The Secret Shame of the Middle Class

[Kershaw]

http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/

Since 2013, the Federal Reserve Board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased. But the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
Well, I knew. I knew because I am in that 47 percent.

Very long, but seemingly very well researched and written. I enjoyed reading it.

Edit: Just for clarification, it is obvious the author lived beyond his means and I do not condone that lifestyle. I simply meant I enjoyed reading about his thoughts on his mistakes and his mistakes can serve to inform my life.

[2761377]

so, wait- is this Mitt's 47% we're talking about? that put's the 'dink' in coinkydink.

[Das Delfin]

^ Those statistics are not mutually exclusive and the way that paragraph is written is extremely misleading. But the OP's point is more about the author than the people he's writing about

[Cephas]

That article, while interesting, is a psychological demonstration of exactly why the author is in the position he is in. He vacillates incessantly between taking the blame himself, which he rightly should (cash out your 401k to pay your daughters wedding...WTF?) and blaming "stagnant" wage growth. At the same time, he says he makes more than most people, so I'm not sure that him earning more wouldn't have simply meant that he made more bad decisions and was in the same spot he's in now. Actually, his article says that earning more doesn't equate to more stability, so rising wages wouldn't help anyone. The only thing that can help is stopping the ridiculous spending.

Thanks for posting it. I think everyone should read this sort of thing and learn from it - mostly that you are in the driver's seat when it comes to finances and that spending to keep up or because you think you "deserve" will only get you right where this guy is.

On the topic of money. Anyone read the Mr. Money Mustache blog?

[Kershaw]

Exactly.

He goes from valid points about the economy to a complete victimization mentality. He'll say it's not his fault and then he'll write a scenario that is just absurd that he doesn't realize that it is his fault. Clearing out his 401k to pay for daughters wedding, I just about lost my jaw. And paying for his daughter's education, Stanford/Harvard no less? These are all things that his daughters could and should have paid for themselves.

I don't read that blog, but I am on www.reddit.com/r/personalfinance a lot. Which is where I saw the article posted.

[BraveUlysses]

so, wait- is this Mitt's 47% we're talking about? that put's the 'dink' in coinkydink.

You deserve a thousand facepalms for this.


R/personalfinance is only worth reading for the badwithmoney types asking for help on their terrible decisions and habits.

[Kershaw]

Yeah, they can get pretty extreme. They think everyone should be driving a POS car and spending anything on luxuries is absolutely verboten. And I absolutely love seeing the posts that go, "6 months ago I was a broke loser with no job and $120,000 in debt. But I got a job that pays $150,000/year and I paid my debt off in 5 months!" Ok, assbag. Let's all congratulate you for the difficult times you went through.

They do have good advice from time to time though. Like the badwithmoney posts you mentioned.

[2761377]

You deserve a thousand facepalms for this.

snip

a wastrel lifestyle, as outlined by the author, is not likely to engender motivation for conservative political values. which was Mitt's point.

whether this 47% is the same as his, i don't know. it is a coincidence, though.

[BraveUlysses]

a wastrel lifestyle, as outlined by the author, is not likely to engender motivation for conservative political values. which was Mitt's point.

whether this 47% is the same as his, i don't know. it is a coincidence, though.

Two statistics with the same percentage is not much of a coincidence.

Mitt's comments were deriding those who earn so little they don't pay income taxes, this guy is someone who earns enough and pissed it all away while accepting very little responsibility for his actions.

[Kershaw]

And women are 47% of the workforce, IN CANADA! COINCIDENCE? I THINK NOT!

Checkmate, atheists.

[Vincent Brick]

R/personalfinance

*raises hand*

I am on there all the time and I still don't have a clue what I am supposed to do with the old savings I have in no-interest accounts. It hasn't helped me figure much out but don't know where else to learn.

Some of those posts on there are cringe-worthy.

[Kershaw]

Vanguard mutual funds. You're losing money in a no interest account.

[2mAn]

Vanguard mutual funds. You're losing money in a no interest account.

but how will you pay for your $400 emergency?? A savings acct should be where your emergency money is parked. Thats where mine is. Otherwise I have as much as I can afford (which isnt much at the moment) going into my retirement acct. I am contributing more than my company will match, which I feel is the bare minimum when it comes to how much should be allocated to a 401k.

[BraveUlysses]

but how will you pay for your $400 emergency?? A savings acct should be where your emergency money is parked. Thats where mine is. Otherwise I have as much as I can afford (which isnt much at the moment) going into my retirement acct. I am contributing more than my company will match, which I feel is the bare minimum when it comes to how much should be allocated to a 401k.

This can depend on your access level to easy credit, you might not need to keep your money as liquid if you can tap a credit card or a line of credit to deal with a minor emergency like that.

edit: i say this assuming one makes enough money to pay off whatever you put on the credit card as an emergency expense on the next billing cycle, not add it to a pile of existing debt.

[mrsleeve]

really 400 bucks is too much to keep in a savings account........... This is flawed logic that all your extra money should be tied up in some "money making instrument" , if you have to put it on a card, and you dont have the 400 in liquidity can you get it before the bill comes due with out borrowing from somewhere else ??? FFS if I have less than 10k in just my checking account I start to get nervous and thats 3-5 months spending. The decrease in personal stress form not living pay check to pay check was one of the best things that I ever did for my self and my family.

I am a firm believer in keeping 3-6 months minimum and preferably 8-12 months of necessary spending in liquid savings just for this kinda of thing. A visit to the ER for something simple at 3am can be 5k at the drop of a hat (and thanks to the standard high delectables now far more common due to 0-care) much of which you might be responsible for..... Water heater blows out, there is a grand if you can install it your self. Tranny on your 2008 honda DD 1200 bucks..... Get laid off, and and UE is not enough to cover your monthly obligations.... the list is long. I use my CC's all the time and we put our day to day spending on them, but we have the money in the bank to pay them off every single month (since we would be buying all those things anyway) so with the rewards programs attached to them the CC outfits PAY us to use them not the other way around....


I guess I am just old school, and having some liquid capital laying around is important, to cover unforeseen expenses or that nice e30 the old lady 2 streets over does not know how to list on C-list comes up out front on a sunday with a F/S sign on it. It was not all that long ago I had to rely on side work to survive and support my fmaily, and thats where all most all our fun/not mac and cheese/rammen money came from. After learning a few HARD lessons and making better money choices, and change in career that let me earn more money and a few years of frugality (about half a decade in fact). I dont worry about bills anymore, we are at least a year down the line with what we keep in liquidy, and budget for fun stuff now. Anything after that goes into the brokerage account/IRA/401k or the safe. You have to be able to take care of your self now, you cant live for the future with out making it though today....

I used to be part of the 47% and I will be dammed if I am going to be that stressed out in my personal life again.