LA Business Daily
Why are middle class people so stupid these days?
How come discretionary income is an idea out of the past when folks are making big fine incomes there? I see mofos making 100k and spending $2000/mo on their house payment there.. interest only or variable for lord sakes and then they are making $2500/mo in automobile payments and insurance expense... more than their homes cost them.. And if they have to buy anything over $2 out comes the MC. I am so confused, by this, is everyone dead in the brain now? Agreed, Ms. Donna... I think housing is out of control. Alot of so called investors are going to be doomed when the prices come back to earth. These clowns are over leveraged and praying that appreciation stays up because they're buying at such ridiculous prices. Pretty soon all of the people you spoke of who have a hard time affording homes (they're currently renting) well they will be able to afford to own again. At that point the landlords will lose alot of equity and see their vacancy rates skyrocket all at once.. They're going to be in a big mess! I don't know where it will all end. Personally I think that the 10% rule ought to be applied to automobiles. Never spend more than 10% of your income on one. You make 10k spend $1000 You make 100k spend $10,000 If the govt would only ALLOW capitalism to work.. there would be more competition and lower prices. Look at all of the perfectly good refineries sitting idle here in the states and see what I mean. Further yet you may say I am insane but if the US said LOOK we're only going to pay $40 for your oil, they'd still sell it to us.
Public Comments
- Not everyone. Just some people. And do you think it's only the middle class??? Look at what rich people buy. And dont' judge about the credit cards. I use mine for everything, but I pay it off at the end of every month. I like to have a handy record of all my expenses, and my monthly statement does that. I also get airline miles. But you are correct that people should not live beyond what they earn. On the other hand, housing in some parts of the country is very expensive. Where I live, a 3 bedroom home goes for about $800,000... and this is not a rich community. It's just because we're a beach area.
- Why should today be different?
- Unfortunately, there is a vast majority of people living beyond their means. It's all about temptation, isn't it? For example, when qualifying for a home loan people always qualify for way more than they can afford. It's about competition, too. People aren't happy with driving an economical little car when their next door neighbor drives an Escalade. My concern is the future. For those living beyond their means, what are they going to do when they reach retirement age? They'll be broke and unable to work. Talk about tragedy, both for the individual and us. We're going to be supporting those who blew their money foolishly- subsidized housing, food stamps, medicare, etc... And for those of us who invest money so that our futures are secure, is it really fair to us? We're being penalized because we're smart enough to plan ahead? I hope things change, as the incentive to plan for retirement is lessened each day.
- I think its greed, and the need for instant gratification. Its funny to note that of the Forbes 10 richest people in the world, over half of them drive cars older than the average middle class dude who needs a new car every 2-3 years. To some extent, it seems those with financial expertise can be determined to some extent by their lifestyle. Eg, those who are frugal are either forced to, or choose to, as they would rather have their money work for them, rather than work for it. Its also interesting to note the big uproar over gas prices.... Gee folks, gas is 20%-30% of the total operating costs of a new car, with depreciation/insurance taking the biggest portion. Yet, no one seems to mind spending 25% of their income on transportation, yet cry bloody murder when they have to pay an extra 200/month on fuel. I guess the one good thing that will come out of $5-$6/gallon fuel is a change in priorities. The same will occur once the real estate market tanks. The big question will be whether govt bails out the banks and the automakers, or lets capitalism make the call.
