Do you actually know anyone who’s in this situation?
Those I know personally
myself - parents paid my tuition, I paid everything else (rent, food, books, etc) by working through school making a little over minimum wage (I’m long past this stage)
close cousin - single income social worker w/ 4 kids; they own a house, and while they haven’t shared income info, they probably make median income or so and live a lower-middle to middle-class lifestyle
other cousins (not as close) - work in the trades (plumbing), drive trucks, teachers, etc
in-laws - immigrants w/ three kids who have lived in a 2BR apartment since moving here, never really getting ahead
Both sides of my family are generally fairly successful (middle class and upper middle class), with most of my cousins having completed a 4-year degree. My family is quite close, vacationing together almost every year, renting large houses in the middle of nowhere so we can spend time together (e.g. this year we had ~20 people in one house in nowhere Idaho).
My in-laws, however, are the opposite. My MIL completed a chef certification, but other than that, neither has completed formal education beyond K-12. They drive nicer cars, wear nicer clothes, and go to nicer restaurants than I ever did growing up (we thought the “cheap Chinese” place was a special treat). Both of them work, while I grew up in a single-income family. I don’t know details about their financial situation, and I’m honestly preparing our finances so we can support them when they can no longer supplement their SS income.
My family is largely quite successful (siblings are professor, accountant, actuary, and software engineer), I work in a field with a lot of successful people, and my neighbors are largely fairly successful (mostly middle middle class to upper middle class). That said, I’ve had neighbors have cars repossessed, coworkers struggle w/ credit card debt, and people making more than me struggle with a house down-payment (and I bought in my late 20s making much less than I do now), and the reason for each is pretty obvious from the outside (they spend way more than me on hobbies, cars, and other lifestyle items).
That said, I do admit I have limited personal experience with people in this situation. However, I personally choose to live like I’m a level below my means so I have a cushion in case something goes wrong. And one of my life goals is to leave my career early to actively help people with spending problems at all income levels to break that cycle, hence why I’m so interested in this.
they have a job opportunity dry up after they already moved for it, or they had a messy divorce because their spouse was abusive, or they poured a ton of money into some career training that turned out not to give them any real, marketable skills
At the risk of sounding callous, this sounds like symptoms of the same underlying problem: lack of diligence. And no, I’m not saying they didn’t “work hard enough” or they should “pull themselves up by their bootstraps,” I’m saying they could have mitigated these problems by making different decisions:
Luck is what happens when preparation meets opportunity.
Seneca
Breakdown of those problems you mentioned
job opportunity dry up - always have a backup plan; as The Money Guy host likes to say, make sure to include a “doo doo plan” in your projections (i.e. what you’ll do if the plan doesn’t work out)
messy divorce - don’t just marry for love, make sure your goals align and you truly know who you’re getting involved with; divorce can still happen, but you can usually avoid abusive people by listening to advice from family and friends (i.e. those who aren’t blinded by hormones)
career training - look at expected outcomes from whatever the training is, not just the handful of success stories; as in, don’t blindly trust what the people giving the training claim, verify it by looking at market data or asking someone in the business
I fully appreciate that many people don’t have the training or experience to avoid manipulation by others, which is a common thread here, so we absolutely need to improve our education system. But blaming others for your choices is a recipe for failure and isn’t going to help you move forward.
I have made my fair share of mistakes, some of them have cost me a lot. But I refuse to blame others and instead choose to point the finger back at myself, and I think that has made all the difference. And that’s what I’m getting at here: you can’t change your present, but you can make choices to change your future.
Thirty years ago, a family could weather one or two of those, no problem. My dad got laid off not too long before I was born, and he was the sole earner for our family. He got hired fairly soon after, but in the meantime we were fine.
Personal anecode about losing my job
And that’s the same today. I lost my job at the start of COVID right after my daughter was born (she was born in March, 2020, so we saw lockdowns come into effect while we were in the hospital). So I had a ton of medical expenses, few opportunities for work (I was a consultant at the time), and an uncertain economic future. But what I did have was 6-12 months expenses in cash. So we were fine, and it took me most of a year to find a new job because companies had frozen hiring (ended up w/ W-2 position because I couldn’t network due to lockdowns).
That set us back a couple of years, but we were already ahead because we were living below our means. Fast-forward to today and we’re back to being ahead because we continued to live below our means.
The authors found that household liabilities rose relative to income and real interest rates mostly declined from 1995 to 2010, which led them to suggest that an increase in loan supply relative to loan demand happened during that period.
I read this as: debt got cheaper, so people got more debt. So people are in more debt today, but they’re paying about the same to service that debt. So people are spending more than they used to, but they’re able to do that because borrowing rates are lower.
The solution, then, isn’t necessarily that people don’t have enough income, it’s that their expectations of what that income can buy is out of whack. In my experience, people largely paid for things w/ cash 30 years ago, whereas today paying with credit is a lot more common. People don’t save up to buy things as much, and instead buy now pay later. So the real issue here is discipline, at least for those in the middle class and above.
Something systemic probably changed.
My argument is that systemic change is access to credit, which has gotten a lot easier in the last 10-20 years where you can get a new CC or personal loan on your computer instead of actually having to go talk to someone at a bank. That means being irresponsible with money is easier, which I think encourages more people to do it.
So I do think younger generations (including my own, I’m a millennial) are more irresponsible with money and have higher expectations of what that money can buy than previous generations. Over the last 30+ years, real wages have increased consistently (i.e. after taking inflation into account), and we’re back to the peak of the early 70s before the stagflation of the 80s. Yet people claim we’re getting poorer, so I have to take that as people having unrealistic expectations instead of an income problem.
You and I have had remarkably similar lives, actually.
myself - parents paid my tuition, I paid everything else (rent, food, books, etc) by working through school making a little over minimum wage (I’m long past this stage)
Same. I was a cashier and then a pharmacy tech.
Both sides of my family are generally fairly successful (middle class and upper middle class), with most of my cousins having completed a 4-year degree.
Close. I think about half of my cousins have a degree; the other half went into trades.
My family is largely quite successful (siblings are professor, accountant, actuary, and software engineer), I work in a field with a lot of successful people,
—same, but—
and my neighbors are largely fairly successful (mostly middle middle class to upper middle class).
Here’s where we differ. My neighbors are not poor, but the neighborhood is not yet completely gentrified. We have some K12 teachers, some construction workers, a few military people, alongside some people in more white collar high-earning-potential professions.
That said, I’ve had neighbors have cars repossessed, coworkers struggle w/ credit card debt, and people making more than me struggle with a house down-payment
Same. And it’s happened enough that there’s no way I can attribute it solely to bad decision making.
(and I bought in my late 20s making much less than I do now),
Same, though I had access to down payment assistance.
That said, I do admit I have limited personal experience with people in this situation.
Thank you for being honest about this. I would personally suggest that you talk with some people who are in situations like you’re talking about. Some of them knowingly made poor choices that led to their current struggles, but more often they were dealt one major blow or a series of minor blows at a time of high risk.
However, I personally choose to live like I’m a level below my means so I have a cushion in case something goes wrong.
I say this without malice: many (if not most) people who are struggling have never been able to make that choice meaningfully. I’m glad to have been able to, but it’s not common.
And one of my life goals is to leave my career early to actively help people with spending problems at all income levels to break that cycle, hence why I’m so interested in this.
I wish you luck in that, I truly do. Please consult with people who have been in the situations you’re talking about before you draw up a wonderful, shiny plan for their finances.
At the risk of sounding callous, this sounds like symptoms of the same underlying problem: lack of diligence.
Sometimes, maybe. But the point I’m making isn’t that no one ever makes mistakes. It’s that one or two such mistakes can end up catastrophically for people who don’t have far to wiggle. A person who is generally attentive to their finances but makes a couple of bad calls before they have a safety net can end up on the back foot for the rest of their life.
And no, I’m not saying they didn’t “work hard enough” or they should “pull themselves up by their bootstraps,” I’m saying they could have mitigated these problems by making different decisions:
Hindsight being 20/20, you’re always going to say you’d make different decisions when you have perfect vision as to the outcomes of the bad outcomes. But to avoid these in the first place, you’d have to have perfect view of the future.
job opportunity dry up - always have a backup plan; as The Money Guy host likes to say, make sure to include a “doo doo plan” in your projections (i.e. what you’ll do if the plan doesn’t work out)
I’ve been in a position several times where the job opportunity I accepted was the only one I was offered. Having a “doo doo plan” is great, if you have multiple options to begin with.
messy divorce - don’t just marry for love, make sure your goals align and you truly know who you’re getting involved with; divorce can still happen, but you can usually avoid abusive people by listening to advice from family and friends (i.e. those who aren’t blinded by hormones)
I agree with this to a point, but (hyperbole) nobody has ever gotten married truly thinking that they didn’t know their spouse well. Even family and friends can be wrong.
career training - look at expected outcomes from whatever the training is, not just the handful of success stories; as in, don’t blindly trust what the people giving the training claim, verify it by looking at market data or asking someone in the business
The case in point that I’m thinking about for this one was a person who entered a front end web development training program with the promise of job search assistance upon graduation. Reviews of the school were good, personal anecdotes from graduates were good. It was only after the program that my friend discovered the cracks in the process (as he was falling through one). Due diligence was done, to the satisfaction of most reasonable people. In this case, I think he was taken advantage of. Speaking of which…
I fully appreciate that many people don’t have the training or experience to avoid manipulation by others, which is a common thread here, so we absolutely need to improve our education system.
100% agree with you here.
But blaming others for your choices is a recipe for failure and isn’t going to help you move forward.
I apologize, I was unclear about this. None of the people I’ve mentioned are complaining or blaming others for their current state. Every single one of them is actively working to improve their situations. I’m saying, as a person who watched the trajectory of their lives from the outside, they weren’t the primary cause of their financial troubles.
I realize that it sounds like I’m leaving myself out of that, and I suppose I am blaming others here. But to be clear, I’m probably the most well-off of the people I’m talking about. In comparison to the people I’m talking about, my concerns are very minor. We’ll be ok, and we’re already working on improving our situation. And even I am not blaming any one person; I think the problem with my finances lies in historic inflation, a global pandemic, and corporate greed.
I have made my fair share of mistakes, some of them have cost me a lot. But I refuse to blame others and instead choose to point the finger back at myself, and I think that has made all the difference. And that’s what I’m getting at here: you can’t change your present, but you can make choices to change your future.
…if you know what the future holds.
[Ok, Lemmy is saying that this is too long, so I’m going to try to split my reply up.]
I lost my job at the start of COVID right after my daughter was born (she was born in March, 2020, so we saw lockdowns come into effect while we were in the hospital).
Again, same. Though for me, it was December of 2019 and a son, and I was laid off in late January. Wild times.
But what I did have was 6-12 months expenses in cash.
We had carved away at our cash reserves building a house that our larger family could actually fit in, and they hadn’t built back up yet. It was a calculated risk to do that rather than buy, and I wouldn’t have changed the calculation in hindsight, but the one-two-three-four punch of house-child-layoff-pandemic within the span of a few months isn’t really something you expect when you’re doing the numbers.
That set us back a couple of years, but we were already ahead because we were living below our means. Fast-forward to today and we’re back to being ahead because we continued to live below our means.
I’m glad for you. And also: your situation is not normative.
Here’s an interesting article about household debt over time, which goes back to 1995 (so almost 30 years). […] debt got cheaper, so people got more debt.
A couple of things to note:
Those numbers end in 2010, which means that they’re actually almost as far away from today as the beginning of that study is from the end of that study. A lot has happened in the last 14 years.
Those numbers also end right as the company was digging its way out of the 2008 financial crisis, which was largely caused (as I’m sure you recall) by debt mismanagement (specifically subprime mortgages). Those numbers, in and of themselves, are signposts of the very institutional and systemic changes I’m taking about.
It’s impossible to disentangle the chicken and the egg here. Were people in more debt in 2010 because rates were low? Or were rates low because the economy was burning, largely because more people were in bad debt situations?
In my experience, people largely paid for things w/ cash 30 years ago, whereas today paying with credit is a lot more common.
My parents used credit in the 90s. We had car payments and a mortgage (and their mortgage rate was in the double digits, no less—but it was still a smaller percentage of their single monthly income than my 2.8% mortgage is today, in a better field, with a second income.
People don’t save up to buy things as much, and instead buy now pay later.
Again, the chicken and the egg: so people not save up because they don’t want to? Or because they can’t? If our car dies, I can’t save up to buy another. I have to buy now and pay later.
So the real issue here is discipline, at least for those in the middle class and above.
With your caveat, I’m amenable to entertaining your argument for a significant portion of the population. I just don’t recognize it in practice.
being irresponsible with money is easier, which I think encourages more people to do it.
I just don’t see the numbers bearing that out. And anecdotally, it might be easier to sign up for a credit card online, but I was getting junk mail about credit cards on the day I turned 18, in 2003. One of my first jobs included trying to pitch a private label grocery store credit card to everyone who walked in. When I got to college (also in 2003), a credit card company had a booth there and was offering students free pizza if you signed up for a credit card. I didn’t bite, but there was a substantial line at that booth. So it might be quicker now, but I haven’t received a mailer for a credit card in years.
So I do think younger generations (including my own, I’m a millennial)
Me too. I think we might be the same person. This is honestly kind of weirding me out.
[…] are more irresponsible with money and have higher expectations of what that money can buy than previous generations. Over the last 30+ years, real wages have increased consistently (i.e. after taking inflation into account), and we’re back to the peak of the early 70s before the stagflation of the 80s. Yet people claim we’re getting poorer, so I have to take that as people having unrealistic expectations instead of an income problem.
Those I know personally
Both sides of my family are generally fairly successful (middle class and upper middle class), with most of my cousins having completed a 4-year degree. My family is quite close, vacationing together almost every year, renting large houses in the middle of nowhere so we can spend time together (e.g. this year we had ~20 people in one house in nowhere Idaho).
My in-laws, however, are the opposite. My MIL completed a chef certification, but other than that, neither has completed formal education beyond K-12. They drive nicer cars, wear nicer clothes, and go to nicer restaurants than I ever did growing up (we thought the “cheap Chinese” place was a special treat). Both of them work, while I grew up in a single-income family. I don’t know details about their financial situation, and I’m honestly preparing our finances so we can support them when they can no longer supplement their SS income.
My family is largely quite successful (siblings are professor, accountant, actuary, and software engineer), I work in a field with a lot of successful people, and my neighbors are largely fairly successful (mostly middle middle class to upper middle class). That said, I’ve had neighbors have cars repossessed, coworkers struggle w/ credit card debt, and people making more than me struggle with a house down-payment (and I bought in my late 20s making much less than I do now), and the reason for each is pretty obvious from the outside (they spend way more than me on hobbies, cars, and other lifestyle items).
That said, I do admit I have limited personal experience with people in this situation. However, I personally choose to live like I’m a level below my means so I have a cushion in case something goes wrong. And one of my life goals is to leave my career early to actively help people with spending problems at all income levels to break that cycle, hence why I’m so interested in this.
At the risk of sounding callous, this sounds like symptoms of the same underlying problem: lack of diligence. And no, I’m not saying they didn’t “work hard enough” or they should “pull themselves up by their bootstraps,” I’m saying they could have mitigated these problems by making different decisions:
Breakdown of those problems you mentioned
I fully appreciate that many people don’t have the training or experience to avoid manipulation by others, which is a common thread here, so we absolutely need to improve our education system. But blaming others for your choices is a recipe for failure and isn’t going to help you move forward.
I have made my fair share of mistakes, some of them have cost me a lot. But I refuse to blame others and instead choose to point the finger back at myself, and I think that has made all the difference. And that’s what I’m getting at here: you can’t change your present, but you can make choices to change your future.
Personal anecode about losing my job
And that’s the same today. I lost my job at the start of COVID right after my daughter was born (she was born in March, 2020, so we saw lockdowns come into effect while we were in the hospital). So I had a ton of medical expenses, few opportunities for work (I was a consultant at the time), and an uncertain economic future. But what I did have was 6-12 months expenses in cash. So we were fine, and it took me most of a year to find a new job because companies had frozen hiring (ended up w/ W-2 position because I couldn’t network due to lockdowns).
That set us back a couple of years, but we were already ahead because we were living below our means. Fast-forward to today and we’re back to being ahead because we continued to live below our means.
Here’s an interesting article about household debt over time, which goes back to 1995 (so almost 30 years). A quote:
I read this as: debt got cheaper, so people got more debt. So people are in more debt today, but they’re paying about the same to service that debt. So people are spending more than they used to, but they’re able to do that because borrowing rates are lower.
The solution, then, isn’t necessarily that people don’t have enough income, it’s that their expectations of what that income can buy is out of whack. In my experience, people largely paid for things w/ cash 30 years ago, whereas today paying with credit is a lot more common. People don’t save up to buy things as much, and instead buy now pay later. So the real issue here is discipline, at least for those in the middle class and above.
My argument is that systemic change is access to credit, which has gotten a lot easier in the last 10-20 years where you can get a new CC or personal loan on your computer instead of actually having to go talk to someone at a bank. That means being irresponsible with money is easier, which I think encourages more people to do it.
So I do think younger generations (including my own, I’m a millennial) are more irresponsible with money and have higher expectations of what that money can buy than previous generations. Over the last 30+ years, real wages have increased consistently (i.e. after taking inflation into account), and we’re back to the peak of the early 70s before the stagflation of the 80s. Yet people claim we’re getting poorer, so I have to take that as people having unrealistic expectations instead of an income problem.
You and I have had remarkably similar lives, actually.
Same. I was a cashier and then a pharmacy tech.
Close. I think about half of my cousins have a degree; the other half went into trades.
—same, but—
Here’s where we differ. My neighbors are not poor, but the neighborhood is not yet completely gentrified. We have some K12 teachers, some construction workers, a few military people, alongside some people in more white collar high-earning-potential professions.
Same. And it’s happened enough that there’s no way I can attribute it solely to bad decision making.
Same, though I had access to down payment assistance.
Thank you for being honest about this. I would personally suggest that you talk with some people who are in situations like you’re talking about. Some of them knowingly made poor choices that led to their current struggles, but more often they were dealt one major blow or a series of minor blows at a time of high risk.
I say this without malice: many (if not most) people who are struggling have never been able to make that choice meaningfully. I’m glad to have been able to, but it’s not common.
I wish you luck in that, I truly do. Please consult with people who have been in the situations you’re talking about before you draw up a wonderful, shiny plan for their finances.
Sometimes, maybe. But the point I’m making isn’t that no one ever makes mistakes. It’s that one or two such mistakes can end up catastrophically for people who don’t have far to wiggle. A person who is generally attentive to their finances but makes a couple of bad calls before they have a safety net can end up on the back foot for the rest of their life.
Hindsight being 20/20, you’re always going to say you’d make different decisions when you have perfect vision as to the outcomes of the bad outcomes. But to avoid these in the first place, you’d have to have perfect view of the future.
I’ve been in a position several times where the job opportunity I accepted was the only one I was offered. Having a “doo doo plan” is great, if you have multiple options to begin with.
I agree with this to a point, but (hyperbole) nobody has ever gotten married truly thinking that they didn’t know their spouse well. Even family and friends can be wrong.
The case in point that I’m thinking about for this one was a person who entered a front end web development training program with the promise of job search assistance upon graduation. Reviews of the school were good, personal anecdotes from graduates were good. It was only after the program that my friend discovered the cracks in the process (as he was falling through one). Due diligence was done, to the satisfaction of most reasonable people. In this case, I think he was taken advantage of. Speaking of which…
100% agree with you here.
I apologize, I was unclear about this. None of the people I’ve mentioned are complaining or blaming others for their current state. Every single one of them is actively working to improve their situations. I’m saying, as a person who watched the trajectory of their lives from the outside, they weren’t the primary cause of their financial troubles.
I realize that it sounds like I’m leaving myself out of that, and I suppose I am blaming others here. But to be clear, I’m probably the most well-off of the people I’m talking about. In comparison to the people I’m talking about, my concerns are very minor. We’ll be ok, and we’re already working on improving our situation. And even I am not blaming any one person; I think the problem with my finances lies in historic inflation, a global pandemic, and corporate greed.
…if you know what the future holds.
[Ok, Lemmy is saying that this is too long, so I’m going to try to split my reply up.]
[1/2]
[2/2]
Again, same. Though for me, it was December of 2019 and a son, and I was laid off in late January. Wild times.
We had carved away at our cash reserves building a house that our larger family could actually fit in, and they hadn’t built back up yet. It was a calculated risk to do that rather than buy, and I wouldn’t have changed the calculation in hindsight, but the one-two-three-four punch of house-child-layoff-pandemic within the span of a few months isn’t really something you expect when you’re doing the numbers.
I’m glad for you. And also: your situation is not normative.
A couple of things to note:
Those numbers end in 2010, which means that they’re actually almost as far away from today as the beginning of that study is from the end of that study. A lot has happened in the last 14 years.
Those numbers also end right as the company was digging its way out of the 2008 financial crisis, which was largely caused (as I’m sure you recall) by debt mismanagement (specifically subprime mortgages). Those numbers, in and of themselves, are signposts of the very institutional and systemic changes I’m taking about.
It’s impossible to disentangle the chicken and the egg here. Were people in more debt in 2010 because rates were low? Or were rates low because the economy was burning, largely because more people were in bad debt situations?
Actually, the data suggests that private per capita spending in the US has tracked more or less with inflation since at least 1960.
My parents used credit in the 90s. We had car payments and a mortgage (and their mortgage rate was in the double digits, no less—but it was still a smaller percentage of their single monthly income than my 2.8% mortgage is today, in a better field, with a second income.
Again, the chicken and the egg: so people not save up because they don’t want to? Or because they can’t? If our car dies, I can’t save up to buy another. I have to buy now and pay later.
With your caveat, I’m amenable to entertaining your argument for a significant portion of the population. I just don’t recognize it in practice.
I just don’t see the numbers bearing that out. And anecdotally, it might be easier to sign up for a credit card online, but I was getting junk mail about credit cards on the day I turned 18, in 2003. One of my first jobs included trying to pitch a private label grocery store credit card to everyone who walked in. When I got to college (also in 2003), a credit card company had a booth there and was offering students free pizza if you signed up for a credit card. I didn’t bite, but there was a substantial line at that booth. So it might be quicker now, but I haven’t received a mailer for a credit card in years.
Me too. I think we might be the same person. This is honestly kind of weirding me out.
Housing costs as a factor of monthly income are back up to 2008 Financial Crisis levels, though; and over the last two decades that growth you’re talking about has been concentrated largely at the top. The numbers support peoples’ assertion that we’re getting poorer.
Thanks for chatting with me about this. It’s a really interesting topic.