The crisis of middle-class America

[skycat]

This is long, but a must read.

http://www.ft.com/cms/s/2/1a8a5cb2-9ab2-11df-87e6-00144feab49a.html

The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.

The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.

Alexis de Tocqueville, the great French chronicler of early America, was once misquoted as having said: “America is the best country in the world to be poor.” That is no longer the case. Nowadays in America, you have a smaller chance of swapping your lower income bracket for a higher one than in almost any other developed economy – even Britain on some measures. To invert the classic Horatio Alger stories, in today’s America if you are born in rags, you are likelier to stay in rags than in almost any corner of old Europe.

Combine those two deep-seated trends with a third – steeply rising inequality – and you get the slow-burning crisis of American capitalism. It is one thing to suffer ­grinding income stagnation. It is another to realise that you have a diminishing likelihood of escaping it – particularly when the fortunate few living across the proverbial tracks seem more pampered each time you catch a glimpse.

[Rage Against the McKee]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

[06wildcat]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

Yeah, the majority of the "middle class" has about as much financial smarts as most homeless people. I'm sure that their loan, now 21 years into a 30-year mortgage was far too small for any lender to look at a refinance so it very well could be in the 8- to 10-percent range or even a little higher. Still, at 10 percent, they're total payment might be about $600/month or about 10 percent of their gross pay.

I have a similar mortgage (a little more, probably a much lower interest rate) and a student loan that comes to about 30 percent of my gross pay, which is substantially lower than the Freeman's. Yet I still manage to sock 10 percent of my pay away and live a very comfortable life.

Of course this means I know what delayed gratification means and I don't eat every meal in a restaurant, but I also like knowing that I'm not going to lose my house if I lose my job.

[skycat]

I wonder if our economy would have grown as fast as it did these past several decades were it not for rampant consumerism and profligate credit spending? Ultimately it was unsustainable, of course.

[Dirty Sanchez]

I wonder if our economy would have grown as fast as it did these past several decades were it not for rampant consumerism and profligate credit spending? Ultimately it was unsustainable, of course.

Absolutely it wouldn't have.

[Sugar Dick]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

No kidding, a $70,000 a year salary should put you comfortably in a $250,000 house.  But, this about sums it up:

Solid Democratic voters, the Freemans are evidently phlegmatic in their outlook. The visitor’s gaze is drawn to their fridge door, which is festooned with humorous magnets. One says: “I am sorry I missed Church, I was busy practicing witchcraft and becoming a lesbian.” Another says: “I would tell you to go to Hell but I work there and I don’t want to see you every day.” A third, “Jesus loves you but I think you’re an bad person.” Mark chuckles: “Laughter is the best medicine.”

Seriously though, this story and this angle on the "middle class" (whoever that includes) has been recycled about 1000 times, and apparently it has made its way overseas now.  Nobody paid any attention to it when it was first released, and nobody pays any attention to it now.

Probably because anyone with eyes can see that its not true.   

[skycat]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

No kidding, a $70,000 a year salary should put you comfortably in a $250,000 house.  But, this about sums it up:

Solid Democratic voters, the Freemans are evidently phlegmatic in their outlook. The visitor’s gaze is drawn to their fridge door, which is festooned with humorous magnets. One says: “I am sorry I missed Church, I was busy practicing witchcraft and becoming a lesbian.” Another says: “I would tell you to go to Hell but I work there and I don’t want to see you every day.” A third, “Jesus loves you but I think you’re an bad person.” Mark chuckles: “Laughter is the best medicine.”

Seriously though, this story and this angle on the "middle class" (whoever that includes) has been recycled about 1000 times, and apparently it has made its way overseas now.  Nobody paid any attention to it when it was first released, and nobody pays any attention to it now.

Probably because anyone with eyes can see that its not true.   

Which parts are not true?

[Sugar Dick]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

No kidding, a $70,000 a year salary should put you comfortably in a $250,000 house.  But, this about sums it up:

Solid Democratic voters, the Freemans are evidently phlegmatic in their outlook. The visitor’s gaze is drawn to their fridge door, which is festooned with humorous magnets. One says: “I am sorry I missed Church, I was busy practicing witchcraft and becoming a lesbian.” Another says: “I would tell you to go to Hell but I work there and I don’t want to see you every day.” A third, “Jesus loves you but I think you’re an bad person.” Mark chuckles: “Laughter is the best medicine.”

Seriously though, this story and this angle on the "middle class" (whoever that includes) has been recycled about 1000 times, and apparently it has made its way overseas now.  Nobody paid any attention to it when it was first released, and nobody pays any attention to it now.

Probably because anyone with eyes can see that its not true.   

Which parts are not true?

The part about the magnets on the Freeman's fridge
 

[skycat]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

No kidding, a $70,000 a year salary should put you comfortably in a $250,000 house.  But, this about sums it up:

Solid Democratic voters, the Freemans are evidently phlegmatic in their outlook. The visitor’s gaze is drawn to their fridge door, which is festooned with humorous magnets. One says: “I am sorry I missed Church, I was busy practicing witchcraft and becoming a lesbian.” Another says: “I would tell you to go to Hell but I work there and I don’t want to see you every day.” A third, “Jesus loves you but I think you’re an bad person.” Mark chuckles: “Laughter is the best medicine.”

Seriously though, this story and this angle on the "middle class" (whoever that includes) has been recycled about 1000 times, and apparently it has made its way overseas now.  Nobody paid any attention to it when it was first released, and nobody pays any attention to it now.

Probably because anyone with eyes can see that its not true.   

Which parts are not true?

The part about the magnets on the Freeman's fridge
 

Har har. So you can't tell us which parts aren't true.

[Stupid Fitz]

How much has the avg govt worker's salary increased?

[Dugout DickStone]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

Yeah, the majority of the "middle class" has about as much financial smarts as most homeless people. I'm sure that their loan, now 21 years into a 30-year mortgage was far too small for any lender to look at a refinance so it very well could be in the 8- to 10-percent range or even a little higher. Still, at 10 percent, they're total payment might be about $600/month or about 10 percent of their gross pay.

I have a similar mortgage (a little more, probably a much lower interest rate) and a student loan that comes to about 30 percent of my gross pay, which is substantially lower than the Freeman's. Yet I still manage to sock 10 percent of my pay away and live a very comfortable life.

Of course this means I know what delayed gratification means and I don't eat every meal in a restaurant, but I also like knowing that I'm not going to lose my house if I lose my job.

Bragging about how low one's interest rate is means it is usally not very low.  Like bench press or hotness of wife/gf.

[john "teach me how to" dougie]

How much has the avg govt worker's salary increased?

I don't know how much they have increased, but I do know they make more than their private sector counterparts.

[06wildcat]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

Yeah, the majority of the "middle class" has about as much financial smarts as most homeless people. I'm sure that their loan, now 21 years into a 30-year mortgage was far too small for any lender to look at a refinance so it very well could be in the 8- to 10-percent range or even a little higher. Still, at 10 percent, they're total payment might be about $600/month or about 10 percent of their gross pay.

I have a similar mortgage (a little more, probably a much lower interest rate) and a student loan that comes to about 30 percent of my gross pay, which is substantially lower than the Freeman's. Yet I still manage to sock 10 percent of my pay away and live a very comfortable life.

Of course this means I know what delayed gratification means and I don't eat every meal in a restaurant, but I also like knowing that I'm not going to lose my house if I lose my job.

Bragging about how low one's interest rate is means it is usally not very low.  Like bench press or hotness of wife/gf.

 

[MakeItRain]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

No kidding, a $70,000 a year salary should put you comfortably in a $250,000 house.  But, this about sums it up:

LOL says the troll renting out a basement apartment. 

$70,000 will absolutely not put you "comfortably" in a $250,000 house.  Do you understand all of the costs of a house other than the amount the house sold for?  Insurance, home warranty, taxes.  Your line of thinking is part of the bullshit that started the housing finance crisis.  Odd definition of "comfortable."  It would work comfortably if you either:
a) have the house furnished with garage sale scraps, & have no car payment, & have no student loans/cc debt/etc., & have no luxuries at all like phone/internet/satellite/cable/etc., & most of all have no kids.  So it would work if you wanted to spend a quarter of a mil on a house but live your life like the Amish, but without the 28 kids per household.
b) just live off of a crap load of credit <--- pretty much how most of the middle class lives in places with a high cost of living.

[Sugar Dick]

While it does really suck that 90% of Americans don't get raises that can keep up with inflation, I just find it hard to believe that a family that makes $70,000/year cannot make payments on a $50,000 mortgage. Too many people in this country are just terrible at saving money.

No kidding, a $70,000 a year salary should put you comfortably in a $250,000 house.  But, this about sums it up:

LOL says the troll renting out a basement apartment. 

$70,000 will absolutely not put you "comfortably" in a $250,000 house.  Do you understand all of the costs of a house other than the amount the house sold for?  Insurance, home warranty, taxes.  Your line of thinking is part of the bullshit that started the housing finance crisis.  Odd definition of "comfortable."  It would work comfortably if you either:
a) have the house furnished with garage sale scraps, & have no car payment, & have no student loans/cc debt/etc., & have no luxuries at all like phone/internet/satellite/cable/etc., & most of all have no kids.  So it would work if you wanted to spend a quarter of a mil on a house but live your life like the Amish, but without the 28 kids per household.
b) just live off of a crap load of credit <--- pretty much how most of the middle class lives in places with a high cost of living.

Hey math whiz, let me hit you up with some truth (kenny powers voice).

70k a year, is almost $6000 p/mo in income.  A $250,000 house, would have about a $200,000 mortgage at closing.  A $200,000 mortgage would run you about $1400-$1700 a month (T&I included) depending on your interest rate (less monthly payment in todays interest rate environment).  That's around 25% of monthly income.  A conservative financial planner would tell you 25% of your monthly income should go towards housing.

If you don't know what the f*ck your talking about, don't post.  The only way you couldn't afford a $250,000 house at $70k a year in income is if you were in way over your head in other installment debt (i.e. two car payments, boat payment, jet ski payment, student loans, etc.) in addition to Obama campaign fund donations, moveon.org contributions, and camp ground membership.

Obviously I'm way richer than you, but insulting someone because you're jealous of them is never a good way to go.  :two cents:

Here's something you can play with after you pull your head out of your azz.  http://www.mortgagecalculator.org/
FYI JoCo property tax rates are around 1.5%, your mom's basement in Dodge City probably closer to 1%.  Insurance on a $250,000 house would be around $1200 a year ($100 a month).

[OK_Cat]

Sugar Dick is obviously a college student with no real knowledge on how the world works.   

[Sugar Dick]

Sugar Dick is obviously a college student with no real knowledge on how the world works.   

Use italics numbnutz

[john "teach me how to" dougie]

$70,000 is much more than enough to buy a $250,000 home as long as Obama doesn't shazbot! with the mortgage interest deduction.

[bonercat]

The one thing I am taking away from this post is that I would like a $70,000 salary right now please.

[MakeItRain]

The one thing I am taking away from this post is that I would like a $70,000 salary right now please.

Trust me these idiots and their mortgage calculators don't know what the eff they are talking about.  First of all the family makes $70,000, they don't take home nearly that.  Sugar Dick not surprisingly used tarded math.  $70,000 is $5800/month before taxes.  If the man took home $70,000 he would have said he made $85,000.  Again that kind of math was one of the reasons for the housing crisis.  Sugar Dick doesn't own a house he has no clue as to what "comfortable" means.

[john "teach me how to" dougie]

The one thing I am taking away from this post is that I would like a $70,000 salary right now please.

Trust me these idiots and their mortgage calculators don't know what the shazbot! they are talking about.  First of all the family makes $70,000, they don't take home nearly that.  Sugar Dick not surprisingly used tarded math.  $70,000 is $5800/month before taxes.  If the man took home $70,000 he would have said he made $85,000.  Again that kind of math was one of the reasons for the housing crisis.  Sugar Dick doesn't own a house he has no clue as to what "comfortable" means.

Just this week, I refinanced my mortgage. 4.0% fixed for 30 years and my new payment is $1806.00 (from lender, not calculator). Even if you are only bringing home $4,000 after taxes and medical, you could make it if you have any self control at all.  As long as Obama doesn't shazbot! everything up by raising taxes.

[Jeffy]

The one thing I am taking away from this post is that I would like a $70,000 salary right now please.

Trust me these idiots and their mortgage calculators don't know what the eff they are talking about.  First of all the family makes $70,000, they don't take home nearly that.  Sugar Dick not surprisingly used tarded math.  $70,000 is $5800/month before taxes.  If the man took home $70,000 he would have said he made $85,000.  Again that kind of math was one of the reasons for the housing crisis.  Sugar Dick doesn't own a house he has no clue as to what "comfortable" means.

For the most part, I agree with MIR.  If by chance someone does take home $70000/yr or 5800/month, their house payment should be no more than $1500/month.  That means no more than a $150,000 house.

Too many people want to spend more than 25% of their monthly income on a house and they end up house poor.  Add in a $400 car payment and there's a recipe for trouble, especially if the income goes down.

[john "teach me how to" dougie]

The one thing I am taking away from this post is that I would like a $70,000 salary right now please.

Trust me these idiots and their mortgage calculators don't know what the shazbot! they are talking about.  First of all the family makes $70,000, they don't take home nearly that.  Sugar Dick not surprisingly used tarded math.  $70,000 is $5800/month before taxes.  If the man took home $70,000 he would have said he made $85,000.  Again that kind of math was one of the reasons for the housing crisis.  Sugar Dick doesn't own a house he has no clue as to what "comfortable" means.

For the most part, I agree with MIR.  If by chance someone does take home $70000/yr or 5800/month, their house payment should be no more than $1500/month.  That means no more than a $150,000 house.

Too many people want to spend more than 25% of their monthly income on a house and they end up house poor.  Add in a $400 car payment and there's a recipe for trouble, especially if the income goes down.

CALIFORNIA WOULD BE EMPTY

[MakeItRain]

The one thing I am taking away from this post is that I would like a $70,000 salary right now please.

Trust me these idiots and their mortgage calculators don't know what the shazbot! they are talking about.  First of all the family makes $70,000, they don't take home nearly that.  Sugar Dick not surprisingly used tarded math.  $70,000 is $5800/month before taxes.  If the man took home $70,000 he would have said he made $85,000.  Again that kind of math was one of the reasons for the housing crisis.  Sugar Dick doesn't own a house he has no clue as to what "comfortable" means.

Just this week, I refinanced my mortgage. 4.0% fixed for 30 years and my new payment is $1806.00 (from lender, not calculator). Even if you are only bringing home $4,000 after taxes and medical, you could make it if you have any self control at all.  As long as Obama doesn't shazbot! everything up by raising taxes.

Does "self control" entail not having kids, food, car payments, furniture & appliance payments, student loan payoffs, insurance payments, medical bills on top of insurance, auto repairs, and savings/investments?

My family has all of these things, make more than $70,000 and we will not be moving into a house that costs a quarter mil.  Maybe we should get into counterfeiting?

[Jeffy]

The one thing I am taking away from this post is that I would like a $70,000 salary right now please.

Trust me these idiots and their mortgage calculators don't know what the shazbot! they are talking about.  First of all the family makes $70,000, they don't take home nearly that.  Sugar Dick not surprisingly used tarded math.  $70,000 is $5800/month before taxes.  If the man took home $70,000 he would have said he made $85,000.  Again that kind of math was one of the reasons for the housing crisis.  Sugar Dick doesn't own a house he has no clue as to what "comfortable" means.

For the most part, I agree with MIR.  If by chance someone does take home $70000/yr or 5800/month, their house payment should be no more than $1500/month.  That means no more than a $150,000 house.

Too many people want to spend more than 25% of their monthly income on a house and they end up house poor.  Add in a $400 car payment and there's a recipe for trouble, especially if the income goes down.

CALIFORNIA WOULD BE EMPTY

Hence the housing bubble and continued increase in forclosure rates.