I am rich, relatively. I can’t pay all of my bills, but relative to about half of America, I am rich. Relative to the other half of America, I am poor. I consider myself a moderate, but didn’t expect to be sitting the middle this way. And yet, this does not feel like middle class. The classic distinctions we’ve made in America are archaic. So, don’t be surprised if conventional financial wisdom doesn’t seem to work. Before you blame yourself, check whether it is working for other people like you. It may be for a society that only exists in the past. Ah, but perhaps there are riches in the future.
Thanks to pulling together news for Pretending Not To Panic (t-shirts and hip flasks available), I come across data about America’s and Americans’ economic conditions. Theories, ideologies, and assertions are set aside for data. Looking at the data the other day I realized how rich I am; and then I felt even sorrier for half the nation.
If you’re new to this blog, browse back through and see how I lost 98% of my net worth (Triple Whammy), couldn’t get a job (My Jobs Report), and managed to avoid foreclosure (Mortgage Chronology). There’s more, but that’s enough – unless you really want to deep dive into the story of my life. Have fun!
Because of my situation I’ve been working seven days a week (My Rule Of 7), which after a few years, I’ve had to modify because it has dragged on so long. I now take a day off every two months. Whether I need it or – oh, skip the not part, I always need it. Financially, life is much better now. Business has picked up (and I thank all of my clients whether their projects are large or quick). I’ve gone from wondering how I am going to have enough for food even while not paying the mortgage, to paying the mortgage and everything else except for one bill (sorry about that last one, but I’m working on it.) At this rate, I’ll get back to being able to pay the bills, repair what needs it, visit a doctor, and maybe even buy some clothes that fit.
Despite the positive future, I am very aware of the insufficiencies of the present. If nothing changes, and nothing breaks, all I have to do is be patient and pass along apologies when I finally pay my debts.
Where do I begin as I wade into the data?
The datum that caught my attention was the fact that 40% of Americans have negative net worth. Regardless of the level of wealth inequality, four out of ten Americans owe more than they own. Thanks to some recent shifts in my portfolio, and to the edge effects of the booming Seattle housing market, my net worth is probably positive – and probably positive by enough to put me at just about the middle between the richest and poorest Americans. The concept that America is rich may be true, but too many Americans aren’t.
The other datum was about income. I may not be making enough to pay my bills (and you can check on my frugal lifestyle throughout this blog) but I am making enough to barely be considered middle class. (I’m middle class again?) The upper end of middle class makes four times as much as me, but the poverty line makes about a third as much as me. About one-sixth of Americans are in poverty. I’m making more than three times their income. To them I could be considered rich. For a long time, middle class was a position of ease but without the luxury, but that’s not the case, anymore.
The third datum (and there are plenty more) is that there is no state in America where a person working a full-time job at minimum wage can afford a one-bedroom apartment. Working hard is no longer enough to get ahead, despite the traditional American Dream.
Forget about me (for a while). What is life like for the lower class? We like to think of America as class-less, but a lower class exists. Many of them are even following the conventional wisdom. Spend less than you earn, and invest the rest, and your dreams will come true. But, when you can’t earn enough, you can’t invest, and you can’t get closer to your dreams. I hear a lot of rationalization, as if so many people just see their circumstance as personal and partly their fault, but when the statistics start to accumulate then the system must be questioned and old wisdoms challenged.
There are avenues for escape, but they aren’t as successful as before. Education was one avenue, but the statistics show that a smart poor kid has a lower chance of graduating than an average rich kid. Inventions can create incredible wealth, but they have a high failure rate. Entrepreneurship is a self-empowered opportunity, but the early capital is harder to acquire since the Great Recession. Wage stagnation means the old style of comfort via career isn’t keeping up with inflation, which is still okay if your income exceeds expenses; but if it doesn’t, then a downward spiral occurs. Lotteries can seem appealing in such a situation. (I buy.)
To the many people I’ve met who rationalize their situation away as if it was their fault, I suggest they look around. Everyone makes occasional bad choices, but this many people in debt, this many people in poverty, this many people without adequate housing is probably not the result of this many people making the wrong choices. They may have merely been following advice that no longer works; which is why I cheer the people who are finding new ways to approach debt (e.g. peer-to-peer), new ways to handle money (e.g. Bitcoin and the sharing economy), and new ways to house themselves (e.g. tiny houses)
I’ll close so I can enjoy a homemade infused herbal vodka martini, from the deck of my house with the modified mortgage, while a $2.29/pound pork chop marinated in home-grown sage and rosemary roasts in the oven with homemade baked beans, and I ponder what old movie I’ll be able to stream from Netflix on a beautiful Saturday night. That’s rich, and luxurious, and doesn’t cost much, relatively.