I left out one key entry after the “minimize your taxes” item:
You can accomplish that more easily if you start sooner rather than later. Debt used smartly is a huge way to start sooner.
The “get ahead” question is a good one that I should have made clearer from the start.
In the context I’m talking about, it means “having upward mobility,” which INCLUDES getting out of poverty. This, I think, makes the anxiety about debt more sensible and complicated, at least to me, who sees the idea of having to go into debt to better yourself enough to be able to have food every night as absurd.
You, any you, don’t have to go into debt to better yourself to be able to afford food. That’s pure friggin’ nonsense.
Are there people who are so far behind the average in terms of education, age, and employability that they’re irredeemably screwed and only their kids have any hope of a better, much less good economic life? You bet. Those people are far more numerous than I wish they were in what’s supposed to be a successful prosperous 21st Century society. But by and large those folks aren’t going to be helped by debt. Though doubtless some of them did mistakenly use debt to fill their backpack with anvils along the way.
Economic life is a lifelong race. Just like at the start of the Boston Marathon, there are people right at the front of the pack and people way at the back of the pack. The folks at the back are starting with a big handicap. Maybe one they’ll never overcome. But the idea that somehow debt is the difference or the magic catch-up medicine or the key (im)moral actor in all this is childish at best.
I’m still struggling to understand what you/the straw man is really thinking and trying to say.
Here’s my interpretation of the person who originated this thought was trying to say: in today’s society, a college degree for any job above minimum wage is vital. In today’s society, having a car is generally important for employment, especially if you’re stuck with minimum wage jobs. If you have neither, your options for supporting yourself are, at the least, severely limited. Yet these days, you can’t generally afford to pay for them with cash. You have to basically have to “sign your life away” to big banks in order to efficiently function in today’s society.
That’s the perspective that I’m trying to work through: the belief that today’s world is basically saying that having debt to powerful corporate entities is a necessary cornerstone of aspiring to be a fully self sufficient member of society.
(The person also mentioned having a home as part of this, but I find this less compelling, now that I think about it. It seems to be stuck in the old but popular notion that renting is irresponsible and a waste of money, which as pointed out above, may not be true. It is the prevailing social viewpoint, though.)
ETA: Your last post wasn’t there when I wrote this. So it’s not directly responsive. That’s not me trying to ignore you.
ETA2: Have now read your post. What I wrote below actually fits pretty well. That person is missing the differences in starting positions. Yes, if you’re well back in the pack, you can use debt for school and a car to buy yourself a better starting position. Which debt you have to pay back, and it may or may not make enough difference. But the debt is not the origin of the problem. The starting position is.
I hope I’m not coming across as a doctrinaire jerk. That’s certainly not my goal. Here’s a line of thinking that *may *be more useful than rehashing the same hole.
No one survives, much less succeeds, without massive help from other people. If a newborn is abandoned, it’ll die in 12 to 24 hours even in temperate conditions. Quite literally the entire rest of your life only exists if somebody helps you during those first few hours. And continues to do so for a couple decades or more.
Parents invest effort in raising newborns to be first toddlers, then children, then teens, and finally adults. Some parents try real hard, others can’t much be bothered. Some have plenty of excess capacity to spend parenting, others are stretched very, very thin. Some can and do dump vast money into the effort, some give all they can possibly stand, but it just ain’t much, some could afford much but spend little. Some parents have to split the available effort and money across 6 kids; others have just one.
Schools are similar. Some kids get to go to good schools because somebody else (the local taxpayers) bought that good school. Some kids get to go to shitty schools because somebody else (the local taxpayers) only bought that shitty school. And some kids go to truly outstanding elite schools paid for directly by their parents.
Anyone finishing high school, whether graduating or dropping out, is the beneficiary of all of that help, be that big or small. Then comes the big split: straight to work or further school? Further school is taking on even more help. No matter what tuition costs or how it’s paid for, it’s a small fraction of the cost of creating and running the school. The taxpayers or the donors or the endowment is making up the rest.
Bottom line: By the time a person takes their first real job and begins to participate in the marathon economic arms race, they’ve already consumed a bunch of help.
The problem comes in that if you’re the kid of caring, involved, professional / executive class parents they plus the system at large has spent 1-10 million dollars and umpteen thousand parent-hours preparing you to run the marathon. You’re skilled, you’re fast, and you’ve been given a place near the front of the pack.
If Dad’s absent or in jail, Mom works intermittently as a cashier using public transportation to get to work, and you’re kid number 6, you’ll reach age 17 with 10% as much parenting and 2% as much investment in your future success. Compared to the other kid above, you’re not real skilled, you’re not real fast, and you’re starting at the back of the pack.
The second kid is 99% screwed almost before he/she begins. But starting position isnt’ strict destiny.
There’s plenty of ways for a decent fraction of the kids with all the advantages to drop the baton. They can be jerks, they can be druggies, they can decide they don’t care to run the race at all.
There are plenty of ways for a much smaller fraction of the kids with few or no advantages to make up some of the distance. And a chance, however small, that such a kid will make up all that distance, never look back, and win the race as the next Bill Gates or Bill Clinton. But that’s sure not the way to bet.
If we want to rail about economic injustice in the world, it’s all the stuff I said above. It’s not the idea that consumer debt is somehow required to succeed and therefore the Lending Man controls us all and keeps us down.
I’ve borrowed a hunk of money over the years to improve my life and economic prospects. But it’s a drop in the bucket compared to all the other investments and gifts I got from parents, taxpayers, and the rest of society. Just by playing along as best I could and starting not all the way back of the pack.
If we want to fix something to spread the opportunity more widely amongst our citizens, *that’s *what to fix.
I don’t think living in a third wold country counts as getting far “in modern America” - you left the America part behind completely.
Yes, it does. Neither you nor your brother started upper class, so weren’t remaining upper class without family money involved. Without money, you aren’t upper class, and the only money you start off with is family money - there’s simply no logical (much less realistic) scenario that works for that. It’s really that simple, if you’re born into an upper class family, you either accept family money, or drop your class until some later time.
You have to do stuff to live in the world, from hunter gatherer societies to modern times. Whining that having to do so is an ‘indictment’ of any particular system is meaningless, and in general shows a lack of historical knowledge and perspective. If you want to get ahead, you have to work for people with more stuff, that’s just how things are, have been, and likely will be. Turning it into a unique critique of one particular social system doesn’t make sense.
Also, you still haven’t told us what time period it is that you’re talking about when Americans could typically buy a house without debt.
But who says you need a brand new car to get to work? Better to buy a car with adequate reliability at $3,000 and pay it off in three years at less than $100 a month. If you bank the other $200 you’d have been spending on the new car, at the end of the period you’ve got $7,200 Use that to trade up your beater and start putting aside $300 a month. After another 24 months, the time you’d have paid off the new car, you’ve got another $7,200 or – if you figure the beater would last that long and didn’t trade up – $14,400 which is enough for a nice used car. Repeat as necessary until you can get a new car at the level you’d like.
Dave Ramsey has a simple plan for getting out of debt. First step is to pay minimums on everything until you have a thousand dollars saved up. Then list your debts from smallest to largest (regardless of the interest rate) and increase the payments to as much as you can stand on the smallest debt, while keeping the others to the minimum. When that smallest debt has been paid off, shift the AMAYCS money plus the minimum you were paying on it to the next bigger debt.
Rinse and repeat until everything is paid off. Your living during this period would be austere (A frequent phrase on his radio broadcasts is, "You never see the inside of a restaurant unless you work there.) but by paying debts off in this order it’s psychologically rewarding to see them disappear. All in all, his program has seven steps (tackling the mortgage is #6) and after that, unless your previous lifestyle was so extravagant it was unsustainable, you’re paying cash for everything.
One of the problems not really addressed, although Desert Dog’s “… You never see the inside of a restaurant unless you work there. …” is close, is that all advertising is aimed at increasing spending not saving. And most of it is aimed at the middle classes, not the people who are really truly hand-to-mouth.
As such, a message about debt and “getting ahead” that’s totally reasonable when applied to somebody with some savings and a bunch of free cash flow is positively dangerous when applied to somebody with neither of those things. But they both watch the same TV channels.
I would suggest that such a person, if they are uncontrollably compelled to spend more than they make by TV commercials, throw out their TV. I have some mildly addictive/compulsive behavior, so I tailor my life to not do those things that will cause me to act compulsively or form an addiction. This is partially why I minimize my TV watching to almost 0 (besides not finding much interesting programs on the TV anymore).
I’ve managed to do OK without ever incurring any debt. Then again, my job is illegal, I live off the grid, and I also live a life with much more risk in it than those in middle-class America. I’m almost certain most people would probably rather deal with debt than risk being killed over their job. However, if you can deal with the risk, their are options to selling your soul to corporate America.
You can make it up until you have to buy a house. I am gonna assume you can live with parents etc until you get out of college, but they dont pay tuition.
In many places, Community College is pretty much free.
Get a Job say as a security Gd. Minimum wage, $10/hr, about $300/wk take home.
Save 200/wk= After 2 years you have 20000. Reasonable car is $10K.
Cal state is $5000/yr. 2 years there spend the rest. I am gonna assume you dont work. But you could work 24 hours a wk.
This is what I did. Wages were less and so was college, of course.
Take advantage of Community college, and dont go to a pricey University.
There is one type of debt that is almost unavoidable for most Americans: Utilities.
We get the bill for utilities after we’ve used them. That means that we’re running up a debt over the course of the month that we have to pay at the beginning of the next month.
I say almost because there are some rentals that include all utilities, and rent is usually paid in advance. Also it’s frequently possible to deliberately overpay on your utilities, but even then you technically have a debt to the utility company that’s offset by their debt to you.
I inadvertently left off my real punch line.
I wasn’t so much suggesting that folks at the bottom are railroaded into spending more than they should or taking on debt that’ll be harmful in their situation.
Although you’re 100% right that avoiding addictive situations is smarter than fighting them daily. Poor impulse control and low economic status tend to correlate, so that’s often easier said than done by the folks your advice is meant to apply to.
Remembering the OP isn’t saying “Debt is evil”. He’s saying “Some other people say that debt is the Man ruling us.” and he’s trying to understand that.
My actual punch line was this
… and when the thoughtful poor folks see those commercials it’s easy for them to think “That’s as bad as an ad for heroin :eek: They’re just trying to get me hooked and I know I’ll be screwed if I do. Those lenders are as bad as drug pushers.”
IOW, the economic mismatch between poor and middle class means not only that the same message has very different outcomes if followed by different groups, but it triggers those groups to have very different thoughts about very different motivations on the part of the sender. That second difference is what triggers the hostility and cynicism inherent in the POV the OP is exploring.
No one considers that a debt. :rolleyes:
Try not paying it and see where it gets you. Legally and morally it’s a debt.
Oh ok, I see. I’m really bad at reading Internet sarcasm/jokes, even when the punchlines are properly given, so I probably still would have misunderstood your point 
<snipped>
As I suggested, you can pick apart the numbers pretty easy (It was expected :D) and I also stated they were for demonstrative purposes. The point was that you can save and buy things rather than borrow, which, I believe, was the OP question.
This topic has drifted quite a bit.
Sure, but that’s more of a cash-flow constriction than anything else.
I mean, unless you’re talking about tornado damage or something else in the six figures range, most home repairs are in the $500-5000 range in my experience. New water heater, new roof, etc… none of those are more than the cost of say… 4 months of mortgage payments. Taxes and insurance are generally taken out as part of your monthly payments, so they’re rolled into the cost.
Ultimately what it seems to boil down to, as best as I can tell, is whether or not you have the financial resources to weather some costly repairs, and how much you value your flexibility in being able to move on short notice with no lasting committments.
If you’re buying a house, you really need the former, and you lose a LOT of flexibility on moving. But you gain the fact that with the exception of taxes and insurance, every dime you pay in mortgage payments goes toward your ownership of the house, instead of basically being an expense that you never recoup.
So if you’re unwilling or unable to set aside money or time for repairs, or really value the fact that someone else does the maintenance and that you’re not on the hook for anything, then renting may be a perfectly rational way to go, even if it’s not necessarily the most financially advantageous model.
I couldn’t even rent a studio apartment for less than triple what my mortgage on my three bedroom house with basement and garage costs. We just purchased our current house not quite two years ago. When my wife retires in no more than 3 years we’ll be able to pay it off and only have to pay taxes and insurance, which combined come to maybe $50 a month.