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The next recession is going to cause major pain for a significant majority of the US population. We are way overextended on our lifestyle through the use of debt.
When people lose their jobs they will not have enough savings to sustain their lifestyle. They will also be forced to take much lower paying jobs and be underemployed.
The RESET button is coming!
I don't know.
I grew up working to middle class. I had everything I needed - a bit of extra, but not a ton. I got whacked by the recession for a few years after graduation.
Once the income grew a bit, I went on a financial bender for about two years. Tons of trips. New car. Loads of toys.
If we get hit again, people will tighten up for a bit, then probably loosen up feeling they "deserve it" once conditions improve.
I grew up working to middle class. I had everything I needed - a bit of extra, but not a ton. I got whacked by the recession for a few years after graduation.
Once the income grew a bit, I went on a financial bender for about two years. Tons of trips. New car. Loads of toys.
If we get hit again, people will tighten up for a bit, then probably loosen up feeling they "deserve it" once conditions improve.
Without continuous income they won’t be able to support their mortgage, car payment, student loans, child care costs, etc.
I’m expecting a great deal of pain for this segment of the population.
Where do you guys live that college is so expensive? I could do 2 years at a community college for about $5k and then transfer to the flagship state university for $20k more. So a BS for $25k all in. Even if I went 4 years to the state uni it’s $40k all in. I worked at a grocery store only in the summer and holidays through college and I was clearing $4k/yr back in 2003. When I was in undergrad tuition was ~$6k/yr, so it’s gone up about 1/3rd in the past 15 yrs, more than inflation but not as insane as many would have you believe.
What’s become expensive is the college lifestyle today (and in my day, 15 yrs ago). Can’t work because you need to focus on your “studies”. Need a nice apartment (can’t live like a hobo!), need to go out with friends 2-3 nights a week (YOLO), and vacations in the summer to decompress.
There is some vetting. Not all schools are worthy of attending and not all teach the same curriculum.
I would be embarrassed to attend some of these so called educational institutions.
Also, since when is 40k an easy debt to pay off? Especially if you went to a school that people wont acknowledge?
Also, since when is 40k an easy debt to pay off? Especially if you went to a school that people wont acknowledge?
Especially when millions of underemployed graduates are making $12-$15 an hour with $40K+ in debt. There is no way out of that debt slavery, thus the cries for bailouts. Millions of worthless degrees out there. The bubble in higher education is soon to pop! What is happening in Alaska with their higher ed system is the first of many dominoes to fall......
There is some vetting. Not all schools are worthy of attending and not all teach the same curriculum.
I would be embarrassed to attend some of these so called educational institutions.
Also, since when is 40k an easy debt to pay off? Especially if you went to a school that people wont acknowledge?
I didn’t say it was easy to pay off but in that situation you are literally borrowing every dime to get a 4 year degree at a state university. I guess I went to one of those so called schools (2 of them actually) and started working in 2013. I’d say I’m doing just fine, my $25k was relatively easy to pay off, but I made it a priority, I know people still paying and complaining and in the same breadth talking about their 2 week trip to New Zealand.
I know plenty of people working good jobs with degrees from Missouri State, Arkansas State, University of Missouri Saint Louis, etc. Sometimes it pays to get out of the snobbery of the east coast $40k isn’t a drop in the bucket, but it’s also possible to work during school and summers. Heck, I had about $5k saved (which when I started was a full year’s tuition) from working from 16 until college started at a grocery store. Bartend during the school year can easily get you $10k and summers can you get you another $8-$10k, that would cover tuition and probably 75-80% of living expenses if you lived with roommates. If you “had” to go to a university for all 4 years that or something similar would get you out for under $15-$20k. But to each his/her own I guess.
It’s a lot of people not thinking about tomorrow. I came from a very wealthy family and college tuition was no issue whatsoever, but I still ended up going to a state school to save money and my first apartment was $250/month plus utilities, $30, in 2003. It was a horrible pile of garbage apartment but it was cheap! I had poor friends borrowing every penny staying in brand new student housing at $800/month in a quad. Literally my second year apartment was 2 bedrooms for $600/month! No idea why anyone would have paid $800 for a tiny room sharing the kitchen with 3 roommates when it was far more expensive than an apartment on the edge of campus that was closer to most buildings than his was. I always spent less on my housing than anyone I knew and yet I had enough money to spend whatever I wanted. It’s just ironic the people who can least afford it spend the most sometimes.
The vision of the person who does everything right and still struggles is cute but it’s not reality 99% of the time. The poor people I know, young people thankfully (fiance’s friends), waste massive amounts of money on the dumbest things. One is about 350 pounds, the fattest woman I have ever seen, she thinks $20 is a reasonable price for lunch. Despite at one point telling my fiancé she couldn’t eat out because she has $8 in her checking account. Why do I have a fortune in the bank and consider $15 expensive for lunch and she has $8 and thinks $20 is reasonable?! It doesn’t make any sense. My fiancé complains we don’t travel enough because everyone on Instagram does and her friends who work in the serving industry just went to Tahiti or Hawaii or Europe or whatever. Uhh, well I’m going out on a limb and saying they’re spending money they don’t have. No retirement savings but yay you went to Europe! I wonder if any generation ever before mine, the dumb Millennials, ever was more child-like in their sense of wants being needs and total lack of regard for fiscal responsibility. Everything is a need now, no matter if it’s a smart phone or vacations or city apartments or Starbucks or drinks out with friends, it’s something they “deserve,” money be damned!
It never ceases to amaze me too how my dad and I will be using two year old iPhones and someone else I know has no money whatsoever is bragging about their brand new phone and how they upgrade every year. Why some people can feel so secure financially when they’re dirt poor and I spend so carefully when I could choose not to, I’ll never understand. I don’t know how these people aren’t enacting austerity measures. I had a time when all of my money was invested in long term assets, no cash flow besides my company, and I could barely sleep at night with only $10,000 in checking. That felt like a five alarm fire to me and I cut costs everywhere I could and lived on very little. Yet at least I knew eventually, I’d have tons of cash, and I still spent frugally. You have people with $500 in checking eating $40 meals. I wouldn’t spend nearly 10% of my net worth on a meal hahaha
Last edited by JonathanLB; 08-05-2019 at 05:46 PM..
So I am having a hard time understanding/processing all of the information we read out there relating to salaries, house prices, student loan debt, food costs, transportation, etc. Is almost everyone living on a financial edge? If you simply take the median household income of $61k, how are people paying for housing wherein the median price in the U.S. is around $300k? Hell, even if that median household income was $80k its still not enough!
After you had your mortgage, and some basic living expenses like food and gas for your car there is not much left over. How are you then paying student load debt, spending on other consumer products (e.g., consumer spending is at all-time highs), paying your car note (the car debt is at an all time high as well - over a trillion dollars), where the average car transaction sale is around $30k per KBB. Ohh and dont forget to save for retirement as well.
Curious to hear what other people think. I know the numbers above are not perfect, however, I would say they are accurate enough for this discussion.
If you earn the median income and try to have a median lifestyle, you will be pretty tight no doubt. However, it isn't accurate to say "almost everyone" is on the edge, since expenses and income are both highly variable. Something like 1/3 of American adults own a home outright, for instance.
The one thing I can virtually guarantee you is that if you have student loan debt and buy the most house you can qualify for and the most car you can qualify for, and finance your appliances and furniture, and keep going like that, eventually a time will come when you can't pay your bills. Maybe not right away, but eventually something will happen ...
I live in Denver... I just dont understand the spending habits of people here. It seems like everone lives in a $500k house and drives a $50k car.
I think people have borrowed their way into the upper middle class. That or mom and dad paid for their lifestyle.
It so sad to see people trying to find happiness in stuff.
None of that is "real" nor "sustainable" just like our government budgetary policy.
The pain will be very hard and very quick on the way down for these people. The irony is that they will blame everyone else for their plight (banks, the government, schools, realtors, employers)..
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$40k isn’t a drop in the bucket, but it’s also possible to work during school and summers. Heck, I had about $5k saved (which when I started was a full year’s tuition) from working from 16 until college started at a grocery store. Bartend during the school year can easily get you $10k and summers can you get you another $8-$10k, that would cover tuition and probably 75-80% of living expenses if you lived with roommates. If you “had” to go to a university for all 4 years that or something similar would get you out for under $15-$20k. But to each his/her own I guess.
