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Old 04-23-2016, 01:52 PM   #41
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This is what struck me the most from the article.

"In a 2010 report titled “Middle Class in America,” the U.S. Commerce Department defined that class less by its position on the economic scale than by its aspirations: homeownership, a car for each adult, health security, a college education for each child, retirement security, and a family vacation each year. By that standard, my wife and I do not live anywhere near a middle-class life, even though I earn what would generally be considered a middle-class income or better. A 2014 analysis by USA Today concluded that the American dream, defined by factors that generally corresponded to the Commerce Department’s middle-class benchmarks, would require an income of just more than $130,000 a year for an average family of four. Median family income in 2014 was roughly half that."

In short, much of the "middle class" aspires to a life that is twice as expensive as they can afford without going into massive debt. Perhaps this is obvious, but it suggests a strong sense of middle class entitlement, a sense of deserving basically twice as much as they can afford.

Throughout our lives of both good and bad "luck", one enduring trait DW and I have shared is that we are entitled to what we could earn by our efforts.

At least 1/3 of our friends are financially struggling "middle class". The common thread is that they all feel entitled to a certain lifestyle regardless of their ability to pay for it. Debt spans the huge gap between actual financial resources and the so-called "deserved" lifestyle. Stumbling along the cliff edge...

On the other hand we, do have some older FIRE'd friends. We are excited by 20% off day at a favorite restaurant or a new release movie at the matinee.

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Old 04-23-2016, 01:57 PM   #42
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I'm not sure I believe anything any more. Even my poor sister who always makes low salary to my family managed to have a large retirement account. On top of that she owns 3 houses in California, 2 paid off completely. Never married. She had nearly 3/4 of a million in her 401k when she last showed us. There were times in the past that she could only afford to put in 4%. She was unemployed often. But the trick is she invested 100% in stocks.
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Old 04-23-2016, 02:53 PM   #43
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I worked with a government agency dealing with the public. There are many people who do not have the intelligence to be able to choose a high paying career. There are many people who have average intelligence, including myself, who could not have been doctors or rocket scientists, even if someone else was footing the bill for our college education. Then, there are some people, that I wondered how they were able to make it through life at all. These were not people who were mentally disabled, but were below average intelligence.

Imagine what life in the US would be like, if everyone had high IQs and had the extremely high paying jobs. There would not be any restaurant or hospital cooks, LPNs at hospitals and nursing homes, farmers, grocery store workers, garbage collectors, teachers, custodians in schools, hospitals, hotels and nursing homes, water plant workers, etc.

What if no one wanted to have children, because of the expense of them and the work involved? What if everyone waited until they could truly afford to have children, before they had them. Many people would never be able to have children or their child-bearing years would be over.

What would such a country look like? I hope that I never find out. How would you feel if you could not make a high paying career choice, because you were not born with a higher IQ? What if someone told you that you could not become a parent, because you were only earning $30,000.00 per year? I have known many good people, who don't have a high IQ or high salary and who reared good children.

Yes, I do think that there are too many people, who live beyond their means. I sometimes shake my head, when I see how they conduct their financial lives. I see some people, who if they did not have bad luck, would have no luck at all. They can't afford a new car and then their old car breaks down and they can't afford to get it fixed. They can't afford to not get it fixed, because they will lose their job. They live where there is not public transportation, because they can not afford the rent costs or to buy a house, where there is public transportation. They put the repair on their credit card. Then their child gets sick and they miss a day or two pay. Not every one gets sick and vacation pay. Then the washing machine dies or whatever, and the debt snowballs.

I consider myself very lucky indeed. I had a job with sick and vacation pay. I was evidently born with a frugal gene and absolutely hate debt. Yes, I feel fortunate that I could easily cover a $400 expense or one that was much higher. I do feel sorry for many of the people who could not.
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Old 04-23-2016, 03:05 PM   #44
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I think it's really easy for many of us to get judgmental... I know I put the J in in INTJ all the time.

I think the article in the OP and the article linked by Gumby both high light the human nature desire to provide the best for our kids - whether we can afford it or not... and the expectation of what a middle class lifestyle is has also gotten inflated.

I hit the lottery when it came to parents and upbringing... Dad made decent income (engineer) but lived frugally and I grew up in a household where budgets/costs were pinched constantly. Parents paid school costs - but had strings attached on the major and grades. I wanted to be a poli sci major, dad replied "not on my dime". I wanted to go to a small liberal arts college in the midwest - same reply from dad. The engineering degree from a state school turned out to be big boost in my adult life. Dad was right.

I also got lucky with no overwhelming medical bills during the years I was saving... My best friend wasn't so lucky and it took her years to pay off the debt she accumulated from her back surgery, her heart ablation, etc... Even with insurance - the out of pocket was still a burden. Add to that a bad marriage and divorce rights as the dot.com bubble burst... she was behind the eight ball financially for a while.

So yeah - it's easy to say folks should have made better choices... but not everyone struggling is there because of frivolous expenses.
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Old 04-23-2016, 03:06 PM   #45
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During my w@rking days in the '90's, co workers who knew I did alot of investing, asked for money tips and advice. I specifically remember once "how do I make more on my money "?

I told him if he paid off any CC debt, he would be earning close to 12%. I asked where he had his cash now. He said he had $12,000 in the kitchen drawer, that's where his wife and 2 teenage girls got their allowances, and it was also their "emergency stash " for repairs and whatever. He carried over $10,000 in CC debt!

I told him to pay off the CC debt with the cash, and use the CC for their "emergency stash". He would hear nothing of it and thought it was stupid advice. He never asked me again.
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Old 04-23-2016, 03:16 PM   #46
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Old 04-23-2016, 03:24 PM   #47
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Maybe it sounds counter intuitive, but being unemployed can be a positive financial experience.

I know that after the one time I was unemployed for a moderate stretch (over a year) that when I got my next job I was plowing a ton back into savings.

To things contributed in our case:

1. We learned to live on a very minimal budget to make our savings last longer. We just didn't see much reason to step up the spending after I got a new job.

2. It focused us on rebuilding our savings. We did have solid savings to fall back on, but afterwards, we really wanted to rebuilt it. And we just keep going.
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I lost my Megacorp pension at age 38, after 17 years of service. Seemed like a real blow at the time, but since I was management I had to put whatever positive spin on it I could with most of my 80 co-workers. Some of them really went ballistic!

We were already LBYM and maxing out our 401k's, but we both ratcheted back spending even more and saved that much more in taxable once the pension went poof. We reached FI about 12 years later, and I retired after 19 years (7 years after FI).

In retrospect, Megacorp probably did me a favor - we decided we'd better not count on anyone other than ourselves. Served us well in the long run...
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Old 04-23-2016, 03:26 PM   #48
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I consider myself very lucky indeed. I had a job with sick and vacation pay. I was evidently born with a frugal gene and absolutely hate debt. Yes, I feel fortunate that I could easily cover a $400 expense or one that was much higher. I do feel sorry for many of the people who could not.
I entirely agree with you on having empathy for those who are less fortunate and struggling through no fault of their own. I have a bit of a harder time understanding a highly educated person who spends his and his parents retirement savings on a wedding and expensive college educations when there are cheaper alternatives available that would better fit in his family's budget. I've been to pot luck wedding receptions that were a lot of fun and we have many threads in this forum alone on financial aid tips and good value colleges.
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Old 04-23-2016, 03:37 PM   #49
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I do agree with you on having empathy for those who are struggling through no fault of their own. I do have a bit of a harder time understanding a highly educated person who spends his and his parents retirement savings on a wedding and expensive college educations when there are less expensive options. I've been to pot luck wedding receptions that were a lot of fun and we have many threads in this forum alone on financial aid tips and good value colleges.
+1 I just have a really hard time differentiating those who are struggling through no fault of their own (bad luck) who I do empathize with and those who are struggling as a collective result of bad decisions they have made for whom I have some, but less empathy.
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Old 04-23-2016, 03:49 PM   #50
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............Imagine what life in the US would be like, if everyone had high IQs and had the extremely high paying jobs. There would not be any restaurant or hospital cooks, LPNs at hospitals and nursing homes, farmers, grocery store workers, garbage collectors, teachers, custodians in schools, hospitals, hotels and nursing homes, water plant workers, etc. ............
Do you seriously think that teachers are in the same intelligence range as garbage collectors and custodians? And that farmers are stupid? You must have never know people in either profession.
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Old 04-23-2016, 03:58 PM   #51
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+1 I just have a really hard time differentiating those who are struggling through no fault of their own (bad luck) who I do empathize with and those who are struggling as a collective result of bad decisions they have made for whom I have some, but less empathy.
+2. Let me know if you ever figure out how to differentiate. I am left to guess more often than not, and I'm sure I guess wrong often...
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Old 04-23-2016, 04:05 PM   #52
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Come'on, my brother is very average or below average intelligence. He was fired from his first job at a gas station. He was fired after his first job out of college. He graduated with a C average from a Average college. Since he was born, he didn't like school. He liked to stay home with my mother because he hated school. He wanted to be a technician, my mother said to try to be an engineer because all of your brothers and one sister were. But he has done the best in all of us, money wise. He has huge pension, huge 401k, rental properties. He marries to a smart frugal wife with the same income, same pension, same 401k size. Not only that she has retiree's insurance. He always lives frugally. He always pays things in cash. I never know why then. Now I know.


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Old 04-23-2016, 04:38 PM   #53
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It would be great if this was done in high school. Force kids to take a mandatory class teaching basic finance. Everybody should be comfortable with percentages and calculating interest. Compounding interest should also be taught, in both directions. If done in high school, then you can also introduce choosing a college/major and the associated costs. With a few basic skills and exposure to thinking about money and how they relate to your choices, I think as a society we'd be better off.
They do just that in Virginia. The problem I see is that it is viewed as an "easy A", and many live in home environments that counter any good lessons they might pick up in class.

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Old 04-23-2016, 04:49 PM   #54
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Do you seriously think that teachers are in the same intelligence range as garbage collectors and custodians?
I know of at least one garbage collector who started out with one truck and his brother as a partner. Twenty-five years later they owned a fleet of trucks and a large company, and were both millionaires many times over. And there is still the occasional article about some custodian who lives simply and leaves a multi-million bequest to a charity. Stupid people don't do that. So one finds very smart people and stupid people in almost every walk of life.

It was a bit eye-opening a few years ago at my last job when there was a payroll glitch and payroll deposits were held up from Friday to the following Monday. Not a big deal for most folks here (or at the job site) but I was surprised at the number who were a bit panicky about it, and at least two had to take out payday loans. To cover one weekend!

In contrast, in my early 20's I somehow managed to lose a paycheck, this is long before direct deposit became available. It took about six weeks to process stopping payment on the lost one and to issue a replacement. This was not a problem for me because even then I knew that "stuff happens" and I'd need some money to cover it when it did so I had the money in savings to more than cover a lost paycheck.

It is simply beyond my comprehension why this is so hard for so many people to understand. Just wired differently I suppose.
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Old 04-23-2016, 05:42 PM   #55
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The short bus crowd is one thing. People with college degrees? Please. Suffer the consequences of your actions.
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Old 04-23-2016, 05:58 PM   #56
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.......... So one finds very smart people and stupid people in almost every walk of life.............
Amen to that, but I hate to see the stereotype of teachers and farmers as inherently dimwitted. Walk a mile in their shoes and see how easy the job is - it takes multiple talents to be good at it.
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Old 04-23-2016, 06:04 PM   #57
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Amen to that, but I hate to see the stereotype of teachers and farmers as inherently dimwitted. Walk a mile in their shoes and see how easy the job is - it takes multiple talents to be good at it.
Oh, I would never suggest that! Most of the teachers I knew were smarter than me - that's why they were teaching me!

And running a farm is no simple matter anymore if it ever was. It is a complicated business for sure now. Those gigunda John Deere tractors and equipment ain't cheap!
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Old 04-23-2016, 06:07 PM   #58
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C'mon, your sister is far from poor if she has 3 houses in California and $750,000 in her nest egg. Her unemployment has nothing to do with being rich or poor. Her networth is probably more than $1 million.

Poor = by definition, means you have no cash, not even $50 in your pocket, you have no house, and you probably live on the streets begging.

Your sister is rich.


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I'm not sure I believe anything any more. Even my poor sister who always makes low salary to my family managed to have a large retirement account. On top of that she owns 3 houses in California, 2 paid off completely. Never married. She had nearly 3/4 of a million in her 401k when she last showed us. There were times in the past that she could only afford to put in 4%. She was unemployed often. But the trick is she invested 100% in stocks.


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Old 04-23-2016, 06:17 PM   #59
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C'mon, your sister is far from poor if she has 3 houses in California and $750,000 in her nest egg. Her unemployment has nothing to do with being rich or poor. Her networth is probably more than $1 million.



Poor = by definition, means you have no cash, not even $50 in your pocket, you have no house, and you probably live on the streets begging.



Your sister is rich.

She always said she is poor because she never makes enough money. If she gets this full time job, she makes $60k a year, not rich salary. Years ago, her income is 1/5 of ours, that she only could contribute 4% max. Yes that's why it's amazing she has more money than I thought otherwise. I agree, she is not in the poor category. But she doesn't think she has enough to retire and will keep working 5 more years until she gets her full SS and a pension. And she still shops at a thrift shop and brags about her $1 blouse.


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Old 04-23-2016, 06:40 PM   #60
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She always said she is poor because she never makes enough money. If she gets this full time job, she makes $60k a year, not rich salary. Years ago, her income is 1/5 of ours, that she only could contribute 4% max. Yes that's why it's amazing she has more money than I thought otherwise. I agree, she is not in the poor category. But she doesn't think she has enough to retire and will keep working 5 more years until she gets her full SS and a pension. And she still shops at a thrift shop and brags about her $1 blouse.


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Considering that the average household income in the US is $51,939 https://en.wikipedia.org/wiki/Househ..._United_States and the average NW is $301,000 The Average American Net Worth Is Huge! | Financial Samurai I would have to say that your sister is very wealthy. Good for her!
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