Flexing.
We have a very materialistic and consumeristic culture and we shame the poor.
Or more specifically, we are ashamed when we can’t afford things we need. We are saturated by right-wing propaganda that says if you don’t succeed, it’s your fault. So, like abuse victims, we internalize the shame of what is done to us.
It’s a message tailored so we don’t question the rich, and as an added benefit to them, trains the poor to not seek government systemic solutions to the inequality that creates their poverty.
Homeless people are more financially rich than most of this country.
Do you see the problem yet
It’s actually curious to read this comment while several others state how they could manage to pay their debt, but they choose to be in debt because it’s somehow convenient for them. I believe them, it’s just curious because anyone could say the same.
Part of that has to do with how our economy is built around credit cards and debt itself. They don’t want you to fully pay off your credit card debt, and will reduce the amount you can borrow if you do. And if you try to opt out of the debt system entirely, it hurts you as well because you have no credit score from the credit card companies and no history of paying off you debt on time, which hurts your chances to get things like loans and mortgages. I hate debt, and ran into this issue the first time I went to buy a car because I had always used debit cards to buy stuff. Despite the cards being Visa cards that just got paid off immediately by charging my bank account instead of being paid off over time, I didn’t have any debt history as a result and had to have somebody cosign my car loan to vouch for me that I’d actually pay the loan.
and will reduce the amount you can borrow if you do.
This is not true.
are you talking about the comment mentioning it makes financial sense to not pay off their mortgage?
How else are we supposed to know who’s better than who?
I thought you guys used race and gender for that?
Oh that too. We make sure to remind the poor white folk they are still better than rich black people
You said people and folk, but I think you meant men.
My apologies. In my attempt to be horrifically racist, I forgot to also be sexist. It won’t happen again.
God damn lazy modern bigots. Back in my day there was a word for people like you, but using it will get me banned on half the fediverse.
With a star on your belly.
The Jones’s are a bunch of chatty kathy pricks.
Yeah, but they have a hot tub.
I mean, I have a hot tub. Granted, it been sitting on its side for about 5 years, the critters have claimed it as their own and now live inside, and the siding is rotted to hell, but it’s there.
Sounds to me like the critters are the Jones’s now!
Being in debt isn’t synonymous with being broke.
I could pay off my house tomorrow if I wanted, but financially it doesn’t make sense - so I keep the debt. That doesn’t mean my net worth is negative or that I don’t have disposable income.
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I could pay off my house tomorrow…
That’s not what being in debt is
Is it not debt when you owe money to the bank?
I’m just telling you the meaning of the phrase ‘to be in debt’ vs having some debt. I didn’t invent it.
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
I am absolutely beyond broke on paper. My debts are well into the six figures and my bank account is in the low five figures.
I’m in my 40s and have a whopping $15k for retirement and no assets.
It’s pretty awesome.
I had $17k in the 401k when I was laid off from my last job - it had been twice that but there was that big collapse. Raised a lot of kids and couldn’t put much away. Always something but never much. That was in my 40s.
I am dug out now, mostly, in my 50s, not to the point I think I’ll retire but oh my God when I look at the difference between them and now it’s crazy, there is so much more.
I just want to say, don’t give up hope. I would never have dreamed that this would turn around and it did. And the kids grew up too.
Oh, sorry, I haven’t given up hope. It was sort of said with…a laugh. I do have some investments I’ve made as of late that are looking like they could pay off big…we’ll see. Either way, I still sleep okay at night and I have a roof over my head so I can’t complain.
I’ve been there. It sucks. But it was possible for me to get out. It took years. Be careful, and be ready to catch any luck that might come your way.
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?
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.
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.
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.
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.
Honestly, not being a dick and caveat for me not knowing shit about you, but if you are curious enough about the topic to ask, you should take a quick finance course. Not like enroll in college or anything. I wanna say there are tons and tons of free to access resources for learning how debt and assets work that will undoubtedly improve how you manage your own money.
Just to save the search (I use Udemy the most but definitely have not checked out all of these platforms personally, so do yo own due diligence lol)
-
PERSONAL FINANCE FOR SELF-RELIANCE COURSE - In our course of working with and developing courses in personal finance, we found that the best beginning program had already been developed. As such, we have received permission from the Church of Jesus Christ of Latter-day Saints to use their Personal Finances for Self-Reliance program materials on this website.
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MONEY WISE FINANCIAL COURSE - This beginning course gives you a broad introduction to the many different areas of personal finance, with the hope that you will continue your study to understand better the topics covered in this website.
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- File a tax return
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- Understand and get six types of insurance
- Make a spending plan
- Buy a car
- Find a great apartment
- Buy a house
- Get a jump start on retirement
- Save for college
- Get out of credit card debt
- Avoid identity theft and fraud
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Fuck it, lol, here is a link to a list of 30 free financial courses for all types of financing.
-
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And that you were never taught better was intentional.
who’s pretending they aren’t broke?
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…
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.
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
Cash liquidity =/= standard of living
A lot of people are in debt on things like cars and homes, that’s where a lot of the debt is. There is also credit card debt, but that’s a whole other thing. So long as people can make the payments on the loans, and those payments grow slower than their income, they can maintain a given standard of living.
Also a lot of the super rich make most of their money off of collateralized assets as a sort of tax dodge. Them being largely payed in assets that appreciate in value, they then take loans out against the value of the asset, and so long as the asset appreciates in value faster than the interest rate, they’re fine. Since the assets aren’t taxed until they are sold (unrealized gains) and they’re technically not selling the assets by using them as collateral against a loan, so they’re not taxed on that income. This situation also skews the numbers on “the average debt of Americans”.
Ultimately though, this is all a super fragile situation, and all it takes is for assets (like say a house or stock in a big tech company) to decrease in value for everything to explode.
There are also a lot of Americans who are not in such a situation and are limping along financially, trading debt for time, and live at a much lower standard of living.
The US is big on wealth inequality, like most third-world countries. Yeah, lots of people are broke, but lots of people are also making 200k/year. Overall we’re definitely struggling, but that doesn’t mean everyone is struggling.
Lemmy also leans both older and into the tech demographic, which tend to be higher paid.
The US is big on wealth inequality
You misspelled “built”.
Maybe the real curency was the debt we found along the way?
