Life has become harder, experts say

There are far more ways to spend money, and much less restraint in doing so. Moderation is no longer valued, and rampant consumerism drives the need for ever-escalating purchasing power. Me, I'd love to be able to be a stay-at-home Mom, but it's not in the cards we've dealt ourselves.

 

I see young families with new cars, plasma tv's, nice computers and the latest cell phones. There appears to be expectation from too many young people to instantly live the life their parents took 30 years to obtain. They do this through credit.

Thirty years ago college students couldn't get credit cards. The entire buy-now-pay-later culture has put the average middle class family deeper and deeper into debt -- and the interest payment on such actions are probably the difference.

I don't think it's any harder, people today just don't want to wait until they can afford something (i.e., pay cash) when they can buy it now 'and not pay until NEXT YEAR.'

 

I remember a discussion on the Boards not too long ago very similar to this one, and the consensus of those who remember the "good ol' days" was exactly what Rally and T2 said.

I grew up in a middle class family. We had a modest house, one car, one TV, and not a lot of "toys". We went out for dinner maybe a couple of times a month. Now, it's bigger houses, multiple cars, multiple TV's, gadgets coming out of our ears, doing something that costs money several times a week, etc. Plus there's the "must have it now" attitude.

Acording to the article, major fixed expenses have gone up by $21,000. But of that, $17,000 relates to a second car and daycare (which wouldn't be needed if one parent stayed home). Basically, most of the wife's after-tax income is paying for another car and daycare. The rest of the increase in fixed expense relates to mortgage; since the 1970 cost has been inflation-adjusted, the increase would seem to be due to the size of the house (which needs to be bigger in order to hold all the extra crap we own now compared to 30 years ago).

So basically, life may be "harder" than it was 30 years ago, but that depends on your definition of "hard". And if it is harder, it's because we've done it to ourselves.

[ October 17, 2007, 16:35: Message edited by: Splunge ]

 

Hmmm.... I got a completely different impression of the article. What I read said all of the luxury items being purchased actually accounted for a small percentage of total income. Basically, that it's not the $4 lattes that money is going to. I read that housing costs and education are the big thing that are eating up people's pay check.

The article defined "housing" as mortgage, property taxes, home owners insurance, and utilities. Surely, the size of the house will affect all of those factors, but the article stressed that the increase we see between 30+ years ago and today far out-paces inflation, and cannot be accounted for solely by the increased house size either.

Was I reading a different article?

 

The math in the article is somewhat faulty. You get tax credits for child care and there is no way you pay $22K when you make $74K (and own a house).

Also note the car payments -- two new cars. I would call that a luxury. I have always ensured only one car payment at a time, even if that means driving for a few more years on an older car.

Health insurance back then was an 80/20 at best and overall the cost of medical would have been greater for the average family.

I think the after tax income should be more and the fixed expenses could be less for the 'modern' family that is trying to conserve -- that they choose to spend more is exactly what I was addressing.

All in all, I think the article is misleading and just adding fuel to the 'look how much worse I have it' fire.

 

Isn't perhaps part of the reason that with both parents going to work, there's less incentive to raise the pay levels than there was before, with just the father working? It was understood that the man would be supporting his family and now it looks like no one expects to be able to do that and wages aim at about half of the family needs.

 

Based upon my years in public accounting and my observations of my co-workers situations I have found that those who are middle class but cash strapped typically are that way because of housing or child care costs.

I have looked at many two income families and then looked at the child care bills and concluded that they would be better off if the lower income spouse stayed at home. The bills for nannies, day care, summer camps etc. that I have seen have been bloody high although I am sure that there are more economical alternatives.

For those with housing woes I normally have little sympathy. Generally they are the people who insist on living within the big city and then complain about their house costing $800,000 when an identical house out in the suburb where I live would cost around $275,000.

Personally, I would have to say that I am middle class and my standard of living is pretty damned good. Of course I am single with no dependents so comparing my situation to someone trying to support a family really isn't fair. Of course that does go completely against the "single people are at a huge disadvantage because they can't share fixed costs" school of thought.

 

the numbers just dont seem right. almost everybody i know spends way more on childcare, insurance, cars, food & especially clothing!

 

I'm guessing that the reduced percentage of food cost is the fact that restaurant meals are more expensive...

But what ever happenned to the idea of saving up money for a major purchase? Sure you get a used TV when you get your first place, but you save up for a nicer one. Same with furniture, cars and the like. That cuts down on the payments and the like...

 

Hmm. We pay more with money that is worth less then it was back then. That sounds about right.

As for is it harder? Nope. Technology has made almost everything easier (at a slightly higher cost I'll grant you.) Depends if you want easy living or more money.