78% of Americans live paycheck to paycheck

[Parsad]

On 5/26/2024 at 8:03 AM, Luca said:

I think that 95% of the board thinks that getting wealthy is as easy as you described (janitor can make it to 8m), people who are not wealthy just spend their money on useless junk and its their fault! Why does this thread even exist? To reconfirm your opinions and circle jerk on the dumb fucks that cant save? xD

 

The thread is about a lack of savings...not getting wealthy.  There are people in very poor countries with low incomes per capita saving a greater percentage of their income than than North Americans.  Savings rates are very indicative of economic output long-term from countries.  Cheers!

[Parsad]

On 5/26/2024 at 12:06 PM, Luca said:

Our investment gains are someone else's spending. There has to be a mass consumer class for investors to get rich on Starbucks, Apple, and Nintendo investments. If everybody becomes a Ramsey hustler and saver, then one won't have spectacular gains. Yes, you can get rich if you save and invest your money but this depends on circumstances. If you went to a good university, studied something like engineering, accounting, etc, then are able to lay things aside while maintaining a reasonable quality of life with your family->you will make reasonable money over your life. On the other hand, if you come from a family with poor educational background, live in a bad neighborhood, local state school that has low quality, etc, your odds are really not in your favor, and sure, you could pull yourself up and still make a living but over the last 30-40 years society in the west became a lot more gentrified...many people are left behind, family background and networking is more and more a predictor of your financial future then it was in the 60-70s. Corporate America has been and is shifted against the normie worker and politics play a role here for what its worth.

 

There is nothing new in what you said.  That's the way it was 20 years ago, 50 years ago, 100 years ago.

 

The fact that today's entrepreneur can access and sell to global markets instantaneously and with far less resources, rather than simply in their community, opens up the sheer size of the market available.  

 

And that market will continue to get bigger as more and more people enter the middle class.  China, Europe's and North America's massive middle class, combined with burgeoning middle classes in India, South America and eventually Africa, will continue to increase the size of the market.

 

Cheers!

[schin]

1 hour ago, Parsad said:

 

The thread is about a lack of savings...not getting wealthy.  There are people in very poor countries with low incomes per capita saving a greater percentage of their income than than North Americans.  Savings rates are very indicative of economic output long-term from countries.  Cheers!

 

Buffett was right that luck of being born in the right country or migrating to the right country is a huge factor.

 

In terms of saving, it's almost like playing a video game and your power level is low. You try to find some power-up or something to get more time. I know it's not always easy, but I would assume most people would have that same feeling of nervousness without a buffer.  I either have to work harder or take on more shifts...Or make sacrifices to start the snowball again.

 

I know someone will point out the extreme cases of large families out of wedlock or mentally challenged, homeless people... but, that must be 10% of that 78%.  For most people in the 78%, are they really focused on needs versus wants (frivolous consumption) that they can control?

[Cigarbutt]

On 5/27/2024 at 8:05 PM, james22 said:

 

Optimism is always better than pessimism. -Mostly true and fair enough.

And generational comparisons are never very meaningful. -Somewhat true but secular trends have some signal value

A 1940s (post-war) home wouldn't be acceptable today (too small, without a garage, etc.).

And you had to survive a war to buy one.

   -Comments not really helpful vs rise of house and stock premium to incomes in the last 40 years

A factual aspect of the thread is the decreasing rate of savings (private and now also public) and the potential implication related to the continued relative downtrend in median wage growth (lower investments, lower productivity etc).

In 1999, this had been noticed and it was suggested that it was ok. It's been ok and there has been continued growth in goods productivity although service productivity remains a significant question mark. Debt productivity (linked to decreased savings) has certainly gone down (mathematical fact).

Americans Are Not Saving: Should We Worry? - Federal Reserve Bank of Chicago (chicagofed.org)

-----

1-Optimism is intuitively linked to resilience.

2-Resilience is intuitively linked to optimism.

Cause and effect can go both ways (opinion).

An example of 1-

Boston telecom billionaire Robert Hale, who started his business by taking a loan from his parents, left 1,000 graduating students at Umass Dartmouth in complete awe by gifting them $1,000 each. - Luxurylaunches

Mr. Hale, in the years that followed 1999, was resilient because he was optimistic. Impressive.

On a personal level, i identify more with 2-. This has implications for personal reflections about what 'we' should do as a tribe/community/nation or whatever.

[james22]

7 minutes ago, Cigarbutt said:

A 1940s (post-war) home wouldn't be acceptable today (too small, without a garage, etc.).

And you had to survive a war to buy one.

   -Comments not really helpful vs rise of house and stock premium to incomes in the last 40 years

 

The first accounts for some of that premium, certainly.

 

And the second provides perspective, no?

[Cigarbutt]

16 minutes ago, james22 said:

The first accounts for some of that premium, certainly.

And the second provides perspective, no?

Yes and yes.

For fun, i just spent 45 seconds for an anecdotal perspective.

We bought our house (typical suburb in North America) in 1996 in a 4.5 price to median income ratio environment.

Today, for an almost 100% quality and size compared new home, my kids face a 7 price to median income ratio environment.

When discussed, some suggest then to save more and some to save less. i guess it depends how optimistic you are about future prospects. And yes we do live in an environment of government debt to GDP at typical levels seen during major world wars.

[Jaygo]

1 minute ago, Cigarbutt said:

Yes and yes.

For fun, i just spent 45 seconds for an anecdotal perspective.

We bought our house (typical suburb in North America) in 1996 in a 4.5 price to median income ratio environment.

Today, for an almost 100% quality and size compared new home, my kids face a 7 price to median income ratio environment.

When discussed, some suggest then to save more and some to save less. i guess it depends how optimistic you are about future prospects. And yes we do live in an environment of government debt to GDP at typical levels seen during major world wars.

What was the population of your city in 1996 vs today. I feel that if cities grow out in a circle like a rock thrown into a pond than the equivalent homes in the same neighborhood should go up in real value 

 

For my local, Toronto, the population has basically doubled so a well placed home now has significantly more economic activity surrounding it there so it seems understandable that the price should rise faster than alternatives. 

 

The savings rate thing likely has more to do with personal preferences not to work as hard, long or productively as the past therefore the is less production to go around, pair that with the fact that many items are "improving" like cars so now necessary items are increasing as a percentage of wages. 

 

Ex. If a bricklayer in 1996 could place 800 bricks a day and drove a small pickup with no airbags, power windows, AC etc and now a bricklayer can place 800 bricks a day but his truck now has a V8, leather, AC, power everything, heated mirrors etc it makes sense that on that one item alone he now has less money to save. Compound this by almost everything in our lives and folks have less money unless they increase their productivity or work more.

 

 

 

 

 

[Cigarbutt]

13 hours ago, Jaygo said:

What was the population of your city in 1996 vs today. I feel that if cities grow out in a circle like a rock thrown into a pond than the equivalent homes in the same neighborhood should go up in real value 

 

For my local, Toronto, the population has basically doubled so a well placed home now has significantly more economic activity surrounding it there so it seems understandable that the price should rise faster than alternatives. 

 

The savings rate thing likely has more to do with personal preferences not to work as hard, long or productively as the past therefore the is less production to go around, pair that with the fact that many items are "improving" like cars so now necessary items are increasing as a percentage of wages. 

 

Ex. If a bricklayer in 1996 could place 800 bricks a day and drove a small pickup with no airbags, power windows, AC etc and now a bricklayer can place 800 bricks a day but his truck now has a V8, leather, AC, power everything, heated mirrors etc it makes sense that on that one item alone he now has less money to save. Compound this by almost everything in our lives and folks have less money unless they increase their productivity or work more.

 

 

 

 

 

No, it doesn't appear that population growth in my city played a material part in the relative price increase vs median incomes.

Interesting you mention a bricklayer. One of my nephews (to whom i'm relatively close) is a bricklayer and is not doing too badly i guess but he does strongly feel that "the system is rigged" (his words not mine)..