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Old 02-20-2008, 10:04 AM
 
1,861 posts, read 3,024,986 times
Reputation: 559

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Quote:
Originally Posted by MotleyCrew View Post
I don't think BHead broker gives the impression that he is above the rabble. He took chances and profited by those risks. The only way my husband and I made enough money to flee CA was to take some risks by building spec homes after working at our office. The hours were long.We framed the homes with our children and therefore taught them some valuable skills. We may have looked odd and did draw some laughter, but we made some very good money. Being stuck working for someone can make a person feel trapped, but in reality you trap yourself. Start a side business, work a second job. You can do it, really.
Well, I'll think about that - I've had second jobs before, but I'm getting a bit old. I don't feel "trapped" at my job, because I do love it. What I'm merely saying is that with everything going up, except wages since the 1970's (real wages have stagnated that long), layoffs (myself 10 years ago, and I've just caught up), divorces (women come out WAY below men in income after divorce), medical bills (like having to pay 20% of a $500,000 bill, which many could not do), etc., don't blame the citizens of this country.

Blame the laws that favor the rich, for example - tax breaks that we would never see, corporate welfare, depression of wages by illegal immigration, outsourcing our jobs to other countries, etc. Blame the corporate fat cats who make 400 times the average worker - THEIR wages go up by huge percentages every year, but not the average person's wages. Blame the oil companies that rip us off, while their profits are bigger than ever (my bill went up 40% this year). Wonder if their profits went up 40% too?

It is NOT always just an individual's fault. I DO think the poster meant to be "superior" - that's just the impression I got when he/she said that "it's pathetic" to "bemoan" the situation. Who's pathetic? Anyone who has a hard time financially for any reason? It's a hell of a way to talk about your fellow citizens.

It's fine to talk about how well you've done, but it's not fine to put others down in this way, IMO. Listen to others, find out what they've been going through - perhaps you'll see something you didn't see at first. Look around you. Look at those who are homeless, who used to be middle-class people. Look at the 1/3 of elderly retired women who live in poverty. It doesn't take much to look. In my town, there are people in the shelter who have 40/hour week jobs - but they can't afford housing.

To me, there is something that stinks in this country, and it is not the citizens, many of whom work their butts off all their lives.
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Old 02-20-2008, 10:22 AM
 
Location: Forests of Maine
30,686 posts, read 49,462,974 times
Reputation: 19134
Quote:
Originally Posted by Eastern Roamer View Post
I don't bemoan the situation, I was responding to a question on City-Data. And I admit, to an extent, you're right... there are things we can do to seek higher income and reduce our spending. I constantly re-evaluate these things.

Most people simply live beyond their means. Some people are just getting by and cannot make enough money to save.
We found great encouragement while reading 'The Millionaire Nextdoor".

Couples who earn anywhere from $40k/year to $200k/year, are living lives of Net Worth accumulating; and they are building Net Worths of greater than a $1million.

It is happening.

However every expense must be 're-evaluate' often.

To drive a 20-year old car, means that even when it is running good, you must preschedule a trip to the mechanic each year. To go over every inch of that car to look for anything that is getting ready to die. We budget $500 each year for each vehicle. Take them in when they appear to be fine, and get them inspected thoroughly. Not a 'safety' inspection, but a road-trip inspection. Is anything wearing out? With that attitude a $1,000 car will last you another ten years. Lower insurance, and no car payments; means a lot of money is saved.

A lot of people choose to rent an apartment. They choose to not build home-ownership equity. That is fine for them.

But others choose to accumulate Net Worth instead.

Is that 'luck'? Or is that a conscious decision to build Wealth?

We choose to build Net Worth. We also choose to allow other folks to pay our mortgage payments for us. We bought apartment buildings, using zero-down, and high interest rates. It cost us a lot in interest payments, but it built equity and the money did not come from my pay-checks. It was a huge part of a 'normal' household budget, that we did not have to pay. Later each property was re-financed to lower interest-rate mortgages, so they could build equity faster and avoid the high interest rates.

We found that we could lower our vehicle expenses.

We found that we could own a home and get rid of our mortgage expenses.

We studied household budgeting and we learned how to budget our money.

We studied tax preparation, and learned how to play the tax-filing game. To lower our tax obligation to zero.

There was a bit of luck involved. But it was mostly study and planning.



From 'The Millionaire Nextdoor" we can see that few people can find higher income situations. From my years of doing budget counseling, it was very obvious that for many couples when a wife goes to work her added expenses often were more than her income. Her additional wardrobe expenses, day-care expenses, her commuting expenses, the added household food budget [because nobody is at home to cook so they eat out more], all adds up to more than what the wife was earning outside of the home. We commonly had to advise couples that the wife had to quit work and be the 'home-ec' role.

We can also see from the examples set before us, that reducing our spending is the one thing that is the most easy for us to do. And it has the greatest impact on our finances.

So good 'luck'

[if luck is defined as making a conscious desicion]
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Old 02-20-2008, 10:25 AM
 
28,905 posts, read 46,745,065 times
Reputation: 46028
Quote:
Originally Posted by forest beekeeper View Post
We found great encouragement while reading 'The Millionaire Nextdoor".

Couples who earn anywhere from $40k/year to $200k/year, are living lives of Net Worth accumulating; and they are building Net Worths of greater than a $1million.

It is happening.

However every expense must be 're-evaluate' often.

To drive a 20-year old car, means that even when it is running good, you must preschedule a trip to the mechanic each year. To go over every inch of that car to look for anything that is getting ready to die. We budget $500 each year for each vehicle. Take them in when they appear to be fine, and get them inspected thoroughly. Not a 'safety' inspection, but a road-trip inspection. Is anything wearing out? With that attitude a $1,000 car will last you another ten years. Lower insurance, and no car payments; means a lot of money is saved.

A lot of people choose to rent an apartment. They choose to not build home-ownership equity. That is fine for them.

But others choose to accumulate Net Worth instead.

Is that 'luck'? Or is that a conscious decision to build Wealth?

We choose to build Net Worth. We also choose to allow other folks to pay our mortgage payments for us. We bought apartment buildings, using zero-down, and high interest rates. It cost us a lot in interest payments, but it built equity and the money did not come from my pay-checks. It was a huge part of a 'normal' household budget, that we did not have to pay. Later each property was re-financed to lower interest-rate mortgages, so they could build equity faster and avoid the high interest rates.

We found the we could lower our vehicle expenses.

We found that we could own a home and lower our mortgage expenses.

We studied household budgeting and we learned how to budget our money.

We studied tax preparation, and learned how to play the tax-filing game. To lower our tax obligation to zero.

There was a bit of luck involved. But it was mostly study and planning.



From 'The Millionaire Nextdoor" we can see that few people can find higher income situations. From my years of doing budget counseling, it was very obvious that for many couples when a wife goes to work her added expenses often were more than her income. Her additional wardrobe expenses, day-care expenses, her commuting expenses, the added household food budget [because nobody is at home to cook so they eat out more], all adds up to more than what the wife was earning outside of the home. We commonly had to advise couples that the wife had to quit work and be the 'home-ec' role.

We can also see from the examples set before us, that reducing our spending is the one thing that is the most easy for us to do. And it has the greatest impact on our finances.
BINGO. It's not about salary (which, by the way, have kept pace with inflation since 1980, and have far exceeded income growth in other industrialized countries such as Western Europe). It's about the growth of household wealth, which has dramatically increased over the past 25 years beyond the most optimistic expectations of any politician or economist.
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Old 02-20-2008, 11:02 AM
Status: "0-0-2 Game On!" (set 4 days ago)
 
Location: The beautiful Rogue Valley, Oregon
7,304 posts, read 15,356,670 times
Reputation: 9483
Quote:
Originally Posted by cpg35223 View Post
BINGO. It's not about salary (which, by the way, have kept pace with inflation since 1980, and have far exceeded income growth in other industrialized countries such as Western Europe)....
Salaries have been keeping up with inflation ONLY for the top two quintiles of income (currently that's 85,000 a year and above). And that's only if you use the CPI, which many agree drastically understates real inflation.
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Old 02-20-2008, 11:26 AM
 
1,861 posts, read 3,024,986 times
Reputation: 559
Quote:
Originally Posted by PNW-type-gal View Post
Salaries have been keeping up with inflation ONLY for the top two quintiles of income (currently that's 85,000 a year and above). And that's only if you use the CPI, which many agree drastically understates real inflation.
What about the "inflation" of something like oil? My oil bill went up 40% this year - my salary went up only 3%. So, shouldn't my salary go up 40% to keep up with "inflation"?

What inflation do they talk about? What do they consider inflation to be, compared to salaries? What things do they consider that "inflate"? Food, housing, utilities, etc??
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Old 02-20-2008, 12:06 PM
Status: "0-0-2 Game On!" (set 4 days ago)
 
Location: The beautiful Rogue Valley, Oregon
7,304 posts, read 15,356,670 times
Reputation: 9483
Quote:
Originally Posted by cousinsal View Post
What about the "inflation" of something like oil? My oil bill went up 40% this year - my salary went up only 3%. So, shouldn't my salary go up 40% to keep up with "inflation"?

What inflation do they talk about? What do they consider inflation to be, compared to salaries? What things do they consider that "inflate"? Food, housing, utilities, etc??
We're heading into the bowels of economics here, but, in general:

There are a number of different measure of inflation - the commonly used CPI (Consumer price index), PPI (Producer price index), Cost-of-Living index, put out by different agencies and groups, and measuring different things in different ways.

Here's a (pretty conservative) take on why the CPI under-reports inflation:
USATODAY.com - If you think inflation is on the move, time to protect portfolio

There is an entire field called "hedonic adjustment" which says that, for example, since you paid x number of dollars for a car in 1970, but new cars in 2008 have power windows and technological advances and more safety and "luxury" features (like radios and A/C), the 2008 new car relative price has to be adjusted to allow for all those "upgrades." Of course, you CAN'T buy a new car without those upgrades, so the fact that you get more value for your dollar doesn't change the fact that it costs you more.(Actually, even without hedonic adjustments, the price of an entry level car has gone down over the decades, but that's just an example.)

As far as your heating bill - there are other things that you buy that have gone down in price, so, on balance, your expenses only went up 4.3% (today's released CPI figure). CPI is based on what's called a "basket" of purchases - actually items or representations of items (such as rent and medical care) and the cost of those items. If you don't buy those things in the proportions that they assume you do, it's not particularly representative.
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Old 02-20-2008, 12:14 PM
 
1,861 posts, read 3,024,986 times
Reputation: 559
Quote:
Originally Posted by PNW-type-gal View Post
We're heading into the bowels of economics here, but, in general:

There are a number of different measure of inflation - the commonly used CPI (Consumer price index), PPI (Producer price index), Cost-of-Living index, put out by different agencies and groups, and measuring different things in different ways.

Here's a (pretty conservative) take on why the CPI under-reports inflation:
USATODAY.com - If you think inflation is on the move, time to protect portfolio

There is an entire field called "hedonic adjustment" which says that, for example, since you paid x number of dollars for a car in 1970, but new cars in 2008 have power windows and technological advances and more safety and "luxury" features (like radios and A/C), the 2008 new car relative price has to be adjusted to allow for all those "upgrades." Of course, you CAN'T buy a new car without those upgrades, so the fact that you get more value for your dollar doesn't change the fact that it costs you more.(Actually, even without hedonic adjustments, the price of an entry level car has gone down over the decades, but that's just an example.)

As far as your heating bill - there are other things that you buy that have gone down in price, so, on balance, your expenses only went up 4.3% (today's released CPI figure). CPI is based on what's called a "basket" of purchases - actually items or representations of items (such as rent and medical care) and the cost of those items. If you don't buy those things in the proportions that they assume you do, it's not particularly representative.
That's interesting - thanks! I can't imagine what has gone down!!

So, my salary doesn't keep up with inflation, even - 3% to inflation of 4.3%. Depressing! I'll bet it does not represent costs for a lot of people.
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Old 02-20-2008, 03:12 PM
 
26,591 posts, read 52,313,328 times
Reputation: 20438
Quote:
Originally Posted by cousinsal View Post
That's interesting - thanks! I can't imagine what has gone down!!

So, my salary doesn't keep up with inflation, even - 3% to inflation of 4.3%. Depressing! I'll bet it does not represent costs for a lot of people.
Home Electronics?

My Apple lle computer with Daisey Wheel Printer and external floppy drive cost $2400 in 1983

You can buy a computer today with a 100 to 1000 times the capability for a quarter of that...

Just look at the prices for a high end Plasma TV

In 1984 my Home Mortage was 13.75% and this was a Good Rate!

I agree, food, energy, shelter, etc... continues to increase...
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Old 02-20-2008, 03:26 PM
Status: "0-0-2 Game On!" (set 4 days ago)
 
Location: The beautiful Rogue Valley, Oregon
7,304 posts, read 15,356,670 times
Reputation: 9483
Quote:
Originally Posted by Ultrarunner View Post
Home Electronics?

My Apple lle computer with Daisey Wheel Printer and external floppy drive cost $2400 in 1983

You can buy a computer today with a 100 to 1000 times the capability for a quarter of that...

Just look at the prices for a high end Plasma TV

In 1984 my Home Mortage was 13.75% and this was a Good Rate!

I agree, food, energy, shelter, etc... continues to increase...
The problem with hedonic adjustment for electronics is that it doesn't go the other way - in 1977, when I was 16 years old, my father bought me a 13" Sony color TV for my room (I paid part of it out of my chores money). I still had that TV as of last year, and it still worked. In the last 10 years, I've had to purchase 3 TVs, because they tend to last 2-5 years MAX. Granted, they're bigger, and they have better resolution, but they are built to fall apart so that you'll replace them (or buy the expensive extended warranty).

Ditto my computers - I used to keep them longer, but now I have to replace them more often because software I need for work updates and needs the bigger/better/faster processor or OS. I'm about to have to switch to Vista for a new software upgrade, and my 2 yr old desktop won't cut it for Vista.
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Old 02-20-2008, 04:49 PM
 
26,591 posts, read 52,313,328 times
Reputation: 20438
Your right about being built different... my Apple was made in the Good Ole USA in Fremont CA... 25 years later, it works like the day it was new

My old USA made Zenith TVs have never had a problem and I assume they will keep working at least until February of next year...

When my parents got married they bought a Sear Washing Machine that cost my Father almost 3 weeks pay... today, I can buy the basic model for 1 day's pay...

My Grand Parents took the trip of a lifetime for their 40 wedding anniversry when they went to flew a Pan Am 707 to Europe in 1968... the air line tickets cost nearly $1000 dollars each... I've flown to the same route $400 last year.
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