Comments on: Going Broke on $50,000: The Story of the Struggling American Middle Class. The $50,000 Median Household Budget. http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/ Investing ideas for preserving wealth in a fluctuating market. Fri, 19 Mar 2010 00:18:05 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Don Burnstein http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12847 Don Burnstein Tue, 01 Sep 2009 17:50:59 +0000 http://www.mybudget360.com/?p=1138#comment-12847 I think that's happening now. Even the upper 10% are taking kids of private schools, watching 20 years worth of investments get whacked, real-estate values declining, health insurance at the top end of the range or higher - around $20,000 a year. They have no choice. I 'd say a $100,000 salary would probably take that revised budget, add enough to bring it up to $60,000 which leaves the low 6 figure earner little wiggle room. The average $50,000 wage earner is poor now. As you implied, what was once taken for granted are now unaffordable luxuries. Add in the anxiety of losing even this teneous connection to a low standard of living by USA standards by a sudden job loss or illness and even if they get an occasional windfall, it will be used to pay down debt, or put in savings. This was the sweet spot at one point for a consumer driven GDP that was pulled forward by debt . I once did a look at Consumer debt in 1945-46, adjusted it for inflation and population and came out with a figure of 150 billion compared to the 2.5 trillion we have now not counting mortgage debt. People have been fiancing their onw deficits for a long time and now many are forcibly deleveraging through bankruptcy. I suspect next year, individual bankruptcies will exceed the record set in 2005 when people filed to get ahead of the reform in October. In My neck of the woods, filings are up 50% Y oY I think that’s happening now. Even the upper 10% are taking kids of private schools, watching 20 years worth of investments get whacked, real-estate values declining, health insurance at the top end of the range or higher – around $20,000 a year. They have no choice. I ‘d say a $100,000 salary would probably take that revised budget, add enough to bring it up to $60,000 which leaves the low 6 figure earner little wiggle room.

The average $50,000 wage earner is poor now. As you implied, what was once taken for granted are now unaffordable luxuries. Add in the anxiety of losing even this teneous connection to a low standard of living by USA standards by a sudden job loss or illness and even if they get an occasional windfall, it will be used to pay down debt, or put in savings. This was the sweet spot at one point for a consumer driven GDP that was pulled forward by debt . I once did a look at Consumer debt in 1945-46, adjusted it for inflation and population and came out with a figure of 150 billion compared to the 2.5 trillion we have now not counting mortgage debt.

People have been fiancing their onw deficits for a long time and now many are forcibly deleveraging through bankruptcy. I suspect next year, individual bankruptcies will exceed the record set in 2005 when people filed to get ahead of the reform in October. In My neck of the woods, filings are up 50% Y oY

]]> By: Sam http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12824 Sam Tue, 01 Sep 2009 03:18:04 +0000 http://www.mybudget360.com/?p=1138#comment-12824 The grim reality is that most of us will need to become "third worlders." We're going to have to go without health care, AC, cars, etc etc. Those will all become unaffordable luxuries for most of us soon. We will have to learn to eat pb&J, beans and rice, "drive" a bicycle, and wear our coats, hats, gloves all day long in the house in winter like they do in the unheated houses in the mountains of Peru. We'll have to go to bed at sunset and get up at sunrise like the Amish do in order to save on the electric bill, dry our clothes on a clothesline, probably eventually wash on a scrub board, etc etc etc. Perhaps some of us will emigrate to China to open an "American" laundry in China in the future! The Chinese have done our laundry for decades. Soon the tables will turn and we will end up doing their laundry.... What goes around comes around in this world! The grim reality is that most of us will need to become “third worlders.” We’re going to have to go without health care, AC, cars, etc etc. Those will all become unaffordable luxuries for most of us soon. We will have to learn to eat pb&J, beans and rice, “drive” a bicycle, and wear our coats, hats, gloves all day long in the house in winter like they do in the unheated houses in the mountains of Peru. We’ll have to go to bed at sunset and get up at sunrise like the Amish do in order to save on the electric bill, dry our clothes on a clothesline, probably eventually wash on a scrub board, etc etc etc. Perhaps some of us will emigrate to China to open an “American” laundry in China in the future! The Chinese have done our laundry for decades. Soon the tables will turn and we will end up doing their laundry…. What goes around comes around in this world!

]]> By: Don Burnstein http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12808 Don Burnstein Mon, 31 Aug 2009 19:28:16 +0000 http://www.mybudget360.com/?p=1138#comment-12808 $1200 is slightly above low income housing for Indiana and this is a sate that has really been hard hit. Rentals went way up as foreclosures keep going like gangbusters. The notion that there are plenty of places available for $800 anywhere in the country, especially if the renters have impaired credit from a foreclosure is just dreaming. There may be something available for a single person with one bedroom. But if they have kids, and need two-three bedrooms, $1200 is cutting it close. Once the inventory of foreclosed, devalued homes under $100,000 are eaten up by investors and first time home buyers no longer get a $8,000 credit, and/or the banks start to actually foreclose on the properties that are in the process but have not been pulled through so they can be carried at full value on their balance sheets even though it's a non-performing asset have been it's reasonable to assume the supple-demand equation will be highly in favor of renters. That $1200 rental may still be available as long as people don't mind a few murders in the street and the sounds of automatic gunfire. I just love it when Americans show no empathy and no sympathy for the plight of the middle class that have driven many of those American's wealth. Even Henry Ford believed that his workers needed to make enough to buy the cars he sold. The same people then show their intelligence by showing how "easy" it is to balance the payments with a low income . Wiping their hands after "solving" this problem. They then HAVE to interject how they have no feeling for a large part of the country that are in situations where the above analysis would be pure nirvana for them Not only that , The analysis is also showing a family that is virtually debt free. Add a few credit card payments to the low car payment, and maybe some payday loans that were used to cover the out of pocket expenses for a crappy health insurance policy. Then see what's left. A better representation of the family's finances should include 1. Monthly Minimum Payments on Credit Cards at 35% at the average debt of $9,000. $656 a month with the new 5% minimum payment or $262 per month at the old 2% minimum payment. 2. Auto Fuel assumes 3 fill-ups on a family size vehicle and 4-5 fill-ups on a compact car. Or 1200 miles a year or 100 miles a month. Really? With kids and commute. I would put it up around $700.00 at a bare minimum 3. Out of pocket medical expenses. $250 per month This is after they have charged them to their credit limits on the credit cards that no longer have any credit left on them. 4. Insurance needs to be bumped to include Life Insurance and Renter's Insurance. 5. Bank Charges: They don't make 40 Billion in the aggregate on wealthy people. So lets make it $50 a month 6. Health Insurance: Less and less employers are offering fully paid health insurance, so go ahead and eliminate the clothes, entertainment, personal care and vacations. Then add about $100. If they are not supplied any insurance which becomes almost a given for the 30- 50% of the middle class that are employed by small business or own small businesses. That can be $800 for a major medical for a family of 3 to $1600 for a family of four assumming no preexisting conditions. Of course 47 million are going naked but there is no break down of the income levels. 7. Gas and Electric in any of the northern states needs to be punched up by 3-4 times. Make it $200.00 So here is what I think is a more realistic snapshot: 1. Rent $600 2. Gas and Electric $320.00 3. Phone $50 4. *DSL (no way) 5. Insurance $225.00 6. Groceries $550.00 7. * Car Payment $300 8. Auto Fuel: $700.00 9. Auto Maintenance: $50 10. Household Maintenance $40.00 11. Misc $100 12. Health Insurance $325-$1200 13. Credit Card payments $252-$656 14 Out of pocket medical Expenses $250 15. Bank Charges $50.00 Total Expenses : ($3812.00 ) Take Home: : 3285.00 (Deficit)/Dsiposable $1200 is slightly above low income housing for Indiana and this is a sate that has really been hard hit. Rentals went way up as foreclosures keep going like gangbusters. The notion that there are plenty of places available for $800 anywhere in the country, especially if the renters have impaired credit from a foreclosure is just dreaming. There may be something available for a single person with one bedroom. But if they have kids, and need two-three bedrooms, $1200 is cutting it close.

Once the inventory of foreclosed, devalued homes under $100,000 are eaten up by investors and first time home buyers no longer get a $8,000 credit, and/or the banks start to actually foreclose on the properties that are in the process but have not been pulled through so they can be carried at full value on their balance sheets even though it’s a non-performing asset have been it’s reasonable to assume the supple-demand equation will be highly in favor of renters. That $1200 rental may still be available as long as people don’t mind a few murders in the street and the sounds of automatic gunfire.

I just love it when Americans show no empathy and no sympathy for the plight of the middle class that have driven many of those American’s wealth. Even Henry Ford believed that his workers needed to make enough to buy the cars he sold.

The same people then show their intelligence by showing how “easy” it is to balance the payments with a low income . Wiping their hands after “solving” this problem. They then HAVE to interject how they have no feeling for a large part of the country that are in situations where the above analysis would be pure nirvana for them

Not only that , The analysis is also showing a family that is virtually debt free. Add a few credit card payments to the low car payment, and maybe some payday loans that were used to cover the out of pocket expenses for a crappy health insurance policy. Then see what’s left.

A better representation of the family’s finances should include

1. Monthly Minimum Payments on Credit Cards at 35% at the average debt of $9,000. $656 a month with the new 5% minimum payment or $262 per month at the old 2% minimum payment.

2. Auto Fuel assumes 3 fill-ups on a family size vehicle and 4-5 fill-ups on a compact car. Or 1200 miles a year or 100 miles a month. Really? With kids and commute. I would put it up around $700.00 at a bare minimum

3. Out of pocket medical expenses. $250 per month
This is after they have charged them to their credit limits on the credit cards that no longer have any credit left on them.

4. Insurance needs to be bumped to include Life Insurance and Renter’s Insurance.

5. Bank Charges: They don’t make 40 Billion in the aggregate on wealthy people. So lets make it $50 a month

6. Health Insurance: Less and less employers are offering fully paid health insurance, so go ahead and eliminate the clothes, entertainment, personal care and vacations. Then add about $100. If they are not supplied any insurance which becomes almost a given for the 30- 50% of the middle class that are employed by small business or own small businesses. That can be $800 for a major medical for a family of 3 to $1600 for a family of four assumming no preexisting conditions. Of course 47 million are going naked but there is no break down of the income levels.

7. Gas and Electric in any of the northern states needs to be punched up by 3-4 times. Make it $200.00

So here is what I think is a more realistic snapshot:

1. Rent $600
2. Gas and Electric $320.00
3. Phone $50
4. *DSL (no way)
5. Insurance $225.00
6. Groceries $550.00
7. * Car Payment $300
8. Auto Fuel: $700.00
9. Auto Maintenance: $50
10. Household Maintenance $40.00
11. Misc $100
12. Health Insurance $325-$1200
13. Credit Card payments $252-$656
14 Out of pocket medical Expenses $250
15. Bank Charges $50.00

Total Expenses : ($3812.00 )
Take Home: : 3285.00
(Deficit)/Dsiposable

]]> By: RWS http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12796 RWS Mon, 31 Aug 2009 14:41:54 +0000 http://www.mybudget360.com/?p=1138#comment-12796 TJ is just typical of all republicans. They make statements like that until it happens to them and they are the first to whine. Democrats and progressives are simply people who are smart enough to realize that it could easily happen to them and that care about those who have less. TJ is just typical of all republicans. They make statements like that until it happens to them and they are the first to whine.
Democrats and progressives are simply people who are smart enough to realize that it could easily happen to them and that care about those who have less.

]]> By: Zack S http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12773 Zack S Mon, 31 Aug 2009 00:40:18 +0000 http://www.mybudget360.com/?p=1138#comment-12773 Hmmm, let's see. A few million people lose their jobs and homes in the near future and end up on the street. I wonder what those formerly middle class people will do with their now copious free time? You think they might be a tad angry?? Hmmm, let’s see. A few million people lose their jobs and homes in the near future and end up on the street. I wonder what those formerly middle class people will do with their now copious free time? You think they might be a tad angry??

]]> By: J http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12765 J Sun, 30 Aug 2009 22:09:36 +0000 http://www.mybudget360.com/?p=1138#comment-12765 Try to get a decent house rental in Houston for $1200, not possible, and if you want a good school then your into $2000+ Try to get a decent house rental in Houston for $1200, not possible, and if you want a good school then your into $2000+

]]> By: Bubba http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12763 Bubba Sun, 30 Aug 2009 21:47:57 +0000 http://www.mybudget360.com/?p=1138#comment-12763 $1200 gets you nice rental home? Not anywhere near Los Angeles. I pay $1750 for my modest 50 year old house with a small yard and that's because last November I negotiated a $250 drop in my rent. All the "systems" at work here run against the prototypical American who is working hard to pull himself up "by his own bootstraps". If you are a free-lancer you not only have to pay high rent (pay the mortgage for someone who bought several homes years ago when they were cheap) you also pay self-employment tax and can't apply for unemployment if things get tough. Then look at how every company you pay monthly bills to is cheating, gouging, or tricking you...slowly nickle and diming you to death. The cable company, the phone company, the water and power company...here in California I called the DWP to find out what the $80.00 charge was (2 months) and I was told that the city wasn't paying for trash pickup anymore and it cost me $36.00/month more now. $1200 gets you nice rental home? Not anywhere near Los Angeles. I pay $1750 for my modest 50 year old house with a small yard and that’s because last November I negotiated a $250 drop in my rent.

All the “systems” at work here run against the prototypical American who is working hard to pull himself up “by his own bootstraps”. If you are a free-lancer you not only have to pay high rent (pay the mortgage for someone who bought several homes years ago when they were cheap) you also pay self-employment tax and can’t apply for unemployment if things get tough. Then look at how every company you pay monthly bills to is cheating, gouging, or tricking you…slowly nickle and diming you to death. The cable company, the phone company, the water and power company…here in California I called the DWP to find out what the $80.00 charge was (2 months) and I was told that the city wasn’t paying for trash pickup anymore and it cost me $36.00/month more now.

]]> By: KB http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12756 KB Sun, 30 Aug 2009 19:36:00 +0000 http://www.mybudget360.com/?p=1138#comment-12756 Yeah, TJ. Nice. Instead of putting 1,200 into a home payment towards a house you will actually OWN, they should totally cram themselves into a small 800 dollar rental where they will never receive equity or property and will have to deal with neighbors on either side, as well as above and below them, and mediate any problems through a landlord. Brilliant. You should be be in charge of the Federal Reserve, my friend. Yeah, TJ. Nice.
Instead of putting 1,200 into a home payment towards a house you will actually OWN, they should totally cram themselves into a small 800 dollar rental where they will never receive equity or property and will have to deal with neighbors on either side, as well as above and below them, and mediate any problems through a landlord.

Brilliant. You should be be in charge of the Federal Reserve, my friend.

]]> By: silver http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12754 silver Sun, 30 Aug 2009 19:05:19 +0000 http://www.mybudget360.com/?p=1138#comment-12754 The answer to collapes is food supply,water,guns an ammo,an silver and secure shelter and above all else..... prayer without ceasing. God Bless. The answer to collapes is food supply,water,guns an ammo,an silver and secure shelter and above all else….. prayer without ceasing. God Bless.

]]> By: TX http://www.mybudget360.com/going-broke-on-50000-the-story-of-the-struggling-american-middle-class-the-50000-median-household-budget/comment-page-1/#comment-12749 TX Sun, 30 Aug 2009 15:51:11 +0000 http://www.mybudget360.com/?p=1138#comment-12749 TJ- While you're at it, just find a house that only costs $600/mo to rent- Even better! While we're dreaming, why not a house that someone will let you live in for free? Gotta be a few of those out there! Stupid poor people, they just don't know how to do anything! TJ- While you’re at it, just find a house that only costs $600/mo to rent- Even better! While we’re dreaming, why not a house that someone will let you live in for free? Gotta be a few of those out there!

Stupid poor people, they just don’t know how to do anything!

]]>