Dumbest WSJ article I've read in a long time

Duke said:

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you are willing to live like a family in the 1950s.

Somehow, no one is.

I've always maintained the same opinion because we did it.

 My Wife never worked. Instead we made the decision early on that she would stay home with the kids. I didn't make big money. We lived in a 900 sq ft house, and for a long time had one car. A Chevette, a Skoda, and a Rabbit, and we didn't have extras because we couldn't afford them. We dared not take on debt because we couldn't afford it.

People say it's different now, you could never do that today, and that's BS. It's no different today than it was then when, at the time, people said it couldn't be done.

Duke said:

MadScientistMatt said:

STM317 said:

And Rockefeller and Carnegie each gave massive amounts of their wealth away for the public good.

Also, what's defined as a middle class lifestyle tends to be a moving target. Whoever coined the phrase "keeping up with the Joneses" was aware that the Joneses weren't sitting still either. In the 1950s, a family might have one car, a 1000 square foot home, some kitchen appliances, one TV, and a radio, and generally cooked their own meals. Houses get bigger, people start wanting to own multiple cars, computers, go out to restaraunts more often, now it's just about expected that you'll have an Android phone for everyone in the family. In 2050, the expectation might be having an actual android for everyone in the family.

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you are willing to live like a family in the 1950s.

Somehow, no one is.

 

What? I eat lard, and expect my heart to explode when I'm 55.

Duke said:

In reply to Dusterbd13-michael :

My hat is off to you, seriously. Judging from social media and what passes for news, you are the exception. 
 

I kinda did the same thing... Less cars.. also private school.. wife insists on montessori school..  Been paying for all that on one income for some time.   It's not as rare as you'd think.

Duke said:

GIRTHQUAKE said:

And while it's a bad idea here, I can totally understand why this guy bought a new car because I was in a similar scenario. When you're in school full time, work part time for nickels and have dozens of things going on, the LAST thing you want is a car you can't trust. I have no doubt he made this bad choice under stress of having to get to work and caught up on homework- like when I got my Subaru because I was working 270 miles away and had 3 days to secure a new reliable car, so I bought new.

A)  What happened to his two previous new cars, which were apparently both less than 6 years old, and that he had negative equity in?

B)  Given his situation, is a $27,000 Accord really The Answer when you could buy a nicely equipped new Cruze, Focus, Corolla, Mazda3, Optima, or Elantra for 2/3 of that amount?  And that's without even considering the whole tier or two of even lower-cost new cars that are below that price range...

 

Unfortunately, certain cars have more mark up and loan to value which can “hide” more of the negative equity brought into the new loan.  Back in ‘96 I was selling Dodge products and the Jeep Cherokee classic was the weapon of choice to roll thousands and thousands of upside down debt from poor decision leases.  This isn’t a new problem.

nutherjrfan said:

In reply to Duke :

Accord is the better panty dropper.  Hate to be rude but that's the gist of that choice.  Don't care if he already had some at the time.

It's always about the status.  Always.

Wait, wait, wait.  In what the heck universe are we that the Honda Accord is a "panty dropper?"  The Accord?  The quintessential conservative 4-door transportermobile?  Nope.  Sorry.  I ain't buyin' it.

Watch.  And learn.

1988RedT2 said:

nutherjrfan said:

In reply to Duke :

Accord is the better panty dropper.  Hate to be rude but that's the gist of that choice.  Don't care if he already had some at the time.

It's always about the status.  Always.

Wait, wait, wait.  In what the heck universe are we that the Honda Accord is a "panty dropper?"  The Accord?  The quintessential conservative 4-door transportermobile?  Nope.  Sorry.  I ain't buyin' it.

Watch.  And learn.

https://www.youtube.com/embed/SV9Uu2T0q0E?rel=0

 

He drives a rental Versa, an Accord is a panty dropper compared to that. 

nutherjrfan said:

Accord is the better panty dropper. 

There are only so many words in the English language and only so many ways to put them together. I congratulate you, sir, on creating a sentence that has truly never existed before this day.

Will said:

nutherjrfan said:

Accord is the better panty dropper. 

There are only so many words in the English language and only so many ways to put them together. I congratulate you, sir, on creating a sentence that has truly never existed before this day.

Now ain't that some E36 M3. 

Fueled by Caffeine said:

Will said:

nutherjrfan said:

Accord is the better panty dropper. 

There are only so many words in the English language and only so many ways to put them together. I congratulate you, sir, on creating a sentence that has truly never existed before this day.

Now ain't that some E36 M3. 

I’m finally surprised.  Never did I think I would hear an accord called “the better panty dropper”.  Holy E36 M3.

I won't drop my panties for just any Accord though.

Cotton said:

Fueled by Caffeine said:

Will said:

nutherjrfan said:

Accord is the better panty dropper. 

There are only so many words in the English language and only so many ways to put them together. I congratulate you, sir, on creating a sentence that has truly never existed before this day.

Now ain't that some E36 M3. 

I’m finally surprised.  Never did I think I would hear an accord called “the better panty dropper”.  Holy E36 M3.

It's those heated leather seats. 
 

We’re all typing on a device made from parts that come from countries where slave/child labor is still 100% cool.

Again, I’m happy to live in a country where Tommy Numbtard can let his girlfriend and the sleazy sales-guy sell him on a 72 month loan on a depreciating asset than the country where such a silly mistake would be irrevocable.

In reply to Duke :

They're not wrong.  Cars are cheaper than ever, but American middle-class buying power is far less than it used to be.  Real-world wages went stagnant to dropping in the 1970s even as productivity and profit per worker kept rising.

...and I see this is already page 3, so I'm going to assume that the thread has been GarageGorillad and I'ma walk outta here...

Are you guys talking smack about Accords? Open your latest GRM and tell me Accords are lame? Come on!

As far as the article, people making poor financial decisions is American as apple pie. Of course, it's always OTHER people, I'm the smart one. 

GIRTHQUAKE said:

And while it's a bad idea here, I can totally understand why this guy bought a new car because I was in a similar scenario. When you're in school full time, work part time for nickels and have dozens of things going on, the LAST thing you want is a car you can't trust. I have no doubt he made this bad choice under stress of having to get to work and caught up on homework- like when I got my Subaru because I was working 270 miles away and had 3 days to secure a new reliable car, so I bought new.

There are any number of perfectly acceptable new cars that cost less than 27,000 dollars.  Maybe not GRM acceptable, but acceptable to a recent college grad.

Duke said (I'm combining posts here): 

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you are willing to live like a family in the 1950s.

Somehow, no one is.

I just hear constant complaining about how it is impossible to live these days on a single salary.  I disagree - it's just that people in the 1950s didn't have a choice about their standard of living because it was what it was.  The current costs are higher because the current standard of living is higher.  If you chose to accept that 1950s standard, you could still successfully live on a single salary.

We grew up in the '70s with double-digit inflation and double-digit unemployment.

We came of age in the 1990s with double-digit loan rates and the mainstreaming of expensive lifestyles.

Somehow we survived, thrived, and learned to live comfortably within our means.  We have not scrimped and saved every dollar.  We put 2 kids through daycare and college relatively economically.  Our debt load is small and everything we currently owe was entirely self-chosen for purchases made strategically.  We've saved for retirement most of our adult lives and expect to retire at or before 60.

A little common sense and self-control was all it took.  We're not exceptional or even particularly savvy about financial things.

 

A big part of "The American Dream" is the concept of social mobility. The extreme of that is the famous rags to riches tales, but for a lot of more normal people it basically translates to the idea that with some work a motivated and intelligent person should be able to do better than their parents. If a normal person has to live like they did 70 years ago to survive (not thrive) with a single income that's kind of antithetical to that concept. That doesn't mean that it's impossible to do, or that the general recipe for success has changed significantly but it does mean that statistically speaking it's less likely to occur now than in the semi-recent past, and it's less likely to occur in the US than other first world countries.

Median Household income in the US was $63179 in 2018. Everyone that I know who supports a family on a single income is comfortably above that number. Some are multiples of that number. And they all live in areas with a low cost of living. It's not impossible, but as with anything making a lot of money makes it much easier.

Here's median household income over time:

The median household income in 1990, when you were "coming of age", starting a career, starting a family, etc was $55952. Again, it was $63179 in 2018. If we put that 1990 median income into an inflation calculator, you know what it would be equivalent to today?

So just to keep up with inflation during the last 30 years, the median household income would need to be 78% higher than it currently is! Incomes aren't even close to being what they were 30 years ago! You know what has more than kept up with inflation though? The cost of housing, medical care/insurance, child care and higher education have all exceeded the rate of inflation by a significant margin since the 90s when you were starting out. It's a good thing that those aren't important pillars of social mobility and The American Dream or anything...oh wait.

 

 

 

 

Hey, like we've said, cars are probably cheaper now than they were in the past! So we've got that going for us... which is nice

 

 

So, can somebody still do ok in the current environment? Absolutely! But there's a lot less room for error. Somebody that's "coming of age" now will need to be far more disciplined and financially savvy than someone who was "coming of age" in the 90s might've been if they want to end up in a similar place. They can't afford to waste any money on frivolities. "A little common sense and self control" probably isn't enough any more to end up in the same spot you're in now. Notice that a person that doesn't overspend on new cars, frequent dining out, fancy cell phones, etc is still impacted by the rising costs of all of these critical expenses. You can do everything right and still have it tougher than somebody 30 years ago did.

It may be stating the obvious, but the time when you're born can have just as much impact on your ability to thrive in the world as how much your parents make or the color of your skin or your gender. We can't control any of these things, but they can have significant impacts on our lives and how difficult it may or may not be to find success.

Suprf1y said:

Duke said:

volvoclearinghouse said:

So, I basically bought my mother's Oldsmobile.  

Except that your car is nicer in probably every way, has more features, performs better, gives better fuel economy, is safer, and will last longer.

 

Not really. It was a Mazda 3 so after about the 3rd year it started returning to the ground from which it came, and the Olds will run forever. Poorly, but forever.

That olds did survive being Mom's primary car for 4 years, then my high school whip, and then my brother's.  Was still running strong at 180,000 miles when my idiot brother ran a red light and got T-boned in it.  Luckily, he got hit on the passenger side and was alone in the car; no one got hurt.  

My 3 has 20,000 miles on it now, is nicer, has more features, and uses less gasoline per mile driven.  My plan is to drive it for the next 11 years, and give it to my daughter when she turns 16.  She did pick out the color, after all.  

In reply to STM317 :

Thank you for posting statistics and real numbers instead of just blaming iphones and all these dumb youngins, like half the people posting in here.

Duke said:

For a while now, I have maintained the opinion that you can still raise a small family on one current income, just like you could in the 1950s, if you are willing to live like a family in the 1950s.

Somehow, no one is.

 

My family is living on a single income here, and not exactly comfortably above the median income number either. It does take some tight spending control but can be done.

In reply to STM317 :

"Median Household income in the US was $63179 in 2018. Everyone that I know who supports a family on a single income is comfortably above that number. Some are multiples of that number. And they all live in areas with a low cost of living. It's not impossible, but as with anything making a lot of money makes it much easier."

Single-earner household here.  While our household income is higher than the median, our annual expenses are less than that number, so we could conceivably make that work.  Granted, you gotta take taxes out of the $63k, but we also have a fair number of non-essential expenses we could conceivably cut.  We also live in an area with higher-than-average cost of living.  

One point that bears highlighting is that graph you showed with inflation-adjusted prices for various things.  Some stuff has gotten a LOT cheaper over the past 40 years or so; attributable mostly to offshoring and automating.  I was cleaning out an old car the other day, and found a tool kit that appeared to be from the early 1980's, still in its original box.  On the box was a price marked- $59.99.  Now, this was just a simple 40 piece socket set, not a Snap-On or anything, just a hardware store set.  In today's dollars that would be the equivalent of probably $150 or more, I'm just guessing.  This sort of set now sells for about $20 at any big box hardware store today-  Made in China.  

Check out the old Radio Shack catalogs from that era.  19" CoLoR TV's for $299 or so.  What's $299 buy you nowadays?  A 40" LED TV?  Of course, people weren't going out and buying 3 TVs and replacing then every 3 or 4 years.  My parents had the same console set in the living room for the first 17 years of my life.  

But then you look at health care costs and college tuition and see the prices are many multiples higher.  Why?  Can't really offshore those things, and they're tough to automate.  

In reply to STM317 :

But at least part of what you're ignoring is stuff like this:

The average house size in 1950 was 983 square feet, down from about 1,100 in 1940.  Today it is over 2,500 sq ft.

So, YES, the cost of housing has gone up but the AMOUNT of housing each family consumes has gone up proportionally.  And cars are actually (inflation-adjusted) cheaper than ever before, DESPITE also being better, nicer, higher performing, and more durable.  Not to mention the entire consumer electronics industry which barely even existed yet everyone now alive takes utterly for granted.

I'm going to leave health care and higher education costs out of it for right now because those are specific cases that were NOT driven by market forces but by lots of government interference and socio-economic engineering.  We can talk about them in a different thread if you want but they are big enough ans separate enough topics that I'd like to leave them out of this one.  But I will restate that if you were willing to accept 1950s level of health care you could still get it at a 1950s price index.

STM317 said:

Here's median household income over time:

The median household income in 1990, when you were "coming of age", starting a career, starting a family, etc was $55952. Again, it was $63179 in 2018. If we put that 1990 median income into an inflation calculator, you know what it would be equivalent to today?

If I read that correctly, doesn't the chart show the median household income in 2018-adjusted dollars?  So that 55,952 doesn't need adjustment?

In reply to volvoclearinghouse :

Right. Consumer electronics are an area that's gotten cheaper over time. So, we've got 1000 channels on TV and most of us carry small computers in our pockets, but that seems kind of inconsequential when the most important parts of life are so expensive. I guess we can all be entertained while we work until we're 70 and die broke due to outrageous medical/end of life costs.

One could also look at the rising cost of education and healthcare contrasted with the decline in cost of consumer goods as an example that the free market causes prices to drop, while the others have no truly free market and often have more government involvement. But that's borderline floundering, so I won't go further.

volvoclearinghouse said:

Check out the old Radio Shack catalogs from that era.  19" CoLoR TV's for $299 or so.  What's $299 buy you nowadays?  A 40" LED TV?  Of course, people weren't going out and buying 3 TVs and replacing then every 3 or 4 years.  My parents had the same console set in the living room for the first 17 years of my life. 

I read on some appliance repair website an article that was going in to the whole "my dryer that I bought in 19-dickity-three lasted for seven hundred years but one I buy now doesn't last more than 15 months" discussion.  I'm going to paraphrase massively here, but his point was that in the olden days, you'd pay $300 for a dryer and expect it to last a lifetime.  The dryer that only lasts a couple years is still $300.  But that $300 was worth more like $2,000 today, so yeah, they don't last as long but they're way cheaper than they used to be as well. 

Not sure how that really fits into the whole discussion, but I thought it was an interesting point.

That kid with the Accord in the article bought the Accord because a salesman emailed him and said he could? Isn't that one step above replying to an email from a Nigerian minister and expecting them to send you a $1.5 million ATM card like they promised?