Why do Americans pretend they're not broke when most Americans are in debt?
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Who's pretending?
We're all broke. Unless you're a boomer trying to sell a $0.50 house you bought in the 50s you paid for on a gas station cashier salary. They're ok for the moment. But even a lot of them are going broke now too. Highest demographic of newly homeless last I heard.
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Good for who?
Rich people always say never to use your own money to start a business.
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This post did not contain any content.wrote last edited by [email protected]
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.
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Okay. Thanks. That makes sense.
I guess the cycle continues if you will the stock to your children. So it could be decades until anyone pays taxes.
And if the stock tanks, then I guess you declare bankruptcy.
wrote last edited by [email protected]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.
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I don't know anyone pretending they aren't broke in America...I know a lot of good people struggling paycheck to paycheck and that's it. I love how Lemmy has become this echo chamber of hate for Americans when y'all are just as fucked in Europe and other countries too with so many similar or different issues. Imagine a little compassion for all people rather than assuming "America bad because America". Just so incredibly sad and stupid to see how dumb so many people are.. that kind of thought process is exactly the same type of people that vote for trump that have this same attitude about "insert race or country here". Y'all need a reality check, yesterday...
wrote last edited by [email protected]Speaking of "paycheck to paycheck":
I certainly have compassion for people who live paycheck to paycheck because they're struggling to make ends meet, but not those living "paycheck to paycheck" who have the ability to save, but choose not to. And, despite popular belief, the majority of people in the "living paycheck to paycheck" category are actually the latter. But it's easy to assume the former meaning (it's more intuitive, after all), so those two 'subsets' are almost always (basically everywhere other than within the depths of the methodology of the research that yields the figures) conflated, and so "living paycheck to paycheck" is often used to great effect in rhetoric as a result.
The fact is, on average, Americans have more of an overspending problem, than an underearning one. Did you know that 48% of consumers earning over $100,000 a year, and over a third earning over $200,000 are "living paycheck to paycheck"? Meanwhile, 25% of those earning less than $50k aren't living paycheck to paycheck (a demo I was part of until I eclipsed $50k a few years ago)—maybe it's time to more closely examine what those people are doing, and follow their example.
It's absurd that anyone making less than $50k a year is saving more money than someone making $200k.
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Do we count mortgages as debt here?
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crazy how people in brazil used to look up to American living standards, but it turns out americans have more inequality, violence, worse education, health system, worse food, and the list goes on
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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.
Cries in near minimum wage UK tech work. The only upside is minimum wage is actually pretty good
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In debt doesn’t mean broke. People with a mortgage that they are easily paying off have debt. Millionaires and billionaires have millions and billions in debt. Debt itself isn’t bad. Debt can be good.
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
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Broke, poor, and in debt are three different things.
Broke just means no cash on hand. You can have tons of cash flow and assets but at the moment you are lacking liquidity to pay cash for things. You may or may not have debt. You might have just blown all your cash on a big purchase.
Poor means you have little and earn little and can do little. Debt is often a factor here but you can be poor and not in debt.
People in debt owe money. They might not be struggling at all. Sometimes rich people borrow money because it costs them less than the interest they receive on the cash they have. Or it could be the opposite, it could be crippling every aspect of their lives.
Americans carry a lot of debt on average. My only debit is my mortgage plus the last two weeks of credit card spending. I pay off my card in full every month. I only use the credit card because it offers purchase protection and I get rewards. Not all debt is bad debt, but a lot of it is.
I used to be comfortably poor with no debt. My income, expenses and living standards were low.
Now earning a little over minimum wage and fucking hell life is easy, but largely because I was poor and just got used to not having things. I continue that now.
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crazy how people in brazil used to look up to American living standards, but it turns out americans have more inequality, violence, worse education, health system, worse food, and the list goes on
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.
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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.
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.
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Do we count mortgages as debt here?
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.
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America is a third world occupied country but everybody is in denial, obese and wearing nice clothes
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Part of that has to do with how our economy is built around credit cards and debt itself. They don't want you to fully pay off your credit card debt, and will reduce the amount you can borrow if you do. And if you try to opt out of the debt system entirely, it hurts you as well because you have no credit score from the credit card companies and no history of paying off you debt on time, which hurts your chances to get things like loans and mortgages. I hate debt, and ran into this issue the first time I went to buy a car because I had always used debit cards to buy stuff. Despite the cards being Visa cards that just got paid off immediately by charging my bank account instead of being paid off over time, I didn't have any debt history as a result and had to have somebody cosign my car loan to vouch for me that I'd actually pay the loan.
and will reduce the amount you can borrow if you do.
This is not true.
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What would happen if stock market dives?
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.
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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.
