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Record number of "nearly poor" emerges in US

Discussion in 'Economics and Financials' started by padre31, Nov 19, 2011.

  1. padre31

    padre31 Premium Member Luxury Box

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    http://www.nytimes.com/2011/11/19/u...erty-but-struggling.html?pagewanted=2&_r=2&hp

    Found this article illustrative of what is happening in the US outside of the Top 5% and employed, not due to the stuff about "paycheck to paycheck" rather I noted the following:

    -Transportation cost 3k a yr
    -she is "looking for scholarships"
    -saved 3 yrs to make a downpayment on a home
    -the high cost of living in the area

    I bring up these points simply because all 4 have viable decisions that can be made to reduce the costs, or to eliminate them but I'd love to hear others' thoughts on what should be done to squeeze more value out of a set into place wage and income structure.

    In my view, this is where Americans can really make some inroads into generating a better life for themselves, if they are willing to disregard perceived value that they have and it is costing them precious $$$$ at a time when there are no more $$$$$'s coming in.
     
  2. pocoloco

    pocoloco I'm your huckleberry Club Member

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    Carpool, community college for 2 years, rent and move to another area?

    I grew up around NYC, and it parts are prohibitively expensive for young people. I moved away, lived in the South, and I lived in the West. I worked on fishing boats in Alaska to save for college, couch surfed at times, slept in my Civic or in tents at other times. It was emotionally difficult living away from friends and family, still is.

    12 years later and college finished, I have a very good and secure job and can afford a different high-priced area. The struggle turned out to be defining. I would encourage parents to not shoulder the burden of tuition, let junior find a way (for example, enlist). Oftentimes, in our post-industrial world, that requires high mobility.

    That's a tough reality if you have family that needs care at home, I was fortunate that mine didn't.

    North Dakota is hiring. Grab a jacket at the Goodwill and get on that Greyhound.
     
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  3. padre31

    padre31 Premium Member Luxury Box

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    Carpool, public transit, bke commute, or buy a scooer etc

    Community College and or CEP (credit by examination tests, the only true "free" lunch colleges offer).

    Car living or what have you is not really a good option for the young girls moving forwards, but for young dudes, why not?

    I think what the article highlights is the need to attack costs from every direction, to repproach costs with a new eye for substitutes because most likely, things are not going to get better anytime soon.

    Also, as the writer of "Rich dad, poor dad" points out, the 230k house is more of a burden then a blessing as it will eat money and not produce any, but if they are going to move in then the focus should be on minimizing costs in terms of energy usage and producing value from the home...that would be were gardening would come into play.

    "If" a garden can save 1k per yr, or more, then that is the closest they are likely to come to an increase in liquidity, that 10k off of the top of their paychecks is a great place to start looking to take back some money and put it into their wallets.

    As an aside, I get a bit disgusted over stuff like "no more red lobster", 50% off coupons can be found, they could go to lunches instead of the more expensive dinner menus etc, when you are talking about 40 bucks vs just outright denial of such a simple pleasure, it makes no sense as this approach is as much mental as it is actual denial if they just outright deny themselves EVER going there, this won't last.

    This is sort of what I mean about Americans needing to get smarter.
     
  4. FinSane

    FinSane Cynical Dolphins Fan

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    Even so, the cost of living continues to go up while wages continue to be stagnant and depressed. You can't ignore the fact that jobs, the ones still around, just don't pay enough. I've worked two jobs, one full-time and one part time, and combined with my bills(I live very cheaply, don't buy myself alot of unnecessary items at all, I eat out and cook about evenly) still barely got me by. Price inflation is out of whack compared to wages and purchasing power. A big part of that is the high cost of oil/gas and transportation of goods and services that's effected by it.

    Also keep in mind too there is no such thing as job security, with now even white collar jobs are not safe from layoffs, downsizing, and outsourcing, even your "non liberal arts" college degree doesn't guarantee job security either. We're experiencing a trend in downward social mobility, where even a noble way of doing things like sacrificing to go to school, getting your degree, then landing a good job, making $30-$60k a year starting out is now becoming got laid off, found a similar job, but took a pay cut, then got laid off from that job, sent resumes to similar jobs but no one's hiring, changed fields, no luck, but found a job in retail/food services, making less than $30k a year, struggling to get by, working part-time, moving in with my parents....to....what's next?
     
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  5. Boik14

    Boik14 Admin Club Member Retired Administrator

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    There was an article written a while back by a Yale professor and while I forget the publication that article was in (WSJ maybe) the article surmized that the housing market as it is now is how it should have been all along. That 230K house that you mention Padre is really only worth what someone is willing to pay for it so I have to agree with your premise. The housing market in my opinion will continue to worsen especially in markets that are becoming more and more elitist such as NYC, Long Island, Parts of California, Northern and Central Jersey where it is becoming harder and harder to live for average salaried workers.

    Personally, I am of the belief that things will continue to get worse within the housing market before they get better because of the economic uncertainty leading to people's unwillingness to tie up large amounts of money in difficult to move markets like the housing market where it can take a lot of time to recoup your investment both initial and additional costs along the way in improvements. The inability for many families to properly maintain a house and thereby its value, due to various factors such as longer hours for those who do have jobs or inability to afford supplies for the house for those that do not have jobs could further impact just how bad the housing market will get. Just my opinion.
     
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  6. Boik14

    Boik14 Admin Club Member Retired Administrator

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    Agreed. Even the prices of things like Corn, cane sugar and coffee are out of whack.
     
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  7. FinSane

    FinSane Cynical Dolphins Fan

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    I've been laid off from a good paying(for a kid in his early 20s) job doing route sales for a grocery distributor. We lost some major accounts due to a trend in automation in the industry(automatic replenishment of product in the stores), which effects a whole lot of people who are middle men in the distribution business: brokers, sales reps, merchandisers, warehouse laborers and managers, drivers, ect. Just a slight change in how a company does business can shed hundreds if not thousands of jobs. Automation also plays a big role in eliminating jobs, even whole companies, and its not as simple as learn new skills especially with the high cost of school and training, even community college tuition is ever increasing especially with state budgets being slashed.

    I'm now doing part time work for a grocery company just so I have a job with money coming in. I'm actively searching for more work and so some side jobs to get extra money. I've slashed my spending and re-adjusted some of my bills(for example I dropped towing and roadside asst. with my insurance company for $70/month and switched to AAA for $70/year. Smart.) I do think responsible people, do cut spending and tighten belts and adjust their life according to their income, not everyone lives beyond their means. But its getting to a point where even smart, responsible people are getting hurt and its got a lot to do with wage supression and the cost of living. Do something about that and alot of these problems will solve themselves.
     
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  8. padre31

    padre31 Premium Member Luxury Box

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    Well b14 and finsane, here is yet another good place to cut costs and increase liquidity.

    It's well known that the generally the more quanitity you buy of a product, the lower the per unit cost becomes, so for those items, why not buy the 50 pd bags?

    I had a Sam's membership at the place I used to work and noticed a 50 pd bag of sugar was..18 bucks, those little bags of sugar at the grocery store are 2 bucks each (plus tax( for 1 pd bags, so for the price of 9 pds of 1 pd bags of sugar, you can buy twice as much if you bought the bakers' sized bag, that does mean you'll have to make a one time purchase of those 5 gallon food buckets to store it in, but you've cut the cost by 50% when all is said and done by lowering your per unit cost from 2.19 down to....36 cents and because you bought such a surplus of sugar, if the 1 pd bags rise in price to 2.50, you've "saved/made" even more $$$.

    The problem is Americans, most of us, have been so trained to just buy the smaller quantity because the massive quantity has diminished value due to the perception of "oh, I'll never use that much of it", when reality..yes you will, eventually, and that is true of every commodity from sugar to olive oil to coffee.

    A great place to take that approach at is Resturant Supply outlets, personal care products, the really crazy thing is, if you do the math, the percentage return on buying the 50pd bag of sugar easily beats the return one could get in the stock market or savings account.

    The last time the economy was this outtawack, the late 70's, John Pugsley wrote about it in his book the Alpha Strategy, which is available as a free .pdf download.
     
  9. padre31

    padre31 Premium Member Luxury Box

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    The only time it really makes sense is when the home is way below market value price and your rent/taxes/upkeep costs are roughly equal to what you'd pay in rent, but there is such a drive to be a homeowner in the American psyche that few people lower income people are objective about it.

    Well, depends, for example what if the home has a room with it's own exit that is not needed by the homeowner, but could be rented out?

    *GASP*! the first reaction is normally "I don't want some stranger living in my house!"

    Reality is, (and I do not have my PVifa chart handy to be really accurate) let's look at that:

    30yrs at 230k at 5%=yearly mortgage payment would be..say 9,500 per yr

    792 per month mortgage

    Sublet a room for 500 dollars a month

    500x12=6,000 per yr

    mortgage payment 9,500-6,000=3,500/12=292 per month

    You've cut your payment by 64%.

    With the internet, it is massively easy to do a background check on potential tenants, eviction laws are also straight forward enough to allow the avg person to bounce a dead beat.
     
  10. pocoloco

    pocoloco I'm your huckleberry Club Member

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    I fairly certain that, for young people from the working class, tons of education and a nomadic life are becoming increasingly necessary. Staying still is moving backwards for working class people over the past decade (http://www.politifact.com/truth-o-meter/statements/2011/nov/18/joe-biden/biden-says-middle-income-earners-lost-ground-reces/).

    Young people need a different mindset, to go work in Qatar or Singapore, if that's what it takes. We have to accept that we are not special or precious, and plan accordingly. I'm not sure it can be accomplished effectively by Sam's Club trips, coupons and gardening. Those do help. I do the former two, but as a renter, I'm unable to do the latter (and there's a long waiting list for community gardens). I grew up gardening, fishing and hunting for much of my family's food, and I like to return to those roots.

    I think historians will look back on this economic era, and conclude that the older generations (from the baby boomers to the hippies) have failed us miserably.
     
  11. padre31

    padre31 Premium Member Luxury Box

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    Eh, and yet the top of the food chain is flourishing, which would seem to me to say it still can be done.


    Different situations poco, one is a young single person, or couple, the other is a family buying a home, one has a elastic earning curve, the youngsters, one has a inelastic income curve, for a young single renter, it makes little sense to garden (but it does to use coupons) for the family situation it makes all sorts of sense to garden as the savings are x4 vs x1, the family situation leverages the production from the garden, a single person has little need for 10 pds worth of veggies at a time.

    FWIW though there are tons of articles on how to get maximium production out of limited growing space, but that is merely one idea, not the whole approach.

    As for buying in bulk, once again it does make more sense for a family then it does for the single person but the single person has more options in terms of transportation and such day to day living expenses.

    Baby boomers became hippies poco, for me history will look back at this period of time and call it the Great Recession when the US economy was forced to adjust to the realities of Globalism and the concentration of wealth, the sort of easy, unplanned lifestyles that existed prior to now will be looked at with "wow, really?"

    But either way, I do think Americans outside of that top 1% have the greatest opportunities to maximize what income they are making...if we smarten up.
     
  12. FinSane

    FinSane Cynical Dolphins Fan

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    I agree people can do more to make their financial house in better shape. But these individual moves won't make much difference if the economy remains in the crapper and policy continues to be skewed in favor the already well-off.
     
  13. padre31

    padre31 Premium Member Luxury Box

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    Not so, first rule of winning a game is knowing you are playing it.
     
  14. Boik14

    Boik14 Admin Club Member Retired Administrator

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    Completely agreed but unfortunately Male Americans are trending away from education. It may be due to the fact that many people do not want to get too far in to debt with the job market so uncertain. You and I realize education is an investment in ones self and not necessarily tangible other then the fact it helps you land better jobs which generally pay more.
     
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  15. padre31

    padre31 Premium Member Luxury Box

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    You are not offbase, my college classes, 2 to 1 females to males some classes it is 3 to 1.

    I do think young males sometimes take the path of least resistance which means not putting in the work it takes to make a college education payoff, for example my approach is to plan on finding a job based on my degree, but to also start a mini business to generate income and maybe a lot of it.

    Have to say though, the females amaze me at times because they work like mad to make it happen, as in "wake up at 4 am, work shift, go to class, do coursework for my 5 classes" sort of effort.
     
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  16. MikeHoncho

    MikeHoncho -=| Censored |=- Club Member

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    But, but... how else will I finish my Astrology Appreciation degree in time?


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  17. Stitches

    Stitches ThePhin's Biggest Killjoy Luxury Box

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    Wish my college classes had that ratio. I was lucky if any of my classes were split 50/50. Most classes were like 2-2.5 to 1 in favor of guys though.
     
  18. padre31

    padre31 Premium Member Luxury Box

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    Really?

    What I think is funny is these films with the "wild college lifestyles of sex and booze"

    Riiight..these ladies would trade sleep for sex in a heartbeat...:lol:

    Dudes, for their part, mostly are interested in..video games, as in that is about all they chat about.
     
  19. padre31

    padre31 Premium Member Luxury Box

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    Hmm, what is the market value of that sucker?

    I love education, or rather the impartation of knowledge, however one had better think long and hard about, you know, finding a job, with that degree.
     
  20. MikeHoncho

    MikeHoncho -=| Censored |=- Club Member

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    As long as I'm happy with what I'm doing... that's all that matters.


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  21. Stitches

    Stitches ThePhin's Biggest Killjoy Luxury Box

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    Yea, I'm sure the guy/girl ratio had a lot to do with being in classes mostly filled with engineering majors.
     
  22. MikeHoncho

    MikeHoncho -=| Censored |=- Club Member

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    FIU. Nuff said. Every. Single. College. Sterotype. Regarding. Women. Evar.
     
  23. Laces Out

    Laces Out Well-Known Member

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    Gonna need some photographic confirmation
     
  24. padre31

    padre31 Premium Member Luxury Box

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    Oh, okay.
     
  25. MikeHoncho

    MikeHoncho -=| Censored |=- Club Member

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    Photographs don't do it justice.

    Dang Pads, you didn't get the statement about the pursuit of a "higher education"? I was dripping in sarcasm there.
     
  26. reshelaL

    reshelaL New Member

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    Economic recessions have paradoxical effects on the mortality trends of populations in rich countries.. I've read an article about this issue, please allow me to share it here. Two recently published studies examine the influence of the economy on the unborn. The study implies even they are affected by the economic down-turn. One draws a parallel between the recession and declining birthrates. Another, more disturbingly, shows a fall in the wellness of those that are born. Here is the proof: Studies say that the poor economy affects birthrates and newborn health. Today’s recession could also represent a global stimulus to redirect societal goals through wealth redistribution, in the same way the Great Depression did almost 80 years ago. Global health disparities are at unparalleled extremes, and we would all benefit from decreasing economic inequalities, not least through lessening the health gap.
     
  27. Eshlemon

    Eshlemon Well-Known Member

    I like Japan's higher learning in this regard which is opposite of ours. Access to the cheapest public colleges require the highest in academic standards, not the lowest. The rest, 80% or so, go to private universities and colleges.

    Not perfect, student academic competition and pressure to get into cheapest public schools, which by default become amoung the most accredited, is tremendous. And the ones who pay the least, are going to make the most.

    For private, only the rich can send their kids away to college the rest have their kids stay home longer and/or do as you did, work. Also takes longer to get degrees, but with less or no debt to start off with.
     

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