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Today I had a very interesting conversation with a dear friend in the USA. Her job involves some complex permutation of health insurance, and as part of it, she deals with "clients" (families) working out their healthcare solutions and options. Often her "clients" are retired. She often goes to their homes for consultations and she says:

"People in these affluent neighborhoods have no savings, a lot of them are living on pension income. Only two out of five households have any retirement savings. In the affluent neighborhoods, none. Which is freaking me out. You can't tell from the curb anymore... Keeping up with the Joneses has cost these families a lot. It's very depressing. The people who are supposedly chic and fancy are broke as all get out and filing for bankruptcy. So it's redefining what success means in pop culture."

She went on to observe that she enjoyed visiting her clients in working-class neighborhoods more, because the economic news there was generally better: that was where she found the savers.

She also praised me for budgeting, even though I am spending all my money this month on home repairs (removing some rot from a corner of the house.) As I type this, an updated dishwasher (new to me, used) is currently gently caressing its third load of dishes. Seeing my drinking glasses come out immaculate is so delightful that I will happily stay home, amusing myself by letting the machine wash the dishes.

Date: 2011-09-08 02:21 pm (UTC)
From: [identity profile] ithilwen.livejournal.com
A huge number of supposedly "affulent" people spend all their income on high-status goods, and are actually living paycheck to paycheck. It's crazy. You understand why very poor people would live that way, but not why folks making what seems on paper to be a good income wouldn't bother to save. At some point over the last 40 years or so, living within one's means went out of fashion here in the the US. I'm not entirely sure what changed to cause that, though (although I suspect the ubiquity of easy credit played a major role).
Edited Date: 2011-09-08 02:22 pm (UTC)

Date: 2011-09-09 02:11 am (UTC)
From: [identity profile] tyellas.livejournal.com
She said the people in the working-class neighborhoods still saved, wary of what today's economy could mean for them.

Date: 2011-09-10 11:58 pm (UTC)
From: [identity profile] ithilwen.livejournal.com
That makes sense; working-class people are more used to job insecurity than the white-collar workers (who until recently didn't have to worry about having their jobs outsourced to some Third-world country).

Date: 2011-09-09 04:22 am (UTC)
From: [identity profile] cirdan-havens.livejournal.com
*sigh* Anything to do with healthcare can get pretty depressing. I can see where such situations would be even more true. Out-of-pocket insurance for older people really sucks, esp if they weren't part of a union or anything. Gives me a lot to look forward to in the next little while. Either that or I need to emigrate. :p

Date: 2011-09-09 11:54 am (UTC)
From: [identity profile] perelleth.livejournal.com
THat's really thought-provoking in terms of wonderung where all that afflucence went...

Date: 2011-09-10 11:56 pm (UTC)
From: [identity profile] ithilwen.livejournal.com
In many cases, I suspect it was never there in the first place. Potemkin subdivisions, constructed out of credit cards...

Date: 2011-09-11 06:30 am (UTC)
From: [identity profile] milites.livejournal.com
I read a blog that used to point out histories of defaulting house mortgages. That is, they'd take a mortgage that was in default, and look at it's history. He never seemed to be short of examples of people who were having their house revalued up each year, and taking that extra value out as cash.

Each year, some of these house owners were taking an extra 50-100 thousand dollars out of their mortgage to support their lifestyle.

When the housing market crashed, they were well underwater. But not only that, they needed to figure out how to live on a hundred K a year less than they've been spending even if they don't lose their jobs.

I just don't understand the mind-set where that seemed like a good idea.

Date: 2011-09-11 07:10 pm (UTC)
From: [identity profile] tyellas.livejournal.com
I have some sympathy for their temptation. When I moved into my house, in its first year, I got a "government evaluation" for it that declared the house was worth 20% more than what I'd paid for it. Yippee! I was a successful investor! Surely I was super smart and able to handle my finances! Eventually I calmed down when I learned more of what owning a house was about, and there were lifestyle changes - I reverted back to "savings" mode, and things smoothed out.

Of course this real estate bubble has ended and I got a more realistic "government evaluation" this year. But what if I hadn't? What if I'd had two bubble evaluations in a row?

So, I snapped back to my senses....but I understand the behaving-financially-badly temptation.

Date: 2011-09-12 03:17 am (UTC)
From: [identity profile] milites.livejournal.com
Even if you'd got two higher valuations in a row, (and I understand, since I got that myself) then you'd still have to pay that money back eventually. It doesn't reduce the amount of money you owe unless you sell your house and buy a smaller, less nice, or worse situated one.

It's not really profit, since you're going to need somewhere to live if you sell your house. If that is going to be buying another house the price of your next house has almost certainly gone up by a similar amount.

Of course, having paid off our mortgage at the end of last year, there may be a certain amount of trying to convince myself it was worth not buying the nice toys, so consider that when you're deciding if I'm delusional or not.

Date: 2011-09-13 07:43 am (UTC)
From: [identity profile] tyellas.livejournal.com
You paid off your mortgage? You are LIVING THE DREAM. And the toys, I find, don't matter so much as the experiences.

Date: 2011-09-13 06:03 am (UTC)
From: [identity profile] gilraen-surion.livejournal.com
It s kind of sad to read this. "Keeping up appearances" and "status anxiety" come to mind. Of course they were helped in their persuits of material show off and perceived happiness by banks that were more than happy to fund these addictions. Still is is a sad sate of our society

You have always taken care of your money, looking after yourself and not overdoing things. At one stage you had budgetting even as a hobby almost. Both of us have always adjusted the lifestyle that we aspired to, to the lifestyle that we could afford. At the same time I never felt I missed out on anything, do you?

Date: 2011-09-13 07:43 am (UTC)
From: [identity profile] tyellas.livejournal.com
Thank you for your compliments on my budget skills! I don't feel like I missed out on anything I really wanted to do, no - I always Found A Way. Coming up in 2013 I want to go to my university reunion, and to visit my family again. And I will make it so.

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