Skip to comments.Fixed Costs Are What's Really Driving Americans To The Poorhouse
Posted on 12/13/2012 2:09:06 PM PST by GlockThe Vote
Thumb through any personal finance book written over the last five years and chances are you'll come across at least a handful of chapters on how cutting daily luxuries like coffee and cable.
It's that kind of finger-wagging criticism that's rubbed so many hardworking people wrong the idea that they wouldn't be in this position if only they'd watched less TV, traded in their car, or tried cooking more meals at home.
In case you're in need of a reminder of the bigger picture, Personal finance expert Helaine Olen nails the issue right on its ugly head in her forthcoming book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry:
"The problem was fixed cost, the things that are difficult to "cut back" on. Housing, health care, and education cost the average family 75 percent of their discretionary income in the 2000s. The comparable figure in 1973: 50 percent.
(Excerpt) Read more at businessinsider.com ...
Fixed Costs ...
Is that what they call homeowner insurance going UP ?
20% in 2010
12% in 2011
“Fixed Costs” = Housing, health care, and education?
All 3 areas where the Government is deeply involved?
All 3 areas where they could potentially subsidize more?
Try to explain that to the average obama cult member?
>> the Fed tells us there is no inflation!
There IS no inflation in the price of essentials such as eyePads, eyephones, Chevvy Volts, designer bluejeans, flatpanel teevees, etc.
Any imaginary inflation you think you are seeing is limited only to luxury items such as milk, hamburger, bread, surgery, gasoline, fluff like that.
All clear now?
>>Is that what they call homeowner insurance going UP ?
Yes. By calling them fixed costs, they mean expenses that you can’t just “turn off”. That doesn’t mean that the price stays the same. In fact, that is the problem. They keep going up while wages are stagnant or declining.
Even as people who work hard all week are forced to cut back first on movies at the theatres, then on movie channels, then on Netflix, then cutting cable to almost-basic cable, then cutting to basic cable, then to an antenna....and they still can’t keep up with the so-called fixed costs.
People who work at a productive job all week, and then have less to show for it than a welfare recipient are just scratching their heads and saying, “I deserve better than this. Why do I bother anymore?”
Sometime back in the late 1970’s, my older brother told me what he thought the future would be like:
Everyone will be able afford the luxuries, but no one will be able to afford the necessities.
Man, was he ever right.
Which explains this graph:
More ‘normal items’ are becoming luxuries.
Those new luxuries need to be cut to pay for government necessities of paying taxes, fees, fines, insurance.
“Fixed Costs” = “Fascist Rape” .....
I don’t get the reasoning behind this article at all.
It’s true that the cost of necessities has gone way up.
But that’s even more reason to cut back on extras like four-dollar cups of coffee and satellite TV.
That isn’t “finger-wagging.” It’s how you stay in the middle class instead of joining the ranks of the poor.
People having trouble paying for groceries shouldn’t be buying iPhones with a $1200 yearly operating cost.
Fixed costs are recurring costs because you have to pay them to operate.
I need a place to run my business. Maybe it doesn’t have to be in a fancy office park, and I can move it to a more “industrial” area where the price is lower but I still have to pay it.
Same goes for living expenses. I have to live somewhere and that cost is a fixed cost. Now the only wiggle room I have in that fixed cost is in the price. Food is a fixed cost. I need to ingest 2500 calories per day to maintain my weight (this assumes that I am not overweight) I still have some wiggle room in that as I don’t have to eat steak but I can eat chicken or hamburger but I am not freed from the 2500 calorie requirement. Yet is costs me X dollars to prvide 3 meals with a total of 2500 calories per day.
Also, this article ignores much of the reason costs for necessities have gone up. That’s because what were formerly considered luxuries are now considered necessities.
House sizes roughly doubled from the 1970 to 2000. Is there any reason to think price wouldn’t also at least double?
Formica countertops used to be standard, with granite a true luxury found only in the highest end homes. Now they’re standard.
Take a look at the car from 1970 compared to the one from 2012. Much more luxurious.
Not to mention cable TV and internet connection used to be luxuries, now they’re considered utilities we must have.
Education is by any standard wildly luxurious compared to what it used to be.
Heck, if you watch the old Honeymooners TV show, they didn’t have a phone. They had to go down to the drugstore downstairs to make a phone call.
A good deal of inflation can be blamed on government at all levels.
I’ve been in arguments with people in financial distress who insist that an iPhone is a “necessity” because “you have to have a cell phone.”
But you can get a cheap phone for pennies and buy whatever minutes you need.
Another thing no one ever brings up that drives up cost is credit. It isn’t just that cars are more luxurious — they are — it’s the fact that nobody pays cash for them. If everybody paid cash, car prices would drop like a rock.
Look at countries where home mortgages are uncommon — the price of housing is invariably cheaper.
Yes, but, all three are also subsidized. There are many factors at work in price increases.
I made a calculation nearly a DECADE ago that I didn’t need a “smart phone” or anything like it. I have cable Internet at home, high-speed at work. That’s where I’m located 98% of the time. I can skate by the other 2% with a simple Jihad Phone, so that’s all that I’ve used - heck it doesn’t even have a camera.
You do know you can elect NOT to post random disjointed thoughts that occur to you, don't you?