It's 10 P.M. Do you know where you money is?

mushy, it's not a rant, and I so agree with you.

freaking entitlement.

Might have something to do with paying their debt instead of saving...

mushypancakes, I agree with you in general that people should live within their means. But there is a reason that folks take on debt to buy houses and that is that the mortgage interest is tax deductible. So they look at it as paying rent to the bank, yet at a significant discount because most of the payment is written off on their taxes. It doesn't matter if they actually truly own the physical house (which almost none of us do). It's a financial decision to maximize your purchasing power for housing. In addition, they can build equity in the house that is also tax free if they sell the house after two years.

I think the entitlement aspect comes into play with things like cars, stereos, big screen tvs, and clothes more than anything else. Look at so and so and what they have. I should have that too. Or, look what my parents have, that's the standard of living I'm used to, why should I have to lower that?

I'm pretty sure the Bureau of Economic Analsysis (BEA) counts it as a saving when you pay down your personal debt. Here's a BEA webpage showing how they calculate the saving rate, and the historic development of the rate thus caluclated. Basically they have two definition. One is that what you save is what's left of your income after you've paid for consumption, taxes, and interest payments. The other is that what you save is the sum of the assets that you buy. In theory, both measures should be the same. (They don't, for reasons I don't understand.) And they both would count debt payments (but not interest payments on the debt) as savings.

Thanks for the link, Thomas. I did not know that. I always thought my savings was what was actually in my savings and investment accounts.

Well, I do have savings, otherwise I couldn't sleep at night, but
let me ask you something Thomas: You mentioned your generous salary
and the plenty of leftovers at the end of the month. Do you have a mortgage to pay, children and a spouse to support?

BC (before child) I had no idea that children are the original money pit,
but aside from the mortgage, children are a huge expense, and the
average American has between two and three kids.

For a typical family where Mom stays at home with the kids and Dad
brings home the bacon, it's mighty difficult to put substantial savings
aside for rainy days.

Thats me too..

Not long ago I read that the number one indicator for filing bankruptcy was whether or not you had children.

http://www.cccssf.org/media/101003.html

I get that. Thanks for explaining it further, though.

Almost nobody owns their home?! Doesn't that seem weird. ? Or is that just me and my hick-ways.

I'd love to figure out a way to buy a house. To actually own before I want to sell it. lol. I do hate the idea of a long term mortgage ...but also hate the idea of paying rent for nada.
Such a waste.

Yeah, the entitlement is big with things. It's weird to me how a guy making 6 times what I make is broke and waiting on a paycheck every month, yet know lots of people like this. PLUS, they would have nothing if they lost their job...no back-up.
Just too damn stressful for me.

I own a house. Me. No one else. The bank has long been paid off.

No, but I have a rent to pay, which costs me more than a mortage for the same place would. Children and a spouse would cost me more, but would also bring me plenty of money in tax deductions, kindergeld, and so forth. Plus my wife and children would be health-insured for no extra money. (The German welfare state does have its advantages.) Summing up extra cost and tax benefits, I don't think my wife and children would make a big difference to my finances, assuming they would volunteer to share my spartanic life style. (My only financial sins are travelling, eating out, and buying too many books. Without these, I could still live comfortably on the income I had as a Ph.D student, which was DM 1700/month net. ($1150 at today's exchange rate.)


This may be true in America. But Germans have children too, and much fewer German women have paid work than American women do. So there also has to be a difference between the countries.

well, there is a) little kindergeld here and b) college will cost you an arm and a leg, unlike in most of Europe.

Yeah, but you're old as dirt.

True, but the house was paid for when I was 27.

Put that in your pipe and smoke it.

Hu huh, he said pipe, huh huh.

The rewards of dealing pot outweigh the dangers at times.

Heh! My thought exactly.

Student loans are huge. I had scholarships and grants and all kinds of things to make a dent in the total but my parents didn't contribute all that much and the total debt was major. I made double payments on it when I started my job (a big jump in total income, rather than getting used to in I put a chunk into student loans -- $600/ month as opposed to $300/ month), which reduced the total interest I had to pay over the life of the loan by a good amount. I saved the same amount per month after that, for the purpose of having money once I became a stay-at-home mom -- that kindergeld sure sounds good -- but that money ended up being the down payment on our house.

Our cars are paid off, the student loans are finally paid off, and the house remains our main expense. E.G. has retirement savings and we have some money in the bank, but we're just getting to the point where we're actually saving. I'm glad that paying off loans is considered saving.

We live freakishly frugal lives by the standards of most of our peers. Both of our cars were cheap -- E.G.'s cost a whopping $1,000, an upgrade from the one that cost $1. We don't travel much. We hardly ever eat out. We don't go to movies much, or have other "entertainment" expenses.

I do think American entitlement is a big part of the problem, but I think it's a separate problem from the student-loans-and-kids problem.

(Oh and I have to amend my previous statement on this thread about knowing how much I have in the bank at all times. Wrote more checks than usual lately and when I deposited a paycheck found that I had only $9 left in my account -- I'd thought it was more like $100. Oops. I want to start doing more online, it sounds good in a lot of ways.)

Yeah, but how long ago were you 27, huh Gus?

House prices are through the stratosphere. It's ridiculous. The whole system is now predicated on the idea of making a certain payment per month for 20-30 years, not buying the house outright unless you're super-rich.

Let me think about that for a second. Ok, take my current age and subtract a bunch of years until I get to 27.

Damn... this is tough!

Got it! One hundred years on the nose.

ok, I just have to comment on this nimh.


Actually, to ask questions (not to question your method or motive, as in right or wrong) so that I can understand where exactly you are coming from.

Without getting into quoting you exactly (let's not fight sweetheart), so give me a little leeway with my statements and questions. This is going to be generalities. It is about something I've wondered about with some people in general, not particularly you. I heard the things I'm going to say brought up by quite a few others besides you. OK?......OK.

You've indicated in other threads, well, a less than happy attitude toward the "rich" as opposed to the "poor" As in the rich have all this money, and spend it in ways that don't take into account there are others who need much less than that to even survive. I'd have to say, in just my opinion, I'd call that a feeling of resentment. The rich have all this money and the poor have none and the poor will seldom be able to get more because the rich keep it.

So……let's just say for arguments sake, you consider yourself, if you had to make a choice, a "poor" person (never mind what you really consider yourself). Let's also say I consider myself a "rich" person.

So now, as a poor person, you have this vague idea of how much you have, you seem to realize when you've been splurging, and cut back for some indeterminate (it seems) period of time….which, I'm guessing ends when you get a different vague idea that you now have "enough" to splurge again.

Me, as a rich person, have a very good idea of what it coming in and going out on a week by week, month by month basis. I anticipate that 6 months from now and large bill will be coming in for let's say property taxes, car insurance, a wedding, etc. I also anticipate I'm going to live to be 100 years old someday, and would like to have enough put aside to buy myself a big cake and candles on that awesome day. In addition, I know in 2 years I'll be needing a new car. Some other things I'm looking forward to getting in various time frames between now and my 100th birthday cake is a flat screen TV, a garage in the back of my house, a deck in the back yard

I look forward with joyous anticipation to each one of these things, even paying property tax and car insurance, because that means I have a house to live in and a car to drive.

In amongst all these items that range from necessary now to necessary in 52 years to something I'd like to have…there are things like a pizza or new nail polish or some nifty stencils to paint the stepping stones for my garden.

I know I want all these things. It didn't take a lot of thought to think of them. I know I'm going to get old, and need cars, and electric, and nail polish.

Now, how can I accomplish all these totally reasonable wants (at least I don't see what I listed as totally unreasonable when spread over the next 52 years) if I only have a vague idea of how much I have?

Well, unless I win a lottery, I can't. But, I have had people indicate to me that I am "lucky" to have the material things I have. My husband, who is a soft touch, has given away literally thousands of dollars over an extended period of time to 2 or 3 people who have run out of toilet paper, can't get to work because they don't have bus fare, but when they do get a paycheck buy a webcam. That's a more extreme example of course. However, there are others who aren't in such dire straights who have expressed either directly or indirectly a vague feeling of negativity towards those that are lucky in that they were lucky enough to bet they were going to continue to wake up when the sun rises, and will need to be able to function accordingly.

So…my question nimh….How do you reconcile the fact that you are satisfied with having a vague idea of your financial standing at any given time, yet feel poorly toward someone who, because they anticipated the future and last year bet they would be around today, can splurge on something without vaguely wondering if this is going to effect their ability to pay for an unexpected bill? Hmmmmmmm?