Is Inequality the Problem?
In this morning's New York Times, David Leonhardt writes about two widely used measures of middle class squeeze: income inequality and income volatility. He points out that inequality has increased shaprly over the past 20 years, but that a new report from the GAO suggests that volatility may not have increased. He uses this certainty/uncertainty dichotomy to suggest that policies should be aimed toward the thing we're sure has increased (inequality) rather than the thing we're less sure has changed (volatility). According to the GAO, one in five people experiences a drop of 25% or more of their income each year, a proportion that was about the same in 1980, and, by implication, not an issue worth worrying about.
I applaud Leonhardt for asking for more hard data and always cross-examinging the data available, and I suspect Jacob Hacker will have something to say about the GAO report. But for now, it is the policy claim that puzzles me. From my perspective, the harm to middle class families is the combination of stagnant incomes combined with rising costs. That combination means that volatility hurts more today than it did in the 1970s when families could put aside 11% of their pay in savings, when consumer debt was less than 2% of income and when two-parent families had a worker at home who could go into the workforce in a time of crisis. When a family has no savings, no back up worker, and is loaded with debt, every income disruption is more painful--and more dangerous.
Leonhardt talks about families feeling more stretched, which he relates this to inequality of income. But flat wages and rising expenses have stretched the middle class--not the increases in salaries of the top 10%. He might have made a distributional argument that wages would have risen for the middle if the top hadn't gobbled up all that money, but that's a very different argument involving a very different set of policy proscriptives. Instead, his focus on inequality misses the point that if incomes had risen faster than expenses for the middle, families wouldn't be in such pain--even if incomes had risen even faster at the top.
Ultimately Leonhardt embraces policy proposals that would help out families caught in the squeeze: cut costs with better support for health insurance, retirement, children's education and other basic needs. But when he is chiding others about the importance of having the right identification of the problem in order to find the right policy solutions, then his focus on inequality seems somewhat misplaced.
A little off topic, but if you look at where the bankruptcy filings have dropped the most, you might get the impression that poorer states are doing better.
I made a comment at my blog on the article. From where I stand, it appears the new bankruptcy law is exaggerating inequality rather than stopping abuse.
What I think it shows is that the poorest folks just can't afford to access the courthouse anymore. Bankruptcy is just too expensive for those at the lowest income levels.
Satellite Sky Blog
Find the Truth. Do Justice.
April 25, 2007 3:09 PM | Reply | Permalink
Volatility also cuts both ways. On Wall Street, the big banks love volatility in the stock market because it's the bigs ups and downs where they can make money.
So, what's the other side of the lack of income volatility? Maybe you're no more likely to lose 25% of your income than you were before, but are you more or less likely to increase your income by 25%? If the answer is that you're not more likely, then that is a problem.
thosethingswesay.blogspot.com
April 25, 2007 4:45 PM | Reply | Permalink
Re: when two-parent families had a worker at home who could go into the workforce in a time of crisis.
This is something I am skeptical about. True, non-working wives could enter the work force back then if their husband was laid off, but what would they earn? Lacking experience or marketable skills (in most cases without a college degree) they would have made little better than minimum wage with no benefits. A much bigger culprit in the question of why lay-offs hurt more now (along with the fact that they tend to be permanent whereas many lay-offs were once just temporrary) is the fact that unemployment payments have lost much of the value they once held. Unemployment is supposed to pay 2/3 of one's lost income-- but with an pay-out cap that was originally intended to affect only high income workers. Now it slams the middle class and even the better paid working class so that for a person who was making 50K a year unemployment replaces just 1/4 of their previous income. One thing we could do to help middle class andworking class people is to reset that pay-out cap to what it was 40 years ago in today's dollars and restore the ability of people to at least try to make ends meet after a lay-off.
April 25, 2007 4:46 PM | Reply | Permalink
I took Leonhart to be saying that risk doesn't arise primarily from volatility, but rather that inequality makes the usual volatility riskier. I'll buy that, and it corresponds to a gut feeling I had with Hacker, that he was trying to minimize class divisions as the proverbial elephant in the room. Or maybe that he was trying to make dealing with them more palatable to politics. I can see the latter, with social security again as the model for how health-care reform and other changes could ally the poor and middle class for a change. But the basic idea I started with from Leonhart still rings true.
There's of course a different kind of volatility, in that people who work steadily do not have the promise of a steady employer until retirement. That adds a different kind of risk, as to how well the switch from pensions to IRAs and 401(k)s prepare us for the future. I wish Leonhart acknowledged that. But I realize it's a different concept. Perhaps he took on instead a bit of a straw man, not a major talking point. But Hacker's no doubt worth treating as a major thinker, so why not.
John
http://www.haberarts.com/
April 25, 2007 4:50 PM | Reply | Permalink
When you say that real incomes are going down/staying the same, how are you measuring that? From the 1970s on we have seen a massive increase in immigration. Immigrants tend to be lower class workers who can drive down the “average” person’s wages without costing anyone anything. If we add an additional 25% to our population and those new people are in a lower income bracket; then even if everyone else’s wages stay the same the average wage would decrease. If our average wages are staying the same, and we have been taking on millions of low wage workers; then it follows that the average real wages have probably been increasing.
See
http://www.econtalk.org/archives/2007/03/easterbrook_on.html
April 25, 2007 4:50 PM | Reply | Permalink
There are some ways in which rising absolute incomes matter. But there are also many ways in which the relative increase in inequality- no matter the absolute increase in income- is of ultimate importance in any society.
Rising relative inequality makes for more violent societies. It makes for higher death rates. It makes for increased illness. See Richard Wilkinson's and Michael Marmot's works on the social epidemiology of inequality. Turns out we are much more of a social animal than we had thought. Social status, the quality of relationships, hierarchy, social dominance, etc. These are all powerful factors shaping the quality of life. Inequallity matters much more than we ever dared imagine.
April 25, 2007 5:26 PM | Reply | Permalink
I like how you talk statistically because, when I looked at my social security report the other day, I noticed that some years, I do well, and others I don't. However, the average is pretty acceptable so I don't necessarily agree with:
That combination means that volatility hurts more today than it did in the 1970s
because like the "grand ol duke of york" my salary marches up the hill again and then marches down it again.
because of that, I believe that it's my job to hedge my income through investments, living below my means, etc...
if you factor in deflation, a lot of things are cheaper today then they were years ago. for example, computers have fallen in price by 75%! so, even if salaries stayed constant, famlies are better off.
and, even if you hate wal-mart, you can certainly get a pair of pants for $12 and a pair of good sneakers for $30. when I was younger, pants and shoes were much more expensive. when I drove by a gas station, the other day, you could get 30 eggs for $1.99-- enough to last me for a month or more.
From my perspective, the harm to middle class families is the combination of stagnant incomes combined with rising costs.
some costs have gone up and others have gone down. I remember how much my mother hated the long distance bill when I was young. nowadays, the phone company only charges $20/month! and what about the internet? companies used to charge by the minute and now they don't and qwest even increased my connection speed for free!
the most coherent argument I've heard about college costs rising is that colleges raise their prices because they preceive that students can afford it because loans are available. and hospitals probably raise prices because of TINA (there is no alternative).
a book I read talked about high "by train freight charges" but cars solved that problem because, nowadays, we have a highly competitive trucking industry-- although, we are starting to worry about the carbon.
and what about car engines? we're getting 200,000 miles on them! I remember my grandparents thinking that 100,000 miles was a good deal!
April 25, 2007 9:37 PM | Reply | Permalink
You forget that at the time when only one person worked, the majority of the good jobs available only required a high school diploma. Experience and skill would get you a more interesting job, but you could always work at the factory for about the same amount of money.
Since that time, businesses have closed shop in the US and moved factory work overseas. On top of that, businesses still here have imported cheap labor either illegally or using the H1-B program. 12-20 million illegal workers have taken low-skill jobs from the American workers who previously performed that same work. On the high-skill end, roughly half a million H1-B workers in the country take US jobs, then return home, fueling the offshoring of good-paying, high-skill US jobs once they return to their country. (More education won't solve that problem.)
So, now there's more people competing for fewer jobs. In those conditions, supply and demand dictates that workers compete for their jobs by accepting lower wages, which is exactly what we've seen. If immigration reform comes though, just like big business wants, then wages will decline even more.
Say goodbye to the middle class if immigration reform ever happens.
April 25, 2007 10:50 PM | Reply | Permalink
Re: You forget that at the time when only one person worked, the majority of the good jobs available only required a high school diploma.
You also forget that back then discrimination against women in the workplace was far more extreme (and quite legal). The only "good" jobs available to women were in teaching anbd medicine (usually nursing, although women doctors were not rare), both requiring fairly specific education and credentials. Outside of that women could work retail, resturants, bars, etc-- all low-paying work for the most part.
Re: ...more people competing for fewer jobs.
Um, if you look at the numbers there are definitely more jobs today than there were in, say, 1970. More people, too. But the unemployment rate is roughly where it was a generation ago (with labor force participation rates greater than a generation ago due to women entering the work force in large numbers) so apparently jobs, in general, are not a problem. The problem is that jobs tend not to last. When I was a chilin the 70s I cannot recall a single family-supporting adult ever losing his job permanently. Temporary lay-offs were common, but with better unemployment (see my point above) and union SUB pay and some modest savings, many people treated that as welcome vacation. But permanent job loss was rare, usually the result of either serious misbehavior at work, or of teh entire business going belly up.
April 26, 2007 3:37 AM | Reply | Permalink
The analysis was faulty since it only looked at the chances of being unemployed in the near future. People see what has happened in the US over the past 30 years; jobs for life at big firms like the automakers have been eliminated, even for those late in their careers. In other cases workers have had to agree to givebacks on health and pension benefits and even wages.
Young people today no longer expect to work at the same firm for their entire career, this has to increase stress and must also affect how people plan for the future. A good study of attitudes would be useful as opposed to the superficial questions used in this survey.
--- Policies not Politics
Daily Landscape
April 26, 2007 5:46 AM | Reply | Permalink
but what would they earn?
my grandmother, during WWII, got a job and made a very decent wage and, in fact, my grandfather-- a plumber, often got laid off and my grandmother was the breadwinner and her work got her promoted into "men's jobs" because her bosses saw her work ethic and ability.
restore the ability of people to at least try to make ends meet after a lay-off.
when was it taken away? As a contractor, I've been laid off more times than I want to admit but I kept fighting the good fight, stayed competitive and finally got a "real job."
recently, I've redoubled my efforts to stay competive so I started teaching myself piano, reading about economics, history and politics.
maybe such efforts won't pay off for others, but it's been a fun journey to start learning again and I think that society does pay for it!
too many people are college baked coach potatos who simply followed marching orders... break rank, and you'll be scolded for it but, in the future, the habit of independence pays off!
my boss told me yesterday that I get paid well because I have specialized skills but I think that I get paid well because I didn't stop fighting the good fight!
my suggestion to the next generation would be: "enjoy fantasizing about work!", "ask yourself: who would pay for my skills?," and "how much would they pay me for them?," and, finally, "how can I make myself more valuable to my community?" and, of course, "myself?"
April 26, 2007 8:18 AM | Reply | Permalink
John writes:
This was driven home to me last week when I learned that a friend of mine, son of a favorite teacher of mine, was downsized out of a job after 27 years with the same company. This was not some blue-collar assembly line worker. This was a person with a college education, an incredible work ethic, and a personality which made his company a pleasure.
One does the math. What chance does a person in his mid to late fifties have at finding a job at a comparable salary after being downsized? Can he or she look forward to putting the word "consultant" on his/her business cards and look forward to becoming the management equivalent of a Kelly Girl until death or retirement? It would be easier, perhaps, if this wasn't a culture where the first question one asks upon meeting someone is often "What do you do?".
aMike
p.s. Not wanting to end this on a downer, a visit to Fired shows that at least some can find humor in disaster.
April 26, 2007 8:46 AM | Reply | Permalink
Re: my grandmother, during WWII, got a job
Right, during WWII, when there was a terrible labor shortage and women flooded into the workforce a la Rosie the Riveter. But we are talking the 50s 60s and 70s here when middle-class women were expected to stay home with teh kids, and when, if they went to college at all, it was to get "Mrs" degree.
Re: when was it taken away?
Please reread what I wrote. Inflation has badly eroded the value of unemployment payments because they are capped at what is now an absurdly low rate (the cap has not been changed in many years, if ever). In most states you can only collect, at max, about $1200 a month. Once upon a time you could survive, at a middle class level, on $1200 a month. Nowadays that's sub-poverty.
April 26, 2007 9:07 AM | Reply | Permalink
Actually, I was surprised how large the income volatility is.
In my opinion, it goes a long way explaining why Americans save so little. First, the average of negative savings hides the fact that the net worth is probably quite divergent. More importantly, it is rather hard to gouge each expense against the bottom line of the household, instead, people have a sense what they can afford and what they cannot. And it is much harder to adjust down than up.
Another aspect is that the job mix changed, and there are fewer industrial jobs that were traditionally volatile, so the volatility per sector is probably increasing.
The conclusion of the article, that inequality is rising and volatility is not, so inequality should be the primary focus seems sound: the argument was that the first thing to do is to increase income redistribution to finance health care etc.
April 26, 2007 9:19 AM | Reply | Permalink
Once upon a time you could survive, at a middle class level, on $1200 a month.
I think that's better than minimum wage since that comes to about $7.50 an hour to stay on unemployment. How high do you think it should be?
Inflation has badly eroded the value of unemployment payments...
well, as I wrote, I live below my means and pay $545 a month in rent, $17 in electricity , $100 for internet and cellphone, about $8 for gas and $300 for eating-- cause I eat out a lot.
So, that comes to just about $1000 a month and I'll bump that up to $1200 to cover the car.
Of course, i save money and could live for several years w/o unemployment.
I know that some people on this list get upset when I mention that mexican immigrants sometimes live one family to a room to survive. since I grew up fairly poor, I learned how to survive like that and appreciate anything extra.
The real questions are: "how much is enough?"; "what does 'quality of life' mean?"; etc...
I, for one, don't get entangled in a lifestyle that I can't maintain but others rush right into a set of bad choices.
April 26, 2007 11:19 AM | Reply | Permalink
It is harder to run up a hill and then down the other side than to run on a flat road the same distance. For the vast majority it is also more expensive to have your income fluctuate than to have a steady income, if you use credit to smooth out your consumption. One reason is that the interest that you get on your savings is less than the interest you have to pay when you borrow money. (This is assuming the absence of any non-market safety nets, such as government welfare programs or charities.) Sometimes the difference is extreme - for example the difference between credit card interest rates and savings account interest rates.
If you knew beforehand when and by how much your income would fluctuate, and were very disciplined, you could pretty much avoid this problem, if you got that knowledge when you are about to start an "up" period. But if you get that knowledge when you are about to start a "down" period, it would not help very much. And of course, no one has that information.
Faced with this uncertainty, one course of action is to be extremely risk averse, save as much as you can, and always have a reserve (at one time the recommendation was six months of earnings - is that still adequate?) before you buy anything on credit. That sounds like good advice to me, but it doesn't seem to be how the vast majority of people in the US live their lives. Advertising and the implicit messages in TV shows, movies and other media, are heavily weighted in favor of "consume now", as opposed to "save for the future". As far as the advertising goes, is that because it is inherently more profitable to push consumption instead of savings, or is it specific to the American consumer culture?
April 26, 2007 11:25 AM | Reply | Permalink
Living below your means is good, but you just admitted you grew up poor, and it sounds like you are spending like a poor person. Most middle class Americans don't want to live like a poor person just to get by. If that's the case, then we're all poor and, frankly, the system is broken.
Also, by not getting "entangled in a lifestyle that [you] can't maintain," do you mean that you are not ever planning on having kids, or that you are not going to worry about your kids being educated and healthy? Or are you telling me you are raising kids on a place with $545 a month rent and $300 a month food budget?
April 26, 2007 3:56 PM | Reply | Permalink
Re; I think that's better than minimum wage since that comes to about $7.50 an hour to stay on unemployment. How high do you think it should be?
It should replace 2/3 of one's income (except for truly upper income persons, say over 100K) which is what it was designed to do before inflation turned it into chump change.
Re: So, that comes to just about $1000 a month and I'll bump that up to $1200 to cover the car.
And your health insurance? Provided by an employer? well if you're unemployed you're going to be paying COBRA (generally $300, more for a family policy). Where's that in your budget? And since you donlt mention children I'll assume you don't have any. Would you like to raise kids on $1200 a month?
Re: for one, don't get entangled in a lifestyle that I can't maintain
True, there are people who are living beyond their means. But let's assume we are talking about people living within their means, until unemployment hit.
April 26, 2007 3:58 PM | Reply | Permalink
Only is a very limiting word that can be shown wrong by a single counter-example, of which I have two. My grandmother worked at the local newspaper in the classifieds section. Office work, and not just secretarial work, has always been open for women. My great-aunt was a seamstress that worked in a local clothing factory, which traditionally employed women.
Neither of these jobs required special training. But, because of the unions at the time, both jobs paid well, regardless of any sex discrimination.
Interesting statistics, but those don't say what kind of jobs are out there. Factory jobs have been shipped overseas. Most jobs gains have been in the service industry, which generally pays less. In fact, if you look at inflation-adjusted wages, we earn less than people back in 1968.
You still have more people looking for the fewer good jobs out there. The more that people accept lower-paying, lower-skill positions, the more they come in competition with low-skill illegal workers. I still stand by my statement that if we have immigration reform, then the bottom will fall out of the employment market, eliminating the middle class.
April 26, 2007 5:39 PM | Reply | Permalink
Other necessary items: toiletries, including shampoo, deodorant, and toothpaste; clothing, because very few take naked people seriously; cleaning supplies and laundry soap; lightbulbs; heating oil and winter gear. If there are children involved, school supplies.
That's off the top of my head. I'm not saying that people don't live beyond their means, but there are a number of additional factors that require money. And they are the kinds of things that one tends to take for granted unless it's a stretch to purchase them. Or they're only intermittant needs, so they don't fit into a monthly budget, but they definitely have to find a home in a yearly budget.
Also, just as an additional thought, in some places housing is prohibitively expensive, even if one is doing everything possible to economize.
April 26, 2007 8:56 PM | Reply | Permalink
Re: Office work, and not just secretarial work, has always been open for women.
Yes, but clerical jobs do require some skills. Hence the classic line "But can you type". But to get back to what sparked this line exchange, if the husband was laid off in recessionary times how likely was it the wife (with no recent job experience) would have any luck finding work instead? The husband still had a better shot at getting another job than the wife did. Moreover the lay off was likely to be temporary and the husband called back to his old job after a few months (once upon a time "layoff" and "firing" meant very different things) so with unemployment paying 2/3 of the lost income, some savinsg and maybe additional union layoff benefits the family would not be in desperate straits as today.
Re: Factory jobs have been shipped overseas.
Factory jobs are/were NOT good jobs. Why do people keep pretending that they are? They are monotonous, boring, injurious to long-term health and sometimes dangerous. We should no more regret their passing than we regret the loss of old field hand jobs.
Re: I still stand by my statement that if we have immigration reform, then the bottom will fall out of the employment market, eliminating the middle class.
I partially agree with you about immigration, except that it isn't the middle class (which I define as people with college educations in higher paying "knowledge" and professional work) but rather what's left of the old working class.
April 27, 2007 3:47 AM | Reply | Permalink
It's not the inequality but what caused it: a generation of falling real wages for half the population and stagnation for the next 49%. If everyone's income grew 5% a year, the outcome would be vastly unequal and totally awesome at the same time.
April 27, 2007 4:09 PM | Reply | Permalink
I think a lot of folks are going to be needing "doctor assisted" retirement if you catch my drift (i.e. Dr. Kirvorkian.)
I hope that wasn't too off topic - I think it was more in response to some of the comments.
April 27, 2007 10:22 PM | Reply | Permalink
most of the items that you listed don't cost much. my clothing lasts for years so it's not something that I need to replace all that often and I replace it when I'm making "good money," not between contracts.
May 1, 2007 10:22 PM | Reply | Permalink
And your health insurance?
so far, I played the statistics and went uninsured because heart attack risks start at 45 years of age. Thus, I "self insured" since I keep cash on hand for medical emergencies. now that my savings is starting to grow, I'll probably have to a high deductible policy to protect my nest egg.
let's assume we are talking about people living within their means
to me, this means that you've taken care of protecting yourself during a downturn. i.e. priorities first, then quality of life.
May 1, 2007 10:27 PM | Reply | Permalink
Most middle class Americans don't want to live like a poor person just to get by.
yeah, I agree... most people indeed want to live like kings and queens. to me, that's selfish.
my aunt and uncle are supposedly "enviromentalists" but they own a big house which isn't all that environmentally friendly.
To me, part of my happyness comes from knowing that my environmental footprints walk the walk and talk the talk!
do you mean that you are not ever planning on having kids
right now, I don't have kids but I've counseled couples with kids and, for example, I've encouraged them to use bunk beds until their children really need seperate rooms so they can, in the mean time, get a nest egg together.
do you mean that you are not ever planning on having kids,
I currently don't have kids but I do hope to adopt, in a few years, since our world, IMO, has enough people.
or that you are not going to worry about your kids being educated
education need not be expensive. I recently read a report that homeschooling costs $545 a child. Thus, it's only "public school pork," for better or worse, that drives the cost of education up.
and healthy?
I won't be buying soda and other junk for the kids I adopt.
May 1, 2007 10:40 PM | Reply | Permalink
There is no question that the purchasing power of the middle class worker has fallen. In 1970 a median family of four had one breadwinner and had reasonable expectations to own their own home, pay for healthcare, send their children to state college and have a respectable retirement. Today the same median family has two breadwinners and is rapidly losing hope of accomplishing any of these goals.
The only rational explanation for why this has occured is that wage earners who "kept up" with the increases in the CPI did not begin to meet their actual cost of living increases.
An artificially low CPI has many financial advantages for business and government. First it keeps expectations for future inflation damped, keeps interest rates for business capital, home mortgages and federal debt low. It even gives us an optimistic view of the growth of the CPI which means that we may be in a recession and not even know it.
All of these artificially created benefits seem good on their surface, but unfortunately they are built on the back of the middle class. Ultimately, the middle class' ability to buy goods and services will be fatally compromised and we will fall into recession by any measure.
Now that the middle class' ability to compensate for their loss of purchasing power by use of home equity is being rapidly eliminated, we are seeing the first signs of increased wages coupled with flat purchases of goods and services.
May 2, 2007 10:55 AM | Reply | Permalink
In the above comment the last CPI should be GNP.
May 2, 2007 10:57 AM | Reply | Permalink
Most people do want to live like kings and queens, but most people are happy to live like middle class people. Nice house. Safe neighborhood. Food on the table. Poor people don't have any of that. So maybe we are talking about different things. I don't know what you consider a big house.
Above you were talking about living one family to a room as an ideal for most Americans, and now you are talking about having kids share a room with bunk beds. On the budget you outlined, you can't even afford bunk beds by the way. When you said you think most Americans should live like poor people, and I said most Americans didn't want to live like poor people, I assumed you were talking about four or five people living and sleeping in a one bedroom apartment, since that is what you described. Now all of a sudden its a house with a room for the kids and bunk beds - you're not going to get that on $545 a month, unless you live out in the middle of nowhere and then you need more than $8 a month for gas and you've got to add to your automobile expenses.
Homeschooling, huh? Either you have a non-working spouse - in which case you need to support him or her which instantly doubles all of your other costs like food, gas, car - or you are single and adopting, in which case how are you going to work and homeschool at the same time?
Soda and junk food is cheap. Know what isn't cheap? Baby food, organic food, specialty food for when your kid has food allergies, fresh fruit and vegetables, fresh meat.
I think its safe to say that if you are spending $300 a month on food now then with a spouse and two kids you are going to be spending at least $800-$1000 on food a month (I would say $1200, and it could easily be that, but there is some minor savings in feeding multiple people).
Some other things you may not have thought of about kids:
Life Insurance
Medical (or at least co-pays, etc.)
Relatives (they come to see the kids, and stay to eat all your food, unless you have the nice ones that bring you food)
Plus all the stuff that comes as they grow, like computers, uniforms, braces, etc.
As I believe I said before (or should have), anyone can make it on their own if they are even remotely employable, young, healthy, and single. Those people aren't really the ones we're talking about, though, since at some point everyone gets layed off, older, sicker, and at some point hopefully attached.
May 12, 2007 10:50 AM | Reply | Permalink
so far, I played the statistics and went uninsured because heart attack risks start at 45 years of age.
Heart attack? How about your appendix bursting - only $48,000. Ever jump? You land the wrong way and get a fractured ankle, that's over $100K.
Plus, you don't want to have or adopt kids until you are 45? You will certainly need to get health insurance when you have those.
No offense, but this isn't like one of those warranty plans they try and stick you with at Circuit City. Not having health insurance is like financial roulette. On any given day you might be lucky and come out ahead, but over the long term your entire financial strategy is essentially "be lucky"... that's not a strategy to wealth, its just dumb luck.
I don't know what state you are in, but do yourself a favor and check out Tonik... its low cost health insurance specifically designed for those young and health - generally under $100 a month. www.tonik.com
Long term, though, you will need some real health insurance, and once you have kids and lose your job, Cobra will be more like $600 or $1000 a month.
May 12, 2007 10:58 AM | Reply | Permalink
Hair supplies and cleaning supplies don't cost much, huh? I'm going to go out on a limb here and say you are a guy. I'm also going to say that for the sake of your budget I hope you are not interested in women, because most women are not going to see it that way.
May 12, 2007 11:01 AM | Reply | Permalink
I think a response to this from a lot of people around my age (late 20s to late 30s) is that they now say they want to retire at 50.
Not that any of us actually expect to retire at 50, but that we need to adjust our savings in such a way that we can't rely on having steady work after 50.
of course, since most people my age will probably live until late 80s or 90s, this is going to create some weird dynamics 30 years from now. Probably a lot weirder than if society just started accepting that people older than 50 should be treated like people younger than 50.
May 12, 2007 11:05 AM | Reply | Permalink
You're right about that re: weirdness.
I'm hoping to keep inhaling/exhaling about that length of time myself. I've two 100th birthdays in the family this year. :-). I still have too much fun to think about retiring (66 times around the track so far). I don't know what retirement plans (if or when) my friend Ron had, but it would have been nice if the decision had been left in his hands.
aMike
May 12, 2007 12:09 PM | Reply | Permalink