With Just $10 "You're Wealthier Than 25% Of Americans"

Zero Hedge ^ | 10/21/15 | Tyler Durden

[bert]

the term Free Traitors was coined by small narrow minded people that don’t understand business nor trade

[wbill]

So someone who owes a million on his fancy house and has $900,000 in the bank has negative net worth and is therefore poor?

Exactly. Conceivably, one could have an annual salary of $500,000 and be considered "poor", using this definition.

As always, there are lies, dammed lies, and statistics.

[kiltie65]

“modern electronics and technology are actually making the average person/family poorer...”

So true. When all the technology we had was our land line phone, my phone bill was $11 per month, AND the family considered it a mortal sin to EVER use long distance, and the occasional times we had to, we always asked the operator for time and charges afterwards so we would know what to expect on the bill.

[RainMan]

This is true, however 30 years ago you were also likely to pay long distance charges to call the next county. There were years in the 80’s where my long distance bill was never less than $250/mo ... which in those times was extremely more expensive than the equivalent of a cell phone, cable tv or internet access in today’s dollars ... combined.

[Hieronymus]

It depends on how much the fancy house is actually worth. If he has $900,000 in the bank, owes two million on the house, and the house is only worth a million, assuming all his other assets and liabilities net out to zero, he is worth -$100,000. If the house is worth three million, then he is definitely rich, with a net worth of $1,900,000.

The person with a negative net worth may be materially comfortable, but is vulnerable to things such as inflation or loosing his job. Walking away from the debt may or may not be a good option. This can be a psychological burden, and may be a real problem when the house of cards collapses. Still, it is very different from wondering what one will eat tonight.

[RainMan]

and then there is basic math and understanding the difference between liquidity and net worth. In the example, the person is basing their perception of wealth on liquidity where current income is exceeding current expenses (i.e, they can pay their bills and have money left over), but net liabilities still exceed net assets therefore they have a negative net worth. As long as there are no shocks to the system, this person should be fine, but a loss of a job, crash in the housing market, increase in interest rates, or any number of other events outside of their control could send this person into a financial abyss.

[Ancesthntr]

the fallacy in the college debt is not evaluating the education as an asset that is multiples of the debt incurred to obtain it.

Exactly. That college debt has purchased an asset...though of course what it is actually worth in net present value terms depends largely on 2 factors: first, what the degree is in and, second, how hard the person wants to work to get ahead in their field. This would be a different story if people accumulated $50,000 or more of debt to buy a year-long cruise or big screen TVs.