Millions of Americans to Fall off an 'Income Cliff'

If by smart you mean above average I Q people I agree. For this small group will have what it takes to be financial secure. Due to the ability to get jobs requiring high IQ that pay the big bucks.

But average IQ people are screwed by this system that is designed to destroy the value of labor and has. Whereas before sweat shop globalism average IQ people could be middle class because labor had value. It no longer does. Why? Because our workers are forced to compete with cents on the dollar labor from dirt poor foreign workers. Something our founders wisely refused to do. Instead if disemboweling our people.. And that system won us ww2 and created the largest middle class in world history as the non protection is destroying our workers and middle class. Giving us the primary cause of this cliff.

Perot tried to stop the insanity but failed. He had an allegiance to our nation and people whereas our politicians and elites have none.

 

LOL! Financially smart people have way more money than 6 months income invested in liquid assets that could be used if needed. If you are insinuating that I was born with a silver spoon in my mouth, you are way off. My Dad did physical labor on construction sites. My Mom was a stay at home Mom. My first job paid $2.30 an hour and I worked my ass off at that job - as I have done at every job I have ever had.

And, just to make sure that you realize something, 6 months income and 6 months living expenses are 2 different things, unless that person is living check to check. And that leads us back to "financial smarts."

I always assumed you were a smart guy, but are you telling me that you don't have 6 months income saved up in investments?

Some people prepare for the future because downturns are inevitable. And, the current situation has barely even affected them, hell, some of them have increased their wealth in the last 4 months. All it takes is long term preparation and financial smarts. Not really any good reasons that others couldn't be there also. Frugality has huge benefits. Say your living expenses are only 50% of your income after taxes. And you invest that other 50%. Do you realize the power in that? And, it wouldn't take long to have several years of living expenses invested in liquid assets. Do you realize that 30 year mortgages on houses that are beyond one's means are finance killers? Can't do 50%? Then do 30%. Can't do 30%? Then do 20%. Can't do 20%, well, then live check to check and when the crap hits the fan, come to PF and bitch and whine that life isn't fair.

Nothing is stopping you from filing that suit. Except, perhaps, the very same reason that you don't have 6 months "income" saved up or invested. Before you claim that you do, remember, your opening statement was that NOBODY has six months income saved up.

Nobody said frugality and self-responsibility is easy, but it is doable. But considering that self-discipline is severely lacking in our citizenry, I can understand why several forum members are telling me I am off base in this discussion.

 

Who does what? Lives like they're poor, even though they're middle class?

As my pal said .. smart people. And they do it so that if bad times eventuate, they will survive. They do it so that they can secure more property. They do it so that they can educate their kids well enough that they'll be financially secure. Etc Etc.

Well, you see that's where we might differ - our understanding of what can be afforded on a typical American middle class income. Not what can be bought, but what can be afforded. Pretty sure America has a lot of middle class people with mortgages, gargantuan houses which cost a fortune to heat and cool, brand new cars, etc .. none of which they can really afford. To be able to afford those things means you must be able to pay for them without borrowing money, AND be able to spare the cash you paid for them.

No matter what 'class' you are, what you can actually afford is what you can pay for in cash. If you have to borrow money for any reason but tax effectiveness (ie, you're an investor), it means the thing you want is outside your price range. Which means you can't afford it.

 

Why didn't they move to where the jobs are? Why didn't they sell everything, and put the funds towards a modest home paid for in cash?

People survive when they adapt to changed circumstances. Those who refuse to adapt, won't survive.

 

I'm retired, basically living off my savings now. If my income is ever interrupted people will go to jail and governments will fall. If that does happen, what the hell.

You are completely wrong in your assessment of the nation's finances and yours too IMO. I only hope we more astute and less judgmental citizens will keep you from ever finding out by just how much.

 

And there's your answer.

Importantly, your answer confirms that it's not a case for pity. It's a case of people choosing to live beyond their means, and regarding anything else as 'suffering'.

Well they're REALLY suffering now. Unlike the smart people.

 

I agree with most of what you wrote above. I have also considered that their needs to be a political party for the middle class.

However, since we all have to deal with both the political and economic systems as they currently are, it behooves each of us to figure out how to make that system work for ourselves. Yes, there are winners and losers - such is life. Smart decisions and frugality creates winners. The absence of that typically creates losers.

Judging from your past posts on PF, I don't think that you are for socialism or communism. My solution is to tell as many people as possible that frugality and decisions based on the long term are what is needed for financial security. For example, have you ever looked into what a 30 year mortgage really ends up costing?

I will stand by my assertion that people need to be financially smart and frugal and make sacrifices for future security. That several members are arguing against this truly baffles me.

 

If a frog had wings it wouldn't bump it's arse so much. McCabe and Mrs., Miller! One of my favorite movies.Who worries about not being able to afford stuff? Just pull a Donald and stiff the people you owe and when they sue you settle for a fraction of what you owe.

 

No other animal species I'm aware of can risk putting aside the need to hunt/graze to raft the Grand Canyon. That's the great thing about being a human animal - we can secure the means of our survival, after which we can raft all we like.

Yet we're still subject to the laws of physics. If we 'raft' instead of 'securing our food source', we 'starve'.

 

Are you planning to only live for six months? You said NOBODY has six months of savings. But then you admit that you do. Please re-evaluate and get back with me... do some people have six months income saved up or do they not? Do you?

My assessment? My assessment is that if people lived more frugally with thoughts of the future, that they would be much better off. So you think there is something wrong or untrue about that?

And you are damned right I am judgmental. I scrimped and saved and worked my ass off and made good financial decisions, I sacrificed things of immediate satisfaction for future security. And when other people make bad decisions and stupidly throw their money down the toilet, then bitch that the system is messed up, well, their misfortune is their own fault.

 

You need to get out more, in that case.

We have a middle class income, and we've always shopped at charity stores. We get our furniture from roadsides, and burn salvaged wood in our fireplace for winter heat. We drive old bangers, and don't run airconditioning or clothes dryers. Our vacations are free camping in the forest. We never borrow money.

I don't regard this life as anywhere near the suffering of being in debt, or being a renter, or not knowing if I can feed my kids next month. A massive house, new cars, or a resort vacation ... is never going to feel as good as the total freedom provided by financial security and the ability to tolerate 'poverty' quite happily.

 

Thanks for pointing that out. I realized early in life that those 30 year mortgages on "too much house" were killers. And I took a different route - start small and cheap with the crappiest house in the neighborhood, add sweat equity, sell, repeat... and I live in a damn nice house now and it was paid off the day I moved in it in 1998. But I guess that what other posters are telling us is that being financially smart and working hard both in and outside of your job are just too much for most people to endure. After all, it is the "system" that is keeping the people down, not their poor decisions.

 

^^^^^^This right here^^^^^^

The financial security I have created for my family is priceless. Thank you very much for posting. Youngsters (and apparently many others) would do well to heed your advice.

 

The rental car places sell low mileage cars for cheap, and come with a warranty too. I've done that route. And when my daughter was a Junior in college and moved from the dorms to an apartment, we populated it with furniture from the Goodwill store.

I don't have to do the above, I could buy all brand new stuff, but I don't see any reason to throw money away. And back to my daughter, because I was extremely frugal earlier in life, my daughter got a college education at a major university with zero loans. Yep, I paid for the whole thing on a single earner middle class income. And that gift to her outweighs any amount of vacations I could have ever taken.

And lest anyone thing otherwise, I have done wonderful things in my life... as you noted, hiking and backpacking are inexpensive. In my younger days, I rock climbed and mountaineered in New Mexico and Colorado. Cheap vacations that were awe-inspiring. Good stuff.

 

Yes.
I explained it in that thread I linked to.

You can show all the graphs you want, it doesn't disprove what I stated.

Maybe it's just "too complicated"?

 

Not really talking about IQ, really just talking about simple financial intelligence. As in, if you spend more than you earn, you are in for a fall. As in, if you take out huge loans and run up your credit cards, you are in for a huge fall. As in, if you spend everything you make, and don't save anything, you are ripe for disaster. Go back to Crank's post #103 above. Crank is very financially astute.

I know of middle class husbands and wives with 2 incomes that make quite a bit more than my wife and I do, but they are living check to check. Yet they think that I am rich because I have decent investments. I just have to smile to myself, knowing that I built my wealth on less than what they earned, while all they did was mismanage their funds. One of my co-workers and his wife have made more than my family has over the years, yet they had to take on college loans to put their child through college, but I didn't have to do that. It all comes down to financial smarts.

That is an entirely different, but very interesting topic. Is the system "designed" to do that? need to start a new thread.

I am all for a wall on our borders, I am all for stopping the work VISAs, I am all for drastically limiting immigration. Supply and demand applies to labor too. Of course, as you mention, competition from the poor of other countries is something that we have to contend with. And if wages are dropping, then we have no choice but to make smarter decisions with our money. If wages are dropping, people are just going to have to lower their desired standard of living so they can save some money for a rainy day fund.

I realize that suggesting Americans need to tighten their belts is worthy of crucifixion, after all, this is America where everyone deserves, nay, is OWED a 2500 square foot home with a gardener and a maid, free lobster and caviar and champagne at every meal, top notch and readily available no-cost healthcare on demand, and doctorate degrees in whatever subject one chooses just for walking into the classroom and sitting in the chair. Of course the previous sentence is tongue in cheek, but hell, that is the direction we are currently heading in.

So by all means, let's just keep convincing the poor that they deserve every luxury known to man, and that someone else is to blame when they can't have everything they want. Let's convince them they deserve houses they can't afford, let's convince them that maxed out credit cards are a good thing, and then let's cry and fret when the bottom of the cliff swiftly approaches. On the other hand, I am thinking it would be better to get them up to speed about finances, and try to push them in the direction of making better decisions.

Perot was from Texas, and you just can't beat that. One commentator said he was a mixture of East Texas wisdom with high-tech wizardry," or something like that.

 

I love stories like yours. It's a great inspiration, and a sharp reminder of how easy it is to do it right.

We're in the same position. We could buy everything new, but never will. There is about five minutes of satisfaction in doing so .. but years of lost money which could have been spent on rafting the grand canyon, or paying for your child's college.

We've also managed to do plenty, adventure wise. Backpacked in our younger days, lived in 'grass huts' in exotic parts of the world, camped all over our own nation, rode horses cross country for days at a time, sailed long distances (the wind is free!) in old boats, hiked forests and high places, etc etc. And all of it was done on the cheap. Never been to a resort, never want to.

 

Well said.

"worthy of crucifixion" LOL. yeah, it's like you're suggesting they kill their own mothers.

 

Really? I had no idea.

 

I worked with a guy one time who said he didn't care if syrup went to $10 a sop, he'd eat it if he wanted it. Life is short

 

That's okay. It seems plenty of Americans have no idea.

 

An attitude which only the rich can afford. The rest of us must live as though it will be long.

Having said that, I understand the syrup thing. We feel the same way about coffee, chocolate, and cheese (as in, we can't tolerate the cheap or dumbed down stuff). That's why we forgo other things .. so we can buy the good stuff.

 

There you have it. Poor people forgo things because they don't have the money to buy them. The saddest thing older people say is "I wish I would have...…"

 

On the contrary, it's only when you reach financial security that you can afford to forgo something you can live without, in exchange for a 'luxury'. Prior to this point, luxuries aren't even in the equation. You buy what you can afford, not what you prefer. We ALL prefer the good stuff, but we can't all afford it.

Actually, it's far FAR sadder to find old people who's lives were so empty that 'paid entertainment' was so important, that they rued the lack of it on their deathbed. Trust me when I say this: The number one regret of dying people .. is people. Not things, not adventures, not risks taken - just people. Literally .. staying at home and being with family. You will never EVER hear someone say they wished they'd spent more time away from home and family, or parachuted, or owned more cars, or a bigger house, or seen the pyramids. Not ever.

 

You would be surprised at the things you can live without.