Are we in a minority?

[disneysteve]

"oh, you have to do everything different!" well, it seems to me different is better than what MOST people do.

While I'm not generally a Dave Ramsey fan, I do like his quote that says something to the effect - Live like no one else today so that you can live like no one else later.

Yes, I am different. I don't spend all of my money. I'm not hung up on having the latest and greatest material goods. I don't dress to impress. I don't spend money I don't have on things I don't need to impress people I don't like. And I don't want to work until they bury me.

[maat55]

Our culture has shifted from low debt and frugality to one of living on tomorrow's labor.

Our government promotes spending and there are just too many toys to buy. People these days are too busy keeping up with the Jone's.

[disneysteve]

there are just too many toys to buy

I hear this a lot and I don't buy it (no pun intended). I'm old enough to have seen all kinds of toys and gadgets come along. At least in my lifetime, there have always been an abundance of things on which you could blow money. Maybe it was upgrading to a color TV or a hi-fi stereo record player or an 8-track tape player or a cassette player or an 8mm movie camera or super-8 or super-8 with sound or a Polaroid camera that took color photographs or a digital wristwatch. I could go on and on. The point is that there have always been new, neat-o gadgets that your neighbor had and you didn't.

[jefffou]

Our government promotes spending and there are just too many toys to buy. People these days are too busy keeping up with the Jone's.

Good point. The Fed doesn't want you to save. That's why they lower interest rates.

It's not only the government, it's EVERY message on the radio, television, and internet and any other type of media conceivable.

And the message is "You will NOT be happy unless you have so and so!" The message is, of course, opposed to sound financial principles and the children are raised with this message blasting into their brains day and night. Eventually, it seeps in.

Jeff

[Radiance]

The message is, of course, opposed to sound financial principles and the children are raised with this message blasting into their brains day and night. Eventually, it seeps in.

Good point, this is why I don't watch TV, therefore I see no commercials.
My son is two and he watches mommy picked DVDs...

Even then he identifies some characters from the DVD on stores and feels attracted to them... a Mickey Mouse ball, an SpongeBob bag...lucky me, he has not discovered I could buy them, so he grabs them but let them go when it is time to go. He thinks they belong in the store.

[disneysteve]

It's not only the government, it's EVERY message on the radio, television, and internet and any other type of media conceivable.

True, but again, this isn't a new issue. In fact, years ago, advertising on TV was even more embedded. TV shows were essentially run by the sponsors with product ads and placement incorporated right into the show itself rather than just as a commercial break between show segments.

Of course, we are much more tied to media today, especially the internet. Personally, though, I tend to tune out the ads. My daughter will often say something about a commercial and when I say I don't know what she is talking about, she'll say that I was sitting right next to her when the ad was shown. I just ignore the ads. Madison Ave. must hate me.

[disneysteve]

Did anyone see Suze Orman last week? I was listening to the podcast yesterday. There was a woman on who was having issues over money with her husband. The couple earns $210,000, a comfortable income no matter where you live. However, they also have 200K in student loans, 20K in credit card debt and only $500 in savings. The wife has just 14K in her retirement account and the husband has $0 in retirement savings. This is not a couple just out of school but rather in their mid-40s with 2 children. The problem was the husband wants to change careers and go to law school. Of course, Suze said he's nuts and needs to grow up and get with the program.

This is a perfect example of what this article was talking about. These people make great money and have nothing to show for it, very little savings and a ton of debt.

[bjl584]

Did anyone see Suze Orman last week? I was listening to the podcast yesterday. There was a woman on who was having issues over money with her husband. The couple earns $210,000, a comfortable income no matter where you live. However, they also have 200K in student loans, 20K in credit card debt and only $500 in savings. The wife has just 14K in her retirement account and the husband has $0 in retirement savings. This is not a couple just out of school but rather in their mid-40s with 2 children. The problem was the husband wants to change careers and go to law school. Of course, Suze said he's nuts and needs to grow up and get with the program.

This is a perfect example of what this article was talking about. These people make great money and have nothing to show for it, very little savings and a ton of debt.

Steve,
I saw it. I usually try to catch her show every week. Unfortunately there is a case like this profiled on her show almost every week. Did you happen to catch the show that is on after hers? I can't recal the name of it, but it basically about a woman that helps couples get out of debt and on a budget. Every couple profiled is living paycheck to paycheck, has a bunch of useless possessions,has tons of CC debt, and has no savings. It's really sad that so many people find themselves in this situation.

Brian

[disneysteve]

That's true, Brian. And the point I want to make is that many people think their financial problems are due to not enough income. Cases like this show that more money doesn't fix the problem. If a couple earning over $200,000 can't make ends meet, the problem isn't income.

There was also a caller for the "Can I Afford It?" segment who earned $25,000/month. Even Suze remarked about how much money that was. The problem was that their monthly expenses were over $21,000. Median income in this country is $50,000. These folks earn that much in 2 months. But they've built themselves a lifestyle that consumes almost everything they earn. Nobody needs to spend $21,000 to live. I don't care where you live or how high the COL is. Probably 90% of Americans live on a lot less than that so it can certainly be done. These people should be flush with cash, have huge savings built up and be on track for a life of leisure - but they're not.

[maat55]

I hear this a lot and I don't buy it (no pun intended). I'm old enough to have seen all kinds of toys and gadgets come along. At least in my lifetime, there have always been an abundance of things on which you could blow money. Maybe it was upgrading to a color TV or a hi-fi stereo record player or an 8-track tape player or a cassette player or an 8mm movie camera or super-8 or super-8 with sound or a Polaroid camera that took color photographs or a digital wristwatch. I could go on and on. The point is that there have always been new, neat-o gadgets that your neighbor had and you didn't.

I'm betting that if a child today had only what I had as a child, they would feel abused.

Kids went out and played because there was nothing to do indoors, with todays junk, many just stay inside.

Today, people have cell phones, internet, cable, Starbucks, more eating out choices, video games and movies that are new expenses to the average household that did not exist when we were kids.

People that do not have cable, cells, DVD players or internet are considered dinosaurs.

[maat55]

Good point. The Fed doesn't want you to save. That's why they lower interest rates.

It's not only the government, it's EVERY message on the radio, television, and internet and any other type of media conceivable.

And the message is "You will NOT be happy unless you have so and so!" The message is, of course, opposed to sound financial principles and the children are raised with this message blasting into their brains day and night. Eventually, it seeps in.

Jeff
401k Advice

Agreed, people used to save more because they had fewer monthly expenses, cable, cells and internet have been added as normal monthly expenses.

Our country's economy being 70% consumption is no accident. Between government promotion, advanced marketing, loose monetary policy, a devalued dollar and excessive taxation, saving is extremely difficult and unattractive to more people today.

[wnlbutterfly]

Not only have those things been added to the normal monthly expenses, but now days many people see those as necessities as well.

I got a slap of reality a year or so ago when my son told me his friend thought we were rich. I was telling him we weren't of course, and then I decided to look up the median income for our area. OMG...we make nearly double what those around us make and still living paycheck to paycheck, that made me take a long look at our budget and how we were spending.

Once you start getting behind in bills (like the one mentioned that was making $75k but always late and such), you end up paying so much more in late fees and overdraft charges that it can make it hard to really catch back up.

[maat55]

Not only have those things been added to the normal monthly expenses, but now days many people see those as necessities as well.

I got a slap of reality a year or so ago when my son told me his friend thought we were rich. I was telling him we weren't of course, and then I decided to look up the median income for our area. OMG...we make nearly double what those around us make and still living paycheck to paycheck, that made me take a long look at our budget and how we were spending.

Once you start getting behind in bills (like the one mentioned that was making $75k but always late and such), you end up paying so much more in late fees and overdraft charges that it can make it hard to really catch back up.

I lived paycheck to paycheck most of my life. I don't miss it. I don't mind giving up things to save money, the peace is worth it.

[Daylily]

I wish I could say I was surprised by that stat ... but I'm not. And every time I see a statistic like this all I can think about is how horrible my tax rates are going be when these people approach retirement and expect an entitlement program like Social Secuirty to support them.

It horrifies me that people haven't saved.
I am sure Social Security will be means-tested by the time I retire which means that my frugal lifestyle and saving on my own will be rewarded with receiving little to no Social Security payments.

[disneysteve]

I'm betting that if a child today had only what I had as a child, they would feel abused.

Today, people have cell phones, internet, cable, Starbucks, more eating out choices, video games and movies that are new expenses to the average household that did not exist when we were kids.

That's all true. I'm not denying that there are things to spend money on today that didn't exist 20 or 10 or even 5 years ago. My point is that 40 years ago when I was little, there were also things to spend money on that didn't exist 5 or 10 or 20 years before that. Innovation and gadgets and luxuries aren't new.

Not only have those things been added to the normal monthly expenses, but now days many people see those as necessities as well.

Bingo! This is the problem. It isn't that new things exist. That's called progress. We aren't all sitting around a 9-inch black and white TV to watch Milton Berle anymore. The problem is that people have blurred - heck they've totally erased - the line between need and want, between necessity and luxury. Part of that is due to costs coming down dramatically making things that used to be out of reach for most people now quite affordable. However, just because something is affordable still doesn't make it a need. It just makes it a cheap luxury. We get into that debate periodically around here with cell phones. Unless your cell phone is your only phone - no land line - I maintain that a cell phone is a luxury item, even if it only costs you $20/month. Not all that long ago, certainly in my adulthood, cell phones weren't around. People still lived and worked and communicated with their jobs and their families. Nothing has changed in the world (except maybe fewer pay phones) to make cell phones a necessity. And that's just one example.

Portable music players have been around for 40+ years. First, it was transistor radios. Then the Sony Walkman came along. Then we got portable CD players. Finally, MP3 players. So the technology keeps improving but the concept isn't all that new.