Earn more, spend more, want more:
It does seem many people lose focus on happiness and instead focus on buying more things. This is something that I believe is a problem.
When the lowest pay rises, what happens?
No kidding. Other effects are a bit trickier but that one is not tough to figure out.
It is true jobs can be lost but at low rates that effect is very small. As the unemployment rate rises the job losses would increase with similar raises in the minimum wage. Raising the minimum wage to $7.25 now is a good idea – it should have been raised earlier.
I make $6.50 an hour. Am I poor? by Karen Datko:
I am no longer proud.
Pride should not be tied to how much money you have. It is, often, but it shouldn’t be. If you act foolishly or you waste money or you act irresponsibly being ashamed is possibly reasonable. When you have extra money, you can waste some and not feel ashamed because you have some to waste. But when you are doing your best you should be proud no matter how much money you have. Buying more pairs of shoes, or fancy coffee or a new video game or the full cable TV package… is not what you should take pride in.
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Economic statistics, like all data, needs to be defined. The way to collect data (economic data or any other type) is to operationally define the terms. Statistics don’t lie. Statistics can be faulty, when those collecting the data fail to use good operational definitions and the data quality is poor (without a definition people make guess…). People can also just make up false number. And people can try to mislead by stating statistics in a way that seem to indicate something that is not the most accurate way to view the whole situation.
The way to cope with such problems is to understand statistics and data. The data can be wrong. So you have to access that possibility. And the data can mean something different than you assume (and often the data is not presented with the operation definitions). When that is the case be careful about your assumptions (with financial and economic data and other data too). But don’t decide to just ignore data because then you condemn yourself to ignorance of the many things which data shed light onto.
In, What ‘Unemployment’ Really Means These Days, the unemployment data is explored. The post does a good job of showing how you can get different measures of the “unemployment rate” depending on how you define what you will measure. I happen to believe the existing measure is best but you need to understand that it doesn’t factor in underemployment and people giving up completely… I believe the best way to deal with those weaknesses is to have supplementary measures that enhance your understanding of the unemployment rate. And too view it as only one measure of economic health. Look also at median wages, health care coverage, hours worked, vacation time…
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In an instant, retirement savings vanish by Bob Sullivan:
This risk is something the government should address. The risk is to the economy at large, as well as having extreme consequences for individual investors. We need to do as much as possible to encourage retirement savings. Not providing government backing (such as provided by FDIC…) is a mistake. The funding should be similar to that for FDIC where member banks are assessed fees to cover the costs of the program based on the risks seen in that institution.
FDIC has done a great job of creating an environment that gives individuals confidence in the system and encourages economic development. Securities Investor Protection Corporation is another possible model but for something so important to the economic security of the country (and individuals lives) direct government involvement makes sense to me.
From the official US Federal Trade Commission site:
Viewing your credit report is an important step to financial security. You should review your credit reports annually (at least) to correct and any errors. Also doing so can be a tool to help you spot identity theft. The credit report site also has a large frequently asked question section with answers to questions like: What is a credit score? How do I request a “fraud alert” be placed on my file? Should I order all my credit reports at one time or space them out over 12 months? (I would suggest spreading the requests out during the year myself).
I do not believe we will have a huge decline in most housing markets see: Housing and the Economy. Still the article below is packed with great information. Definitely worth reading. Other related posts: 30 Year Fixed Rate Mortgage Rates – Europe and USA Housing Price Boom – How Not to Convert Equity – Beginning of the End of Housing Bubble?
The Coming Collapse in Housing November 17, 2006
by John Mauldin
I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it’s the key to the global economic outlook.
Setting the Scene
House prices in recent years have leaped well beyond their normal relationships to the CPI.
Even when the increasing size of houses–the McMansion effect–is excluded, inflation-adjusted house prices have jumped as never before in over a century.
Update: I would not even consider using Vonage. Any company that takes you money using there online site and then refuses to cancel your service without you call them is exactly like the traditional phone companies they try in ads to say they are different than. Then you call and then force your through a ridicules voice mail tree and then they tell you you have to call back between 9-5 on weekdays to have the privilege of not having them take your money. Completely unacceptable behavior. You can get VOIP phone service without a monthly free now via Ooma by purchasing a device to plug your broadband internet connection into (I got mine for $203 via Amazon).
old post:
Cutting expenses is a great way to free up money to add to savings.
A couple years ago I switched to Vonage for my phone service. They provide phone service through my DSL high speed internet line. I play just $18/mo for local and long distance calls (this is for 500 minutes or less – for $29/mo you can get unlimited calling in North America and Europe). I still use my same phone (I just plug my regular phone into a modem they provided). You do lose the ability to make phone calls when the internet is down which happens if the power goes off – people can still leave you voicemail). I have been very happy and get free voice mail and free caller ID.
More recently I picked up a prepaid phone from Virgin. I pay only for the time I use (no monthly charges) – 25 cents a minute for the first 10 minutes any day and 10 cents a minute thereafter. There are no fees for calling from out of your service area and you have a regular cell phone number. They require I add a minimum of $15 every 3 months to the account but if I don’t use that much the balance just keep growing. This is ideal for anyone that doesn’t spend much time on cell phones. Now some people are very attached to their cell phone. Then this isn’t a good way to save money but for those that don’t feel the need to to stay in touch at all times this is a good option to stay connected when you want without having to pay high monthly fees.
Together I save at least $35/mo. (over $400 a year) and loose nothing I value. I would have to earn an extra $700, or so, to have the same impact (I have to pay taxes on additional earning).
Here is a great tool to see how rich you are: Global Rich List. It drives home the point I made yesterday about how rich almost everyone in America is. Most people (not only in the USA) will probably be surprised how rich they are compared to everyone else in the world.
People in the USA make a great deal of money. There are many who make huge amounts of money so many who make a great deal think it is unfair they don’t make more. And many of those just decide to buy what they can’t afford. Then they create their own financial weakness.
Why Living in a Rich Society Makes Us Feel Poor
I guess that would be me. I don’t mind if people spend what they earn, but I do mind when people that are given huge amounts of money and spend beyond their means and then complain that they can’t have their cake and eat it too. I am not saying that people don’t have to make tough choices but there are hundreds of millions of people alive today that have real tough economic lives. People that want to live beyond their means in the USA and then complain that life is not fair need to realize that yes life is not fair. And the biggest truth is that hey have been given the advantage over most everyone else in the world (yes some small number that happen to live near them may be even richer).
If they want to spend more – go earn more first. This option, available to most in the USA, is not available to most people alive today. Most people in the USA should be helping those less fortunate than themselves not complaining that they don’t get to buy enough toys compared to this person they see on TV or that they know…
Charities to consider: Trickle Up – Accumen Fund – Grammen Bank – Habitat for Humanity