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Old 10-08-2010, 11:50 AM
 
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Quote:
Originally Posted by slackjaw View Post
Most are this way, I saw some chart once that showed the percentage of people's income that went towards food/housing in previous generations versus today and it isn't even close.

Middle class today with large home, mobile phone, digital TV with a hundred channels, two vehicles, etc. is a wealthy person in previous generation.
The biggest difference is that more of those purchases are made with credit which produces DEBT. Wealth is based

Wealth = Assets - Liabilities

Debt is a liability

If you don't understand this then you don't understand the concept of wealth. Another factor of wealth is how many of your assets do you have that produce INCOME.

Millions of Americans have been taught to believe that a home is a symbol or a way to become wealthy. That is fundamentally incorrect and it's one of the reasons we had a housing bubble. Until you own your home outright it is a financial LIABILITY and unless your home produces an income for you it is really not a source of wealth.
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Old 10-08-2010, 12:02 PM
 
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Quote:
Originally Posted by slackjaw View Post
My wife borrowed to go to law school, and we've not reached poverty quite yet.
Take out a calculator one day and with interest and principle figure out the total cost of your wife's law school loans.

As long as she owes on those loans THEY ARE A FINANCIAL LIABILITY.

Remember Wealth = Assets - Liabilities

There was a recent article in Fortune Magazine about a guy who was a brand manager for Proctor and Gamble and "Did the Math" of the total cost with principle and interest of how much a top flight MBA cost.

Why business school is a waste of time and money - Oct. 4, 2010

Now is the Missus can consistently crank out a six figure yearly income after taxes it's probably the right move long term.

Another advantage of being a lawyer is that you can work for yourself. The current economic climate favors investors, speculators, business owners, and highly talented and skilled workers who can sell their services in the open market. IT DOES NOT FAVOR WAGE EARNERS.
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Old 10-08-2010, 12:07 PM
 
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Quote:
Originally Posted by HappyTexan View Post
That large government spending did make its way through the system..India, China, Brazil's systems..NOT ours and NOT Europe.

Be aware...currency wars are starting up..US and China, China and Japan.
Banks are making big money right now by borrowing money from the FED at virtually zero percent and then investing that money in India, China, Viet Nam, Brazil and other emerging market countries. They are also selling U.S dollars and buying Australian, and New Zealand dollars and investing in bonds from those countries, it's incredibly easy money with not a lot or risk.

Not only beware but be ready to trade THERE IS MONEY TO BE MADE!
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Old 10-08-2010, 12:23 PM
 
Location: San Diego California
6,797 posts, read 6,639,309 times
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Quote:
Originally Posted by JazzyTallGuy View Post
The fact is more workers care competing for labor ON A GLOBAL SCALE. The dirty little secret that NOBODY will tell the American wage earner is that they are no longer PRICE COMPETITIVE with other workers around the world. A worker in a solar panel factory in the United States gets $27.00 an hour, the same worker in a Chinese factory gets $1.80. Jobs for researchers and engineers in India and China pay 1/3 or less than an American worker in a similar occupation get. If capital is allowed to flow freely it ALWAYS flows to where their is the greatest return on investment given an investor's risk tolerance. The biggest reason this recover has been so slow is that right now it simply makes more sense to ship your dollars to China, Viet Nam, Australia, India and other high growth emerging market countries than it does here in the United States.

This is NOT just a recession this is also an economic restructuring asset prices and wages are being RECALIBRATED based on an entirely new set of global economic dynamics.
Be careful, telling people the truth in this thread can get you labeled a Doom and Gloomer in a hurry.
Seriously though, you are absolutely right, and the reality that multi national corps. are getting rich from this situation at the expense of American workers is undeniable. At some point we need to acknowledge that our markets are a marketable asset, and treat them accordingly. If the US worker has to compete head to head with workers in China and India, their standard of living is going to gravitate in the direction of those competitors.
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Old 10-08-2010, 12:25 PM
 
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Quote:
Originally Posted by tvdxer View Post
It's all very interesting.

In a certain way, the Standard of Living for all Americans is higher than it has ever been. I am a young 24 years old, but even I remember comparatively austere times: back when most people had to find a payphone to make calls from anywhere but home or work, back when the answer to any factual question was NOT on your fingertips, back when you actually had to develop film before you saw your pictures, etc. By most measures, the American middle class has it the best of all the world's middle classes: bigger houses, bigger yards, more luxurious cars, and more consumption opportunities (even a worker here can own his own boat, four-wheeler, RV, or horse - and many can own all of them). Try to live a relatively middle class life (3,000 square foot home on 1/2 acre with two SUVs, a boat, a Jetski, and an RV) anywhere else than the U.S. and a select few other countries and see how much it will cost you in local terms. You'll be shocked.

The dark side, however, is a lot of this prosperity is saddled in debt - debt that will stay with most of the middle class for a lifetime, barring any hyper-inflation (and certainly in that case, the almighty bankers will find plenty of counter-measures). To make matters worse, healthcare costs are ascending at an alarming rate, and because of our odd healthcare system which ties health insurance to a job, medical bankruptcy is always a possibility. This causes the majority to feel stress (anticipation of a negative event). I think on the macro level, the stress of having to face potential drastic decreases in one's standard of living (and the actions that follow from that sense of foreboding, e.g. not taking vacation because of fear of one's employer thinking they are lazy) is much more of an issue than an actual decrease in standards of living.
If you have consumer goods bought on credit you really don't have prosperity. A great many people in this country get their paycheck and immediately start paying their credit accounts to maintain their ALMIGHTY CREDIT SCORE. That is not prosperity when the majority of your wages go into somebody else’s pocket and you do nothing to build your personal wealth. Also remember consumers goods DEPRECIATE IN VALUE over time and in some cases rather qucikly.

The American public has been seduced and manipulated by media and corporate interest to believe the number and type of consumer goods they buy equate to wealth and prosperity.

Remember Wealth = Assets - Liabilities.

Last edited by JazzyTallGuy; 10-08-2010 at 12:43 PM..
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Old 10-08-2010, 12:29 PM
 
8,265 posts, read 11,211,395 times
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Quote:
Originally Posted by JazzyTallGuy View Post
Take out a calculator one day and with interest and principle figure out the total cost of your wife's law school loans.

As long as she owes on those loans THEY ARE A FINANCIAL LIABILITY.

Remember Wealth = Assets - Liabilities
Thank you teacher, I am not four years old. I know to within a hundred bucks how much she took out, how much was paid in interest, how long it took to pay off, and how much interest we saved by paying them off faster.

It is difficult to quantify a break even point as I've got no idea what she'd be if not a lawyer, but I'm fairly confident we've already passed it just given median wage statistics for four year degrees.
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Old 10-08-2010, 12:31 PM
 
Location: San Diego California
6,797 posts, read 6,639,309 times
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That would make the equation… Wealth = Assets - Depreciation - Liabilities
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Old 10-08-2010, 12:32 PM
 
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Quote:
Originally Posted by Shizzles View Post
Well, then quite frankly Helicopter Ben is wrong, becuase just looking at house prices here in PA, it's clear we've been living a joke for a long time now.

In a truly free-market economy, prices should go up and down based on demand. Why would the government be so keen on keeping asset prices high? Isn't that going to make the correct far worse eventually?
Because they drank the "Home Prices Always Rise" Kool-Aid. The harsh reality is a home is like any other asset based on market conditions its value can rise and fall. The problem is that many people treated the valuation on their home LIKE INCOME and until this crash so did banks. That's way they went crazy with home equity loans and some truly outrageous mortgages. The logic was you could always refinance your way out of whatever bind you were in.
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Old 10-08-2010, 12:33 PM
 
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Quote:
Originally Posted by JazzyTallGuy View Post
The biggest difference is that more of those purchases are made with credit which produces DEBT.
We were talking expenses versus income, not wealth. People today spend less of their paychecks on the basics of food/shelter/clothes, regardless of what percentage of that pie goes towards debt service.
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Old 10-08-2010, 12:35 PM
 
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Quote:
Originally Posted by newenglandgirl View Post
If that was true then (when we were growing up), it was largely true in a one wage-earner household. Today with both partners working full time and some two jobs, what you say may be true.

The rule of thumb was always housing costs should be no more than 1/3 one person's income. Mortgages once went by this principle. Try that now.

Basic salary $50,000 (for one person)
After taxes $42,000 ?

Housing with mortgage $12,000

Property taxes, house insurance, water & sewer etc $6,000+
(added to $12,000 = $18,000 = almost 43% of net salary (of course much more, on a lesser salary)


$100,000 income (2 people) = almost 20% of net salary. Having an earning partner helps.

How many families are there with single-parent households with kids?

Probably about 30% to 40% of "families" fit this scenario.
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