"Nearly half of Americans can’t afford the basics of life anymore"

[JestJes]

Bad advice! That was one of the best parts of first having the internet at home. Like these forums, I could read-read-read and learn so many things. Along the way I realized some of the advice my elders had delivered was flawed or simply dated. There were new solutions or more efficient solutions. Then two decades later (roughly speaking) I found these forums and things were good. Wish I had found all of you in the 1980s when I was very young (high school) and very dumb and naive. I'd be much richer now (compound interest on investments instead of on debt).

@JestJes My elders say the same thing to my DW and I - our dates aren't shiny enough. Sitting on the porch steps and looking at the stars eating something sweet or listening to the country night sounds around us on a walk just isn't good enough. We need a REAL date. We do those too occasionally. Meanwhile the savings pile up.

Glad its not just me! I'll tease her some times like, "I know mom, the worst thing that you can do for a relationship is spend time just being together.  We need to numb out in front of a screen STAT!"

[Just Joe]

We had a great date last night! We sat on the front porch and watched a thunderstorm roll through. There was even exciting lightning arcing across the sky with thunderboomers. We followed that with building a flat pack bathroom cabinet together. Never did quite settle down and watch TV before bedtime.

[mizzourah2006]

I wonder what life was like in the 40s for a single mother of 2 trying to support her family while working as a cashier at the local mom and pop grocer.

[Just Joe]

Around my part of the country I assume she would have more family and church support. Extended family support. Assuming she hadn't broken social mores bringing those children into the world and thus was disowned.

[simonsez]

The original article appears to present most of the ALICE study correctly (based on my quick read through) other than the arguably large percentile leap of equating 43% with "Half".

When it's a nebulous thing like "43%" don't have a budget for the basics - that's fine.  Heck, round it up to half, the point is made.

Net worth however is just low-hanging fruit that many know a little about (various percentiles) and a journalist knows this and is just generating clickbait.  When you say that 'other research' indicates MORE than half (or 'most') of Americans have a negative net worth - you're asking to be reamed.  Reamed=clicks=success!

To be clear, the 43rd percentile is sure as shit above zero and should not be confused with the part about 'basics' or anything like that.  i.e. If a 43rd percentile of net worth really was $0 and the 50th percentile was 82k-94k, the distribution reflected in the range of those 7 percentiles would indicate much worse wealth disparity than really exists.  Most calculators have net worth in the negatives until about the 10th-13th percentile with the 43rd around 50-65k (a lot higher than zero!).

[Rosy]

I'm tired of reading articles which state how bad the average person is at paying for basic expenses. I would say the median household is doing okay. The figures certainly suggest so.

As far as I can see, it is only the bottom 30-40% that are struggling.
[snip]

You could argue that the middle class is struggling too, but not from lack of financial resources. Lack of education, poor role models, bad advice... peer pressure even, but not because of financial poverty.

Why in the world would it be acceptable that only 30%-40% of the population is struggling? If those numbers are correct then I'd consider this a red flag.
Where is your breaking point? 50% or 75% who are struggling?

Sure, this forum is for outliers who found a way to drastically improve their lives financially.
Some of them despite their income limitations.
There will always be rich and poor, but regardless of this particular article ...

Isn't it true that the number of people living below the poverty line has risen?
Isn't it true that we have unprecedented homelessness and a problematic healthcare system?
Isn't it true that we have a student loan crisis that is crippling the financial well being of millions of families?
Isn't it true that over the past twenty years wealth has shifted and the so-called "middle class" has shrunk significantly or fell into poverty?

I see an ever growing fringe population that is struggling, a new growing elite that is remarkably callous and not just class conscious but dismissive of those who do not cut it while they are secure in their superiority and wealth.
The children of the many who have risen financially in the last twenty years have no idea what life is like for those less fortunate.
They smirk because they don't know any better.

Be that as it may, I am not advocating for total equality. I've lived long enough to understand that it is not possible or even desirable. Forced equality as the experiments have shown in the 20th century, is detrimental to the development and advancement of humans.
However, I believe any strong and worthwhile society must include provisions for the less fortunate. 
There are those who cannot help themselves, the very young, the very old and the sick or infirm in mind or body.

The alternative is to let them die or think nothing of letting them suffer.
Revolutions happen because people who have no hope have nothing to lose and that makes them dangerous.
So one might argue public welfare is actually a form of protection for the rich:).

We are on the brink of a monumental change to an AI society and it will be hell if we don't come up with solutions for the masses that include a measure of compassion.

This little article is definitely click-bait and is certainly presenting false information but the sad part is that "the people" who read this and simply nod in agreement are doomed unless they keep on looking for how to improve their personal situation instead of accepting and believing that there is no way out.

It feels good to read that you are not the only one struggling but it certainly feels a hell of a lot better to read a blog such as MMM and find hope and endless inspiration and motivation.
One can learn to see that your assumptions held you back, change learned bad financial behaviour and figure out that your past stupid decisions were due to your own financial illiteracy. 
Luck and skills and drive play a role, so does health and education and connections. Even a chance encounter can change your life for the better.

A sweeping statement of "it is their fault that they are poor" is wrong in most cases.
There is no gritting teeth or hardship for those of privilege - growing up financially secure gives one confidence instead of relentless fear of failure and the awareness of dire consequence for you and your family if you make but one wrong move.

We do not all have equal opportunities and our individual circumstances differ greatly.
Saying if I did it, everyone can, is foolish.
Bottom line I do believe that most of us can significantly improve our finances if we want to bad enough - fear is an excellent motivator.

[MoneyGoatee]

Just want to address a bit on the point that "majority of wealth is held by a tiny minority."  If the super-rich people put all their money under their pillows or something, then yes.  But they don't do that and never have.  These people put their money everywhere, in investments, in their companies, in other people's companies, etc.  Some of their money is even in your pockets, in your investment accounts, the same way some of your investment money is in other people's pockets.  That's why it's called currency.  Our collective wealth is sort of interconnected.  If Google loses money, then the stock market loses money, and all our investment accounts lose money, and vice versa.  In short, some of their wealth is our wealth.  The fact that we don't think that is just one symptom of our "every man for himself" mentality that may be the true cause of our downfall.

[Laserjet3051]

For those interested in digging into the data:

https://www.unitedforalice.org/home

Have perused it, think the methodology looks solid for what they are trying to do (standardized levels for every county in the country)

Obviously for mustachian intents and purposes, you can always find cheaper than median housing, etc.

But when doing a large scale study researchers can't assume that everyone will find the cheapest housing and childcare.  If "everyone" finds the cheapest housing and childcare, then obviously the costs rise. Supply is limited. Averages and percentiles make sense (for what it is worth the ALICE study appears to use the 40th and 50th percentiles of HUD's fair market rent stats and two bedroom apartments for families of three or more).

The original article appears to present most of the ALICE study correctly (based on my quick read through) where it presents info from it other than the arguably large percentile leap of equating 43% with "Half". Where it seems to get confusing is by providing context for the ALICE terms with studies and claims that it doesn't cite.

As for the "american incomes haven't risen in half a century"claim - unless I'm missing it, that doesn't appear in the ALICE study. Without sources I'm not sure where the author is getting that. Maybe this? (where wage is equated with purchasing power):
https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

I agree. I went through the detailed methodology as well as many data sets and agree, the methods and descriptive statistics are rock solid. What, and how, an unscrupulous news agency or reporter might skew these findings is on the reporter, not the original report.

[StarBright]

Don't change the goalposts, mate. The article is about literally over half of Americans having a negative net wealth.

Stick to the stats that the article posted - not the ones that you can find, which go to something else entirely. "Savings, education, investment"? What does that have to do with poverty? What does that have to do with having a negative net worth?

You mention 51 million households - but only 1/3 of them actually live in poverty. The remaining 2/3 are "asset limited, income constrained, employed' - in other words, not in poverty. Not necessarily billionaires, but hardly impoverished, as your own data states.

So, maybe if the article was titled "Nearly half of Americans aren't succeeding" rather than "can't afford the basics of life", or if the article said "the median American household has less wealth than 1/10 of what the top quartile has", rather than "the median American household is underwater", then you might be onto something.

Hi Bloop Bloop - FWIW, the article (and actual study) are not actually about negative net worth. The negative net worth stat was used to illuminate the author's description of what "Asset Limited" means in terms of the study.

Others have effectively covered the dubious claim of negative net worth. I agree that it is wrong. I suspect the author is actually referring to recent studies that show upwards of 60% of Americans die in debt (which is Asset Limiting for sure). But obviously debt and net worth aren't the same.

After reading about the study and methodology, I actually find the title of the piece very appropriate (If we accept the 43% figure as close enough to half): Half of Americans Are Effectively Poor Now.
 The whole point of the study is that the official US poverty threshold does not effectively capture the real picture of getting by in the U.S.

If you define non-poverty in the US as a budget that includes housing, food, childcare, healthcare, transportation, and a cellphone - then 43% of Americans aren't currently meeting that in the counties in which they live.

The author is definitely hyperbolic and using dubious stats (Lord I wish people would cite when appropriate) - but the title does factually represent the conclusions of the ALICE study.

[Bloop Bloop]

After reading about the study and methodology, I actually find the title of the piece very appropriate (If we accept the 43% figure as close enough to half): Half of Americans Are Effectively Poor Now.
 The whole point of the study is that the official US poverty threshold does not effectively capture the real picture of getting by in the U.S.

If you define non-poverty in the US as a budget that includes housing, food, childcare, healthcare, transportation, and a cellphone - then 43% of Americans aren't currently meeting that in the counties in which they live.

I understand the data to mean that 43% of Americans don't budget or plan their finances well enough to give them a comfortable existence, not that they don't earn enough to have those things if they budgeted properly. If the article discussed why this is the case, it would be a much stronger article.

I'm tired of reading articles which state how bad the average person is at paying for basic expenses. I would say the median household is doing okay. The figures certainly suggest so.

As far as I can see, it is only the bottom 30-40% that are struggling.
[snip]

You could argue that the middle class is struggling too, but not from lack of financial resources. Lack of education, poor role models, bad advice... peer pressure even, but not because of financial poverty.

Why in the world would it be acceptable that only 30%-40% of the population is struggling? If those numbers are correct then I'd consider this a red flag.
Where is your breaking point? 50% or 75% who are struggling?

I don't set policy so it's not my job to say where the breaking point is. It's a matter for other people to worry about.

The article, if it wants to state that Americans are struggling, does so in the wrong way, by using fake news and fake statistics.

"Isn't it true that over the past twenty years wealth has shifted and the so-called "middle class" has shrunk significantly or fell into poverty?"

It has not fallen into poverty. It has merely shifted. It's a good point you bring up. It's a shame the article does nothing to engage with it, and doesn't private simple data (like Gini coefficients) that might engage with your point. Rather, it's clickbait, pure sand simple, written by a hack with no better ability than to lie and use fuzzy assertions.

[cloudsail]

If you define non-poverty in the US as a budget that includes housing, food, childcare, healthcare, transportation, and a cellphone

I don't have access to a computer so can't download the ALICE methodology, but I'm curious about their numbers? These categories all span a huge spectrum in costs. I would expect that if your salary is near the bottom percentiles, your spending on these categories should also be in the bottom percentiles (except for healthcare which can't be controlled, but there's ACA now), instead of, say, the median.

[Bloop Bloop]

That's a good point. When evaluating housing affordability, for example, shouldn't the right comparator be the x %-tile dwelling (inclusive of rentals) for the particular family type at the x percentile of earnings?

[StarBright]

If you define non-poverty in the US as a budget that includes housing, food, childcare, healthcare, transportation, and a cellphone

I don't have access to a computer so can't download the ALICE methodology, but I'm curious about their numbers? These categories all span a huge spectrum in costs. I would expect that if your salary is near the bottom percentiles, your spending on these categories should also be in the bottom percentiles (except for healthcare which can't be controlled, but there's ACA now), instead of, say, the median.

Here is a very basic outline of what they use for their "survival" budget (I've cut and pasted the baseline info but plenty more detail to be had on the webpage when you get a chance - it is also a worthwhile read):

Housing: HUD Fair Market Rate (For the non-Americans,  this is the rate that is used for government subsidized housing in the US). 1-2 person household gets one bedroom. 3+ household gets two bedroom (so a family of four automatically has kids sharing a room).

Childcare: The child care budget is based on the average annual cost of care for one infant and one
preschooler in registered family child care homes (the least expensive child care option). Data are compiled
by each state's governmental department in charge of child care regulations.

Food: The food budget is based on the Thrifty Level (lowest of four levels) of the USDA Food Plans. The
household food budget is adjusted for six select household compositions.

Transportation: The transportation budget is calculated using average annual expenditures for transportation by car and by public transportation from the Bureau of Labor Statistics’ Consumer Expenditure Survey.  in counties where 8 percent or more of the
population uses public transportation, the cost for public transportation is used; in those counties where less than 8 percent of the population uses public transportation, the cost for auto transportation is used instead. Car expenses include gas, oil and other vehicle maintenance expenses, but not lease payments, car loan payments or major repairs.

Health Care:
The health care budget includes the nominal out of pocket spending on health insurance medical services, prescription drugs and medical supplies using the average annual health expenditure reported in the CES.

Cell Phone: The cost is based on the cheapest available as reported by Consumer Reports. While there are
government subsidies for low income residents, the income eligibility is significantly less than the ALICE Thresholds, and therefore these subsidies are excluded.

Miscellaneous:
The Miscellaneous category includes 10 percent of the budget total (including taxes) to cover cost overruns.

Also- Taxes.

My understanding is that these numbers are on a per county basis for the whole country. In places where they don't have county info they use state averages (they note with the childcare because some counties may not have childcare coverage).

For what it is worth - I was pretty impressed by the website and the transparency of their method. I'm happy to look up other stuff if other people don't have access or can't find it (I think this is a very worthwhile discussion to have).

[APowers]

If you define non-poverty in the US as a budget that includes housing, food, childcare, healthcare, transportation, and a cellphone

I don't have access to a computer so can't download the ALICE methodology, but I'm curious about their numbers? These categories all span a huge spectrum in costs. I would expect that if your salary is near the bottom percentiles, your spending on these categories should also be in the bottom percentiles (except for healthcare which can't be controlled, but there's ACA now), instead of, say, the median.

Here is a very basic outline of what they use for their "survival" budget (I've cut and pasted the baseline info but plenty more detail to be had on the webpage when you get a chance - it is also a worthwhile read):

[snip]

I'm always skeptical of the numbers these studies put out....*goes to look at actual numbers*....Yeeeeeahhh....

[looking at numbers from my hometown]
When a "survival" budget includes nearly $700/month on vehicle expenses (especially when they're not including loan/lease/major repairs) and almost $600/month for food....it is way overinflated.

Healthcare also is overinflated, assuming ACA/medicaid eligibility, unless they're assuming a serious chronic illness in the family.

Housing seemed within reason for a 2 bedroom apartment.

Childcare also seemed high....but we've never actually had to pay for childcare, so I tend to give this a pass.

Also....taxes? Are they seriously trying to count gas/sales/etc. taxes instead of budgeting them in the categories for the respective expenses they attach to? Or are they trying to argue that a "low-income" person will end up paying ~$400/month in income taxes? Either way seems ridiculous.


When I can more or less comfortably fit housing, food, childcare, healthcare, transportation, and a phone into a single-income budget for a family of four (2 parents, 2 kids) of <$2,000/month [or $3,200/month if you insist both adults work and pay cited rates for childcare]....you can bet that I'm going to cry foul when someone says $60k/yr is a "bare-minimum 'survival'".

There is a HUGE difference between "can't make ends meet because I'm not good at money management" and "can't make ends meet no matter how good I am with money." The first is due to ignorance, misinformation, lack of education, lack of self-control, poor planning, or even possibly malicious interference or stupidity; the second is actual poverty.  When we conflate the two, we do a major disservice to solving the root of each of those problems.

[cloudsail]

So I got on a computer, and apparently for where I live it's $74,052. And for the county where I used to live it's $83,652. That's... insane. I mean, we spend more than that but we have a very high income, a huge mortgage, and I consider our expenses to be exploding mountains of wastefulness. If you remove the giant mortgage (but keep the giant property tax and expensive insurance) that's actually approximately how much we spend. I'm actively working to lower our expenses because I think we spend too much. Is this supposed to make me feel better about our spending?

[SwordGuy]

"The average retirement age in the United States among currently living retirees was 59.88 years old. The median living retiree left work at 62 years old, and the most common age to retire was 62 years old. 18.7% of retirees retired at age 62, and a whopping 63.1% retired between the ages of 57 and 66."

So, clearly most people can and do retire by the "normal" retirement age of 66.
Source: https://dqydj.com/average-retirement-age-in-the-united-states/


But let's put things into perspective historically.

What was the average retirement age by decade in the US?   Is there a trend?

Decade	Age
1900	76
1910	74
1920	73
1930	72
1940	70
1950	70
1960	66
1970	65
1980	64
1990	63
2000	63
2010	64

Wow.  On the whole the average retirement age has been dropping pretty consistently.    Folks must be doing better than the golden days of the past since they are retiring 12 years earlier than 1900.

Not only that, but they live a lot longer now, too, so they feel able to retire earlier for a longer period of time!  That's a double-axis of improvement right there.

There's a bit of a stall in the recent decade.  Could be an anomaly, might be just noise.   Let's see if there's any other relevant info.

Source: https://www.statista.com/statistics/319983/average-retirement-age-in-the-us/

Is there anything else that might account for that one decade, one retirement year uptick in the general trend?

Are people spending a whole lot more money on things that don't bring them wealth and income, but instead create recurring expenses that make it harder to retire?

Why, yes, they are!!!   Average new car price is over twice what perfectly good new car costs.   That's $20,000 per car, on average, that's tossed away with every car purchased.   That's a lot of money tossed away.  Or they lease cars so they get to pay new car prices forever instead of just for the purchase loan term! And don't forget the extra vehicle taxes and insurance!  Lordy!

How about houses?  Are house sizes one hell of a lot bigger than they used to be?    Why, yes, they are way bigger!!!  About 260% bigger than they were in 1920.   So, we're definitely buying much bigger homes than our ancestors did.   Housing size grew by almost 600 sq feet since 1990.  Garages are also way bigger and THEY DON'T COUNT IN house square footage size so the numbers on house size are actually way worse.

Perhaps we need them so big because we have more children now than our ancestors did?  Or perhaps because we have all those longer living grandparents living with us?

Why, no, average family size is smaller now than it's ever been.   And Americans invented warehousing our parents and grandparents so we didn't have to live with them, so that's not driving it.

We live in hugely bigger homes and apartments with far fewer people.  That luxury comes with a price.   Possibly retiring a whole year later on average?

There exist very legitimate claims about systemic, structural problems with our economy, social justice and health care.

But a lot of the detailed claims I see bandied about are either bogus as hell or so misleading as to be lies.

[DadJokes]

If you define non-poverty in the US as a budget that includes housing, food, childcare, healthcare, transportation, and a cellphone

I don't have access to a computer so can't download the ALICE methodology, but I'm curious about their numbers? These categories all span a huge spectrum in costs. I would expect that if your salary is near the bottom percentiles, your spending on these categories should also be in the bottom percentiles (except for healthcare which can't be controlled, but there's ACA now), instead of, say, the median.

Here is a very basic outline of what they use for their "survival" budget (I've cut and pasted the baseline info but plenty more detail to be had on the webpage when you get a chance - it is also a worthwhile read):

[snip]

I'm always skeptical of the numbers these studies put out....*goes to look at actual numbers*....Yeeeeeahhh....

[looking at numbers from my hometown]
When a "survival" budget includes nearly $700/month on vehicle expenses (especially when they're not including loan/lease/major repairs) and almost $600/month for food....it is way overinflated.

Healthcare also is overinflated, assuming ACA/medicaid eligibility, unless they're assuming a serious chronic illness in the family.

Housing seemed within reason for a 2 bedroom apartment.

Childcare also seemed high....but we've never actually had to pay for childcare, so I tend to give this a pass.

Also....taxes? Are they seriously trying to count gas/sales/etc. taxes instead of budgeting them in the categories for the respective expenses they attach to? Or are they trying to argue that a "low-income" person will end up paying ~$400/month in income taxes? Either way seems ridiculous.


When I can more or less comfortably fit housing, food, childcare, healthcare, transportation, and a phone into a single-income budget for a family of four (2 parents, 2 kids) of <$2,000/month [or $3,200/month if you insist both adults work and pay cited rates for childcare]....you can bet that I'm going to cry foul when someone says $60k/yr is a "bare-minimum 'survival'".

There is a HUGE difference between "can't make ends meet because I'm not good at money management" and "can't make ends meet no matter how good I am with money." The first is due to ignorance, misinformation, lack of education, lack of self-control, poor planning, or even possibly malicious interference or stupidity; the second is actual poverty.  When we conflate the two, we do a major disservice to solving the root of each of those problems.

After reading your post, I went in and looked up my numbers...

Category	ALICE	Our Budget	Notes
Housing	1,103	1,928
Childcare	739	171	I'm certainly aware of people that pay $200/wk for childcare. Like the state's research, they apparently just didn't look very hard.
Food	435	455	This includes $80/month for restaurants.
Transportation	777	303	Difference between a $500 car payment and a $50/month maintenance/replacement fund
Healthcare	3,026	752	This isn't a fair comparison. Wife and I are both government employees and benefit from fantastic healthcare options. I added life/LTD insurance to ours as well.
Technology	75	60	Apparently, I got our phones with unlimited data for less than consumer reports thinks is possible for a 2gb plan. Also, since when are smart phones a necessity?
Misc	616	367
Taxes	758	552	This looks closer than it is. Our $552 is entirely made up of FICA on our income before investing. We have no federal income tax. The data ALICE used was a much lower income and a lot of income tax.
Total	7,529	4,588	Our income is barely enough to cover what the ALICE study thinks the necessities cost

[RWD]

$3k/month for health care!? Please tell me that is not typical or I am going to have to seriously rethink my FIRE plans....

[StarBright]

I'm always skeptical of the numbers these studies put out....*goes to look at actual numbers*....Yeeeeeahhh....

[looking at numbers from my hometown]
When a "survival" budget includes nearly $700/month on vehicle expenses (especially when they're not including loan/lease/major repairs) and almost $600/month for food....it is way overinflated.

Healthcare also is overinflated, assuming ACA/medicaid eligibility, unless they're assuming a serious chronic illness in the family.

Housing seemed within reason for a 2 bedroom apartment.

Childcare also seemed high....but we've never actually had to pay for childcare, so I tend to give this a pass.

Also....taxes? Are they seriously trying to count gas/sales/etc. taxes instead of budgeting them in the categories for the respective expenses they attach to? Or are they trying to argue that a "low-income" person will end up paying ~$400/month in income taxes? Either way seems ridiculous.


When I can more or less comfortably fit housing, food, childcare, healthcare, transportation, and a phone into a single-income budget for a family of four (2 parents, 2 kids) of <$2,000/month [or $3,200/month if you insist both adults work and pay cited rates for childcare]....you can bet that I'm going to cry foul when someone says $60k/yr is a "bare-minimum 'survival'".

There is a HUGE difference between "can't make ends meet because I'm not good at money management" and "can't make ends meet no matter how good I am with money." The first is due to ignorance, misinformation, lack of education, lack of self-control, poor planning, or even possibly malicious interference or stupidity; the second is actual poverty.  When we conflate the two, we do a major disservice to solving the root of each of those problems.

Not everyone can do a $200 a month food budget though - we all know that you are a rockstar! Seriously, I got my food and household budget down to $500 for a family of four and that takes major, major work and planning and time on my part. I probably could get mine down to about $100 a week if I tried really hard and simplified menus extensively.

I agree that my county numbers do seem a bit high for a family of 4 @70k - but not egregiously so for a family with two in daycare. I thought the number for an individual was appropriate @ 19k a year.

I had a hard time finding two bedroom apartments at the price it stated (4 for the whole county on zillow) and many of them were at least 20 minutes away from where most of the jobs are which inflates commute and gas costs.

I have never seen childcare as low as the given rate for an infant and a toddler (unless you qualify for subsidized care), but I also know that there is a childcare shortage in the county where I live.

I thought healthcare seemed high as well, but we have decentish insurance. And I know we have a paucity of providers in our county for the ACA exchange. Additionally, I think one of things with ALICE families is that many don't qualify for ACA subsidies. If your job offers any health insurance (even if it is quite expensive) you probably don't qualify.

Food was high-ish for sure.

Transportation seemed high as well. But if you live where the housing meets the price threshold then you are definitely commuting farther.

Taxes- we have SHITTY taxes here so I suspect the local taxes are a legit problem with my county. Our county has municipal taxes for the town in which you work and live with no reciprocity between the two, penalties for remote work, and no tax breaks based on income level. Most towns have additional school taxes as well. To your point about low income and taxes, part of the point of the study is that many ALICE families are not low income. They are median income so yes, they will definitely pay some taxes.

I would say that obviously some categories are going to come in higher because they have to use averages and medians for a large scale study. For every family that has no health problems, there is a family dealing with a chronic condition. There is no way to give a perfect accounting of everything but this does provide a snapshot of what lower middle and middle middle class people tend to deal with. These numbers don't include student loans or car payments - these are averages for "four walls".

I like how @DadJokes compared their budget to the ALICE numbers so I'll do the same :)

Category   ALICE   Our Budget         Notes
Housing          695           734                   Does not include property taxes, 1,154.19 w/ prop taxes
Childcare        1,787         1,110                  this is for a 5 year old, and summer care for 7 year old (ALICE numbers are for infant and toddler) - medium cost for the area on the daycare, cheapest I could find on the summer care.
Food               603          587                    This is our average so far for 2019, includes pet food
Transportation   697          50                    I work from home all year, DH only commutes about 9 months a year, we have a car that gets good mileage
Healthcare        800         762                   This was our 2018 average, but also doesn't include vitamins, tylenol, trips to minute clinic that weren't covered by our insurance etc (so add probably a couple hundred more annually)
Technology        75           60                   DH has a smart phone, I do not
Misc                 534           534
Taxes              678         1,365.75              This number doesn't include sales but is our fed, state, municipal income tax for multiple towns, and local school income tax. Does not include state to my remote work state because I didn't feel like looking it up :) Our numbers are definitely higher than average because we have a higher than average income.
Total               5,869      5,202.75        

So while we come in lower, we also save by having me be a full time worker with no commute, we are almost out of the daycare years (and don't pay for after school care because I work from home), and I could get food much lower if I really wanted. I'm hopeful that health insurance will be lower in 2019 - but we do deal with chronic health issues in our house. Note this number also doesn't include car insurance or property taxes.

I think one of the issues with these sorts of articles when it comes to the MMM forum is that we are unicorns. We are a very tiny percent of the population and we can budget and save and ninja our way to frugality. So yes, a percentage of these ALICE families can go find the unicorn childcare and housing, and cheap transpo and great health insurance etc and then do what we do.

But not everyone can and that is why these studies have to use averages and generalized numbers.

[SwordGuy]

I think one of the issues with these sorts of articles when it comes to the MMM forum is that we are unicorns. We are a very tiny percent of the population and we can budget and save and ninja our way to frugality. So yes, a percentage of these ALICE families can go find the unicorn childcare and housing, and cheap transport and great health insurance etc and then do what we do.

But not everyone can and that is why these studies have to use averages and generalized numbers.

My daughter has Down syndrome.  She's mentally retarded and operates at a 5 year old level on abstract thinking.
So you are absolutely correct that "not everyone" can budget.

But basic arithmetic is something that elementary school kids are taught.    Most children do NOT have serious mental ability or physical health issues that prevent them from learning this basic skill.   A K-12 education is freely provided in this country and budget-level math is a 6th grade or below skill.   Most people not budgeting have either chosen not to learn how or chosen not to use what they learned.

"I'm not good at math." is presented as a badge of honor and perfectly acceptable excuse instead of a shameful admission that "I chose not to do the work to learn how to do math."

The above group only have limited sympathy from me until someone comes along and points out they are doing it wrong and need to change their behavior.  Then they know better and should be expected to do better.

The people who work hard but aren't paid a living wage for the work they do?   That's different.  Those folks have a legitimate reason for having difficulty making ends meet.  It's because the value of their life's work is being stolen from them by poverty wage-paying employers.   The people who have serious health issues?  That's different too.   We have a horrible health care system.  It's shameful that people die of easily treated diseases simply because some pharmacy exec wants to gouge the market.

[StarBright]

@SwordGuy my "not everyone can" was a comment on scarcity of resources as much as anything else (not just ability - though I do think that poverty mindset and decision fatigue eventually come into play).

The ALICE report for my county indicates that there are approximately 18k households that fall below the threshold - and yet a quick search for a two bedroom apartment at the allotted amount indicated 4 available apartments. Lets be generous and multiply that by 100 - still not enough affordable housing.

There are waiting lists for childcare at all but the most expensive facilities where I live and prices go up every year and the waiting lists don't get shorter. 

The cost of insurance is what it is - hopefully these folks get lucky and get cheapish plans with low deductibles and don't end up with health issues.

I think food and transportation are places where people can definitely cut down - but housing, childcare and health insurance are the big three. There are more families looking for cheaper housing and cheaper childcare than is available.

Now I am only speaking about my county - hopefully these numbers are absolutely insane for other places. But for where I live, the numbers seem a bit high but they don't look crazy.

[SwordGuy]

@SwordGuy my "not everyone can" was a comment on scarcity of resources as much as anything else (not just ability - though I do think that poverty mindset and decision fatigue eventually come into play).

You bring up many fair points.

The ALICE report for my county indicates that there are approximately 18k households that fall below the threshold - and yet a quick search for a two bedroom apartment at the allotted amount indicated 4 available apartments. Lets be generous and multiply that by 100 - still not enough affordable housing.

But then where are most of those 18k households living *NOW*?   I bet a whole lot of them are already in the more affordable apartments and they aren't moving unless they have to because (a) moving is expensive and (b) they found an affordable one.
Is that a possible explanation?

[StarBright]

But then where are most of those 18k households living *NOW*?   I bet a whole lot of them are already in the more affordable apartments and they aren't moving unless they have to because (a) moving is expensive and (b) they found an affordable one.
Is that a possible explanation?

It is definitely a possible explanation, though honestly, I think it is more likely that a family of four is just living in a slightly more expensive rental. Once you start looking for two beds @ $800 a month (as opposed to $695) there are a LOT more options, and you can find even find the occasional three-bedroom rental for $900.

I think people just suck it up and pay more, especially on housing and childcare (due to lack of options) and try to save money elsewhere.  Some months they are probably within budget, and some months a medical issue or car or home repair probably gets charged to the credit card.

Anecdotally, I've had several friends talk about starting to pay off their debt once their youngest enter first grade - which implies they are going into debt for daycare. We had one set of friends actually take out a HELOC when their planned second child turned out to be twins. But they were going to get a 20% discount on daycare if they paid it up front for the year for all three kids, so they took out a 35k loan to do it.

I recently read that 40% of Americans carry credit card debt. Interesting that that is right around the number that falls below the ALICE thresholds. Obviously - could be entirely a coincidence, but it is interesting.

Found the article! : https://www.marketwatch.com/story/a-growing-number-of-americans-have-more-credit-card-debt-than-savings-2019-02-13

[SwordGuy]

But then where are most of those 18k households living *NOW*?   I bet a whole lot of them are already in the more affordable apartments and they aren't moving unless they have to because (a) moving is expensive and (b) they found an affordable one.
Is that a possible explanation?

It is definitely a possible explanation, though honestly, I think it is more likely that a family of four is just living in a slightly more expensive rental. Once you start looking for two beds @ $800 a month (as opposed to $695) there are a LOT more options, and you can find even find the occasional three-bedroom rental for $900.

I think people just suck it up and pay more, especially on housing and childcare (due to lack of options) and try to save money elsewhere.  Some months they are probably within budget, and some months a medical issue or car or home repair probably gets charged to the credit card.

Anecdotally, I've had several friends talk about starting to pay off their debt once their youngest enter first grade - which implies they are going into debt for daycare. We had one set of friends actually take out a HELOC when their planned second child turned out to be twins. But they were going to get a 20% discount on daycare if they paid it up front for the year for all three kids, so they took out a 35k loan to do it.

I recently read that 40% of Americans carry credit card debt. Interesting that that is right around the number that falls below the ALICE thresholds. Obviously - could be entirely a coincidence, but it is interesting.

Found the article! : https://www.marketwatch.com/story/a-growing-number-of-americans-have-more-credit-card-debt-than-savings-2019-02-13

Could be.   

I've observed that people who bitch about not having any money often have nicer cars and phones than we do even when I know they make a fraction of what we do.   Sometimes it's employers ripping them off with poverty wages, sometimes it's just piss-poor life choices, sometimes it's both.  And sometimes people are just unlucky.

[Spud]

The amount of knowledge and intelligence needed to FIRE is actually pretty low. If you finished high school and you can read, then you’re clever enough. For example, you could find this blog, and through nothing more than reading and then applying what you’ve read, you could turn your life around.

The thing that stops most people from living off half of what they earn and investing the rest is a combination of values learned in their formative years from their parents and friends, beliefs, peer pressure, image consciousness, societal pressure and ubiquitous advertising. See how none of that is actually financial. None of it is numbers, stock market or spreadsheets? It’s all psychological.

It’s not that people are suspicious of index funds and don’t have an incredibly deep understanding of economics, or don’t understand the maths of earning $2,000 a month but spending $2,500 a month  = debt. It’s that they can’t control their urge to spend, and so they are constantly shooting themselves in the foot. Spending has nothing to do with money and everything to do with the person’s desire to obtain whatever goods and services their lusting after. They need it, they deserve it, they need to keep up with the Joneses. Spending money is what prevents them from amassing the funds to invest in the first place.

Overspending is like smoking. They know they should quit. They know how to quit. They understand what smoking is doing to their bodies. They know it might well be the death of them. Do they quit? No. Why? Because not quitting today won’t kill them today. Repeat that for a lifetime and you have the foundation of why very few people ever save money for the future, quit smoking, stop drinking, lose weight and keep it off, right that novel they always wanted to write, learn Spanish or a myriad of other positive things.

The negative consequence of not doing the simple positive actions needed to quit smoking or stop spending is not instantly apparent. It only becomes apparent after consistently not doing the simple positive actions for months, years, possibly decades. It's just to tough because smoking and spending are addictive.

The thing that makes me sad is that there are many are probably many “rags to riches” stories that aren’t actually “rags to riches”. Instead they are “rags to high income/high spending/high debt.”

[DadJokes]

The amount of knowledge and intelligence needed to FIRE is actually pretty low. If you finished high school and you can read, then you’re clever enough. For example, you could find this blog, and through nothing more than reading and then applying what you’ve read, you could turn your life around.

It's not that easy. The amount of conflicting information on the internet (as well as clickbait articles) is overwhelming. Heck, I had never even heard of Dave Ramsey until 2014, and I had no idea about MMM or the FIRE movement at all until about a year ago.

If it weren't so taboo to discuss finances, it would be much easier to spread this kind of information. As things are, we just have to hope people stumble across the right articles or websites.

[GuitarStv]

"The average retirement age in the United States among currently living retirees was 59.88 years old. The median living retiree left work at 62 years old, and the most common age to retire was 62 years old. 18.7% of retirees retired at age 62, and a whopping 63.1% retired between the ages of 57 and 66."

So, clearly most people can and do retire by the "normal" retirement age of 66.
Source: https://dqydj.com/average-retirement-age-in-the-united-states/


But let's put things into perspective historically.

What was the average retirement age by decade in the US?   Is there a trend?

Decade	Age
1900	76
1910	74
1920	73
1930	72
1940	70
1950	70
1960	66
1970	65
1980	64
1990	63
2000	63
2010	64

Wow.  On the whole the average retirement age has been dropping pretty consistently.    Folks must be doing better than the golden days of the past since they are retiring 12 years earlier than 1900.

Not only that, but they live a lot longer now, too, so they feel able to retire earlier for a longer period of time!  That's a double-axis of improvement right there.

There's a bit of a stall in the recent decade.  Could be an anomaly, might be just noise.   Let's see if there's any other relevant info.

Source: https://www.statista.com/statistics/319983/average-retirement-age-in-the-us/

Is there anything else that might account for that one decade, one retirement year uptick in the general trend?

Are people spending a whole lot more money on things that don't bring them wealth and income, but instead create recurring expenses that make it harder to retire?

Why, yes, they are!!!   Average new car price is over twice what perfectly good new car costs.   That's $20,000 per car, on average, that's tossed away with every car purchased.   That's a lot of money tossed away.  Or they lease cars so they get to pay new car prices forever instead of just for the purchase loan term! And don't forget the extra vehicle taxes and insurance!  Lordy!

How about houses?  Are house sizes one hell of a lot bigger than they used to be?    Why, yes, they are way bigger!!!  About 260% bigger than they were in 1920.   So, we're definitely buying much bigger homes than our ancestors did.   Housing size grew by almost 600 sq feet since 1990.  Garages are also way bigger and THEY DON'T COUNT IN house square footage size so the numbers on house size are actually way worse.

Perhaps we need them so big because we have more children now than our ancestors did?  Or perhaps because we have all those longer living grandparents living with us?

Why, no, average family size is smaller now than it's ever been.   And Americans invented warehousing our parents and grandparents so we didn't have to live with them, so that's not driving it.

We live in hugely bigger homes and apartments with far fewer people.  That luxury comes with a price.   Possibly retiring a whole year later on average?

There exist very legitimate claims about systemic, structural problems with our economy, social justice and health care.

But a lot of the detailed claims I see bandied about are either bogus as hell or so misleading as to be lies.

I'm interested in the retirement ages you give.

In 1900 for example, the average life expectancy for a white man was 47 years old.  Only 12 percent of those who were born in 1900 would live until 65 (https://www.seniorliving.org/history/1900-2000-changes-life-expectancy-united-states/).  Given that, how exactly was the retirement age of 76 calculated?

It seems a bit "bogus as hell and misleading".

[Davnasty]

The amount of knowledge and intelligence needed to FIRE is actually pretty low. If you finished high school and you can read, then you’re clever enough. For example, you could find this blog, and through nothing more than reading and then applying what you’ve read, you could turn your life around.

It's not that easy. The amount of conflicting information on the internet (as well as clickbait articles) is overwhelming. Heck, I had never even heard of Dave Ramsey until 2014, and I had no idea about MMM or the FIRE movement at all until about a year ago.

If it weren't so taboo to discuss finances, it would be much easier to spread this kind of information. As things are, we just have to hope people stumble across the right articles or websites.

I agree. If the only information out there was good information then yes, it would be as simple as reading and following through. Unfortunately there's lots of bad information out there too. If I were to explain the guidelines of something like MMM to someone they would have all the information they need, but they'd have to trust me first. It may not take a genius to make it work, but it does take a certain type of intelligence.

I also agree with other parts of what Spud said, that the issue is more psychological than lack of income. It's popular to criticize employers for not paying enough, but I prefer to criticize advertisers who encourage spending on the unnecessary and politicians who facilitate the policy and environment to support them.

[BTDretire]

I'm tired of reading articles which state how bad the average person is at paying for basic expenses. I would say the median household is doing okay. The figures certainly suggest so.

As far as I can see, it is only the bottom 30-40% that are struggling.
[snip]

You could argue that the middle class is struggling too, but not from lack of financial resources. Lack of education, poor role models, bad advice... peer pressure even, but not because of financial poverty.

Why in the world would it be acceptable that only 30%-40% of the population is struggling? If those numbers are correct then I'd consider this a red flag.
Where is your breaking point? 50% or 75% who are struggling?

Sure, this forum is for outliers who found a way to drastically improve their lives financially.
Some of them despite their income limitations.
There will always be rich and poor, but regardless of this particular article ...

Isn't it true that the number of people living below the poverty line has risen?

Like like it was down 17% from 2014 to 2017

Isn't it true that we have unprecedented homelessness and a problematic healthcare system?

Looks like healthcare coverage increased after Obamacare. I have to ask, "at what cost"

Isn't it true that we have a student loan crisis that is crippling the financial well being of millions of families?

Average Debt per Graduate at Graduation (2017): $28,500--- Is that crippling for the average College graduate?
The average monthly student loan payment ranges from $200 to $300, according to a report from the Federal Reserve.
80% owe less than $50,000.
35% owe less than $25,000[/quote]

Isn't it true that over the past twenty years wealth has shifted and the so-called "middle class" has shrunk significantly or fell into poverty?
I'm tired of looking :-(

Is there anyway to see where you post graphs in the posts?
 I tried to line up the graphs with the question and my response, didn't work.

[SwordGuy]

"The average retirement age in the United States among currently living retirees was 59.88 years old. The median living retiree left work at 62 years old, and the most common age to retire was 62 years old. 18.7% of retirees retired at age 62, and a whopping 63.1% retired between the ages of 57 and 66."

So, clearly most people can and do retire by the "normal" retirement age of 66.
Source: https://dqydj.com/average-retirement-age-in-the-united-states/


But let's put things into perspective historically.

What was the average retirement age by decade in the US?   Is there a trend?

Decade	Age
1900	76
1910	74
1920	73
1930	72
1940	70
1950	70
1960	66
1970	65
1980	64
1990	63
2000	63
2010	64

Wow.  On the whole the average retirement age has been dropping pretty consistently.    Folks must be doing better than the golden days of the past since they are retiring 12 years earlier than 1900.

Not only that, but they live a lot longer now, too, so they feel able to retire earlier for a longer period of time!  That's a double-axis of improvement right there.

There's a bit of a stall in the recent decade.  Could be an anomaly, might be just noise.   Let's see if there's any other relevant info.

Source: https://www.statista.com/statistics/319983/average-retirement-age-in-the-us/

I'm interested in the retirement ages you give.

In 1900 for example, the average life expectancy for a white man was 47 years old.  Only 12 percent of those who were born in 1900 would live until 65 (https://www.seniorliving.org/history/1900-2000-changes-life-expectancy-united-states/).  Given that, how exactly was the retirement age of 76 calculated?

It seems a bit "bogus as hell and misleading".

Fair question.   I  checked and it would cost me $49 to get the answer from that website and your curiosity is not sufficient motivation for me to spend it. :)

My guess is survivorship bias.   People who are alive retire, the others just died.

When we ask the question "what % of males are married?", we don't include the ones who already died in the calculation for the same reason. 

And if most people "worked until they dropped dead or too ill to move", then our current system is several orders of magnitude better than people give it credit for.

[Ynari]

I also agree with other parts of what Spud said, that the issue is more psychological than lack of income. It's popular to criticize employers for not paying enough, but I prefer to criticize advertisers who encourage spending on the unnecessary and politicians who facilitate the policy and environment to support them.

There was a decent piece in the Economist recently about this. I don't think it's anything new or surprising to mustachians, but cool that some research has been done.

[Researchers] estimate that a doubling of ad spending is associated with a subsequent drop in reported satisfaction of 3%—an effect about a quarter as strong as a spell of unemployment.
...
Perpetual dissatisfaction may well boost economic growth by keeping highly productive workers who might otherwise enjoy more time with their families chained to their desks. But it is a funny sort of prosperity that depends on people never being satisfied with their lot.

I'm interested in the retirement ages you give.

In 1900 for example, the average life expectancy for a white man was 47 years old.  Only 12 percent of those who were born in 1900 would live until 65 (https://www.seniorliving.org/history/1900-2000-changes-life-expectancy-united-states/).  Given that, how exactly was the retirement age of 76 calculated?

It seems a bit "bogus as hell and misleading".

These statistics don't set off any alarms of outright falsity to me, but they could use a big fat conditional statement. Of the people who retired at all (as opposed to people who died working, whether they were young or old), the retirement age has been declining. I'd be curious if the % of people who retire EVER has changed throughout the decades. I'd suspect that as retirement happens younger, a larger percent of people retire at all. I wonder, though, what influences that % outside of lifespan - is it that we have greater ability to retire (pensions and savings and general standard of living), or is it there is more to retire *to* now? Maybe people didn't want to retire in the past - their job provided them value such as self worth and community (wikipedia paints such a picture). We see a lot of that today, but seem to have more of an understanding of retirement, more people (aka friends and family) are doing it, so it's less "being put out to pasture" and more "entering the next chapter of your life".

[GuitarStv]

80 thousand years ago we were hunter gatherers, so there was no work beyond a few hours a day hunting and gathering.  Retirement rate at this point was effectively 100%.  We still have yet to catch up to that figure since the agricultural revolution.  :P

[Bernard]

I'm interested in the retirement ages you give.

In 1900 for example, the average life expectancy for a white man was 47 years old.  Only 12 percent of those who were born in 1900 would live until 65 (https://www.seniorliving.org/history/1900-2000-changes-life-expectancy-united-states/).  Given that, how exactly was the retirement age of 76 calculated?

It seems a bit "bogus as hell and misleading".

I once wondered about that as well, and thanks to my wife who is smarter than me, I now can answer your question.
The "average" life expectancy got up for one primary reason: less death children at child birth. Those who didn't die at birth and didn't die due to an unhealthy life lived as long as people live today. Sure, they didn't get heart transplants and chemo treatments, but they also didn't do heavy drugs and ate junk food.

[libertarian4321]

They started with a conclusion, something along the lines of "Americans are poor, Americans can't make it, woe is me, blah blah blah."  Then they manipulated the numbers to fit their conclusion, running up costs far higher than I expect most on this board would consider reasonable.  Then pretending they tried their best to get good data.

$700/month for vehicle expenses?  Yikes!  Was that for a Tesla Model S or the Model X?  I'm a multimillionaire, and I spend a tiny fraction of that amount in an average month, without even trying very hard.

"Smart phones are necessary"  Really?  You might be able to claim cell phones are necessary, but SMART phones are NOT.   And their "lowest cost" was far more than I pay for my smart phone.  It would be even less with a flip phone.

And on and on.  You get the idea.  They are intentionally running up the base cost of living to prove their pre-arrived at conclusion, that Americans can't make it.

But we've all seen similar "reports" before.  And I'm sure we'll see them again.

[StarBright]

They started with a conclusion, something along the lines of "Americans are poor, Americans can't make it, woe is me, blah blah blah."  Then they manipulated the numbers to fit their conclusion, running up costs far higher than I expect most on this board would consider reasonable.  Then pretending they tried their best to get good data.

$700/month for vehicle expenses?  Yikes!  Was that for a Tesla Model S or the Model X?  I'm a multimillionaire, and I spend a tiny fraction of that amount in an average month, without even trying very hard.

"Smart phones are necessary"  Really?  You might be able to claim cell phones are necessary, but SMART phones are NOT.   And their "lowest cost" was far more than I pay for my smart phone.  It would be even less with a flip phone.

And on and on.  You get the idea.  They are intentionally running up the base cost of living to prove their pre-arrived at conclusion, that Americans can't make it.

But we've all seen similar "reports" before.  And I'm sure we'll see them again.

I am curious how you know the bolded? I've been really interested in this since the original article was posted and am spending a lot of time looking into it.

From what I can tell the original study began in Morris County, NJ over a decade ago. The anecdote tied to it is that they noticed that a lot of the people coming in to the soup kitchen there had jobs. And they were wondering why people with jobs needed a soup kitchen. (This also jibes with a million headlines about the "working poor" cleaning out food pantries all over the country- there is an Oxfam study from several years ago that comes to mind - like 50% of their registered families were working).

I agree that Transportation numbers seem outrageous (though less outrageous in my county once I talked to a friend about it.  Apparently two of the major employers in our area basically require a toll road to get there, I had no idea!).

And we all know that you can get that food budget super low if you are willing to.

But I've now looked at the reports for several areas where I've lived and the housing and childcare numbers in the ALICE budget are really low and not even close to average (let alone luxurious).

I also used to say that smart phones weren't necessary - but most people I know need them for their jobs (including family members I have that fall below the ALICE threshold for their area).

I agree - part of the population is probably wasteful and they suck, etc. etc. blah blah blah. But is it really so hard to believe that there are hardworking people out there, possibly as much as entire quartiles of the population, that have legitimate issues meeting living expenses? Or do we just not want to believe it?

re:

[
I've observed that people who bitch about not having any money often have nicer cars and phones than we do even when I know they make a fraction of what we do.   Sometimes it's employers ripping them off with poverty wages, sometimes it's just piss-poor life choices, sometimes it's both.  And sometimes people are just unlucky.

I know some of those people too (Heck, I am related to some of those people). But I would say more people that I know are not complaining about their income, but are taking on side hustles. I have friends with full time jobs that also do uber, task rabbit, bar tend, GRE grading, try to sell Lula Roe or Rodin and Fields etc. 

I have to be honest that I'm really bothered when I see people in their mid/late 30s taking on sidework. It just doesn't feel right. It feels like everyone is scrambling not to fall behind.

 

[SwordGuy]

I have to be honest that I'm really bothered when I see people in their mid/late 30s taking on sidework. It just doesn't feel right. It feels like everyone is scrambling not to fall behind.

Or they are scrambling to get ahead at a faster rate than otherwise possible.

Or doing what they need to do to facilitate a career change mid-career.

[elysianfields]

btw, when I was 17yrs old working in a gas station, a gallon of gas was 18.9¢.

Oh my dog!  What century was that, the 14th?

Seriously, the lowest I remember it was 32.9¢

[elysianfields]

we need to teach ppl to not believe ads and salespeople

That's just stupid.  In George Carlin's takedown of the Ten Commandments, he says "Coveting your neighbor's goods is how we keep the economy going... coveting creates jobs, leave it alone!"

Besides, ad people need gigs too.

[SwordGuy]

btw, when I was 17yrs old working in a gas station, a gallon of gas was 18.9¢.

Oh my dog!  What century was that, the 14th?

Seriously, the lowest I remember it was 32.9¢

I remember $0.26 per gallon and it doubling overnight with the 1973 Arab oil embargo.  Gasoline was my major expense for my yard mowing business.

I've never bought a gas guzzling car because of it.

And I've been continually amazed at the folks who do and then are surprised (and really financially stretched) when the gas prices double and then get another gas guzzler after the prices drop back down.

[Jenny Wren]

I just want to comment on the smart phones aren't necessary belief that pervades this board. It's not 2010 anymore, our society has evolved (or devolved, depending on your perspective).


For many, many people smart phones are necessary because of the internet. it's necessary for everything from school to work to getting a great deal on groceries. For many in poverty or near it, a smart phone is their only internet device. Job applications, payroll, school stuff, etc often required internet. Sure, people could go to the library, but that takes time, resources (gas/bus fare), and limited access. and everyone on this board is always on about maximizing time.

I would instead argue that a $200+ smartphone and bells & whistles plan is not necessary, but an inexpensive phone and plan is. Otherwise you sound like my Luddite mother that screams about how no one needs the internet then has me use my internet to do everything from Pay her property taxes to scheduling her Dr appointments. It's ridiculous.

[FIREstache]

I remember $0.26 per gallon and it doubling overnight with the 1973 Arab oil embargo.  Gasoline was my major expense for my yard mowing business.

I've never bought a gas guzzling car because of it.

And I've been continually amazed at the folks who do and then are surprised (and really financially stretched) when the gas prices double and then get another gas guzzler after the prices drop back down.

No doubt.  I bought one gas guzzling car in my life and one gas guzzling truck (temporary second vehicle), but I have definitely trended towards cars with better gas mileage as I got older, even though I put less than 5,000 miles per year on my car.  That will most certainly go up when I FIRE, though.

I vaguely remember those gas price increases in 1973.  I was pretty young and not buying my gas at that time.

[Rosy]

btw, when I was 17yrs old working in a gas station, a gallon of gas was 18.9¢.

Oh my dog!  What century was that, the 14th?

Seriously, the lowest I remember it was 32.9¢

I remember $0.26 per gallon and it doubling overnight with the 1973 Arab oil embargo.  Gasoline was my major expense for my yard mowing business.

I've never bought a gas guzzling car because of it.

And I've been continually amazed at the folks who do and then are surprised (and really financially stretched) when the gas prices double and then get another gas guzzler after the prices drop back down.

20 cents in 1969, the year I arrived in the states.
Amazing how few people insist on great gas mileage. I mean, doesn't it make sense to choose a car for the one thing that you can control and may well benefit from for years to come?

[js82]

I'm tired of reading articles which state how bad the average person is at paying for basic expenses. I would say the median household is doing okay. The figures certainly suggest so. As far as I can see, it is only the bottom 30-40% that are struggling.

Articles which try to make people feel better for their own financial choices, by painting those of (median) others as being equally bad, are incredibly dangerous and disingenuous. One must be truthful, first and foremost.

If "doing okay" means "one significant medical event away from serious financial trouble", then perhaps.

The 97k median net worth figure includes home equity.  Unfortunately, until you get to somewhere past the 70th percentile, the majority of most households' assets are not in a particularly liquid form - when you remove home equity, the median net worth drops to 33k.  When you remove other assets (i.e. retirement accounts) that cannot be liquidated without penalty, that number will fall even further.  If households are counting vehicle value in their "assets" total, this number becomes even tinier.  That's not a lot of money if/when something happens, particularly if it's something of the medical variety that both costs a ton of money and potentially impairs your earning ability.

(Reference: https://dqydj.com/net-worth-percentile-calculator-united-states/ )

[ChrisLansing]

"People shouldn't have to be heroes in order to enjoy a good life."

I'll set aside the use of the word "hero" to mean someone who is wise in handling their money.    That said, I think this is where we're at right now - people have to be "heros" to enjoy a good life.      My parents could believe that hard work was all that was needed for a comfortable life style.   It was pretty much true for that generation.    They could be unwise (by mustachian standards) and still end up doing ok.    In the future the great separation will be between those who learn to manage their finaces and those who don't.   

[Cranky]

I’m going to agree that for many families, a smartphone isn’t exactly a luxury - it’s their main internet connection. I’m so ancient that I find the internet a pleasant luxury, but I realize that many people don’t have that luxury.

[GuitarStv]

I have never owned a cellphone, let alone a smart phone . . . so . . . they don't seem super necessary to me.  It wasn't necessary when I was in university, is not necessary for submitting job applications and finding a new job (did that two years ago with no issue), has never been necessary for payroll, and is not necessary for my son going to elementary school.

[BTDretire]

btw, when I was 17yrs old working in a gas station, a gallon of gas was 18.9¢.

Oh my dog!  What century was that, the 14th?

Seriously, the lowest I remember it was 32.9¢

 I'm pretty sure it was 1971 or 1972, and the local stations were having gas wars.
I see your point though, if I look up historical prices, I don't see 18.9¢ until I go back to 1941.
 I'm sticking with my story though, must have been a local anomaly with the stations competing.
 Another thought, my boss owned two stations, about 1-1/2 blocks apart, a Shell and a Union 76.
 He may have been doing some shenanigans against his Shell station, Not sure what they were
doing to him, but he ended up, selling two bay Shell station and building 10 bays onto the Union 76,
plus a car wash.
 I closed at 10pm one night and he said, let's go for an airplane ride, he had an airplane at the airport
across the street! On another occasion, he flew his helicopter over and landed it on top of his 10 bay roof.
He did good for himself. :-)

[FIREstache]

I never had a cell phone in college when I went to a state university where I lived, but they were less common then, but it seems about everyone has them anymore, usually smart phones.  It's pretty annoying to see people glued to their phones all the time.  I indeed have one my self, but I use it very little.  I still think it is a luxury, especially if you're paying for significant data rather than a bare minimum service.

[Jenny Wren]

I have never owned a cellphone, let alone a smart phone . . . so . . . they don't seem super necessary to me.  It wasn't necessary when I was in university, is not necessary for submitting job applications and finding a new job (did that two years ago with no issue), has never been necessary for payroll, and is not necessary for my son going to elementary school.

Not to split hairs, but are you low-income? Would a phone be your only access to a computer/internet connection outside of normal business hours of a library? Particularly a US library system with minimal funding and short hours? If not, then your comment doesn't apply to my point.

My last job, at a college, required me to input my hours via an online portal. Easy enough to do when timesheet day was a business day, but when it landed on a weekend, I had to to do it from home (could not input in advance). Also not a big deal, because I have a computer and internet access at home. If I hadn't, then my phone would have been my only option. For many people, this is their only option for internet access, and it's a hell of a lot more affordable than my computer set-up and monthly internet service. My phone, with unlimited, is less than $45 for a single line. Internet around here, where it's a comcast monopoly, is $75 for the lowest tier. Plus, the smartphone is also a camera and ::gasp:: a phone. My used pixel cost $100 plus $45 for the new battery.

Further, every entry level position my son recently applied to required that applications and resumes be submitted online, no exceptions. Also not an issue, since we have internet service and computers.

Poverty costs money and it takes more time to be poor, which leads to a cycle that is hard to get out of. Not needing a smartphone (and by this I mean the internet access it provides, not the phone itself) is a privilege in many instances.

[GuitarStv]

I have never owned a cellphone, let alone a smart phone . . . so . . . they don't seem super necessary to me.  It wasn't necessary when I was in university, is not necessary for submitting job applications and finding a new job (did that two years ago with no issue), has never been necessary for payroll, and is not necessary for my son going to elementary school.

Not to split hairs, but are you low-income? Would a phone be your only access to a computer/internet connection outside of normal business hours of a library? Particularly a US library system with minimal funding and short hours? If not, then your comment doesn't apply to my point.

My last job, at a college, required me to input my hours via an online portal. Easy enough to do when timesheet day was a business day, but when it landed on a weekend, I had to to do it from home (could not input in advance). Also not a big deal, because I have a computer and internet access at home. If I hadn't, then my phone would have been my only option. For many people, this is their only option for internet access, and it's a hell of a lot more affordable than my computer set-up and monthly internet service. My phone, with unlimited, is less than $45 for a single line. Internet around here, where it's a comcast monopoly, is $75 for the lowest tier. Plus, the smartphone is also a camera and ::gasp:: a phone. My used pixel cost $100 plus $45 for the new battery.

Further, every entry level position my son recently applied to required that applications and resumes be submitted online, no exceptions. Also not an issue, since we have internet service and computers.

Poverty costs money and it takes more time to be poor, which leads to a cycle that is hard to get out of. Not needing a smartphone (and by this I mean the internet access it provides, not the phone itself) is a privilege in many instances.

I agree, access to the internet is important.  I just disagree that a cellphone is the best way to get that.

Owning a cell phone is more expensive than home internet, every time I run the numbers.  Data/internet access on a cell phone is quite expensive in Canada . . . but getting broadband internet access can be very cheap.  Purchasing a used computer (particularly older corporate off-lease PCs) is incredibly cheap - and can be had for under 100$.  I pay 20$ a month for our home internet, and 14$ a month for our home phone.  It's extremely difficult to beat those numbers with a phone here.

To be fair, Canadian cell prices are ridiculous, so YMMV.