Might I suggest that the reasons for Americans' fiscal problems aren't limited to poor habits?
I've spent 34 of my 50 years employed, watching coworkers live on leftovers, drive fifteen-year-old cars and live paycheck-to-paycheck. Done it myself and it sucks. And it's not because we're layabouts or spendthrifts, it's because the system is stacked against us. Most of the economic problems Americans face are things they can't control.
Op-ed conservatism acts like an Army drill sergeant yelling at recruits for being exhausted after an hour of PT at six in the morning. The running and the calisthenics aren't really tiring, goes the narrative, the recruits are just lazy and weak and don't want to work for it. They aren't trying hard enough. They don't want it badly enough. Their exhaustion isn't a physiological response to all that exercise, it's a MORAL failing. A character flaw.
In this article, there's no mention of macroeconomic realities beyond the control of normal people.
No talk of multinational corporations sending jobs to Third World countries or importing half of Bangalore to dodge American market rate. No tell of taxes, or inflation or a hundred other things individuals making five, six, even seven figures have no control over. No discussion of the reality that being successful, in a corporate heirarchy or as an entrepreneur, requires a specific combination of traits most people lack as a package. And no small amount of luck, particularly in creative endeavors like writing and art.
Yes, people could work more hours, get more formal qualifications and seek out better employment. I agree with that. I'm doing that myself right now - today, in fact. But these days, the larger economic reality is that nobody's gonna nickel-and-dime their way into a house. College degrees are expensive, worthless formalities unless you want to be a doctor, a lawyer or an engineer. Nobody has twenty grand in cash just sitting around that could go to buy a used car like Dave Ramsey seems to think we do. Nobody's going to overtime their way out of a five-figure credit card bill. These things require movin' on up.
You're not lazy or entitled if you're working your ass off making $75,000 and the floor for "Life Can't Fuck You Up With Weird Curveballs Anymore" is $150,000. That's governments' fault. That's the banks' fault. That's OSHA's fault. But it's not YOUR fault.
I get what you're saying, but I absolutely disagree that the system is stacked against people.
I believe nobody has to live paycheck to paycheck for a lifetime, and that most people who start early with good financial practices can reach millionaire status by the time they get old.
Getting past the paycheck-to-paycheck problem isn't even hard for most people over the long term. Work a second job for a year or two, save and invest the money, and you'll be ahead of most people for the rest of your life.
But I also think that way because I did a lot of things that used to be considered common sense but today are considered extreme. I drove a beater with rearview mirrors held on by duct tape, lived with roommates, stacked cash for a long time, worked more than one job, lived below my means long term, etc., etc.
I think a lot of people never do the right thing for a long enough period of time to ever get ahead. Their expenses creep up. They do the right thing for a while and save money, then blow it on something big. They somehow get their hands on a big check and spend it.
Long story short, I completely reject the whole idea that people are particularly disadvantaged today or that the system makes it hard to succeed. To the contrary, I'd say it's arguably easier for people to succeed today than at just about any other point in human history. Maybe it was marginally easier for the Baby Boomers, assuming they didn't get killed in Vietnam or something, but I think what has really changed is people's expectations of what the good life looks like have soared into the stratosphere at the same time people's willingness to deal with uncomfortable things has plunged.
A lot of what is going wrong right now is bad government and corrupt politicians. Of course making bad decisions is going to hurt you, but so are Private Equity buy outs of entire local industries. When I see how the PBM's are ripping off everybody, I see a bought congress person blocking reform, every time. I don't know how people get the opportunity to do what my parents or grandparents did. They built small and cheap. Tiny yards, small two bedroom homes with no garage attached. They had one TV, one wall phone, a window shaker A/C unit, maybe, and one car. Try doing that now- everyone is "forced" to enter the housing market buying a much fancier home with at least two baths, two car garage, central air, smart phones, huge TV set(s), and two cars. So the starting point has been moved. I read that, adjusted for inflation, real net wages and purchasing power has gone up by 20 percent since the 80's. But our standard of living demands are higher, which is fueling a wealth division. And off course health care costs have exploded, too. Don't know the answer, but if I were younger I'd take a hard pass on college this time around and go into the trades, where -maybe- AI and robots won't be able to replace you, at least not yet. Thanks for posting your comment.
One reason is that libertarian economics don't work when you include the Third World.
Another is that capitalism is a force for good until it crosses a national border, at which point it turns on its home country with a vengeance and everybody sub-MBA has to worry about layoffs.
Yet another is zoning regulations calibrated to the NIMBYs, because the economic incentives of a hundred years ago made the freestanding suburban house the standard retirement fund for half the country.
Income taxes that've turned Americans into reciprocal parasites - you can't afford to save for retirement or send you kids to college, so the kids take out loans paid for by somebody else who can't afford to save or send their own kids to college because of taxes, etc.
I agree with everything you say here, but I feel like you are leaving out the other half of the situation.
Going with your example, you have the guy making 30k a year. He's making it. Living exactly within his means.
So now he makes 40k. What is he supposed to do, in your mind? I would agree that he should stay living on 30k for now and bank the extra 10k for a bit. But not forever. At -some- point he should start to spend the money. So build up an emergency fund for a while. I'd say 6 months worth. Then get the IRA/401k funded, 15% of 40k is 6k. So you have an extra 4k, so you can at some point start to live on 34k instead of 30k. And the same applies once you're making 50k.
Aesop has a fable about a miser, the moral of which is that a possession is only valuable if it is used. There is no point in doing all this if you aren't going to do something with it.
I'm not saying you should go out and sign up for a long term note/debt on a car or house because I 100% agree, you can't always count on the income. And that is especially true on a "perishable good" like an athlete.
But if you told me Mayweather was living on 30k a year despite being a billionaire I would argue that is even more irrational than spending it all and going bankrupt, because at least then he got to consume -something- for all his effort.
There is, of course, a middle path. I am not saying anything you claim is wrong, only that it leaves out the entire other side of the situation. The situation is a balancing scale, both sides have to be weighed against the other. The goal is not zero consumption, it's actually quite the opposite. It's to maximize consumption by not over-consuming in a way that lowers you ability to consume in the future.
I absolutely agree there's a middle ground between being a miser and spending everything as soon as it comes in. I also think taking some time at a new income level before you go up on spending is wise.
Also, as someone who has been on the other side of the situation before in the past and has probably been a little cheap given the amount of money I had, I totally get what you're saying. I've also read, "Die with Zero" by Bill Perkins, which I didn't love, but that makes that makes that point really specifically.
The thing is, I think percentage wise, there are only a small number of people in that situation, while probably more than half of the population is letting their spending float up to meet their income to the point where it's having a major negative impact on their finances.
In any case, just the "middle ground" you're talking about will put you ahead of most people.
Might I suggest that the reasons for Americans' fiscal problems aren't limited to poor habits?
I've spent 34 of my 50 years employed, watching coworkers live on leftovers, drive fifteen-year-old cars and live paycheck-to-paycheck. Done it myself and it sucks. And it's not because we're layabouts or spendthrifts, it's because the system is stacked against us. Most of the economic problems Americans face are things they can't control.
Op-ed conservatism acts like an Army drill sergeant yelling at recruits for being exhausted after an hour of PT at six in the morning. The running and the calisthenics aren't really tiring, goes the narrative, the recruits are just lazy and weak and don't want to work for it. They aren't trying hard enough. They don't want it badly enough. Their exhaustion isn't a physiological response to all that exercise, it's a MORAL failing. A character flaw.
In this article, there's no mention of macroeconomic realities beyond the control of normal people.
No talk of multinational corporations sending jobs to Third World countries or importing half of Bangalore to dodge American market rate. No tell of taxes, or inflation or a hundred other things individuals making five, six, even seven figures have no control over. No discussion of the reality that being successful, in a corporate heirarchy or as an entrepreneur, requires a specific combination of traits most people lack as a package. And no small amount of luck, particularly in creative endeavors like writing and art.
Yes, people could work more hours, get more formal qualifications and seek out better employment. I agree with that. I'm doing that myself right now - today, in fact. But these days, the larger economic reality is that nobody's gonna nickel-and-dime their way into a house. College degrees are expensive, worthless formalities unless you want to be a doctor, a lawyer or an engineer. Nobody has twenty grand in cash just sitting around that could go to buy a used car like Dave Ramsey seems to think we do. Nobody's going to overtime their way out of a five-figure credit card bill. These things require movin' on up.
You're not lazy or entitled if you're working your ass off making $75,000 and the floor for "Life Can't Fuck You Up With Weird Curveballs Anymore" is $150,000. That's governments' fault. That's the banks' fault. That's OSHA's fault. But it's not YOUR fault.
I get what you're saying, but I absolutely disagree that the system is stacked against people.
I believe nobody has to live paycheck to paycheck for a lifetime, and that most people who start early with good financial practices can reach millionaire status by the time they get old.
Getting past the paycheck-to-paycheck problem isn't even hard for most people over the long term. Work a second job for a year or two, save and invest the money, and you'll be ahead of most people for the rest of your life.
But I also think that way because I did a lot of things that used to be considered common sense but today are considered extreme. I drove a beater with rearview mirrors held on by duct tape, lived with roommates, stacked cash for a long time, worked more than one job, lived below my means long term, etc., etc.
I think a lot of people never do the right thing for a long enough period of time to ever get ahead. Their expenses creep up. They do the right thing for a while and save money, then blow it on something big. They somehow get their hands on a big check and spend it.
Long story short, I completely reject the whole idea that people are particularly disadvantaged today or that the system makes it hard to succeed. To the contrary, I'd say it's arguably easier for people to succeed today than at just about any other point in human history. Maybe it was marginally easier for the Baby Boomers, assuming they didn't get killed in Vietnam or something, but I think what has really changed is people's expectations of what the good life looks like have soared into the stratosphere at the same time people's willingness to deal with uncomfortable things has plunged.
A lot of what is going wrong right now is bad government and corrupt politicians. Of course making bad decisions is going to hurt you, but so are Private Equity buy outs of entire local industries. When I see how the PBM's are ripping off everybody, I see a bought congress person blocking reform, every time. I don't know how people get the opportunity to do what my parents or grandparents did. They built small and cheap. Tiny yards, small two bedroom homes with no garage attached. They had one TV, one wall phone, a window shaker A/C unit, maybe, and one car. Try doing that now- everyone is "forced" to enter the housing market buying a much fancier home with at least two baths, two car garage, central air, smart phones, huge TV set(s), and two cars. So the starting point has been moved. I read that, adjusted for inflation, real net wages and purchasing power has gone up by 20 percent since the 80's. But our standard of living demands are higher, which is fueling a wealth division. And off course health care costs have exploded, too. Don't know the answer, but if I were younger I'd take a hard pass on college this time around and go into the trades, where -maybe- AI and robots won't be able to replace you, at least not yet. Thanks for posting your comment.
One reason is that libertarian economics don't work when you include the Third World.
Another is that capitalism is a force for good until it crosses a national border, at which point it turns on its home country with a vengeance and everybody sub-MBA has to worry about layoffs.
Yet another is zoning regulations calibrated to the NIMBYs, because the economic incentives of a hundred years ago made the freestanding suburban house the standard retirement fund for half the country.
Income taxes that've turned Americans into reciprocal parasites - you can't afford to save for retirement or send you kids to college, so the kids take out loans paid for by somebody else who can't afford to save or send their own kids to college because of taxes, etc.
I agree with everything you say here, but I feel like you are leaving out the other half of the situation.
Going with your example, you have the guy making 30k a year. He's making it. Living exactly within his means.
So now he makes 40k. What is he supposed to do, in your mind? I would agree that he should stay living on 30k for now and bank the extra 10k for a bit. But not forever. At -some- point he should start to spend the money. So build up an emergency fund for a while. I'd say 6 months worth. Then get the IRA/401k funded, 15% of 40k is 6k. So you have an extra 4k, so you can at some point start to live on 34k instead of 30k. And the same applies once you're making 50k.
Aesop has a fable about a miser, the moral of which is that a possession is only valuable if it is used. There is no point in doing all this if you aren't going to do something with it.
I'm not saying you should go out and sign up for a long term note/debt on a car or house because I 100% agree, you can't always count on the income. And that is especially true on a "perishable good" like an athlete.
But if you told me Mayweather was living on 30k a year despite being a billionaire I would argue that is even more irrational than spending it all and going bankrupt, because at least then he got to consume -something- for all his effort.
There is, of course, a middle path. I am not saying anything you claim is wrong, only that it leaves out the entire other side of the situation. The situation is a balancing scale, both sides have to be weighed against the other. The goal is not zero consumption, it's actually quite the opposite. It's to maximize consumption by not over-consuming in a way that lowers you ability to consume in the future.
I absolutely agree there's a middle ground between being a miser and spending everything as soon as it comes in. I also think taking some time at a new income level before you go up on spending is wise.
Also, as someone who has been on the other side of the situation before in the past and has probably been a little cheap given the amount of money I had, I totally get what you're saying. I've also read, "Die with Zero" by Bill Perkins, which I didn't love, but that makes that makes that point really specifically.
The thing is, I think percentage wise, there are only a small number of people in that situation, while probably more than half of the population is letting their spending float up to meet their income to the point where it's having a major negative impact on their finances.
In any case, just the "middle ground" you're talking about will put you ahead of most people.