What budget? Why worry? How do people do it?

[eliza61]

Hey I have the other side of the coin funny story. My youngest son will be starting college in September. So we've done the whole college tour, financial aid application etc, etc.
Anyhoo, a few months ago he got a pre approved Citibank visa card in the mail. I called citigroup thinking they did not know he was a college kid (he's 18 now so I guess he's not a minor). They said that's ok, we're approving him on his "earning potential"!!

I was floored and laughing like a loon. I asked them why in the name of all that is holy would you give some one with no income a credit card with an income line of $2500? Basically they figure since he is going to college he has to buy books and incidentals. So I ask them what happens when he can't pay that money back?

then I asked the women would she lend a complete stranger with no job $2500 bucks of her own money? You could here the crickets chirping in the silence.

I totally agree to personal responsibility but I also agree with coporate responsibility also. At least a bit of coporate common sense? My son is a great kid but I can guarantee you he has yet to read a credit card agreement in his 18 years and wouldn't think to comparison shop on interest rates.

Absolutely no point, i just thought the conversation was hysterical and sad.

 

[Colleen27]

It's very easy to go back to "simpler days". Like I said in an earlier post, it's all about choices individuals make. You can choose not to buy that $600 iPad or $200 pair of jeans or $150 pair of shoes.

Choices. If you can't live within your income, don't expect those that do to bail you out.

You're blurring the line between micro and macro level thinking. On the individual level what you're saying works. On the societal level it doesn't. Frugal living can change a family's fortunes specifically because most people aren't doing it - in essence right now families that live within their means are getting the best of both worlds, the personal benefits of their own restraint and the economic growth of their neighbors' free spending.

It is like the "just go to college" response to declining wages for the working class; that can be a great success on the individual level, but if everyone or even a clear majority took that advice a 4 year degree would be critically devalued as the supply of degreed job seekers comes to far exceed the demand for them in the workplace (and we're right on the edge of that now). It fails to address the fact that a large percentage of the jobs available in our nation are low-wage and dead-end, and that rather than any one person's specific situation is the problem that needs to be solved to rebuild a middle class.

Consume, but do it within your means.I agree that we have a mess right now; however, I don't see that "well, we're screwed anyway, so we just have to keep doing what we're doing" is a reasonable answer. Instead, we need our government, our leadership, to make it possible/favorable for Americans to bring back industry. We need to build more non-service oriented jobs. To some extent, that leadership, the spark for that goal, must come from the government.

I agree. And generally I'm an optimist about such things. But it doesn't make sense to sit in smug judgment of the very trends that, for now, are the thing that keep our economy running. And I hate to say it but I don't expect to see much top-down leadership in remaking that economy. Not in our era of multi-million dollar media driven campaigns. Elected officials have to think about their campaign donations, and too many of those donors are the ones who stand to lose the most if our economy does begin to shift back towards domestic production, livable wages, and sustainable/moderate growth.

First of all, and remember I said I'm the weird one on these boards, I don't know all these so call people who are living this wonderful life. The poor people in camden are not the "dis" poor. They are struggling to find money at the end of the month to eat. so their choices are not as fun. Their choices are "eat food' or "pay rent". they have lost jobs or the amount the make is no way keeping up with the cost of living. Don't even get me started on how the price of gas is forcing some hard choices on them.


But your post highlights an underlying problem, as long as we feel safe in finding a "villian" and saying "well if all the people on food stamps would stop going to the nail salon and buying 200 sneakers, the economy would be fabulous" we never have to figure out a long term solution and we have to find a long term solution because Ayla whether we like it or not, the poor, the elderly and disinfranchised are not magically going to disappear so we will be bailing them out.

Don't take me for a know it all, I don't have any mind shattering solutions either. so I'm just as frustrated.

I know a lot of poor families. Most are the epic losers in this economy - people who saw their career fields decimated and who are working for a fraction of the modest-but-livable wages they'd grown accustomed to. We know former union carpenters and plumbers who are working for $8/hour at Home Depot because it is the only place they could find work, die setters and machinists patching together minimum wage temp work to try to keep above water, marine mechanics mowing lawns. Our area has seen one hard hit after another in all three of the largest local employment sectors - first the shrinking of the auto industry, then the housing bust, then the gas prices that have decimated pleasure boating. These aren't people who are enjoying manicures while on food stamps; these are people who are living with the crushing uncertainty of not knowing how they're going to keep a roof over their heads and heat in their home.

Yes, there are some sad stories there, and a few of those folks probably do deserve help. But let's be honest, many of the folks posting their stories are in the position they are because they made really, really stupid decisions. I find the entitlement attitude evident there disturbing.

I think location has a lot to do with perception of the housing mess. We know a LOT of people who have lost homes to foreclosure. Most bought houses that cost around 100K on conventional or FHA mortgages; for years, the main reason people moved to our community was the unusual combination of affordable homes and excellent schools. For a lot of us (we bought our first house in '01), buying worked out to be cheaper than renting. Then came 2008 and the market in our area fell by about 65% at the same time as the job losses started to pile up. I just can't see directing anger or blame at the folks I see around me, who are underwater on homes worth less than half what they paid and trying to get by on wages that are often not much more than half what they were making when they bought.

I totally agree to personal responsibility but I also agree with coporate responsibility also. At least a bit of coporate common sense? My son is a great kid but I can guarantee you he has yet to read a credit card agreement in his 18 years and wouldn't think to comparison shop on interest rates.

Absolutely no point, i just thought the conversation was hysterical and sad.

And the sad part is, that is tighter credit than in years past. When I was in college the credit card companies were routinely offering 5K and even 10K credit limits to students.

 

[Kathi OD]

I have no idea why more people haven't done it. I can only speak for myself and my family. My family has made a conscious decision to forget about the Jones' and focus on our family. Are we still consumers? Of course we are. Anyone that buys food or clothes is a consumer. If those people on food stamps would stop going to the nail salon and buying $200 sneakers, they could afford their own food. Common sense doesn't seem so common anymore.

I personally know more than one family on food stamps. Forget the nail salon, these people don't even go to the hairdresser or barber. They can't afford it. $200 sneakers?? Are you kidding me? They're shopping at thrift stores or WalMart.

One of these people happens to be my MIL. She is 83 and appalled that she needs to be on assistance, as she and my FIL worked hard their whole lives.

I know exactly what she is buying, because she is unable to shop for herself and I do ALL her shopping. Between her small pension and social security, she has barely enough income to pay her rent ($335/month), electricity, telephone, & water bills, along with her insurances and medications. If she's lucky, there is $10 left over at the end of the month. She gets a whopping $89/month in food stamps! I don't know if you've been in a grocery store lately, but $89 doesn't go very far, even if you are only buying for one.

I know other families who are in similar situations. None of them, not a single one, is excited that they need help from the government. People who think that those on public assistance are getting rich off the taxpayer need to walk a mile in their shoes.

 

[Ayla]

I personally know more than one family on food stamps. Forget the nail salon, these people don't even go to the hairdresser or barber. They can't afford it. $200 sneakers?? Are you kidding me? They're shopping at thrift stores or WalMart.

One of these people happens to be my MIL. She is 83 and appalled that she needs to be on assistance, as she and my FIL worked hard their whole lives.

I know exactly what she is buying, because she is unable to shop for herself and I do ALL her shopping. Between her small pension and social security, she has barely enough income to pay her rent ($335/month), electricity, telephone, & water bills, along with her insurances and medications. If she's lucky, there is $10 left over at the end of the month. She gets a whopping $89/month in food stamps! I don't know if you've been in a grocery store lately, but $89 doesn't go very far, even if you are only buying for one.

I know other families who are in similar situations. None of them, not a single one, is excited that they need help from the government. People who think that those on public assistance are getting rich off the taxpayer need to walk a mile in their shoes.

I was quoting eliza.

 

[Ayla]

You're blurring the line between micro and macro level thinking. On the individual level what you're saying works. On the societal level it doesn't. Frugal living can change a family's fortunes specifically because most people aren't doing it - in essence right now families that live within their means are getting the best of both worlds, the personal benefits of their own restraint and the economic growth of their neighbors' free spending.

I disagree. If everyone lives within their means and only spends the money they can afford, many many problems we are currently having would go away. But like I said, I do what's best for myself and my family. I don't care what's best for "society". Though you are correct, we are definitely benefiting from living within our means.

 

[Ayla]

I realize it's a pipe dream to have everyone living within their means. It will never happen.

 

[disneysteve]

My youngest son will be starting college in September. So we've done the whole college tour, financial aid application etc, etc.
Anyhoo, a few months ago he got a pre approved Citibank visa card in the mail. I called citigroup thinking they did not know he was a college kid (he's 18 now so I guess he's not a minor). They said that's ok, we're approving him on his "earning potential"!!

I was floored and laughing like a loon. I asked them why in the name of all that is holy would you give some one with no income a credit card with an income line of $2500?

I totally agree with you here.

When I was in college (1982-86), my friends and I would go to the mall and apply for all of the store credit cards where they were giving you a free gift for applying. We knew there was no chance in hell that we'd get approved because we had no jobs and no income. We came home with free food, umbrellas, clocks, tote bags, whatever the gift du jour was. We did that many times over the 4 years and never, never did any of us get approved. How could we? We had no money.

Jump ahead a few years and suddenly the credit card companies were giving cards to anyone with a pulse. If you could sign your name, you could have a 5K or 10K credit line. It made no sense at all.

That said, of course, the final decision should have been with the card holder to not charge more than they could afford to repay. I've read more than one story of college students committing suicide after running up thousands of dollars of credit card debt they couldn't repay. Well what exactly did they think was going to happen when the bill came? These are college students so one would assume they have at least average intelligence and could figure out that this wasn't free money.

I did actually get a credit card in college - my father co-signed for the account. I used it regularly for agreed upon expenses that my parents were helping with anyway. It never occurred to me to run it up to buy things that I couldn't afford.

 

[crisi]

I disagree. If everyone lives within their means and only spends the money they can afford, many many problems we are currently having would go away. But like I said, I do what's best for myself and my family. I don't care what's best for "society". Though you are correct, we are definitely benefiting from living within our means.

Over time, but the economic depression that would result from a sudden reset would make the 1930s look like the 1990s.

However, a slow rebalancing wouldnt do it. It will slow down the recovery (it is believed to be one of the contributors to our slow recovery already...the savings rate went up and at a macro level, we've taken on new debt much more slowly than in the past). It would slow growth, but it wouldn't kick us into an economic apocalypse. And it might be done slowly, if we undertook a national education program similar to how we've reduced teenage pregnancy, or smoking, or diversity and racism.

 

[disykat]

I feel it with the OP. I find it frustrating at times to feel like I work hard to be responsible with my money, yet society seems to value and even reward living above your means. I think it's something worth a whine.

I didn't respond the first time I read through the thread, but I just saw an article (by a random yahoo contributor) that was titled something like "100,000 and still feel poor." Later in the article he referenced "not having money to burn." While I too sometimes wish I had money to burn and could relate to his words, I think sometimes we confuse that with "poor" when it's not the same thing at all! Kind of ridiculous in a "let them eat cake" kind of way.

 

[disneysteve]

I just saw an article (by a random yahoo contributor) that was titled something like "100,000 and still feel poor."

Here it is:

http://finance.yahoo.com/news/first-person-earn-more-100-000-still-feel-151200753.html

 

[disneysteve]

I posted that link before I read the article. What a crock. $1,000/month on food just for the "basics." I don't think so. She must have a very different definition of basics than I do.

Bought the kid a brand new car to deliver pizzas, and took out a loan to do so. Then goes on to say they've avoided debt. Sorry but borrowing money to buy a new car sure counts as debt in my book.

And the one kid can't find any job anywhere? Really? I'd say he hasn't tried too hard. My 16-year-old has a babysitting job and this college kid can't find something to do to contribute to his living expenses?

 

[Corinne]

Sorry I really never understand the purpose of these vents. Pretty much they are simply "every body on public assistance is stealing my hard earned cash, while I live in a 2X4 shoebox and ride a 10 year old car"

Do you really worry about the "Joneses" that much? there have always been poor people, there always will be? Do you know all these folks who you say are getting fancy degrees and then not moving to where the jobs are?

you're tired of hearing about them? turn off your tv. stop watching the news. Hang out on the dis boards.

I think it's a bit ironic that you are tired of hearing about them yet you spread the very same information.

So now will have 20 pages of budgeters patting themselves on the back for being master of the universe and whining about how unfair life is.

Do they make you feel better?

ITA Eliza, I don't get the need for the rant either.

 

[eliza61]

I realize it's a pipe dream to have everyone living within their means. It will never happen.

I don't think it's a bad dream. what I'd like for us to do is get away from these "simplistic" answers only because it prevents us from searching and finding long term sustainable solutions.

things like
1) whats preventing people from living within their means. If there are over 300 million americans and over 50% are not doing it, there is some underlying problem than is more complicated than 150 sneakers.
2) what does that do to our economy? immediately and long term.
3) Do we even know who the "poor" are. For example one favorite "myth" is the welfare mother with 6 babies. statistics from 2008 or 2009 (I can't remember which year) showed the average family collecting public assistance had 2.5 kids. (I always loved the .5 number, how do you have 1/2 a kid?)

so it's not the dream that is wrong, we just need to be careful on execution and ramifications of that dream.

Also Ayla, these are just my ramblings from volunteering with the poor. I am no more the expert than anyone here and like I've always said, I've made enough bad money decision in my life to not pass too much judgement.

 

[Planogirl]

Go ahead and flog me. We owe money due to a car loan. I realize that not everyone feels this way but clearly some feel that anyone who owes money (except maybe a home loan) is a slacker. To each their own.

That aside, I also don't see the point of these rants. People will do what they want. Others approving or disapproving won't change that. I do wish that the schools offered a few courses in money management though. That could help some people.

 

[Muushka]

I don't think it's a bad dream. what I'd like for us to do is get away from these "simplistic" answers only because it prevents us from searching and finding long term sustainable solutions.

things like
1) whats preventing people from living within their means. If there are over 300 million americans and over 50% are not doing it, there is some underlying problem than is more complicated than 150 sneakers.
2) what does that do to our economy? immediately and long term.
3) Do we even know who the "poor" are. For example one favorite "myth" is the welfare mother with 6 babies. statistics from 2008 or 2009 (I can't remember which year) showed the average family collecting public assistance had 2.5 kids. (I always loved the .5 number, how do you have 1/2 a kid?)

so it's not the dream that is wrong, we just need to be careful on execution and ramifications of that dream.

Also Ayla, these are just my ramblings from volunteering with the poor. I am no more the expert than anyone here and like I've always said, I've made enough bad money decision in my life to not pass too much judgement.

Therein lies the question. What about those of us who have not made bad money decisions? Do we get to pass judgement?

 

[MrsPete]

I posted that link before I read the article. What a crock. $1,000/month on food just for the "basics." I don't think so. She must have a very different definition of basics than I do.

Bought the kid a brand new car to deliver pizzas, and took out a loan to do so. Then goes on to say they've avoided debt. Sorry but borrowing money to buy a new car sure counts as debt in my book.

And the one kid can't find any job anywhere? Really? I'd say he hasn't tried too hard. My 16-year-old has a babysitting job and this college kid can't find something to do to contribute to his living expenses?

This article is typical of the "I can't make ends meet" things that I hear in real life.

Personally, I spent $48 at the grocery store this week -- and that was mostly for expensive fresh fruit and some $4 for six deli cookies that I bought for my sick child. That's not really what it cost to feed my family this week. The reality is that I have a freezer full of meat purchased from a co-op and a pantry full of canned goods, dried beans, and other basics purchased when they were on super-sales. Catch me on the right week, and I might spend a couple hundred. But it's considerably less than $1000/month.

Pizza delivery people don't make much money, and they put loads of wear on their cars. I wonder if it wouldn't have been cheaper to let the kid go without BOTH the car and the job.

As for teens and jobs, a few years ago almost all my students had jobs -- today about half of them work. However, while I was out and about this afternoon, I did see two "now hiring" signs. They were both for food service, but that's a decent teenaged job.

To add to the teenaged job comment, when I was in college almost everyone worked. Today many of my friends' children do not work, even in the summer. Borrowing is just accepted as a necessity for college students, but -- even if you buy into that concept -- I simply can't fathom not pushing your college student to work during the summer to decrease the amount of loans he's required to take out!

 

[MrsPete]

1) whats preventing people from living within their means. If there are over 300 million americans and over 50% are not doing it, there is some underlying problem than is more complicated than 150 sneakers . . .

3) Do we even know who the "poor" are. For example one favorite "myth" is the welfare mother with 6 babies. statistics from 2008 or 2009 (I can't remember which year) showed the average family collecting public assistance had 2.5 kids. (I always loved the .5 number, how do you have 1/2 a kid?)

You're right that it's more than a problem with $150 sneakers. Finances are a complicated subject, and families get themselves into trouble for multiple reasons. For some it's too little income, for others it's too much debt. For others, it's impulsive spending, lack of planning, medical bills, or whatever. I don't think you can pinpoint a SINGLE problem for most people -- with rare exceptions, it's that multiple issues are present.

As for not knowing who the poor are, I disagree. Some people masquerade as middle-class (through debt, family help, or whatever), but tell-tale signs give it away. The co-worker who counts the minutes 'til payday, or who gets calls from collectors on the phone. The family member who constantly wants to borrow money.

 

[ilovemk76]

You're right that it's more than a problem with $150 sneakers. Finances are a complicated subject, and families get themselves into trouble for multiple reasons. For some it's too little income, for others it's too much debt. For others, it's impulsive spending, lack of planning, medical bills, or whatever. I don't think you can pinpoint a SINGLE problem for most people -- with rare exceptions, it's that multiple issues are present.

As for not knowing who the poor are, I disagree. Some people masquerade as middle-class (through debt, family help, or whatever), but tell-tale signs give it away. The co-worker who counts the minutes 'til payday, or who gets calls from collectors on the phone. The family member who constantly wants to borrow money.

This is why I love Gail Vaz-Oxlaide's show "Til Debt Do Us Part". You see how people who earn $25K up to $150K end up in trouble and how you can get out and retire with $. Her other show "Princess" shows how family and friends can be enablers and enable the princess to live well above their means. I highly recommend these two shows.

 

[Colleen27]

Over time, but the economic depression that would result from a sudden reset would make the 1930s look like the 1990s.

However, a slow rebalancing wouldnt do it. It will slow down the recovery (it is believed to be one of the contributors to our slow recovery already...the savings rate went up and at a macro level, we've taken on new debt much more slowly than in the past). It would slow growth, but it wouldn't kick us into an economic apocalypse. And it might be done slowly, if we undertook a national education program similar to how we've reduced teenage pregnancy, or smoking, or diversity and racism.

I'm not sure that even a slow transition would work unless there's some other accompanying shift, either in the cost of living or in industries to replace the jobs lost as the oversupply of retail, dining, and convenience services adjusts downward. We already have high unemployment and no matter how gradually it is done, people living within their means translates to the need for fewer employees in many "optional" and luxury businesses.

I disagree. If everyone lives within their means and only spends the money they can afford, many many problems we are currently having would go away. But like I said, I do what's best for myself and my family. I don't care what's best for "society". Though you are correct, we are definitely benefiting from living within our means.

And we are too. That doesn't mean I think that it would work for everyone to do it our way. I know we're lousy consumers. We just don't generate much economic activity. I grow and can food, make and mend clothes, and don't shop unless I absolutely have to. My older kids' favorite store is a resale boutique that specializes in trendy teen brands and styles, and we eat out maybe once a month. But if everyone lived the way we do we'd be hurting - many of my husband's customers are people taking out HELOC debt to afford repairs/upgrades to their homes, and I'm sure plenty of the people who buy from me can't really afford handmade/boutique items.

This article is typical of the "I can't make ends meet" things that I hear in real life.

Personally, I spent $48 at the grocery store this week -- and that was mostly for expensive fresh fruit and some $4 for six deli cookies that I bought for my sick child. That's not really what it cost to feed my family this week. The reality is that I have a freezer full of meat purchased from a co-op and a pantry full of canned goods, dried beans, and other basics purchased when they were on super-sales. Catch me on the right week, and I might spend a couple hundred. But it's considerably less than $1000/month.

Pizza delivery people don't make much money, and they put loads of wear on their cars. I wonder if it wouldn't have been cheaper to let the kid go without BOTH the car and the job.

As for teens and jobs, a few years ago almost all my students had jobs -- today about half of them work. However, while I was out and about this afternoon, I did see two "now hiring" signs. They were both for food service, but that's a decent teenaged job.

To add to the teenaged job comment, when I was in college almost everyone worked. Today many of my friends' children do not work, even in the summer. Borrowing is just accepted as a necessity for college students, but -- even if you buy into that concept -- I simply can't fathom not pushing your college student to work during the summer to decrease the amount of loans he's required to take out!

Again I think it is a question of perspective. I can count on one hand the number of people I know who earn 6 figures and none complain about money; the complaints/vents I hear are mostly from families earning <40K. I don't think I could keep myself from laughing out loud if someone was complaining to me about $1000/mo on basic groceries or making a car payment for a kid to deliver pizzas.

I think the decline in teens working is another consequence of the current economy. When I was in high school it wasn't too difficult to find a job that would work around school, sports, and other commitments. Now, though, I hear from my kids' friends and coaches (our HS varsity athletes are involved in coaching youth sports) that you have to be willing to put the job first to get hired around here, even in McJobs. There are enough unemployed adults who aren't subject to work permit limits and won't want days off for school events that there's little to no incentive for hiring teens, especially teens who are involved in activities that demand a lot of their time.

 

[crisi]

To add to the teenaged job comment, when I was in college almost everyone worked. Today many of my friends' children do not work, even in the summer. Borrowing is just accepted as a necessity for college students, but -- even if you buy into that concept -- I simply can't fathom not pushing your college student to work during the summer to decrease the amount of loans he's required to take out!

Its been a tough time for college students to find jobs. I have a few coworkers with college age kids - one had a paid internship last year, but he is an Engineering major at Stanford. Most of the others have spent summers not working, not because they don't want to work, but because there are few summer jobs. Before the economy crashed, college students could paint houses or mow lawns over the summer, one of my coworkers had a son who managed to get TWO lawnmowing clients, despite being the kind of kid who worked his butt off trying to find clients when he couldn't find someone to hire him for the summer.