out or any supplies or toiletries you might need.

[union_maid]

20. No vacations here

I have never, ever been on a vacation to a place like Cancun. My husband and I do spend a couple of weekends a year taking car trips to visit friends. Occasionally we go in on a motel room with some of them if it's not practical to stay in each other's homes. Our "vacations" cost maybe a few dollars more than just staying home would.

We are falling farther and farther behind because things are going up, our medical co-pays alone - while being fully insured - run several hundred dollars a month. Our income is much less than it was a few years ago, since my husband's health problems coincided with his outsourcing. We're both working, but most of what we saved for retirement is gone. It's not because of lack of frugality, unless we should have saved by not indulging medications that are needed.

[ProudDad]

53. They probably picked Cancun

because it's cheap.

It's cheap because it's one of the worst places in the WORLD to take a vacation unless you get the HELL out of hotel row and head toward the north side of Cancun town or west across to Merida.

I first glimpsed hotel row when riding the bus to visit some friends who were staying in the bowels of hotel row, heard a gasp from my 2nd ex-wife and looked up to see a big orange KFC. Gad! It's like the Las Vegas strip without the class.

Thank goodness nearly all of the vacation was out in the Yucatan and in Cuba!

[area51]

8. Elizabeth Warren

She's been on PBS's NOW show a few times.

[lindisfarne]

9. Sad that so many of those in debt voted for Bush. n/t

[Rex]

10. Fuck credit cards and their dominion over the working class.

Artificial layers of revenue for parasitic organizations. In nature parasites are bad and usually cause harm to the host.

[SoCalDem]

49. We cut ours up, paid them off and haven't used one since Oct 05

Don't miss them ONE BIT..

Of course we don't buy much anymore, either. We go grocery shopping, and spend money on the cars, have DishTV and that's about it.

At our ages, we are DIVESTING ourselves of stuff.. Still have a ways to go, but it feels good to get rid of stuff instead of continually accumulating it.

We kept ONE card (Discover) for emergencies, but other than to use it for a hotel reservation guarantee, it's gathering dust :)

[HughBeaumont]

12. Wages simply aren't keeping up with inflation.

This has been the sad tale of the Bewshconomy but not ONE person chooses to report on it. Instead, they're like the RW Plain Dealer, writing stories about how offshoring isn't any big deal, about how the economy is going gangbusters and trumping up Ken BootBlackwell.

[Tracer]

14. I thank my mother ...

... who grew up during the Depression, for her mantra --- "There's no friend like money in the bank".

I somehow paid attention to this (while ignoring many of her other platitudes), and have no debt at all (and have some "money in the bank"). All the while doing this on an average of $30,000/yr.

Thanks Mom.

[RawMaterials]

17. Good Job Tracer

:applause: If only more people could remember the wisdom of the Depression era generation. I personally think everything my grandfather say's is gold.

[Boomer]

18. Same here

My mother was so frugal that she washed sheets of aluminum foil so she could reuse them. Some of my friends laughed at this, but I found her thrift admirable rather than absurd.

Which means (as noted in series of posts before this one) that I'm seriously out of step with a lot of Americans, who feel that thrift is an imposition and a deprivation. :shrug: I always saw it as just a sensible approach to life because it kept me from getting even MORE stressed out dealing with debt.

When it comes to finances, I've always been a glass half-full kinda gal. I count my blessings for having a house, food to eat, and don't fret too much about not being able to afford luxuries. Compared to life just a few hundred years ago, I'm living a lifestyle that would have been envied by anyone but royalty. And if you like indoor plumbing and frequent baths, even royalty might have been envious. :P

[tblue37]

52. I have always tried to live by the pioneer ethos:

Use it up, wear it out, make it do, or do without.

I reuse paper towels, plastic bags, paper bags. Anthing that can find a second use gets a second use.

The paper towels are saved to be used later on things that don't need them to be hygeinically clean. For example, I have a cat that pukes a lot. Old paper towels are saved to clean that up, or to wipe around the bottom part of the toilet.

Old plastic bags are used for throwing away organic stuff that would otherwise make the trash can stink (I don't have a garbage disposal).

[femrap]

21. Tracer.....

Never thought of money in the bank as a friend....but your mom is right. I have always considered money in the bank as 'f*ck you money.' It enabled me to get out of oppressive situations such as bad jobs and bad relationships!

[bikebloke]

23. Another frugal lifestyler here

I guess I listened to my grandmother, who was widowed and raised four kids during the Depression. My father called me "jew boy" - yeah a ditto-head to the grave. But then I paid for my college education, which he scorned because then I wasn't turning out to be his mini-me, stroking his own ego. Thrift also allowed me to travel and live around the world, while friends said I should spend the money on TV's and stereos. Now I save for old age or hard times. I suspect the latter will come first.

[earth mom]

30. Good for you-but are you married and or have kids?

It's easier to save on 2 incomes or if you don't have kids.

[Tracer]

45. Golden Rule .....

.... I've been divorced since my two kids were 5 and 7. They are now grown adults.

I did it all on my own and it wasn't always easy! It sure would have been better all around to have two salaries, and a father present for the kids, but everything has worked out.

[earth mom]

50. Again-good for you. So, okay How'd you do it?

We have one income and a kid. And not a cent put away for a rainy day. We don't have any credit cards, and don't go out to dinner (though we do get an $11 pizza a couple times a month), I cut everyones hair including the dogs', shop at thrift stores and haven't had a vacation that wasn't an overnight to the coast in years. I could go on and on but I think you get the picture.

Hubby and I would love some money saved in the bank, but it's just not possible because there is NEVER any money left over. That's why I really don't know how anyone saves money unless they are single or have 2 incomes or no kids. :shrug:

[barb162]

31. smart mom!

[Yupster]

32. I'm with you Tracer

No debt at all. House paid off, cars only with cash.

I know people have hard times, but I can't understand why so many people live beyond their means, and do it for years.

[ckramer]

40. Cool!

Happy Mother's Day to your mom!

[ovidsen]

16. Monkey see, monkey do.

Okay, that's being unkind to monkeys.

The 10s of millions of people who voted for Bush (or who didn't vote) are now acting like the government they elected.

Spend a lot of money on toys (guns and butter!) and rack up a tremendous debt doing it. Take out a second mortgage (on your home or your children) to pay for it. Insist that those toys are absolutely essential and furthermore, it's the American way.

Marvel at the sheer size of the debt and cringe at what interest rates are doing to that debt. Express satisfaction that your basic needs are being met. Well, not really. Those unexpected medical expenses are a bear! And that's just for starters! Oh well... tomorrow is another day. What's a little more debt? And gosh darn it you deserve those guns and butter!

I find those parallels scary.

[NashVegas]

22. The Saddest Part of This Article:

Many families, particularly middle-income households, aren't acknowledging that declining incomes mean they must radically adjust their standards of living, according to Weller and Warren. Warren suggested that families that can no longer realistically afford their single-family houses should move to condominiums, consider limiting their families to a single automobile, get second jobs to pay off debt ...

They're telling us that middle income people won't be able to afford a lifestyle that their income would have sustained, easily, 10, 20, 50 years ago. That's fucked.

[Yupster]

33. Middle income families fifty years ago

didn't live anything like they do today.

They had one car if any. They didn't have air-conditioning. Where I grew up they lived in apartments and slept on the roof or fire escape during hot summer nights. No computers, one black and white TV if any, one phone.

If people think we live worse today than people did 50 years ago, they have short memories, or a short number of birthdays.

[union_maid]

36. I remember 50 years ago

But there are no cheap apartments at all in many areas now. The ones that the families I know came from are not rentals anymore and they're exclusively for the affluent. Neighborhoods that you wouldn't want to walk around in at one time are now full of apartments selling for around a million dollars.

One black and white TV cost the same as a big screen color TV (not HD) in actual dollars - not adjusted for inflation. Adjust for just a portion of the differential in cost of living and a TV in the fifties would cost the equivalent of a big, high definition set now. We had the same number of phones per square foot as we do now in our house.

My first car cost $50. Repairs were much more possible to do yourself and cheaper to do, so having an old wreck was possible. People seemed to aquire second cars as they moved to areas with no public transit.

One blue collar income could support a family and buy a modest house in the suburbs. Can you say that about now? I don't think so. We have more gadgets, which come cheap, but healthcare, housing and necessary transportation are increasingly out of reach for even two income families.

[Tansy_Gold]

41. I remember 50 years ago, too.

And I grew up in a family that re-used brown paper lunch bags, washed (and folded!) aluminum foil, had a cabinet stocked with jelly and cheese glasses, and so on. I still re-use plastic Zip-loc bags. . . .

But the whole American lifestyle has changed dramatically in those 50 years. It's not just that a week in Cancun is cheaper than a week-end at Disneyland or that a big-screen tv costs less today than a 17-inch b&w in 1960. It's that over the first half of that 50 years, Americans were both encouraged to buy buy buy buy buy buy AND paid the kinds of wages that allowed them to buy. Now we're still bombarded with the advertising that says buy, but we don't have the means to do it. The pills that are pushed on tv cost more than the set and the cable service; if you add in the cost of insurance, forget it.

I recently met a couple from the Netherlands, who said that their income tax rate is a little more than 50%. But they don't have to worry about health care bankrupting them. They don't have to worry about education costs for their grandchildren. They have one car and two bicycles, and the bikes wear out a lot sooner than the car because they use them far more. They can bike to the store, bike to the theatre, bike just about anywhere, and a gas price of approx. $7/gal is no big deal.

We have an American lifestyle (and mindset) that balks at this, and yet we can't seem to get our collective heads around the idea that if you have "planned" communities that include no facilities for jobs or shopping and all those facilities require driving 20 miles in a gas-guzzling car, then $3/gallon gas is going to have a major impact on the entire economy. Ditto with health-care costs. If neither employers nor the gubmint will cover medical needs, then the skyrocketing cost associated with advancing technology (and non-stop advertising) is going to impact -- ding ding ding -- the entire economy.

Blaming individuals who aren't frugal enough to save themselves from financial disaster is just another version of the repuke "personal responsibility" fallacy. The post-world-war-II economy, the need to turn all that military production (and profit) into "peacetime" production created a booming consumer economy. A more "community" oriented system of government AND economics might have been able to maintain some level of that prosperity; what we've got here was almost foreordained.


Tansy Gold, just babbling

[shrike]

43. The job situation fifty years ago was much more stable

Sign on with a company, show up every day, do what they asked of you and you have a job for life. Not anymore.

Elizabeth Warren's "The Two-Income Trap" does a great job explaining how and why the basics are bankrupting Americans. But the toys are cheaper than ever . . .

I agree with you, btw, about changing our mindsets re: community. I bike as much as I can, but some parts of town are frankly dangerous to ride in. Plus, as one cyclist pointed out to me, bike paths are our salvation since sidewalks don't exist anymore, especially in the newer communities.

I would LOVE to live in a community where I could walk everywhere: to work, to shop, to the movies. Some suburbanites don't, however, and they can be quite irrational. A developer near our town wanted to put in a small shopping center with a grocery store (fresh foods, deli mets), a bank, an ice cream parlor and other amenities right next to a subdivision. The neighbors went nuts: they'd moved out into the "country" (on quarter-acre lots, LOL) and wanted it to stay "rural." Never mind that there was a gas station and another commercial plaza right across the street -- this was at a VERY busy intersection. Plus, they said, such a development would bring "strangers" into the neighborhood, who would then abduct their children . . . !

This, unfortunately, is what we're up against in some places.

[sleipnir]

56. Well, 50 years ago we didn't have the internet.

But, whatever, let's make gross generalizations about goods and costs...

Not to be hard on you Yupster, but this is a chronic issue with dealing with costs and expenses from past times, especially when the scale is half a century.

"Well, we could only afford one horse back in 1850, Lord knows how these families do it today." (Whereas today, no one can afford a horse, except for the uber-rich)

[noonwitch]

24. They're using credit to fill up their gas tanks, too

In hopes that the price will fall. I actually think it will fall a little before the elections this November.

[sunniluna]

48. in regards to gas

i think people should take public tranporation whenever possible, i'm in l.a. and i take public transporation, my car is for emergencies only, my goal is to get rid of it so i can pay for food...lol...sort of joke, sort of not...but the more people who take public transporation in los angeles the better it will be, this is sort of local comment, since in other places its not that big of a deal. in l.a. they've set it up where you have to drive and i think we should stop that madness, if everyone took the bus, the service would have to be better and people would be more accomodating of the lateness factor, maybe spread out start times or something...

i've caculated that i will save 5000 dollars a year, taking public transportation to and from work, that's a big savings.

sunni

[Javaman]

25. Obvious Man, save me!!!! nt

[Broken_Hero]

26. thats, true...

my wife and i are in credit card debt, of about 1800 dollars. But, the debt was incurred, by buying gas, food, tires, and necessities, because of other incidents that life throws at you.

CAr breaking down, loan from bank=bank payment

Ac breaks down=another loan payment

catch my drift? My wife and I cannot even begin to start saving yet. When things mess up, and need to be repaired. Like our mini van last year, engine blew, transmission went, we didnt' have 5,000 in our pockets to fix it, so loan from bank.

And, we just got a house in april of 2004, and since then, we have been trying furioiusly, to begin to save money, each time i save a 100, or 200 something happens, window breaks, new tires, what have you...today, for my wife and i, its impossible for us to save. We use credit cards, because we are tired of going to the bank for loans, they treat us like shit to begin with, and they want collateral for any amount of money that we borrow, be it 500 bucks, or 5,000....

We dont' abuse credit cards, but if we didnt' have them...god, we would be up a creek with a bank, or we would forfiet our house, cause our bank only loans, if we have collateral to match it, and what happens, when you run out of the collateral? Starve to death? Not I, credit cards have saved our asses, and we are doing our best to pay them back down.

The basic necessities have gotten more expensive, especially energy costs, its sickening. My wife and I are only ONE major incident away from losing our house...talk about living on the edge....the american dream...:(

[Nevernose]

27. I save 25 bucks a week

I know EXACTLY what you're going through. That's a 100 dollars a month in savings, for which I am constantly barraged at the Credit Union to have some kind of fancy IRA for retirement or my kid's (nonexistant) college fund. Yeah, like I've got money in the bank to fund any kind of investment beyond my "oh-shit-what-if-my-car-breaks-down" savings account.

I do give $25 a month to a charitable cause, like the ACLU or DU or a local hoemelss shelter, or some other activist liberal group that could use the money, and $20 a week to the Unitarian Church I attend. I've been poor, and I'm willing to help out financially, however much I can, to those less fortunate. Other than that, there's not many places I could cut back on.

Nevada Power wants to jack up our rates something like 30% in two increments by September 1st -- just in time for summer in the Mojave. I'm a single parent trying to make it on the pay of a schoolteacher in what is becoming a very expensive city to live in. Fuck the shareholders of Nevada Power.

The only saving grace is that I spent so many years dirt poor (including a six month living-in-my-truck poor before The Kid was around), working crappy jobs and taking one university class at a time, is that I have a fairly good idea of how to stretch a shoestring budget until it's a mile long and my daughter and I are just kind of used to doing without.

[Broken_Hero]

29. Yes, and it gets harder

when Gas goes out of damn control. When we first got our house in april of 2004, i didn't even budget gas, it was more like a fu-fu thing, what we are outta gas! Lets go get some! Since march of 2005, I have to budget gas down to the nickel, and in some cases, i use the card, cause damn, just living to pay bills wears you out, and my wife and I decide to go out and eat, oh, heaven forbid that!

With the house, our payments on the house have increased...through higher flood insurance, and taxes. When we first got our house, in 2004, our house payment was 690, now its 830...that is a big jump! Now, people in our district just voted YES for another school bond issue, now our property taxes are going up, yet again...wow, just more debt, more money, and yet wages aren't keeping up. In my wife adn I's case, we are barely keeping up, one major incident, and we lose house...big gamble, the american dream is...

It just seems the bleeding never stops...more property taxes, more $ for gas, energy, food, everything...anyone who says the basics prices of goods arent' rising, is a total moron. I keep a good eye on basic goods, our prices of milk/eggs/bread have been increasing for the past month...things are going up, yet our wages, are barely rising....

Its frustrating, when you have to bust extremem ass, just to keep afloat, adn at the same time, you have to PRAY that nothing happens, otherwise, you are screwed....

[Yupster]

34. It is sure difficult to save money buying a house

I was amazed when I bought my first one how many incidental expenses were involved like repairs, etc. I remember my first trip to the gardening store. I spent about $ 300 just buying garden hoses and buckets and rakes, etc.

Not to be an old geezer giving advice to young people, but please save a good healthy cash reserve before taking on a huge expense like a home.

[Broken_Hero]

35. we did...

but we underestimated, what everying would cost, and what else had to be fixed. We had 5,000 saved, after we got the house, and my wife and i got married, literally 3 weeks after we got into the house, so we had cash for that, and we used up the 5,000 before the end of may. Breaker boxes, tools, rakes, all the yard shit, lawnmowers.....the 5,000 didn't last long, :) Its not like we just bought a house, with only a dollar in reserve...but after dealing with the house, our cars starting acting up, and when cars go bad, its like a big money pit opens up, for you to dump cash in...

[shrike]

44. I don't know how people who don't have a handyman in the family do it

My husband can fix anything, and our house is in tip top shape. He is constantly in demand for repair jobs: there are some customers, like the elderly or the single moms, that he gives a significant break to; some jobs are so small he tries to do them for free but they always insist on paying him something.

He's done jobs for a few wealthy folk, and all of them were incredibly nice, and sensitive to the fact that Bush is wreaking havoc on this country.

He does have two troublesome people who call him and always want to pay the least amount possible and buy the cheapest materials. And guess what -- they're Republicans!

[Broken_Hero]

51. I'm not a great handy man

but i do what i can...i can fix it, but it won't look all the great, half the time that is...:) all ready had to do a lot of plumbing, and put in two sinks, and did a pretty decent job of that, thanks internet! Most of the other fixes were easy...leak in roof, easy, tar, shingle, whammo done, things like that are easy to me. The breaker box, and anything electric, nah, i know i can't do that, but some of my wife's cousins are pretty decent....:) I'm glad your husband helps out those in need, kudos!...:)

[sunniluna]

47. a house

i'm never going to buy a house, that is not even a thought in my mind anymore, in l.a. with the average house prices over one half a million, man, i'm worried about even keeping my apartment, if they converted my apartment to condos, i'd actually be on the streets, i'd be homeless.

last summer due to budget cuts they cut the class i was teaching and i couldn't find another job due to the fact that:

a i teach, people won't hire teachers, they think you will go back in september
b many places woudn't hire me because i had a degree

i tried to get a job at trader joes, the mall, the grocery store and i couldn't get one, this put me in a very bad situation, there was virtually no safety net, because i don't have kids (not that i think that is unfair, i wouldn't want that net to be taken away) and because my rent was too high. i was like, what am i suppose to do, become homeless and i was told yeah, that's what would have to happen.

in order to make rent and survive the summer, i had to survive on water and a big bag of rice i had purchased earlier in the year, i kept making deals with my utitlity company and i just paid the minimal (my savings had been wiped out in a divorce and a car emergency) and sold everything that i owned, my clothes, computer, i mean if the district hadn't let me back on, well i would have been one of those people talking to themselves in the streets. i never thought this could happen, but wow its so easy to end up f*cked especially in this economy.

sunni

[ProudDad]

54. No problem

My girlfriend and I only made about $110,000 last year. We can't even afford a 900 sq. foot, 2 bedroom box in the war zone in the S.F. East Bay area -- they start at about $480,000!

[Nevernose]

28. For those struggling: Frugal and Efficient Living Support Group

A lot of helpful advice I've found here.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topics&forum=353

[Phoebe Loosinhouse]

37. add up your utilities alone and throw in phone services and cable

Plus, my husband and I use to fuel up 2 cars at 20 bucks each fill for about 60 a week. Now the same comsumption is about 120 a week. That's an extra 240 a month for gasoline alone.

It is shocking what Americans pay for the basics. I don't know how people seem to have the spare dollars for frivolities that they seem to. But, we do save a lot and put a lot aside.

[high density]

38. As big businesses report record profits

It's so sickening to me. At some point all of this consumer debt is going to reach a critical mass and then poof, there goes our "strong and getting stronger" economy. Every time I drive past LL Bean in Freeport, I think to myself that it would probably be empty without credit cards propping up all this spending.

[Bigmack]

42. "The Two Income Trap" ...

by Elizabeth Warren tells about this happening over the last few years. Not luxury spending, but rather three big -mostly unavoidable - expenses going thru the roof. Houses, health care, and child care can kill young people.

The RW meme on this is "Kids today just blow their money... not like when I was young." Bullshit!

When I was young a house cost two or three times my yearly wage... not 10 or 12 times.
Health care was cheap and available.

Most people... not just young people... are one minor financial disaster away from bankruptcy. Wait.. the Repubs solved that little loophole! Now, instead of bankruptcy, you just owe your soul to the company store.

About the book "Two Income Trap" ... it's a great, if depressing read.

From Publishers Weekly
Warren, a law professor at Harvard (The Fragile Middle Class) and her daughter Tyagi, a former McKinsey consultant, have joined forces here to argue here that the two-parent middle-class working family is on the brink of financial disaster. The number of families declaring bankruptcy or receiving a foreclosure against their house has shot up dramatically. Presenting carefully researched economic data to support their arguments, the authors contend that, contrary to popular myth, families aren't in trouble because they're squandering their second income on luxuries. On the contrary, both incomes are almost entirely committed to necessities, such as home and car payments, health insurance and children's education costs. When an unforeseen event such as serious illness, job loss or divorce occurs, families have no discretionary income to fall back on. The authors recommend a number of useful societal solutions to get families out of this trap, such as legally prohibiting credit card companies from charging grossly unfair interest rates and exposing banks that employ a loan-to-own strategy that steers minority customers to higher mortgage rates with an eye to future foreclosures. Warren and Tyagi point out that families buy homes they cannot afford in order to live in a neighborhood with better schools. Their proposed solution, however-to institute a public school voucher system with wider choice-is less carefully thought out. Overall, however, this is a needed examination of an emerging social problem.

[sunniluna]

46. the insanity

in l.a. its so expensive here and while sometimes i want to move, where would i move somewhere where it's cheaper, where would i work? where would my boyfriend work?

i'm almost forced to stay in a big city, becuase that's the only place i can live a sort of normal life. i don't have kids, but man, its like gas is almost four dollars, so i've started taking the bus, the bus in los angeles, that's a big step. i don't eat out, i don't do anything that is not free, but still, i'm getting poorer and poorer, everything keeps going up. my friends are either very wealty or almost homeless, i seem to be the only person left in the middle, and i'm slowly dropping out of the middle class...its just weird, it seems like we are in a depression...

sunni

[ProudDad]

55. Steps you can take RIGHT NOW

1) Don't buy anything you don't need.

2) Don't buy new unless you must, go to thrift stores, etc.

3) Don't buy ANYTHING you don't need.

4) DON'T buy a new car

5) DON'T buy ANYTHING from Walmart, Target or K-mart.
If you must buy new, buy from local mom and pop stores.
Pay a little more to support your LOCAL economy!

STARVE THE BEAST.

The beast is the corporate capitalist economy which is pretending to do you a good deed with "cheap prices" while sending your jobs overseas, polluting your air and water and funneling your tax dollars to the war machine owned by the ultra-rich!

STARVE THE BEAST!!!!

Kill the Corporate Capitalist monster that's killing you.

[sleipnir]

57. Right. Put me on the street with the garbage then.

My employment requires me to maintain a reasonable level of modern, fashionable dress. So, to make my money, I have to spend a decent amount of cash each year on clothing. I have cut back drastically and I always enjoy shopping for "trendy" shit at the thrift shop, problem is, so are millions other people in NYC (literally.) There aren't enough thrift shops here, and that's the truth.

I don't buy things that I don't need, the problem is that everything I buy, I need. The spreadsheet isn't looking to good and i can see the trend moving towards the red each year.

The only prayer I see is 2008 and a new government and a new world once again. But, that's nothing more than a pipe dream at this point...

[NickB79]

58. I'd add one more: have only one child

Maybe two if you can afford it, but anything more than that will put you in a world of hurt down the road. We've reached the point where we simply can't afford to raise large families like our parents and grandparents did. If you are a young couple, don't have more children than you can afford.

[Bigmack]

59. Having a kid...

is the most dangerous economic decision a woman can have. See my post above... about "Two Income Trap"

The authors point to stats that say - never mind that your marriage will last forever - that having a child puts a woman at the economic mercy of her husband.... the economy ... everything!

Child care costs are a killer, too. How about health care for a kid?