The Secret Shame of Middle Class Americans

Your favorite books and links
BRUTE
Posts: 3797
Joined: Sat Dec 26, 2015 5:20 pm

Re: The Secret Shame of Middle Class Americans

Post by BRUTE »

IlliniDave wrote:At this point I'm beginning to wonder if the widespread prosperity in the US during the 50s and 60s wasn't just a case of catching lightning in a bottle that has set an expectational bar in the culture that's too high to overcome most of the time.
+1

there was probably a similar one-time shift with computers/internet being introduced, but its profits were far less equally spread among the population.

Dragline
Posts: 4436
Joined: Wed Aug 24, 2011 1:50 am

Re: The Secret Shame of Middle Class Americans

Post by Dragline »

Sclass wrote: I detected a bit of unwillingness to adapt in the follow ups. I got worried because the people were all educated and proud of their schooling even though it wasn't getting them paid in today's market like it did in their glory days.

Some of these People had invested in education where education was no longer as useful while still trying to hold on to what they had previously won. I mean these folks seemed to have difficulty returning gracefully to poorer lifestyles which would be better suited to their new incomes. Did they forget to how be poor, or did they just want to stick to the past?

I guess there was a selection bias for journalists. However many of the stories were about writers who were hell bent on writing even after they themselves had said the industry had collapsed.

I cannot put my finger on it but I feel there is this over investment made in education that the individuals cannot walk away from. Kind of like how a business owner cannot walk away from a failing business that they spent years building.
Its a combination of the "sunk costs" fallacy and basic cognitive dissonance.

Faced with the reality that whatever they "invested" in their educations is not paying off and is not likely to do so in the future, they would rather ignore that fact so as to continue justifying their current course of action. At bottom, they also like to think that their educations make them qualitatively "better" than others who might have gone to community or state college and can't accept that their financial outlook is worse.

Contrast with the children in the wapo article who do not seemed to attach their self-worth to their educational achievement levels.

A foolish consistency indeed.

7Wannabe5
Posts: 9369
Joined: Fri Oct 18, 2013 9:03 am

Re: The Secret Shame of Middle Class Americans

Post by 7Wannabe5 »

Sunk-cost sucks. KISS. Body to body. Job to job.

User avatar
Bankai
Posts: 986
Joined: Fri Jul 25, 2014 5:28 am

Re: The Secret Shame of Middle Class Americans

Post by Bankai »

http://www.bbc.co.uk/news/business-37504449

More than 16m people in the UK have savings of less than £100, a study by the Money Advice Service (MAS) has found.
In five areas of the country, more than half the adult population has savings below that level.


From original study:

https://www.moneyadviceservice.org.uk/e ... ncial-risk

Non-Savers

People in this saver type have the lowest average income; are least likely to be
economically active; and, perhaps as a consequence, are least likely to be satisfied
with life or their financial circumstances. They are least confident about managing
money and about making financial decisions.

Non-Savers are the most anxious about their finances, and the most likely to feel that
there is nothing they can do to improve the situation
, so it is perhaps not surprising
that they are also the most likely to ‘live for today’ (49% agree with this statement vs.
30% overall). They are least likely to save instead of borrow, and the most likely to save
only for a specific purpose (rather than for saving’s own sake). They are least likely to
have financial goals for the next five years and where they do have a goal, it is most
likely to be simply making ends meet. They are also least likely to have plans in place to
meet these goals: 46% of Non-Savers have plans vs. 64% overall.

This lack of planning extends to retirement and end-of-life planning: only 38% of
Non-Savers have a pension that they have paid into vs. 59% overall; 34% expect to
depend on the state pension; and a further 31% don’t know how they will fund their
retirement
. They are also least likely to have made a will or planned for the costs
of care.
(...)
Those Non-Savers who do have credit cards are most likely to be paying off only the minimum every month.
They are also least likely to be protected from financial shocks by insurance, such as home insurance
(held by 27% vs. 46% overall), life cover or critical illness insurance.
(...)
Compounding the difficulty of building up a savings buffer, as for all saver types, is the
pressure to spend
.
(...)
Understandably, they are focused on the short term. When
asked a hypothetical question: “Would you rather have £200 now or £400 in two
months’ time?” 35% (vs. 21% overall) chose the quick win
, rather than waiting for the
bigger prize. The risk for this saver type is that an unexpected bill of £300 would have a
serious impact on their financial wellbeing: 18% would not be able to pay at all,
14% would resort to credit and 19% would have to borrow from friends.


So basically every second person I pass on a street should have a red, flashing banner "I'm broke" above their heads. I wonder how much of this is self-imposed and how much could be improved with proper financial education?

Post Reply