This has been an enjoyable thread. Thanks to all who have contibuted!

If I can add anything, it would be that where you live is a big detrmining factor in the amount of money that is left over for saving or investing.The cost of living is relative to your location.

Several people have posted the costs of living from their locations that certainly don't apply to the rest of the country. Where I'm at here in western NY, $750 a month will get you a whole house, utilities included!
$1000 a month for food?

I pay $450 a month for a spacious 2 bedroom apartment, utilities included.Food around $450 a month.

Hi, alpha480v. Thanks for joining in the discussion!

You're absolutely right, where one lives makes a big difference in the amount of disposable income one has. To be honest, I'd like to consider moving to a smaller town that's more affordable, but there are so many things tying me to where I am.

Wow! $450/month for a 2-bedroom apartment where you live. Is it a small town, big town, small city? I'm a Canuck in Alberta, which currently has a boom economy (especially in the big cities), so a 2-bedroom is currently going for about $900 to 1000, $600 to 700 for a basement suite. As a comparison for you, my husband and I paid $475/month for a 2-bedroom apartment here 27 years ago!

I believe I'm the (only) one who quoted the $1000/month for food. This is for a family of five, with three teens, but still we budget carefully and don't buy a lot of meat or convenience-type products. This is a lot of money for groceries, but there are other cities in Canada where the cost for food, rent and real estate are higher than where I live.

No, Wildrose, I posted a thou a month for food too. I also have 3 teens.

We do eat a pile of meat though; I bet it is 20 or 30 bucks a week easily. We buy cheaper cuts mostly because we have a slow cooker which works miracles. Steak is an occasional treat since it would be 30 bucks for just one meal.

We also buy a fair bit of sweets mostly because I spoil the kids. They are all scrawny anyways so I am not worried about their weight.

I nag them 'eat, eat, here, have more!'

Drew

I think a lot of jobs pay less than what they did in the past in inflation adjusted dollars. Plus more and more jobs require an expensive college degree than were required in the past. And a lot of very good paying manufacturing jobs have been lost to overseas markets. All helping to hold down wages in the US.

That has led many people that were accustomed to having a middle class income and lifestyle to slip out of the middle class, even if they don't really realize the fact. It happens slowly as their wages stay the same but the prices of everything around them move up. Gradually their paychecks just don't go as far as they used to go, and if they want to continue living at the same level they were accustomed to they must either earn more money or borrow to fill in the gaps between earnings and expenditures.

Quite simply they no longer earn enough to be considered middle class, but are still trying to hold onto the lifestyle through debt instead of earnings. Eventually it will catch up to them. The fact that wages have been stagnent for years and inflation hasn't is a real issue that has helped to drag many people out of the middle class, but you don't get a letter in the mail that says "We are sorry to inform you that you no longer qualify for membership in the middle class. Welcome to the lower middle class or lower class."

It is very difficult to come to terms with the fact that whatever we earn is not going to be enough to support what we would consider a normal American lifestyle. Not only is it difficult, but down right painful and depressing. And what some have described here as ways to live within ones income it isn't really that appealing to most of us, because quite honestly it isn't how we feel a middle class American should be living. Which is true, it isn't the middle class lifestyle most of us picture. The two cars, nice house, two kids, family vacation, computers, large screen tvs, digital cable, video games, cell phones etc.

But it is the lifestyle of the lower middle class, which encompasses far more of us than we would like to admit. What we are seeing kids is the start of the decline in the standard of living in the US.

It might not be obvious yet, but I think for a lot of us we will soon find that we can no longer keep up with our delusion that we are middle class. Or else our perception of the middle class lifestyle will have to be adjusted downward to a level more in line with the past.

For some of us there is no delusion. We prepared, paid attention a long time ago, followed a path and then surprise! The impossible lifestyle follows.

Great- your old CORII- you have seniority and you got into the pyramid scheme first. Now your children and the firneds of your children are screwed. It costs 50,000 dollars just for a 20% downpayment on a modest house. What working class joe can build up that kind of bankroll. They can't. But they get suckered into the ARMs, the exotic mortgages, the no money down. And then when the wizard draws back the curtains and the scheme is revealed, they lose all...foreclosure, bankruptcy. Its their fault right...no spare me the reponse I'll write it myself... here goes.



They don't have to buy a house. They can rent and scrimp and save like I did in my days. I worked two jobs and made enough money to buy a small house. And then I got better jobs and made a mint when I sold my house after my neighborhood gentrified. I also made a mint because I happened to live through the stock market expansion of the 90's so I'm set for retirment. Poor people could do the same if they just used a little old thing called elbow grease and good old fashioned American ambition!!

Hi, Drew.

We also buy the cheaper cuts most frequently. Another thing I do to stretch the meat portion of my food budget is buy small amounts of chicken breasts, lean ground beef, lean sausages, etc. and use them in stir-frys and casseroles, or use them along with fresh veggies, grated cheese and lettuce in wraps or tacos.

One thing I find really frustrating of late is that when I'm grocery shopping, the non-food items (paper, hygiene, cleaning products) take up such a large portion of our grocery budget. I'd rather spend the money on food, but we need these things also. It just really irks me that I've spent $60 of the grocery money before I even get to the stuff we eat.

Kenohio, I think this is the situation many middle class families are in right now, in a nutshell. As you stated, the paychecks stay the same or rise very marginally, and the cost of goods and services rises at a greater rate. The average person may not really think about it much when the home insurance raises by $70 this year over last, and the property taxes go up by 9%. Registering your vehicle, paying your pet licence, utility bill's a bit higher. One at a time, it doesn't look like a big deal. But when you sit down and calculate where your income has gone, you see the grand total of these increases compared to the marginal increase in your income (if you received one). Then comes the job of trying to trim the "fat" out of one's expenses. I think there comes a point when, for most people, there just isn't any more fat, and that's when a lot of the items that are real necessities are purchased on credit.

Well, I think gradually this is going to have an impact on the economy. When increases in property taxes and food and utilities eat up pretty much every bit of disposable income, people may allow their debt load to continue to grow, but I think it's more likely that more and more they will just do without all but the most necessary of items. Then all the big box stores and specialty stores alike will take a big hit.

Exactly, Thuja. The average person is just trying to get into a house. Sure, there are those who want a large home filled with the best of everything right from the start, but many just want to get into a home. What have most of us been told for many years, even by our parents, who would not want to steer us the wrong way? "Buy a home, paying rent every month is just throwing money away." Now, in many places, just trying to get into a house is a monumental task, and yes, many have been suckered into impossible mortgages. I think also that there has been a real snowball effect with this - someone hears from a coworker that he was able to get into a home with a creative mortgage plan, and that person investigates and finds out that there's a lender who will be happy to do the same for him. Before you know it, it's more like the norm, and even people who just want a small home to start a family in are over their heads in debt.

I agree with not biting off more than one can chew, but I can see how easily the dilemma can develop for young people today. How can you save money for a downpayment when you have to pay back student loans and somehow afford the rising costs of living, which will affect you even as you live in a small apartment and try to save money? It seems that the only way a young couple can start out without huge debt is if they have a big hand up from their parents, and I know that's impossible in most cases.

Eventually, all of this will erode the middle class, the upper middle class, hell, maybe even some of the wealthier when the real estate market, lending institutions and the construction industry find themselves affected by the average joe's and jane's lack of ability to get into a home and the erosion of their disposable income.

I think that is the whole issue we all have to come to grips with in the emerging American economic reality. In the past it was pretty much guaranteed, that if you obtained a college degree you would end up earning enough to give you a spot in the Middle Class. Heck even if you didn't get a college degree, but were fortunate enough to get on at the mill, factory or government job you were going to be middle class.

Now that isn't the case, but the expectations that everything is the same are still the common mindset. The adjustment to reality will be very dramatic and unfortunate indeed.

The reshuffling and rebalancing of expectations and realities will be a huge blow to the American Psyche. Will it be enough to get us to regain our place in the world's pecking order? Who knows, but believe me there are a lot of other countries out there that would love to have a shot at anything closely resembling the standard of living we have enjoyed here over the last 100 years. And now that they have had a taste of the Middle Class lifestyle, I think we will have to fight even harder to hold our place in the Middle Class not only against our neighbors in the US, but against billions of people world-wide.

Quite a daunting feat, that has yet to sink in.

I am 41, and never in my life have I bought into a pyramid scheme. Or gotten a mortgage for a house I might add.

What I have done, spanning a couple of decades now, is pick a career which matters, put my head down, acquired some valuable skills in a cumulative fashion, and filled a very small, very valuable niche in it.

I didn't whine much along the way when I took pay CUTS to acquire more experience in a different area, I've never thought of anything as "impossible", just some things are tougher to acquire than others, and paid attention to the way the world generally works and used these observations to my advantage.

Didn't strike me as difficult along the way, but I've got some natural advantages over an "average" American I suppose.

Presto....

Bully for you, Club of Rome. You are lucky you had some forsight. The point is though, overall, the middle class is harder to maintain. Not everyone can be chiefs, there has to be braves too. (sorry everyone for the bad bad cliche')

A working man could support his family on one income in the sixties. Now two incomes are required; that is a pretty marked change.

I work in the blue collar sector and see job ads paying the exact same wage I was making 16 years ago for the same position. Luckily I have switched gears to a degree and am working in a profession with an extreme labour shortage. I feel very sorry for those with no education or marketable skills. It must be tough trying to survive on minimum wage.

Overall there has been less than 20 % growth in wages in my area over the past decade and a half. A decent factory job payed between 12 and 16 bucks an hour then and pays maybe as high as the low twenties now. 8, 10 or 12 buck/hr jobs are a dime a dozen. What is worse is the fact that most of these jobs are through a temp agency; zero job security!

I know some of my kids will return, or not leave our nest until they have a sizable down payment. They are well aware of how money works. Luckily me and the missus really like our kids.

As for inflation, everyone has to be feeling that pinch too, unless one is buying computers or electronics. Motorcycles have doubled in price in the last couple of decades, although I suppose one is getting way more bang for the buck now. (I was a road racer) Housing is through the roof as are the little things. I noticed too, Wildrose, how much of my grocery bill is BS things like toothpaste, vitamins, laundry detergent, etc. Food is still cheap in comparison; however each of these items seems to add about 10 bucks to the bill.

I know one thing, it sure as hell isn't getting easier, and I'm one of the lucky ones!

Drew

http://karmak.org/archive/2004/04/incom ... h97pie.gif

There you go.

1% own 39% of the stuff.

CORII, if you don't mind me asking, did you buy a home? Or have you always rented?

We went to pick up commodities for a soup kitchen we help out yesterday and heard something very scary. The guy who runs the place and picks up food for all the local food pantries says that almost every place in the state is practically out of food. The number of people needing food is up, and the amount of food is down. People are coming that never came before. They are the working poor. They can't make ends meet now, and we aren't even into the heating season. It's getting bad out there.

The really scary part is that we aren't too far behind the working poor. I noticed that even with all the conservation and efficiency we have done, the bills still come up to what we make every month and sometimes more. We're next...