I am amazed at how much money people spend on vehicles.
A technician I work with just bought a brand new F-250 truck with extended cab, extended bed, and every option. I am guessing the price is at least twice his yearly salary. And then he complains he’s living paycheck to paycheck.
I’m 52 and have owned dozens of vehicles. I currently own eight. I pay cash for them. I have never taken out a loan, and I have never made a car payment in my life. Most vehicles I purchase are at least 10 years old, and somewhere between $2K and $7K. The downside is that I spend a lot of time working on cars. But I enjoy it, and it teaches me a lot about mechanics and engineering.
That is true, but it is none of my business if Joe wants to spend lots of money on crap, not that I approve the principle of buying shit you don’t need. If nobody did it, not only would life go on (no economic collapse), society would be tangibly better off.
I’ve often wondered why Americans “need” as much money as they do. Do they really spend $100,000 on a wedding? My wife and I live quite frugally but comfortably. (My teen-age son OTOH has had several smart-phones and spent much more on his computer than I spent on my last three laptops combined. He’s about to buy the latest iPhone. I can hardly say No — it’s his SocSec money!)
People focus on the $23 trillion “national debt.” However there is another $50 trillion of debt owed by American companies and individuals.
The U.S. borrows to run a trade deficit with the rest of the world. Among OECD countries here are the top 11 by size of current-account deficit as percentage of GDP, along with the top 5 surpluses:
Turkey -5.55%
United Kingdom -4.07%
Canada -2.98%
New Zealand -2.74%
United States -2.40%
Australia -2.34%
Mexico -1.64%
Slovakia -1.50%
Chile -1.48%
France -1.42%
Greece -0.82%
…
Denmark 7.58%
Germany 8.05%
Switzerland 9.32%
Netherlands 9.80%
Ireland 12.54%
(It surprises how often the Anglophonic countries end up together near an extremum on various lists!)
Here are similar lists for trade balance:
Greece -9.4%
Latvia -7.0%
United Kingdom -6.9%
Luxembourg -6.0%
Lithuania -5.0%
Portugal -4.9%
Turkey -4.7%
United States -4.0%
Israel -2.3%
Spain -1.6%
…
Switzerland 8.0%
Korea, South 8.5%
Germany 8.6%
Netherlands 11.9%
Ireland 37.4%
No-one should be paying for grad school. Your institution should be paying you to go there, by giving you the full tuition waiver and grad student stipend. If you get admitted to grad school without money, that school doesn’t really want you. (The cost of grad school is still pretty steep, because the opportunity cost is high. But no-one should be taking out loans to pay for their tuition, fees, or living expenses.)
This lady who paid for the ART program should have gone elsewhere, where she would have at least had a teaching assistantship.
Professional school is a different story. You’ll pay for professional school, unless you’re doing a program that combines your training with a PhD program.
First it’s not just Americans. I realize some people want to use a topic like consumer spending and debt to segue over to how govt social spending should be higher in the US (but sometimes based on underestimating how high it is in the US especially counting state and local). Which perhaps it should be, or not, not to debate that here. But the US isn’t near the top of the list of countries for household debt as % of GDP, a list which also doesn’t go particularly according to “higher govt social spending=lower household debt”.
And those %'s have generally increased in most countries over time, whether lower or higher than US now.
Also on a macro basis I’d distinguish pretty sharply between borrowing for education, an investment, v borrowing for consumption (say weddings). Though I realize in micro every day terms a person might make unwise choices for one or both those things for similar reasons in terms of their own personality and desire or social pressure to imitate other people. Still, society wide you want people to invest in education, if it’s productive investment, and give incentives to invest wisely (making higher education ‘free’ at the margin for the individual, though obviously not free for society as a whole, wouldn’t seem necessarily a good way to improve the quality of those decisions). Whereas though a lot people have the view of say lavish weddings, ‘well they keep people employed so that’s necessary also’, but in economics the difference is that lavish weddings don’t increase society’s ability to generate future economic output, but sound education investments do.
Otherwise, it’s basically a tangent IMO to negatively judge the virtue of people who spend beyond their means, though even more of a tangent to say that overspending by some people is the excuse to raise other people’s taxes. Basically I think, no libertarian particularly, you can have a mixed capitalist/socialist system, which is what we already have in the US along with all the other rich countries, and still just draw a line that spending within one’s means, except for outright poor people*, is the person’s own problem. It doesn’t mean they are a bad person that they get themselves into debt, it doesn’t make me morally superior that I don’t. But it’s also not my problem that they do, not my responsibility to fix it. I see that as a reasonable middle ground.
*there are loads of people living beyond their means in the 3rd and 4th, and even highest income quintile. It’s by no means limited to people in the lowest quintile where ‘safety net’ discussions are most relevant, or even 2nd quintile.
Rutger Bregman’s book, Utopia for Realists, has some very interesting and useful things to say about poverty, consumerism, and work. Short version: we could divvy up the existing pie differently and end poverty, reduce credit and consumerism’s role as palliatives and necessary for keeping a ridiculous economy afloat for the 1%, spend less time at work, and have better healthcare and education. The other Kropotkin argued at the end of the 19th century that it was possible then, and he was right. Productivity has increased several times since then, but some people think that wealth and the labour of others should be deployed to make them even wealthier. I don’t say “eat the rich,” because I’m trying to go vegan, but we only have poor people because we have rich people.
I am, as I type, sitting in my classroom, which is a computer lab. I just had a student, a gentleman in his 50’s practice writing an essay before scheduling a GED test. He said he had to do it from our machines because he did not have a computer or internet access at home, although he could do it on his new phone. It was easier for him to do it on one of our desktops though, so that’s what he did.
It is not my place to judge whether or not he made a sound decision in purchasing a new phone (I could see it was a Galaxy S10 when he set on the desk next to him) over a cheap laptop. Maybe he needs a phone with internet capabilities more than he needs a cheap laptop. But ultimately, this is a needs vs wants issue.
This…
Should also not be discounted. Housing prices have gone up astronomically, as has the other things you mentioned, notably healthcare. My wife works in a daycare center, one that has a good reputation locally. It’s one of only two actual centers in our city. All the other daycares are operated out of private homes.
Every single parent that brings their kid to my wife’s center is white-collar and rather well-off by our town’s standards: physicians, attorneys, a local judge, and business owners. Nobody else can afford the monthly daycare cost.
Agree with this wholeheartedly. Again, it’s a Needs-vs-Wants issue. An acquaintance of mine bought a brand new Dodge Ram 3500 a few years ago. It had everything imaginable: long bed, 4 doors, highest trim level, diesel, 4WD, special-ordered paint package, several dealer-installed options like electronically retracting running boards and trailer towing package and hitch. The price he paid? $72K and some change.
$72,000 for a damn pickup. He’s not a farmer, construction worker, or someone else that needs a pickup as part of their daily duties. He doesn’t even have a trailer to tow, even though he got a tow package. I could have found a perfectly serviceable pickup with the same basic configurations (4 door, 4WD, diesel long bed) for maybe $5K on the local Craigslist.
But maybe I’m way off base with all of this, and letting my own conceit cloud my judgement. I will soon be starting teaching full-time at satellite campus. I will have a 70-mile daily commute, with about 15 miles of that outside of cell phone reception. I will be looking at buying a new (2020) car. I will likely finance it as I don’t have the cash to buy it outright. I will buying a small, cheap car (Toyota Corolla, Honda Fit, Kia Soul, or similar) with a basic trim package because that is what I need. If I was going by Wants instead I’d be trying to buy the new Supra. The difference, I think, between the purchase I am considering and the one my acquaintance made is that I am planning on spending 1/5 of my annual income on basic transportation with no frills, and he spent his entire annual income on a vehicle that provided basic transportation, but also provided every other feature at a premium price. He couldn’t even park it in his driveway due to the length and had to park on the street.
Am I being an idiot for buying new and driving it into the ground instead of purchasing an old beater with high mileage and unknown provenance? I don’t know, but this is something I have been researching for a couple months (I even started a thread about it here on the Dope) and I think I’m making the right choice. I hate working on cars and have no desire to risk a breakdown on a deserted, windy mountain road where the cell signals never reach. To me, that’s worth a small car payment each month. When I brought this up on the Dope, at least one poster clearly thought I was being arrogant and foolish.
And there are structural issues here. Most Texas public schoolshave a 4-year graduation rate under 25% and a 6-year graduation rate under 50%. And Texas public colleges aren’t atypical here. When people talk about runaway student debt, everyone loves to imagine an Ivy League Alumna with a degree in French Lit. But that’s not what it is: it’s the first generation college student who had a good enough SAT to get into their local regional university but not enough to get any funding beyond a Pell Grant. He majors in business or engineering. This kid is bright enough and may well be pretty determined, but he doesn’t understand the system or how to college, gets little advice or guidance–partially because he doesn’t know it exists or that he needs it–and so he flounders and struggles and eventually drops out, with $80K in debt and a job as an assistant manager at a Dominos. THAT’S the student debt crisis, and blaming it on stuck up kids going to Ivy League schools is so misinformed it drives me batty.
“Many years ago” is a very important qualifier here. Fancy, heavily endowed private schools–like UChicago–have totally reorganized their approach in the last twenty years.
People’s paychecks are tied to the spending of others, but that doesn’t mean that the spending is necessarily efficient, prudent, or proper. If we “improved” our spending behavior, we’d still be spending. It’s just that we’d be spending on other things of theoretically greater utility, and the distribution of labor in the economy would look different. But one’s choices with money are not limited to “spend on low-value goods and services” and “stick money in a mattress”; you have the freedom to spend on a variety of options.
I was at Home Depot the other day, picking up 28 sheets of corrugated metal roofing. I parked my 2000 F-150 next to some ginormous Ram something-or-other. That truck made mine look like a toy - it absolutely loomed over mine. But, here’s the funny thing: I could put my roofing in my truck bed, and he couldn’t. The monster truck was a crew-cab, and it had a short bed. My little F-150 has a full 8’ bed. I guess if you want to drive your family back and forth to the grocery store, that truck would be useful, but if you want to actually haul crap…
Not to say that I have made some really, really dumb decisions, boy howdy have I. But reading through this thread leads me to the conclusion that I am a freaking Genius leading an incredibly charmed life (life part is true, genius bit…eeeehhhh debatable)
Imho, the first step to solving any debt problem, national or local or personal is to pry peoples faces (and ears) away from the screens and ear pieces ear buds head phones whatever the hep cats cool kids mod squad is callin em these days
The OP lists people who are “financially struggling”.
Well who isnt and who never did in the past? Everyone has to watch their money and so did our parents and grandparents. Think life is bad now, think of back in the depression or even earlier.
I’d say the big trouble now is the high cost of housing in major cities. Now technically a rule of thumb is to only spend about 30% on housing but many people spend way more and its a constant struggle to pay the rent.
In comparison look at this little tech school in South Dakota.
According to THIS SHEET they boast a 78% graduation rate in just 2 years and a 99% rate of people finding employment in the field, and 82% finding jobs in state. They also boast the high percentage of graduates who move from the financially lower classes to the upper 20%.
It is true that many people in America are less frugal than they could be or should be.
It is true that people in a poverty mindset tend to accumulate shortsighted habits that are ideal for low cash-flow but bad for higher-wealth situations.
It is also true that being poor in America is in many ways more expensive than being rich, facing certain penalties, deposits, and inconveniences that rich people don’t bear. article on the subject
But most of us, we’re just spending too much on useless shit. I just bought a $900 handpan instrument that I never play. Hopefully I’ll recoup it on eBay, but really, what’s that all about.
A whole lot of those kids are the sons and daughters of tradesmen who wanted something different for their kids than what they had–for good reason. HVAC, construction, working on cars–this jobs pay well enough to support a family, but they really suck past 40, and they really, really suck past 50. They are often impossible past 60. Your knees, your back, your feet–these are things that wear out. And then there is the possibility of career ending disease or injury: things that side-line someone with a desk job for a few week lead to a person in the trades being unemployed for months–or forever.
There’s a place for the trades. But the community of tradesmen is not a group that is universally happy with their jobs or their life, and a great many of them want better for their kids. And honestly, I think it’s foolish for anyone to go into the trades without an exit plan–to be working toward something that will make them less dependent on the ability to do grueling physical labor as they approach middle age.
I also don’t think you can let colleges off the hook here. If over half–or 75%–of your students are leaving without a degree, the conversation shouldn’t be “Oh my god, all these kids are terrible and unprepared.” People love slagging on those dumb unprepared kids who should have accepted their natural station in life. But when that many kids are failing, their are issues with the institution. Some schools are much, much better at supporting students and moving them through.
Are you claiming that this is typical of tech schools? Because in my link, UT has an 80% graduation rate. There are good schools of every type. That doesn’t make tech school the better option for everyone. And, again, it’s telling that people in the trades often want different for their kids.
Depends entirely where you live and where you have to go. Not counting the many areas that have no bus service, no one would want to have to take three busses each way to get to work.
Keep in mind that community colleges ARE trade schools, but that gets overlooked because they also have academic courses. Since they are publicly accountable and not-for-profit, they’re not inflating their “success numbers” or hounding people to take out high student loans.
Can you come up with some examples of things of “greater utility” that we’d consume if it weren’t for “low-value goods and services” that currently flood the market?
I’m not disagreeing with your point. It’s just hard to imagine what it would look like.