Seven things the Middle Class can no longer afford

[Independent]

This complaint is seriously innumerate:

“Median-income families in only one major city [Washington DC] can afford the average price Americans are paying for new cars and trucks nowadays.”

It's always been true that the median family doesn't buy the average priced new car. Lower income families have always bought used cars or no cars. So, of course, average new cars prices are driven by the budgets of upper income families. If they want air conditioning, keyless entry, and 200 hp engines, that will determine the average cost. And, surprise, average new cars will cost more than the median family can "afford".

 

[Bestwifeever]

?... maybe it is not that advertisers aren't trying to target older people. It's that they're so darn clumsy and bigoted about it. Why wouldn't they offer me beautiful clothing, gorgeous houses with all the mod-cons, and cruise ship brochures showing vital, attractive people cavorting about?

Amethyst

Amazing that advertisers think commercials with incontinent dancing funny-looking women will sell more bladder protection products.

 

[purplesky]

Did everyone read the same article.

The article states that many middle income earners can no longer REALLY afford these items. Yes the middle class can spend the money but the article explains the consequences very well.

They said a vacation would require a sacrifice of not buying another big ticket item.

The article is saying middle income people shouldn't buy a new 32k car .

Medical ,credit card debt and student loan debt also is putting a huge strain on spending for the middle class.

So people don't have emergency funds. True

Retirement savings is low. Also true
At 50k a year with 2 kids retirement savings is going to suffer.

Not to mention paying for kids college and broke aging parents or in laws who need help

 

[Mulligan]

Oh, all sorts of vendors claim to be interested in my money! Just a sampling of the delectable wares that are on offer:

• Walk-In Bathtubs
• Gigantic Underwear
• Elastic Waist Slacks/Sweater Combos
• Expensive River Cruises, with Brochures Featuring Only Gray-haired People
• Stairway Elevator Chairs
• Assisted Living - Live in a tiny cottage or condo for only $4,000 a month!
• People offering to Teach Me to Use a Computer!

So maybe it is not that advertisers aren't trying to target older people. It's that they're so darn clumsy and bigoted about it. Why wouldn't they offer me beautiful clothing, gorgeous houses with all the mod-cons, and cruise ship brochures showing vital, attractive people cavorting about?

Amethyst

Fox News commercials are all about catering to the elders. I watch a few of the evening shows occasionally and their commercials are targeted at an age that makes me feel like a teenager. Of course their viewing age is around 65 if memory serves me.


Sent from my iPad using Tapatalk

 

[brewer12345]

Fox News commercials are all about catering to the elders. I watch a few of the evening shows occasionally and their commercials are targeted at an age that makes me feel like a teenager. Of course their viewing age is around 65 if memory serves me.


Sent from my iPad using Tapatalk

Sounds like they are catering to the "get off my lawn" demographic.

 

[Mulligan]

Sounds like they are catering to the "get off my lawn" demographic.

It is definitely a narrow but significant demographic, and it is plan to see I will be among them in a few years!


Sent from my iPad using Tapatalk

 

[Amethyst]

I know, right? What I am trying to say is that not everybody over 50 needs diapers, at least not yet. Advertisements, however, give the impression that everyone is singing, dancing, wearing thigh-high boots, drinking Gator Spit and buying everything in sight, right up till their 50th birthday. Then they suddenly fall off a high cliff and become demented, incontinent, and unable to take a bath by themselves.

Gee, I hope the "millennials" are listening. You only have a few years left! Better buy stuff now!

Amethyst

Amazing that advertisers think commercials with incontinent dancing funny-looking women will sell more bladder protection products.

 

[Andre1969]

On the subject of new cars, my grandparents on my Dad's side of the family tended to buy fairly often. But, they were always a one-car family, so they never had the expense of a second car. The cars they bought were...
1949 Ford (bought used, everything else was brand-new)
1957 Ford Fairlane 500 4-door hardtop ($3500 as equipped, and, adjusted for inflation, probably the most expensive car they ever owned)
1961 Ford Galaxie 500 4-door hardtop
1963 Mercury Monterrey 4-door hardtop (Granddad liked the "Breezeway" roll-down rear window, which made it handy for hauling lumber, ladders, etc...)
1967 Pontiac Tempest hardtop coupe (kids were all grown by this time, no need for a large-ish 4-door)
1971 Pontiac Tempest hardtop coupe
1975 Dodge Dart Swinger
1977 Ford Granada coupe
1981 Ford Granada coupe
1985 Ford LTD
1989 Ford Taurus LX
1994 Ford Taurus GL.

Most of these cars were still in good shape when they traded, it's just that Granddad liked to dump them before anything major cropped up. He really liked the '61 Galaxie, but traded it prematurely because he wanted that roll-down rear window that the Mercury offered. The '75 Dart was troublesome, constantly stalling out, and the dealer never could fix it, so it was traded prematurely on the Granada, which ate a transmission almost immediately...but at least was under warranty. And relatively trouble-free the rest of its time with them.

I think the '89 Taurus only had about 30,000 miles on it when they traded, but by that time, Grandmom was getting sick, and Granddad wanted a brand-new, reliable car, just in case. I think she died about 7-8 months after he bought the '94. I remember Granddad wanting me to take him car shopping in 2000. He was so used to trading every 3-4 years, and at this point he'd had the Taurus almost seven years, so in his mind he was way overdue. But, he didn't like the new cars that were out by then, and he was only up to around 30,000 miles on this car, so I talked him into keeping it.

Grandmom and Granddad were pretty much middle class, IMO. Granddad retired from the railroad in 1974, making $6.00 per hour, at the age of 60. Grandmom had always worked as well, but more sporadically, as she had taken time off when the kids were little. She retired around the same time. Even though they traded cars fairly often, by and large the cars were fairly modest. It's not like they were buying a brand-new Lincoln or Cadillac every few years.

 

[HFWR]

I know, right? What I am trying to say is that not everybody over 50 needs diapers, at least not yet. Advertisements, however, give the impression that everyone is singing, dancing, wearing thigh-high boots, drinking Gator Spit and buying everything in sight, right up till their 50th birthday. Then they suddenly fall off a high cliff and become demented, incontinent, and unable to take a bath by themselves.

Gee, I hope the "millennials" are listening. You only have a few years left! Better buy stuff now!

Amethyst

 

[tuixiu]

One thing that bugs me is how that article mentioned that the average price of a new car these days is around $32,000.

I suspect this is one of those things where median would be a lot more useful measure than average.

 

[Mulligan]

I suspect this is one of those things where median would be a lot more useful measure than average.

My GF bought a brand new Civic with what she wanted for $17k and is very pleased. Unfortunately anything I want is 35k and up. So I went the cheap way a couple months ago and bought a $38k when brand new SUV for $12k. It looks brand new because I bought it from a one owner old man who paid cash for it. I don't begrudge anyone who buys brand new, I just cannot peal off the bills that are stuck clinging to the inside walls of my piggybank.


Sent from my iPad using Tapatalk

 

[clifp]

Did everyone read the same article.

The article states that many middle income earners can no longer REALLY afford these items. Yes the middle class can spend the money but the article explains the consequences very well.

They said a vacation would require a sacrifice of not buying another big ticket item.

The article is saying middle income people shouldn't buy a new 32k car .

Medical ,credit card debt and student loan debt also is putting a huge strain on spending for the middle class.

So people don't have emergency funds. True

Retirement savings is low. Also true
At 50k a year with 2 kids retirement savings is going to suffer.

Not to mention paying for kids college and broke aging parents or in laws who need help

Yes I did . The author states her belief I just don't think she proved her case very well.

Affordable is highly subjective term some couples with a $60K income may consider a $30K car or $300K house affordable another may not consider them affordable and both couples could be right.

By the LYBM standards of many folks on this forum, new cars and vacations were never affordable to the average American family EVER. If you don't have cash to pay for these things you don't buy them. Fortunately for the American economy hundreds of millions did buy these things on credit.

If the author showed that American were getting less of these things, than in the past, that would bolster her argument. But as I showed American have more cars, and fly more during the summer months (my proxy for vacations) than we have in the past.

So if these things were truly less affordable and yet we were consuming more of them, then only way we could be doing so is going deeper into debt. If you have an alternate explanation I'd be happy to to hear it.

But that doesn't seem to be the case.

he percentage of U.S. households in debt shrank over a decade, even while the median amount owed shot to $70,000, the Census Bureau reported today. Almost three-quarters of American households reported holding some form of debt in 2000. Eleven years later, the share had fallen to 69 percent in the wake of the worst economic downturn since the Great Depression, the first drop in median household debt in more than a decade.

...
The percentage of American households holding any type of debt peaked in 2002 at 75 percent and has been declining steadily. The total median household debt hit its high of $74,619 in 2010, the Census Bureau said...


Unsecured debt, which includes credit cards and student loans, rose for all U.S. households to $7,000, a 30.5 percent increase from the $5,365 median tab registered in 2000.

So really the only thing that points to American putting the vacations etc on their credit card is fairly modest increase of unsecured debt, and I suspect that much of that increase is due to student loan debt.

Forget to add, we have a word to describe Americans who can afford to buy a big ticket item without sacrificing something else. That word is called rich

 

[purplesky]

Yes I did . The author states her belief I just don't think she proved her case very well.

Affordable is highly subjective term some couples with a $60K income may consider a $30K car or $300K house affordable another may not consider them affordable and both couples could be right.

By the LYBM standards of many folks on this forum, new cars and vacations were never affordable to the average American family EVER. If you don't have cash to pay for these things you don't buy them. Fortunately for the American economy hundreds of millions did buy these things on credit.

If the author showed that American were getting less of these things, than in the past, that would bolster her argument. But as I showed American have more cars, and fly more during the summer months (my proxy for vacations) than we have in the past.

So if these things were truly less affordable and yet we were consuming more of them, then only way we could be doing so is going deeper into debt. If you have an alternate explanation I'd be happy to to hear it.

But that doesn't seem to be the case.
So really the only thing that points to American putting the vacations etc on their credit card is fairly modest increase of unsecured debt, and I suspect that much of that increase is due to student loan debt.

Forget to add, we have a word to describe Americans who can afford to buy a big ticket item without sacrificing something else. That word is called rich

My takeaway from the article is that she is telling the reader that a middle class person making 56k cannot REALLY afford the avg. price of 32k for a new car that people are currently paying. And she added a helpful quote "
“just because you can manage the monthly payment doesn’t mean you should let a $30,000 or $40,000 ride gobble up all such a huge share of your paycheck.” That is too much car for 56k in income..If you are making 56k. A 300k house and a 30k car and vacations and a 6 month emergency fund and a reasonably funded 401k and a college fund for little billy is not happening. But wait. Health insurance,car insurance,cell phone,utilities,neighborhood association fee,clothing,etc,

I really don't think the average middle class American is going on a real vacation much.

What I learned from her article was helpful.

6 month emergency fund. Don't buy too much car. Stay away from credit card debt. Save for retirement. If you go on vacation don't over spend on other big ticket items at same time.

I read the thread before I read her article and I expected something different.

The spending power of the middle class is not what it used to be.

I am not trying to argue. I just got a different message or angle from the article.

​

 

[Calico]

I know, right? What I am trying to say is that not everybody over 50 needs diapers, at least not yet. Advertisements, however, give the impression that everyone is singing, dancing, wearing thigh-high boots, drinking Gator Spit and buying everything in sight, right up till their 50th birthday. Then they suddenly fall off a high cliff and become demented, incontinent, and unable to take a bath by themselves.

Gee, I hope the "millennials" are listening. You only have a few years left! Better buy stuff now!

Amethyst

On a related note, I received yet another brochure in the mail yesterday gently urging me to plan ahead for my "final expenses" in order to spare my family members the trauma of having to do so. I won't be 59 for a couple more months. I guess the end is nigh.

 

[Hamlet]

This old youtube lecture by Elizabeth Warren before she entered politics does a much better job of presenting this case, IMO. She does a pretty thorough job of presenting actual data--

I truly detest articles like this that ignore obvious economic data that doesn't fit into their bias. The basic premise of these article was their was some glorious bygone eras that existed outside of 1950s TV when the middle class could afford all this stuff.
Affordability is pretty subjective test what interests me is how much American's buy this stuff now vs the past.

 

[daylatedollarshort]

This old youtube lecture by Elizabeth Warren before she entered politics does a much better job of presenting this case, IMO. She does a pretty thorough job of presenting actual data

I read her book Two Income Trap years ago and would put it on my top ten of all time best financial books list.

As far as the video, I agree with many of her points, but house size is one variable the middle class still has control over. House sizes have crept way up over recent decades, it is not just buying schools:

"According to the National Association of Home Builders, the average size of a new single-family American residence in 1950 was 983 square feet. Today, it is nearly 2500 square feet."

The Righteous Small House: Challenging House Size and the Irresponsible American Dream by Jason McLennan — YES! Magazine

This is not something I thought a lot about when we were younger. If we had, we would have gone smaller - lower home prices, insurance, taxes, upkeep, utilities, etc.

 

[Hamlet]

She actually addresses that in the video. New built homes are no longer being bought by entry level home-buyers, but by the upper middle class and above. Basically, there are no longer entry level homes being built-- all the new houses are move-up homes and the middle class is for the most part living in older homes.

The size of the house bought by the median-income two parent, two child family that she filtered for went up by a bathroom or a bedroom (but not both). So some creep, but nothing compared to the size change in new homes.

I read her book Two Income Trap years ago and would put it on my top ten of all time best financial books list.

As far as the video, I agree with many of her points, but house size is one variable the middle class still has control over. House sizes have crept way up over recent decades, it is not just buying schools:

"According to the National Association of Home Builders, the average size of a new single-family American residence in 1950 was 983 square feet. Today, it is nearly 2500 square feet."

The Righteous Small House: Challenging House Size and the Irresponsible American Dream by Jason McLennan — YES! Magazine

This is not something I thought a lot about when we were younger. If we had, we would have gone smaller - lower home prices, insurance, taxes, upkeep, utilities, etc.

 

[purplesky]

She actually addresses that in the video. New built homes are no longer being bought by entry level home-buyers, but by the upper middle class and above. Basically, there are no longer entry level homes being built-- all the new houses are move-up homes and the middle class is for the most part living in older homes.

The size of the house bought by the median-income two parent, two child family that she filtered for went up by a bathroom or a bedroom (but not both). So some creep, but nothing compared to the size change in new homes.

Yes I think the stagnant wages that the middle class has enjoyed for the past several decades has finally brought new home construction at the entry level to a crawl.

A few markets are still good. The rest of the country. not so much.

 

[athena53]

Can average people in this forum relate to the article & where the author is coming from? Most folks in this forum seem to be multi-millionaires who can (and have been for some time) afford everything in the list.

Heck, yes, I can. I've never been able to afford everything I wanted in that list. My splurge is travel to Europe. I went at age 25 and age 28 and couldn't afford to go again on my own dime till I was 48. (Got there on business, though.). I married a financial train wreck, had a kid and struggled to keep the bills paid while my husband was unemployed the last 5 years and spending money faster than I could make it. I haven't bought a new car since 1991; current DH and I lived with one car for 11 years.

You know what? Life is good. We ARE multimillionaires and we still can't afford to have the best of everything on that list and we "can't afford" credit card interest at all. We're both adults who know that you can't get everything you want and sometimes you can but it takes awhile.

 

[Al in Ohio]

Article is crap. Shock value and way off base.


Sent from my iPad using Early Retirement Forum

 

[daylatedollarshort]

She actually addresses that in the video. New built homes are no longer being bought by entry level home-buyers, but by the upper middle class and above. Basically, there are no longer entry level homes being built-- all the new houses are move-up homes and the middle class is for the most part living in older homes.

The size of the house bought by the median-income two parent, two child family that she filtered for went up by a bathroom or a bedroom (but not both). So some creep, but nothing compared to the size change in new homes.

I guess I don't see that personally because in the Bay Area a lot of the cost is in the land, so many of the lower cost subdvisions are made up of newer homes out in the boonies. The urban areas with the older homes are often where the prices are higher because of the location and proximity to jobs.

 

[AnIntentionalRoad]

I came across this article today. I am not sure what point the author is trying to make. Her list of 7 things the middle class can no longer afford strikes me as putting the people who can not afford such things well below middle class. Perhaps my perspective is skewed.

What she says the M/C can no longer afford:

- Vacations

- New Cars

- Paying off Debt

- Emergency Savings Account

- Retirement Accounts

- Medical Care

- Dental Care

7 Things the Middle Class Can’t Afford Anymore

Yes, it's tough to afford those things when one has a $150 cable bill and $200 mobile phone bill each month. Not to mention the fast food and luxury home.

One makes his choices and lives with his choices.

 

[purplesky]

Can average people in this forum relate to the article & where the author is coming from? Most folks in this forum seem to be multi-millionaires who can (and have been for some time) afford everything in the list.

It sounds like everyone on here is a millionaire.

 

[Major Tom]

It sounds like everyone on here is a millionaire.

I believe most here who are already ER'ed yes, but not all. I am only a millionaire if you include the value of my future SS. I seem to remember there are a few other ER's here with sub-1M portfolios. We are, of course, foolhardy and not "real" ER's

 

[marko]

It sounds like everyone on here is a millionaire.

Well, the "FI" in Fire does stand for Financially Independent. You don't have to be a millionaire, but it does help. (and a million dollars doesn't [-]buy[/-] mean what it used to!)