Financial News

[Y2HH]

So, no one owned goods that would be deemed luxury goods 30 years ago?

 

All you're doing is stating that the luxury items of today didn't exist 30 years ago and therefore everyone is worse at managing money.

 

And I'll note 1 more point...you also explicitly blamed the credit providers in your effort to defend them...by saying that they were happy to provide people lines of credit that they wouldn't pay off.

 

Actually, that's not what I'm doing at all...you missed the entire point, and you reply clearly shows this.

 

People DID own luxury items 40 years ago, they just didn't own 4 of each, mostly because they couldn't afford 4 of each. A radio was a luxury item back then, and an average middle class family had one. A record player is another, and a family had one. A television is another, and...you guessed it, most middle class families had ONE! The same can be said of automobiles.

 

I grew up in the 80's, living in a middle class family, but we didn't have a VCR, and we didn't have cable TV. We did without things because we couldn't afford them at the time, and this was when credit WAS available, as my parents had credit cards...they just all had zero balances on them. I guess I learned a slightly valuable life lesson living through that...which is why I live the way I do today.

 

And I don't blame credit providers, either, I blame the people for overspending, which I specifically pointed out -- and you apparently ignored -- numerous times. The credit providers didn't hold a gun to anyones head and said "SPEND IT OR WE SHOOT!", no...people simply *chose* to live beyond their means, and now they can't get by without multiple incomes because they ran up debt. I guess in some way you can "blame" those that made this credit available...but then you have people like me, who didn't live that way...and aren't in credit debt...because once again, nobody forced me to spend what I didn't have. I call it self control. I also call it living within your means. Of course, this is taking a "normal middle class life" into account, I'm not speaking about people that fell into financial ruin over a car accident, or for unforeseen health reasons.

 

I'd love to own another TV, and another computer, (I work in the computer industry and I'm using a 4 year old pc)...and I'd love to be able to buy my wife an iPhone 4...but we don't have they money to do that right now...otherwise I wouldn't have any savings for "rainy days"...and I'd probably be running up credit card debt.

 

The problem is, most people today have bastardized what a middle class life is...and they life upper middle class or even "rich", when they don't have the money to be doing so. Scale it back...believe me, it's possible...and we don't have to blame credit card companies, governments or banks because we love to spend what we don't have!

Edited February 12, 2011 by Y2HH

[Balta1701]

Unfortunately, there is data which can be applied to that exact question as well. If people are getting themselves into trouble because they're making more purchases on entertainment-related items than they were in the past, then entertainment-related spending as a share of income should be rising.

 

Here is data through 2000:

 

Here's a chart from the NYT through 2009 showing the breakdown in a different way.

 

The amount of their spending that has gone to those luxury items you say people are using to bankrupt themselves has hardly changed over 40 years. What has changed? Well, food costs have gone down. Housing has gone up. Transportation has gone up (which is what happens when you need to have a 2 income household and have to maintain 2 cars). And health care has turned around and is now going up.

 

Here's another presentation, showing virtually constant household expenditure fractions on entertainment goods since 1990.

 

Here's the BLS version of the same data.

 

The real difference is that wage growth for everyone outside the top of the top earners has not kept up with productivity growth or with the costs of living.

[NorthSideSox72]

Sort of funny... Balta is saying that real income versus business performance hasn't risen at the same rate and that's the problem, while Y2HH is saying that the definition of "need" for middle classes has changed and that causes the problem. Um... how about, its all the above?

 

[Balta1701]

Sort of funny... Balta is saying that real income versus business performance hasn't risen at the same rate and that's the problem, while Y2HH is saying that the definition of "need" for middle classes has changed and that causes the problem. Um... how about, its all the above?

The reason I'm a jerk on things like this is that Y2HH's POV leads to the conclusion that improving middle class living standards is a bad thing.

[southsider2k5]

The reason I'm a jerk on things like this is that Y2HH's POV leads to the conclusion that improving middle class living standards is a bad thing.

 

No, it leads to the conclusion that people are responsible for their own messes by their own excesses. Relying on debt for unnecessary consumer spending isn't "improving middle class living standards". That's the mentality of "I can't be broke, I have more checks still!" that seems to be permeating down from our federal government and into our personal lives.

[Balta1701]

No, it leads to the conclusion that people are responsible for their own messes by their own excesses. Relying on debt for unnecessary consumer spending isn't "improving middle class living standards". That's the mentality of "I can't be broke, I have more checks still!" that seems to be permeating down from our federal government and into our personal lives.

The thing you explicitly criticize as "unnecessary consumer spending" is maintaining a constant standard of middle class living.

 

You're rephrasing it here but it's the same exact point. Middle Class people today need to work harder and make due with less than middle class people in the last generation. If they attempt to get around that using any means that you don't approve of, then you criticize.

[southsider2k5]

The thing you explicitly criticize as "unnecessary consumer spending" is maintaining a constant standard of middle class living.

 

You're rephrasing it here but it's the same exact point. Middle Class people today need to work harder and make due with less than middle class people in the last generation. If they attempt to get around that using any means that you don't approve of, then you criticize.

 

You don't see there being a difference between middle class and every member of the family having an I-phone spending? That's not maintaining a constant anything. That is spending more on luxury items. None of those graphs you put up really identify that category well enough for my liking. Or do you really think laptops for the whole family fits under "Home furnishings"?

[Balta1701]

You don't see there being a difference between middle class and every member of the family having an I-phone spending? That's not maintaining a constant anything. That is spending more on luxury items. None of those graphs you put up really identify that category well enough for my liking. Or do you really think laptops for the whole family fits under "Home furnishings"?

In this world? Absolutely. Here we are again with the idea that cell phones and internet access for families isn't completely necessary in the modern world, which I think is ludicrous.

 

And anyway...as I pointed out but you brushed off...all those purchases have done is replace other purchases that have either gone down in price or been phased out. Otherwise, the income fractions spent on those items would have gone up, not stayed steady. That's why I keep saying every version of this argument you guys make, where you want to lecture people for buying things you judge to be unnecessary, is tantamount to saying that the Middle Class lifestyle needs to take a step back. The Middle Class needs to stop pretending that they can have a Middle Class lifestyle.

[southsider2k5]

In this world? Absolutely. Here we are again with the idea that cell phones and internet access for families isn't completely necessary in the modern world, which I think is ludicrous.

 

And anyway...as I pointed out but you brushed off...all those purchases have done is replace other purchases that have either gone down in price or been phased out. Otherwise, the income fractions spent on those items would have gone up, not stayed steady. That's why I keep saying every version of this argument you guys make, where you want to lecture people for buying things you judge to be unnecessary, is tantamount to saying that the Middle Class lifestyle needs to take a step back. The Middle Class needs to stop pretending that they can have a Middle Class lifestyle.

 

Well that explains a lot honestly.

[Y2HH]

In this world? Absolutely. Here we are again with the idea that cell phones and internet access for families isn't completely necessary in the modern world, which I think is ludicrous.

 

And anyway...as I pointed out but you brushed off...all those purchases have done is replace other purchases that have either gone down in price or been phased out. Otherwise, the income fractions spent on those items would have gone up, not stayed steady. That's why I keep saying every version of this argument you guys make, where you want to lecture people for buying things you judge to be unnecessary, is tantamount to saying that the Middle Class lifestyle needs to take a step back. The Middle Class needs to stop pretending that they can have a Middle Class lifestyle.

 

I'm middle class and I have a middle class lifestyle. Funny.

 

Nobody said phones and internet access aren't necessary in the modern world, either. But you don't need Android or Iphone devices when you can get buy 1 get 3 free phones for ... free.

 

I can go on and on...but I think in some odd/paradoxical way we are saying some of the same things, but in completely different ways.

 

People don't have to spend as much as they do.

 

And as for what you say about middle class -- it IS better than it was 40 years ago, that's the point...and in some ways, it's STILL not enough for many people, which is why they spend more than they make.

Edited February 13, 2011 by Y2HH

[Y2HH]

No, it leads to the conclusion that people are responsible for their own messes by their own excesses. Relying on debt for unnecessary consumer spending isn't "improving middle class living standards". That's the mentality of "I can't be broke, I have more checks still!" that seems to be permeating down from our federal government and into our personal lives.

 

Exactly what I mean.

[Y2HH]

The reason I'm a jerk on things like this is that Y2HH's POV leads to the conclusion that improving middle class living standards is a bad thing.

 

Wrong, and wrong.

 

Middle class standards HAVE improved and ARE improving. That's why middle class families can have 3 f***ing televisions now and two cars. And not just any cars...25k+ cars and trucks...because why not?! Nobody wants to be seen in a 13k car that works but doesn't go 150mph!

 

Oh, and we can't have the superbowl party here unless we have a 63" 3D LCD TV, either! So let's buy that, despite the fact that the 60" Plasma right next to it costs 1/3rd the price! Plasmas old though, screw plasma...we need the BEST!

 

You don't seem to get that, do you? Because it's the predominant mentality that I witness on a daily basis. People can live better lives than 40 years ago, without being in debt.

 

I should teach a spending/investing class, because I can easily reconstruct a persons budget to fit their means...so long as they forego the 3 televisions and 250$ a month cable bills, because they *NEED* every channel.

 

Another interesting tidbit...these same people that are in debt while making 2 40k incomes...WILL still be in debt if they were both making 80k incomes. I see that quite often, too. Big promotions come around, and I hear how they'll never worry about money again...and things stay status quo, only now instead of eating at Red Lobster 4 times a month, they eat at Nick's Fish Market...and they're still at square 1...same debt despite making 2x the money...because all they did was lift their spending by 2x.

 

Edited February 13, 2011 by Y2HH

[lostfan]

Ugh I really wish my wife didn't insist on having the max cable package from Verizon. She is the one who doesn't get this, not me, although in life I have had to remind myself a couple of times not to spend money just because I have it. She would be a financial disaster without me.

 

Still, if you want to argue that the inflated costs of housing isn't probably the most significant factor out of all of them, you're probably arguing with a wall. Real wages HAVE declined relative to X number of years ago and probably starting around the early 80s or so. My dad was a steelworker while I was growing up, I think the year I was born and when I was a baby in the early 80s he made about $30k, give or take a couple thousand. Back then, that was decent money to support a family in the suburbs. Then as the years went on we know what happened to that industry. His salary never went up to match the cost of living, and by the time I was ready to go to high school... he's still making the same wages, hence, we were always broke, trying to figure out which bill to let float, going long periods of time without cable or hot water, eventually losing the house to foreclosure (the house being in very bad shape because he couldn't afford to do routine maintenance).

[Y2HH]

Ugh I really wish my wife didn't insist on having the max cable package from Verizon. She is the one who doesn't get this, not me, although in life I have had to remind myself a couple of times not to spend money just because I have it. She would be a financial disaster without me.

 

Still, if you want to argue that the inflated costs of housing isn't probably the most significant factor out of all of them, you're probably arguing with a wall. Real wages HAVE declined relative to X number of years ago and probably starting around the early 80s or so. My dad was a steelworker while I was growing up, I think the year I was born and when I was a baby in the early 80s he made about $30k, give or take a couple thousand. Back then, that was decent money to support a family in the suburbs. Then as the years went on we know what happened to that industry. His salary never went up to match the cost of living, and by the time I was ready to go to high school... he's still making the same wages, hence, we were always broke, trying to figure out which bill to let float, going long periods of time without cable or hot water, eventually losing the house to foreclosure (the house being in very bad shape because he couldn't afford to do routine maintenance).

 

You bring up an exellent point in regard to housing, I touched on it earlier and I believe housing, even at it's current levels, remains inflated. Houses, especially well kept houses, simply cost too much. I know how easy it is to fall into the debt trap, too as I've witnessed many people I know do it. All you have to do is look at their things and you can see why, too. Always seem to have a new snowblower, or lawnmower, or iPhone. Whatever the case may be, it the typical keep up with the Jonses mentality. And it's even a possible learned behavior from watching our government operate on a daily basis.

 

Life can still be fun without a 300$ per month cable bill for 600 channels of movies you've already seen.

 

While my father never lost the house, he also never made more than 42k, all the way up unt retirement. At times growing up it wasn't fun to watch everyone around me with the newest toys, nintendos or vcr's, which I would have died to have. But it was what it was. We got by. And now I have all these things, bit I also tend to understand when to say when.

[kapkomet]

Nah, it's all good, as long as "middle class internet poster" has what he needs to be "middle class" and keep on rock and rolling... it's what's keeping us alive. Envornmental consequences? Bah. Go live like a cave man, then come post on this message board, otherwise, it's hypocritical as hell. Keep writing the blank checks! BOOOOOOOOOOOOING.

[StrangeSox]

For me, it is.

 

Not actually reading it (because in most cases I have legitimate access), but accessing it via an unauthorized medium (the commercial Internet). Just because classified information appears in public doesn't mean it's de facto declassified so if I started browsing Wikileaks at work it'd be treated like any other security violation.

 

Right, I heard this on NPR. You have a classification and you know the rules. You know if its above your grade. I don't have any sort of classification related to those materials, so it doesn't really matter for me.

[lostfan]

it's sort of like how a CPA can't claim ignorance on tax laws. you're expected to know better.

[iamshack]

You bring up an exellent point in regard to housing, I touched on it earlier and I believe housing, even at it's current levels, remains inflated. Houses, especially well kept houses, simply cost too much. I know how easy it is to fall into the debt trap, too as I've witnessed many people I know do it. All you have to do is look at their things and you can see why, too. Always seem to have a new snowblower, or lawnmower, or iPhone. Whatever the case may be, it the typical keep up with the Jonses mentality. And it's even a possible learned behavior from watching our government operate on a daily basis.

 

Life can still be fun without a 300$ per month cable bill for 600 channels of movies you've already seen.

 

While my father never lost the house, he also never made more than 42k, all the way up unt retirement. At times growing up it wasn't fun to watch everyone around me with the newest toys, nintendos or vcr's, which I would have died to have. But it was what it was. We got by. And now I have all these things, bit I also tend to understand when to say when.

The one thing you guys aren't even mentioning though is that this kind of spending is required to keep our economy rolling along...

 

While I agree that a lot of these purchases are unnecessary, and I make quite a few of them myself, I also choose to live this lifestyle instead of getting married, having children, and spending my earnings on that lifestyle. And I think there are a lot of people like that these days. Instead of people getting married at 22-27 years of age, there seem to be a lot more people in their twenties, living a single lifestyle, which allows them more disposable income to buy things like iPhones and plasma televisions, and BMWs. Not sure if there is real data to back that up, but those are what my observations are.

 

Things like cable though, you're absolutely correct. I spend $130 on cable and $60 on internet, and you can throw an extra $50 on that for 10 months out of the year because I buy the NFL Sunday Ticket the the Extra Innings packages so I can watch the Sox and the Bears. I try to make up for this though by reducing my other utility costs...I am really anal about the lights and the thermostat, so I keep that really low except for the summer months, when it is so hot here it's just impossible not to have a really high electric bill.

 

Interesting discussion and debate though.

[JorgeFabregas]

Consumer goods and gadgets are incredibly cheap because they're made in China (or have their prices dragged down by Chinese competition). Let's not confuse that with true buying power, though. The things that almost everybody agrees are worthwhile (as opposed to plastic disposable crap) such as education, medical care, and housing are incredibly expensive.

 

As long as everyone's listing them--I don't have cable, I have basic DSL, and my wife and I use Virgin Mobile (which is 1/2 the cost of the main carriers). Netflix is our only other recurring entertainment expenditure. We watch it on a Roku box and a 15 year-old TV.

 

Oh, and we've never bought a car that cost more than 4k. I do not understand how coworkers in similar positions always seems to have $10, $20, or $30k cars.

Edited February 13, 2011 by JorgeFabregas

[Jenksismyhero]

Here's how:

 

 

To me that commercial is the perfect example of "middle class" America these days. Debt, debt, debt to keep up. Screw the future, get it now.

[StrangeSox]

Here's how:

 

 

To me that commercial is the perfect example of "middle class" America these days. Debt, debt, debt to keep up. Screw the future, get it now.

 

Better example imo

 

http://www.youtube.com/watch?v=_Q9MfwUMWvU

[kapkomet]

Here's how:

 

 

To me that commercial is the perfect example of "middle class" America these days. Debt, debt, debt to keep up. Screw the future, get it now.

Fixed.

 

We have to keep spending, or the whole house of cards falls down. What a way to live, from individuals to corporations, to governments. I'm glad the liberals think that this is a good idea.

[lostfan]

I got a letter from the bank yesterday or the day before saying congratulations, your loan is scheduled to mature on 3/1/2011. Meaning that is my last car note on a 72 month loan, yesssssssssssssssss. i'm not undoing the setup I had though, that money goes into a separate savings account and the difference will be that I'm not having a payment come out of that every month, and it'll accumulate really fast. So the only thing I'm going to use it for is repairs and whatnot and it's my next down payment on my car.

 

Also my cable bill isn't $300, now that I think about it. It's more like $180 and that's with 35/25, a landline, and most premium channels. Not a bad deal. Still if I was single the only thing I'd have is basic cable with the internet and a phone.

[southsider2k5]

So the only question is when does your wife go buy the new ride?

[lostfan]

lol, she mentioned that she might need some of my money to do repairs on her car. Fine, whatever, the car is in my name. It took her like 2 months to convince me she needed that one. As long as there's nothing wrong with it she's not getting another one. if i can ride out my loan so can she.

 

I just spent like 15 minutes answering questions about what I was doing with the tax return (using almost all of it on debt). I was rolling my eyes because I know her questions were stemming from the fact that she was planning on a spending binge, or at least using some for her own debt, and I wouldn't let her. Let's see, remove debt to avoid interest in the future and free up cash flow or buy more s*** we don't need? Hmmm