Posted on 03/21/2014 1:21:34 PM PDT by SeekAndFind
One phenomenon of the modern economy is affluence that doesnt feel like it. You work, earn and spend quite a lot, yet it seems youre getting nowhere.
Some new economic analysis helps quantify just how many people might be characterized as the wealthy poor and its a surprisingly large chunk of the overall population. A new paper by economists Greg Kaplan and Justin Weidner of Princeton University, and Giovanni Violante of New York University, finds that about 70 million Americans may live in families they describe as wealthy hand-to-mouth households. These are families that own assets such as homes, cars, retirement plans and even boats, yet still spend virtually every dollar of their regular income because its necessary to pay all the bills theyve racked up.
Many breadwinners may feel they have no choice but to live from paycheck to paycheck, especially if they have kids headed to college and other bills that come with the duties of raising a family. Plus, monthly expenses such as mortgage payments and tuition are a form of investing, since its reasonable to expect some return from owning real estate or financing education (though not as much, perhaps, as we once thought).
The vulnerable 'rich'
Yet spending every dollar of regular income even if its a high income can leave affluent families as vulnerable to an economic shock as those who have no wealth at all. The problem comes when a major portion of net worth is tied up in illiquid assets such as homes, cars and other such items that cant be translated easily into cash when necessary.
Many families learned this unhappy lesson during the 20072009 recession, when layoffs slammed white- and blue-collar workers alike, home values plunged and banks shuttered their lending windows.
(Excerpt) Read more at finance.yahoo.com ...
Thank our debt-laden government and our Central Bank that supports them and the TBTF financial system for all this.
Only in America can we create a sub-class to fit an agenda.
Obamaville voters will keep Dems in office.
The Walking Dead!
ping
First World Problems.
it used to be the working poor,,,
now, no work..
Creating a new term in an attempt to create a new class of victims. In the old days, they called it “living beyond your means” and you learned the hard way to stop doing it.
These folks living without reversing course, shrinking down and saving for a rainy day will, after some years of the beat down, decide never again and finally take control. Typically after a shocker.
Been there, doing that now.
But I finally installed a new AC/Heating unit all by myself for the most part - there’s still some American Fighting Spirit in this big belly somewhere! Show me a good licensed professional and I’ll shake his hand and remember his name.
Illiterate Electorate.
Will remain after the present tumor is excised from the wh.
I HATE my cable bill! Keep trying to figure out how to get rid of it but still watch the few shows I like. Have a similar disgust for my cell phone bill.
Seems to me when cable first came out the story was that the fee we paid meant that we wouldn’t have to watch commercials. HA!
A story about class and I was wondering how soon the PC policy would show up.
Shonuff... the first sentence.
“””Many families learned this unhappy lesson during the 20072009 recession””””
BOOOM! I knew they would blame it on Bush somehow.
“”””Many families learned this unhappy lesson during the 20072009 recession”””””
Damm you BUSH!!! We all know as soon as lord Barak was sworn in in 2009 he sprinkled some pixie unicorn rainbow dust on it and it disappeared. All hail the savior!
I thought they were going to talk about “Wealthy Poor” as in families that do not work yet have full cupboards, plazma TVs, and an IPhone in every little fat kid’s hand.
But I should know better than to think a news article would report on that. That would be racist. You’d think I woulda learnt my PC by now.
A lot of these people are only “wealthy poor” as opposed to “poor poor” because they were able to buy homes, cars and other assets when wages were higher. As these people retire and then die, more and more American households will be made of of lifetime $8 an hour temp/part time workers who never had a chance to own a home or save anything. They will rent their housing from the huge financial institutions and wealthy foreign owners that are buying up housing now.
“Have a similar disgust for my cell phone bill.”
Get a pay as you go cell phone, rather than a contracted one. I use mine for emergencies or for when my landline handset runs out of charge. A whole lot cheaper than a monthly contract.
I have been talking about this for years!
Nearly all of those people living in McMansions are as this article defines “working poor”. At a glance from afar they appear rich (as how rich is depicted on TV) but a closer look at their balances sheets reveal they are spending more than they make, have no savings, and have pulled all the equity out of their homes to fund their lavish lifestyles. They may make a lot of money, but are just one lost paycheck away from bankruptcy.
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