Life and Debt
August 9, 2004 12:56 PM Subscribe
An interesting study by The Century Foundation. I found it while perusing the NY Times op-eds...specifically, Bob Herbert. It seems that "Household debt and personal bankruptcies are reaching record highs despite low interest rates and rising real estate values."
This is one of the scary, buy a bunker and 2 years worth of MRE's stats that keeps me up at night. Buy gold! And palladium!
Or, conversely, if you have a lot of debt, don't worry because the coming hyperinflation will make short work of it!
posted by loquax at 1:15 PM on August 9, 2004
Or, conversely, if you have a lot of debt, don't worry because the coming hyperinflation will make short work of it!
posted by loquax at 1:15 PM on August 9, 2004
When interest rates spike by 4%, times are going to become very interesting for a lot of people.
I'm damn glad I've managed my money so as to be essentially debt-free (only an outstanding house mortgage).
posted by five fresh fish at 1:16 PM on August 9, 2004
I'm damn glad I've managed my money so as to be essentially debt-free (only an outstanding house mortgage).
posted by five fresh fish at 1:16 PM on August 9, 2004
Oh, by the way, this stat and much of the current state of the economy has nothing to do with Bush, or Clinton for that matter. All politicians may lie about it and tweak it this way or that, but they have little to no control over it.
posted by loquax at 1:18 PM on August 9, 2004
posted by loquax at 1:18 PM on August 9, 2004
Looks to me to be the same things I've read since the early 90s. To quote the PDF:
"With more income going to housing and other rising expenses related to medical care, education, vehicles, child care, and so forth, families are relying on credit as a way to meet everyday needs."
...
"Remarkably, a family with two earners today actually has less discretionary income, after fixed costs like medical insurance and mortgage payments are accounted for, than did a family with only one breadwinner in the 1970s."
...
"Unfortunately, the one scenario that would ensure that families could start paying down their debts— rising incomes—does not seem to be developing."
Seems logical to me that borrowing doesn't do any good if you don't have the means to pay off the debt very, very quickly. Unfortunaltely, that seems to be the approach my state government seems to be taking: cut taxes and borrow for huge government spending projects.
posted by infowar at 1:18 PM on August 9, 2004
"With more income going to housing and other rising expenses related to medical care, education, vehicles, child care, and so forth, families are relying on credit as a way to meet everyday needs."
...
"Remarkably, a family with two earners today actually has less discretionary income, after fixed costs like medical insurance and mortgage payments are accounted for, than did a family with only one breadwinner in the 1970s."
...
"Unfortunately, the one scenario that would ensure that families could start paying down their debts— rising incomes—does not seem to be developing."
Seems logical to me that borrowing doesn't do any good if you don't have the means to pay off the debt very, very quickly. Unfortunaltely, that seems to be the approach my state government seems to be taking: cut taxes and borrow for huge government spending projects.
posted by infowar at 1:18 PM on August 9, 2004
Honestly, if you think my post had anything to do with the current election, you're delusional. As loquax said, this trend has been brewing through both Democratic and Republican administrations. A majority of states are going bankrupt for the same reason most consumers are overwhelmed with debt: they borrow based on future earnings. Neither Kerry nor Bush have any sound policy to deal with this crisis.
posted by BlueTrain at 1:24 PM on August 9, 2004
posted by BlueTrain at 1:24 PM on August 9, 2004
Household debt and personal bankruptcies are reaching record highs despite low interest rates...
I would say because of rather than despite low interest rates...My debt is going through the roof because the credit card companies won't stop sending me these 0% balance transfer offers...Eventually it's going to bite me but I haven't paid any interest for the last couple of years.
posted by jacobsee at 1:32 PM on August 9, 2004
I would say because of rather than despite low interest rates...My debt is going through the roof because the credit card companies won't stop sending me these 0% balance transfer offers...Eventually it's going to bite me but I haven't paid any interest for the last couple of years.
posted by jacobsee at 1:32 PM on August 9, 2004
It could have something to do with the fact that the pay in newly created jobs is lower than the jobs lost in our economy. This is not just the "liberal media" talking either. Even the IRS noticed that people are making less money. As for fold's comments on how thinly stretched the two income family is, here's a book on the subject. From the description:
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.
I'm not ready to blame the record level of bankruptcies on working moms. There is enough blame to spread: the fact that incomes are not going up; the ready access to too much credit; inflated housing costs; not saving anything in good times; health insurance issues. There are millions of people who declared bankruptcy, and although there are common details, each has a different story of how they got there.
posted by ilsa at 1:32 PM on August 9, 2004
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.
I'm not ready to blame the record level of bankruptcies on working moms. There is enough blame to spread: the fact that incomes are not going up; the ready access to too much credit; inflated housing costs; not saving anything in good times; health insurance issues. There are millions of people who declared bankruptcy, and although there are common details, each has a different story of how they got there.
posted by ilsa at 1:32 PM on August 9, 2004
The conclusion of the report takes a subtle political dig:
"Reversing the deterioration in household finances will require stronger income growth, less borrowing, and more saving. Politicians will debate how to accomplish these goals, but recent policies clearly have not helped."
posted by jacobsee at 1:48 PM on August 9, 2004
"Reversing the deterioration in household finances will require stronger income growth, less borrowing, and more saving. Politicians will debate how to accomplish these goals, but recent policies clearly have not helped."
posted by jacobsee at 1:48 PM on August 9, 2004
My debt is going through the roof because the credit card companies won't stop sending me these 0% balance transfer offers
Pass the buck much?
posted by rushmc at 1:48 PM on August 9, 2004
Pass the buck much?
posted by rushmc at 1:48 PM on August 9, 2004
On what planet are "home and car payments" completely separate from luxuries? What has happened to the average home size in the past 50 years? Average car ownership? Average car size? Average car features? Average home features? What was a "necessity" 50 years ago and what is a "necessity" today? My father grew up in a house without plumbing. Today, you're a pauper if you grow up in a house without AC, TV, DVD, and WWW.
Saying "I spend all my money on house and car payments" is meaningless if i'm stretching my paycheck to live alone in a house with a swimming pool and a garage for my 5000lb 6-passenger SUV.
posted by techgnollogic at 2:05 PM on August 9, 2004
Saying "I spend all my money on house and car payments" is meaningless if i'm stretching my paycheck to live alone in a house with a swimming pool and a garage for my 5000lb 6-passenger SUV.
posted by techgnollogic at 2:05 PM on August 9, 2004
I'm not ready to blame the record level of bankruptcies on working moms.
Anthropologist Marvin Harris wrote about this nearly three decades ago in America Now--making the point that such once everyday expectations of being able to buy a house and raise children on one income alone disappeared sometime in the 1970s. Much of the ensuing generic Won’t someone please think of the children ?! rhetoric relates to these two facts.
According to Harris, by the way, the moms went to work from necessity--not choice--and became feminists because of the attitudes and treatment they encountered on the job when they did .
posted by y2karl at 2:05 PM on August 9, 2004
Anthropologist Marvin Harris wrote about this nearly three decades ago in America Now--making the point that such once everyday expectations of being able to buy a house and raise children on one income alone disappeared sometime in the 1970s. Much of the ensuing generic Won’t someone please think of the children ?! rhetoric relates to these two facts.
According to Harris, by the way, the moms went to work from necessity--not choice--and became feminists because of the attitudes and treatment they encountered on the job when they did .
posted by y2karl at 2:05 PM on August 9, 2004
The crisis here, IMO, is not the bankruptcies or the high debt level. The problem is when we as a society stop spending money because our credit is maxed out or we're bankrupt. We've been living a home equity, low rate, high credit limit fantasy of infinite growth of markets, profits and wages. If Americans can no longer spend the way they have in the past and fuel this necessary growth, the economy collapses unless another market can pick up the slack.
The household problems discussed in the post are not the real issues, they are merely the symptoms of the disease, being an absolute lack of foresight among some of the past creators and overseers of the world economy, greed among those that manipulate the world economy (banks, market makers, hedge funds, etc), and the ignorance and malleability of all of us individual consumers, paying 18.9% on huge credit card balances. The sustainability of this economic model (which is very new and very experimental) was sacrificed for immediate gains, like jacobsee mentioned, by shifting the problems around and borrowing from tomorrow to pay for today. Not to mention the aging demographics of Western Society and the woeful state of pensions, or the pathetic trade and budget deficit that the US currently enjoys. I hope that someone is working in the back rooms to figure this out, but the only way I can see the prevention of another really spectacular depression is if China and India get 100% middle class really really fast.
posted by loquax at 2:07 PM on August 9, 2004
The household problems discussed in the post are not the real issues, they are merely the symptoms of the disease, being an absolute lack of foresight among some of the past creators and overseers of the world economy, greed among those that manipulate the world economy (banks, market makers, hedge funds, etc), and the ignorance and malleability of all of us individual consumers, paying 18.9% on huge credit card balances. The sustainability of this economic model (which is very new and very experimental) was sacrificed for immediate gains, like jacobsee mentioned, by shifting the problems around and borrowing from tomorrow to pay for today. Not to mention the aging demographics of Western Society and the woeful state of pensions, or the pathetic trade and budget deficit that the US currently enjoys. I hope that someone is working in the back rooms to figure this out, but the only way I can see the prevention of another really spectacular depression is if China and India get 100% middle class really really fast.
posted by loquax at 2:07 PM on August 9, 2004
When I read about these trends, it just angers me more every time I drive by a Citibank credit card billboard on the freeway telling drivers to "live richly" by making spur-of-the-moment purchases.
The problem isn't with the current president, it's with our culture. When it comes time to buy a house or a car, we splurge, and we eventually pay the price of constantly going for instant gratification but eventual work increase to pay for it.
I've long wondered what the next generation will be like. They've been watching wall-to-wall episodes of Cribs and various cult-of-celebrity home improvement shows. They not only want to live like celebrities, they expect it. I wonder what the US will be like when today's tweens are hitting 30 and realizing this is not my beautiful house, this is not my beautiful wife, and this is not my beautiful life.
posted by mathowie at 2:14 PM on August 9, 2004
The problem isn't with the current president, it's with our culture. When it comes time to buy a house or a car, we splurge, and we eventually pay the price of constantly going for instant gratification but eventual work increase to pay for it.
I've long wondered what the next generation will be like. They've been watching wall-to-wall episodes of Cribs and various cult-of-celebrity home improvement shows. They not only want to live like celebrities, they expect it. I wonder what the US will be like when today's tweens are hitting 30 and realizing this is not my beautiful house, this is not my beautiful wife, and this is not my beautiful life.
posted by mathowie at 2:14 PM on August 9, 2004
such once everyday expectations of being able to buy a house and raise children on one income alone disappeared sometime in the 1970s
That's still easy enough, or at least entirely possible, in most of the country* as long as you're willing to live the kind of life people lived in the 40s--60s in the kind of house people grew up in during the 40s--60s. A little 3/1 on a tiny lot with few amenities, no more than one car for the family, etc, and at this point you'd probably also have to be willing to live in an integrated neighborhood.
*ie, not California or Boston.
posted by ROU_Xenophobe at 2:19 PM on August 9, 2004
That's still easy enough, or at least entirely possible, in most of the country* as long as you're willing to live the kind of life people lived in the 40s--60s in the kind of house people grew up in during the 40s--60s. A little 3/1 on a tiny lot with few amenities, no more than one car for the family, etc, and at this point you'd probably also have to be willing to live in an integrated neighborhood.
*ie, not California or Boston.
posted by ROU_Xenophobe at 2:19 PM on August 9, 2004
techgnollogic - did you even read the paper that was linked to?
posted by bshort at 2:31 PM on August 9, 2004
posted by bshort at 2:31 PM on August 9, 2004
Oh no! Not an integrated neighborhood!
It is definitely possible to buy a house and raise children on one income, particularly if you don't mind used cars. And I might point out that in the 40s-60s, young marrieds routinely lived with one or the other set of parents -- or in an apartment -- until such time as there was money for a proper down payment on a house (none of this zero-down with a second mortgage up front to avoid PMI). This had the added advantage of Gramma being around to watch a little one while mom worked.
Once you figure the price of childcare, lunch out every day, work clothes, dry cleaning for same, convenience food, and gas, it's easy to completely consume the second income on the expenses of getting to work.
posted by ilsa at 2:34 PM on August 9, 2004
It is definitely possible to buy a house and raise children on one income, particularly if you don't mind used cars. And I might point out that in the 40s-60s, young marrieds routinely lived with one or the other set of parents -- or in an apartment -- until such time as there was money for a proper down payment on a house (none of this zero-down with a second mortgage up front to avoid PMI). This had the added advantage of Gramma being around to watch a little one while mom worked.
Once you figure the price of childcare, lunch out every day, work clothes, dry cleaning for same, convenience food, and gas, it's easy to completely consume the second income on the expenses of getting to work.
posted by ilsa at 2:34 PM on August 9, 2004
My debt is going through the roof because the credit card companies won't stop sending me these 0% balance transfer offers
It all depends on what you choose do with those offers. (Choice number one should be to throw them away the vast majority of the time.) My debt is finally under control, in part because I've transferred my balances to 0% cards, cut up the old high-interest rate cards, and then put the new cards at the back of my desk drawer. That way I'm only paying down -- but in the event there's an emergency (or I just need to buy something that requires a credit card, like a plane ticket -- and only if I can pay it off at the end of the month), I've got a card handy.
It also helped to get Ye Olde Student Loan Debte -- now finally below 5 digits, nearly 15 years after graduating from college! -- consolidated to 3%, down from 8%, and the fact that I'm driving a 10-year-old car (although given the scary noises it's been making lately, this cost-saving measure may not last too much longer... yes, that sound was me knocking on wood, why?).
Today, you're a pauper if you grow up in a house without AC, TV, DVD, and WWW.
Hmm, methinks it's not cable bills that are bankrupting people, but possibly the insanely disproportionate cost of housing itself. 25 years ago, my folks sold our first house -- a three-bedroom place in a college town -- for $40,000, which was a little more than my dad's annual salary (and, ironically, nearly the same amount of student loans I took out for my B.A.). Today, I make a few thousand more then my dad did back then -- and where I live, median home prices are approaching half a million dollars (one of the reasons I'm strongly considering leaving*). Hell, my monthly rent on a one bedroom is more than my parents mortgage on the 3-bedroom house they bought less than 10 years ago in Santa Fe (itself no cheap housing market!). So could you explain how it's the cost of a $20/month internet connection that's the problem here?
*Although of course, given the kind of job that I do, I can probably only find similar work in another major city -- with its own attendant high housing prices.
and at this point you'd probably also have to be willing to live in an integrated neighborhood.
Interesting how this seems to imply/assume that anyone having a hard time figuring out how to afford a house is A) white, and B) just not willing to live in a neighborhood that's not exclusively white.
posted by scody at 2:39 PM on August 9, 2004
It all depends on what you choose do with those offers. (Choice number one should be to throw them away the vast majority of the time.) My debt is finally under control, in part because I've transferred my balances to 0% cards, cut up the old high-interest rate cards, and then put the new cards at the back of my desk drawer. That way I'm only paying down -- but in the event there's an emergency (or I just need to buy something that requires a credit card, like a plane ticket -- and only if I can pay it off at the end of the month), I've got a card handy.
It also helped to get Ye Olde Student Loan Debte -- now finally below 5 digits, nearly 15 years after graduating from college! -- consolidated to 3%, down from 8%, and the fact that I'm driving a 10-year-old car (although given the scary noises it's been making lately, this cost-saving measure may not last too much longer... yes, that sound was me knocking on wood, why?).
Today, you're a pauper if you grow up in a house without AC, TV, DVD, and WWW.
Hmm, methinks it's not cable bills that are bankrupting people, but possibly the insanely disproportionate cost of housing itself. 25 years ago, my folks sold our first house -- a three-bedroom place in a college town -- for $40,000, which was a little more than my dad's annual salary (and, ironically, nearly the same amount of student loans I took out for my B.A.). Today, I make a few thousand more then my dad did back then -- and where I live, median home prices are approaching half a million dollars (one of the reasons I'm strongly considering leaving*). Hell, my monthly rent on a one bedroom is more than my parents mortgage on the 3-bedroom house they bought less than 10 years ago in Santa Fe (itself no cheap housing market!). So could you explain how it's the cost of a $20/month internet connection that's the problem here?
*Although of course, given the kind of job that I do, I can probably only find similar work in another major city -- with its own attendant high housing prices.
and at this point you'd probably also have to be willing to live in an integrated neighborhood.
Interesting how this seems to imply/assume that anyone having a hard time figuring out how to afford a house is A) white, and B) just not willing to live in a neighborhood that's not exclusively white.
posted by scody at 2:39 PM on August 9, 2004
Eventually it's going to bite me but I haven't paid any interest for the last couple of years.
I also haven't paid any interest on my credit cards for the last couple of years, because I pay off my balance in full every month, i.e., I don't buy what I can't pay for. I really don't want to dismiss all the other sociological/economic factors at play here, but mathowie's right: when we begin to expect things that we can't afford, we get trapped by our own inability to pay for what we accumulate. Vicious cycle.
posted by ChrisTN at 2:47 PM on August 9, 2004
I also haven't paid any interest on my credit cards for the last couple of years, because I pay off my balance in full every month, i.e., I don't buy what I can't pay for. I really don't want to dismiss all the other sociological/economic factors at play here, but mathowie's right: when we begin to expect things that we can't afford, we get trapped by our own inability to pay for what we accumulate. Vicious cycle.
posted by ChrisTN at 2:47 PM on August 9, 2004
According to the National Association of Home Builders, the median and average prices of new and existing homes
more than doubled in the last two decades of the 20th Century. Looking at one of their reports, one can see that between 1970 and 1990 the Median sf went from 1,385 to 1,905 sf. The Median price for houses in that timeframe went from $23,400 to $122,900. While some amenities like garage size and central air account for some of the price differences, the useable square feet changed relatively little compared to the price changes.
It is unfair to compare the price of things like home, medical costs, and automobiles to things like DVD players and TV. While the costs of the latter have reached the point of extremely low prices brought about by globalisation and productivity enhancements, the former have risen sharply in price.
Look at it this way. A $30 DVD player and a $100 TV set runs $130. Based on 2002 data the median mortgage payment n Humboldt County, California is $1,076.80. So those "luxury items" are roughly 15% of one month's house payment. Assuming a $3,100 monthly income that is 4%. I don't find this as extravagant waste of money. I wouldn't necessarily buy those items, but the point is these items are miniscule compared to the cost of these fixed costs.
A simple job loss or extended job illness is catastrophic because these fixed costs are so high. Once could easily afford the DVD and TV if housing costs are 30% of monthly income, but with no income at all, that housing cost grows quickly. IOW, don't look at "frivilous" expenditures, look at the expenditures as a precentage of income.
FWIW, I don't want a large house. I'd much prefer the post WW2 size homes built in many American communities. But those aren't being built anymore and building a home from scratch on that kind of lot isn't easy or cheap either. Government regulations and requirements encourage building on large lots out of town and drive up the costs of housing.
posted by infowar at 2:53 PM on August 9, 2004
more than doubled in the last two decades of the 20th Century. Looking at one of their reports, one can see that between 1970 and 1990 the Median sf went from 1,385 to 1,905 sf. The Median price for houses in that timeframe went from $23,400 to $122,900. While some amenities like garage size and central air account for some of the price differences, the useable square feet changed relatively little compared to the price changes.
It is unfair to compare the price of things like home, medical costs, and automobiles to things like DVD players and TV. While the costs of the latter have reached the point of extremely low prices brought about by globalisation and productivity enhancements, the former have risen sharply in price.
Look at it this way. A $30 DVD player and a $100 TV set runs $130. Based on 2002 data the median mortgage payment n Humboldt County, California is $1,076.80. So those "luxury items" are roughly 15% of one month's house payment. Assuming a $3,100 monthly income that is 4%. I don't find this as extravagant waste of money. I wouldn't necessarily buy those items, but the point is these items are miniscule compared to the cost of these fixed costs.
A simple job loss or extended job illness is catastrophic because these fixed costs are so high. Once could easily afford the DVD and TV if housing costs are 30% of monthly income, but with no income at all, that housing cost grows quickly. IOW, don't look at "frivilous" expenditures, look at the expenditures as a precentage of income.
FWIW, I don't want a large house. I'd much prefer the post WW2 size homes built in many American communities. But those aren't being built anymore and building a home from scratch on that kind of lot isn't easy or cheap either. Government regulations and requirements encourage building on large lots out of town and drive up the costs of housing.
posted by infowar at 2:53 PM on August 9, 2004
infowar, how about those average home prices adjusted for inflation? How much are today's houses actually costing in 1970s dollars?
posted by mathowie at 3:20 PM on August 9, 2004
posted by mathowie at 3:20 PM on August 9, 2004
I've got a solution: Get rid of healthcare so that the population drops and housing costs go back down!
Seriously, someone's living in all of these houses. It's a problem, so where's the solution?
and at this point you'd probably also have to be willing to live in an integrated neighborhood.
I took that as sarcasm. I hope I was right.
posted by SpecialK at 3:28 PM on August 9, 2004
Seriously, someone's living in all of these houses. It's a problem, so where's the solution?
and at this point you'd probably also have to be willing to live in an integrated neighborhood.
I took that as sarcasm. I hope I was right.
posted by SpecialK at 3:28 PM on August 9, 2004
Matt -- According to the inflation calculator at http://www.westegg.com/inflation/ ...
What cost $23400 in 1970 would cost $112207.12 in 2003.
Thank you, ladies and gentlemen, please play again!
posted by SpecialK at 3:30 PM on August 9, 2004
What cost $23400 in 1970 would cost $112207.12 in 2003.
Thank you, ladies and gentlemen, please play again!
posted by SpecialK at 3:30 PM on August 9, 2004
(Of course, back to the original point, what we're seeing is salaries not keeping pace with inflation. If I make $35,000 this year, a decent out-of-college salary, that means in 1970 dollars I was making $7300 per year. I can afford a $120k house on my salary as soon as I have everything paid off and can save a down payment, but I don't want to buy that inexpensive of a house in my market.)
posted by SpecialK at 3:34 PM on August 9, 2004
posted by SpecialK at 3:34 PM on August 9, 2004
(A little more research, and I promise to stop spamming this topic... Federal minimum wage in 1970 was $1.65/hour or about $3,432 per year. It's $5.15 now, or about $10,712. Adjusted for inflation, it should be $16,457... or about $7.91 per hour.)
posted by SpecialK at 3:40 PM on August 9, 2004
posted by SpecialK at 3:40 PM on August 9, 2004
more on Elizabeth Warren (mentioned in the NYT op-ed ... i thought her two recent interviews on NOW were excellent. if non-fiction books (by anyone other than Aldous Huxley, Terence McKenna or Daniel Dennett) didn't put me to sleep, i'd read hers next ... ok, ok, i'll try ...
2/6/04: Why are so many middle class families going broke?
6/25/04: Why are record numbers of American families losing their homes? (scroll down 65% or Ctrl-F "greenspan")
the moral of the current american story for me is: don't have kids unless you're rich, and don't expect to buy a house unless there's a massive collapse in the housing market (which is what i'm hoping for - sorry, homeowners ...)
posted by mrgrimm at 3:45 PM on August 9, 2004
2/6/04: Why are so many middle class families going broke?
6/25/04: Why are record numbers of American families losing their homes? (scroll down 65% or Ctrl-F "greenspan")
the moral of the current american story for me is: don't have kids unless you're rich, and don't expect to buy a house unless there's a massive collapse in the housing market (which is what i'm hoping for - sorry, homeowners ...)
posted by mrgrimm at 3:45 PM on August 9, 2004
According to this calculator $23,400 in 1970 dollars is $110,962.80 in 2003 dollars.
On preview, it appears SpecialK's estimate corroborates the ballpark.
posted by sequential at 3:47 PM on August 9, 2004
On preview, it appears SpecialK's estimate corroborates the ballpark.
posted by sequential at 3:47 PM on August 9, 2004
I've long wondered what the next generation will be like. They've been watching wall-to-wall episodes of Cribs and various cult-of-celebrity home improvement shows. They not only want to live like celebrities, they expect it. I wonder what the US will be like when today's tweens are hitting 30 and realizing this is not my beautiful house, this is not my beautiful wife, and this is not my beautiful life.
scary thought...
may you all live in interesting times
/curse
posted by jacobsee at 4:09 PM on August 9, 2004
scary thought...
may you all live in interesting times
/curse
posted by jacobsee at 4:09 PM on August 9, 2004
If everyone spent only what they earned and shunned all leveraged purchases, the American Economy would be a cooked goose.
Plain and simple, credit purchases are what fuel GNP growth.
Meanwhile that sucking sound you hear is the sound of the upper class vacuuming the middle class for all its worth.
(I'm debt free except for a college loan that I pay faithfully but which grows in principle by about 5% a year.) So how about someone asking why the higher education system, operating under tax free status and amassing giant "endowments" continues to raise tuition. Is it that they are over paying the faculty?
posted by Fupped Duck at 4:25 PM on August 9, 2004
Plain and simple, credit purchases are what fuel GNP growth.
Meanwhile that sucking sound you hear is the sound of the upper class vacuuming the middle class for all its worth.
(I'm debt free except for a college loan that I pay faithfully but which grows in principle by about 5% a year.) So how about someone asking why the higher education system, operating under tax free status and amassing giant "endowments" continues to raise tuition. Is it that they are over paying the faculty?
posted by Fupped Duck at 4:25 PM on August 9, 2004
Once you figure the price of childcare, lunch out every day, work clothes, dry cleaning for same, convenience food, and gas, it's easy to completely consume the second income on the expenses of getting to work.
If true, it stuns me that anyone would choose this route. Sure, work is great fun and all... but compared to being at home? Sheeeyit, no.
MetaPoll: How many folk here are entirely debt-free? How many are debt-free with the exception of their home?
posted by five fresh fish at 4:47 PM on August 9, 2004
If true, it stuns me that anyone would choose this route. Sure, work is great fun and all... but compared to being at home? Sheeeyit, no.
MetaPoll: How many folk here are entirely debt-free? How many are debt-free with the exception of their home?
posted by five fresh fish at 4:47 PM on August 9, 2004
techgnologic and matthowie nailed it. It's all about the rising expectation of what constitutes a "normal" lifestyle. Compared to 40 years ago, people expect bigger houses, with all mod cons. Those houses are filled with gadgets: computers, big televisions, DVD players, video recorders, camcorders, games consoles, microwaves, sandwich toasters, etc etc. Each month I could be paying out monthly bills for broadband, cable/satellite TV, Xbox live, mobile phones. If you have a DVD player and a stereo you need to buy DVDs and CDs, and these quickly add up. I expect to be driving a much nicer car, with air conditioning.
We're assailed by TV shows which show average people living in luxurious houses, with not a money care in the world. (Did anyone ask how the cast of Friends could afford to live where they did? I swear they must have been dealing crack!)
We expect expensive holidays, in some far off location.
Is it any wonder people consistently over-estimate the kind of lifestyle they should be living? Or how those people who do try and live within their means see how Mr Jones down the road is seemingly living much better, on the same income?
This is not just an American problem. Total debt in the UK has just passed one trillion pounds. It only passed half a trillion 6 years ago, or so. I bought my house 5 years ago, and somehow it has doubled in value since then. I had 3 lodgers and very helpful parents just to get on the housing ladder back then. I can't imagine how I could ever do it now in the current housing situation. It's all going to come crashing down some day, and I just hope I've paid off my mortgage when that happens.
posted by salmacis at 4:55 PM on August 9, 2004
We're assailed by TV shows which show average people living in luxurious houses, with not a money care in the world. (Did anyone ask how the cast of Friends could afford to live where they did? I swear they must have been dealing crack!)
We expect expensive holidays, in some far off location.
Is it any wonder people consistently over-estimate the kind of lifestyle they should be living? Or how those people who do try and live within their means see how Mr Jones down the road is seemingly living much better, on the same income?
This is not just an American problem. Total debt in the UK has just passed one trillion pounds. It only passed half a trillion 6 years ago, or so. I bought my house 5 years ago, and somehow it has doubled in value since then. I had 3 lodgers and very helpful parents just to get on the housing ladder back then. I can't imagine how I could ever do it now in the current housing situation. It's all going to come crashing down some day, and I just hope I've paid off my mortgage when that happens.
posted by salmacis at 4:55 PM on August 9, 2004
MetaPoll: How many folk here are entirely debt-free? How many are debt-free with the exception of their home?
I am. But that home cost is still a killer. 5 years down the line and I still have one lodger. Kids are out of the question, although that's more of a blessing than anything, to be honest. :-)
posted by salmacis at 4:57 PM on August 9, 2004
I am. But that home cost is still a killer. 5 years down the line and I still have one lodger. Kids are out of the question, although that's more of a blessing than anything, to be honest. :-)
posted by salmacis at 4:57 PM on August 9, 2004
metapoll: i've successfully paid off about $20K in student loans, and i'm still working down $3K left on consumer debt incurred by about two years of unemployment. i'm hoping to be debt-free within the next year, year and a half, if there are no more serious dental expenses :)) ...
posted by mrgrimm at 4:59 PM on August 9, 2004
posted by mrgrimm at 4:59 PM on August 9, 2004
We expect expensive holidays, in some far off location.
Who is this "we" I keep hearing about? Because I took my first 2-week vacation of my entire post-college adult life last year (I'm 35, so that means I went 13 years without a "proper" vacation), and even then I went on the off-season and stayed much of the time with friends. Because that's all I could afford (even with a full-time job and paid time off) -- and it was the first time I could afford even that.
posted by scody at 5:06 PM on August 9, 2004
Who is this "we" I keep hearing about? Because I took my first 2-week vacation of my entire post-college adult life last year (I'm 35, so that means I went 13 years without a "proper" vacation), and even then I went on the off-season and stayed much of the time with friends. Because that's all I could afford (even with a full-time job and paid time off) -- and it was the first time I could afford even that.
posted by scody at 5:06 PM on August 9, 2004
The problem is partially that people are buying too many things impulsively and on credit and which they don't really need-- and to modify what salmacis said, it's not so much the expectation of what constitutes a normal lifestyle as it is that so many of those things which many people consider normal to have are completely and totally unneccessary.
It is also partially that salaries are not keeping pace with inflation, or as I like to put it, the money is being consolidated into the hands of the very few. As the middle class keeps getting squeezed, eventually there won't be one-- just the rich and their laborers, who spend their money on consumer goods-- i.e. the junk their labor produces.
posted by nath at 5:07 PM on August 9, 2004
It is also partially that salaries are not keeping pace with inflation, or as I like to put it, the money is being consolidated into the hands of the very few. As the middle class keeps getting squeezed, eventually there won't be one-- just the rich and their laborers, who spend their money on consumer goods-- i.e. the junk their labor produces.
posted by nath at 5:07 PM on August 9, 2004
Just as a sobering thought, what really brought the Roman Empire down, more than any other factor, was the gradual, but relentless squeezing of the middle classes. In exactly the same way as what we're seeing now in contemporary America, the Roman middle classes eventually unable to pay taxes, so some people had to sell up and become serfs, which meant lower tax revinues, which meant the remainder had to be squeezed harder...
No society can continue to function when too many people's standard of living - either up or down - is sufficiently far from the median. America is among the worst countries in the world in that respect, as we've discussed previously here.
posted by salmacis at 5:24 PM on August 9, 2004
No society can continue to function when too many people's standard of living - either up or down - is sufficiently far from the median. America is among the worst countries in the world in that respect, as we've discussed previously here.
posted by salmacis at 5:24 PM on August 9, 2004
Today, I make a few thousand more then my dad did back then -- and where I live, median home prices are approaching half a million dollars
That's because you live in LA, where the real estate market went nuts. Which is why I said "ie, not in California or Boston."
I'd freely admit that you can't easily support a family on one middle-class salary in LA. But it's entirely possible to support a family on one middle-class salary if you live somewhere else, like Pittsburgh or Buffalo or St. Louis or Nashville or Memphis or D/FW or Raleigh-Durham or Springfield IL or Lansing or... The point being that if that's what you value, you can make it happen.
I took that as sarcasm. I hope I was right
More a snotty comment about people who engage in white-flight, but close enough. It was definitely written with Comic Book Guy saying it.
posted by ROU_Xenophobe at 5:40 PM on August 9, 2004
That's because you live in LA, where the real estate market went nuts. Which is why I said "ie, not in California or Boston."
I'd freely admit that you can't easily support a family on one middle-class salary in LA. But it's entirely possible to support a family on one middle-class salary if you live somewhere else, like Pittsburgh or Buffalo or St. Louis or Nashville or Memphis or D/FW or Raleigh-Durham or Springfield IL or Lansing or... The point being that if that's what you value, you can make it happen.
I took that as sarcasm. I hope I was right
More a snotty comment about people who engage in white-flight, but close enough. It was definitely written with Comic Book Guy saying it.
posted by ROU_Xenophobe at 5:40 PM on August 9, 2004
Metapoll: I'm debt free except for one $20K college loan that will be deferred for 4 more years (thank you, grad school). My secret is using a check card instead of a credit card and eating out less than once a week.
We expect expensive holidays, in some far off location.
Ack, I need far off locations. I still travel internationally at least twice a year on my own dime, but I at least manage to do it pretty cheaply by staying with friends. This is the one thing that I'll have a hard time giving up if I need to save money; I need to see as much of the world as I can while I have the means. When/if I have kids and/or a career this will probably have to stop.
I'm looking to buy a house, though. Home prices are amazingly cheap in Pittsburgh even in the 'nicer' areas. Taxes are a bit steep, though.
posted by Alison at 5:43 PM on August 9, 2004
We expect expensive holidays, in some far off location.
Ack, I need far off locations. I still travel internationally at least twice a year on my own dime, but I at least manage to do it pretty cheaply by staying with friends. This is the one thing that I'll have a hard time giving up if I need to save money; I need to see as much of the world as I can while I have the means. When/if I have kids and/or a career this will probably have to stop.
I'm looking to buy a house, though. Home prices are amazingly cheap in Pittsburgh even in the 'nicer' areas. Taxes are a bit steep, though.
posted by Alison at 5:43 PM on August 9, 2004
Metapoll: None. I managed to either finance through mini-scholarships or get my parents to help me with tuition and rent all the way through, so I didn't have to take out student loans. I also worked full time at a salaried job and consulted when I wasn't working full time or doing homework, which you could say helped a lot.
I also ate a lot of Mac 'N Cheese.
posted by SpecialK at 8:45 PM on August 9, 2004
I also ate a lot of Mac 'N Cheese.
posted by SpecialK at 8:45 PM on August 9, 2004
Today, I make a few thousand more then my dad did back then -- and where I live, median home prices are approaching half a million dollars
That's because you live in LA, where the real estate market went nuts. Which is why I said "ie, not in California or Boston."
And that's also why I mentioned the inflated housing markets in other major urban areas as well -- because to stay in my line of work, I'm looking at a finite number of markets. Chicago or Philly, for example, may not have median home prices quite as high as L.A.'s, but they're not so substantially lower that it would be significantly more affordable to buy a house there. Sure, I could better afford to buy a house in someplace like St. Louis based on what I make now, but the job I presently have essentially doesn't exist in St. Louis -- and believe me, I've looked, for this very reason.
So that's the catch-22 for me: to live somewhere I can continue doing what I love, I cannot afford to buy a house. To move somewhere I could afford to buy a house, I'd very likely have to give up the career I love.
posted by scody at 11:09 PM on August 9, 2004
That's because you live in LA, where the real estate market went nuts. Which is why I said "ie, not in California or Boston."
And that's also why I mentioned the inflated housing markets in other major urban areas as well -- because to stay in my line of work, I'm looking at a finite number of markets. Chicago or Philly, for example, may not have median home prices quite as high as L.A.'s, but they're not so substantially lower that it would be significantly more affordable to buy a house there. Sure, I could better afford to buy a house in someplace like St. Louis based on what I make now, but the job I presently have essentially doesn't exist in St. Louis -- and believe me, I've looked, for this very reason.
So that's the catch-22 for me: to live somewhere I can continue doing what I love, I cannot afford to buy a house. To move somewhere I could afford to buy a house, I'd very likely have to give up the career I love.
posted by scody at 11:09 PM on August 9, 2004
Mind if I ask what it is you do for a living?
posted by techgnollogic at 11:27 PM on August 9, 2004
posted by techgnollogic at 11:27 PM on August 9, 2004
I'm in museum/art book publishing. Outside of academic presses, the main publishing center is of course New York (no need to mention housing prices there!), though most major cities have their own wing of the industry (in Chicago, for example, there's a fair amount of business and medical publishing -- I was a business communications editor there for several years, and made less in the private sector than I currently make at a non-profit). And of course, there are museums all over the country... but the majority of them don't have in-house publishing programs.
Overall, the publishing world (both academic and trade) and the museum world alike have become much tighter job markets in the past decade. Combine two tight markets, and you get the picture -- in the past couple years, in fact, there are a couple of major museums who've shut down their publishing departments entirely.
Certainly, there are related things I could do (and have done in the past) -- but as far as being able to continue doing what I currently do (and, after so many years working boring gigs just to pay the rent, it's not something I think I'd give up lightly), there's a definite trade-off that I find rather frustrating.
posted by scody at 12:23 AM on August 10, 2004
Overall, the publishing world (both academic and trade) and the museum world alike have become much tighter job markets in the past decade. Combine two tight markets, and you get the picture -- in the past couple years, in fact, there are a couple of major museums who've shut down their publishing departments entirely.
Certainly, there are related things I could do (and have done in the past) -- but as far as being able to continue doing what I currently do (and, after so many years working boring gigs just to pay the rent, it's not something I think I'd give up lightly), there's a definite trade-off that I find rather frustrating.
posted by scody at 12:23 AM on August 10, 2004
My secret is using a check card instead of a credit card and eating out less than once a week.
On average Americans go out to eat for %40 of meals. Growing up going out to eat was a once a week special event. The eating out trend is directly reflected in the "fattening up of America" over the past 20 years , we are now the fattest country in the world, at least according to the movie SuperSizeMe.
posted by stbalbach at 12:49 AM on August 10, 2004
On average Americans go out to eat for %40 of meals. Growing up going out to eat was a once a week special event. The eating out trend is directly reflected in the "fattening up of America" over the past 20 years , we are now the fattest country in the world, at least according to the movie SuperSizeMe.
posted by stbalbach at 12:49 AM on August 10, 2004
My husband and I just decided this past weekend to get a roommate. All the money this individual brings in (except the portion that goes toward extra groceries) is going directly onto consumer debt, with the highest interest rate being taken care of first. Everything else will continue to get regular payments, plus whatever else I can afford.
I've cut down on my school schedule. I'm in for a promotion at work (a community college), and I'm taking a part-time job at H&R Block during tax season. Training starts next month.
After graduation, which should be in May, I've got to go right into a master's program so I can defer my student loans a bit longer. Even though they've been consolidated to an extremely low rate, I want to pay off my unsecured consumer debt before I start working on those. Damn private schools! I know, I know...no one forced me to go there. But I actually got more in scholarships. Once I did the math, it cost me LESS that way. But the debt load is still daunting. Sigh...
posted by Beansidhe at 5:23 AM on August 10, 2004
I've cut down on my school schedule. I'm in for a promotion at work (a community college), and I'm taking a part-time job at H&R Block during tax season. Training starts next month.
After graduation, which should be in May, I've got to go right into a master's program so I can defer my student loans a bit longer. Even though they've been consolidated to an extremely low rate, I want to pay off my unsecured consumer debt before I start working on those. Damn private schools! I know, I know...no one forced me to go there. But I actually got more in scholarships. Once I did the math, it cost me LESS that way. But the debt load is still daunting. Sigh...
posted by Beansidhe at 5:23 AM on August 10, 2004
MetaPoll: How many folk here are entirely debt-free? How many are debt-free with the exception of their home?
we are debt free, although we're thinking of buying a second house (i work shifts away from home, so it makes more sense than paying rent for somewhere to sleep there) on a mortgage (which we expect to pay off in about 7 years) (and in fact, we could pay for it with cash, but it would mean moving money from the uk where it's invested, which is probably not a good idea).
we've just been going through our finances this last few days. truth is we live pretty much like students, even though we've both had well paid jobs for years - we spend less than half of what we earn, don't have a car or dvd player, ipod, etc etc. we're intending to change that and spend a bit more because otherwise we're just going to end up dying with a pile of cash (we reckon we can spend a bit more, buy the house, and retire at about 50). we don't have kids.
i note that someone above says americans eat out for 40% of meals. we actually made a concious decision that we should eat out more (it's something we enjoy), but haven't actually got round to it for the last month. our idea of "more" was once a fortnight.
i guess this sounds weird. there's also the fact that we moved to a much cheaper country factored into it i guess. also, working shifts tends to restrict the amount of time you have to actually spend.
posted by andrew cooke at 6:29 AM on August 10, 2004
we are debt free, although we're thinking of buying a second house (i work shifts away from home, so it makes more sense than paying rent for somewhere to sleep there) on a mortgage (which we expect to pay off in about 7 years) (and in fact, we could pay for it with cash, but it would mean moving money from the uk where it's invested, which is probably not a good idea).
we've just been going through our finances this last few days. truth is we live pretty much like students, even though we've both had well paid jobs for years - we spend less than half of what we earn, don't have a car or dvd player, ipod, etc etc. we're intending to change that and spend a bit more because otherwise we're just going to end up dying with a pile of cash (we reckon we can spend a bit more, buy the house, and retire at about 50). we don't have kids.
i note that someone above says americans eat out for 40% of meals. we actually made a concious decision that we should eat out more (it's something we enjoy), but haven't actually got round to it for the last month. our idea of "more" was once a fortnight.
i guess this sounds weird. there's also the fact that we moved to a much cheaper country factored into it i guess. also, working shifts tends to restrict the amount of time you have to actually spend.
posted by andrew cooke at 6:29 AM on August 10, 2004
Feel free to play with the numbers I cited. You can find them (PDF) at: http://www.nahb.org/fileUpload_details.aspx?contentTypeID=7&contentID=20
I would have thought the numbers were adjusted by an index. One of the charts did so with 1996 as the baseline (1996 = 100).
The chart on page 15 clearly has the median price for a house in 2002 at $187,500 while in 2003 a house with 10 sf more is $193,900. Did inflation account for that too? I certainly didn't see my wages inflate like that.
posted by infowar at 6:31 AM on August 10, 2004
I would have thought the numbers were adjusted by an index. One of the charts did so with 1996 as the baseline (1996 = 100).
The chart on page 15 clearly has the median price for a house in 2002 at $187,500 while in 2003 a house with 10 sf more is $193,900. Did inflation account for that too? I certainly didn't see my wages inflate like that.
posted by infowar at 6:31 AM on August 10, 2004
I'm debt free!! I'm also wealthier than I've ever been in my life! (Though to be honest that's saying very little.) Couldn't afford to buy a house though, especially with contracts being what they are. Happily I have a deal for a flat with no rent attached.
posted by biffa at 6:53 AM on August 10, 2004
posted by biffa at 6:53 AM on August 10, 2004
A story: I live in a developing community in south-central Pennsylvania, and last week stopped at a supermarket in the fastest-growing area of the county, meaning the biggest and most expensive homes.
The place was a mega-mart - no surprise there. But what did sort of take me aback was the space it has alotted to pre-made food. We're not talking a few square feet for pre-fried chicken and a salad bar; literally, one quarter of the damned store was devoted to this, with all sorts of choices - from sushi to sandwiches and everything in between.
All of it, of course, pretty pricey; less pricey than eating out, to be sure, but far more pricey than cooking a plate of pasta at home.
Ah, but we're tired when we get home from work, the kids are cranky, who wants to cook?
Likewise, I might buy, say, a Saturn for a payment of less than $200 a month. But look at what my neighbor's got. And dammit, if I'm successful, I want my vehicle to reflect it. So instead I get something that's costing me $400 a month. Lease.
And as for the home, with 2.5 kids, 2,000 square feet would be more than enough. But, you know, I want something bigger, more elaborate. I want something with gables and a high foyer and a multi-tiered deck even though we never sit out on the deck.
We Americans have backed ourselves into this corner, and the problem is that while we may think that "if we only could make a little more money it all would be manageable," it wouldn't be. We would, instead, spend more on our vehicle, buy a bigger house, cook at home even less.
In other words, we're fucked. And God forbid that there should be some sort of major financial meltdown - the country would come apart at the seams.
posted by kgasmart at 7:07 AM on August 10, 2004
The place was a mega-mart - no surprise there. But what did sort of take me aback was the space it has alotted to pre-made food. We're not talking a few square feet for pre-fried chicken and a salad bar; literally, one quarter of the damned store was devoted to this, with all sorts of choices - from sushi to sandwiches and everything in between.
All of it, of course, pretty pricey; less pricey than eating out, to be sure, but far more pricey than cooking a plate of pasta at home.
Ah, but we're tired when we get home from work, the kids are cranky, who wants to cook?
Likewise, I might buy, say, a Saturn for a payment of less than $200 a month. But look at what my neighbor's got. And dammit, if I'm successful, I want my vehicle to reflect it. So instead I get something that's costing me $400 a month. Lease.
And as for the home, with 2.5 kids, 2,000 square feet would be more than enough. But, you know, I want something bigger, more elaborate. I want something with gables and a high foyer and a multi-tiered deck even though we never sit out on the deck.
We Americans have backed ourselves into this corner, and the problem is that while we may think that "if we only could make a little more money it all would be manageable," it wouldn't be. We would, instead, spend more on our vehicle, buy a bigger house, cook at home even less.
In other words, we're fucked. And God forbid that there should be some sort of major financial meltdown - the country would come apart at the seams.
posted by kgasmart at 7:07 AM on August 10, 2004
After just a quick perusal of the comments, another study to throw into the pack as food for thought is the Harvard Bankruptcy Project. (Would hunt down the link but am at work and don't have the time). The project not only covers the tracking of how fixed costs and housing are far outpacing income, but also is seeking to ferret out misleading and low goverment statistics on bankruptcy, particularly small businesses filing Chapter 7 (the percentage difference between government reports and their research may be as high as 5% in some districts).
FYI, the Harvard Bankruptcy Project is also head by Professor Elizabeth Warren.
On preview: mcgrimm - although "Two Income Trap" is interesting (if you can stay awake!), wait for their next book (think coming out sometime early next year).
posted by BurnedEve at 7:09 AM on August 10, 2004
FYI, the Harvard Bankruptcy Project is also head by Professor Elizabeth Warren.
On preview: mcgrimm - although "Two Income Trap" is interesting (if you can stay awake!), wait for their next book (think coming out sometime early next year).
posted by BurnedEve at 7:09 AM on August 10, 2004
I'm a little skeptical of those who say the MAIN problem is people's expectations growing so much faster than reality. Despite my comment earlier about 0% credit card deals, I feel like we're living pretty frugally in Salt Lake Utah (not a real-estate hot spot by any means). My wife works part time, I have a decent engineering salary, and we spend hardly anything on "luxury items". Our biggest expense by far is the mortgage, followed by food. Close behind are home-improvement expenses (both elected and necessary). We're now faced with the NEED to replace our roof which is going to run about $8000. Possibly less if I do the tear off myself but that's going to be killer. Hence my work finessing the credit card offers. It's actually a great deal to continue to pass a big lump of debt from one card to the other at 0% interest, but I know that this won't last forever.
I actually consider us pretty lucky compared to some, and I know that if an emergency were to come up, we would have families to rely on. But I really hate that idea and wish I could manage to build up some savings...
I will conceed that we probably bought a bit too much house 3 years ago...a lot bigger than the first house of the previous generation. And we certainly didn't realize how much work our renovations would be. I just hope the bubble doesn't pop too hard in our area and we still come out ahead if we decide to sell.
posted by jacobsee at 8:37 AM on August 10, 2004
I actually consider us pretty lucky compared to some, and I know that if an emergency were to come up, we would have families to rely on. But I really hate that idea and wish I could manage to build up some savings...
I will conceed that we probably bought a bit too much house 3 years ago...a lot bigger than the first house of the previous generation. And we certainly didn't realize how much work our renovations would be. I just hope the bubble doesn't pop too hard in our area and we still come out ahead if we decide to sell.
posted by jacobsee at 8:37 AM on August 10, 2004
My point is: I think the issue is people's rising expectations COMBINED with the fact that prices, especially for necessities such as housing and food, are rising so much faster than incomes. And it really does make a certain amount of sense to live better on some credit. But this assumption could prove to be a bad one if the economy goes into the crapper...i guess we'll see soon enough. Or hopefully not.
posted by jacobsee at 9:07 AM on August 10, 2004
posted by jacobsee at 9:07 AM on August 10, 2004
Personally I blame the rise in bankrupticies on the dramatic fall in personal incomes and the rapid rise in worker productivity. What? %-))
I remember years ago in school we were told that by the year 2000 people would only work 1 day a week and we would all have flying cars because of the great strides in worker productivity and technology.
Anyone seen my flying car? I forgot where I parked it!
posted by nofundy at 10:10 AM on August 10, 2004
I remember years ago in school we were told that by the year 2000 people would only work 1 day a week and we would all have flying cars because of the great strides in worker productivity and technology.
Anyone seen my flying car? I forgot where I parked it!
posted by nofundy at 10:10 AM on August 10, 2004
This article from the Washington Monthly spells out pretty well to my mind why we are in the housing mess we are in. In a nutshell, Fannie Mae and Freddie mac changes in 1989 made loaning money for a house a largely no risk proposal for banks, as they could resell the paper later to the government. Sort of a financial pass the hot potato game.
Now, with no worry about getting repaid, the banks want to get the homeowner into anything they can to make money. Take a slice of the pie and sell the risk to the taxpayer. What a great deal!
Since people are, by and large, not too bright they will borrow to the hilt in search of happiness and contentment through a split level with 2.5 car garage & SUV in the driveway. Thus, home prices have skyrocketed.
I make enough to afford an SUV or big house, but don't want them. I learned when I was younger material goods won't make me happy, and have found my pleasures elsewhere than the trough of consumerism. We spend too much on international travel maybe, but because of our thrift elsewhere it isn't too much of a burden.
My girlfriend got into a discussion with a co-worker the other day where the co-worker was trying to argue that having no repair expense with a new car made it not that much more expensive than having an old one. It was pointed out that at $350 a month car payment and insurance, that is $4200 a year. That is enough to have a complete engine and transmission installed in most any older economy car.
The point is: you could do a major overhaul on your older car every other year and still spend half of what the new car person does. Fortunately, older cars rarely need a major repair. Usually it is smaller easier things like brakes alternators etc. Even paying the dealer to do this stuff, AND renting a luxury car while its in the shop, you make out like a bandit.
Even better is to have no car, but i'm not there yet.
posted by jester69 at 10:17 AM on August 10, 2004
Now, with no worry about getting repaid, the banks want to get the homeowner into anything they can to make money. Take a slice of the pie and sell the risk to the taxpayer. What a great deal!
Since people are, by and large, not too bright they will borrow to the hilt in search of happiness and contentment through a split level with 2.5 car garage & SUV in the driveway. Thus, home prices have skyrocketed.
I make enough to afford an SUV or big house, but don't want them. I learned when I was younger material goods won't make me happy, and have found my pleasures elsewhere than the trough of consumerism. We spend too much on international travel maybe, but because of our thrift elsewhere it isn't too much of a burden.
My girlfriend got into a discussion with a co-worker the other day where the co-worker was trying to argue that having no repair expense with a new car made it not that much more expensive than having an old one. It was pointed out that at $350 a month car payment and insurance, that is $4200 a year. That is enough to have a complete engine and transmission installed in most any older economy car.
The point is: you could do a major overhaul on your older car every other year and still spend half of what the new car person does. Fortunately, older cars rarely need a major repair. Usually it is smaller easier things like brakes alternators etc. Even paying the dealer to do this stuff, AND renting a luxury car while its in the shop, you make out like a bandit.
Even better is to have no car, but i'm not there yet.
posted by jester69 at 10:17 AM on August 10, 2004
...to live somewhere I can continue doing what I love, I cannot afford to buy a house. ...I'd very likely have to give up the career I love.
Like all of us, you want your cake and to eat it, too.
Did your father hold a job that he loved?
Mine didn't. He fucking hated it. But it paid well, which made it possible for him to support a wife and two kids, and own a very modest home.
posted by five fresh fish at 10:21 AM on August 10, 2004
Like all of us, you want your cake and to eat it, too.
Did your father hold a job that he loved?
Mine didn't. He fucking hated it. But it paid well, which made it possible for him to support a wife and two kids, and own a very modest home.
posted by five fresh fish at 10:21 AM on August 10, 2004
you could do a major overhaul on your older car every other year and still spend half of what the new car person does
exactly right...we haven't had car payments in 4 years and it's nice. When we need a several hundred dollar fix-up once or twice a year it hurts, but compared to a fixed car payment it's a deal.
posted by jacobsee at 10:36 AM on August 10, 2004
exactly right...we haven't had car payments in 4 years and it's nice. When we need a several hundred dollar fix-up once or twice a year it hurts, but compared to a fixed car payment it's a deal.
posted by jacobsee at 10:36 AM on August 10, 2004
Mine didn't. He fucking hated it. But it paid well, which made it possible for him to support a wife and two kids, and own a very modest home.
In other words, his expectations were realistic.
But that was also back in the day when making sacrifices on behalf of a greater good was considered noble rather than foolish.
posted by kgasmart at 10:55 AM on August 10, 2004
In other words, his expectations were realistic.
But that was also back in the day when making sacrifices on behalf of a greater good was considered noble rather than foolish.
posted by kgasmart at 10:55 AM on August 10, 2004
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Yeah, we're definitely turning a corner:
Instead, the problem is that Bush has presided over an economy where 1.8 million private-sector jobs have vanished, 3.7 million Americans have lost their health coverage, and wage increases have fallen behind the rising the cost of living. After rallying Americans in the aftermath of the 9/11 terrorist attacks and defeating the Taliban regime in Afghanistan, Bush led the nation into the war in Iraq without an exit strategy or even a plausible explanation.
Thus, he can't make the classic case for re-electing a president: The country is in better shape than when I took office, and I'll make things even better if you give me another four years. For all the simplicity that appeals to Bush and his media adviser Karen Hughes, slogans such as "We're turning the corner, and we're not turning back" can boomerang on Bush, just as they did this week. His opponents can ask "Why not turn back" to the country's condition before Bush took office – peace, prosperity, and a nation that was at least a little less polarized? And what are we turning the corner on? The problems Bush inherited? Or those he himself presided over, such as the growing federal deficit and rising unemployment?
posted by fold_and_mutilate at 1:11 PM on August 9, 2004