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Actually it's the government that is cherry picking. Just because we've seen deflation in electronics, clothing, and a few other things doesn't change my point in the slightest.
Why? Because the expenses that have inflated as I described are those that need to get paid first.
So we have a situation where the well to do 'feels' the CPI as the government reports, because their income exceeds those necessary expenses. However, a greater and greater percentage of the population doesn't feel it at all, as all of their income is being consumed by those necessary expenses that have skyrocketed exponentially beyond what the government reported CPI is. Think rent, food, college, healthcare, insurance, taxes, etc.....
From a practical standpoint, the CPI is hogwash for most people.
No, only healthcare and higher education are like that. The others on your list are quite in line with the CPI.
The CPI has increased approximately 8-fold since 1962, for example. Let's look at costs from [1] in 1962.
If we multiply everything on the list by 8, in accordance with CPI, we get:
New House - $100,400 (The construction sizes have increased from about 1200 sq ft. to 2400 sq ft. in this time, [2] which is a full doubling. Adjusting for this, we come to $200,800)
Average Income - $44,448
New Car - $23,392
Average Rent - $880/month
Harvard Tuition - $12,160 per year
Movie Ticket - $8.00
Gasoline - $2.16 per gallon
Postage Stamp - $0.32 per stamp
Commentary:
House - After adjusting to square feet, we see that we are similar to modern values
Income - Similar to modern values
New Car - Similar to modern "base" models, without bells and whistles
Rent - Similar to modern values, outside of big cities. Keep in mind that there has been a shift of population to cities, so the fair comparison is to non-urban regions here. In light of that, an apartment going for $880/month should be considered as similar to modern values
Harvard Tuition - Yes, this has increased much faster than CPI. For the current academic year it is $43,938.
Movie Ticket - Similar to modern values. The last two tickets I bought were $9.00 each
Gasoline - Similar to modern values, for now at least(!). Obviously there is a lot of fluctuation on this.
Postage Stamp - we are right now at 46 cents. This has gone up faster than the CPI, which may be partially due to fiscal difficulties with the USPS resulting from reduction in mail usage and its replacement by electronic modes of communication...
There are still opportunities to get ahead, but it requires substantial personal sacrifice. If you sit around and expect our current corporate government overlords to "play fair", you will live and die for a promise you will never see.
Ah, but remember, we once had a government that truly cared about the well-being, health, and happiness of the less-economically fortunate, in this country (FDR's administration)
Hmmm, maybe what we really need, is a modern-day FDR...and to prove, once again, that the government can in fact potentially be a champion, of and for the people it serves...
When I was well off, I lived below my means. And that is what is making my life better today when I get to experience poor up close and personal again. I'm glad I learned how to make it on whatever I had and never forgot how to be frugal!
And on top of that the American poor don't live better than the poor in other industrialized countries.
Furthermore to mention the word 'character' in the context that the post you are referring to was written implies that a hard working American that doesn't earn a ton of money has no character.
I reject that implication wholeheartedly.
I was talking specifically of the poor. They mostly don't work and if they do, not hard enough. Their lack is one of character. All their food, medical, transportation, cell phone (in NY), education, housing is paid for. They fail to take advantage of it. They don't try to better themselves.
"Live within your means" as a phrase and as a popular figure of speech, would seem to be self-evident and obvious, at least on the surface. Simply put, it might represent not spending what you don't have. However -- and this is a big "but" -- it can also get incredibly frustrating to have people automatically parroting this phrase, for several reasons. First, the "means" with which one lives has gone down, not up, over the past 30+ years, with wages not being fairly-adjusted to inflation. What this means on a practical level, is that with the varying levels of inflation and deflation of the dollar over the past few decades, people's standards of living have gone down, not up. It was much easier to "live within one's means" in 1950, 1960, and 1970, than it was was say from 1980 - present. Houses that could once be bought decades ago on a single-income family salary for $25,000 may now, in 2015, cost as much as $750,000+, in certain residential areas. This is an extreme example where it is obvious that the financial industry has "moved the goal posts" of what living within one's means represents today in 2015, vs. what it used to mean.
While observing some degree of "living within one's means" would actually seem prudent and even wise, it almost sounds like some people may take it to drastic extremes, where it is used as a justification for endorsing the gradual (and involuntary) reduction of people's living standards, over time. While also serving as an apologist of sorts to the well-off, well-to-do, and the wealthy. Keeping in mind that it is much, much easier to live within one's means, so to speak, if one is already well-off in the first place.
Most millionaires are self created, meaning they did not inherit their money, but created it through their company, work, investments, whatever. They did this by living within their means the entire time, including before they became millionaires. It would beseech you to do some research regarding this phenomenon. and for starts I would point you towards a somewhat mundane, yet highly educational reading of "The Millionaire Next Door."
Little know fact: The #1 vehicle owned by millionaires? The Ford F-150 pickup truck.
The best way to become "well-off" is to study them and learn their tactics. While true that many do get advantages over others in the ladder of life, the education and skills with which to climb that ladder are indeed available to everyone. You'll never get anywhere if you don't at least try to climb.
When I was well off, I lived below my means. And that is what is making my life better today when I get to experience poor up close and personal again. I'm glad I learned how to make it on whatever I had and never forgot how to be frugal!
Sounds like we are in somewhat similar positions. Good luck to you climbing back up the rungs on the ladder of life. I personally don't have a need to climb as high as I once was, but just a few more rungs would be nice, but I am just as happy where I am now if it never happens. So I can't eat at the best restaurants ever night anymore. I discovered that I am an excellent cook again!
Actually, while not "rich" per se, I am currently in the upper-middle class economic demographic myself -- and FWIW, actual houses in my neighborhood that could be bought for ~$25k in the 1950's, etc. do in fact now today cost around $750k. My own home residence was appraised for $700k. I earn a lower-end 6-figure annual salary. I have worked very, very hard in my current area of employment for over 2 decades now, and have literally "pulled myself up by the bootstraps". All of this, however, does not lessen the fact that I deeply sympathize with the plight of those who are less well-off financially. It doesn't make it right, either, that people have to needlessly have to suffer financially due to external monetary circumstances fully-outside of their control like inflation and deflation, and then be preached at to have live within their means, even as their living standards are actively being degraded, reduced, and eroded, in a race to the bottom engineered by the financial industry.
In 1950s a full time worker with a good job made $40 bucks a week with a stay at home wife.
In the year 2015 fairly common for new home buyers to have household income of $3,000 a week (husband and wife combined.
Housing of course went up. A lot of this has to do with Women's Lib and ease of mortgages.
Look at early 70s where most women did not work and banks were tough on loans requiring large down payments and steady jobs. Now flash forward to 2004 when easy credit and 3% down was available for home buyers and couples buying houses had two incomes. Home values shot through the roof.
If every women in America decided to be a stay at home Mom, couples once again decided to get married young like in the 1950s when they had less money, banks went back to requiring 25% down and folks stopped trading up to larger home - prices would fall in half overnight.
I had Doctors and Lawyers on my dumpy little block growing up. Why folks bought a house as a newlywed couple and knew neighbors and stayed put.
Society and Demographics have a lot to do with this. And in NY we have the Asian population who thinks RE is a great investment and drive up prices. Great Investment!!, Houses used to be a zero investment. Remember you bought one and lived in it to you died. Price of it did not matter much. It threw off no income and you were never selling.
"Live within your means" as a phrase and as a popular figure of speech, would seem to be self-evident and obvious, at least on the surface. Simply put, it might represent not spending what you don't have. However -- and this is a big "but" -- it can also get incredibly frustrating to have people automatically parroting this phrase, for several reasons. First, the "means" with which one lives has gone down, not up, over the past 30+ years, with wages not being fairly-adjusted to inflation. What this means on a practical level, is that with the varying levels of inflation and deflation of the dollar over the past few decades, people's standards of living have gone down, not up. It was much easier to "live within one's means" in 1950, 1960, and 1970, than it was was say from 1980 - present. Houses that could once be bought decades ago on a single-income family salary for $25,000 may now, in 2015, cost as much as $750,000+, in certain residential areas. This is an extreme example where it is obvious that the financial industry has "moved the goal posts" of what living within one's means represents today in 2015, vs. what it used to mean.
While observing some degree of "living within one's means" would actually seem prudent and even wise, it almost sounds like some people may take it to drastic extremes, where it is used as a justification for endorsing the gradual (and involuntary) reduction of people's living standards, over time. While also serving as an apologist of sorts to the well-off, well-to-do, and the wealthy. Keeping in mind that it is much, much easier to live within one's means, so to speak, if one is already well-off in the first place.
I am not certain what you are driving at, but assuming I have an idea what you saying, I disagree.
First of all, living within ones means actually can help most people achieve greater financial success because you are paying off fewer to no bills trying to keep up with the Jones.
So when an opportunity comes to make a move such as a good investment, start your own business, buy a piece of property, etc., you have the means to do so.
Those who are saddled with huge credit card payments (that the interest alone will keep them in debt forever) because they just had to have the latest greatest plasma TV like their buddy for example, will never be able to make an upward move.
I remember one day my son saying so & so's dad was rich because he and his wife drove fancy cars, lived in a very fancy house, boat, etc.
Granted from the outside, they did seem to have wealth. Then after a time this persons house of cards collapsed because they had been living well beyond their means. This guy actually made decent money, but was not satisfied with his current economic standing, so he lived well beyond his means. Then the stories started to circulate about how he was refusing to pay creditors unless they agreed to take pennies on the dollar. He was doing this to everyone, including small guys like the lawn/landscaping service, plumbers, electricians, etc.
The long and short of it was that he put on a façade to impress people, and dug himself into a huge hole. To me this is a classic example of someone who was impatient and living beyond his means.
Obviously this person does not fit into your thinking that it is the well to do who have an easier time living within their means. Instead it takes discipline, patience, and sound financial planning, regardless of whether they are lower or upper income.
Little know fact: The #1 vehicle owned by millionaires? The Ford F-150 pickup truck.
How do you define millionaire? >$1M in assets? >$1M income per year? Neither is close to being the exclusive club it once was, and the first is downright common. Which is probably why the most popular vehicle owned by the general population is the same one that is popular with millionaires.
I grew up in a farming area where any and every farmer past middle age has >$1M in assets. This is normal for anyone who earns their living via a business of some kind rather than a job. Some are more capital intensive than others, but usually you end up with a lot of assets eventually if you stay afloat. This does *not* mean they have ever had high income or living standards.
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