Who’s pretending?
We’re all broke. Unless you’re a boomer trying to sell a $0.50 house you bought in the 50s you paid for on a gas station cashier salary. They’re ok for the moment. But even a lot of them are going broke now too. Highest demographic of newly homeless last I heard.
I think most americans identify with the book cover, and not the book.
I’ve dealt with people that made it to adulthood not really understanding that if they have cash in their pocket, but more debt than that, they don’t really have money available to spend on frivolous things. Some of them are my friends.
They will be “broke” 5 days of the week, but spend freely from when then cash their paycheck (or get that next payday loan!) until all they have is change.
But, I’ve been lucky. I got a degree without taking on debt AND the worst CC hole I had to dig myself out of was not even to the limit of one card. I think most people have to ignore student or medical or other debt just to function…
Stupidity and the art of flexing.
I hate that the concepts of broke and debt even exist. It’s all made up.
Must keep up with the Jones.
If you own a house or vehicle in the USA there’s a good chance you’re in debt.
Having debt is not the same as being in debt.
In debt = your assets are worth less than your obligations.
Having debt = you owe some money to people, but have the property to back up the debt in case something happens.
spendy culture in general is disconnected from reality
I blame that predestination bullshit that’s in the country’s DNA. If you’re rich it must mean God loves you and if you’re poor that’s due to your sins.
Puritanism meets prosperity gospel. The original Jesus would get crucified all over again if he set foot in this hellhole.
Not enough people talk about this. This attitude is rampant in the Republican party and no one says a word about it Not even Republicans
Debt is not a broke person thing. Most people you’d consider to be well off have debt.
Americans dont feel broke because they have extremely strong purchasing power.
What’s important is how much you can buy, not how much money you have.
I don’t know anyone pretending they aren’t broke in America…I know a lot of good people struggling paycheck to paycheck and that’s it. I love how Lemmy has become this echo chamber of hate for Americans when y’all are just as fucked in Europe and other countries too with so many similar or different issues. Imagine a little compassion for all people rather than assuming “America bad because America”. Just so incredibly sad and stupid to see how dumb so many people are… that kind of thought process is exactly the same type of people that vote for trump that have this same attitude about “insert race or country here”. Y’all need a reality check, yesterday…
when y’all are just as fucked in Europe
I’m sorry, is this some joke I’m too publicly health insured and 6 weeks of paid holidays by law and so on to understand?
Are you pretending that no one is broke in countries that have mandatory paid leave and “free” public health systems? As someone who lives in one of those countries myself I can, with 100% certainty, say you’re incredibly wrong.
In previous centuries with colonialism Europe was the cause of much disgrace in the world.
After WWII with neo colonialism it was either us or ussr imposing their way of life and values over the media, but overly exploiting resources and weakening both local economy and healthy politicians and putting dictators everywhere.
us bad fame still didn’t catch up with all the bad stuff they did and are still doing.
I’m American
Speaking of “paycheck to paycheck”:
I certainly have compassion for people who live paycheck to paycheck because they’re struggling to make ends meet, but not those living “paycheck to paycheck” who have the ability to save, but choose not to. And, despite popular belief, the majority of people in the “living paycheck to paycheck” category are actually the latter. But it’s easy to assume the former meaning (it’s more intuitive, after all), so those two ‘subsets’ are almost always (basically everywhere other than within the depths of the methodology of the research that yields the figures) conflated, and so “living paycheck to paycheck” is often used to great effect in rhetoric as a result.
The fact is, on average, Americans have more of an overspending problem, than an underearning one. Did you know that 48% of consumers earning over $100,000 a year, and over a third earning over $200,000 are “living paycheck to paycheck”? Meanwhile, 25% of those earning less than $50k aren’t living paycheck to paycheck (a demo I was part of until I eclipsed $50k a few years ago)—maybe it’s time to more closely examine what those people are doing, and follow their example.
It’s absurd that anyone making less than $50k a year is saving more money than someone making $200k.
It’s absurd that anyone making less than $50k a year is saving more money than someone making $200k.
If they arent buying assets they arent actually saving, they are just building a buffer against drowning.
Also to simplify your percentages there of people living paycheck to paychecks.
- 75% under 50k a year
- 48% of people making 100k a year (only 21% of people are above this line)
- 33% of people making 200k+ a year
Seems like increasing pay does reduce that issue even if there is an issue of spending to your max budget in america but I’d actually rather have currency in circulation than sitting in accounts for the sake of collecting.
Debt, used properly, makes you wealthy. Every billionaire you know has debt because of the advantages.
I grew up middle class. To afford my prestigeous university, I took out debt (before grant only financial aid). The value of my education allowed me to earn a higher salary to pay it off in two years. I kept earning that salary and more after the debt was paid. It had a high present value.
I bought my latest house four years ago. Mortgage rates were so low I decided to finance part of it at 2% even though I had the cash. I now earn 4.5% in money markets. After taxes, I earn 0.72% every year not to pay off my mortgage. With $350,000 remaining, this is an extra $2,500/year right now.
I shop with credit cards that give me 2-5% back on purchases. I pay off my balance every month and have never paid one penny in interest or penalties in over a decade. My credit cards therefore pay ~$1,500/year tax free.
Larry Ellison likes controlling Oracle and being a billionaire. Rather than selling stock of Oracle to fund his lifestyle, he instead borrows against the value of the stock. As Oracle appreciated, he got to keep the gains he doesn’t trigger capital gains taxes.
Most Americans do live paycheck to paycheck. They live at the ragged edge of their means and remain ignorant of finance. However, this is a global phenomenon. The difference is that much of the United States tax code is set up to benefit the wealthy. Adopt their habits and your wealth starts to snowball.
Larry Ellison likes controlling Oracle and being a billionaire. Rather than selling stock of Oracle to fund his lifestyle, he instead borrows against the value of the stock. As Oracle appreciated, he got to keep the gains he doesn’t trigger capital gains taxes.
I never really understood this. He still has to pay the loan, and he isn’t doing that with his symbolic $1/year salary. What part am I missing?
As I understand it, one way is to just borrow again against similar stock. He borrows against stock bundle A for a while, and when that loan comes due, repays with a fresh loan against stock bundle B. A and B can be the same amount of stock, but as long as the line goes up, the loan against B more than repays the loan against stock A.
There’s intricacies and details in the process, but that’s how I understand the basic process goes.
Debt interest below investment yield means infinite money.
You’re missing the taxes they aren’t paying on the yield of the investment. That’s only taxed when sold. So if you borrow against investments tied up in the market then it never triggers the tax.
Theoretically their estate would get taxed on the value resulting in a nice cascade of tax triggers but they’re doing away with that asap.
You need to pay that loan with cash, right? I get that your assets secure the loan, but without another source of cash, how you pay back the loan and not sell your assets?
Just keep borrowing and pay with that. Debt interest lower than yield.
Can you provide an example? I’m not sure I get how that works out in their favor. In my view, paying debt with more debt is a terrible mistake and will get you in financial trouble. But I get that they have far more assets than I do. I just don’t quite see where it doesn’t go wrong.
Do they not have to pay the principle?
I borrow $1000, assuring you I can pay you back because I have $5000 worth of stock.
A few years later, I borrow $5000, assuring you I can pay you back because I have $10000 worth of stock (it’s not more stock, it’s just worth more now). I use that $5000 to pay off the $1000 debt plus interest, and then have some left over.
Few years later, I borrow $10000, assuring you I can pay you back because I have $50,000 worth of stock. I use that $10000 to pay off the $5000 debt plus interest and then have some leftover.
Repeat as necessary. The bank does eventually get their money (when you die or are for some reason forced to sell, paying off the debt with cash rather than promises). To the bank this is an investment. To you, it’s a way to get cash without having to actually sell your stocks, avoiding taxes, and letting your value continue to skyrocket.
Okay. Thanks. That makes sense.
I guess the cycle continues if you will the stock to your children. So it could be decades until anyone pays taxes.
And if the stock tanks, then I guess you declare bankruptcy.
Other reply was good.
To answer your question, you can borrow against equity tied up in assets without down payment. For example, if you have a house you can borrow against the value less any mortgage up to some percent of the total value. In my situation i can borrow up to 60% of the value of a house.
Down payments are for purchasing assets where the purchased asset will act as collateral. The idea is that the bank walks away with something if you immediately fail to pay on debts.
Stocks can act as equity assets in a similar way as the house. Equity loans generally have relatively low interest.
As a side note, this is all bullshit, interest is evil, and the system should be burnt to the ground and billionaires rotisseried over the coals for dinner.
I shop with credit cards that give me 2-5% back on purchases. I pay off my balance every month and have never paid one penny in interest or penalties in over a decade. My credit cards therefore pay ~$1,500/year tax free.
I don’t really have anything to add as this is pretty much all spot on to how the wealthy live, but on this one I’d like to point out that you’re not actually making money - you’re just taking back part of the money that you already paid. That money isn’t paid by the credit card companies, they’d never be dumb enough to leave money on the table like that. They pay it through increased transaction fees for the businesses, who eat the extra cost through higher prices. There are states that do something similar with their recycling programs. They give you 5 cents per bottle you recycle at the center, but you paid a 5 cent bottle deposit when you bought them at the store. You’re not making any money, or even making back some of what you paid the store. You’re just getting your deposit back.
Maybe you somehow reduce your taxes by cycling that money through a cash back program? I’m not well versed on finances, so I won’t even try to theorize on that, but it certainly isn’t free money or something.
Yes, the credit card spending is technically a rebate, hence why it is tax free. However, I am going to purchase an identical basket of goods and services whether or not I use credit, so it is functionally identical.
Most americans aren’t in debt.
Most americans aren’t in debt.
American household debt is on a relentless upward trajectory. It was at a record $18.20 trillion by 2025, up $4.6 trillion since 2019. With 90% of Americans having some form of debt
https://www.debt.org/faqs/americans-in-debt/demographics/
IDK about US education and math but “most” in the rest of the world means more than 50%.
You are a retard.
“some form of debt” can literally mean a credit card that hasn’t been paid off for the month, which applies to almost everyone with a credit card since people use credit cards as a way to build credit.
They’re not in debt in the sense that they don’t have the money to pay off their debts.
Did you make this account today to be rude and ableist?
Hope they throw you out (again)
In debt means just that.
Having debt is not the same as being “in debt”, as in underwater in their obligations vs assets.
Having debt is EXAXTLY same as being “in debt”, it means owing money.
While that can mean 1 cent or 1000000 it is still the same. Just as 1 cent profit and 1000000 are profit.Anyway still looks like most have a lot of problems: https://www.prnewswire.com/news-releases/58-of-americans-say-their-finances-are-in-crisis-achieve-survey-finds-302521350.html
