Community Chat

[GingerPeach]

I found this excerpt from the article very telling.  How many of us are "financially illiterate" - to any degree?  Apparently 65 percent of Americans aged 25 to 65 are in that grouping.

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"It is ironic that as financial products have become increasingly sophisticated, theoretically giving individuals more options to smooth out the bumps in their lives, something like the opposite seems to have happened, at least for many. Indeed, Annamaria Lusardi and her colleagues found that, in general, the more sophisticated a country’s credit and financial markets, the worse the problem of financial insecurity for its citizens. Why? Lusardi argues that as the financial world has grown more complex, our knowledge of finances has not kept pace. Basically, a good many Americans are “financially illiterate,” and this illiteracy correlates highly with financial distress. A 2011 study she and a colleague conducted measuring knowledge of fundamental financial principles (compound interest, risk diversification, and the effects of inflation) found that 65 percent of Americans ages 25 to 65 were financial illiterates."

[ZoetheCat]

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@RoughDraft wrote:

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@Mominohio wrote:

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@Noel7 wrote:

Billionaires keep getting richer while the middle class is disappearing.

THAT is what is wrong, especially since a high percent of our military families are on food stamps .

FOR SHAME.  And yet, so many believe those on food stamps don't deserve it.

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I have to point out that one of the many ways the 'rich get richer' is that those less rich, support them. Voluntarily.

Take professional sports, for instance. The  players, the owners get rich because people continue to pay increasingly ridiculous prices for the tickets, the merchandise etc. No one is forced to buy this type of product, it isn't a necessity of life, but people (some who really shouldn't afford it) continue to pay. Those middle class people (and below) could easily say no to this and any number of other 'rich' people offering goods and services that aren't essential to life. But they don't. They create the wealth for these wealthy, it isn't robbed from them.

And along the way, those rich folks create huge businesses and many many jobs. Many of them give back to charity and the community, in big ways that serve a lot of people. Many of them develop new technologies and products that revolutionize our existence (think Henry Ford, or any of the tech biggies) What is so wrong with that?

And our military families on food stamps is a tragedy. But it isn't the fault of the rich. It is the fault of the government who doesn't allocate what military families deserve, and the people who elect and retain that government and it's representatives, without demanding change.

And there are many  on food stamps who don't deserve it. 

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If I may point out, most of the mega wealthy are not common household names.  You mentioned professional sports teams/players and owners.  At least the players "earn" their keep or they're gone.  Owners often buy clubs as a tax write off or other nepharious reasons.  The real money is made on Wall Street and when a company cuts 1,000 employees to make investors happy, that's not CREATING jobs.  Neither is hiding one's money in off-shore banks so the government cannot tax them.

As for the super wealthy creating jobs, sorry, I haven't seen much of that in the last 25 years.  Even if they do start a company here, within five years, they've moved to China, Mexico or some other country that supplies cheap labor and inferior products. And we sit here in a country that has a disgraceful infrastructure crumbling around us and cities where not even the water is safe to drink.

As for food stamps, I refuse to sit in judgment of people that may really be hungry.  

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I really don't understand the whole "super wealthy creating jobs" canard.  Does anyone really still believe that works to any meaningul degree?  Certainly not during my lifetime.  That whole "trickle down" thing is not only disingenous, it's insulting.

I, too, agree that I will not sit in judgment of those that use food stamps.  I don't know their circumstances or their struggles.  I suppose I could be suspicious of everyone who uses them, but I prefer to believe that they need our help.  

[GingerPeach]

The author, Neil Gabler, tells us (spoiler alert!) that "those of you with elephant memories may remember that for three years, I was one of the replacements for Gene Siskel and Roger Ebert on the PBS movie-review show Sneak Previews."

It's a good article and I'm only halfway through.

He does run on a lot about how one's choices can define one's financial outcome, and by his choice to be a writer, and making subsequent other choices with regard to housing, education of his children, switching from two incomes to one, and so on, he is now among the percentage who will have trouble coming up with the $400 emergency money.

Most of that would not seem to apply to most of the folks who cannot come up with the $400.

[shoekitty]

I also think that middle class is different for every area and or state.  I consider myself middle/upper middle class here in Santa Clara County, CA,  However, in most any other state we would be very  wealthy with my husbands income!  We could buy a home with cash,  (twice our home size) elsewhere for less than a down payment here.  Middle class can also be how one defines themselves, and what they compare themselves too.  We have literally no debt, and our home will paid off in 3 years years.  We could pay it off today, but choose to wait.  We consider ourselves to be about the luckiest people ever.  Many of our acquaintances have more, they have many rentals, boats, vacation properties, time shares, a home so large with pools, tennis courts, bowling lanes, etc...We have one tv, a 32 inch one to boot.  Our kids tease us relentlessly, but we choose our life style. When and if we want more tv's, we will buy them.  I guess knowing we could afford a bigger, better home is enough for us.  Everyone chooses their lifestyle.

Personally I think there would be less unhappiness and whining about tough times, if people quit looking at what everyone else has.  The last 15 years hasn't been easy.  Times are NOT what they used to be, even when I was starting out in the world.  It takes 2 incomes, and a lot of hustling to make it these days.  I really, give it to the newer generation, they have a tough path a head of them!

It takes so much more to have less than we did 15 years ago.  I don't know what the answer is.

[Noel7]

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@Mominohio wrote:

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@Noel7 wrote:

Billionaires keep getting richer while the middle class is disappearing.

THAT is what is wrong, especially since a high percent of our military families are on food stamps .

FOR SHAME.  And yet, so many believe those on food stamps don't deserve it.

---

I have to point out that one of the many ways the 'rich get richer' is that those less rich, support them. Voluntarily.

Take professional sports, for instance. The  players, the owners get rich because people continue to pay increasingly ridiculous prices for the tickets, the merchandise etc. No one is forced to buy this type of product, it isn't a necessity of life, but people (some who really shouldn't afford it) continue to pay. Those middle class people (and below) could easily say no to this and any number of other 'rich' people offering goods and services that aren't essential to life. But they don't. They create the wealth for these wealthy, it isn't robbed from them.

And along the way, those rich folks create huge businesses and many many jobs. Many of them give back to charity and the community, in big ways that serve a lot of people. Many of them develop new technologies and products that revolutionize our existence (think Henry Ford, or any of the tech biggies) What is so wrong with that?

And our military families on food stamps is a tragedy. But it isn't the fault of the rich. It is the fault of the government who doesn't allocate what military families deserve, and the people who elect and retain that government and it's representatives, without demanding change.

And there are many  on food stamps who don't deserve it. 

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There are no sports figures I know of who are among the super rich.

Sorry but I don't agree with any of your other points, either, nor did I say anything is the fault of the rich.

[Moonchilde]

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@Mominohio wrote:

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@Moonchilde wrote:

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@shoekitty wrote:

Part of the problem is when the tech age burst on the scene millions of jobs were eliminated or downsized.  My husband for one had a company that kept on yop of things.  He was lucky.  However, they got rid of the older people, and worked with those like my husband who were a bit younger at the time. He is an engineer.  Believe me there is not one engineer who has a compass and slide ruler anymore, Who has a draft table?  They don't use the same tools, or supplies.  (Think of the workers that used to make those products).  Gone.   he had to be retrained to design on computer., then they learned a different method.  Think of the people in banks who sorted our cashed  checks put them in the drawer, and mailed them to you end of the month? Many were of age to retire when many jobs were no longer needed.  When we mail our bills in, there is no human to sort, open put them to our acct, deposit them. Think of the operators who answered "may I help you?, and found a phone number, address for you...for FREE.

What I am saying is the middle class was put out of many jobs by machines, computers, or a more efficent way to get work done with the least human time.  Shoot there was time not too long ago humans pasted labels to beer bottles in the factory. 

I think in several years even teachers will be replaced in many classes by pod casts, by students using ipads. It is sad, but jobs of the future are hard to predict.  I am 68, and never 35 years ago could I dream of this world.  Shoot I remember a world where you had to see a movie in the theaters, then wait for 5 years before it was shown on TV in black and white. No VHS, CD, DVD for sure!

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But heck, @shoekitty, somehow, some way, it's all our fault, really. We just should have known - that it would happen, what the future cost of living would be, and most important of all - we should have calculated things so that no matter what happened, we would all have sufficient $$ (whatever unknown figure that might be) to take care of ourselves until we die, without government help. If we can't do that, obviously we're worthless, selfish, lazy spendthrifts - always have been, always will be I guess ;-(

😜😏😒😖

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In all fairness, @Moonchilde, the OP was mostly about people having no emergency fund.

It is quite understandable how so many people can't afford to retire or retire completely. Living after the working years is longer and more expensive than ever, and those maybe millions it will take (with healthcare especially) for a long life is beyond  most people's ability, and I get that.

But why more of the population doesn't even have $400 for an emergency is really inexcusable. Yes, that money could easily be eaten up in an emergency, and take awhile to rebuild, and sometimes the 'emergency' fund is being tapped on a regular basis, but to just plain have so many people so unprepared has some basis in lack of self control and planning. Not for everyone, but for a great many.

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But not every response to every post (in any thread) is solely about a thread's OP. Threads wander here and there, as this one has, from the $400 issue to "what's wrong with people today", and there have been pretty clear comments from several people to the effect that if anyone finds themselves in financial trouble, period (no mention of the $400, just any financial difficulty, period) it's because they wasted their money, threw it away, mismanaged it, etc. or are just plain greedy.

Shoekitty's post was much like my earlier one giving reasons why the past 20 years have decimated the "middle class", mostly through no fault of their own. And my post was tongue-in-cheek in response to hers - which I agree with. We both would disagree that, as several intimated, it's clearly all our greedy fault :-(

[ms traditional]

if you read the Wall Street Journal which chronicles all things economic, you would call these "revelations" old news.  it is a good addition to anyone's newspaper reading because the lack of knowledge of basic economics has become more and more staggering in this country. it's important to   know how these things work, folks.

[esmeraldagooch]

Not new news, but glad you figured this out.  A good share of the JOBs report monthy are part time jobs not full time good paying jobs.  No one can run a home on them.

By the way  UPS is saying they need to change their pension plan as it is running dry and Central states pension fund is also asking for a change to pay pensioners less as it is running dry too. Central states pension fund covers workers and retirees from mote than 1,500 companies across a range of industries but most of it's retirees were truck drivers.

Some UPS drivers are affected by the Central States pension fund.

[Mominohio]

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@GingerPeach wrote:

I found this excerpt from the article very telling.  How many of us are "financially illiterate" - to any degree?  Apparently 65 percent of Americans aged 25 to 65 are in that grouping.

______________________________________________________________

"It is ironic that as financial products have become increasingly sophisticated, theoretically giving individuals more options to smooth out the bumps in their lives, something like the opposite seems to have happened, at least for many. Indeed, Annamaria Lusardi and her colleagues found that, in general, the more sophisticated a country’s credit and financial markets, the worse the problem of financial insecurity for its citizens. Why? Lusardi argues that as the financial world has grown more complex, our knowledge of finances has not kept pace. Basically, a good many Americans are “financially illiterate,” and this illiteracy correlates highly with financial distress. A 2011 study she and a colleague conducted measuring knowledge of fundamental financial principles (compound interest, risk diversification, and the effects of inflation) found that 65 percent of Americans ages 25 to 65 were financial illiterates."

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@GingerPeach This is very interesting, and a very valid point. One can't maximize anything they don't understand fully.

I think the author (at least in this portion of writing) misses the fact that along with the sophistication of the financial products has come easier access to credit. Be it loans, credit cards etc. more and more Americans are using and abusing credit, where several generations ago, it was difficult to obtain, depended upon less (especially for daily life, and reserved for the big things like homes or a car), and considered an obligation to pay back and use sparingly.

Today, people charge or finance just about anything from a vacation to the weeks groceries to the utilities. It works for those that can budget, pay that bill each month without interest, and continue to invest and save while swiping that card. Sadly, many cannot, hence their constant state of 'broke'.

Add in those 'check into cash' type places, that those with no credit turn to, and you have a cycle of high interest debt that many never get out of.

I have a friend that goes to one every week. She 'needs' to take  a new loan each time, because she had so much to pay back with the principle and interest that she doesn't have the money to get through till the next paycheck. She won't break the cycle, and several years ago, I know they were charging at least $15 for every hundred she 'borrowed'.

So go on Friday and get $200 for gas and groceries to get through the week, and the next Friday you owe them $230. Take the loan again before you walk out the door, and by the end of the month, you've given someone $120 for basically nothing. I told her if she can afford to walk in and pay them each week, she could use a credit card, pay the balance each month, pay no interest, and save herself that $120 each month. Or at tax refund time, put back half as a safety net, and pretend it isn't there until really needed. But she just wouldn't break the cycle.

[Mominohio]

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@shoekitty wrote:

I also think that middle class is different for every area and or state.  I consider myself middle/upper middle class here in Santa Clara County, CA,  However, in most any other state we would be very  wealthy with my husbands income!  We could buy a home with cash,  (twice our home size) elsewhere for less than a down payment here.  Middle class can also be how one defines themselves, and what they compare themselves too.  We have literally no debt, and our home will paid off in 3 years years.  We could pay it off today, but choose to wait.  We consider ourselves to be about the luckiest people ever.  Many of our acquaintances have more, they have many rentals, boats, vacation properties, time shares, a home so large with pools, tennis courts, bowling lanes, etc...We have one tv, a 32 inch one to boot.  Our kids tease us relentlessly, but we choose our life style. When and if we want more tv's, we will buy them.  I guess knowing we could afford a bigger, better home is enough for us.  Everyone chooses their lifestyle.

Personally I think there would be less unhappiness and whining about tough times, if people quit looking at what everyone else has.  The last 15 years hasn't been easy.  Times are NOT what they used to be, even when I was starting out in the world.  It takes 2 incomes, and a lot of hustling to make it these days.  I really, give it to the newer generation, they have a tough path a head of them!

It takes so much more to have less than we did 15 years ago.  I don't know what the answer is.

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Wonderful post @shoekitty

Wealth is indeed relative. 

I don't watch much of the home buying shows that everyone is into, but when I do happen across one, I'm floored by the prices of houses in some areas. Houses that here in the middle of Ohio one could easily find for $60,000-$80,000, are $300,000 or more.  Of course wages and opportunities are different in those places as well.

Which always makes me wonder why people who are in the lower wage earning fields don't seek out regions where the cost of living is less. Yes, their pay may be slightly less, but the savings on housing and other things would put them in much higher standards than living in an area with such high costs.