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Old 10-08-2010, 11:36 AM
 
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Quote:
Originally Posted by jimhcom View Post
That would make the equation… Wealth = Assets - Depreciation - Liabilities
No, I think Jazzy had it right. Wealth is a snapshot of (assets - liabilities) at a given point in time. Not projected changes in the values of either.
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Old 10-08-2010, 11:40 AM
 
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Quote:
Originally Posted by JazzyTallGuy View Post
If you have consumber good bought on credit you really don't have prosperity
If someone has a few million bucks in the bank but carry a low or zero percent car loan they could certainly be considered prosperous.
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Old 10-08-2010, 11:48 AM
 
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Quote:
Originally Posted by slackjaw View Post
If someone has a few million bucks in the bank but carry a low or zero percent car loan they could certainly be considered prosperous.
Chances are if they got in the position they made an INVESTMENT and they have assets that produce INCOME.

That is what separates the average middle class American that is getting KILLED in this economy versus many upper income Americans. The average middle class American has few if any assets that produce income. They depend on a WAGE for their income. A major reason that more jobs are not being produced in this country is that WAGE COMPETITION from other parts of the world put the American worker at a disadvantage.
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Old 10-08-2010, 12:18 PM
 
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Not necessarily, many people who still work don't use their investment portfolios for income at all. They plan on doing so someday but for now it is all reinvestment of divs/capgains and build wealth thru increase of assets, using excess disposable income to regularly increase investments.

My point was having consumer debt doesn't automatically make them lacking in prosperity. There is good debt and bad debt, there are a lot of factors that go into whether leveraging even a depreciating asset is always wise or unwise.

I'd agree that as a general statement consumer debt should be avoided, it does far more harm to most people than good.
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Old 10-08-2010, 07:37 PM
 
Location: Near a river
16,042 posts, read 20,157,061 times
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Quote:
Originally Posted by JazzyTallGuy View Post
Chances are if they got in the position they made an INVESTMENT and they have assets that produce INCOME.

That is what separates the average middle class American that is getting KILLED in this economy versus many upper income Americans. The average middle class American has few if any assets that produce income. They depend on a WAGE for their income. A major reason that more jobs are not being produced in this country is that WAGE COMPETITION from other parts of the world put the American worker at a disadvantage.
Thank you for speaking up for the average American worker. I'm tired of hearing about how the millionaires made their millions through investments (this is all good) BUT.... and therefore the world is OK, no problem, sit tight and everything will turn around.

Not so, for the American wage earner. I know it's hard to identify with those poor folks who are getting sucked down the drain. How many??
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Old 10-12-2010, 08:38 AM
 
Location: San Diego California
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charles hugh smith-Weblog and Essays

Here are some interesting statistics on people who are struggling to look middle class, but really are not. This is the perception of wealth, in place of the actuality. Is the middle class becoming the poser class?
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Old 10-12-2010, 09:58 AM
 
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Interesting post. I think I'd take issue with some of his qualifiers for being middle class:

1. reliable private transport
2. a home with meaningful equity
3. healthcare insurance/coverage
4. a retirement fund of some sort
5. a college education/higher education or training

So the guy in pharma sales with no college degree but six figure income who rents a nice apartment in Alexandria and takes the metro to work in DC immediately fails qualifiers 1,2,5 for being middle class?

I believe middle class is your standard of living, not your net worth. It's not optimal but it is quite possible to have a career and retire collecting social security, all living a comfortable life, without ever accumulating significant assets. Do we look back and say sure you lived a good life at out at restaurants had cars went on vacations raised a family but since your net worth never got about x sorry you weren't middle class? What were they in poverty?
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Old 10-12-2010, 02:40 PM
 
Location: Cushing OK
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This raises a very interesting question. Are we developing a *cultural* and a financial standard for our class system?

If you look at British society in the late 1700's there are some comparisons. It was the rise of Money. Those who were of the lower classes, and the merchant classes but who had made big were able to buy themselves to the top. The gentry retained that identity but often by financial standards were actually quite poor. They owned land and farms but in comparison to those families who did have wealth and those who had added it by marriage, the lower gentry was not well off. They were considered "poor", not as poor as the underclass poor but still poor because everything they did have was tied up in loans.

The perception was that the lower gentry were still gentry, no matter if they lost the estate or kept it. It was *cultural*. It was the way they spoke, their education, their knowledge, the way they dressed. In terms of class, if a woman of the gentry had to support herself, it was quite respectable to work as a governess. A governess was somewhere between classes. She taught and supervised children, but wasn't a servant. She was invited to some of the parties, but wasn't quite society. The nanny, on the other hand was a high level servant. The difference being the class of the person.

But they did acknowledge financial situations. It was a time when estates were taken over due to debt by the new wealty. So the origional gentry remained gentry, but were poor gentry.

Is that what we are moving towards? I myself was raised in a solidly middle class home. Due to health problems, and recession problems when I was trying to start a carrear, I have lived below the poverty line most of my adult life. I don't consider myself "poor" exactly since I know how to live in the limits, but then I couldn't go out and purchase everything the "middle class" could a few years ago when stuff was status. However I was raised with a certain standard, and got a good education, and a multitude of other values which are still there. I'm sure the people who have lost jobs and are scrambling to figure out what to do now, and especially those who will never make it back to the standard, still feel the same inside and have the same values and want their kids to as well.

So what *do* we call the cultural middle class that no longer can claim middle class levels of income?
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Old 10-12-2010, 04:14 PM
 
Location: Near a river
16,042 posts, read 20,157,061 times
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Quote:
Originally Posted by slackjaw View Post
Interesting post. I think I'd take issue with some of his qualifiers for being middle class:

1. reliable private transport
2. a home with meaningful equity
3. healthcare insurance/coverage
4. a retirement fund of some sort
5. a college education/higher education or training

So the guy in pharma sales with no college degree but six figure income who rents a nice apartment in Alexandria and takes the metro to work in DC immediately fails qualifiers 1,2,5 for being middle class?

I believe middle class is your standard of living, not your net worth. It's not optimal but it is quite possible to have a career and retire collecting social security, all living a comfortable life, without ever accumulating significant assets. Do we look back and say sure you lived a good life at out at restaurants had cars went on vacations raised a family but since your net worth never got about x sorry you weren't middle class? What were they in poverty?
I agree. It's standard of living that allows some rate of savings. A good definition of middle class is not living paycheck to paycheck, hand to mouth. A middle class person has something left over to save, no matter how modestly, and is able to live within her means while saving.

For a wealthy person, that same savings, or more, gets compounded by investments. So you could say that wealthier folks don't live off their paychecks alone but also off their investments.

Super wealthy is when you're giving so much away to alleviate your tax burden and you create a family foundation for charitable giving (Newman, etc).
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Old 10-12-2010, 04:17 PM
 
Location: Near a river
16,042 posts, read 20,157,061 times
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Quote:
Originally Posted by nightbird47 View Post
So what *do* we call the cultural middle class that no longer can claim middle class levels of income?
The cultural middle class.

Because "class" also involves values. Those values run deep and never leave us.
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