Has a wish for rich life passed our ability to pay for it?

[question everything]

LYNN O'SHAUGHNESSY

Has a wish for rich life passed our ability to pay for it?

March 26, 2006

(snip)

While 67 percent of American households have connected their TVs to cable, only 41 percent of families have an Individual Retirement Account. In tax year 2004, only 17 percent of families bothered to contribute to their IRAs. Meanwhile, 52 percent of workers, according to the annual Retirement Confidence Survey, have saved less than $25,000.

I started thinking about where Americans spend their money when I read a story this month about a hedge fund manager who blew into Greenwich, Conn., wielding blueprints for a mansion that could easily accommodate King Kong and all his jungle buddies. The guy wanted to build a 39,000-square-foot mansion with enough legroom for eight NBA basketball courts. The architects had penciled in 16 bathrooms, which I suppose would be handy if a school bus ever broke down in front of the estate. Greenwich, by the way, is a blue-blooded preserve, which is inured to excessive opulence, but these building plans were so over the top that it prompted The New York Times to write an editorial questioning why someone would need a mansion that could swallow 17 average American homes.

(snip)

A huge house is going to generate higher property taxes, obscene utility costs, bigger insurance bills, more visits from repairmen, extra trips to Home Depot, and cash – or plastic – to buy furniture and other stuff to fill up the rooms and closets. Owning extra cars also creates a financial drain.

(snip)

Perhaps people are spending carelessly because they hold skewed ideas of what it takes to live comfortably in retirement. In the latest annual Retirement Confidence Survey, which is released by the Employee Benefit Research Institute, 32 percent of Americans think they can retire with less than $250,000. Dream on. Plenty of Americans believe they don't have to save because they are holed up in their own Fort Knox.

(snip)

If you aren't where you want to be financially, there are ways to play catch-up. Stop buying stuff with credit cards. Examine how you can curb your consumption – in big and small ways. You can start by peeling your own carrots. If you know you'll need cash from your house to support your retirement, it's best to downsize now rather than wait. To get a better idea of where you stand financially, visit AnalyzeNow.com, which offers plenty of inexpensive and free retirement planning tools.


Find this article at:
http://www.signonsandiego.com/uniontrib/20060326/news_lz1b26has.html

[Bobbieo]

1. The answer is YES!!!

And the answer is becoming more evident every day. We are rapidly becoming a nation of the very rich and the poor - just like Mexico. The Wal-Marts and Home Depots have wiped out the middle class.

[Warpy]

2. Um, questioning how the poor spend their few dollars

because some unimaginably rich asshole is planning a 39,000 square foot mansion in Greenwich is just a little insulting.

The fact is that people no longer believe they'll have a retirement to save for. Pensions have consistently been looted by the type of man who thinks he needs a 39,000 square foot monument to his colossal ego and social security is under attack. Most of us fully expect to work until we literally drop dead from the effort. That $40 per month won't overcome that ultimate reality, but it will make the journey a little more pleasant when we come home from a hard day at work and flop down for some mindless entertainment for a couple of hours until we pass out.

The problem is rather that an unimaginably rich asshole is able to squander money on a 39,000 square foot monstrosity in an overpriced area like Greenwich while the rest of us feel terribly lucky to have $40 a month to squander on our entire entertainment budget (less than 2 movies a month, if you're counting alternatives). The problem is the tax code that has robbed the working class to fatten the rich, while the rich merrily loot everything the working class has worked to accumulate for their future.

The problem is one of wealth distribution, a problem that has gotten horrifically worse since 1980. The problem is an idiotic economics theory that says the rich hire the poor out of social responsibility instead of to create the goods and services they have customers for.

The problem is conservative economics theory, something that has infected both parties.

[SmokingJacket]

6. Agreed. Peeling one's own carrots...

is not going to help anyone climb out of poverty. Sorry, that's just insulting.

(A pack of Julienned carrots is 1.10 -- I buy them for my kids' lunches so I don't have to spend 15 mintues before school washing and peeling while simultaneously looking for boots and mittens and homework. Yes, it's an "extravagence," but to compare it to a 39,000 square foot house makes me want to slap someone.)

[Boojatta]

10. Warren Buffet made his first $100,000 peeling carrots for people!

Then he invested the $100,000 in companies that peel carrots for people and he became a millionaire. The rest is history.

:popcorn:

[question everything]

7. "We need to spend to power the economy"

so we hear, starting with the tax cuts back in 2001.

This is the flip side of the problem. That close to 80% of our economy is service driven. That so many earn a living in service oriented businesses, so that if all of us all of a sudden will decide to save instead of spend, we will cause a major recession and millions will lose their minimum wage jobs.

Having been through too many cycles of unemployment and underemployment, I can more than sympathize with the desire to keep some happiness in one's life. When we lost our jobs the first time - yes, both of us from the same employer going through "restructuring" - many told us to sell the house and this was our first inclination. Then I started thinking that we will have to live someplace, probably in a smaller place, will have to pay rent, storage space, and be miserable every time we come back home. So we hung tight for a year at least with our favorite, familiar surroundings.

But I would like to think that if you do have $40 or even $100 (both cable and Internet connection) to pay Comcast, or Cox or Road Runner, that you can put $10 a month in an IRA account, or through your employer in 401K.

I know that in the past few years, when we finally can afford it, we put the maximum into spouse's 401K and my IRA. And we drive a 1993 Volvo and a 1998 Camry and take maybe one trip a year and buy a new computer every five to 10 years (having a Mac helps).

And I sometimes feel like a Republican who, seeing how so many splurge on the newest SUVs and flat screen TVs while putting zero amount for retirement, that I really would not like to support them, some 30 or 20 years down the road, when, like the grasshopper they are down to nothing and want my tax to help them.

[Deja Q]

3. Been turning around and curbing my desire for possessions for 3 years.

Still do spend, but the amount and quantity are both decreasing.

And possessions are to me what companionship and friendship are to you.

I'm working hard to pay things back so I can continue to work up from there.

Government can do what it wants with the teeniebopper video game ipod addicts. Why can't the older generations be allowed to continue, for they do want to learn and be useful?

Forgive me - I'm not branding every teenager as indolent, but I've ran across many who think that trendy fashion and glitzy rhinestone cell phone covers and video games and being the same as each other is cooler than being an individual for its own sake. If they want to laugh at me, I'll laugh right back. I've allowed myself to be hurt by such slime too many times. I may not be the fastest at cognitive processes, but I am more loyal and more thoughtful of decent Americans than those brats.

[AndyTiedye]

5. EVERY Generation Has Accused the Next One of Being Indolent...

...while claiming that THEY all had to walk 5 miles to school in the snow, and it was uphill in both directions.

Teenagers have been mostly into the latest fad for as long as I can remember, too.

Those of us who don't fit in have always had a tough time of it.

possessions are to me what companionship and friendship are to you.

I am sure that the reality of the situation is a bit more complicated than that.

Those of us with little talent for social interaction are more likely to need props.
(Though for that I have found home-made props to be best).

Government can do what it wants with the teeniebopper video game ipod addicts.

They want to use them for cannon-fodder a never-ending series of PNAC wars. The kids deserve better than that.

[stray cat]

4. Health care and a roof is no longer achievable for many

[question everything]

8. And will be less so in the future

Hosing prices may decline, at least stabilize - one hopes so.

But as recently reported even on DU, a retired couple will need $190,000 to spend on health care. This is not in anyone's equation, and I don't know if this number takes into consideration the new Medicare drug policy.

[Cassandra]

9. When my parents were still living in La Jolla...

a man who had made a lot of money fairly young started building a huge house in their neighborhood. After he finished it he had to sell it because he had forgotten to include the cost of furnishing and maintaining it, as well as the property taxes, in his initial calculations. How does someone that dumb make so much money, anyway?

[undergroundpanther]

11. What do you think

Video link
http://anon.newmediamill.speedera.net/anon.newmediamill/cu/Xmascompbb.mov

[question everything]

12. Nothing changed since John Edwards was talking about the Two Americans

it is just that fewer and fewer are paying attention.

I am in no position to tell anyone to throw away their credit cards. We use them, we on occasions carry debt on them - but manage to stay at lower rate - and were our salvation during long periods of unemployment.

I just think that putting money into retirement needs to get top priorities.

Debt eventually will be paid. Or not. I believe that retirement funds are still protected under bankruptcy proceedings and other extreme measures.

And I wish that people at least tried to live within their means. To at least use simple report forms to track their income and expenses. To be able to say that, perhaps, this week we can skip eating out once, or going to a cheaper restaurant, and cut the number of Starbuck trips. To keep the car for one more year, unless, of course, repairs are getting to be major expenses.

Most important, to stay up to the "Jonses" to develop one's life style that one feels comfortable around, and not to buy something because "everyone else does."

[kiraboo]

13. People can be very defensive when discussing this issue!

Of course it's important not to generalize. But who doesn't know, personally, ten people who are living outside their means, or at the least, jeapordizing a liveable retirement by spending on things that aren't necessary? We aren't talking just about the poor. While I agree that peeling carrots isn't the best example of how to save a buck, I believe it was more intended to illustrate a point than to BE the point.

I have been asked so many times how my family can afford to live as well as we do on as little as we make. The answer is that we have made sacrifices. I do peel my own carrots! I don't have cable! Our family owns no cellphones. Nor do we have thousands of dollars of technology in our house. Our cars are both over a decade old! We don't believe we are "owed" a vacation every year. My kids don't wear $50 jeans. We never make big purchases on impulse. Etc. etc. It's the combination of measures which has allowed us to save, save, save and still live very comfortably.

I'm not claiming any kind of virtue. I understand that many people have pared their expenses down to the bare minimum. I'm just saying that there are ways to save LOTS of money, and many people are simply unwilling to take the steps. I have no idea why.