Why do Americans pretend they're not broke when most Americans are in debt?
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I guess the cycle continues if you will the stock to your children.
In the US at least, there is what's called a "step-up in basis", where when you do this, they receive the stock as if they had just bought it, instead of 'inheriting' the parent's accumulated capital gains. In other words, if I bought a stock for $10 and it becomes worth $100, then I sell it, I'd pay capital gains tax on the $90 I made. But if the stock goes to my kid while it's worth $100, it's treated as if they bought it when it was worth $100 (which, in a way, is true, it is worth $100 at the time they gained possession of it), so if they sell it right after inheriting, they would pay no capital gains.
This is probably a large part of the reason that 70% of generational wealth is gone in two generations, and 90% in three, on average.
And if the stock tanks, then I guess you declare bankruptcy.
Yeah, ultimately, it is kind of a ‘house of cards’. The only way this strategy works at all is if the market value of the assets being used as collateral continuously increases, and not just increases, but increases at a greater rate than inflation and the interest rate on the debt, combined.
This is probably a large part of the reason that 70% of generational wealth is gone in two generations, and 90% in three, on average.
Are you saying they mismanage the wealth by selling the assets, therefore not paying capital gains, but also using the cash to fund their lifestyle?
I assumed a fiscal manager would advise them to live off debt in the same way their parent had.
The only way this strategy works at all is if the market value of the assets being used as collateral continuously increases, and not just increases, but increases at a greater rate than inflation and the interest rate on the debt, combined.
Line goes up.
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If you own a house or vehicle in the USA there's a good chance you're in debt.
Having debt is not the same as being in debt.
In debt = your assets are worth less than your obligations.
Having debt = you owe some money to people, but have the property to back up the debt in case something happens.
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Because being poor means you're weak, and weakness makes you're a piability to your friends, useless, and prey.
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Just a small correction there: debt can never be good.
But debt can be necessary, but that is only because some financial institutions have made it so, because many of them make their money from peoples debt.
So they spread the myth that debt is good, despite the fact that the world would be a far better place without debt.
Absolutely false. Debt is a tool. It's a wealth multiplier.
You can use tools incorrectly, and that can harm you. But used correctly, they can let you do things quicker and easier than you could have without them.
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Most americans aren’t in debt.
American household debt is on a relentless upward trajectory. It was at a record $18.20 trillion by 2025, up $4.6 trillion since 2019. With 90% of Americans having some form of debt
https://www.debt.org/faqs/americans-in-debt/demographics/
IDK about US education and math but "most" in the rest of the world means more than 50%.
10% = not goodHaving debt is not the same as being "in debt", as in underwater in their obligations vs assets.
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Ego
Bad education
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The US is big on wealth inequality, like most third-world countries. Yeah, lots of people are broke, but lots of people are also making 200k/year. Overall we're definitely struggling, but that doesn't mean everyone is struggling.
Lemmy also leans both older and into the tech demographic, which tend to be higher paid.
The US is big on wealth inequality
You misspelled "built".
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Being in debt isn't synonymous with being broke.
I could pay off my house tomorrow if I wanted, but financially it doesn’t make sense - so I keep the debt. That doesn’t mean my net worth is negative or that I don’t have disposable income.
wrote last edited by [email protected]I could pay off my house tomorrow...
That's not what being in debt is
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I swear the biggest lie is that America is somehow a better country because it has houses that are expensive and fast food so that it can import what essentially accounts to slave labor when they finally come over excited to work for lower wages and live in cramped housing without their social networks other than the other slave laborers.
Its probably how we make it how people not climbing financially can still feel superior. No one has to pay the debt if you can keep getting new people on a lower rung.
Americans rarely have access to real bread
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Having debt is not the same as being "in debt", as in underwater in their obligations vs assets.
Having debt is EXAXTLY same as being “in debt”, it means owing money.
While that can mean 1 cent or 1000000 it is still the same. Just as 1 cent profit and 1000000 are profit.Anyway still looks like most have a lot of problems:
https://www.prnewswire.com/news-releases/58-of-americans-say-their-finances-are-in-crisis-achieve-survey-finds-302521350.html -
Just a small correction there: debt can never be good.
But debt can be necessary, but that is only because some financial institutions have made it so, because many of them make their money from peoples debt.
So they spread the myth that debt is good, despite the fact that the world would be a far better place without debt.
I had $90k of mortgage debt that I could have paid off but chose not to because they were charging me 2.5% interest and I was getting 5% interest letting the money sit in a bank account. Debt was most certainly a good thing in that scenario.
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Propaganda of American exceptionalism.
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I could pay off my house tomorrow...
That's not what being in debt is
Is it not debt when you owe money to the bank?
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Is it not debt when you owe money to the bank?
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They often are, yes. I'm not sure exactly what "in debt" means to OP. But, when I use it like this I generally mean "negative net worth" not "carrying a line of credit".
I currently have a balance on a CC, but I don't consider myself in debt, because it's smaller than my checking account balance, and that's smaller than my investment account balance, and that's smaller than my retirement account balance.
I don't own a home, but I also didn't really consider myself "in debt" when I purchased my current car.
Oddly enough I would say I am "in debt to" my CC company, because I do owe money to them and they do not owe money to me. The "to X" part of the phrase restricts my consideration to just two-party financial relationship, in my mind. When you leave off the "to X", I consider all the financial relationship I have and (roughly) sum over them.
Same here, funny carry a balance, but at least for a couple of weeks I owe my credit card company.
Simply because if I use my debit card, i get nothing. Use my credit card and I get 2 to 3 percent off...
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Yeah, close to 6% of the population is making unfathomable amounts of money and the crazy thing is that just 6% of the population is still 20 Million people. You could replace the entire population of Tokyo with American millionaires and still have more to spare to claim New York too.
wrote last edited by [email protected]Tokyo metro area is more than 36 million people.
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Same here, funny carry a balance, but at least for a couple of weeks I owe my credit card company.
Simply because if I use my debit card, i get nothing. Use my credit card and I get 2 to 3 percent off...
Yeah, I pay it off about twice a month, but usually between the day I schedule a payment and the day it arrives I've used the card again, so it's rare for me to have a zero (or negative!) balance.
I do like the CC rewards, but they get that my "shorting" / charging the merchant. So, if the merchant is part of your community, try to avoid involving a CC processor by paying in cash. (I think cash is a pain to deal with, so my in-built preference is for some sort of card / phone payment system.)
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I would rather no debt, but I kinda need a house because it's illegal to buy a field and live there in a yurt
Come out to the country. Just make sure your field is outside city limits, and you'll probably be fine living there, as long as your sewage doesn't drain into a protected waterway. A 3-phase septic wouldn't be too hard to put in, but it's a lot easier if you'll rent heavy machinery instead of shovels.
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We're talking about an average over 30 years. The market will dip multiple times through that period, but it will likely average ~10% per year gains as it has for more than a century.
I meant more like something akin to the great depression, but I get the point, if you have a buffer to wait out bad times you can enjoy some extra money for less price
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Tokyo metro area is more than 36 million people.
True but I think the rich are about 10% so I think that's number should be closer to like 30-35m
Either way, US has a mega city or canada sized country of pure high income and or asset owner.
These people are true benefecies of the empire. They essentially enforce regime orthodoxy on political level while providing their professional services to the owner class. For this they are permitted to thrive, while the rest of working class is being driven into more poverty with each generation.
