25
Sep
07

How Much is Enough?

How much is enough? The amount of money spent by Americans in any given year is astounding. This money, we are told, drives the economy and supposedly ends up putting more and more money in the pockets of every American. If you believe that statement I have a nice pig for sale that flew here from Antarctica.

The average American family, according to 2003 statistics, made around $73,770 per year, assuming both the husband and wife work full-time jobs. The same family in 1973 with only one wage earner made about $42,500. A very sobering statistic shows that the 1973 family with $42,500 available only had to spend $22,890 on fixed cost items (housing, insurance, child care, transportation and taxes). The 1973 family had almost $20,000 left for discretionary spending. The 2003 family with $73,770 available had to spend $55,660 on fixed cost items and had only $18,110 left for discretionary spending.

How can it be possible that a family living today, with two people earning almost double what a family did 30 years ago, have LESS money to spend on food, clothing, entertainment and savings than the family one generation ago? The answer lies in the incredible escalation of fixed cost expenses.

Housing expenses have gone from $5820 in 1973 to $10,500 in 2003. Child care expenses were non-existent 30 years ago because one parent could stay at home and watch the children. Now parents spend $5,600 per child on after school and summer day care, and $7,000 per year on a pre-schooler. Due to the need for two vehicles, transportation costs have increased dramatically from $5,600 per year to $8,000.

It is very interesting that in spite of these statistics, last year Americans shelled out close to 150 billion dollars on music, dolls, clothes and other “in” things for the 20 million girls aged 8-14. It is truly amazing that with less discretionary income Americans can still; drink copious amounts of both alchoholic and carbonated beverages, smoke cigarettes, eat out two, three or even ten times per week, buy designer label clothes, flock to stadiums and arenas to root for their favorite sports team, rent or go to movies weekly, have every new technological toy on the market, drive SUVs that are lucky to get 12 mpg, send their kids to private schools, enroll their kids in every single activity known to man, give their kids every new game or toy on the market, and flush money down the gaming industry’s toilets of lottery tickets and slot machines.

The only way people can spend as they do is the ease of credit. Credit cards provide an easy way to get $5,000-20,000 more discretionary income per year. Sooner or later they do have to be repaid, either at $50 per month for 1000 years or through foreclosure of the house.

I am sorry, but I would rather see the Federal Reserve Board charge 15% interest to make people quit borrowing than to lower interest rates to spur people to borrow more. The day of reckoning will come for this greed driven country. Sooner or later the unbridled lust for “bigger, better, MORE and MORE”, will drive America the beautiful to its knees.

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