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dvcgirl
06-23-2009, 07:24 AM
I read financial news and listen to the talking heads on CNBC....and the deeper analysis on Bloomberg.....and I hear some talking about this "new normal" that we're going to see in our economy. Basically, a much slower rate of growth. Then there are those that simply see this is as a bad recession from which we'll emerge and go back to our happy spending and consuming ways.

Well, I'm in the "new normal" camp. I just read two articles....back to back on MSNBC about people in massive credit card debt. And still, they don't seem to fully comprehend how much trouble they are in. One woman is 65K in CC debt. A full 2/3 of her net income goes to paying her minimums. She's 43 and a state worker in California.....not exactly a good employer to have these days. Her pension is about as safe as that of a GM retiree. Mary Uhazi seems almost baffled that she has nothing to show for the 60K in debt. Oh well, the good news is that the reporter tells us that Mary has cut back on eating out. I had to laugh out loud.

The next couple is pictured sitting in their RV....62 years old and $87,000 in CC debt. The first line of that piece was this...."Julie Hamman knew she had too much credit card debt." Oh, do ya think??!!??? Geez, what exacty does Julie expect will happen?

And I listen to Dave Ramsey and callers phone in with tales of incredible debt. For as much as some of us have been talking about this for years around here.....and waiting for "the day of reckoning" to come.....well, now that it's here, it's pretty darned sobering.

I just think that there are so many Americans carrying so much debt and that many are still sort of walking through life in a fog thinking....."is this really happening?". They've been cut off in most cases, and their interest rates are climbing. They simply can't spend anymore.

Sure, it seems like we've averted the complete market meltdown that we were facing in September and October of 2008. But the effects of those days and the massive credit contraction that is a direct result of that event....well, we're going to be feeling that for a long, long time.

blaze1599
06-23-2009, 07:38 AM
What scares me the most about this is in 30 years or so that people so far in debt that the government will have to help them exist. Not that this is wrong but for those of us who try to live right and save money to take care of ourselves will be penalized in some way for this effort and sacrifice earlier in our lives. This seems to be the way things go now. Just completely screw up the govt will bail/help/something to fix the mess you yourself have created and then those that struggled and sacrificed will get no help since they are not in as much trouble. Maybe its time to let them got to complete ruin and let those that can stand stay standing and those that cannot must make choices to get themselves back up.

My two cents

jennyopenny
06-23-2009, 08:56 AM
It really is scary.
I am by no means perfect, but at at least I try. No c/c's, but not great at building up a large savings either.

My parents got a travel trailer/rv thing a few years back. After a down payment, they will make payments for another three years. (a total of five) It in no way stretches their budget. On the flip side, their friends got one-
a much nicer, bus type rv. They will pay around $1000 a month for the next 15 years!!! Thes people will be dead, or too old to drive, and still paying on this monster.
It just blows my mind. :scared1:

secretpantssam
06-23-2009, 09:12 AM
I can't imagine being in that kind of debt. $60k?? That's insane! But I do fear that some people are trying to change their habits now, but once they pay down their debt and get better jobs in the future, they'll go right back to spending.

I just really hope that everyone learns from this and we can start being more financially responsible as a country.

MrsPete
06-23-2009, 10:25 AM
I read financial news and listen to the talking heads on CNBC....and the deeper analysis on Bloomberg.....and I hear some talking about this "new normal" that we're going to see in our economy. Basically, a much slower rate of growth. Then there are those that simply see this is as a bad recession from which we'll emerge and go back to our happy spending and consuming ways. I am with you in the "new normal" camp. Well, actually, I think it's more of getting back to the "old normal".

For the last 20-25 years we've been in a bubble of excess spending-consuming. It's easy to see things that triggered the change: Much of it started in the 70s when large numbers of women joined the workforce (and families had greater resources at their fingertips), and it was fueled by the deregulation of banking, Clinton's rulings that essentially made it impossible for banks not to loan money, and credit cards became easy and accessible to everyone -- even people who couldn't pay. Technology provided us with an ever-increasing array of products that we "needed", and advertisers fanned the flames by convincing many people that they "deserve" this or that item. The nail in the coffin was the general public's acceptance that "everybody has debt" and the loss of the idea that one should work towards being debt-free.

Our experiences over the last 20-25 years have not been normal. As a country, we have been leading a lifestyle that cannot continue. We cannot borrow, borrow, borrow and expect it not to catch up to us. We as a nation -- and specifically the people like the ones you mentioned in your post -- are going to have to adopt frugality again. I do not think we're going to be able to return to the bubble in which we've been living; our wallets coudln't support it then, and as a nation our credit can no longer stretch that far.

So the "new normal" is really more of a matter of getting back to old-fashioned values. We have to accept that our toddlers might not wear leather jackets. We might have to cook at home occasionally. We might have to accept that cruising the Caribbean is a splurge rather than an every-year vacation. We might not be able to trade in our car every two years.

We're going to have to live within our means -- that's the new normal. Just like Americans did for generations before us.

extremesoccermom
06-23-2009, 11:06 AM
I just can't imagine. My parents were and are savers they paid for things with cash. I am the same way. I may buy a big purchase with free financing (like my car- 10 years ago) but I make sure I can pay if off before the end date.
However, I see this distructive pattern in both of my brothers and to a smaller degree my sister. I just don't get it. One even filed for bankrupcy and had done it again. He now has a failing business and is getting married to a very nice woman with 2 daughters and no job.
They all owe my parents for items they have bought and no longer have (cars, homes..) I can't believe my parents keep bailing them out! My parents are in their 70's and the kids are in their 40's. Get real!!

My son 19 in college wants to move out. He has no job and I refuse to cosign anything. He shows no inititive and I refuse to pay for anything other than food and shelter. WE are very lucky that he is able to go to school for free (I have worked for the university for 19 years). All we pay for are lab fees, books and parking. He was whinning to me yesterday about not having any money. I listened and I will help him make a budget but the money well is empty as of high school graduation. He has known this since he started high school and I do not feel one bit sorry for him. (Thank goodness he doesn't have a credit card).

punkin
06-23-2009, 11:08 AM
I am not sure there is a "new normal." Those of us who hang out on the budget boards never bought into the old normal, but the majority of the people out there are still spending like there's no tomorrow. In my area, some stores and restaurants are going out of business while others are still filled to the rafters. I figure the people who lost income are going to tighten their belts, but the vast majority who still have income coming in will continue to party.

luvmy3
06-23-2009, 11:15 AM
I am not sure there is a "new normal." Those of us who hang out on the budget boards never bought into the old normal, but the majority of the people out there are still spending like there's no tomorrow. In my area, some stores and restaurants are going out of business while others are still filled to the rafters. I figure the people who lost income are going to tighten their belts, but the vast majority who still have income coming in will continue to party.

I hope so :thumbsup2

MrsJD
06-23-2009, 11:29 AM
My Dh and I have not yet felt too much of the economic stress. We own his business and I work for a small business...either of which could go sour at any given time. I feel very lucky to be in the position we are in when I see all the doom and gloom on the TV. But with that being said, when I look around at my friends and family, none of them have lost thier jobs or suffered terribly. So it makes me wonder if it's really as bad as everyones makes it out to be.

As for the "new normal" I agree with the posters that said it is more just going back to traditional values and ideas. We've never bought anything we can't afford. Sure I have a mortgage on my house and a boat payment, but both are within reason. When I see people buying houses with $1400 a month payments, and they only have an income of $40,000- I have to wonder what the heck they are thinking. The only people that can be blamed for this situation in the American public in general. Most of us are in debt. And I fear that those of us that have been responsible for our whole lives are going to be the ones that pay for the mistakes that were made by others. On one hand I feel confidant b/c my assets far out way my debt, but on the other I fear that the social crisis will drag me down.

So, I try to ignore it all and concentrate on my personal finances and live my life the best I can.

I think I have no point here, but wanted to add my two cents!

kelleigh1
06-23-2009, 11:41 AM
I have been in debt for far longer than I'd like to think about, but I am at the point now where I can see the light at the end of the tunnel. And that feels great!

I am angry at myself for getting to this point and I refuse to let it happen again. I have 2 sisters. The older had some financial issues in the past, including a bankruptcy, but she worked out of it and her family is in a good place financially. She doesn't have to worry every time she goes to the grocery about what she can afford. She still uses coupons and shops smart, but if she sees something she really craves, she knows she can afford to buy it.

My younger sister is the opposite end of the spectrum. They are in terrible debt and can barely live paycheck to paycheck. In fact, they play the game of which bills get paid each month - and yet they don't seem to know how to stop the unnecessary spending. They get lazy and don't feel like cooking dinner, so they order out. She just doesn't get it.

So I see how both sides live and I know how I live, and I refuse, absolutely refuse to fall to the bottom where my younger sister is. And I've promised myself that when I get my debt paid off, I will not fall into that trap again. The credit card will be for emergencies only (car repairs, etc.) and everything else will be paid with cash. I will plan vacations on what we have or can put away between the time we plan and the time we leave. (We did that for our last Disney trip and it felt amazing!)

I'm glad that I started making changes long before the current financial crisis. I just wish that I hadn't allowed myself to get into this trouble in the first place. But I can proudly say that I have never missed a payment, been late, or had to borrow money from someone else to pay a bill.

EthansMom
06-23-2009, 11:55 AM
At least half the people I personally know who are in their late 30s and early 40s (my peers) have been living beyond their means (funded with debt) and have given little to no thought to funding their retirement or saving for their kids' college. It's not that these folks don't make good money because the ones I know are largely making good incomes and could be living well enough. But they feel entitled to have everything that the Jones' AND the Smith's have... and aren't willing to delay their gratification one minute.

I can easily forsee us having a society in about 20-30 years where we have a large population of folks who are "have-nots" whose children can't afford college, who aren't able to retire, and who have very little equity due to many bad financial decisions in their 20s, 30s or 40s and a smaller population of "haves" who have lived within their means and saved diligently and who will be taxed at dramatically higher rates than currently in order to help bailout our less prudent citizens.

gilby
06-23-2009, 12:04 PM
We need to teach our kids from the time they are small, that they don't need everything that every other kid has. This is part of the reason why people are so far in debt, the neighbors bought a new vehicle, we need one, they are building a 400,000 dollar house, we will build a 500,000 and the list goes on. People can only blame themselves not anyone else, there is a point in your life that you just have to say NO. We live in a 114,000 dollar house and you know what, it does the purpose, It is fixed up and does the purpose of a house that is 300,000 and guess what we can still enjoy life, pay groceries with cash, buy furniture with cash.
AND WE ARE HAPPY AND WE CAN SLEEP AT NIGHT NOT WONDERING WHERE THE NEXT DOLLAR IS COMING.

thebeesknees
06-23-2009, 12:16 PM
We need to teach our kids from the time they are small, that they don't need everything that every other kid has.

I agree. My parents taught us this when we were little and I am so grateful to them for it. If we wanted a toy, movie, etc., we were told, "It's your money, honey." My mom cooked at home every night so we hardly ever ate out, we used lots of coupons, drove older cars, and hardly ever felt like we were missing out on stuff. Now that I have my own family, I'm glad I have my parents' example of living within a budget. Even with lean times, my DH and I have been able to meet our obligations because we were trained to live within our means since we were small. I hope I can teach my children the same.

disykat
06-23-2009, 12:16 PM
I am with you in the "new normal" camp. Well, actually, I think it's more of getting back to the "old normal".



Exactly! I'm old enough that I just shake my head at what people consider normal.
When I was a college student, things like vacations, new furniture, eating out, etc. just weren't things that were even in my peers vocabulary.
When I was in my 20's, everyone I knew had roommates and still had bricks and boards bookshelves. The switchover to an "adult" lifestyle was gradual. In order to get a credit card, I had to start with a store credit card (I applied for several before getting one), then get a gas credit card, and finally, after establishing a trail of credit - I was able to get a VISA card.
When I bought my first house (at age 30) everyone I knew was buying fixer upper "starter homes."
Although there were certainly technological advances etc., my experiences were somewhat similar - in terms of my expectations for living style - to those my parents experienced decades before.

THAT used to be normal!

kelleigh1
06-23-2009, 01:16 PM
We need to teach our kids from the time they are small, that they don't need everything that every other kid has.

:thumbsup2

My parents taught us how to earn the money to get the things that really mattered to us. We didn't have the biggest and the best. We had what we needed. As teens, designer jeans and name brand sneakers were the big things. If we wanted Calvin Kleins or Nike, the deal was that my parents would pay up to what they would have spent on the KMart brands and we had to come up with the rest. It really taught us how to save and how to work for what we wanted.

It is very important to teach kids these lessons now. For everyone who wants to give their kids everything, they aren't doing them any favors for the future.

m&m's mom
06-23-2009, 01:39 PM
I just feel so frustrated. It was sooo not easy doing the right thing.
We bought a much cheaper 1st house than our friends and our 2nd is cheaper than others.
Now we owe way less on our house than our friends and neighbors. We bought a $225,000 house and put down $80,000. I know a lot of people that would have put nothing down and bought a $305,000 house.
There is a couple one house down that the wife has always stayed home and they are HUGELY in debt w/ CC. Now their ARM is readjusting and they do not have the rating and income to re-finance. They will probably file for bankruptcy and keep the same house, cars etc they have now except they will "have a clean slate".
Make homebuyers put at least 10%. That way you have a vested interest in the house and you have a little more wiggle room if the value decreases.

Ava
06-23-2009, 02:35 PM
It is very important to teach kids these lessons now. For everyone who wants to give their kids everything, they aren't doing them any favors for the future.
:thumbsup2

My parents didn't teach me a lot about budgeting (so I'm trying to learn now), but they did teach me that I can't have everything I want. I learned to make choices, and to save my own money to buy things I wanted. I also learned to value and take care of the things I had, because I knew if something broke or was lost I wouldn't just get a new one.

I hope I can teach my children the same values, because I know more than one adult who needs the lesson. Let's just say that a person in her late 20s with a full-time job should be paying all of her own bills, not charging designer bags and the new iPhone on daddy's credit card. :sad2:

I actually take pride in supporting myself and my family. Sometimes I wish I was a trust fund kid, or had parents who could afford to support me, but then I realize what a different person I would be if that were the case.

crisi
06-23-2009, 02:37 PM
Hopefully, this means that credit will tighten, that credit card companies may finally be forced to take some responsibility for the credit they extended, and it will no longer be possible for a dog to get a credit card. Short term, that means a lot of pain as the economy "rightsizes" itself - but long term that is a much healthier situation.

PrincessDadx2
06-23-2009, 02:59 PM
Well, the good news is if these two people owe $152,000 in credit card debt and the US average is ~ $8,000 then there are 17 other families with $0 CC debt :goodvibes

Most are probably on this board :lmao:

I feel sorry for people born after 1980. I lived through the oil shocks, Carter inflation, and Reagan 20% interest rates and learned that the good times won't go on forever. Save in the good times so you can make it through the bad times.

I am amazed by the people who made $500k per year selling real estate or making mortgages and spent all of it plus extra going into debt. Now they are bankrupt, stupid :confused3

wall*e2008
06-23-2009, 03:13 PM
Hopefully, this means that credit will tighten, that credit card companies may finally be forced to take some responsibility for the credit they extended, and it will no longer be possible for a dog to get a credit card. Short term, that means a lot of pain as the economy "rightsizes" itself - but long term that is a much healthier situation.

They are. Look at all the complaints here on the BB where the CC was near it's limit, the person makes a huge payment so they have "room" on the card for the next purchase and then the CC company lowers the limit the day after the payment is made.

The person is mad they are not "out" the money and don't ahve the item they wanted to buy. In reality they have less debt, but they don't see it that way.

Ava
06-23-2009, 03:15 PM
I feel sorry for people born after 1980. I lived through the oil shocks, Carter inflation, and Reagan 20% interest rates and learned that the good times won't go on forever. Save in the good times so you can make it through the bad times.
Good point. I was born in 1980 (no need to feel sorry for me, haha) and don't really remember any bad times. It does kind of stink for us 1980s babies, being in our 20s and trying to get established/start families in this economy. I'm just doing the best I can with budgeting and saving and not over-spending, and hopefully things will get better.

disykat
06-23-2009, 03:22 PM
Good point. I was born in 1980 (no need to feel sorry for me, haha) and don't really remember any bad times. It does kind of stink for us 1980s babies, being in our 20s and trying to get established/start families in this economy. I'm just doing the best I can with budgeting and saving and not over-spending, and hopefully things will get better.

It wasn't exactly a picnic doing it during during the early 80's either - or during the 30's, 40's, 50's...

That's the point. Young people have only had the audacity to expect to immediately achieve the same standard of living of their well established parents in the last two decades. It is NORMAL to have to budget and not overspend.

sk!mom
06-23-2009, 03:44 PM
Good point. I was born in 1980 (no need to feel sorry for me, haha) and don't really remember any bad times. It does kind of stink for us 1980s babies, being in our 20s and trying to get established/start families in this economy. I'm just doing the best I can with budgeting and saving and not over-spending, and hopefully things will get better.


If that's the way that you look at it, then it stunk for this 1960's baby to be working our ways through college and and trying to get life started in the early 80's.

My point is... it's never easy to acquire the things most of us need/want while not going into overwhelming debt. We, as a society, have developed a sense of entitlement and no longer feel that it's "fair" if our finances require us to delay gratification.

Why shouldn't we have a fancy house, vacations every year, whatever...other people do?

It's going to be a painful readjustment but hopefully we, as a whole, will learn something.

gina2000
06-23-2009, 03:55 PM
I'm much more concerned about jobs than bad credit. As more and more middle class jobs go away, a significant amount of the middle class sinks into the lower class. Couple this with rising medical costs, corporate cutabacks in medical contributions, and nonexistant pension benefits, and you have a recipe for a generation whose standard of living is significantly lower than their parents'.

Ava
06-23-2009, 04:15 PM
It wasn't exactly a picnic doing it during during the early 80's either - or during the 30's, 40's, 50's...

That's the point. Young people have only had the audacity to expect to immediately achieve the same standard of living of their well established parents in the last two decades. It is NORMAL to have to budget and not overspend.
I don't have the audacity to expect anything. I also realize that it's normal to have to budget and not overspend. That said, I was never taught about budgeting, or really about money in general, as a child. I never really experienced "lean times," just as a coincidence of when I was born. I wasn't intending to demean the difficulties of generations before me, just pointing out that it stinks for my generation too I suppose.

dvcgirl
06-23-2009, 04:44 PM
I'm much more concerned about jobs than bad credit. As more and more middle class jobs go away, a significant amount of the middle class sinks into the lower class. Couple this with rising medical costs, corporate cutabacks in medical contributions, and nonexistant pension benefits, and you have a recipe for a generation whose standard of living is significantly lower than their parents'.

Good point, and it all ties together really. A lot of middle class jobs are disappearing or seeing the income level drop fairly significantly. And the responsibility for benefits and pensions has been shifting at a rapid pace from the employer to the employee. That's all fine and good, but it implies that Americans need to be saving and investing at a pretty significant rate....and well, they're not. In fact many are in debt and struggling to get out.

That's what really hits me when I see someone like the people in the articles I mentioned.....in their 40s-50s-60s with tens of thousands in CC debt. These people are clearly not savers. It will take them years to pay down the debt and all I can think of that those are years where no saving can take place. And we've all seen how much we can depend on pensions. Does anyone really believe that *any* pension fund is safe these days? Does anyone think that they'll be in better shape down the road? I think not.

We have a slew of people in their 50s and 60s who have saved next to nothing and have no pension. They're going to have to really start saving, and I mean *saving*.....40% plus of their income if they'd like to ever stop working. It's just not going to happen.

Ultimately it affects us all. We're not going to see anything close to the returns we've seen in the markets in the last twenty years. The Great Deleveraging is going to be taking place for quite some time.

DISdreamin'
06-23-2009, 05:50 PM
I agree with SO much of what you have all been posting!

Personally, DH and I aren't in such a great spot savings/retirement wise given our ages. Neither of us have had full-time real-paying jobs until within the past 6 years, and we're both in our early 40's! Up until then we did consulting work, fellowships, PT stuff and/or were in school. Sadly, this put us in our late 30's before we really got on board with savings and retirement. We have lots to do before we will be set for an eventual retirement!

Honestly, I wouldn't change how we have done things, but I do often wish we had seen fit to put away at least a little into retirement MUCH earlier in life. Hopefully we'll be okay long-term, but we have a lot of catch-up to do before that will be the case.

Ashley Kees
06-23-2009, 06:14 PM
It wasn't exactly a picnic doing it during during the early 80's either - or during the 30's, 40's, 50's...

That's the point. Young people have only had the audacity to expect to immediately achieve the same standard of living of their well established parents in the last two decades. It is NORMAL to have to budget and not overspend.


Whoa whoa whoa!!! That's a little rough there! I was born in 1980, and I don't have the "audacity to expect" anything! What I DOOOO have is a MIL who is ashamed of our living in an apartment and my kids sharing a room, who rails us for not buying a house even though "we could probably afford it if we just tried!", who gives me absolute hell about only having one car, saying that it "makes her look bad" and who thinks camping is "low class and tacky".
I also have a MOTHER who has like $50k in cc debt from years of "trying to give her kids everything" and $40k in car loans for her dream car that she decided she had earned even if she couldn't really afford it.
I also have a good number of friends my own age who have chosen to NOT buy a house when they aren't sure of their financial situations, who share a car, who cook instead of eat out, and who go camping instead of to Disney every year.

I was also blessed enough to have GRANDPARENTS who taught me how to cook, clean, sew, bargain shop, and generally to NOT live like my parents.

It's not the 20 somethings that have been living beyond our means over the last few years. Most of the last decade for us has been in college dorms, our parents houses, and studio apartments eating ramen and saving our change out of our pants in a jar next to the washing machine.

It is entirely unfair to judge all of us by a few crazies. I assure you, they make up a SMALL percentage of our age-group. Only the crazies make it on the news while the rest of us eat grilled cheese sandwiches in front of our non-plasma screen TVs.

Ashley Kees
06-23-2009, 06:28 PM
I don't have the audacity to expect anything. I also realize that it's normal to have to budget and not overspend. That said, I was never taught about budgeting, or really about money in general, as a child. I never really experienced "lean times," just as a coincidence of when I was born. I wasn't intending to demean the difficulties of generations before me, just pointing out that it stinks for my generation too I suppose.

Hear hear! My DH was never taught ANYTHING about money. Nada. Zip. He proposed when were were 18, and his parents were mad as heck about it. MIL got in my face and said if he was going to throw his life on me, they were cutting him off. No allowance, no paying for college, no paying for car or insurance, no paying for his first apartment to get his feet wet. We said fine and got married anyway. It didn't matter. That made them madder. Thankfully, my grandparents TRAINED me to budget so we were fine. We're paying for our own college, our own kids, etc., and are 1/2 way to paying cash for our first house, which we will fix up ourselves. I taught DH how to budget, and now he's tighter with money than I am. Meanwhile his parents are worried they are going to loose the house they "upgraded" to in '07 so they could keep up with the Jonses.

omghidanielle
06-23-2009, 06:59 PM
My parents didn't teach me much about saving/budgeting, what is sad is that I learned about saving/budgeting because of my Mom's siblings constantly crying to her for a handout! It hurts me so much to see my Mom constantly helping them out when, in theory, they live a much better life than she does. It's pretty sad when a "normal" suburban family with a nice single home, with SUVs and all the hookups have to constantly rely on their older sister, who lives in a tiny rowhome in a dumpy neighborhood in the city, (that they consider to be 'the ghetto') who has a mentally incapacitated husband, to help them out whenever they accidentally overspent, by trying so hard to keep up with the rest of their neighborhood, this year. :mad:

MermaidsMom
06-23-2009, 07:00 PM
Folks need to be careful not to trip over the long arms they will get by patting themselves on the backs for being so smart! Gratitude is wonderful but gloating is just unattractive.

dvcgirl
06-23-2009, 07:54 PM
Folks need to be careful not to trip over the long arms they will get by patting themselves on the backs for being so smart! Gratitude is wonderful but gloating is just unattractive.

Oh, I don't think anyone here is gloating. I think it's okay to say that one has avoiding the debt trap, or pulled themselves out never to return to that black hole. I only post these types of things to initiate some intelligent discussion about where we're heading in this country. I for one get zero satisfaction that the folks I read about are tens of thousands of dollars in CC debt.

I really and truly feel for them. And I feel like for as much as they're stressed...well, that they still don't seem to comprehend the depth of their dilemma. We all want to be optimists and say that "it's never to late to start saving" or "it's never too late to change your financial path". Sadly, for some people, it's simply going to be too little too late.

And on a larger scale....how this massive debt burden by Americans in general will impact us all. For selfish reasons, that's why this topic interests me so much. I really and truly believe that we all need to live a balanced lifestyle.....it's not healthy to save every penny we earn. What fun would that be? However, because of the events unfolding right in front of our eyes, whatever you're saving....plan on saving more....because we're just not going to see the the kind of returns we have in the past.

I'm no genius, not by a long shot, but on this front I feel like I can see the future...and it's not a pleasant one for many. And even for people like me and my DH...who have been fortunate and are mega-savers....we'll all be impacted by the deflation of this massive debt bubble.

cats mom
06-23-2009, 08:16 PM
I'm much more concerned about jobs than bad credit. As more and more middle class jobs go away, a significant amount of the middle class sinks into the lower class. Couple this with rising medical costs, corporate cutabacks in medical contributions, and nonexistant pension benefits, and you have a recipe for a generation whose standard of living is significantly lower than their parents'.

Yep, the monthly jobs report for my county was just released a few days ago. I've seen news reports/articles trying to spin the info into a positive thing because there was a month over month gain of 300 jobs.
Umm, year over year we were down 71,100 jobs! :confused3

Plus I'm thinking the gains in leisure and hospitality (staffing for summer tourist season) and administrative and support (includes temporary services) are not going to come close to off setting the losses in professional, scientific, technical, manufacturing, and government sectors.
:rolleyes1



Hopefully, this means that credit will tighten, that credit card companies may finally be forced to take some responsibility for the credit they extended, and it will no longer be possible for a dog to get a credit card. Short term, that means a lot of pain as the economy "rightsizes" itself - but long term that is a much healthier situation.

I'm watching this closely. I've had an ongoing discussion with a mortgage broker acquaintance for a couple of years now. We're constantly at odds because he's all about innovative products to get people into housing (apparently no matter what they can or can't legitimately afford)
I'm all about financial responsibility. ;)

In 2007 he was telling me about all the no doc, 100% financing deals he was finding for people. Now he's telling me about government programs that allow basically the same thing. ie: he's still getting folks into houses with no skin in the game.
:eek:

MrsPete
06-23-2009, 08:20 PM
I don't have the audacity to expect anything. I also realize that it's normal to have to budget and not overspend. Of course there are individuals in every generation who are better (or worse) off than their peers, but LARGE NUMBERS of the people born in "your time" don't have a clue and DO have an attitude of entitlement.We have a slew of people in their 50s and 60s who have saved next to nothing and have no pension. They're going to have to really start saving, and I mean *saving*.....40% plus of their income if they'd like to ever stop working. It's just not going to happen.

Ultimately it affects us all. We're not going to see anything close to the returns we've seen in the markets in the last twenty years. The Great Deleveraging is going to be taking place for quite some time.Throw in the unavoidable demise of Social Security, and you're exactly right that it's going to affect us all. My parents didn't teach me much about saving/budgeting, what is sad is that I learned about saving/budgeting because of my Mom's siblings constantly crying to her for a handout! It hurts me so much to see my Mom constantly helping them out when, in theory, they live a much better life than she does. I learned LOTS from my parents about budgeting . . . but it was sort of backwards. As a teen I realized that though they're good people, they didn't have a clue when it comes to money, and I didn't want to follow in their footsteps. So I read all I could and educated myself.Oh, I don't think anyone here is gloating. I think it's okay to say that one has avoiding the debt trap, or pulled themselves out never to return to that black hole. I only post these types of things to initiate some intelligent discussion about where we're heading in this country. I for one get zero satisfaction that the folks I read about are tens of thousands of dollars in CC debt. Exactly. This is the BUDGET board. It's entirely appropriate in this setting to talk about what we've done right (and wrong) because it helps other people make their own decisions.

Colleen27
06-23-2009, 09:44 PM
I'm much more concerned about jobs than bad credit. As more and more middle class jobs go away, a significant amount of the middle class sinks into the lower class. Couple this with rising medical costs, corporate cutabacks in medical contributions, and nonexistant pension benefits, and you have a recipe for a generation whose standard of living is significantly lower than their parents'.

That's my concern too. I really don't have a whole lot of sympathy for folks who spent themselves into the poorhouse, but the reality is that as long as they are employed they have a way out. It might not be a pleasant road, but changing habits, renegotiating terms, and paying off that debt will put them on a better road. The people who are seeing their livelihoods disappear have a much harder road ahead, and my fear is that the "new normal" will be even greater concentration of wealth in the hands of the "haves" and a permanent underclass of "have nots" who struggle perpetually in the low-wage service jobs that are replacing blue-collar professions.

Princess April
06-23-2009, 10:27 PM
How 'bout us "kids" that were born in the 70's???? (to be more specific the late 70's) :lmao:(lol) But seriously, I was lucky enough to be raised by my grandparents who were a product of the great depression. Sure we had $$$$ and I had all the trappings of it.... private school, my own car at 16, a horse...etc, the list can go on and on. But, ya know what??? My grandmother NEVER missed the opportunity to use coupons, save her "egg" money and they NEVER let me forget that these "things" were just that... THINGS, and that I was blessed to have them and they had to work very hard to come to the point that they were at.
When DH and I got married (I was 20) I naturally assumed that we would be moving into their large home.... HA! :rotfl2: Guess again! In the words of my grandpa, "If your old enough to get married your old enough to live on your own." That was the hardest and best advise I could have been given. They made it very clear that they loved me :love: and that they were always there for me, but it was time for me to be an adult... and I did. Was it always pretty? Nope. (I found out that they sell panties at Walmart and they come in plastic packages... they never came that way at Victoria's Secret :lmao:) They offered (and we accepted) to help us set up a budget and that is how we got to where we are today. A lot of work, sweat and tears, but we are succeeding now. "Gamer" has long since passed away but to this day we still take grandpa to Disney with us every year (our treat) as a thank you for teaching me (us) so much.
I think most of it comes from what you are taught as a child, not what you have. Now, my DD has most anything a child could want, but we stress the importance of saving (and she's only 5). Hopefully she will learn, as I did, and not only have nice things, but appreciate where they come from and know what it takes to get there.

Gretchen3ajoshmom
06-24-2009, 07:16 AM
"The New Normal" has me and my DH :rotfl2: We have been struggling and budgeting for our 3 years together- while every one around us is spending to the extreme - vacations, new wardrobes, dinners out etc.... The economy did not change our behavior- we were already living frugally! The big shocker for us; however, is NOT getting dirty looks at the check out with my stack of coupons and how many good sale items are GONE before we get to the Acme.... Another shocker- how over picked my favorite clothing sale racks and thrift stores are..... luckly these new "sober" people don't have all of our skills yet....;)

Inigo
06-24-2009, 09:04 AM
The US Census Bureau predicts that the US population age 65 and over will grow from 34.6 million in 1999 to 82.0 million in 2050, a 137 percent increase. The projections also show an especially rapid surge in the elderly population as the surviving "baby boomers" pass age 65; in the year 2011, baby boomers (those born between 1946 and 1964) will begin turning 65.

To me, that's really scary, as there are so many people who are not saving for retirement, and who think Social Security will provide enough for their needs. Even if they don't feel that SS will provide all the $$ they need, there is still going to be a big demand on the SS system.

Since their are few jobs, and fewer people paying into SS, where is the $$ going to come from?

The crisis is going to go on for a long time. Right now, DH and I have plenty in annuities and a paid for farm, but is that going to be enough? I'm worried about the future for this whole country.

englishteacha
06-24-2009, 09:38 AM
So many of my younger friends in college are racking up huge college debt. I don't know how they are going to pay for $120K once they are done. I'm not against private colleges, but when you have to take out $40K in loans just for one year of school, perhaps it's time to consider state colleges.

We're in our late 20s, college is paid off, our home is tiny but we have a tiny mortgage, and our decor is "Yard Sale and Hand-me-down Chic." We're able to take time off to do volunteer work, afford budget vacations, and are able to eat out and treat friends and family occasionally. So many people my age are in massive debt...some left from college, some from buying too much house, car, or stuff.

MrsJD
06-24-2009, 10:00 AM
I have found this thread very interesting. I am constantly dealing with money issues...at work, with our business, personal finances and those of our employees. We have been very FORTUNATE and never had to struggle. But we have never lived extravagantly either. I have never had one penny of credit card debt, we pay our cards off every month. In our 20's DH had a great job and we saved tons of money every year. His job was dangerous and we lived on the road for 6 years. When we decided to settle down, we had to take lower paying jobs. After a down payment on a house, improvements, an adoption and starting a business, our savings is significantly smaller, but it still exists. In 15 yeas of marriage we have taken only 3-4 short vacations. I am proud of us and we worked hard to be in the position we are in now.

Sorry if I am gloating, I think I deserve it!

With that said I am planning to go all out on not one, but two trips to Orlando in the next year!!! We can afford to do it and yes, we DESERVE it.

Ava
06-24-2009, 10:08 AM
Of course there are individuals in every generation who are better (or worse) off than their peers, but LARGE NUMBERS of the people born in "your time" don't have a clue and DO have an attitude of entitlement.
Oh I know that. I have more than one friend around my age who's parents still support them, because their own salary cannot possibly sustain the lifestyle they want/expect.

I learned LOTS from my parents about budgeting . . . but it was sort of backwards. As a teen I realized that though they're good people, they didn't have a clue when it comes to money, and I didn't want to follow in their footsteps. So I read all I could and educated myself.
Same here. My parents were not budgeters or savers, and are just now getting their act together financially in their 50s. My father works for the government, so he should have a pension when he retires, but I've gotten the impression that they don't have much more than that saved for retirement. I'd like to do things differently with my own finances, be able to have a comfortable retirement and not have to work until I'm 70.

Gretchen3ajoshmom
06-24-2009, 10:11 AM
Sorry if I am gloating, I think I deserve it!

With that said I am planning to go all out on not one, but two trips to Orlando in the next year!!! We can afford to do it and yes, we DESERVE it


Gloat away!!! You are doing great! I will be their in 2012....at least one trip!!

Enjoy!!!

cats mom
06-24-2009, 04:48 PM
And on a larger scale....how this massive debt burden by Americans in general will impact us all. For selfish reasons, that's why this topic interests me so much. I really and truly believe that we all need to live a balanced lifestyle.....it's not healthy to save every penny we earn. What fun would that be? However, because of the events unfolding right in front of our eyes, whatever you're saving....plan on saving more....because we're just not going to see the the kind of returns we have in the past.

I'm no genius, not by a long shot, but on this front I feel like I can see the future...and it's not a pleasant one for many. And even for people like me and my DH...who have been fortunate and are mega-savers....we'll all be impacted by the deflation of this massive debt bubble.


And I'm afraid our national economy is so dependant on debt, that any type of return to the old rules (or the new normal if you will) is going to cause so much pain in the system, that said rules may be all too quickly abandoned.

Thus my comment regarding what my mortgage broker acquaintance is telling me he is seeing in his line of work vs. what the media is reporting. ie: government funded programs allowing people to buy houses they can't really afford, and also helping put a floor under prices that need to decline, if anyone is going to buy using conventional financing rules that is.

Unfortunately I think the whole financial system is still so awash in ponzi schemes and cheap money that those who are savers; but are interested in safe money investments, will watch their dollars die from inflation.

What to do, what to do? :confused3

melancholywings
06-24-2009, 06:45 PM
As I child of the 80's I think the education system is also partly to blame.
High School doesn't really prepare us to be able to function as an adult - to much of it is focused on prepping kids for collage. Home Ec and Shop should be considered as important as English Lit. But socially they are ranked up there with PE - required but not important. Some people have never been exposed to home and life management. And then these same kids go off to college where they are practically handed a free credit card - on my campus every year they handed out little boxes with a swag item and a credit card. They'd even give you extra swag if you applied on the spot.

Colleen27
06-24-2009, 06:58 PM
As I child of the 80's I think the education system is also partly to blame.
High School doesn't really prepare us to be able to function as an adult - to much of it is focused on prepping kids for collage. Home Ec and Shop should be considered as important as English Lit. But socially they are ranked up there with PE - required but not important. Some people have never been exposed to home and life management. And then these same kids go off to college where they are practically handed a free credit card - on my campus every year they handed out little boxes with a swag item and a credit card. They'd even give you extra swag if you applied on the spot.

I agree! Here, shop and home ec don't even rank as high as PE - PE is required, the others are not, and in fact kids who are involved in a dedicated elective like band, orchestra, or chorus don't even have the opportunity to take home ec or shop at the schools I attended. The district we live in now doesn't even offer them, having instead consolidated both into an optional, 1/2 year "life skills" class that attempts to cover everything from planning a nutritious menu to sewing on a button to changing a tire to balancing a checkbook. My impression from the kids I know is that only slackers who aren't interested in AP, arts/music, or tech electives take it.

It isn't just the school system's fault. Around here, parents have been the driving force behind that change - they don't want their kids "wasting time" on basic skills that every person really should know when they could be doing something else that would give a leg up in competitive college admissions. Our society in general has come to a point where work is valued by what it pays, and the unpaid work that keeps a household running smoothly and on budget is often degraded and devalued.

Princess_Pris85
06-24-2009, 07:10 PM
I completely agree with the above two posts. As a recent college graduate, I'm positive that while some of my peers are aware of looming debt and money management, the majority are just not fully aware of what debt really means. We never took home ec or any "practical" home skills - something as practical as budgeting early on, would've probably helped a ton. I can't fault the 18 year old who thinks they've got a great deal going on with Stafford loans when their parents (along with the rest of society) are the ones pushing them to go to the best school they can get in to, not necessarily the cheapest.

wall*e2008
06-24-2009, 07:26 PM
I agree! Here, shop and home ec don't even rank as high as PE - PE is required, the others are not, and in fact kids who are involved in a dedicated elective like band, orchestra, or chorus don't even have the opportunity to take home ec or shop at the schools I attended. The district we live in now doesn't even offer them, having instead consolidated both into an optional, 1/2 year "life skills" class that attempts to cover everything from planning a nutritious menu to sewing on a button to changing a tire to balancing a checkbook. My impression from the kids I know is that only slackers who aren't interested in AP, arts/music, or tech electives take it.

It isn't just the school system's fault. Around here, parents have been the driving force behind that change - they don't want their kids "wasting time" on basic skills that every person really should know when they could be doing something else that would give a leg up in competitive college admissions. Our society in general has come to a point where work is valued by what it pays, and the unpaid work that keeps a household running smoothly and on budget is often degraded and devalued.

Do you really think home ec taught you anything in the 70s? All we did was make chocolate chip cookies each class.

Colleen27
06-24-2009, 07:44 PM
Do you really think home ec taught you anything in the 70s? All we did was make chocolate chip cookies each class.

That's an argument for better planning, IMO, not for doing away with the class. I never took home ec because it didn't fit into my schedule, but from friends who did I understand that it covered balancing a checkbook, budgeting, savings/credit & compound interest, energy use/conservation, basic nutrition & cooking, and hand sewing/mending. In a perfect world it would be parents passing on that knowledge, but just as with sex ed, we're seeing that many don't take the time to teach the lessons kids need to be prepared for young adulthood.

fkj2
06-24-2009, 09:11 PM
Had an interesting discussion with my physical therapist today. He presented a viewpoint that I don't see mentioned often.

As we know, the US GDP is about 70% driven by consumer spending. Demographically, the US has an aging population. While there're still things we'd all like to buy, our biggest shopping days (as boomers) are probably behind us. Not to mention the associated loss (perceived vs. real) that homewners and investors have taken in the markets. As to the younger--and smaller--generations, they've not the financial wherewithall to assume the role as the driver of consumption.

He questioned how the economy could possibly return to its "glory days" when boomers won't buy and younger generations can't. He has a friend who studies behavioral patterns. According to him--and it's all just opinion--he believes this rally the market has currently experienced will be short-lived.

As others here have already mentioned, I don't think the powers that be have grasped the concept that consuming behavior has changed so dramatically, and still think that things will go back to the way they were.

Took
06-24-2009, 11:04 PM
I agree! Here, shop and home ec don't even rank as high as PE - PE is required, the others are not, and in fact kids who are involved in a dedicated elective like band, orchestra, or chorus don't even have the opportunity to take home ec or shop at the schools I attended. The district we live in now doesn't even offer them, having instead consolidated both into an optional, 1/2 year "life skills" class that attempts to cover everything from planning a nutritious menu to sewing on a button to changing a tire to balancing a checkbook. My impression from the kids I know is that only slackers who aren't interested in AP, arts/music, or tech electives take it.

It isn't just the school system's fault. Around here, parents have been the driving force behind that change - they don't want their kids "wasting time" on basic skills that every person really should know when they could be doing something else that would give a leg up in competitive college admissions. Our society in general has come to a point where work is valued by what it pays, and the unpaid work that keeps a household running smoothly and on budget is often degraded and devalued.

You know, hubby and I never took shop or home ec but we are budgeters and savers (w/ nothing but a fairly small home loan and no cc debt) and know a lot about taking care of our home. We learned from our parents. Thus, I don't think home ec or shop should be mandatory. Perhaps, instead, high schoolers should have to take a life-skills placement test (much like a math-placement test) to see IF they need home ec and/or shop. If the skills are not there, then they need to take these courses.

That said, I agree with most of the "gloaters" here on this board. We deserve pats on the back since most of us were giving up "things" while our spend-thrift friends and family had it all (and the debt to go with it). I didn't even have a house until I was 37! But, when hubby and I did buy, we put 25% down and took only a 15 year fixed-rate mortgage that we'll have paid off in 7 years.

I sincerely HOPE that more Americans are going to start living frugally and saving. there could be hope for us all yet.

BTW, did anyone see the comments from the Pope on greed? Timely message?

Took

dvcgirl
06-25-2009, 05:51 AM
Had an interesting discussion with my physical therapist today. He presented a viewpoint that I don't see mentioned often.

As we know, the US GDP is about 70% driven by consumer spending. Demographically, the US has an aging population. While there're still things we'd all like to buy, our biggest shopping days (as boomers) are probably behind us. Not to mention the associated loss (perceived vs. real) that homewners and investors have taken in the markets. As to the younger--and smaller--generations, they've not the financial wherewithall to assume the role as the driver of consumption.

He questioned how the economy could possibly return to its "glory days" when boomers won't buy and younger generations can't. He has a friend who studies behavioral patterns. According to him--and it's all just opinion--he believes this rally the market has currently experienced will be short-lived.

As others here have already mentioned, I don't think the powers that be have grasped the concept that consuming behavior has changed so dramatically, and still think that things will go back to the way they were.

Well, I agree with your physical therapist. The "theory" about how we get back to our "old ways" is to save and invest. And yes, that's wonderful....but how to we get back to 3-4% year over year GDP growth?

The one stat that always blows me away (and it's right from the FED) is how at the peak of the insanity....in 2005, Americans pulled 800 Billion dollars in equity out of their homes....and they spent it. That's nearly 6% of GDP right there. Plus, collectively, we were spending every nickel we made and were carrying a couple of TRillion in consumer debt.

Guess who was doing most of that spending? Baby Boomers. Now the BB are hurting....been burned not once but twice, and are going to have cut back, way back on spending. American business needs to figure out a plan that doesn't involve being the "middle man" between China and customers at Walmart.

wall*e2008
06-25-2009, 06:23 AM
That's an argument for better planning, IMO, not for doing away with the class. I never took home ec because it didn't fit into my schedule, but from friends who did I understand that it covered balancing a checkbook, budgeting, savings/credit & compound interest, energy use/conservation, basic nutrition & cooking, and hand sewing/mending. In a perfect world it would be parents passing on that knowledge, but just as with sex ed, we're seeing that many don't take the time to teach the lessons kids need to be prepared for young adulthood.

In our school it was manditory and every 7th grader took it. We had four full sized kitchens and we were to cook each class. The only thing an hour age you was time for cookies. So cookies we made. We then took them with us to our next class. The boys would be waiting for us each time to try to get a cookie.

"balancing a checkbook, budgeting, savings/credit & compound interest" should be part of basic math class.

Nutrition was covered in our health classes.

HomeEc was only about cooking.

wall*e2008
06-25-2009, 06:26 AM
Had an interesting discussion with my physical therapist today. He presented a viewpoint that I don't see mentioned often.

As we know, the US GDP is about 70% driven by consumer spending. Demographically, the US has an aging population. While there're still things we'd all like to buy, our biggest shopping days (as boomers) are probably behind us. Not to mention the associated loss (perceived vs. real) that homewners and investors have taken in the markets. As to the younger--and smaller--generations, they've not the financial wherewithall to assume the role as the driver of consumption.

He questioned how the economy could possibly return to its "glory days" when boomers won't buy and younger generations can't. He has a friend who studies behavioral patterns. According to him--and it's all just opinion--he believes this rally the market has currently experienced will be short-lived.

As others here have already mentioned, I don't think the powers that be have grasped the concept that consuming behavior has changed so dramatically, and still think that things will go back to the way they were.

You do realize that we are graduating the largest classes ever in the US.

In 2007 we had the most babies born EVER!

http://www.nytimes.com/2009/03/19/health/19birth.html?ref=us


We are in the new baby boom

http://******************/x-2370-Denver-Early-Childhood-Parenting-Examiner~y2009m3d18-The-new-US-baby-boom

dvcgirl
06-25-2009, 07:09 AM
You do realize that we are graduating the largest classes ever in the US.

In 2007 we had the most babies born EVER!

http://www.nytimes.com/2009/03/19/health/19birth.html?ref=us


We are in the new baby boom

http://******************/x-2370-Denver-Early-Childhood-Parenting-Examiner~y2009m3d18-The-new-US-baby-boom

Well, our new little baby boom aside, it won't skew the numbers much when it comes to our current glut of Baby Boomers hitting retirement age. They'll move through the system like a pig through a python......

Remember, in 1950 we had 16 workers for every American collecting Social Security. By 2008 it was just 3.3 workers per retiree. In twenty years, we're down to 2 workers per retiree. We need to be procreating a whole lot more if we're going to pay 65 year olds a government pension and replace their hips.

And still, SS is relatively easy to fix. Raise the age to 70 or so and drop the benefits....raise taxes a small amount, throw in a little means testing. We'll probably see all of the above by the time they get around to it (if they ever do).

It's the Medicare nightmare that cripples us if we don't cut that *way* back. This is the big problem.....and must be dealt with. Still both programs combined will cost 25% of our tax dollars in ten years if not dealt with.....by 2030 (half way through the BB retirement years), we're at 50%. So, half of our tax dollars will go to caring for the Boomers.

And so, it would be a pretty good idea to be saving as much as you can ;).

wall*e2008
06-25-2009, 07:19 AM
And so, it would be a pretty good idea to be saving as much as you can ;).

No need to worry about me.;)

I live for both today and tomorrow. Over saving is sacrificing today for tomorrow and tomorrow may never come.

Colleen27
06-25-2009, 07:20 AM
Well, our new little baby boom aside, it won't skew the numbers much when it comes to our current glut of Baby Boomers hitting retirement age. They'll move through the system like a pig through a python......

Remember, in 1950 we had 16 workers for every American collecting Social Security. By 2008 it was just 3.3 workers per retiree. In twenty years, we're down to 2 workers per retiree. We need to be procreating a whole lot more if we're going to pay 65 year olds a government pension and replace their hips.

And still, SS is relatively easy to fix. Raise the age to 70 or so and drop the benefits....raise taxes a small amount, throw in a little means testing. We'll probably see all of the above by the time they get around to it (if they ever do).

It's the Medicare nightmare that cripples us if we don't cut that *way* back. This is the big problem.....and must be dealt with. Still both programs combined will cost 25% of our tax dollars in ten years if not dealt with.....by 2030 (half way through the BB retirement years), we're at 50%. So, half of our tax dollars will go to caring for the Boomers.

And so, it would be a pretty good idea to be saving as much as you can ;).

I wonder how the current state of American health in general will effect those projections. Will we end up paying more as overweight/obese boomers hit the Medicare rolls as predicted, or will enough of them drop dead prematurely that it actually lessens the anticipated load? My parents and inlaws are at the older end of the baby boom generation (in their early 60s), and I cannot believe how many of their friends are dying or being diagnosed with terminal conditions already. It doesn't seem to me like they're old enough yet to be having heart attacks and fatal strokes and end-stage cancers.

MoniqueU
06-25-2009, 07:27 AM
I am one of the stupid people that was living beyond my means. The new normal has been quite a shocker to me.For us with kids headed to college and drained 401k due to job losses we are probablu in worse shape then some peple in that article.We are just one job loss away from the cards in our house falling to pieces. I would build up an emergency fund but there is NOTHING left over for that to happen. It seems we are operating on deficit spending andt that is without credit cards to fall back on.

MermaidsMom
06-25-2009, 07:27 AM
Well, our new little baby boom aside, it won't skew the numbers much when it comes to our current glut of Baby Boomers hitting retirement age. They'll move through the system like a pig through a python......

Remember, in 1950 we had 16 workers for every American collecting Social Security. By 2008 it was just 3.3 workers per retiree. In twenty years, we're down to 2 workers per retiree. We need to be procreating a whole lot more if we're going to pay 65 year olds a government pension and replace their hips.

And still, SS is relatively easy to fix. Raise the age to 70 or so and drop the benefits....raise taxes a small amount, throw in a little means testing. We'll probably see all of the above by the time they get around to it (if they ever do).

It's the Medicare nightmare that cripples us if we don't cut that *way* back. This is the big problem.....and must be dealt with. Still both programs combined will cost 25% of our tax dollars in ten years if not dealt with.....by 2030 (half way through the BB retirement years), we're at 50%. So, half of our tax dollars will go to caring for the Boomers.

And so, it would be a pretty good idea to be saving as much as you can ;).


Please give us back all of the cash we have been forced to give to the system before they change the rules and decide we are now too rich to receive the benefits from it. We have given the maximum amount into the system for 40 years....with the understanding that it's OUR money, a savings account for our retirement years.

Please don't be so quick to give away other peoples money. That's how we got into this mess.

Just because politicians have used it to get themselves reelected does not mean we deserve to have it confiscated from us now that we are nearing retirement age.

wall*e2008
06-25-2009, 07:27 AM
I wonder how the current state of American health in general will effect those projections. Will we end up paying more as overweight/obese boomers hit the Medicare rolls as predicted, or will enough of them drop dead prematurely that it actually lessens the anticipated load? My parents and inlaws are at the older end of the baby boom generation (in their early 60s), and I cannot believe how many of their friends are dying or being diagnosed with terminal conditions already. It doesn't seem to me like they're old enough yet to be having heart attacks and fatal strokes and end-stage cancers.

My grandfather once told me (not sure of his source) that if he got to 65 then he had a high probability to get to 75. Many of his generation passed in their early 60s. My uncle died of cancer (and he had great health insurance) in his early 60s as did his father (my grandfather). So far all the rest have lived past their early 60s. Many are into their 70s now and of the other grandparents all were into their 80s. For my DH his dad dies in his early 60s (we make sure he is seen often by a Dr. to get him past his early 60s) and the rest of the mom, aunts and uncles were into their 80 and some even into their 90s. From the people I know my grandfathers statement does hold true.

I once read an article that replace smoker with obese in your statement. About 1/3 of all smokers die before retirement. FIL was the only smoker of the ones I have talked about.

We spend the most money in our lives within the last 6 months. That is where we need to reform our healthcare system. Another place is the high cost of bringing some into the world.

wall*e2008
06-25-2009, 07:28 AM
I am one of the stupid people that was living beyond my means. The new normal has been quite a shocker to me.For us with kids headed to college and drained 401k due to job losses we are probablu in worse shape then some peple in that article.We are just one job loss away from the cards in our house falling to pieces. I would build up an emergency fund but there is NOTHING left over for that to happen. It seems we are operating on deficit spending andt that is without credit cards to fall back on.

I wish you the best of luck.

dvcgirl
06-25-2009, 07:38 AM
No need to worry about me.;)

I live for both today and tomorrow. Over saving is sacrificing today for tomorrow and tomorrow may never come.

True, and I'll admit, we make enough that we feel fulfilled in our day to day life while being able to save over half of what we make. But that's not possible for everyone. And so as a result, we've got too many people who have been living for today....saving next to nothing for tomorrow.

Let's face it, if a family is earning 50K a year (household income), it's way more fun to spend that 5K a year you should be saving on a new car payment, a trip to Disney world and at the mall. There will always be time to start saving later.....

Colleen27
06-25-2009, 07:40 AM
You know, hubby and I never took shop or home ec but we are budgeters and savers (w/ nothing but a fairly small home loan and no cc debt) and know a lot about taking care of our home. We learned from our parents. Thus, I don't think home ec or shop should be mandatory. Perhaps, instead, high schoolers should have to take a life-skills placement test (much like a math-placement test) to see IF they need home ec and/or shop. If the skills are not there, then they need to take these courses.

That said, I agree with most of the "gloaters" here on this board. We deserve pats on the back since most of us were giving up "things" while our spend-thrift friends and family had it all (and the debt to go with it). I didn't even have a house until I was 37! But, when hubby and I did buy, we put 25% down and took only a 15 year fixed-rate mortgage that we'll have paid off in 7 years.

I sincerely HOPE that more Americans are going to start living frugally and saving. there could be hope for us all yet.


The problem with expecting parents to teach those lessons is that so many parents these days never learned them! I don't think it would hurt any student, even if they have been taught the basics at home, to spend a semester on basic life skills, but an option to test out of the class is a good idea. Here, kids can "test out" (not via a test, but an exemption) of PE if they play a varsity or junior varsity sport. Creating a similar option for a life skills class would hopefully encourage more parents to go over these kinds of things at home, or barring that, encourage students to get together with friends to learn the material to test out.

I personally don't feel like I have any right to gloat. Yes, we made better choices with our money than many of our friends, but we also had better luck to help us along the way. We're in a good position now, partly because of the things we did without but also partly because we've never experienced a layoff or other job loss, never been hit with an expensive emergency that would have consumed our savings, never been in a position where we can't work. And I just can't ignore that "But for the grace of God" element in our success.

I certainly hope America can adjust to a more sustainable, responsible "new normal", both on an individual and collective level. I'm encouraged by the trends I see around me right now, but it remains to be seen if the frugality of the moment is here to stay or if it is just a passing fad.

Colleen27
06-25-2009, 08:08 AM
We spend the most money in our lives within the last 6 months. That is where we need to reform our healthcare system. Another place is the high cost of bringing some into the world.

I agree. We went through that with my grandmother in her last years - doctors trying to order invasive and expensive tests to diagnose conditions that we wouldn't have been willing to treat at that point (or for which she couldn't have survived treatment because of other medical issues), wanting to try new treatments when we were very clear on just wanting comfort care, etc. It sometimes felt like the medical profession in general was at war with the very idea of death; the notion that we would allow our beloved grandmother to pass on without trying everything possible to keep her alive just a little longer seemed difficult for some to comprehend. Throw a family that is having a hard time letting go into the mix rather than one who has accepted saying goodbye and you've got a recipe for tens or even hundreds of thousands of dollars of dollars wasted on medical costs at the taxpayers' expense.

I can better understand health care dollars spent at the other end, to bring life into the world or nurture a new life that got off to a difficult start. What I don't understand is the "spare no expense" approach to postponing natural death. There is nothing tragic about a situation like my grandmother's - she lived 90 years surrounded by family, celebrated her 50th wedding anniversary to a husband she loved right until the end, got to see her children and grandchildren grow up and played with her great-grandchildren, and in the end she was ready to let go and be reunited with my grandfather in the next life. It was a long, full life, but all lives come to an end. I'm not sure why we as a culture are so uncomfortable with accepting that or why we fight so hard to delay it by any small measure of time.

fkj2
06-25-2009, 08:25 AM
You do realize that we are graduating the largest classes ever in the US.

In 2007 we had the most babies born EVER!

http://www.nytimes.com/2009/03/19/health/19birth.html?ref=us


We are in the new baby boom

http://******************/x-2370-Denver-Early-Childhood-Parenting-Examiner~y2009m3d18-The-new-US-baby-boom

No, I wasn't aware we were in a new baby boom.

How long will it take before the new crop begins producing and consuming? If it's going to take like 18+ years, well, I dunno if I can wait that long.

So, you're pretty confident the trend will continue?

Colleen27
06-25-2009, 08:29 AM
No, I wasn't aware we were in a new baby boom.

How long will it take before the new crop begins producing and consuming? If it's going to take like 18+ years, well, I dunno if I can wait that long.

And that's why it isn't likely to have much impact on the SS situation. By the time the "new boomers" are seeking full time employment, the oldest of the baby boomers will by pushing 90.

wall*e2008
06-25-2009, 09:11 AM
No, I wasn't aware we were in a new baby boom.

How long will it take before the new crop begins producing and consuming? If it's going to take like 18+ years, well, I dunno if I can wait that long.

So, you're pretty confident the trend will continue?

And that's why it isn't likely to have much impact on the SS situation. By the time the "new boomers" are seeking full time employment, the oldest of the baby boomers will by pushing 90.

But we are also seeing the baby boom of 20 years ago graduation high school and entering college right now. Why do you think it is so hard to get into many colleges. There are far more applicants than openings.

This current group will help and the ones being made now will help in the future.

The youngest BBers were born in 1964. In 18 years they will be 63 and just starting into the cycle.

Chicago526
06-25-2009, 11:32 AM
How 'bout us "kids" that were born in the 70's???? (to be more specific the late 70's) :lmao:(lol) But seriously, I was lucky enough to be raised by my grandparents who were a product of the great depression. Sure we had $$$$ and I had all the trappings of it.... private school, my own car at 16, a horse...etc, the list can go on and on. But, ya know what??? My grandmother NEVER missed the opportunity to use coupons, save her "egg" money and they NEVER let me forget that these "things" were just that... THINGS, and that I was blessed to have them and they had to work very hard to come to the point that they were at.
When DH and I got married (I was 20) I naturally assumed that we would be moving into their large home.... HA! :rotfl2: Guess again! In the words of my grandpa, "If your old enough to get married your old enough to live on your own." That was the hardest and best advise I could have been given. They made it very clear that they loved me :love: and that they were always there for me, but it was time for me to be an adult... and I did. Was it always pretty? Nope. (I found out that they sell panties at Walmart and they come in plastic packages... they never came that way at Victoria's Secret :lmao:) They offered (and we accepted) to help us set up a budget and that is how we got to where we are today. A lot of work, sweat and tears, but we are succeeding now. "Gamer" has long since passed away but to this day we still take grandpa to Disney with us every year (our treat) as a thank you for teaching me (us) so much.
I think most of it comes from what you are taught as a child, not what you have. Now, my DD has most anything a child could want, but we stress the importance of saving (and she's only 5). Hopefully she will learn, as I did, and not only have nice things, but appreciate where they come from and know what it takes to get there.

I'm a bicentenial baby, so I hear you! My older brothers remember powdered milk and keeping the heat at 55, but I remember having a/c in the summer and my parents taking trips to Hawaii every 3-4 years. By the time I was old enough to notice, my parents were in a much better financial situation and so I'd missed the early "lean" times of building the family finances.

I wasn't spoiled though. I got my first car loan at 22 and bought my first home at 25, my 2nd home at 29. All on my own, no co-signing. I haven't borrowed a dime from my parents since I was 20. I even paid my way through community college and travel agent school.

Yes, I have CC debt, all from our wedding and not from living beyond our means month to month(and I'd do it again in a minute, to use the wedding was worth it), but we're working our way through it and plan to be CC debt free in about 18 months. We'll be car loan free in 6 months.

Most of my friends are similar, they have some debt but nothing huge like you see on financial shows. I know all these young, entitled people are out there, but I sure don't know any personally! I watch these shows, and there are plenty of 40-60 year olds in same boat as the 20-30 year old over spenders. I don't think it's a generational thing at all, really.

Juliet25
06-25-2009, 12:26 PM
I personally don't feel like I have any right to gloat. Yes, we made better choices with our money than many of our friends, but we also had better luck to help us along the way. We're in a good position now, partly because of the things we did without but also partly because we've never experienced a layoff or other job loss, never been hit with an expensive emergency that would have consumed our savings, never been in a position where we can't work. And I just can't ignore that "But for the grace of God" element in our success.

That's a very good point. I hate the fact that my DH and I have CC debt, but I always realize it could be far, far worse. My DH was diagnosed with cancer six months after graduating from law school. He was working as a law clerk with a very accomodating boss and a supportive co-clerk. He was able to draw his full salary the entire year of his clerkship, even though he was absent 50% of the time. Six months after his diagnosis, I lost my job, and a year later, DH lost his post-clerkship law job. It was just one blow after another.

So while I certainly congratulate others on smart financial decisions, don't assume that those who aren't in your position are in the hole b/c they bought a McMansion they couldn't afford or a drive a tricked out Lexus SUV when a used Ford Escort would suffice.

We all make mistakes, but sometimes it's a run of good fortune or a string of bad luck that determines our circumstances. I feel for those who are out of work right now. When DH and I were unemployed it was frustrating, but the jobs were out there. I decided to be a SAHM, but was able to find a job pretty quickly when I went back into the workforce. Now, I just don't know what these people are going to do.

Juliet25
06-25-2009, 12:35 PM
Most of my friends are similar, they have some debt but nothing huge like you see on financial shows. I know all these young, entitled people are out there, but I sure don't know any personally!

I'm 33 and I don't know these people either. A lot of my friends have CC debt. A lot of it is from day-to-day expenses...not fancy vacations or nice cars. It has nothing to do with entitlement. Child care, mortgages, and student loans are expensive. Much, much more expensive then they were years ago.

eliza61
06-25-2009, 01:13 PM
For the last 20-25 years this country has encourage credit spending and we (Americans in general) have gone happily along.

Now I know every one here lives within their means I read all these glorious post about every one here drives a 12 year old car, has tineey tiney houses and kids never want the latest gadgets and no one every buys stuff on credit(and I'm not knocking it, thats your choice) but you must realize that 65-70% of the American population has some sort of consumer debt. That's not saying every one is in financial trouble, just that most americans use credit cards.

The average American household with at least one credit card has nearly $10,700 in credit-card debt, according to CardWeb.com, and the average interest rate runs in the mid- to high teens at any given time.

Here are some interesting facts about our young kids, so it's obvious for all our gloat we haven't done a very good job of passing on our supposedly spend thrift ways.

Adults between the ages of 18 and 24 saw an even sharper rise in credit card debt from 1992 to 2001 -- 104 percent to be precise. It's gotten worse in the last 7 years

Among the youngest adult households with incomes below $50,000 (that's two-thirds of this demographic), nearly one in seven with credit card debt is in debt hardship.

This youngest segment spends close to 30 percent of its income on debt payments, double the percentage spent on average in 1992. http://www.bankrate.com/brm/news/debt/20050117a1.asp full data

We didn't just "Arrive" to this point, our economy runs on spending. So in answer to the OP question, yes we will go back to our spend happy ways. we have no choice, we have created an economy that is driven by consumer spending and unfortunately the only way out of this recession is going to be by shopping, at least in some part.

As soon as the American public feels their jobs are safe, they will be back to spending.

wall*e2008
06-25-2009, 02:01 PM
For the last 20-25 years this country has encourage credit spending and we (Americans in general) have gone happily along.

Now I know every one here lives within their means I read all these glorious post about every one here drives a 12 year old car, has tineey tiney houses and kids never want the latest gadgets and no one every buys stuff on credit(and I'm not knocking it, thats your choice) but you must realize that 65-70% of the American population has some sort of consumer debt. That's not saying every one is in financial trouble, just that most americans use credit cards.
I for one am not gloating. I do not drive a 12 year old car. I have a 6 year old car and DH has a 4 year old car. Both are approaching 100K in miles. It is obvious that we will be replacing both before they are 12 years old. I do not want to be on a an interstate doing 65 in a car that have over 200K in miles. That is a choice we both make. Newer cars also have the newest safety features and that is important when you drive as much as we do and so much of it on the highways. We also do not live in a small home. We have been lucky to never have to put stuff on a credit card just to make ends meet. We use CCs often and would hate to go to an all cash basis. I would not feel safe carrying that amount of cash. This weekend I have to buy an appliance and I will be charging it. There is no way I am going to be carrying almost $1K in cash and I never bring my checkbook since I would not want to lose it.

The average American household with at least one credit card has nearly $10,700 in credit-card debt, according to CardWeb.com, and the average interest rate runs in the mid- to high teens at any given time.
During the month that I charge my health insurance, car insurance, home owners insurance and our monthly expenses, my CC balance is almost that high. I have the money to pay it off, but my credit report and I am sure the CC debt reporters say I have $10K in CC debt. They have no way to know if I will pay it off or not, so it is considered debt. I think people like myself tend to inflate the CC debt numbers.


Here are some interesting facts about our young kids, so it's obvious for all our gloat we haven't done a very good job of passing on our supposedly spend thrift ways.

Adults between the ages of 18 and 24 saw an even sharper rise in credit card debt from 1992 to 2001 -- 104 percent to be precise. It's gotten worse in the last 7 years

Among the youngest adult households with incomes below $50,000 (that's two-thirds of this demographic), nearly one in seven with credit card debt is in debt hardship.

This youngest segment spends close to 30 percent of its income on debt payments, double the percentage spent on average in 1992. http://www.bankrate.com/brm/news/debt/20050117a1.asp full data
ITA Look at how many say they save but their sibling(s) do not. They had the same parents, upbringing and lesson yet they turned out different. Some lessons one can only learn the hard way.

We didn't just "Arrive" to this point, our economy runs on spending. So in answer to the OP question, yes we will go back to our spend happy ways. we have no choice, we have created an economy that is driven by consumer spending and unfortunately the only way out of this recession is going to be by shopping, at least in some part.

As soon as the American public feels their jobs are safe, they will be back to spending.


ITA we will start ramping up our spending when we feel more secure and we realize we have not bought anything in a while.

The other day they were talking about GM on the news and they said that if the worldwide car sales continued at the present rate it would take us 24 years to replace all the existing cars in the world. I know I will not be waiting 18 years to replace my car and 20 to replace DH's car. Both will probably be replaced in the next 4-8 years. I am sure I am not the only one who will "need" to replace the car.

Forget about getting a used car, since you need a person to buy a new one to get them to sell theirs as a used car.

DISdreamin'
06-25-2009, 02:41 PM
During the month that I charge my health insurance, car insurance, home owners insurance and our monthly expenses, my CC balance is almost that high. I have the money to pay it off, but my credit report and I am sure the CC debt reporters say I have $10K in CC debt. They have no way to know if I will pay it off or not, so it is considered debt. I think people like myself tend to inflate the CC debt numbers.

I always wondered about the same thing! DH and I typically charged anywhere between $2500 and $3500 a month on our credit card, but always paid it in full. Our credit reports always showed high revolving credit balances as the reason our FICO scores weren't higher, thus they interpreted this as us carrying a revolving credit balance of ~$3K continually, where it really went up, then back to zero, then up again. This scenario would certainly inflate the numbers if people doing the statistics interpreted the data the same way!

Colleen27
06-25-2009, 02:54 PM
Here are some interesting facts about our young kids, so it's obvious for all our gloat we haven't done a very good job of passing on our supposedly spend thrift ways.

Adults between the ages of 18 and 24 saw an even sharper rise in credit card debt from 1992 to 2001 -- 104 percent to be precise. It's gotten worse in the last 7 years

Among the youngest adult households with incomes below $50,000 (that's two-thirds of this demographic), nearly one in seven with credit card debt is in debt hardship.

This youngest segment spends close to 30 percent of its income on debt payments, double the percentage spent on average in 1992. http://www.bankrate.com/brm/news/debt/20050117a1.asp full data


Those numbers surprise me a bit, mainly because that's my generation. Most of my friends are a lot like me - living fairly modestly compared to how we were raised because we all saw first hand the trouble our (mostly single) parents got into with debt. My own family is a rather extreme example, because of our dedication to having time with the kids at the expense of extra income and our decision to live small at home so we can vacation big, but none of my friends are living in McMansions, driving new cars every 2 years, or boosting the latest and greatest electronics thanks to Visa. Somewhere there are a lot of folks my age living it up, but I don't know many of them!

I don't know that American spending will rebound as quickly as some think/hope. For years now, there have been studies going on attempting to measure the relationship between money, spending, and happiness, and the conclusion seems to be that we as a society are so buried in stuff that it is actually making us less happy. I'd like to think that the lesson we'll learn from this is moderation and more thoughtful spending, putting our money to better use overall rather than buying gadgets and trendy objects that we really don't want, won't ever use, and will feel bad about tossing or giving away.

Jennia
06-25-2009, 03:44 PM
I'll admit that I DO know people like that (all in their 20s). There are quite a few people in my mom's group who go out to lunch every single day and then complain about having no money for a vacation. Or they'll talk about putting everything on the credit cards and paying the minimum, etc. I also see some of these same women NOT saving or being frugal because they're certain that THEIR husbands won't lose their jobs, so why should they bother? In at least one case the family has absolutely nothing in savings, has nothing left in checking at the end of the paycheck, and is still going on outings to the zoo, buying new cell phones, etc, and they don't seem concerned at all.

Ava
06-25-2009, 04:09 PM
I think a big part of the problem is that our society (in general) has become used to instant gratification. If we want something we want to buy it now, not in a month when we've saved the cash for it. Or we see something that is such a good "deal" we simply can't pass it up, even if we don't have the cash for it at the moment. I'm guilty of this myself, and justify it by figuring I can save the money for it by the time the CC bill is due. So far I've been alright and am CC-debt free, but money is tighter now so I'm trying to reverse my thinking. Save the cash first, then make the purchase. I still want to use my CCs for the rewards, but want to have the cash in the bank to pay them off immediately instead of banking on being able to save the money in the weeks between purchase and bill due date.

fkj2
06-25-2009, 04:44 PM
But we are also seeing the baby boom of 20 years ago graduation high school and entering college right now. Why do you think it is so hard to get into many colleges. There are far more applicants than openings.

This current group will help and the ones being made now will help in the future.

The youngest BBers were born in 1964. In 18 years they will be 63 and just starting into the cycle.

Perhaps, but you're also seeing an influx of nontraditional students who are returning to university settings and trade schools to acquire additional job skillls. Talk to nearly anyone over age 50 who's seeking employment and I'm sure most will tell you their age is working against them in obtaining employment. Between age 50 and the then full Social Security retirement age of almost 67, well, that's a lot of years to be under employed, if employment can be found at all. Wait until people begin offering in earnest to work for less just to get a job at all. We're already seeing cutbacks in benefits that are being offered.

Those currently graduating will be competing with not only those returning nontraditional students but also with theoretical retirees who actually won't be retiring because they can't afford to.

Graduates won't easily find available positions to fill.

eliza61
06-25-2009, 05:24 PM
I




ITA we will start ramping up our spending when we feel more secure and we realize we have not bought anything in a while.

The other day they were talking about GM on the news and they said that if the worldwide car sales continued at the present rate it would take us 24 years to replace all the existing cars in the world. I know I will not be waiting 18 years to replace my car and 20 to replace DH's car. Both will probably be replaced in the next 4-8 years. I am sure I am not the only one who will "need" to replace the car.

Forget about getting a used car, since you need a person to buy a new one to get them to sell theirs as a used car.

I don't know that American spending will rebound as quickly as some think/hope. For years now, there have been studies going on attempting to measure the relationship between money, spending, and happiness, and the conclusion seems to be that we as a society are so buried in stuff that it is actually making us less happy. I'd like to think that the lesson we'll learn from this is moderation and more thoughtful spending, putting our money to better use overall rather than buying gadgets and trendy objects that we really don't want, won't ever use, and will feel bad about tossing or giving away.


I don't think it will happen quickly either but I think it will. I'm a sociologist by education so I always look at Americans "attitudes" (drives my dh crazzzzy :lmao:) I think one thing that concerns me Colleen is that unfortunately we are old :scared1: I mean old as in an earlier generation where we can remember old adages like "saving for a rainy day" Heck I remember when banks gave out toasters if you opened a savings account.
Right now, the young adults don't remember so much "saving". They are use to the "I want it now" How did teenagers come to expect $300 coach and prada bags, how did 3000 square feet houses become "Starter" homes.

I'm not sure we can go back to frugality. :sad2:

Colleen27
06-25-2009, 07:57 PM
I don't think it will happen quickly either but I think it will. I'm a sociologist by education so I always look at Americans "attitudes" (drives my dh crazzzzy :lmao:) I think one thing that concerns me Colleen is that unfortunately we are old :scared1: I mean old as in an earlier generation where we can remember old adages like "saving for a rainy day" Heck I remember when banks gave out toasters if you opened a savings account.
Right now, the young adults don't remember so much "saving". They are use to the "I want it now" How did teenagers come to expect $300 coach and prada bags, how did 3000 square feet houses become "Starter" homes.

I'm not sure we can go back to frugality. :sad2:

Interesting. Sociology is a component of my education too, though I haven't finished my degree yet (journalism/sociology double major). And it drives my DH crazy too! :rotfl: I don't think I'm old, though - I just turned 30! That's the new 20, right? :lmao:

I'll admit, the "starter home" thing puzzles me. I'm guilty of it too, to a degree - our starter home was bigger than the house I was raised in, and our permanent home is bigger still, but they're both smaller than the 2400sq ft houses being billed as starter homes in the new developments in my area. I have 3 kids and don't know what I'd do with that kind of space. I'm practically giddy over having one extra room and a basement with a root cellar at the new house! But I do think that a large and growing segment of the population is ready to embrace a new sort of frugality. I think the language will be very different - "simplicity" not savings as the reason not to buy every latest-and-greatest, "peak oil" and "climate change" as the reasons for trading in the SUV for a car, "energy conservation" as the reason for weatherproofing and turning down the thermostat, "food miles" and "sustainability" as the reason for planting the veggie gardens. But in the end the effect is the same - a less spending-focused lifestyle, which is likely to be painful in the near term but better and more responsible in the long run.

Or maybe I'm just spending too much time in my small town, at the community garden and on sustainable living/urban homesteading sites, and hiding from the more materialistic existence that we moved out here in part to get away from.

dvcgirl
06-25-2009, 09:30 PM
We didn't just "Arrive" to this point, our economy runs on spending. So in answer to the OP question, yes we will go back to our spend happy ways. we have no choice, we have created an economy that is driven by consumer spending and unfortunately the only way out of this recession is going to be by shopping, at least in some part.

As soon as the American public feels their jobs are safe, they will be back to spending.

Oh, I'm under no illusion that most Americans won't want to go back to their "happy spending" ways. The real issue is whether or not the credit will be available to them. In the short to medium term....it just won't be there.

And like I mentioned in an earlier post...800 Billion was pulled out in the form of home equity in 2005....and just spent. The Mother of All ATM machines churned out 800 Billion bucks. 6% of GDP.....

Four short years later and a little more than 25% of mortgages in this nation are under water. No equity there to be pulled. Lots of other folks aren't under water but probably close to break-even. That's a big deal.

Then read this board alone and see thread after thread where people are complaining about their credit lines being cut.....rates being raised. Factor in the massive amount of regulation occurring in Washington right now that will take a good deal of leverage out of the system.

Will we end up like our Depression Era Grandparents? No, certainly not. And people will spend as long as they feel that their jobs are secure. But I don't think we're heading back to the insanity of the mid 90s through mid 2000s.

MrsPete
06-25-2009, 10:06 PM
I'll admit, the "starter home" thing puzzles me. I'm guilty of it too, to a degree - our starter home was bigger than the house I was raised in, and our permanent home is bigger still, but they're both smaller than the 2400sq ft houses being billed as starter homes in the new developments in my area.I think people started buying "more house" because housing was (is) a good investment: You spend the money, you get the practical use out of the house, and you sell it for MORE than you paid! What's not to love? When we were married in 1990 the housing mantra was, "Buy as much as you can as soon as you can." Somehow we convinced ourselves that "maxing out" our mortgage potential was a good idea, and since moderation isn't America's greatest strength . . . a good idea was taken to the extreme.

It's kind of like the concept of student loans being "good debt". I don't know why people buy into that idea. Do you have to pay it back? Then it's NOT good!

buzz5985
06-26-2009, 03:24 AM
And that's why it isn't likely to have much impact on the SS situation. By the time the "new boomers" are seeking full time employment, the oldest of the baby boomers will by pushing 90.

I'm not sure of the number - but I believe only the first $87,000 annual income is taxed for SS. Any income over that is not taxed. Easy solution - tax every dollar earned.

DISdreamin'
06-26-2009, 05:42 AM
I'm not sure of the number - but I believe only the first $87,000 annual income is taxed for SS. Any income over that is not taxed. Easy solution - tax every dollar earned.

For 2009, the amount is apparently just under $110K - for most people, that means ALL their income is taxed. I can't see where taxing those making over this would hurt (I'd LOVE to top $110K for my income!) and you're idea appears to be a good one.

MrsPete
06-26-2009, 06:18 AM
For 2009, the amount is apparently just under $110K - for most people, that means ALL their income is taxed. I can't see where taxing those making over this would hurt (I'd LOVE to top $110K for my income!) and you're idea appears to be a good one.That's not a bad solution at all, BUT -- in all fairness -- one other component should be added: If you're going to tax 100% of income, the cap should be removed from Social Security. If the government takes more, they should also give more.

Of course, that rather negates the benefit of taxing the full amount. The real problem here is that it was a bad system in the first place -- that is, a system that counts on today's workers to pay today's retirees -- and it's hard to go back and fix something that's fundamentally unstable.