Where does the money come from?

[BarbC]

Many around here were line workers at GM with both the husband and wife employed there. With the shutdown of the plant, they became unemployed and they soon learned the union was wrong saying they were worth $40 per hr. Now their homes are in foreclosure and they cannot find jobs that pays half of what the union had them believe they were worth. But they were in debt

Same thing happened in Norfolk, VA. A year later, you could pick up a barely used Chapparel boat, ATV, camper and Ford F250 for a song.

 

[scorvers]

Hhhmmm. My wife and I make a little over $150k/yr and we're lucky in that we both work in pretty recession proof fields. We have 3 kids (4,8,and 12) and 5 dogs. House is on a plan to be paid in the next 12 years. My truck is an '01 with 190k miles. Wifes van is an '04 with 86k. We work our tails off. I have 2 boats, nothing big or extravagant, that are paid in full. We don't live an extravagant life style. Wife shops at thrift stores for her business clothes (AMAZING what you can get there!!). I beg/barter/trade for much of my hobbies and other things around the house. We both live by the mantra,"NEVER pay full price!!!". Close to 25% of our salary goes to the kids....private skrewl, insurance, health care.
I tell ya, it's hard at times. We're not living paycheck to paycheck, but man!!!!.....Where does the money go?
I, like most of the posters, ask myself sometimes how folks live the lifestyles they do. I've been in debt before.....NEVER again. We owe on the house, 1 credit card that we keep active for business trips, and a couple small loans thru our credit union so we stay familiar with them.
I see the folks Ol' Man is talking about everyday. I just have to shake my head. I really feel no pity for them at all. My wife and I may not retire rich, but we sure as hell ain't gonna retire poor.

 

[ChattanoogaPhil]

Those we are talking about are not wealthy. They may be in debt, they may be dealing drugs, they may be many things but wealthy is not one of them.

SIDENOTE: Many around here were line workers at GM with both the husband and wife employed there. With the shutdown of the plant, they became unemployed and they soon learned the union was wrong saying they were worth $40 per hr. Now their homes are in foreclosure and they cannot find jobs that pays half of what the union had them believe they were worth. But they were in debt

Perhaps they did well in the market. Market volatility has created amazing opportunity the past couple years. Difficult times provide a wide array of opportunity for those prepared to take advantage of it. Or as you say... your neighbors might all be drug dealers or foreign spies selling classified information to China. In any event, they appear to be doing their part in contributing to consumer demand as well as picking up my slack. Tell em thanks for me.

With some exceptions, the Chattanooga area has largely ignored the downturn in home values (though we didn't experience the spectacular increases in real estate values as other boom/bust areas did), nor have we experienced a huge industry collapse putting so may workers out of a job (carpet mills in N GA have suffered a great deal). Tell your automotive friends VW has been hiring here in Chattanooga. They should start producing next year.

 

[dmar]

I cant understand how he did it, but I worked with a single guy who had a nice house, furniture , car etc. He went into high CC debt, went bankrupt and would do it again. I know he worked his CCs purposely high! I will say he was a OT hound.
My biggest gripe like frank just said, is these outfits that say they will "stiff" CC companys for you, and worse yet, those outfits that claim to be able to pay taxs you owe for pennies on the dollar. Are they lieing? And if it does work, how can that be fair to us dummies that paid every owed cent all of our lives? As a close friend of mine used to say that was a captain when a guard would ask a favor of a good post or something else from him, "If I do you a favor, that means I am screwing someone else!"

Wow, I love that last sentence, "If I do you a favor, that means I am screwing someone else!" If only the people 'representing' us in our government would follow that simple, common sense guideline, we would not be in our current situation!

 

[Mule88]

probably Drugs

 

[ladder13]

Matthew 19:24 pretty much sums up God's view of the wealthy.

 

[sigp220.45]

Not everyone who looks to be doing well is in over their heads. There are lots of smart folks in this country who are very good at making lots of money.

I work for the government, so I'm definitely not one of them. But I don't begrudge them their success. Its the American way.

 

[BLACKHAWKNJ]

A few years ago I read a small article in the Business Section of the New York Times entitled "The Changing Attitude Towards Debt", it quoted the leading Wall Street economist Henry Kaufmann as saying "Nobody celebrates paying off the mortgage anymore." In 1987 I heard a finance program on WCBS-AM from NYC, I remember the in-studio guest and financial guru saying he was opposed to home equity loans-"People were using their house as a bank." The advertising for home equity loans is very seductive, shows the older couple with the cabin at the lake, the proud parents with the college grad, the fancy truck and boat. My SIL said she when she and my brother bought their new house, their home quity loan was pre-approved, she said they were visibly hurt when she refused it. Of course they never tell you that it does not convert a 20 year mortgage into a 40 year one, that monthly payments will be much higher.
I will repeat the stories I know of the several individuals who got home equity loans then took off, leaving their soon to be ex-spouses holding the bag. Also it seems to have become fashionable to default on on's obligations these days, expect someone else to bail you out. Then there's all the "advice" columns that say, default on your mortgage, bank the money, by the time foreclosure proceedings are started you'll have a nice little nest egg.

 

[rburg]

Sometime I need someone to explain the idea of wealthy to me. Back in the campaign season, Hillary wanted to tax the wealthy, so did the president. To them, high earnings equated to wealth.

But we know many of the folks with high gross income figures are also up to their necks in debt. They live paycheck to paycheck just like some of those earning a fraction as much.

And then we also see the folks the OP posted about. High consumption families. From a lifestyle standpoint, they actually consume so much they have the best of it all. But as we've stated, most are in debt so deep they worry constantly.

And the third class of wealthy is the high net worth folks. You don't have a clue as to who they are because they don't let on. They got "wealthy" by saving their money, living below their income, and using some common sense.

So which is the wealthy one? Or are all 3 wealthy? Its none of our business who has a running CC balance and who doesn't. Or who has 2nd mortgages. Well, except when they lose their job and file bankruptcy. Then we all pick up their slack with higher prices on the things we buy.

At the gunshows we often comment that you just can't tell who has the coin and who doesn't. Sometimes its the farmer in overalls who stops and peals off $100 bills. We sometimes see the "high rollers" in their fashionable clothing asking if we take "plastic". Of course we don't. Gun collections are luxury items. When do I feel rich? When I bring home a new to me gun. Or when I sell off a dog on some unsuspecting fool who wants it as badly as I did a few years ago.

 

[BLACKHAWKNJ]

The Old Rule (and still valid, IMHO) is that total wealth minus obligations, debt, taxes, etc=net worth. What you have free and clear determines your net worth. You don't own your car or house until it is paid off.
Wealthy people who are not savvy money managers hire people who are.
And they take advantage of completely legal means to engage in tax "avoidance"-which is legal-as opposed to tax "evasion"-which is not.
In the 1972 Presidential Campaign the McGovernites tried to make an issue of the wealthy avoiding taxes through tax free municipal bonds. The Nixon White House looked into this matter in attempt to defuse the issue. The legal advisers said there were serious legal and constitutional questions about the federal government taxing income derived from the financial obligations issued by a state or municipality, it was felt that taxing such income would kill much of the municipal bond market. One wealthy friend rents a big part of the acreage on his country estate to a real farmer, the land is then taxed at the much lower farmland rate.

 

[H Richard]

I enjoy going to bed at night and sleeping well as I owe nothing to anyone, house paid for , money in the bank, and I don't have to worry about money. However, I worked for 50 years, and saved a substantial part of my earnings every year for retirement. I hadn't bought a "new" car since 1973, which only cost $4300 at the time. We never went without, but we never had quite as much as as many others did, but we were happy. I believe it was referred as being "responsible". Unfortunately we have too many Irresponsible people spending every dime they have and not "putting it away for a rainy day".

 

[USAF385]

Eh.. I just worry about my own pockets.

I was fortunate enough to come into a large inheritance from my grandfather's estate when I turned 18. In the seven years since, all I have spent of it was to enough buy the house and land my brother and I own from our mother and an additional 63 acres of land... other than that I haven't touched it. As far as I know my brother and sisters hardly spent any of it either.

I have a cousin who took his inheritance and retired at the age of 23. He has a big house on the California coast a some real shiny cars.

Not me... I'm working, going to school and in the reserve. I'm pretty tight with my money... heck I don't have cable and I'm using dial up. I'm quite happy living a comfortable life and not buying fancy cars and big houses. My brother is currently active duty Air Force and both of my sisters and their husbands have jobs. That's just the way we were raised I guess.

 

[Bat Guano]

I was raised up on the prairies by parents who went through the Depression; by the time I came along there was some light at the end of the tunnel for them. We never lacked but from hard experience they were downright thoughtful and careful about money. My father, somewhat to his surprise, built a new house in the late 1950s and paid off the mortgage early. He also put his kid (me) through college, pay as you go, and in later life paid his way right up to the end. My parents' example kept me from being dumber than I had to be, and I was able to retire at 51 with a paid for house and no debts. And even a "few" good guns.

My kids are now in their 30s and doing ok, considering the times. Neither has any debt. My son commented to me the other day that he "counts his blessings".

Music to the ears.

No such thing as a free lunch.

 

[regmag-621]

Please ask Fannie Mae and Freddie Mac.

Best Regards

Paul #1354

 

[oldman45]

Please ask Fannie Mae and Freddie Mac.

Best Regards

Paul #1354

Sorry but I cannot do so. The heads of those groups are now advisors to your President.

 

[HarleypsychRN]

Never underestimate the power of "old money". The previous generation worked hard and saved and the children buy expensive toys. Perhaps it's the morgage-up-to-the-neck thing? You can get a used Corvette for a reasonable price, you don't have to buy off the show room. I'm 58 years old and have nice cars but when I've had cars for 250K miles too in the past to make them last and I had one SUV that was literally rusting apart before I finally let it go. Some people are "house poor". It seems like a good time with the economy like it is to get a good deal or some toys if you have the cash.

 

[Peter M. Eick]

My observation living in the burbs is that folks are really leveraged financially. They are in debt to their ears and just keep it going.

Me, I am debt free and paying for their actions. I worked hard to pay it all off an still save 30% of my salary every month. That has meant not buying guns I wanted and skipping a lot of other things.

I gave up trying to sort out how folks do it.

 

[DOEBOY1]

In my line of work I have access to a lot of the elite people. Some worked it out, some inherited, and some are just fronters. When I get to know them I'll ask how I can have what they have when I retire 90 % will say be lucky be in the right place at the right time. One of the wealthest I consider said he ate pbj's for two years when he started a bank. Now just to remind himself he is only a man he will still eat pbj's for lunch. He is who I admire. Had one tell me he would tell anyone anything to get them to buy his land. He also is the one that my former employer had to chase for the money. But the true wealthy that's another story. I was working on street lights for a high end development and started a conversion with a yard worker. I had known him for quite a while around and knew him to be a hard worker regardless of his health (prostate surgery). He started the conversion about deer hunting and was going to take a month off. I made the comment when you have money you can't hide it and he let me in on a little know fact. He said I didn't go through veitnam, work for some ungreatful boss for 25 years before they sent my job to mexico, and do without to pay my house off to die broke working for someone else who still calls me by the wrong name when he's too drunk to walk. That is when I realized he was the wealthy one. His house was paid off the rental house was paid off with a monthly income, and his deer camp land and house were paid off. He had enough to live on to support any gun habit he had. He lives in a double wide that is probably 35 years old and one of the cleanest houses I have ever been in. He has a gun collection that include remington mod 70 and winchesters that would turn your head. His smith collection display is what got me started collecting. He lived, some may have heard this some not , like no one else so he could live like no one else. Now this man didn't make a lot of money his wife i believe stayed at home, he canned meat and veggies makes about a 4th what I make but is truely wealthy. In that he has more time for himself, his wife and grand kids. He does as he pleases goes where he wants and buys what he wants. the trick he says is to know your limits and stick with it. He said if he sees a gun he wants but the price is too high he won't buy it because " they made a million of them and the next one's right around the corner". Good advise I take it to heart the best I can and at times stray but knowing that it is me who is responcible for my debt I work my 90 + hours a week and take time off when I can, hoping to be in his shoes when I retire. Doeboy

 

[leswad]

DOEBOY1, your story reminds me of something I read once at my wealthy cousin’s house long ago. It went some the like this… The definition of “Rich” is defined by being able to live your current lifestyle for 10 years without being dependant on anyone else for income.

Some would think a person making $200,000 a year “rich” when that person could be leveraged in debt to the point he is actually poorer on paper than someone that is making $40,000 and has been responsible with their finances.

 

[feralmerril]

What I never could understand is people we read about who are obvisely very rich and are still working to get richer. Guess thats why I aint rich! The wife and I live in a very small two bedroom house. Its just us. Its kind of ironic that we own a rental that is bigger and newer.
All my working life I scrambeled to make payments on a modest house. Then just before retirement I played a shell game with my 401K, paid off the house getting ready for retirement. Shortly, I had two houses paid for. Life for me, was backwards.
I dont exactly know how to explain this, but I almost belive I lost more money, than I ever made in my life! Yet, we are functioning with no debt but not much income either. Guess God takes care of us!