Has anyone looked at the economic implications of 'living within means'?

Just curious - The repukes defend the destruction of bankruptcy laws by saying that people must "live within their means". Aside from the obvious flaws intrinsic to this argument, has anyone ever considered what would happen to the economy of the US if people truly began living within their means, swearing off credit cards and going back to a cash economy?

...a lot more old used cars on the road.

I understand embargos and lack of import/export cash but still, these old cars are still working.
What's up with that?
Could we do that here, and live more within our means?
It seems "old cars" in the US are only expensive antiques...

I don't think this country has any interest in preserving anything, whether it be cars, buildings or anything else. All that matters is profit.

it's all the embargos. the men in Cuba who work on cars can fix ANYTHING. you'll find an american car, with a russian engine, and a german transmission, cause that's what they had.

and FWIW not all old cars here are expensive antiques, i've sworn myself off "new" cars, my current fleet is: 1927,1950,1951,1961,1963,and 1973. the newest being about a year older than i am. it's cheaper to know one's way around an old inline six cylinder engine than an ocassional trip to a mechanic!

little diesel truck and changing it over to veggie power.
It's just a bit scary when dealing with the tonnage and the possible mistakes...

re Cuba, yes, i mentioned the embargoes in my post, i understand that. My question is more like, "How can americans--more americans value this resourcfullness, this ability to fix anything instead of throwing it in the landfill.

My Austin Healey Sprite is 42 years old and still running strong.. and getting better mileage than my Kia Rio!

We only use the one credit card for those things that require a credit card like some car rental places. And it's paid off immediately.

Fuck jewelry, new cars, clothes hogging, restaurants (I can cook damned well. We go occasionally though, like maybe 4 times a month) and a bunch of other worthless shit that we don't need, etcetera.

Bad consumers, BAD consumers!

a lot of our friends on fixed or lower income levels are bolstering their 'xmas xperience' using credit cards. It blows me away - a fixed income grandmother going to macy's and pulling out the credit card because her granddaughter wants some bs silk purse - and I was curious as to what would happen if people got smart and just told the 'markets' to stick it.

My guess is that the economy of the US would come to a devasting halt. I'm not sure that credit card capitalism is sustainable.

It is called the saver's dilemma. If one person saves more, they may prosper that way, but if alot of people do it, then the jobs that depend on the lost consumption will be lost. It is a basic flaw in our system's design that keeps us running like George Jetson on his treadmill and stopping the treadmill means disaster too.

It's sad. Pathetic. Exploitive...

I've sworn off credit cards. This results in us really scrimping this time of year, but on Monday morning, when Christmas is said and done, we won't owe anyone anything. What would it be like if everyone did this? I don't know, but you can bet that the same GOP'ers whining about the bankruptcy bill would be doing whatever possible to get us using credit again.

They can't afford to.

If they want us to 'live within our means' maybe they should stop mortgaging our country to the Chinese.

People don't get into debt trouble because of over-spending. They get into debt trouble because of a life crisis, divorce or health problems. The credit card has become the social safety net.

I know at least 4 people off the top of my head that bought houses, or cars or just Stuff that they can't really afford.

:wtf:

50 something couple with no kids at home bought a 4 bedroom mc-mansion that they will paying off well into their retirement. They are now bitching about the heating bills and gas prices for their Lexis. (they also have 3 cars between them).

i agree that's idiotic. that's the time when one should be DOWNsizing, not incurring further debts!

We don't use credit. :shrug:

but that's what I meant about the intrinsic flaws within that argument.

I just throw that out there because I think it's hypocritical of repukes to make that argument while all the while supporting credit card companies that innundate us daily, from the moment we are born until the day we day, with messages that we must spend, spend, spend using their credit cards in order to be happy and complete.

But beyond that, I totally agree with you!

"there's more to life than money...live wisely"

Now, realtors, and the housing market otoh. I had a realtor tell me I could afford a $70,000 house on a $23,000 annual income. I told him he was nuts and did not even look at houses that expensive. I ended up losing that job a mere 4 months after I bought my house, but I had bought a $35,000 house with payments of about $215 a month. I paid it off in 46 months with average payments of $728.9 so, yes I could have afforded a $600 house payment but I prefer having it paid off so I can dream about semi-retirement in a year or two, before I am 45.

We know people that have fallen for bad realtor's advice. For example, a couple we know just bought a quarter of a million dollar home based on the husband's overtime pay. Smooth.

Now, I should add this: These are eastern european immigrants who have fallen lock, stock, barrel for the 'perceived' American dream. You know - the one that is used as propaganda throughout the world. Friends tried to tell them that it was a bad, bad, bad move, but they didn't listen.

Look for a bankruptcy or a quick sale in the next two years (Okay, taking off my criswell cap).

Working and middle class people shouldn't get ill if they have inadequate or no insurance. I have no insurance, so I ignore my high pressure, angina, and degenerative disk disease because I can't afford to treat it. And I work, but no bennies. That's how I live within my means. I hope I don't have another heart attack or I'm fucked.

Have been forever, the only thing we owe is the mortage on our house, everything else is cash.

5 x week at $1.75 = $455. One big gulp a day = $300 plus per year. Multiply those numbers times various family members
who indulge, and you can see where your $$ is going to frivolous and unnecessary things.

Imagine all the money per year people are spending for nothing. You can see it in line at any grocery or quickie mart.


Msongs
www.msongs.com/political-shirts.htm

i don't smoke, i don't eat doughnuts, i don't drink coffee

swearing off those things nets me exactly zero dollars in savings a year

who the hell smokes any more anyway?

I don't know, if I entirely agree with the swearing off the credit cards notion. I don't know about you guys, but this year has tested my wife and i financially...with high prices of gas, propane, our car accident at the begining of the year, a lemon car, and now a program car that we got to replace "said" lemon, and a wide variety of unexpected curve balls that life can throw at you, the credits cards that we have, have saved our asses...

This year, has added an additional 20,000 plus to our debt...on top of all the other things that we have, phone, internet, electric, insurance, mortgage...the usual. We exhausted our bank options, used our titles on our cars to borrow money to cover other expenses, and when those options expired(early june), we had no other option, unless we turned our mutual parents upside down and shook them, to see if any loose change would fall.

As far as people living within their means...My wife and I do live within our means, as best as we can...we have no control over what messes up around the house, or car wise, or health issues for that matter, things pop up, and you have to deal with them. To be honest with you, i don't think anyone "truly" lives within their means in the least bit...people buy cars on payment plans, cause they cannot afford to pay the total in full, people buy houses on payment plans, cause they cannot afford to pay it off in full etc etc....so, in short, I don't even know if there truly is anyone who lives within their means...

Look at our defeciet, look at the bills our country is racking up, do you think they can pay that back in full, probably not...unless they went mad crazy at the printing presses at the mint...but anyways.

I do support credit cards, albiet I see a lot of people using them for self gratification and what not, buying crap they don't need, but remember there are smart consumers out there, who use the cards in a different matter all together...well, thats my two bits...:)

ps. I just got done watching Team America World Police, and remember people, freedom only costs a buck oh five....yeah, yeah yeah!!...:)

people who haven't experienced it apparently don't understand that one serious illness such as cancer or even one serious accident costs more than your entire lifetime earnings unless you are quite high income

it is sickening to see that to stay alive you have to somehow come up w. six or seven figures, of course friends in that situation have no option but to declare bankruptcy

no one chooses to get ill or be in a serious accident, no one chooses to find out after the fact that their company (oops) couldn't afford to pay the health insurance bill


since health care costs are out of our control, being frugal and saving money only means the doctor gets more when the inevitable happens but i can't physically save more than i have legally earned unless i am willing to stick guns in people's faces which most people aren't

is that some people simply cannot afford to live without charging things like health care, prescriptions, groceries, car repairs, and emergency items. Most people are not out there charging exorbitant luxury items (although I know some are, mostly middle-class people, not poor). Also, a lot of debt is college debt, and to me that's a very necessary thing.

Stopped listening to the Republican advice to go out and shop, shop, shop. Then, those same Republicans would lose all of those consumers driving their consumer driven economy. Bad thing for all those corporations raking in profits from those consumers taking all of the Republican advice (before the contradiction).

Republican Government = Nothing but a shell game, and the people always lose.

when i was outside, walking around was DISGUST with this notion that shopping was the patriotic response to the tragedy. If capitalism has a future it is not in raping the planet and expanding the landfills.
i believe that new technologies of sustainabilty will provide the jobs of the new american economy.

their house to pay off the credit cards. I don't know how some of them do it. They are making less than we do, but they drive new cars and take expensive vacations. We are debt free except for our mortgage (which is a 30 yr fixed at 5% and it is less than 33% of the value of our house). We use credit cards but they are paid in full every month. If we can't pay for it, we don't buy it. I need to replace my car this year but I will be looking for a fuel efficient used car and will pay cash for most if not all of the purchase.

Houses in my neighborhood have doubled and almost tripled in value over the past 4 years. Most of my neighbors feel pretty wealthy because they are sitting on half a million in equity in their houses. What they don't realize is that what went up, can come down. It has stopped going up the past few months. I think that many people have tapped into that equity to finance lifestyles they can't really afford. They are in for a rude awakening when their houses stop being a source of additional income and those that used adjustable rates are in for a worse shock when their mortgages start going up by hundreds of dollars a month.

if you really thought the value of your property was going down, you'd cash out

why sell stock in december of 2001 when you could have sold it in december of 1999?

it's fun to feel superior to the neighbors but the only way to make real money if you are starting w. nothing is to leverage yourself, that does involve risk (debt) so yr neighbors could be making the right decision to buy a little more house than they can afford now, in future years as they progress in their careers, the mortgage expenses will be the same, yet the value of their equity will be so much more than the "responsible" citizen who bought the cheaper house

i am actually sorry now i bought a cheap house and paid it off, expensive houses increase in value much faster proportionately than starter homes, my frugality has cost me thousands if not tens of thousands because i indulged in fear of the future

We are in a great location and anything we bought would be just as overpriced. To make matters worse, because I have a homestead exemption, if I moved, my property taxes would more than double. Those people who are moving are leaving the state and that isn't an option for us at this time. My husband's job is here and my kid is in high school. I don't view my house as an investment, it is a roof over my head. I love the fact that "on paper" my house makes me look rich - who wouldn't like to think they have a half million dollars in equity. The problem is what people are doing based on that assumption.

I totally understand the concept of leverage, it makes sense in a normal real estate market, you put 10-20% down and realize the appreciation on 100% of the asset. Hubby and I scrimped, saved and borrowed from anyone we could to buy our first home nearly 20 years ago. It was a great investment, we more than quadrupled our investment in 2 years. What doesn't make sense is assuming that real estate is going to continue to go up 20% or more per year. My 2200 sq ft 3 BR, 2BA home is "worth" approximately 750K right now. We paid 300K for it just 4 years ago. Anyone who pays 750K for a cookie cutter tract home is nuts to assume they are going to make lots of money on it in the next few years.

I don't feel superior to my neighbors. On the contrary, I worry about them. They are looking at the equity in their house and it is causing them to make bad financial decisions. Many of my neighbors are borrowing against that equity and buying spec homes at very inflated prices. Most of the new homes being built in our area are being built on spec. The spec homes used to sell in a day or two at a tidy profit. It made sense then, it doesn't now. Even worse, people are constantly refinancing their homes and taking cash out in order to pay for things they otherwise couldn't afford. One neighbor just bragged to me today that she was taking her family on a 7K cruise over the holidays. They took out a home equity loan to pay off their debts and used some of the money to finance the cruise. They will be paying for that cruise for a long time if they make only the interest payments on that equity line. These people have 4 teen/preteens (two in high school) and are looking at huge college costs coming up. They worry about that, but assume that the two spec homes they are building are going to make them lots of money. These aren't people whose income will be increasing. He's 55 and she's in her late 40s. Another neighbor quit his job to become a full-time real estate investor. They now have 4 homes they have fixed up and are trying to rent and/or sell, the mortgage payments are increasing regularly but the home values and rents aren't.

I honestly believe that real estate prices in my area are due for a correction. I have seen it before and got caught. This time, if prices come down, I will still have equity in my house and will still be in a position to make our mortgage payments. I am not so sure my neighbors will be so lucky.

They can't seem to do it, and it's the repuglicans keep it that way.

Here is why.

If the nation lives within its means then we have equlibrium within the economy at exactly the point where national wages plus savings equals gross production of all products and services.

So if we all live within our means the only way for the economy to grow is for wages to grow. Sure fire receipt to get the Republicans to support the minimum wage increase which would become the backbone of a sound economy.

Bwahahahahahahahahah!

That's my best guess.

Never had a credit card; except for the one I was *required* to have at one job (a dept. store--to get the employee discount).
Cash all the way; for the last 15 years.
Own both houses and both cars.
Happy!!LUCKY!!!!!Thankful.....