As an outsider, I really don’t understand how the US economy continues to function. With almost nonexistent social safety nets, jobs you can be fired from if you don’t come to work while ill, lack of paid maternity leave combined with really expensive daycare, and healthcare you can only afford if you’re healthy anyway, the only way for an average person to be able to prepare for contingencies is to have a lot of savings. But at the same time an average person cannot afford to save any money! Boggles the mind.
This IS the reasons a US economy is so strong.
You got it all wrong.
Extreme consumerism, inability to be unemployed (unemployment can end up in being homeless, so the transition period between jobs is almost non-existent, so the economy won't feel it, and the government don't need to pay benefits long term), enforcing businesses and insurance companies to cover the healthcare (inflating costs, creating jobs for middleman to shift the responsibility, building fear in people that if their wealth decreases they will be uninsured), not many social programs (so more money can be spent on public projects). All of those things are fuel to the economy, not dead weight.
How is having a lot of non productive middle man jobs in the health industry "good" ditto having 52 sets of employment laws if you had one you would not need so many HR overhead roles.
Well, you can have 3 employees when 1 if needed, and then 2 unemployed people looking for social benefits, or 3 employed people that add some value. I think it is obvious which one is adding to the economy more.
Not saying it is good, but this is one of the tools governments have to reduce the cost of social state and increase the production.
The tail end of your argument is the broken window fallacy. On every conceivable metric the vast amount of bureaucracy and paper-pushing required by the uniquely dysfunctional US healthcare system fails to deliver any benefit proportionate to its gargantuan costs.
Put another way, if healthcare costs and the amount of insurance paperwork doubled yet again overnight, would that be "fuel to the economy" or "dead weight"?
This is the strange think about market fundamentalism, market efficiency doesn’t really exist but it seems end stage capitalism isn’t about efficiency so much as people who believe they deserve it.
The question will be then if the increased amount of uninsured people will affect the economy badly (by the inability to access professional health services) and if this will result in creating a new market for more efficient, low-cost health providers. This will be controlled by the government as always by relaxing the laws.
Once again - this is from a non-emotional point of view. I am not saying this is good. The way the US works and the way they push towards more "dead weight employee" rather than "social beneficient" works for now well enough to keep it as it is apparently. Otherwise, there will be a much stronger push for change.
Yeah and the US has some of the worst social issues in the world.
Proof by counter example, then. The Scandinavian countries have the exact opposite mindset to the US yet they are some of the richest and happiest countries. But that could be the oil money talking.
Only Norway has any real quantity of oil. Sweden has none. Denmark only has a little. Finland – albeit not technically in Scandinavia, but related since it's part of the Nordic Countries – also don't have oil. And while we're at it, also Iceland don't have oil. That should give you a better idea of how well these countries are being run. Also consider that the dream country of Reich – Venezuela – has tons of oil...
While we're at it, neither Denmark nor Norway are "Democratic Socialist" states. Heck, not even Sweden, though they are marred with a Left-Wing government. They are instead Market-liberal Capitalist Welfare States. While the policies of these countries are "social" they're not Social-ist. Please make a clear distinction between the two, because Socialism – the thing Robert Reich stands for – is anything but what we have here in Norway. But like in most countries, you'll find commies also here. That doesn't mean either Communism or Socialism are viable political ideologies. Quite the contrary!
In this context I think the Norwegian Oil Fund deserves a honorable mention (https://www.nbim.no). It really is a testament to a well-run government that they are saving significant amounts to future generations - and I say this as a somewhat envious dane :)
But it does have abundant geothermal and hydropower. Aluminum smelting is a big part of Iceland's economy, and it wouldn't be possible without the cheap electricity those natural resources supply.
You are introducing emotions to the economic statement. Yes, it does have severe social issues, but calling it worst in the world is ridiculous. Unless "world" is Europe and few rich countries.
Stating that something is not good for the economy does not mean I support it, I vouch for it and I think it has future. Obviously, there are better models, but the current one works good enough currently. Once it will become too much to handle, it will be surely changed (after a series of market crashes). Market and economy will adjust itself when there is no other way.
My comment was not about if it is good, or bad for people, but for the economy (to a certain point). Again, I am not saying it is a good solution, but for now, it worked and works well enough.
I don't think that's right. I think the US enjoys a lot of benefits that would make it an economic powerhouse even if it went to a Nordic model -- most importantly probably its hegemonic status
Absolutely. My comment was without the emotion - it is good enough to work for now, but there are so many better options that would have a better outcome in future.
Yes. You are correct to point out that having no cash savings is not a problem if you are creditworthy; that is you can put yourself in debt in time of need. In addition more than 20% of US households are home-owners and often have access to an inexpensive line of credit.
It boggles the minds of many Americans, but a vast majority of the country doesn't know any better thanks to relative deprivation and lack of meaningful exposure to other ways of life (in other countries). That or they just "chalk it up to grit".
After living abroad as American, I can't imagine returning. I've seen too many friends older, in my same cohort, and younger suffer in unimaginable ways — many through no fault of their own.
I've lived in Zurich for two years now. It would be very difficult to explain to an American who only lives in America how nice real public transit is. Or a good education system. Or the ability to let your kids walk 500m to a park on their own.
Another thing I've noticed is that most Europeans see American as a "high tax" country, and they wonder what we get for those taxes. I can say that I pay less taxes to Switzerland than I pay to the US. I would bet the impression from America is that the Swiss pay more in taxes, but that does not seem to be the case.
The vast majority of the country has decent access to healthcare. Professional jobs, union jobs, they roll okay insurance into compensation and pay enough that people can manage their side of any bills, even if it is a few thousand dollars. And then ~¼ of the country gets insurance from Medicaid, with about ⅕ of the country getting insurance from Medicare.
That doesn't make it a good system, but you've got the wrong idea about the number of people that can't afford healthcare at all.
Most people who go bankrupt from medical bills have insurance, or at least did when they started. More and more insurance plans have substantial coinsurance, which is a way of passing off a lot of risk to the patient, and don't forget the baroque system of networks and excluded services.
Yes, the ~1 million personal bankruptcies that occur in the US are nothing to be proud of. But they don't really undermine an argument that plenty of people have decent access to healthcare.
I don't see how the argument isn't undermined by a substantial number of people who are insured going into bankruptcy from medical bills. Many plans are also poor enough that the people using them forego necessary care
> In the new poll, conducted by The New York Times and the Kaiser Family Foundation, roughly 20 percent of people under age 65 with health insurance nonetheless reported having problems paying their medical bills over the last year. By comparison, 53 percent of people without insurance said the same.
> [...]
> One reason, many experts said, is a gradual shift in the norms about the generosity of health insurance. In recent years, health plans have come with growing deductibles and narrowing networks of providers, provisions devised to lower the cost of premiums. Those features have made health insurance accessible to a larger share of the population, but may also be leaving more insured Americans vulnerable.
> Ten years ago, David Dranove, a professor of health management at Northwestern’s Kellogg School of Management, conducted research on people experiencing medical bankruptcies. The study he co-authored found that bankruptcy was largely a problem of the uninsured. “But with more people buying less generous health insurance, I think the old evidence might no longer be relevant,” he said.
> Insured people with financial problems often have plans with higher deductibles. But many said that the smaller co-payments piled up to make their care unaffordable. Many also received big bills that were not covered by their insurance. Among the 32 percent of insured patients stuck with an out-of-network bill, more than than two-thirds of patients said they didn’t know the provider wasn’t covered. More than 25 percent of the insured respondents said a medical claim had been denied.
Pinning down "medical bankruptcies" turns out to be difficult because people can't agree on how to define it.
Lots of disability insurance policies would cover an extended illness (and every creditable financial advisor would recommend disability insurance come before any discretionary spending).
But I was making a point about the statistics, not launching a spirited defense of the US system.
i think regular people don't have great coverage of disabilities. is cancer a disability? you get it, you can't work during treatment, you lose your job and insurance.
You've pretty accurately described the situation here in the USA. I will describe some workarounds that most of us have had some exposure to. Some are better than others:
1) re housing: if you don't have much savings at all, you live with your parents (or you go on the streets, which is a very sad and tough reality for millions of Americans). if you have some savings but not much, usually you search for roommates or tenants if you have a house but still live paycheck to paycheck.
2) if you lose your job, in most states you can qualify for unemployment, which usually means 1-2k per month in post tax income for 6 months. unemployment has saved my ass twice already and im not even 30. it's very common to lose a job here, but it's also sort of easy to interview and get a job here compared to France.
3) regarding health insurance, if you don't have a job, you get it from your parents or spouse. if those don't work for you, you have to wait a long time until you eventually qualify for medicaid and food stamps (1-2 years if your income was too high this year). my gf didnt have any insurance for the first 20 years of her life, i havent had it in the last 6 years.
so, it's definitely not optimal, but also not a death sentence. with roommates, i'm living on less than $1,000 a month right now and I feel extremely comfortable. I have gone as low as $500 a month but right now I live in NYC where the cheapest room possible is about $600
"if you don't have much savings at all, you live with your parents"
This assumes your parents are alive, can afford their own place, have space for you, and you have a good enough relationship with them for them to let you stay without paying (much) for rent.
"if you don't have a job, you get it from your parents or spouse"
These assume that your parents or spouse have health insurance and that insurance will cover dependents.
"if those don't work for you, you have to wait a long time until you eventually qualify for medicaid and food stamps (1-2 years if your income was too high this year)"
In California, I was told that I'd qualify for Medi-Cal (California's Medicaid program) as soon as I had no job (ie. no income, or very low income -- you can get information on exact income limits from them).
yes, it does assume all those things. I was kicked out at 18. I saved enough money such that I'll always have enough for a deposit on an apartment. I am very good at hawking rooms to roommates. Beyond 18, I wasn't afforded the privilege of living at home for cheap.
>health insurance
Yes, once again it assumes those things. I literally said that in the next sentence. I don't have health care. If I make below $20,000 next year, I get medicaid in 2020.
>Medi-Cal
each state is different. some go by tax return and not current income.
Well it’s pretty healthy (relative to most other western economies using traditional metrics like unemployment, inflation and gdp growth) so if you are interested in having an accurate mental model of how economies work you might want to do more research
Economies don’t care about quality of life. The US has natural resources, a stable government with not too many people trying to steal for themselves, a powerful military, and as a result, a desirable currency. The paycheck to paycheck life just means all of these amazing resources are being allocated in such a way that 20% are gaining a bigger share of the pie than 80%.
The US has a good system of transacting with one another (sufficient security, trust, and credit check systems), but that doesn’t mean people are happier or that it will continue into the future. It very well may be a short lived local maxima.
Quality of life considerations drive every exchange. Even a near-term oriented purchase of candy, for example, improves quality of life briefly. This of course applies to computers, smart phones, clothing, automobiles, houses, investments, and so on.
I would call that “utility”. People engage in transactions because they expect some utility out of it.
I’ve always thought quality of life is more of a macro term, dealing with things like quality of education you can expect your kids to receive, physical safety, access to healthcare, vacations, ability to move “up” in the world, ability to practice your hobbies, etc.
Generally, these are the things you can’t specifically go out and buy, but rather the desired end result of all the work and time that people sell.
It is, but I think it's useful to have a different term for the utility derived from buying a candy bar as opposed to the utility derived from knowing that you will have 4 to 6 weeks of vacation, or your children will have an opportunity for a good education, or that a member of your family's health issues won't derail your family's retirement.
Indeed, and those considerations are built into prices, which factor into each exchange. Homes in good school districts sell for more, and jobs with good or exceptional benefits may have lower takehome — as is the case with civil service jobs where being fired is nearly impossible.
"The paycheck to paycheck life just means all of these amazing resources are being allocated in such a way that 20% are gaining a bigger share of the pie than 80%."
And that a tiny minority are basically ruling over the overwhelming majority, making the laws, and telling the rest of us what to do as we fight with each other over the crumbs that the rich let fall from their table.
Many of us will never be able to afford to retire, while the ultra-rich will never have to work a day in their life, and neither will their children, or their children's children. We will be polishing these people's shoes for generations to come.
This idea of the idle wealthy is a stereotype that harbors envy despite the fact that it does not match reality. In The Millionaire Next Door by Dr. Thomas J. Stanley, the author found that 80% of American millionaires had parents who were not millionaires and inherited no more than ten thousand dollars.
Perhaps Trump’s kids don’t work, but the existence of some idle wealthy people does not mean all or even most wealthy people are idle — any more than some Asians being good at math means all or most are good at math.
What else given by parents ought to be neutralized or otherwise taken away? Work ethic? Polite manners? Good looks? Family connections? Education? Computer skills? Cooking skills? Healthy lifestyle? Dominant presence, at least for sons? Social skills? Athletic ability?
If it’s only money that ought to be “evened out,” what makes it special vis-à-vis these other valuable areas? What is the underlying system of ethics that justifies this intervention?
The Millionaire Next Door devotes an entire chapter to Economic Outpatient Care, that is, continually paying their adult kids’ bills and otherwise bailing them out. For all their skill at building and growing businesses, American millionaires do not seem to be any good at passing these skills on to their children. What that means is through the natural course of things, millionaires’ kids tend to squander their gifted status without outside help from egalitarians.
The difference is that inheriting huge amounts of money leads to a group of people that have power from their money (if they have a lot), but they aren't invested or aligned with society getting better. They are against the success of regular people., who can believe that their success is aligned with using their power to change society to their own benefit. This doesn't always happen of course, but these rich people can believe irrational things, they can screw up society.
You can be this way even if self made, but I think if you were self made the things that worked for you on the way up help you be connected to the real world.
America was partly founded upon the reaction to injustices foisted on the populace by people who largely had power based on their familial lineage. These people who inherited their power were largely insulated from making mistakes, and hence one could say they were less likely to learn. They were also more insulated from poor fortune making them less likely to be empathetic.
So I would suggest if you want to be ruled by people who are less learned and less empathetic then doing away with high estate taxes might be a way to achieve that.
Yeah. I looked into that book. His sample size was 345 people on a 'self reported' survey the authors randomly sent to rich neighborhoods.
Any self respecting scientist would blow their brains out with a shotgun if they were forced to use these results to draw enough conclusions to write a 200 page book with....
This scumbag presents ratios the entire book instead of actual numbers,then at the very end tells you his sample size.
That book is the biggest money grab crock of shit on earth and is as conclusive as a two year olds explanation on why the sky is blue.
If you ever reference that book as a talking point you should be absolutely ashamed of your self because you're a garbage person who is using fake science to fit their bullshit narrative of the poverty being an individuals fault instead of a systemic issue.
Yes, self-reported results will have biases. We might also note selection bias if all the surveys went to neighborhoods in the same city or even the same state, for example.
Americans have (or at least had) cultural mores against discussing the topics of personal finance, income, and net worth at all. Where would you suggest starting?
Statistics requires training and does have some intuitively nonobvious results, such as determining sample size[0]. If you prefer more interactive, Survey Monkey has a form[1] that lets you select population size, confidence, and margin of error. For the U.S. population of 325 million at 95% confidence level and 5% margin of error, the necessary sample size is 385 — not far from your figure Stanley’s.
The topic warrants future study, but Stanley’s book does destroy the notion that all millionaires are a bunch of Paris Hiltons and Thurston Howells — for those readers who are willing to challenge their own prejudices.
The site doesnt go any higher than 385 and it says you need that for anywhere from 100,000 people to 20 billion people, which may be true if the sampling was completely random and there were multiple studies done.
How did he determine the sampling was random?
How can you confirm the self reported data was correct?
Also this was ONE SINGLE unreproduced study...no scientist in the world would write a 2 page paper based on one study much less 200 pages.
That worthless book destroys NO notions. That book is propaganda selling a false narrative based on extremely shoddy science and it would do you well to throw it directly into the garbage.
All of those false assumptions you made are gleaned from social media headlines and not reality. Family and friends still help you out. Jobs won't fire you because you're sick. Women can take leave for maternity (though they might not be paid). Daycare is not as expensive as you may think. Healthcare is provided by your employer.
Now, not all those things are true for everyone but it's true for a lot of us. Quit using the internet as your only source of education.
Women definitely cannot always take leave for maternity. They can if they work for a place that falls under FMLA rules, but not if they don't. Not being paid is generally equal to not being able to take leave if you are low-income.
Healthcare is not always provided by the employer, and the cost may be more than your paycheck if you want a family plan. Literally - I've worked such a job. The weekly cost was more than I brought home working 40 hours a week for a family plan: The individual cost was a very good chunk of the paycheck. This was not a high-paying job. Not only that, but it may be the bare minimum of insurance, rendering it basically major medical only. Lots of places won't do a surgery or screening without your copayment upfront, and this is a real issue.
Jobs don't fire you becasue you are sick: They fire you for not having good enough attendance. This includes nearly everything, including you or your children being sick. These aren't abnormal in any sense.
I wonder if my Internet-mediated viewpoint actually gives me access to a greater diversity of voices than what an average fairly privileged HN commenter is exposed to in their social bubble. Certainly not an unreasonable hypothesis a priori. Not to mention the fact that the least privileged are as underrepresented on the Internet as everywhere else.
Homo sapiens has continued to exist without government for far longer than it has existed with government. But existence isn't really the point. Quality of life is what matters. But this is very hard to measure.
I imagine quality of life is good in the US. But they continue to build up an enormous debt to maintain it.
I don't quite get where you're trying to direct this conversation. You're saying that an American's quality of life is high, but this seems to contradict what the parent comment mentions. You don't seem like you are disagreeing with that comment, though.
Why do you think the social safety net is non-existent? The US has tons of social welfare programs:
- TANF (temporary assistance for needy families)
- Medicaid
- SNAP (food stamps)
- CHIP (child health insurance program)
- unemployment
- disability
- housing assistance
- social security
- ...
States and cities also have many welfare programs along with private charities.
It is absolutely possible to save money on an average salary. In general, Americans are indebted and live beyond their means by choice, not by necessity. And once they get into the debt cycle it can be extremely difficult to get out.
Yes but the welfare spending doesn't go as further as it does in in Australia, NZ, Denmark, Norway, Sweden e.t.c
Mostly because US spends a ridiculous amount of money just moving records and doing busy work with layers and layers of middlemen. The healthcare complex is a good example.
The US "safety-net" health system --- medicare in particular --- is significantly more efficient than the private market health care system in the US, which makes that example poor evidence for the argument you're trying to support.
I think its more complicated. For example, lets say you file for unemployment in Colorado. It can take 4-6 weeks for your claim to be accepted, but you must start (by their rules) looking for work as soon as you open your claim. So imagine, you are living paycheck to paycheck when you had a job, and falling through the cracks now that you don't. You start applying for jobs as soon as you file your claim, but need to buy clothes for interviews, money to drive to interviews, etc - but that money is not coming for another 6 weeks in worst case scenario. And there are already bills like rent, phone, car insurance, maybe a credit card to be paid.
There are all these little gotchas - when there are no margins in your life - where a crack opens a little here, or there, and you fall through, and without help just becomes all the more harder to pull yourself up.
Seems to me that someone who can't survive for six weeks by one mechanism or another--whether by savings, or family and friends, or credit, or charity, or existing government programs, or short term work--is doomed anyway. At some point, people have to be dealt the consequences of their actions. At some point.
You can't just spell out a scenario where someone is completely irresponsible and say, "Well, because of this guy we need even more safety nets--the existing two dozen are insufficient."
That is a completely unrealistic model that would be inadmissible when talking about most other things. I am not even sure it worth responding on a technical level if you can't see that yourself. Just compare this to any sort of statistical model whether it is in manufacturing, engineering or 'plain' mathematics.
What is curious is that people who tend to view the US government as incompetent, which I think many people can agree
with whether their opinion on the governments role, suddenly when talking about poverty seems to think that it is a role model for efficiency. Not even the Nordic model takes this stance.
> It is absolutely possible to save money on an average salary.
Not to pick on your use of average in general concertation, but it appears the average income is around 45 000/year and the median is around 30 000 - for all demographics.
I'm not sure what 30k is after taxes most places in the US... 25k if you're not a home owner?
It may be feasible to save some money in areas with low cost of living - I don't know.
I also only get these weekly/yearly numbers to line up if I multiply with 52 weeks - but is paid vacation and sick days the norm in the US?
I didn't see any specification of "full time". Besides, what does that have to do with the issue anyway? If we're talking about calculating annual incomes, many of those workers work well over 40 hours per week across multiple jobs.
You didn’t see any specification in the response that you replied to where I said “Most full time hourly workers accrue vacation hours just like salaried workers.”?
Even the original post I replied to said Salaried employees typically get paid vacation and sick leave. Employees paid hourly wages do not. Some don’t even get unpaid leave.
The distinction of who gets paid vacation and sick leave is not based on “salaried” vs “hourly” but based on “full time” vs. “part time”. The distinction isn’t nevessarily based on that either.
While I don’t know of any salaried jobs without benefits, I know of plenty of part time hourly jobs with benefits and know of very few hourly jobs that are classified as “full time” that you don’t have paid holidays and vacations.
In fact my wife could go part time and still get full health benefits. I know plenty of people who do what she does part time specifically for the benefits where their checks are basically a token amount while thier spouses make most of the money doing something without benefits like owning a small business or in my case depending on which way the wind is blowing, doing contract/consulting software development instead of working in a salaried position.
Many people I know who do part time work DO get leave and health benefits.
But the original post by e12e I was replying to above doesn’t say anything about full time - it was just talking about calculations to extrapolate wages from income: https://news.ycombinator.com/item?id=17637626
It might be only 'the press' skewing our view here in the EU. Social safety means that I don't have to worry no matter what happens; the stories in the article and in this thread do not seem to point to anything like that in the US. When I get ill, I cannot wait for months for help or money; it needs to be near instant. I also cannot do too much work to get it; I am ill; if I could go to all kinds of offices and fill paperwork and talk with people, I could work. So it needs to be automatic mostly. I might be wrong, but I do not get the impression that's the case with any of these. But that might just be people being negative or the press likes to put down things?
> If you're referring to Hospitals, they are required by law to treat you regardless of your ability to pay
Hospitals—well, emergency departments of hospitals that take Medicare—are required to screen for and stabilize any “emergency medical conditions”, as defined in law, regardless of ability to pay. As your source noted, that is not a mandate for general treatment, or even stabilization of medical conditions generally.
And not only the coverage of the hospital: also the coverage of not being able to work for a period or forever. In a social security system I expect both to be covered.
All those factors are good incentives to stay employed. This keeps the economy moving forward. Credit is what keeps most people afloat during economic hardship which then provides even greater incentive to work more hours.
Your lack of understanding probably comes from the fact that you're misinformed about the facts on the ground.
- While not as robust as some Western European countries, the social safety net in the US is pretty strong.
- The majority of US workers get paid sick days and even for those that don't you will almost never get fired for taking off when sick.
- Maybe about half of US workers get paid maternity leave.
- Only around 10% of Americans do not have health insurance and many of those people are young people unlikely to get sick.
To be clear, I'm not trying to say that everything is perfect and that there is no room for improvement, but the US isn't the dystopia that you make it out to be. It also helps that incomes in the US are among the highest in the world due to the very robust economy.
> Maybe about half of US workers get paid maternity leave.
I think there is some confusion of terminology here: a European probably means paid leave for the first 12-18 months of the baby’s life, until it’s old enough to go to daycare so the parents can return to work. One or a few months leave doesn’t really help much if you still either have to quit or take a long unpaid leave until the kid can be in daycare during the day
Wow. Did not know that. Here you aren’t recommended to leave kids until 12months, and the norm is 18. I suppose that will also happen in the US - that is, if you can afford it you stay home until 12-18 months (or longer). This of course leads to kids to more well off people getting more time with their parents than poorer kids. That would be an almost impossible situation to support politically here, so the solution is to ensure even the poorest kids get the minimum 12 month full time parenting, through tax funded parental leave
While some parents (much more often mothers) choose to exit the workforce semi permanently when they have kids, it's actually very very rare for Americans to take off for 12-18 months. It's generally either ~3 months or "forever."
I know my wife was quite eager to go back to work after 3 months. Staying at home all day with a newborn gets boring fast.
I am 100% convinced that the US is in for a very rude awakening. It's been some time now that things are falling apart on multiple levels, not just regarding economic questions. A few years back, it was my dream to live in the US (I had won a green card thanks to the Diversity Visa program, but ended up letting it expire), but today, I'm glad I stayed put. And I don't think the US will recover in my lifetime to the point that I will see it as an attractive country again.
But at the same time an average person cannot afford to save any money!
This assumption is stated and accepted around here uncritically but with zero supporting evidence. Four out of five Americans are not desperately hand-to-mouth poor as this figure suggests. Accepting the extraordinary 80% claim for the sake of argument, some of them must be in stable, full-time job situations — and some those have to be in two-income households — by law of large numbers.
Having identified a segment of the 80% with at least decent incomes, that shatters a premise of the Reich piece. They can afford to save money but do not because consumption is too high relative to income. The balance goes on credit cards, home equity lines of credit, or other debt instruments.
Of those who are living paycheck-to-paycheck with no emergency fund for contingencies, how many have written goals? How many are executing an intentional plan where they make and follow a budget each month? Those are important questions that go unasked.
You seem to be operating on some unstated assumptions: one, that basic money management skills are just something that everyone should be expected to have, and two, that two stable full-time jobs make enough money for anyone to live comfortably on with those basic money management skills.
First of all, I think it's worth noting that basic money management skills are no longer part of any curriculum with broad acceptance in America. They used to be taught in home economics classes, but those have been pared down to the bone in some places, outright eliminated in others. So expecting Americans to have basic money management skills at this point is, while not exactly unrealistic, at least not something that should be considered the obvious default.
Secondly, there are plenty of places where a two-income household, with both earners making significantly above minimum wage, will still be just squeaking by, particularly in places with very high housing costs. That's not even taking into account other all-too-common situations, like large medical debts, or burdensome student loans.
"But they should just move!" you cry.
"They should have known better than to go to college!" you cry.
(...I'm going to give you the benefit of the doubt that you wouldn't say they should know better than to get cancer or some similar costly illness, but Poe's Law applies here.)
Moving, when you cannot easily save up money, is, at best, highly impractical. It costs mental energy that you probably lack if you are stressed from worrying about your poor financial situation, in addition to the time costs of finding someplace to move to that fits your needs better than where you are now, and the obvious financial costs of hiring movers and potentially putting a down payment on a house, depending on whether you're trying to buy or rent.
College has been sold to every generation in America for some time now as not merely the way to better your situation, but to many as the only way to get a stable job—or even to be a worthwhile person, depending on your (parents') social circles. Just within the past decade or two has the country started to turn around and say, "But we're going to make you pay through the nose for it. For the rest of your life. So if you aren't already wealthy, you better not go for a degree that can't get you six figures within 5 years of graduation!"
So...yeah, assumptions. They're a bitch, and they lead to an awful lot of the kind of moralistic labor-theory-of-value crap that keeps us in this terrible situation, instead of working together to find a way to make it better.
Yes, the labor theory of value is garbage economics, but I’m not sure how it fits into this particular discussion.
Basic money management is not at all complicated. By the time someone completes fourth grade in a typical U.S. elementary school, she has mastered the necessary math for the subject. No, that person may not be able to explain exactly how municipal bonds work or how to compute an amortization table, but she will be able to lay out and follow a budget, with pencil and paper if necessary. “This month I expect to bring home this amount; food, housing, utilities, and transportation will cost so much; and that will leave this many dollars in expendable income.” Addition and subtraction is as complex as any of that gets.
For people who want to learn more, Suze Orman, Clark Howard, Dave Ramsey, The Motley Fool, and Personal Finance Stack Exchange are just a few of many who produce affordable, accessible resources. We all have our respective circles of friends and acquaintances to learn from or at least to ask for pointers.
This is not a high bar. Now, an entirely different question is whether people have learned to moderate their behavior around these basics. “I have so much money and want to buy this; can I afford it?” Prioritizing needs versus wants, setting goals, making a plan are also not heavyweight intellectual endeavors but do require a bit of discipline.
Of course people do fall on hard times through no fault of their own. The disabled and mentally ill are examples or people who fall into bad health, either themselves or their children. (The American system of healthcare and particularly health insurance are terribly broken, but outside the scope of this thread.) Yes, these terrible situations do happen, but they are exceptions. Bad times, not necessarily this severe, will hit us all, so the smart course of action is to save up now for when the rainy day comes later.
Living in a home that costs so much relative to one’s income that it leaves little in the way of disposable income or even to cover all necessities is known as house-poor. As with any other good, when it comes to housing, we all have to ask ourselves whether we can afford it. Yes, moving is stressful, uses mental energy, and costs money. I’m an instrument-rated pilot. An important part of the training is learning to guard against hazardous attitudes, one of which is resignation. Giving up and thinking ‘I guess I can’t do anything about it’ is dangerous in that it can kill you quickly in an airplane or in slow motion from the stress and anguish of living house-poor. They can do something about it, and their lives will be far better on the other side. Rent an apartment at first to allow cushion for saving money. I live in north Alabama, an area whose TV portrayals bigoted people sneer at. The median house price here is under $150k, and believe it or not we do have indoor plumbing!
We’re on the same page about the bum deal many have been sold on college too. Just like everyone in college is not pre-med or pre-law material, not everyone in high school is college material. They are still human beings and therefore worthy of life, liberty, and the pursuit of happiness. The education establishment has done them a grave disservice by making vocational training out to be a last resort for the scum of the earth. People working the skilled trades make good money — in part because they are not competing with people who can walk in off the street and do the same job. Elsewhere you mentioned Home Ec being ground down to nothing, and it seems to be part of the same trend as with vocational training. No one should ever be forced into these programs because of someone’s backward ideas about certain people’s alleged place in society — that would be evil and wrong — but denying someone who’s mechanically inclined or who wants to be a homemaker the opportunity to be their very best at these worthy, honorable, necessary positions – again for the sake of mere political axe grinding — is likewise evil...
There is a huge difference between being able to do the basic math required to keep a budget, and having the skill of keeping a budget, as well as both true understanding of what it means, and of why it is important. None of that is taught in most schools nowadays, and since it wasn't really taught when I was going through school, either, nearly a generation ago, that means that we are relying entirely on people who were never taught it systematically to teach it to their children in whatever unsystematic manner they choose.
Financial literacy, like civics, needs to be a required course for every child growing up. Not fourth-graders; they're mostly too young to really understand the importance. Best to teach it in high school, when you're getting close to the time when they can vote, and when they might already have a part-time job (or, in lower-income areas and for less fortunate families, a full-time night shift job supporting the family).
>>the only way for an average person to be able to prepare for contingencies is to have a lot of savings.
>>Boggles the mind.
Why would it be Mind boggling?
State funded social security schemes do not exist to make up for bad personal finance decisions. They are for circumstance when someone fails despite their best efforts.
If they are used for the former, no amount of social cover will be enough, ever.
This is the correct answer. The modern salary given to someone who is extremely responsible and frugal is enough to cover rent, food, transportation, and the various insurances needed to cope with all of the above.
Oh, what I mean is, the original comment said "how does someone live on $59,000?". Then someone commented, "don't get sick, don't have kids, etc".
Then I responded by setting some parameters. "As long as you are frugal and responsible, $59,000 a year is enough to make sure you are fed and sheltered and that's about it".
If someone chooses to spend their $59,000 on a new BMW and 5 vacations to Paris and granite countertops, then $59,000 will not even be enough to feed them and pay their rent/mortgage bill! :)
True for many places but not for all. I'm sure there are places in the world where cost of living is not that much cheaper, while income levels are significantly worse than in the US.
I'm thinking of Moscow in particular (where rent prices are also quite high). 2017 median income was, reportedly, about 63k RUB/month (~$1k/mo) after the taxes: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
That makes (very roughly) 2.5x cheaper cost of living difference to the US, while income difference is, very roughly, about 4x less ($12k vs $50k after taxes)
That’s 4900 dollars per month before taxes. Substract taxes, health insurance, rent, bills etc and I think it becomes obvious why you’d live paycheck to paycheck. 59k is not much given how expensive some of the essential necessities (place to live, healthcare etc) have become. Throw in car and student loans just to get rid of any left over money you might struggle to save per month.
What's strange is Europeans are constantly told that everything is so much cheaper in the US. I used to earn that median salary according to current exchange rates, and I had an incredibly comfortable life. Owned my own car. Never worried about finances at all.
Commodities might be cheaper overall, but that's like taking a $10,000 paycut for a $1,000 annual perk when you look at all the other crap going on in the US.
Well some things are way cheaper in US, like gas which makes owning a car cheaper. Most consumer goods are also cheaper due to no VAT and stuff like that. But Europe has things going for it too. Free healthcare and free education being the top 2 areas were you save a ton of money compared to US (literally tens of thousands dollars per year you don’t have to spend).
If you have 59K and can't live comfortably, then you are clearly doing something wrong. Or perhaps you have a pretty skewed view on what are “essential necessities”.
According to the source given in the article [1], median worker wage is 44,564 (for a 40-hour workweek).
edit: It could get to 59,000 if these people actually worked
53 hours a week.
>>>According to the Bureau of Labor Statistics (BLS), the median wage for workers in the United States in the fourth quarter of 2017 was $857 per week or $44,564 per year for a 40-hour workweek.
The shape of the income distribution is more important than the median number. The inequality is huge and growing, only a small fraction have the median income.
>Having a higher salary doesn't necessarily mean money woes are behind you, with nearly one in 10 workers making $100,000 or more (9 percent) saying they usually or always live paycheck-to-paycheck and 59 percent in that income bracket in debt. Twenty-eight percent of workers making $50,000-$99,999 usually or always live paycheck to paycheck, 70 percent are in debt; and 51 percent of those making less than $50,000 usually or always live paycheck to paycheck to make ends meet, 73 percent are in debt.
The article presents a graph where two metrics are overlapped on the same scale (union membership and percentage-based middle-class income), with a graph title suggesting that one causes the other. This isn't necessarily true.
Irrespective whether you agree or not with the article's arguments, in general correlation doesn't imply causality.
The drop in the percentage of middle class income could be caused by a bunch of factors, including (but not limited to) increased automation capabilities and increased reliance in off-shore low-wage workers.
What percentage of countries are as wealthy as the United States, while at the same time having the majority of their population living at this level of tenuousness?
Is it your contention that a grant of additional income would transform the entire 80% into net savers and not simply elevate their level of consumption? How much would that grant need to be? What evidence do you offer?
It would help to understand whether this is a uniquely American phenomenon based on our culture/safety net/whatever. It would help me know whether this is a typical scary clickbait headline focused on the US.
It's because the economy isn't a fixed size pie. More people means more demand, especially in a consumptive economy like the US has (those scary trade deficits we run are clear evidence that consumption is higher than production).
It's also not the case that borders can protect workers from competition. Especially in the long run.
The increased demand is the other side of the squeeze on regular people driving the housing prices up. So they lose bargaining power both with their employer and their landlord or developer.
Meanwhile many other goods are manufactured outside of the US, benefiting primarily the mega corporations who can do international arbitrage on physical products.
There's also the third side of the squeeze where the native workers desperately need to contrast themselves from the millions of migrants. They do it by going deep into debt to get a college degree from an American university, which then goes completely unused except for its signalling value
the official rate hides more troubling realities: legions of college grads overqualified for their jobs
Oh, please. If your educated, English speaking, healthy, native born fellow can’t compete for jobs with an Honduran refugee that can barely spells his name; the problem might not be with the migrant to start with.
Robert Reich has become a very compelling and rational voice on these issues, making the problems and their causes much easier to understand. I strongly recommend his documentary at http://inequalityforall.com as well numerous other easily found pieces he's put out.
Reich is a Socialist who wants to take everyone's freedom away for collectivist ideals that are proven to not work. It's a shame so many people fall for his crap. Inequality doesn't necessarily mean worse standard of living. I think most Venezuelans can attest to that... That's why everyone should be extremely wary when listening to Marxists.
"Here's a fun game to play with a right-leaning American: say the word "socialism" and count the number of seconds it takes for them to scream "VENEZUELA" in response. It is unclear how many conservative Americans could identify Venezuela on a map but, boy, they all seem keen to inform you that the beleaguered country is a shining example of why socialism will never work, certainly not in the US..."
What a horrible article. Sneering, unnecessarily polarizing, full of ad hominems, and almost devoid of any real numbers or argument. Panders to the lowest of the left by picking on the lowest of the right and saying, "See!? Look!" Literally "stop thinking differently than me!!!" codified to vaguely resemble actual thought. The topics it is grouped with betray it as clickbait garbage.
Would you please stop using HN for ideological battle? This is not what the site is for, and destroys what it is for, so we eventually have to ban accounts that do it. Ditto for posting rants in general.
What's making this sad is that salary and worker performance are almost always completely disconnected. A responsible worker has no way out of their situation. It's pretty demoralizing if you ask me.
A responsible worker might not buy such an expensive home or such an expensive car, or live such an expensive lifestyle. And perhaps then he could afford to work less – or perhaps continue to work just as hard, and instead invest the proceeds, and then become truly independent. That's a choice for everyone in a free country to make. That they choose to not do it, is no fault of “the rich”. Expecting other people to pay for your own failing, is at best morally questionable.
You are somehow thinking that a responsible worker has money left over. Savings doesn't matter much if you are already using used cars, living somewhere cheap, eating cheaply, and yet still in the position where a flat tire is an emergency or getting sick and missing a day of work throws your finances in disarray. Saving $30 left over after paying for basic crap doesn't help and completely ignores mental health. Investing doesn't even come into the picture because there is never enough money to gamble (invest) with.
To be able to get to the point you describe, you have to make extra money at some point. those things you describe are responsible for folks with leftover money.
It also greatly assumes folks are lucky enough not to have things like an accident that disables them, a spouse that dies young and leaves you supporting children by yourself, a parent that needs taken care of instead of working, and so on.
There's many arguments in this thread to the effect that if Americans had more money they'd just spend more, and not save, with others claiming the opposite is true.
I found it interesting that the recent Trump tax cuts offered the rare opportunity to get some empirical data on that question, because they had the effect that people were getting more of their paycheck.
If 80% of people were desperately trying to save, but couldn't, you'd expect that consumption would stay the same, and the savings rate would go up.
But if they were just didn't care to save and would by and large fit their consumption to their income you'd expect consumption to go up, while the savings rate stayed level.
However, they don't break that down at all. It's conceivable that consumption just went up with 20% of the population, but this is presumably an easy question to answer.
There's a bunch of items like clothing which people will make last if they have to, but if they feel like they have more discretionary income will spend more on.
Did consumption in those categories go up in a way that indicates that people living paycheck-to-paycheck were now spending more?
Maybe I just have a simplistic view of these things, but I don't see how given sufficient data across the economy you couldn't tease out whether people were overspending or truly living at the limit.
After all, just "living paycheck to paycheck" says nothing about your income per-se. You could make several millions/year and struggle to pay your NYC penthouse mortgage and the loan on your Ferrari.
But the image that's invoked when you read that phrase is not someone who's absurdly rich and living beyond his means, but someone who's poor and struggling to make rent on their apartment or paying for their car.
In aggregate, if all those people would make $500 less a month you'd expect a significant spike in foreclosures, evictions, bankruptcies etc. It would look much like the 2007-2009 recession.
Or, if they truly weren't living beyond their means and were all given a $500 lottery ticket how that money gets spent says a lot about their situation.
Does such an injection of cash into the economy e.g. reduce the foreclosure ratio? That would indicate that people weren't truly living beyond their means.
Or does it only show an increase in consumer spending without any meaningful change in such numbers? Then it's more likely that those people were just bad financial planners, or just haven't thought to save any of their income.
We are socialized from elementary school or earlier to value the most exciting toys, cool clothes and awesome food. If your family attempts to be frugal, it affects your social life. Kids grow up almost inevitably developing a magnetic, unconscious attraction to spending more than they can afford.
If we could teach sound financial discipline to younger people (say, by 'gamifying' it like we do everything else these days) while easing off on the consumerism, and somehow make it cool to be smart with money & limited resources, I think it would put a dent in the problem. We made computer geeks cool, maybe we can do this, too.
If everyone from people earning $10 an hour to people earning 120K a year are living "paycheck to paycheck", then it seems misguided to think that the solution somehow lies on the wage side rather than paying attention to the consumption side and the issues of modern capitalist marketing.
The problem with modern American society is that it's developed a superbly optimized form of hyper-capitalism that is able to suck in every single marginal dollar while not delivering meaningful improvements in quality of life.
Areas of the economy that don't operate on that arena (food, electronics, clothing etc.) follow standard deflation curves and get drowned out by the areas of the economy that do.
Take children's safety for example. As a parent, you are expected to buy exactly up to your level of social status in marginal safety improvements for your kids, despite almost no tangible return on investment. If you are a working class family, your kids go to school on their own in a school bus and are latchkey kids in the afternoon while you finish your shift but if you are middle class, you're expected to ferry your kids to every single engagement because "what if something happens to them" and you have to participate in every hare brained exercise in child-rearing on the off chance that it adds some iota of chance to their success. Not doing so not only immediately makes you an outcast in every single social circle, in many cases, busybodies can also bring to bear the power of the state to compel you to behave or childhood services will be brought in to rip your child away from you.
With colleges, families stretch to send their child to the "best" college the child gets into, even if there are plenty of perfectly acceptable colleges for a quarter of the price. If you send your child to the best college, then at least you can reassure yourself that you've done everything you can whereas if you go for the "budget" option, you're forever going to be plagued with the thought of "what if?"
The American cultural pathological fear of every talking about or confronting death leads to the same thing with healthcare. If you have $100K in savings and a parent/loved one is suffering from some medical issue not covered by insurance, you will spend all $100K of that accumulated savings on experimental, last ditch efforts to save them. If you have $500K in savings, you will spend that $500K on a different set of treatments to save them. If you have $500K in savings, it would be morbidly unthinkable to only spend $100K of it and then look your loved one in the eye and tell them you think you're ready to watch them die now. Note that this would be the case even if the $500K treatment was no better or ever worse in outcome than the $100K treatment.
In Economics, there is a theoretical concept of price discrimination where the absolute maximum profit you could ever get from a product is to have some kind of mind reader device that could ascertain the exact maximum amount every single person is willing to pay and charge them exactly that amount for the product. Childcare, education, healthcare & real estate have ballooned in cost because the marketing of American society has become exquisitely tuned to do exactly this.
It doesn't matter how immune you are to this marketing message or how much you would like to reject it, this is marketing that works on a societal level to socially punish any individual who does not willingly give every single marginal dollar to some nebulous notion of the "better life".
Even if we could wave some magic wand and double everybody's wages (in real terms), you would not see any substantial increase in quality of life because those extra dollars would just be absorbed into even more pointless medical tests, fancy college campuses, increased land prices and bullshit helicopter parenting.
This is a great point and it equally applies to housing. Not just which neighborhood you live in, but whether you own a house at all. Spend a quarter million dollars minimum and get locked into a mortgage for decades for what actual improvements over a mediocre rental? Nicer baseboards?
This also occurs in the free time/life difficulty space and has the same societal pressures. Got life figured out and going well? You need to level up. You need a home to work on so you can go to Home Depot every weekend. You need a pet or child(ren) to take care of. Happy with your job? Climb higher on the ladder. It's morally questionable in this society for your life to be easy, regardless of your status.
Try telling people in a social setting, as a working age person, that you accept half the salary in exchange for working half the amount and are happy with it and don't need more. Watch their facial expressions.
This is a great point and it equally applies to housing. Not just which neighborhood you live in, but whether you own a house at all. Spend a quarter million dollars minimum and get locked into a mortgage for decades for what actual improvements over a mediocre rental? Nicer baseboards?
What I got for buying a house is a fixed housing expense. When I got married, my wife - who was already living in one of the best school districts in the state with her (now our) two sons. We moved into a 3 bedroom apartment,1630 square feet for $1200 a month. Within three years, rent had gone up to $1700 a month.
We moved into a house - slightly further north but still in the most affluent county in the state and one of the top 30 in the nation - and now pay $2050 a month. We have 3000+ square feet 5 bedrooms, 3-1/2 baths, a separate large office, a garage, not attached to other apartments, and privacy.
The apartment we left two years ago is now renting for $2150. Our mortgage will never go up, our insurance and property taxes will go up slightly.
My parents bought the home they live in now in 1978 and their mortgage was $650 a month. In 2008 when they paid off their mortgage, they were still paying less than $1000 (insurance and property taxes go up). 30 years later. In 1978 it was a stretch, by 2008 it was nothing. They live in a small town, we live in a major metro area. Now, they don't have to worry about rent - just insurance and a reduced property tax amount since they are over 65. A house is a great inflation hedge.
I would mention that in the two years since we bought the house, the value has gone up $30K+. But, since we have no plans on moving to a cheaper area, equity is meaningless.
What exactly constitutes NOT living paycheck to paycheck?
I mean, I used to be unable to pay bills until my paycheck arrived, I get it. But today, despite having a modest emergency fund and being able to pay all of this month’s bills with last month’s paychecks, I still would consider myself living paycheck to paycheck. I mean, I cannot quit my job for a month or two without substantial financial harm. So I might answer such a survey in the affirmative. Meanwhile, younger me from several years ago would look at my current bank balance with envy.
Is this like a survey of who feels rich? Everyone says no, but everyone below you on the scale thinks you are rich while everyone above you thinks you are poor.
Is that rethorical? It means being able to save money on every paycheck, or have enough saved (or a social safety net) that allows you to lose a job and not go bankrupt/lose assets if you spend a few months without pay. That’s by no means “being rich” in developed countries...
183 comments
[ 5.0 ms ] story [ 172 ms ] threadNot saying it is good, but this is one of the tools governments have to reduce the cost of social state and increase the production.
Put another way, if healthcare costs and the amount of insurance paperwork doubled yet again overnight, would that be "fuel to the economy" or "dead weight"?
Once again - this is from a non-emotional point of view. I am not saying this is good. The way the US works and the way they push towards more "dead weight employee" rather than "social beneficient" works for now well enough to keep it as it is apparently. Otherwise, there will be a much stronger push for change.
Proof by counter example, then. The Scandinavian countries have the exact opposite mindset to the US yet they are some of the richest and happiest countries. But that could be the oil money talking.
While we're at it, neither Denmark nor Norway are "Democratic Socialist" states. Heck, not even Sweden, though they are marred with a Left-Wing government. They are instead Market-liberal Capitalist Welfare States. While the policies of these countries are "social" they're not Social-ist. Please make a clear distinction between the two, because Socialism – the thing Robert Reich stands for – is anything but what we have here in Norway. But like in most countries, you'll find commies also here. That doesn't mean either Communism or Socialism are viable political ideologies. Quite the contrary!
But it does have abundant geothermal and hydropower. Aluminum smelting is a big part of Iceland's economy, and it wouldn't be possible without the cheap electricity those natural resources supply.
Stating that something is not good for the economy does not mean I support it, I vouch for it and I think it has future. Obviously, there are better models, but the current one works good enough currently. Once it will become too much to handle, it will be surely changed (after a series of market crashes). Market and economy will adjust itself when there is no other way.
If everyone doesn’t have access to higher education, you run into underuse if the talent pool through aristocracy in place of meritocracy.
If families don’t have long paid parental leaves and subsidized daycare, you both get low birth rates and lower workforce participation.
The overheads in the healthcare system are well known.
After living abroad as American, I can't imagine returning. I've seen too many friends older, in my same cohort, and younger suffer in unimaginable ways — many through no fault of their own.
Another thing I've noticed is that most Europeans see American as a "high tax" country, and they wonder what we get for those taxes. I can say that I pay less taxes to Switzerland than I pay to the US. I would bet the impression from America is that the Swiss pay more in taxes, but that does not seem to be the case.
That doesn't make it a good system, but you've got the wrong idea about the number of people that can't afford healthcare at all.
And before anyone gets too moralistic about how evil I am, I've contributed $0 so far this year towards my deductible that is thousands of dollars.
https://www.nytimes.com/2016/01/06/upshot/lost-jobs-houses-s...
> In the new poll, conducted by The New York Times and the Kaiser Family Foundation, roughly 20 percent of people under age 65 with health insurance nonetheless reported having problems paying their medical bills over the last year. By comparison, 53 percent of people without insurance said the same.
> [...]
> One reason, many experts said, is a gradual shift in the norms about the generosity of health insurance. In recent years, health plans have come with growing deductibles and narrowing networks of providers, provisions devised to lower the cost of premiums. Those features have made health insurance accessible to a larger share of the population, but may also be leaving more insured Americans vulnerable.
> Ten years ago, David Dranove, a professor of health management at Northwestern’s Kellogg School of Management, conducted research on people experiencing medical bankruptcies. The study he co-authored found that bankruptcy was largely a problem of the uninsured. “But with more people buying less generous health insurance, I think the old evidence might no longer be relevant,” he said.
> Insured people with financial problems often have plans with higher deductibles. But many said that the smaller co-payments piled up to make their care unaffordable. Many also received big bills that were not covered by their insurance. Among the 32 percent of insured patients stuck with an out-of-network bill, more than than two-thirds of patients said they didn’t know the provider wasn’t covered. More than 25 percent of the insured respondents said a medical claim had been denied.
Pinning down "medical bankruptcies" turns out to be difficult because people can't agree on how to define it.
But I was making a point about the statistics, not launching a spirited defense of the US system.
1) re housing: if you don't have much savings at all, you live with your parents (or you go on the streets, which is a very sad and tough reality for millions of Americans). if you have some savings but not much, usually you search for roommates or tenants if you have a house but still live paycheck to paycheck.
2) if you lose your job, in most states you can qualify for unemployment, which usually means 1-2k per month in post tax income for 6 months. unemployment has saved my ass twice already and im not even 30. it's very common to lose a job here, but it's also sort of easy to interview and get a job here compared to France.
3) regarding health insurance, if you don't have a job, you get it from your parents or spouse. if those don't work for you, you have to wait a long time until you eventually qualify for medicaid and food stamps (1-2 years if your income was too high this year). my gf didnt have any insurance for the first 20 years of her life, i havent had it in the last 6 years.
so, it's definitely not optimal, but also not a death sentence. with roommates, i'm living on less than $1,000 a month right now and I feel extremely comfortable. I have gone as low as $500 a month but right now I live in NYC where the cheapest room possible is about $600
This assumes your parents are alive, can afford their own place, have space for you, and you have a good enough relationship with them for them to let you stay without paying (much) for rent.
"if you don't have a job, you get it from your parents or spouse"
These assume that your parents or spouse have health insurance and that insurance will cover dependents.
"if those don't work for you, you have to wait a long time until you eventually qualify for medicaid and food stamps (1-2 years if your income was too high this year)"
In California, I was told that I'd qualify for Medi-Cal (California's Medicaid program) as soon as I had no job (ie. no income, or very low income -- you can get information on exact income limits from them).
yes, it does assume all those things. I was kicked out at 18. I saved enough money such that I'll always have enough for a deposit on an apartment. I am very good at hawking rooms to roommates. Beyond 18, I wasn't afforded the privilege of living at home for cheap.
>health insurance
Yes, once again it assumes those things. I literally said that in the next sentence. I don't have health care. If I make below $20,000 next year, I get medicaid in 2020.
>Medi-Cal
each state is different. some go by tax return and not current income.
The US has a good system of transacting with one another (sufficient security, trust, and credit check systems), but that doesn’t mean people are happier or that it will continue into the future. It very well may be a short lived local maxima.
I’ve always thought quality of life is more of a macro term, dealing with things like quality of education you can expect your kids to receive, physical safety, access to healthcare, vacations, ability to move “up” in the world, ability to practice your hobbies, etc.
Generally, these are the things you can’t specifically go out and buy, but rather the desired end result of all the work and time that people sell.
And that a tiny minority are basically ruling over the overwhelming majority, making the laws, and telling the rest of us what to do as we fight with each other over the crumbs that the rich let fall from their table.
Many of us will never be able to afford to retire, while the ultra-rich will never have to work a day in their life, and neither will their children, or their children's children. We will be polishing these people's shoes for generations to come.
If it’s only money that ought to be “evened out,” what makes it special vis-à-vis these other valuable areas? What is the underlying system of ethics that justifies this intervention?
The Millionaire Next Door devotes an entire chapter to Economic Outpatient Care, that is, continually paying their adult kids’ bills and otherwise bailing them out. For all their skill at building and growing businesses, American millionaires do not seem to be any good at passing these skills on to their children. What that means is through the natural course of things, millionaires’ kids tend to squander their gifted status without outside help from egalitarians.
You can be this way even if self made, but I think if you were self made the things that worked for you on the way up help you be connected to the real world.
The focus should be on making poor people rich, not making rich people poor.
So I would suggest if you want to be ruled by people who are less learned and less empathetic then doing away with high estate taxes might be a way to achieve that.
Any self respecting scientist would blow their brains out with a shotgun if they were forced to use these results to draw enough conclusions to write a 200 page book with....
This scumbag presents ratios the entire book instead of actual numbers,then at the very end tells you his sample size.
That book is the biggest money grab crock of shit on earth and is as conclusive as a two year olds explanation on why the sky is blue.
If you ever reference that book as a talking point you should be absolutely ashamed of your self because you're a garbage person who is using fake science to fit their bullshit narrative of the poverty being an individuals fault instead of a systemic issue.
Americans have (or at least had) cultural mores against discussing the topics of personal finance, income, and net worth at all. Where would you suggest starting?
Statistics requires training and does have some intuitively nonobvious results, such as determining sample size[0]. If you prefer more interactive, Survey Monkey has a form[1] that lets you select population size, confidence, and margin of error. For the U.S. population of 325 million at 95% confidence level and 5% margin of error, the necessary sample size is 385 — not far from your figure Stanley’s.
The topic warrants future study, but Stanley’s book does destroy the notion that all millionaires are a bunch of Paris Hiltons and Thurston Howells — for those readers who are willing to challenge their own prejudices.
[0]: https://en.wikipedia.org/wiki/Sample_size_determination
[1]: https://www.surveymonkey.com/mp/sample-size-calculator/
How did he determine the sampling was random?
How can you confirm the self reported data was correct?
Also this was ONE SINGLE unreproduced study...no scientist in the world would write a 2 page paper based on one study much less 200 pages.
That worthless book destroys NO notions. That book is propaganda selling a false narrative based on extremely shoddy science and it would do you well to throw it directly into the garbage.
Now, not all those things are true for everyone but it's true for a lot of us. Quit using the internet as your only source of education.
Healthcare is not always provided by the employer, and the cost may be more than your paycheck if you want a family plan. Literally - I've worked such a job. The weekly cost was more than I brought home working 40 hours a week for a family plan: The individual cost was a very good chunk of the paycheck. This was not a high-paying job. Not only that, but it may be the bare minimum of insurance, rendering it basically major medical only. Lots of places won't do a surgery or screening without your copayment upfront, and this is a real issue.
Jobs don't fire you becasue you are sick: They fire you for not having good enough attendance. This includes nearly everything, including you or your children being sick. These aren't abnormal in any sense.
Then they give birth on the job?
>Healthcare is not always provided by the employer
I never said it was.
I imagine quality of life is good in the US. But they continue to build up an enormous debt to maintain it.
- TANF (temporary assistance for needy families)
- Medicaid
- SNAP (food stamps)
- CHIP (child health insurance program)
- unemployment
- disability
- housing assistance
- social security
- ...
States and cities also have many welfare programs along with private charities.
It is absolutely possible to save money on an average salary. In general, Americans are indebted and live beyond their means by choice, not by necessity. And once they get into the debt cycle it can be extremely difficult to get out.
Check out Dave Ramsey for practical tips: https://www.daveramsey.com/store/product/the-total-money-mak...
It's less than Denmark/Norway/Sweden, but more than the UK for example (per capita).
Mostly because US spends a ridiculous amount of money just moving records and doing busy work with layers and layers of middlemen. The healthcare complex is a good example.
There are all these little gotchas - when there are no margins in your life - where a crack opens a little here, or there, and you fall through, and without help just becomes all the more harder to pull yourself up.
You can't just spell out a scenario where someone is completely irresponsible and say, "Well, because of this guy we need even more safety nets--the existing two dozen are insufficient."
What is curious is that people who tend to view the US government as incompetent, which I think many people can agree with whether their opinion on the governments role, suddenly when talking about poverty seems to think that it is a role model for efficiency. Not even the Nordic model takes this stance.
Not to pick on your use of average in general concertation, but it appears the average income is around 45 000/year and the median is around 30 000 - for all demographics.
I'm not sure what 30k is after taxes most places in the US... 25k if you're not a home owner?
It may be feasible to save some money in areas with low cost of living - I don't know.
I also only get these weekly/yearly numbers to line up if I multiply with 52 weeks - but is paid vacation and sick days the norm in the US?
https://www.bls.gov/news.release/wkyeng.t05.htm
https://www.ssa.gov/OACT/COLA/central.html
Even the original post I replied to said Salaried employees typically get paid vacation and sick leave. Employees paid hourly wages do not. Some don’t even get unpaid leave.
The distinction of who gets paid vacation and sick leave is not based on “salaried” vs “hourly” but based on “full time” vs. “part time”. The distinction isn’t nevessarily based on that either.
While I don’t know of any salaried jobs without benefits, I know of plenty of part time hourly jobs with benefits and know of very few hourly jobs that are classified as “full time” that you don’t have paid holidays and vacations.
In fact my wife could go part time and still get full health benefits. I know plenty of people who do what she does part time specifically for the benefits where their checks are basically a token amount while thier spouses make most of the money doing something without benefits like owning a small business or in my case depending on which way the wind is blowing, doing contract/consulting software development instead of working in a salaried position.
But the original post by e12e I was replying to above doesn’t say anything about full time - it was just talking about calculations to extrapolate wages from income: https://news.ycombinator.com/item?id=17637626
Unsurprisingly, this number rises with household income. It's ~0.4 for the lowest quintile and ~2.0 for the highest.
https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_an...
There are many medical conditions which are not covered and require insurance or out of pocket payment.
Hospitals—well, emergency departments of hospitals that take Medicare—are required to screen for and stabilize any “emergency medical conditions”, as defined in law, regardless of ability to pay. As your source noted, that is not a mandate for general treatment, or even stabilization of medical conditions generally.
Let's see. In the US, as soon as you can qualify for unemployment, you usually get USD 1,000-2,000/month in post tax income for 6 months.
In Switzerland, you get 70-80% of your last salary.
Are you guys still sure you are not getting ripped off buy your government (respectively the billionaires who own it)?
- While not as robust as some Western European countries, the social safety net in the US is pretty strong.
- The majority of US workers get paid sick days and even for those that don't you will almost never get fired for taking off when sick.
- Maybe about half of US workers get paid maternity leave.
- Only around 10% of Americans do not have health insurance and many of those people are young people unlikely to get sick.
To be clear, I'm not trying to say that everything is perfect and that there is no room for improvement, but the US isn't the dystopia that you make it out to be. It also helps that incomes in the US are among the highest in the world due to the very robust economy.
I think there is some confusion of terminology here: a European probably means paid leave for the first 12-18 months of the baby’s life, until it’s old enough to go to daycare so the parents can return to work. One or a few months leave doesn’t really help much if you still either have to quit or take a long unpaid leave until the kid can be in daycare during the day
I know my wife was quite eager to go back to work after 3 months. Staying at home all day with a newborn gets boring fast.
This assumption is stated and accepted around here uncritically but with zero supporting evidence. Four out of five Americans are not desperately hand-to-mouth poor as this figure suggests. Accepting the extraordinary 80% claim for the sake of argument, some of them must be in stable, full-time job situations — and some those have to be in two-income households — by law of large numbers.
Having identified a segment of the 80% with at least decent incomes, that shatters a premise of the Reich piece. They can afford to save money but do not because consumption is too high relative to income. The balance goes on credit cards, home equity lines of credit, or other debt instruments.
Of those who are living paycheck-to-paycheck with no emergency fund for contingencies, how many have written goals? How many are executing an intentional plan where they make and follow a budget each month? Those are important questions that go unasked.
First of all, I think it's worth noting that basic money management skills are no longer part of any curriculum with broad acceptance in America. They used to be taught in home economics classes, but those have been pared down to the bone in some places, outright eliminated in others. So expecting Americans to have basic money management skills at this point is, while not exactly unrealistic, at least not something that should be considered the obvious default.
Secondly, there are plenty of places where a two-income household, with both earners making significantly above minimum wage, will still be just squeaking by, particularly in places with very high housing costs. That's not even taking into account other all-too-common situations, like large medical debts, or burdensome student loans.
"But they should just move!" you cry. "They should have known better than to go to college!" you cry. (...I'm going to give you the benefit of the doubt that you wouldn't say they should know better than to get cancer or some similar costly illness, but Poe's Law applies here.)
Moving, when you cannot easily save up money, is, at best, highly impractical. It costs mental energy that you probably lack if you are stressed from worrying about your poor financial situation, in addition to the time costs of finding someplace to move to that fits your needs better than where you are now, and the obvious financial costs of hiring movers and potentially putting a down payment on a house, depending on whether you're trying to buy or rent.
College has been sold to every generation in America for some time now as not merely the way to better your situation, but to many as the only way to get a stable job—or even to be a worthwhile person, depending on your (parents') social circles. Just within the past decade or two has the country started to turn around and say, "But we're going to make you pay through the nose for it. For the rest of your life. So if you aren't already wealthy, you better not go for a degree that can't get you six figures within 5 years of graduation!"
So...yeah, assumptions. They're a bitch, and they lead to an awful lot of the kind of moralistic labor-theory-of-value crap that keeps us in this terrible situation, instead of working together to find a way to make it better.
Basic money management is not at all complicated. By the time someone completes fourth grade in a typical U.S. elementary school, she has mastered the necessary math for the subject. No, that person may not be able to explain exactly how municipal bonds work or how to compute an amortization table, but she will be able to lay out and follow a budget, with pencil and paper if necessary. “This month I expect to bring home this amount; food, housing, utilities, and transportation will cost so much; and that will leave this many dollars in expendable income.” Addition and subtraction is as complex as any of that gets.
For people who want to learn more, Suze Orman, Clark Howard, Dave Ramsey, The Motley Fool, and Personal Finance Stack Exchange are just a few of many who produce affordable, accessible resources. We all have our respective circles of friends and acquaintances to learn from or at least to ask for pointers.
This is not a high bar. Now, an entirely different question is whether people have learned to moderate their behavior around these basics. “I have so much money and want to buy this; can I afford it?” Prioritizing needs versus wants, setting goals, making a plan are also not heavyweight intellectual endeavors but do require a bit of discipline.
Of course people do fall on hard times through no fault of their own. The disabled and mentally ill are examples or people who fall into bad health, either themselves or their children. (The American system of healthcare and particularly health insurance are terribly broken, but outside the scope of this thread.) Yes, these terrible situations do happen, but they are exceptions. Bad times, not necessarily this severe, will hit us all, so the smart course of action is to save up now for when the rainy day comes later.
Living in a home that costs so much relative to one’s income that it leaves little in the way of disposable income or even to cover all necessities is known as house-poor. As with any other good, when it comes to housing, we all have to ask ourselves whether we can afford it. Yes, moving is stressful, uses mental energy, and costs money. I’m an instrument-rated pilot. An important part of the training is learning to guard against hazardous attitudes, one of which is resignation. Giving up and thinking ‘I guess I can’t do anything about it’ is dangerous in that it can kill you quickly in an airplane or in slow motion from the stress and anguish of living house-poor. They can do something about it, and their lives will be far better on the other side. Rent an apartment at first to allow cushion for saving money. I live in north Alabama, an area whose TV portrayals bigoted people sneer at. The median house price here is under $150k, and believe it or not we do have indoor plumbing!
We’re on the same page about the bum deal many have been sold on college too. Just like everyone in college is not pre-med or pre-law material, not everyone in high school is college material. They are still human beings and therefore worthy of life, liberty, and the pursuit of happiness. The education establishment has done them a grave disservice by making vocational training out to be a last resort for the scum of the earth. People working the skilled trades make good money — in part because they are not competing with people who can walk in off the street and do the same job. Elsewhere you mentioned Home Ec being ground down to nothing, and it seems to be part of the same trend as with vocational training. No one should ever be forced into these programs because of someone’s backward ideas about certain people’s alleged place in society — that would be evil and wrong — but denying someone who’s mechanically inclined or who wants to be a homemaker the opportunity to be their very best at these worthy, honorable, necessary positions – again for the sake of mere political axe grinding — is likewise evil...
Financial literacy, like civics, needs to be a required course for every child growing up. Not fourth-graders; they're mostly too young to really understand the importance. Best to teach it in high school, when you're getting close to the time when they can vote, and when they might already have a part-time job (or, in lower-income areas and for less fortunate families, a full-time night shift job supporting the family).
>>Boggles the mind.
Why would it be Mind boggling?
State funded social security schemes do not exist to make up for bad personal finance decisions. They are for circumstance when someone fails despite their best efforts.
If they are used for the former, no amount of social cover will be enough, ever.
Also factor in the credit card culture and you get this mess.
Then I responded by setting some parameters. "As long as you are frugal and responsible, $59,000 a year is enough to make sure you are fed and sheltered and that's about it".
If someone chooses to spend their $59,000 on a new BMW and 5 vacations to Paris and granite countertops, then $59,000 will not even be enough to feed them and pay their rent/mortgage bill! :)
I'm thinking of Moscow in particular (where rent prices are also quite high). 2017 median income was, reportedly, about 63k RUB/month (~$1k/mo) after the taxes: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou... That makes (very roughly) 2.5x cheaper cost of living difference to the US, while income difference is, very roughly, about 4x less ($12k vs $50k after taxes)
Edit: Average number of people per household in us is 2.54 (https://www.statista.com/statistics/183648/average-size-of-h...).
edit: It could get to 59,000 if these people actually worked 53 hours a week.
>>>According to the Bureau of Labor Statistics (BLS), the median wage for workers in the United States in the fourth quarter of 2017 was $857 per week or $44,564 per year for a 40-hour workweek.
[1] https://www.thebalancecareers.com/average-salary-information...
The Guardian attributes
https://www.cnbc.com/2017/08/24/most-americans-live-paycheck...
Who attribute a "CareerBuilder Study"
>The job-hunting site polled over 2,000 hiring and human resource managers and more than 3,000 full-time employees between May and June.
Which you can find a synopsis of here
http://press.careerbuilder.com/2017-08-24-Living-Paycheck-to...
Which states
>Having a higher salary doesn't necessarily mean money woes are behind you, with nearly one in 10 workers making $100,000 or more (9 percent) saying they usually or always live paycheck-to-paycheck and 59 percent in that income bracket in debt. Twenty-eight percent of workers making $50,000-$99,999 usually or always live paycheck to paycheck, 70 percent are in debt; and 51 percent of those making less than $50,000 usually or always live paycheck to paycheck to make ends meet, 73 percent are in debt.
At least the Guardian attributing it now.
That's median household (or family) income.
If your household consists of 2 people, that $59k is slashed to $29k per person.
So the real per-capita median income is significantly lower than $59k.
Irrespective whether you agree or not with the article's arguments, in general correlation doesn't imply causality.
The drop in the percentage of middle class income could be caused by a bunch of factors, including (but not limited to) increased automation capabilities and increased reliance in off-shore low-wage workers.
Yes, we know. But it's often a sign that something interesting is going on.
And yet not a word about tens of millions of people immigrating to the US. As if supply didn't matter. It's unions and oligopolies. Sure.
https://en.wikipedia.org/wiki/Immigration_to_the_United_Stat...
It's also not the case that borders can protect workers from competition. Especially in the long run.
Meanwhile many other goods are manufactured outside of the US, benefiting primarily the mega corporations who can do international arbitrage on physical products.
There's also the third side of the squeeze where the native workers desperately need to contrast themselves from the millions of migrants. They do it by going deep into debt to get a college degree from an American university, which then goes completely unused except for its signalling value
the official rate hides more troubling realities: legions of college grads overqualified for their jobs
I agree that manufacturing capital will serve itself.
I also agree that credentialism is a problem but I don't think it is particularly impacted by immigration.
Labor a shrinking market demand and a growing supply, and we're not going to fix that.
https://www.theguardian.com/commentisfree/2018/jul/29/social...
https://news.ycombinator.com/newsguidelines.html
To be able to get to the point you describe, you have to make extra money at some point. those things you describe are responsible for folks with leftover money.
It also greatly assumes folks are lucky enough not to have things like an accident that disables them, a spouse that dies young and leaves you supporting children by yourself, a parent that needs taken care of instead of working, and so on.
I found it interesting that the recent Trump tax cuts offered the rare opportunity to get some empirical data on that question, because they had the effect that people were getting more of their paycheck.
If 80% of people were desperately trying to save, but couldn't, you'd expect that consumption would stay the same, and the savings rate would go up.
But if they were just didn't care to save and would by and large fit their consumption to their income you'd expect consumption to go up, while the savings rate stayed level.
There's a recent episode of Planet Money discussing the Q2 US GDP growth that goes into this a bit, consumption went up as a result of the tax cuts: https://www.npr.org/sections/money/2018/07/27/633230414/gdp-...
However, they don't break that down at all. It's conceivable that consumption just went up with 20% of the population, but this is presumably an easy question to answer.
There's a bunch of items like clothing which people will make last if they have to, but if they feel like they have more discretionary income will spend more on.
Did consumption in those categories go up in a way that indicates that people living paycheck-to-paycheck were now spending more?
Maybe they bought needed underwear they couldn't afford before or something that's a necessity.
Maybe they bought a laptop which provides them massive value as far as information goes.
We have to be careful of interpreting these results based on what we 'expect'.
After all, just "living paycheck to paycheck" says nothing about your income per-se. You could make several millions/year and struggle to pay your NYC penthouse mortgage and the loan on your Ferrari.
But the image that's invoked when you read that phrase is not someone who's absurdly rich and living beyond his means, but someone who's poor and struggling to make rent on their apartment or paying for their car.
In aggregate, if all those people would make $500 less a month you'd expect a significant spike in foreclosures, evictions, bankruptcies etc. It would look much like the 2007-2009 recession.
Or, if they truly weren't living beyond their means and were all given a $500 lottery ticket how that money gets spent says a lot about their situation.
Does such an injection of cash into the economy e.g. reduce the foreclosure ratio? That would indicate that people weren't truly living beyond their means.
Or does it only show an increase in consumer spending without any meaningful change in such numbers? Then it's more likely that those people were just bad financial planners, or just haven't thought to save any of their income.
This would be really interesting data to mine cross correlate if you can find good sources.
If we could teach sound financial discipline to younger people (say, by 'gamifying' it like we do everything else these days) while easing off on the consumerism, and somehow make it cool to be smart with money & limited resources, I think it would put a dent in the problem. We made computer geeks cool, maybe we can do this, too.
In order to make this work, we need a different metric reflecting the performance of our economy.
The problem with modern American society is that it's developed a superbly optimized form of hyper-capitalism that is able to suck in every single marginal dollar while not delivering meaningful improvements in quality of life.
Areas of the economy that don't operate on that arena (food, electronics, clothing etc.) follow standard deflation curves and get drowned out by the areas of the economy that do.
Take children's safety for example. As a parent, you are expected to buy exactly up to your level of social status in marginal safety improvements for your kids, despite almost no tangible return on investment. If you are a working class family, your kids go to school on their own in a school bus and are latchkey kids in the afternoon while you finish your shift but if you are middle class, you're expected to ferry your kids to every single engagement because "what if something happens to them" and you have to participate in every hare brained exercise in child-rearing on the off chance that it adds some iota of chance to their success. Not doing so not only immediately makes you an outcast in every single social circle, in many cases, busybodies can also bring to bear the power of the state to compel you to behave or childhood services will be brought in to rip your child away from you.
With colleges, families stretch to send their child to the "best" college the child gets into, even if there are plenty of perfectly acceptable colleges for a quarter of the price. If you send your child to the best college, then at least you can reassure yourself that you've done everything you can whereas if you go for the "budget" option, you're forever going to be plagued with the thought of "what if?"
The American cultural pathological fear of every talking about or confronting death leads to the same thing with healthcare. If you have $100K in savings and a parent/loved one is suffering from some medical issue not covered by insurance, you will spend all $100K of that accumulated savings on experimental, last ditch efforts to save them. If you have $500K in savings, you will spend that $500K on a different set of treatments to save them. If you have $500K in savings, it would be morbidly unthinkable to only spend $100K of it and then look your loved one in the eye and tell them you think you're ready to watch them die now. Note that this would be the case even if the $500K treatment was no better or ever worse in outcome than the $100K treatment.
In Economics, there is a theoretical concept of price discrimination where the absolute maximum profit you could ever get from a product is to have some kind of mind reader device that could ascertain the exact maximum amount every single person is willing to pay and charge them exactly that amount for the product. Childcare, education, healthcare & real estate have ballooned in cost because the marketing of American society has become exquisitely tuned to do exactly this.
It doesn't matter how immune you are to this marketing message or how much you would like to reject it, this is marketing that works on a societal level to socially punish any individual who does not willingly give every single marginal dollar to some nebulous notion of the "better life".
Even if we could wave some magic wand and double everybody's wages (in real terms), you would not see any substantial increase in quality of life because those extra dollars would just be absorbed into even more pointless medical tests, fancy college campuses, increased land prices and bullshit helicopter parenting.
This also occurs in the free time/life difficulty space and has the same societal pressures. Got life figured out and going well? You need to level up. You need a home to work on so you can go to Home Depot every weekend. You need a pet or child(ren) to take care of. Happy with your job? Climb higher on the ladder. It's morally questionable in this society for your life to be easy, regardless of your status.
Try telling people in a social setting, as a working age person, that you accept half the salary in exchange for working half the amount and are happy with it and don't need more. Watch their facial expressions.
What I got for buying a house is a fixed housing expense. When I got married, my wife - who was already living in one of the best school districts in the state with her (now our) two sons. We moved into a 3 bedroom apartment,1630 square feet for $1200 a month. Within three years, rent had gone up to $1700 a month.
We moved into a house - slightly further north but still in the most affluent county in the state and one of the top 30 in the nation - and now pay $2050 a month. We have 3000+ square feet 5 bedrooms, 3-1/2 baths, a separate large office, a garage, not attached to other apartments, and privacy.
The apartment we left two years ago is now renting for $2150. Our mortgage will never go up, our insurance and property taxes will go up slightly.
My parents bought the home they live in now in 1978 and their mortgage was $650 a month. In 2008 when they paid off their mortgage, they were still paying less than $1000 (insurance and property taxes go up). 30 years later. In 1978 it was a stretch, by 2008 it was nothing. They live in a small town, we live in a major metro area. Now, they don't have to worry about rent - just insurance and a reduced property tax amount since they are over 65. A house is a great inflation hedge.
I would mention that in the two years since we bought the house, the value has gone up $30K+. But, since we have no plans on moving to a cheaper area, equity is meaningless.
I mean, I used to be unable to pay bills until my paycheck arrived, I get it. But today, despite having a modest emergency fund and being able to pay all of this month’s bills with last month’s paychecks, I still would consider myself living paycheck to paycheck. I mean, I cannot quit my job for a month or two without substantial financial harm. So I might answer such a survey in the affirmative. Meanwhile, younger me from several years ago would look at my current bank balance with envy.
Is this like a survey of who feels rich? Everyone says no, but everyone below you on the scale thinks you are rich while everyone above you thinks you are poor.