> Earlier this year, Mr. Guzman put his credit cards in a Ziploc bag with water and placed it in the freezer. In May, however, they went to two weddings, and needed a card to cover the cost of a gift and a rental car.
1. You're never required to attend a wedding
2. You can give gifts with minimal cost
When I got married, I had a friend who was unemployed at the time. Didn't expect a gift, but they still took the time to go out of their way and provide baked goods they homemade for the wedding party. Can't bake? Write a nice letter or compose a song.
You can't mismanage your money, go into debt, and point your finger at anyone but yourself. Can't afford a new car? Don't buy one - buy a used one instead. Can't afford to travel to a wedding? Don't go, send the appropriate cards and letters and niceties. Buried under credit card debt? Don't have a kid yet, don't go get a dog, stop buying on credit.
Yes there are some terrible woes around medical debt, and that's a serious problem we should evaluate and fix, but you can't blame "the economy" or "society" for what is just an inability to manage your money.
> Growing up, Mr. Young says, he was taught to work hard to get a nice house and a reliable vehicle. Now he realizes how easily borrowing too much can undermine this plan.
> “Things we were taught could be assets aren’t really assets,” he said. “They’re liabilities.”
Houses appreciate, cars depreciate. Spend the minimum possible amount on transportation if you want your net worth to go up.
Don't rely on this
Most houses only appreciate if you spend time, effort, and money to properly maintain them. On top of maintenance, in most places, you'll have to pay annual taxes.
When I go to sell my current house, I may break even - essentially living free. However, I certainly don't expect to come out ahead.
Or even grimmer: as above, but start renovations before the market crashes and losing your job. Discover there are major structural problems so it costs 3x more than expected to put the house back into a sellable state. Then, before construction is finished, be forced to sell an unfinished house with negative equity....
If you want to become acutely aware of this, buy a rental property and see how close to just breaking even it usually is as a financial investment.
Late stage capitalism claps back.
most people don't understand exponents, they don't understand the power of compound interest (in either direction), ...
society also amps up weddings, resort style vacations, excess, and so forth.
so yeah, you can certainly blame society.
Actually that's not true anymore, at least where I live. My 15 year old had a class where they explained in pretty good detail how loans work, how one would go about getting a loan without getting ripped off, and how much one would have to pay back. I was very pleased when I saw homework related to this.
I don't know which percentage of kids will absorb (let alone retain) this, but they can no longer claim that society "fails" to teach them.
A quick search shows we still require personal finance to be taught the senior year of high school.
the US health care system will absolutely extort and annihilate your net worth at first opportunity (legions of unnecessary tests/unaffiliated personnel/surprise billing/etc) should something bad happen to you. good luck starting a business like that. yes those words are appropriate: they are criminals that extort and ruin for profit.
many in US are tied to jobs solely for health coverage. so you need to divorce those to have any chance at spinning up entrepreneurship, education, and so forth.
That is such a back-breaking expense when your employer is not footing most of the bill that basically all of my other expenses are insignificant by comparison.
Thankfully, I think we're finally nearing critical mass of people who realize health insurance in the US is completely fucked, that something has to change before long (a decade maybe?).
> Corps would rather hire you as a contractor, to pay you less so they make more. There are not enough jobs, because there is no process for teaching about free enterprise in America.
Corps would rather hire you as a contractor exactly because free enterprise is taught in America.
Milton Freeman made a famous speech where he decried that any businessman who doesn't maximize returns to the shareholders is violating the ethics of the "free enterprise" system. That speech was coincidentally timed about the time wages stopped rising for US workers.
> We have been told to get a good education, to get a good job and to live happier every after.
I hate this trope for the same reason I hate people saying that the USA is "exceptional": it breeds complacency. It's Disney fairy tale junk that should be left in sunday school where it's taught.
This sentiment seems very US specific (maybe 1st world). My background is ahem classic western 1st world culturally, but grew up in a 3rd world country. And for me that cliched recipe worked exactly like it says on the tin. Even with a 3rd world university name on my CV I'm comfortably competitive globally. So when I read the US guys struggling I'm left a little puzzled. Not arrogant enough to assume I'm better so this smells like a country-structural issue.
Which to me suggests the 1st world countries have moved into a post uni-edu era if that makes sense?
Actually I think that works to your advantage. There’s a class of hiring managers who figure that if you went to college in America but didn’t go to Harvard, Yale or MIT, you’re not qualified to tie your own shoes. They don’t know anything about foreign universities, though, so they figure one is as good as any other.
Fortunately I picked a niche where my countrymen dominate so all worked out fine.
>They don’t know anything about foreign universities, though, so they figure one is as good as any other.
I've literally seen directors grab a senior manager in the hall with "I'm supposed to interview this person who is from same country as you - look at this CV and tell me does this look solid"
I racked up a grand total of 4k USD (fees) debt.
3k legit expense, 1k me fkin up. Parents covered the 3 clean, 1k parental loan. I enter adult life nearly (1k) debt free with a world competitive degree.
And that's for an education I'll happily stack 1:1 with against other top unis globally.
I look at the US guys with 100k debts and my god...I'm thankful for my roll of life dice...competitive degree with near zero debt must be 0.1%
If that's what people believe, then it's a problem.
Even when people think back to the 1950's, people still struggled with money. It certainly wasn't "live happily ever after".
It has rarely been easier to get a job than it is now.
> Extremely low unemployment
This is accurate, if you measure U3 -- which is short term unemployed, as measured by surveys required to get short term unemployment insurance. If you measure the labor participation rate (U6), it shows something less than "extremely low unemployment".
That said, I think it's largely a problem with the candidates/employees and their mismatch between company expectations. Many unemployed have already filed for disability, so it's illegal for them to apply to work again. Many are convicted felons and have a criminal record which makes them unemployable in many careers. Many have life problems (learning disability, extreme substance abuse, illiterate, can't hold down a job, live in a region with a death of job openings and unable/unwilling to move, caring for a dependent, etc).
considering that it is the tech companies most involved in hiring h1b. it is not surprising that they are the main entities pushing this lie.
Also, the hot jobs market is not an American phenomenon. It's worldwide:
The Economist | The great jobs boom https://www.economist.com/leaders/2019/05/23/the-rich-world-...
It's so obvious that this is a gig economy thing where survey data are being manipulated for the benefit of these tech companies. the issue is that these companies can't justify all the h1b requests if so many us citizens are out of work. to fix that it's clear they are fudging the definition of an employee.
they've lowered the fed fun rate for the first time in over 10 years. the unemployment numbers are effectively a sham. you can't have recessionary pressures and "full employment".
I think you're going to have a bad time arguing that point. H-1Bs constitute an fraction of the overall tech sector jobs. Personally, I might agree with you on the grounds that those H-1Bs cause a domino effect on overall job openings. However, the argument, at face value, that H-1Bs are a significant factor in the difficulty of finding a tech sector jobs is, in my opinion, largely a scapegoat.
In addition, “we robustly find that new H-1Bs cause no significant increase in firm employment. New H-1Bs substantially and statistically significantly crowd out median employment of other workers,” they continue. This result conflicts with the widely repeated claim that foreign workers create American jobs, which is based, as we have previously reported, partly on the work of economist Madeline Zavodny of Agnes Scott College in Decatur, Georgia. Furthermore, “[o]ur results are consistent with the possibility that H-1B and non-H-1B workers are perfect substitutes. This is notable in light of frequent claims that H-1Bs have unique skills that cannot easily be obtained elsewhere.”
The authors of this “important” study “have done an exhaustive analysis, given the data available, and they have better data than anyone to date, best I can tell,” says labor force expert Hal Salzman of Rutgers University in New Brunswick, New Jersey, by e-mail. “And their findings are consistent with all the other analyses that were done competently—and consistent with what the companies themselves state is the function of H-1B (to lower wage costs and raise profits).”"
https://www.sciencemag.org/careers/2015/05/economists-h-1b-v... (Economists: H-1B visas suppress wages)
https://gspp.berkeley.edu/assets/uploads/research/pdf/h1b.pd... (The Effects of High-Skilled Immigration Policy on Firms:
Evidence from Visa Lotteries)
Wait, what? Where have you been? I mean, 9/10 is a fraction, so yeah… but I’ve been in software development for 25 years across five different geographic regions (of the United States) and I’m usually the _only_ non-Indian non-H1B software developer there.
They take home $8070 .
The mortgage might be $2130 (assuming $360k house, $300k initial mortgage @ 5%) .
Credit cards of $50k - if they put $1000 on it each month @ 12% that's 70 months to pay off .
For $51k of student loans, lets say they are paying $985/month (which would take 5 years .)
So far I've used up $4115 and have $3955 left. Let's assume they pay $2000 for childcare and $1000/month for groceries for a family of three. They'll also have utilities and insurance payments to make. These are all insane number in my opinion, and I was already generous with overpaying on the credit cards and rapidly paying towards the student loans. Now they've only got $955/month left (which some people are actually able to live on.) What did I miss from their budget and which of the numbers did I get wrong?
I'm not saying the article is wrong. I'm saying what was the point of their example household?
These folks are actually doing quite well. And their housing is quite affordable.
But, you know, they ran up a bunch of consumer debt, including $8k on a high-interest TJ Maxx card...
The story here is of a middle-class couple overspending on consumer goods.
People don't naturally pay the minimum for each necessary bill and never buy anything else. They have a stream of money and tend to spend it on what they see their costs are now.
Some adults are cognizant of future planning and are detailed with their budgets (past, present, and future), but I suspect most are too tired from working + raising kids to spend the extra mental effort to budget carefully and stick to it.
> about 23 years to pay it off
i'm guessing that's much much higher than 12% interest, although we don't know what the minimum payment is.
i just looked at this site (TJMaxx isn't available in my country [thankfully?]) and it's nearly 30%:
not sure if correct but i've never seen 12%, only mid 20s
I think there are three classes of interest rates:
- teaser rates (very low, but only in the first x months, then they reset to a standard rate)
- standard rate for decent credit
- default-risk rate -- card holders are moved to this rate by a clause in their contract if they default on any credit obligation on their credit report or if they miss a certain number of payments on the "due by" date.
I'm using my own terminology; no idea what industry jargon is for these.
* Medical Insurance
* 401(k) Contributions
* HSA/FSA Contributions
* Commuting Expenses
* Auto Loan
* Auto Insurance
* Property Taxes (unless you rolled that into the mortgage)
* Home owners insurance
All of that will easily chew up that 955 left a month. And, that doesn't even take into consideration a date night or two a month, and general keep me out of a depressive state stuff.
So that leaves the optional retirement and healthcare savings, plus commuting/gas (which may have some overlap.) And again I was going really high on the debt payoff estimates, groceries, and hopefully child care (though I have seen even worse.)
But yes if have student loans, but then choose to take on a car loan and a mortgage payment that stretches you thin, you start to have to choose between savings, debt pay off and fun things including eating out and more expensive forms of entertainment.
The snapshot isn't the complete picture, but they definitely look like they are in a perfectly reasonably situation, and they could have those optional debts paid down relatively quickly, which would massively ease up their budget.
[EDIT] which is to say that even without a car payment, you better be saving the equivalent of at least half a car payment a month, or you're probably falling behind.
Beyond the obvious examples of borrowing to get an in-demand education and buying real estate in an in-demand location -- there are other smart times to borrow as well, like to expand a business.
It's quite difficult to really get ahead without at least a little leverage.
The irony is that the poorer you are, the more likely you are afraid of any and all debt -- which can be a very bad thing. In philanthropy I've seen many stories of young people who refuse to go to college due to a cultural fear of debt -- which often gets them stuck with a lifetime of low earnings. Or folks avoid taking on a mortgage only to find that rent inflation makes it difficult for them to retire later in life.
(I realize that the article is much more focused on "bad" debt: car loans and running up credit cards to buy consumer goods.)
Any time you have a chance to stash spending you were already making into 0% debt, you are coming out ahead.
There are plenty of reasons to take on debt that make business sense.
Most of what people go into this kind of debt over is not debt that a well-managed business would take on.
The Corporate Debt is going to BITE so hard in the next recession -- I say, bring them the pitch forks and every person who had a C in their title be prepared for clawbacks!
But "Standard APRs" are crazy high at around 14-18%. I have never understood why credit rates are so high compared to literally any other type of borrowing. I also don't understand how standard rates are sky high while promotional rates are near the rock bottom.
It's baffling. But it's helped me manage big sums of debts during a couple of professional transitions I've gone through over the years. Without those 3-5% balance transfers I would still be deeply in debt today.
Promo rates are the bank's marketing department paying to hook in the card holder on the probability that they will use the card for a long time. The standard rate largely factors in the cost of doing transactions (shared with the merchant percentage) and covering the risk of default.
The 14-18% rates go to 24%+ if the card holder moves to a higher risk class (recently defaulted on another card, missing payment dates, etc).
People are getting into debt to buy cars and go on vacation, this is ridiculous. Buying a house, even if it's a stretch on your income -- is not too bad. You can build equity and there is lots of support, you can even rent out a room. But going into debt to buy a luxury car? Absolute stupidity.
Making hard rules about debt is what gets people into trouble in the first place. We need to spend some time teaching/learning how to reason about debt in order to make these decisions.
But I would like to highlight that "middle class" is a made up concept and a fairly arbitrary estimation of class based on net mostly consumeristic factors.
For instance, to be middle class I should be able to pay for college with loans, own a home of ample size, have two cars and afford to have a child and pay for child care while both my partner and I work. I must maintain this definition of 'middle class' at all costs, even if that that means taking on $50,000 of credit card debt. Because I am middle class and I have the stuff to prove it.
Unfortunately, this means the middle class will continue to get poorer and deeper in debt because yes, wages have stagnated, but we continue to go into debt to maintain the appearance of middle classism based on consumeristic targets.
Subtle, but important, difference.
So now instead of 2100 a month paying mostly minimums and looking at 8 years I'm doing 1450 and looking at 3 years. The extra 600 I'm "saving" per month may sometimes go towards the consolidated loan, but often I need to use it - which is what the credit cards were piling up for.
Debt can be a trap because people are simply not paid enough but their expenses outweigh their income. If this happens you need to change jobs, ask your boss for more or change your budget. In my case I asked for $30k more per year and got $20k more per year.
Other tricks: Go to ting or a cheap MNVO, Stop justifying yet another $10 / month netflix/prime/hulu - they all add up quickly. Get off the $160/mo cable plan. Buy your own cable modem and don't rent it from the cable company. They cost $40 and your cable provider is renting it to you for $10 per month.
Food: Set up a "chipotle" at your house, cook in large batches and think of ways to make Tacos or Burritos quickly. This is the most complicated area - people get tired of food quickly. Food can be the most expensive if you just keep eating out.
And of course, as mentioned many times - budget budget budget. There's no way to get out of debt if you don't simply have a balance sheet showing income and expenditures per month. If you don't know then there's no way to stay below the line.
I'm sure there are some banks out there now that help with this. I'm sure it's been said elsewhere but you don't owe society anything - you're just here like everyone else. Stop gifting people, stop xmas shopping, stop going to weddings, stop having kids. I've done all these things and I'm quite happy. My parents stopped sending me stuff and there's no expectations either way now, it's fabulous for everyone.
Mr. Guzman literally froze his credit!
Marx: the section of society that makes their income from a combination of capital and labor.
WSJ: people that buy more expensive things than Doritos
While you may fall in the middle of the distribution, when most people say 'middle class' they mean you have a reasonable amount of stability and security in your life.
On a side note, I think all the above are excellent ways of debt.
Right now you can get a mortgage for under 4%. Mortgages typically do not compound interest. So it makes more sense to dump your savings into one of many savings that pay a similar interest rate or higher & do compound interest.
Many car dealers have 0% interest if you want to buy your car & not lease.
Of course any education debt that gets you a salary much higher than the debt makes sense as well.
EDIT: Here is an interesting interview from Asher Edelman about the velocity of money and Bernie. https://www.youtube.com/watch?v=a9xSVzdUNqo
Friend of mine got a free ride to MIT courtesy of wealthy grandparents on his mothers side.
Another friends single mother was on welfare, as a reasult he got a bunch of grants which paid for everything. He was lucky because he managed to get his BSEE before Reagan made sure kids like him got screwed good and hard.
One can argue that that people currently suffering under high levels of student debt were given a raw deal already.
Life is so very unfair already. That it's 'bad' to make things more fair for one set of people but not another is a weak argument in my opinion.
Tradesmen can be forgiven for not understanding macroeconomic policy though, which is why it isn't their role to set it, just as I don't ask an economist to weld a pipeline together. I can still respect the roles of both practitioners regardless.
Two wrongs don't make a right.
> Tradesmen can be forgiven for not understanding macroeconomic policy though
Well that's very classist of you. I've seen a whole mess of folks with fancy credentials that are about as useful as a pair of tits on a hog.
You know what I saw when I went to university? Professors willfully lowering the bar to cater to unmotived, unprepared students because tuition dollars. Fix that and then we can talk about free education, until then you're just pouring gasoline onto a dumpster fire.
I wouldn't have a welder or other tradesperson perform neurosurgery on me, nor argue as my defense attorney in court. Why would I expect them any more qualified to set economic policy? That's not classism, that's common sense and reason. What is more astounding is that someone could be of the opinion that as person not educated in economics should have the ability to set such policy.
An intelligent, rational human being evaluates a decision and delegates the responsibility to a domain expert when they have ascertained that the domain knowledge and experience they have falls outside of what is required to make said decision. Any other course of action isn't just irrational, but possibly dangerous ("unknown unknowns", "you don't know what you don't know").
Well that's moving the goalposts. You'd made it out like a tradesman couldn't understand economic policy to begin with, that's a different contention.
I sincerely doubt it takes a university education to understand that more money changing hands is a good sign of a healthy economy. They do still teach civics and economics in high school.
It also doesn't take a degree to know that giving money to someone, or in this case something, with no incentive to act right is a bad thing.
And it entirely makes sense to expunge debt that shouldn’t have existed because of broken public policy and an ignorant electorate that withdrew public funding from higher education, necessitating the need for education loans. I understand it might be difficult for some to understand this concept, which is why you push forward despite the opinion of those people.
Like it or not those tradesmen get to vote. You're gonna need to do a job selling your bailout than "the money will bounce around our economy" (which is a valid claim IMO).
There can be multiple bad ideas at one time. Wasting money is wasting money.
it currently is not, which is just asinine; it's modern indentured servitude by any other name (naive 18y/o signs up after getting hustled, etc.)
Which means a student loan cancellation would help the middle class the most since student debt would be a higher percentage of their income and the bottom 75% hold 66% (the majority) of the debt.
> Most student debt is owed by people who are already in the top quartile of wealth
I interpreted most to mean majority. It's clear the middle quartiles holds the majority of the debt not the top.
Why can't you just support policies that help other people without worrying about yourself?
Is 'I had it bad so everyone else should, too' really where you want to live?
I don't care that I'd still have to pay, I want my country to be better. To be a bit melodramatic, yours and my ancestors sacrificed a lot to be where we are now. I'm just glad the only thing I'm likely going to need to sacrifice is some extra tax.
Why not just tax less and let people make their own decisions with how the money they've earned is spent. Every time you create a new tax it's one less choice (freedom) someone has in their life.
That being said, it's hard to blame the individual going to university if there career requires that and it's also a fact that a tradesman is probably going to be earning a lot more than a student for at least the period of time they're studying.
I also believe (like I said before) that allowing people financial help to study improves the whole country, especially being that every family can afford to send their children so for myself I can justify this extra tax.
Your point hasn't swayed me, but it has made me consider the 'other side' at least so thank you.
Same here in the US, but you're right, it's an honorable job and nothing wrong with it.
> allowing people financial help to study improves the whole country, especially being that every family can afford to send their children
In the US we already have that as a system. See: FAFSA/Pell Grants. Those with low incomes already do receive free/subsidized college education.
These "new" proposals say that _everyone_ regardless of income can get free money for college. So in that way it's really just a giveaway for the middle/upper class. Considering that, the argument that it will help the poor doesn't hold water for me.
> Your point hasn't swayed me, but it has made me consider the 'other side' at least so thank you.
Same here, appreciate debating with someone respectfully even if opinions are different.
If you had just paid off your student loans by diligently saving and the Labour party said they'll forgive the debt of your classmates who partied it up and never paid back their loans would you feel the same?
In some respects, it would actually work in a similar way though. In their statement, they said that they'd forgive the student debt of those currently studying, but not those who had already finished (like me). For this I can safely say that I'd still be incredibly happy.
By the way, I'm not trying to paint American's in a negative light. I'm a big fan of America, but it is a difference as far as I can tell, although which line of thinking is right is incredibly hard to say.
The US is more individualistic than the UK, but we're not entirely heartless bastards.
Because it makes society better off, that's why.
You shouldn't have to, that's absurd! They can buy their own car :)
> Why should I pay for firefighters even though my house has a very low risk of burning down?
To protect the life and property of the entire community. This gets down to the point of being a necessity to protect a large group of people vs an individuals choices affecting _only_ themselves.
> Why should I pay for a rehab clinic even though I'm not an addict?
Debatable whether you should have to pay for this or not. But I would prioritize someone's life when it's on the line over a nicety like a college education. You can survive without a college education, just like you can survive without a subsidized Tesla.
A) money IS debt. The money in your savings account, that you are so responsible with, is money that originated as a bank loan, or government debt.
B) If everyone is responsible, then you end up with the paradox of thrift where you get a deflation spiral and economy tanks.
So thank those who are being "irresponsible" for your savings, because without them you would have no income.
If you want to know more about how money works, read the great resource provided by the Bank of England.
Or watch this great video by David Graeber,
Why is what I do with my own money any of your or the government's business?
> money IS debt. The money in your savings account, that you are so responsible with, is money that originated as a bank loan, or government debt.
You're going to need to explain a bit more here. Arguing that money that was _formerly_ debt is still debt when in my possession is gonna take some strong convincing :)
Let's say I pay for my education in cash directly to the university, without taking any private or public sector loans. Would that cause a "deflation spiral" as you put it? It's just bypassing a middleman that is unnecessary if I had saved that cash over time to be able to pay for the goods/service I'm receiving (in this case: an education). So, yes, while money may be government debt, I don't see how avoiding private/public loans would have negative economic impacts overall on society.
It's not that at all. It's "I didn't live high on the hog in college, so why should I pay you to?"
So many garbage people that can't see the forest for the trees. Think of how many more customers with disposable income you could have (if you wanted to start a business) if so many people in this country weren't deep in debt.
Bet it was lower than what the government charges kids that are trying to make a better life for themselves and contribute to a productive society.
its also important to remember that a bunch of banks were forced to take bailouts against their own wishes, as either a precautionary measure, or possibly as marketing spin to make it look like everyone was in equal trouble. https://projects.propublica.org/bailout/main/list/stress_tes... Some banks literally didnt have a choice, the government said "you are taking this money."