StreetsofBeige
Gold Member
I wonder how many would live pay cheque to pay cheque if they simply cut out wasting money of stupid shit and saved some cash.
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New Survey: 78% of US workers live paycheck to paycheck
- Thread starter El_Tiguere
- Start date
90% tax rate was actually what the richest paid in the 1940's- 1960's. You know, the time of the greatest economic boom in this country that brought about the generation that saw the most wealth and opportunity known as the boomers..
HoodWinked
Member
they need to teach personal finance as part of the school curriculum. something useful not squandering the little time they have on shit like crt.
SafeOrAlone
Banned
True in many cases. I want to have empathy but I read a lot of "assist" or "gofundme" posts that talk about how their car is about to be repossessed, etc.
I am always wondering what type of car they burdened themselves with. I mean, maybe they were paying off an affordable car in a lot of cases, but given the state of things, I'm usually suspicious and thinking "did you get yourself into this mess by overspending?"
StreetsofBeige
Gold Member
Yup.
Lots of people at my work in their 20s and 30 with BMWs and Mercedes. I know they arent the top of the class models, but still way more expensive than a Honda.
And they wonder why they cant afford even a decently priced starter condo. Still renting.
Ya, thats because your monthly car payments are double what a cheaper car is, and when it comes to mortgage approval time, the banks see all your loans and notice your disposable income is dinged an extra $500/mth due to a nice car. So your mortgage approval amount goes down the toilet.
When it comes to mortgages it comes down to: how much you can put down first to decrease what you need, then what your net monthly disposable income is so the bank does a calculation. The less buffer money the formula spits out the less you get approved. And if someone has lots of credit card debt and not making payments, your credit rating gets hit so your approval is harder and the rate offered is worse.
I dont think the typical young person even knows that. They probably think they get approved based on the salary they make, not the net monthly disposable income.
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Bladed Thesis
Member
Marginal tax rate, they didn't pay 90% tax rate.
It's a big difference. For example, if I made 20k I owe 10% under the current tax code but only on any income over 18,450 (joint filing). I would only owe 10% of 1550, or $155. My (marginal) tax rate would be 10% but in the reality I'd be paying 0.78% The congressional research service ran a study and applying that math to the era of the 90% marginal tax rate they found the tax rate was something closer to 45%.
Now take the top tax bracket of today (500k+) vs the top tax bracket back then (3.425m adjusted for inflation) and the current marginal tax rate of 37% is pretty damn close to the tax revenue achieved under that era.
In fact, tax revenue as a percentage of GDP shows that similarity plays out even to this day. The reasoning for that is because back then the very rich just used corporations to cover their revenue and thus (corporate taxes have never been over 50%) actually were able to avoid more taxes. This was one of the reasons bipartisan support was given to dropping the marginal tax rate. To see more income taxes filed under the individual tax system vs the corporate tax system. We haven't even gotten into the Tax Reform Act of 1986 that got rid of many deductions and loopholes that were around back when the tax rate (marginal) was 90%.
Here's some sources.
Didn't We Used to Have High Taxes and Prosperity? | Tom Woods
This is an argument we hear a lot: in the 1950s the top marginal income tax rate was 91 percent, and the U.S. economy hummed along just fine. (Let's set aside
tomwoods.com
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StormCell
Member
Pretty much this. I've heard of people becoming millionaires off of nothing more than living simply and putting away their extra cash. While I don't think that living poor will suddenly make anyone truly rich there's certainly a lot of wasteful spending that goes on. For my wife and I, eating out is a big one for us. We can easily spend $500 in a month on just eating out, and I think that's what many people don't consider. For the price of that chicken sandwich or latte, you could save an extra thousand dollars in a year. If my wife and I figured out our meal planning better we could cut the eats budget in half and save an additional $3000 over the span of a year.
To some that doesn't seem like a whole lot, but when it pertains to down payments, you can pay off a ton of loans very quickly and then really save money for things like a down payment. One of the reasons why I continue to drive a 2012 vehicle is because I don't desire another auto loan -- I've been paid off for 4 years and prefer fewer $400/mo payments not more. We've rolled multiple paid off loan payments into our last auto loan now, and when that's paid it's all headed towards my boat loan. I can see blue skies from here!
Aesius
Member
My brother works as a sales/finance manager at a big car dealership. He said that the guys who buy the $60k trucks more often than not make that much or less in a year. And they get approved for the loans!
Maiden Voyage
Gold™ Member
What a necrobump.
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People always talk about income, but never expenses
StreetsofBeige
Gold Member
A lot of people's asset value builds due to long term investments - stocks and real estate.
Unless someone is making good money (esp. dual income and no kids) and lives in a city with low costs of living, most people arent going to be uber millionaires just by saving money every month, sticking it in a low interest savings account and waiting for 40 years. That can work, but people make good chunks of money from home ownership and getting lucky with stock picks IMO are key.
I'd ballpark the average decent house you bought 20 years ago in Toronto for $500,000 (which at the time was a decent amount) is probably worth up to $2M. So all of these people just made $1.5M. When it's time to retire or move to another location, you just got a boost of $1.5M. And that same kind of home which mom and dad bought in 1987 for only $250,000 has made them $1.75M. My parents bought a place in the burns in the 90s for $400k. Now worth about $2M.
Of course that can be an outlier city. I dont think the average house in Winnipeg or Idaho has gone up like this, but homes go up in value over time, so whatever interest you pay you'll really get it back and more as your home appreciates, and whatever is paid to pay down the equity goes right into equity. So someone over 20 years renting a place will have nothing to show, but a guy paying a mortgage over 20 years will have a ton of asset value from the property unless the guy is the unluckiest guy in the world buying a place that has gone down in value as it's in shitty dead town.
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godhandiscen
There are millions of whiny 5-year olds on Earth, and I AM THEIR KING.
This is good. Let the over leveraged banks collapse. Think about it, why should the banks survive? What service to the nation does a bank that over leverages itself in bad gambles provides?
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